their distribution, how they want distribution to work. it's a very tricky question because they could end up cannibalizing some existing revenues. but if they don't cannibalize their own, someone else might do it for them. >> host: blair levin, thank you for being on "the communicators," we look forward to having you back. eliza krigman, politico, thank you. >> host: thank you so much. >> guest: thank you. ..

honorable senators, members of the house of commons, ladies and gentlemen, i begin by congratulating all parliamentarians on this opening day of the 41st parliament of canada on my own behalf and on behalf of her majesty queen elizabeth ii, queen of canada, who sends her congratulations and warm good wishes. many of you are returning to your duties as members of the house of commons, and over one hundred of you are about to take your places as elected representatives for the first time. together, you have been entrusted with a profound responsibility, to serve the public interest on behalf of all canadians. [speaking in french]

>> translator: in the months since my installation as governor general, i have had the privilege of meeting with canadians in their communities, and at rideau hall and la citadelle. it has been an honor to answer this unique call to service, and i want to share with you something of what i have learned in my travels across this remarkable country of ours. i have learned that, regardless of age or affiliation, all canadians want to help create a better future for this country. each of us aspires to a canada where everyone can succeed and contribute, where excellence and opportunity coexist. i have met with canadians from all walks of life and discovered this common ground.

in 2017, we will celebrate the 150th anniversary of confederation, and i invite all canadians to imagine ways to build a smarter, more caring nation as we approach this wonderful milestone. i believe that in order to achieve our vision, we must work together to support families and children, to reinforce learning and innovation, and to encourage philanthropy and volunteerism. each of us can answer the call to service in our own way and, together, continue this bold experiment that we call canada. canadians have expressed their desire for a strong, stable national government in this new parliament. with this clear mandate, our government will deliver on its commitments. it will implement the next phase of canada's economic action plan to build on the progress already made. it will continue to focus on

jobs and growth. it will bring the federal budget back into balance. it will invest in our system of universal health care. it will support the communities and families that work so hard to care for each other. our government will defend the rights of law-abiding citizens, and it will promote canadian values and interests at home and abroad. our government will be here for all canadians, for individuals, for families and for all regions of the country, as together we move canada forward. jobs and growth will remain our government's top priority. [speaking in french] >> translator: through canada's economic action plan, our government took direct action to create jobs and protect canadians during the global recession. on monday, as our first order of business, our government will

reintroduce our budget, in order to implement the next phase of canada's economic action plan, our low tax plan for jobs and growth. we will get back to work on the things that matter most to canadians, good jobs, security for our families and a prosperous future. our government's plan builds on five years of hard work to create the right conditions for growth and job creation, a stable, predictable, low-tax environment, a highly skilled and flexible workforce, support for innovation and new

technologies, and wider access to markets abroad. this approach has allowed canada to meet the challenges of the global recession. the next phase of our government's plan is designed to help us stay on track during the recovery. since 2006, canadians have benefited from significant, broad-based tax cuts. these cuts have given families the flexibility to make the choices that are right for them. oh oh they have freed businesses to -- grow and succeed, creating the jobs on which canadians depend. our government will continue on this path by introducing new tax credits for individuals and families, and by keeping taxes low to create jobs.

it will also complete work already underway with the government of quebec to reach an agreement on tax harmonization no later than september 15, 2011. >> however, there is more to be done. the global economy remains fragile, and risks to our recovery persist. as well, canada's workforce is aging, and it will no longer grow as it has in the past. this demographic challenge will impact our economic future and put long-term pressures on our pension and health systems that must be addressed. in the years ahead, our prosperity will also depend on making sure that all canadians have the skills and opportunities to contribute, to innovate and to succeed. our government's plan will provide assistance for workers who want to learn new skills and seize opportunities. it will remove barriers for

older workers who want to continue their careers. it will lay the foundation for long-term growth by helping a new generation gain the critical skills they will need to thrive in the workforce. the success of canada's job-creating businesses demands both hard work and good ideas, and we must create the right conditions for both to be rewarded. our government will introduce and seek swift passage of copyright legislation that balances the needs of creators and users. in order to improve canada's productivity, enhance our economic competitiveness and increase our standard of living, our government will continue to make targeted investments to promote and encourage research and development in canada's private sector and in our universities, colleges and polytechnics. it will look for ways to support innovation while ensuring that federal investment in research and development is effective and

maximizes results for canadians. it will also release and implement a digital economy strategy that enhances digital infrastructure and encourages canadian businesses to adopt digital technologies and provide digital-skills training for their employees and new hires. [speaking in french] >> translator: in addition, our government will continue to cut red tape for small businesses so that they can focus their attention on growing their businesses and creating jobs. this will be achieved while maintaining the highest standards to protect our environment and the health and safety of canadians. our government will also continue opening new markets for canadian businesses in order to create good new jobs for canadian workers.

since 2006, we have signed free trade agreements covering eight countries, and negotiations covering some fifty more are underway. our government will aim to complete negotiations on a free trade agreement with the a european union by 2012. it will also seek to complete negotiations on a free trade agreement with india in 2013. in all international forums and bilateral negotiations, our government will continue to stand up for canadian farmers and industries by defending supply management. >> the united states as are most

important trading partner, ally and friend. our government will work with president obama and his administration to deliver on the shared vision for perimeter security and economic competitiveness. we will strengthen our collaboration to streamline and secure our border and enhance regulatory cooperation, ensuring that people and goods can flow freely and safely between our two countries. our government also understands the importance of attracting foreign investment to our economy. foreign investment helps canadian companies grow by introducing new technologies and practices, launching pads to strengthen growth and innovation here at home. it provides new opportunities to connect our firms to the world. our government will continue to welcome foreign investment that benefits canada. our government will also move forward with willing partners to establish a new national securities regulator, subject to the supreme court's decision on the extent of federal

jurisdiction. nearly three years ago, the world faced an unprecedented financial crisis. drawing on strong fundamentals and the values of the hard-working canadians and firms that refused to let difficult times define them, our economic action plan helped canada emerge quickly from recession. working closely with provinces, territories and communities, our government moved swiftly to deliver a targeted, time-limited stimulus program that created and protected jobs right across the country. hard work, determination and responsible choices allowed us to make these extraordinary investments when times were tough, while avoiding the high debt levels that threaten other countries. we must now take that same approach to future growth. we must eliminate the deficit and return to balanced budgets to ensure that our economy can

continue to grow and create jobs and that the federal government will have sufficient fiscal flexibility for future choices. our government had committed to achieving this by 2015. in order to accelerate the return to a balanced budget and to eliminate the deficit one year earlier, over the next year we will undertake a strategic and operating review of government spending led by a new cabinet subcommittee established for this purpose. this review will be focused on reducing the cost of government, while keeping taxes low and preserving transfers to individuals and provinces for essential things like pensions, health and education. our government will also complete its stimulus package as promised and continue specific measures to restrain the growth of government expenditures. [speaking in french] >> translator: our government's plan will put

us on a strong footing to resume paying down the federal debt, further reduce taxes on families and continue investing in priorities. there is no greater priority for canadians than caring for their loved ones. canadians believe that their parents and grandparents have worked hard and deserve a secure retirement. they want their children and grandchildren to grow up with every opportunity to lead happy, healthy lives. many canadian families struggle to realize these goals. that is why our government's low-tax plan will permanently enhance the guaranteed income supplement for some 680,000 of canada's most vulnerable

this increase, the largest in a quarter century, will help these seniors make ends meet. at the same time, our government will continue to help canadians save for their retirement, and will work with provincial and territorial partners to implement the pooled registered pension plan. >> our government's plan also recognize the tremendous time and resources required of family caregivers. many individuals and families have added responsibilities in caring for infirm parents or these family caregivers make special sacrifices, often leaving the workforce temporarily and forgoing employment income. the new family caregiver tax credit will support those who care for a dependent family member who is infirm. in addition, our government will remove the cap on eligible expenses that caregivers can

claim under the medical expense tax credit. our government will also support parents in providing their children with opportunities to grow personally and discover their creative passions by establishing a children's arts tax credit. canadians want and expect their health care system to be there when they and their families need it most. canadians want better results from the health care system, at the same time as an aging population is putting unprecedented pressure on the system's ability to deliver. [speaking in french] >> translator: our government is committed to respecting provincial jurisdiction and working with the provinces and territories to ensure that the health care system is sustainable and that there is accountability for results. it will maintain the six percent escalator for the canada health transfer, while working

collaboratively with provincial partners to renew the health accord and to continue reducing wait times. as has been done before, our government will enter into a separate agreement with the government of quebec regarding the implementation of the renewed health accord. >> canadians are united by core values, a shared history and a sense of common purpose. our government will join canadians in celebrating our heritage, in promoting our values and in standing for what is right on the world stage. in an uncertain global environment, our government will also continue to pursue a stable, principled foreign policy that advances canada's interests. the canadian armed forces play a crucial role in defending our sovereignty and national security. as the canadian mission in afghanistan transitions to training, diplomacy and development, our government joins canadians in honoring

those who gave their lives and in recognizing the sacrifice and achievements of all the men and women, both military and civilian, who have served and continue to serve in afghanistan. our government will continue to recognize and support all veterans. today, as north america and the transformed by their people, the canadian armed forces are standing tall with our allies to protect civilians in libya. our government will hold a parliamentary debate on the future of this important mission. as part of our ongoing efforts to promote human rights, our government will create a new office of religious freedom to help protect religious minorities and to promote the pluralism that is essential to the development of free and democratic societies. we will also take action to strengthen our national sovereignty. our government is committed to protecting the integrity of our immigration system. it will introduce measures to

address marriage fraud, an abuse of our system that can victimize unsuspecting canadians and vulnerable immigrants. our government will also reintroduce legislation to combat human smuggling, which can place migrants in dangerous conditions and undermine trust in canada's immigration system. [speaking in french] >> translator: our government has made canada's north a cornerstone of its agenda. the strongest expression of our sovereignty comes through presence and actions, not words. our government will continue to exercise leadership in the stewardship of northern lands and waters. it is also committed to working with the northwest territories and the private sector to complete the dempster highway, by linking inuvik to tuktoyaktuk, thereby realizing

prime minister diefenbaker's vision of connecting canada by road from sea to sea to sea. canada's natural environment shapes our national identity, our health and our prosperity. our government has expanded protected lands and marine areas to an unprecedented extent, so that current and future generations can continue to enjoy them. in this, the 100th anniversary year of our national parks system, our government will create significant new protected areas. it will work with provincial, regional, municipal, aboriginal and community stakeholders toward establishing an urban national park in the rouge valley of eastern toronto.

looking to the future, our government will engage a broad range of stakeholders on the development of a national conservation plan, to move our conservation objectives forward and better connect all canadians with nature. >> our government is committed to developing canada's extraordinary resource wealth in a way that protects the environment. it will support major new clean energy projects of national or regional significance, such as the planned lower churchill hydroelectricity project in atlantic canada. it will engage the provinces, territories and industry on ways to improve the regulatory and environmental assessment process for resource projects, while ensuring meaningful consultation with affected communities, including aboriginal communities. beyond our natural heritage, canadians also cherish our

shared history. anniversaries are an important part of how a society marks its collective progress and defines its goals for the future. a key milestone next year will be the bicentennial of the war of 1812. we will remember how those of diverse backgrounds and various regions came together to fight for canada, ensuring the independent destiny of our country in north america. we will also celebrate the 200th anniversary of the selkirk settlement, which marks the founding of manitoba and the early days of the modern west. next year we will observe her majesty's diamond jubilee, celebrating her six decades of service as queen of canada. and canadians look forward, in just a few weeks' time, to welcoming their royal highnesses the duke and duchess of cambridge on their first royal tour since their marriage this spring.

[speaking in french] >> translator: the government of canada has no more fundamental duty than to protect the personal safety of our citizens and defend against threats to our national security. >> our government will move quickly to reintroduce comprehensive law and order legislation to combat crime and terrorism. these measures will protect children from sex offenders. they will eliminate house arrest and pardons for serious crimes. they will give law enforcement officials, courts and victims the legal tools they need to fight criminals and terrorists. our government will continue to protect the most vulnerable in society and work to prevent crime. it will propose tougher sentences for those who abuse seniors and will help at risk youth avoid gangs and criminal activity. it will address the problem of violence against women and girls. our government has always believed the interests of law-abiding citizens should be placed ahead of those of criminals. canadians who are victimized or threatened by crime deserve

their government's support and protection, and they should have the right to take reasonable steps to defend themselves and their property when the police cannot be there to assist them. our government will reintroduce legislation to clarify and strengthen laws on self-defence, defence of property and citizen's arrest. our government will also continue to implement its response to the air india report. [speaking in french] >> translator: in addition to guarding the interests of our nation as a whole, our government will continue taking action to address the needs and aspirations of every region of the country. local communities are best placed to overcome their unique challenges, but government can help create the conditions for these communities, and the industries that sustain them, to succeed.

>> canada's role communities are rich in history and culture, and generations of rural canadians have worked hard and play by the rules. they should not be the target of unfair laws. our government will act on its promise to introduce legislation to end the wasteful and ineffective long-gun registry. canada's traditional industries remain crucial to our economy. our government has always stood behind canada's agricultural, forestry, fishing, mineral, manufacturing and energy sectors, and will continue to support them as they innovate and grow. it will also introduce legislation to ensure that western farmers have the freedom to sell wheat and barley on the open market. canada's aboriginal peoples are central to canada's history, and our government has made it a priority to renew and deepen our relationship. the contribution of canada's aboriginal peoples will be important to our future prosperity. concerted action is needed to address the barriers to social and economic participation that

many aboriginal canadians face. our government will work with aboriginal communities, provinces and territories to meet this challenge. it will help open the door to greater economic development by providing new investments in first nations land management. it will promote access to clean water and the deployment of clean energy technology in aboriginal and northern communities. building on the work of the national panel on first nation elementary and secondary education, our government will engage with partners to make concrete, positive changes to give first nations children a better education so that they can realize their dreams. we will also expand adult basic education programming in the territories to help to increase education and employment levels. [speaking in french] >> translator: our government will also

introduce legislation to ensure that people living on reserve have the same matrimonial real property rights and protections as other canadians. canada's diverse communities are connected by shared values and aspirations, and by the willingness to lend a hand. this has been markedly evident in the response of ordinary canadians to recent and devastating floods and wildfires. our government recognizes the resolve and courage shown by canadian communities in the face of adversity and will stand by them in their times of need. >> indecent all of the measures our government will pursue, we will provide the principled, accountable leadership and good, clean government that canadians

deserve. on first taking office, our government introduce major new accountability legislation as its first act in the 39th parliament, and it will now move forward on its long-standing commitment to democratic reform. reform of the senate remains a priority for our government. our government will reintroduce legislation to limit term lengths and to encourage provinces and territories to hold elections for senate nominees. canadians rightly expect fairness and accountability in the full range of government institutions that serve them. our government will reintroduce legislation to restore fair representation in the house of commons. it will take steps to phase out direct taxpayer subsidies to federal political parties over the next three years. it will support transparency for first nations communities by requiring their chiefs and councillors to publish their salaries and expenses. our government will also support the efforts of the public service to modernize the way it works so that it can continue to provide the highest standard of service to canadians.

[speaking in french] >> translator: in filling the two upcoming vacancies on the supreme court of canada, our government will engage parliamentarians through the transparent process first used in 2006. our government will also ensure that citizens, the private sector and other partners have improved access to the workings of government through open data, open information and open dialogue. >> as canadians, we take pride in our history and look forward to our future as the true north, strong and free. from our earliest days, we have always come together to advance our common purpose, each of us ready to do our part to move canada forward. [speaking in french] >> translator: building on the careful investments and decisive actions

of the past five years, our government will move swiftly to deliver the next important phase of the economic action plan. our government will reflect the courage canadians show in meeting the challenges of today and their determination to rise to those they see on the horizon. members of the house of commons, you will be asked to appropriate the funds required to carry out the services and expenditures authorized by parliament. >> honorable senators and members of the house of commons, let the work of our great democracy support canadians as they'll go about fashioning a 21st century destiny limited only by their ambition and imagination. may divine providence guide you in your deliberations and make you equal to the trust bestowed upon you.

>> chair -- >> prepare their final report to congress, its investigation of how she was tax dollars are spent on contracting projects in afghanistan and iraq continues this morning. the commission is holding a hearing with undersecretary of state patrick kennedy on the state department contracts in iraq and afghanistan. this is live coverage just getting under way. >> second, the treatment of contingency contracting in the most recent quadrennial diplomacy development, and third, final transition issues in iraq and afghanistan. the commissioners may of course raise additional issues as the question period unfold. our sole witness today is a very

distinguished official of the department of state, ambassador patrick f. kennedy. his current position as undersecretary of state for management puts him squarely at the center of the action and many issues that concern this commission. we appreciate the informed unhelpful testimony he has provided in other appearances before this panel, and welcome him back. we also appreciate his informal responses to our work as well. before we hear ambassador kennedy's testimony, i will comment briefly on our three main areas of interest. first, it's the state department's response to our request for comment on recommendations in our february 2011 report to congress. that report called at what risk correcting over reliance on contractors and continuing operations made 32 recommendations for statutory policy or administrative changes. at our request the department of

state provided responses to the items it would affect it. we appreciate that. to be candid, however, we thought some of the responses were cursory while others struck us as logically dubious. for example, we think the departments resistance for recommendation for a permanent governmentwide inspector general for contingency operations did not pay due regard to the inner agency, the mentions of these operations. or to the drawbacks of setting up special ig shops after boots have already hit the ground. as experience in iraq and afghanistan have shown, a great deal of waste, fraud, and abuse can happen if oversight isn't deployed along with the troops, diplomats and reconstruction officials. state also disregards -- disagrees with the recommendation that suspension and debarment officials document the rationale for not taking action against the contractor,

official, recommended for suspension and debarment. state's response said that would be a burden. a burden? that response approaches a borderline of government negligence to us. if harde targeted oversight offs have recommended that a contractor be suspended or disbarred from receiving taxpayer's money, it is perfectly reasonable and potentially important to insist that other officials write a few sentences of explanation if they decide to do nothing and ignore that recommendation. our second main topic is the treatment of contingency contracting and the state department's quadrennial diplomacy and develpment review, which includes operations of the u.s. agency for international development. to its credit, the department notes the qddr that contracting has real benefits for the government. but has often been the default option, a term that we also use. to work around agencies staffing

and budget constraints. the qddr calls for rebuilding for capabilities in critical areas creating more competition in contracting and strengthening contract oversight and accountability. these are all truly excellent points. we might also note the department of state has given contracting much more thought in public threat at least than the department of defense displayed in their most recent quadrennial defense review, the qdr. nonetheless we hope to continue an early discussion on the qddr to judge whether it is appropriate way to the important of contracting commission success, and to the need for good stewardship of taxpayer dollars. that thought leads to our third main topic, the defense to stay transition in iraq and afghanistan. concerns about the plan, timeliness, resources and risk

of those transitions have been in previous hearings and into special reports to congress. unfortunately, our concerns remain very much alive. and they are reinforced by the department of state inspector general's report released just last week. on october 1 of this year, state will take over responsibility for the u.s. presence in iraq as u.s. troops bring their drawback to essentially zero by december 31, 2011. we have noted that this transition requires that state take on our contract for hundreds of functions ranging from medical care and air transport, to construction and pest control, all of which expand its presence outside of baghdad. much of this work involves contracting, including contracting for thousands of new private security employees. the department's new ig report, however, tells us about, oh,

several key decisions have not been made. some plans cannot be finalized, and progress is slipping in a number of areas, end of quote. the ig also notes quote, a lack of senior level department participation dedicated to the transition process, and i think the key word is dedicated, which may be held by new office of iraq transition coordinator. the state department ig also says 5405 projects valued at 15 billion has been transferred to iraq but with security concerns and poor contract performance being major hindrances to projects completion. those are quotes from that report. the ig report underscores a concern featured in this commission special report of sustainability risk that we released friday morning.

quoting the ig, quote, ambassador officials noted the challenge of getting local and provincial government and the government of iraqi ministries to readily assume responsibility for some transferred projects, end of quote. as we have said repeatedly, even the best u.s. funded projects can turn into waste if the host government doesn't have the money, supply, trained staff, or will to sustain it. so we will certainly talk about these issues with ambassador kennedy. we're also interested in and will explore plan an ongoing contract awards and related oversight. these awards are at the core of the commission's responsibility. let's are questions be misconstrued as a lack of appreciation for this state department, let me note that the department is operating in an unprecedented set of circumstances. we know of no other time in our history when we have asked state

to conduct extensive diplomatic development and reconstruction operations in country where host government cannot provide effective customary security. there are no front lines, and large terrorist organizations are trying to kill our people, and anyone who works for them, or cooperates with them. we truly appreciate the dedication and courage of state department people who have served in iraq and afghanistan, and have nothing but the highest respect for them. we want to ensure that the contingency contracting vital to their work is being conducted in ways that supports states mission while a, my thing the taxpayers money. we've asked ambassador kennedy to operate 10 minute summary of his testimony before we move on to questions from the commissioners. the full text of the ambassadors written statement will be entered into the hearing record and posted on the commission's website. we also ask that the ambassador

provide within 15 business days responses to any questions for the record, and any additional information he may offer to share. ambassador come if you would rise and we swear you in as we swear in all our witness. raising your right hand, do you solemnly swear or affirm that the test and you will give before this commission will be the truth, the whole truth and nothing but the truth? thank you. i will note for the record that the ambassador has responded in the affirmative, and ambassador, all the commissioner members welcome you today. >> thank you very much, mr. chairman, chairman thibault, fellow members of the commission. your time is proficient as the department has been lining for a robust civilian presence in iraq for over two years. much activity has occurred since september 2009 when i last appeared before you. i will focus on the current status of our contacting efforts in iraq ask your invitation requested, but lessons learned also apply to afghanistan.

as you noted we've submitted a written response to each of your 32 recommendations and your second interim report regarding use of contractors, as the military draws down in iraq and state increases are suing presence we are relying on contractors for certain functions which are noninherently governmental. we as contractors for routine and contingency operations when it makes sense and is cost-effective. as opposed to building up permanent u.s. government direct hire staff. our iraq contracting strategy addresses life support, security, transportation facilities. as security improves we will transition to more traditional mode of operation, we've already gone this effort as where 62% of our static guard our local nationals. the department expenses continuous contingencies in our daily operations under challenging conditions worldwide. as needed we create task forces and working groups, we continue

to centralize procurement operations in the bureau of administration. this model is most effective in supporting contingency situations during natural disasters like haiti and japan as well as ongoing stabilization reconstruction as in iraq and afghanistan. based on our experience, state does not see a need for separate continue to contracting office. we deploy our experienced contracting resources as necessary, and are working capital fund allows us to surge and dedicate resources to specific contingency operations as required. we agree with it the commission's observation that state program offices need to plan effectively for contracting officer representative's. state also agrees contracting officers should consistently enter past performance information into the federal database, which will prevent a large firms have not performed well. we do not believe the certifying database views is necessary. timely input and candid performance assessments for all

contractors will suffice. your interim report noted that training is not standardized across agencies for contingency acquisitions workforce, and the defense acquisition university recently developed the contingency related contracting courses. states foreign service institute and our procurement executive are offering you develop a course mission support planning as a pilot to see if the content is useful to the department, routinely offers several other courses of on campus and via distance learning on contracting. mindful of the valuable insights we receive from the commission and other entities with taken additional measures to ensure proper u.s. government management over the increased number of contractors. for iraq our primary contracting team is located in washington, drawing on headquarters expertise. in iraq there are multiple levels of technical oversight depending upon the contracting complexity. since we charge bureaus a 1% fee

for all contracting services, we have the resources to surge and have fired 102 additional staff. the private security contractors produce -- perform an essential legitimate function that enables american diplomacy to become -- to be productive. i have work to enhance states oversight of pfcs. diplomatic security has further developed its plan for oversight and operational control of pfcs personal. for the ds worldwide protective services contract, dss increase staffing to more than 200 direct hire personnel to ensure contract compliance of approximately 5000 contractors. the key element are outlined in my written testimony so i will only note briefly that from the lessons learned we believe that it enhances professionalism and operational control, provides for greater cultural sensitivity, and achieves

greater contract deficiencies. state has also been working on improving legal accountability. we strongly support enacting a civilian extra colonel judicial tradition act, excuse me, to expand extraterritorial jurisdiction over federal employees and contractors operating overseas as well as the document and the international code of conduct for private security service providers. in december 2010, secretary clinton issued the inaugural qddr providing a blueprint for elevating american civilian power to advance our national security, and to better part of with the u.s. military. they qddr sets out four key outcomes for state and usaid, one of these is working smarter to deliver results for the american people. using they qddr blueprint we have begun hands-on implementation. in early 2011 we issued department notices reminding staff of work elements for cors and gt and, in april

knows provided guidance and critical work elements for supervisors to include in those employees performance plans. we launched a skills-based cor class in may 2011. the department has also adopted the federal acquisition certification contracting officer representative requirements for initial and continuous training and contract administration. as part of this process were instead a requirement assistant secretary at any bureau with the service contracting seating 25 minute -- exceeding 25 and for your certified adequate contracted ministration resources have been identified to manage the contract. our iraq funding was reduced below are request in 2011, but we been able to meet the griddle operational needs by delaying selected contract and through the judicious use of carry forward funds for progress. funny for a just and -- afghanistan is reduced because because it's platform there is relatively stable, the current funding levels would be sufficient to cover operations

through using and. our military drawdown in iraq is critical in a transition to supporting an iraq that is sovereign, stable and self-reliant. we are working to achieve sustained diplomacy and a strategic long-term partnership between the united states and iraq. state and defense have been collaborating in unprecedented levels for more than two years in washington and iraq. we are making very good progress. state is contracting certain functions for which is best suited including security facilities, medical and aviation, dod is providing contracts for parts of our life support platform. i'm pleased to give a status report on our progress. this is difficult, as you have noted, but in spite of the difficulty we believe that we are on track. security, all u.s. personnel and contractors in iraq will be under chief of mission authority and security arranges have been worked out between state and dod. on september 29, 2010, state announced the award of the base

contract for worldwide protective services to eight companies. task orders are being competed among base contract awardees and awarded on the best value basis thanks to the assistance of this commission. a warning to multiple companies allows for increased competition for each task orders thereby controlling costs and providing for increased capacity to perform crucial security services in contingency environment. it also gives the u.s. government tiny options the event of a copy failing to perform. several orders have already been awarded a common including separate static guard and movement security task orders for embassy baghdad, a task order for static and movement security in basra, and movement security at embassy kabul. to the maximum extent possible we are repurposing existing dod infrastructure and property for each of our site. we have led numerous facilities contracts in iraq, the status of those efforts is outlined in my

written testimony. a medical contract was awarded for iraq on may 15. we are leveraging dod resources in the theater where dod has superior capabilities. an example is logcap iv which is a tested, proven support mechanism. use of logcap on interfaces is given to stay time to solicit its own life-support contract, another example is our use of the defense logistics agency, food and fuels contracts. also for logcap we're supplementing our oversight with subject matter experts from dod and are discussing a deploy contingency staff with the defense contract management agency. diplomatic security has funded a betting search capability which provides a temporary increase in polygraph operators and investigative assistance and interpreters. this will aid in more rapid vetting life-support contract is required for the transition. with regard to more state and defenses cooperation on equipment, the joint dod, state equipping board has identified more than 3769 individual pieces

of equipment with approximate $209 million to be given as access, sold or loaded to state including medical, i.t., aerial port, and fuel support, biometric input as well as six in raster dod as long state biometric input equipment to roll out biometric confirmation of identity through a duty database, state department security officers can thus verify employees identity. sustainment for much of this equipment will be provided through a contract managed by the army sustainment command at rock island. state is using the many viable insights gained during the iraq transition planning in our afghanistan planning. experience foreign service personnel who have worked in washington on iraq and afghanistan planning will be in afghanistan on their next assignment and will be able to implement many of the lessons learned. in conclusion, the department

has implemented many improvements in his contract oversight and management, and will continue to do so as we execute they qddr initiatives. we have continued working with dod on our iraq transition plans. we have awarded the worldwide protective services contract. the department has taken very seriously the recommendations of this commission, and other oversight organizations to increase our contract oversight staff, and elevate this function to the status it deserves, and we will continue those efforts. the department has further strengthened our oversight of contractors, particularly pfcs. we fully understand that we will have challenges ahead as we carry out a diplomatic mission in iraq, afghanistan and other locations. we will rely on contingency contracting, but we've instituted a sound foundation to carry us forward. thank you for providing me this opportunity to testify and for your ongoing support for the department of state. i would be please to take any questions you might have. thank you.

>> thank you very much, ambassador. will have you out there at 11:00. we appreciate your spending the time with us and we will begin question. we'll start with eight minute questions. we'll start with my co-chair, mr. thibault. >> thank you, commissioner chase. thank you ambassador can do. thank you for coming appear. i want to make a statement. i don't think it's going to conflict with some of the questions i'm going to ask, but i want to make a statement that your department has been exceptionally responsive. it's not a perfect world. we follow up on different things, but i think for the record, every time that we really needed some information, you've been responsive, at least from my perspective. and i thank you for that. i'm going to bounce around a bit. i'm the contracting guys are going to be interested mostly in contracting, but -- and i found part of your statement very

interesting, and that was you state that you're going to have an assistant secretary certify that adequate resources are available and provided for contract oversight, and to get the job done. when are you going to implement that? >> that has been implemented. >> so it starts in fy -- the end of the 11th, 12? >> the end of 11. >> here's my point, and maybe you intend to do it, or maybe it's something you ought to think about. you know, the critical part here to me is fast plan and execute. the staff need to be in place, you need to plan how you're going to utilize the staff, and then you need to execute to make sure that was effective and getting the job done. you didn't have an assistant secretary, have the resources, from my take may be that assistant secretary at the end of the period also ought to put

his reputation on the line sank i got an adequate plan for it and i certify that, and it's been executed effectively, or it has been executed effectively. is that something you intend to do or are you just certify resources? >> it is our intention to add this to the annual certificati certification, that every assistant secretary of state submits to the secretary as part of our process of certifying through the inspector general on oversight and administration. >> is accurate than you intend to include the plan and execute effectively part of that also, and not just -- i found the $4.2 million you figure something like a. >> no, absolutely. our intention is to ensure that this is a soup to nuts process. >> okay. i would like to talk briefly about, what do we call it, the early alert system. what was the contractor that you

would for this? >> i will have to -- i'll have to get that too. i don't have that on the top of my head. >> i don't think was in a statement. >> it's a dod contractor we are writing, mr. chairman. >> okay. >> since dod has the expertise and they are loaning the equipment to us, for our use after they leave, they have a contract that the executed and we thought it made perfect sense for us to ride a quart pail schedule work with a contractor on the contract and you will transition with them in traditional contracting methods? >> yes, sir. >> and when we were recently in afghanistan, some of the sense and warn, and this is not a sizable base, but it certainly might figure consulate say, and they can look like a very large tracks, very large equipment kind of like a tennis racket

with an end on and it would stand up is probably 30 feet by 18 feet, and that's what -- with a couple of episodes at that base where they the protocol for when something is coming in. when one round came income and you ask them do you ever get more than one round and they say no because our counter battery is on them like the dickens. and i know when we're up here before with various state people there was a question about counter battery. at that time maybe you didn't see it in your mission, and i'm looking for clarification. is there a counter battery process envisioned? >> no, sir. the state department does not envision itself as fired 155-millimeter howitzer is back at targets. we have established tight relationships which we continue to expand with the iraqi police service and the iraqi army.

and our intent is to have them -- >> you have said that before, but your statement says, in that october 1 can't you assume full responsibility, and in the united states military is scheduled to be out of there totally, other than foreign military sales by the 31st of december. i will just tell you i continue to find it troublesome, because every instance when i talked -- when i have talked to the military that run this very effectively, the united states military principally, the army, they have stated that the reason they only get one round is because the bad guys know that there's going to be a magnitude of force on the head immediately, and they have visual after visual of how they do that. so i'm just making the statement. that i need to move on. i want to get into the arcane world of auditing.

have you staffed in your mind adequately the support that you need from contract admin, and specifically contract audit? is that something good you are comfortable with, the level that it is presently scheduled or planned for? >> we are in discussions with the defense contract audit agency for deploying a unit of their personal forward. we use defense contract agency, audit agency personnel extensively. he added to that is, i believe it is true, but everything comes into the -- >> okay, okay. i want to lay the groundwork out because -- >> if i might, we have $10 million committed this year, this fiscal year to dcaa for their assistance [talking over each other] >> you are taking up my time. i am in pretty good shape, ambassador. because my point that i'm trying to make here is, are you aware

that dcaa, the last year, you know, all of the costs that are going to flow through you now, and do flow through you, are audited by dcaa. and it's critical onto things. do they get an adequate submission, and do they do the audits timely? and are you aware that in the case of dyncorp, and i picked three because i picked three, the last to the dcaa completed and not it was 2004. are you aware that at kbr, logcap, the last to be completed an audit was 2003. are you aware triple canopy, that they have yet to use their words to complete a year of anchored cost rx now, -- incurred cost? now, yes or no? >> i'm certainly aware that dcaa has not executed every request on a timely basis.

>> okay, i know you're working with them. you said that, but then i would say are you aware that taking those saintly contractors, i picked dyncorp first, that dyncorp has submitted, you know, they've done their part according to dcaa, adequate submission that had been accepted by dcaa for those years better open. .. -- those years that are open. ..

>> now, those are a lot of words, but to auditor, they mean they are concerned, they have unallowable costs, they've pulled them back because the certification is by a senior educationtive in the -- executive in the company, and they don't want to be responsible for it. now, we can explore that some more, but my concern is that -- and in the case of triple canopy, a similar case exists where they didn't submit adequate submissions, and they're feverishly working on it. it's of the highest risk possible, and in my second round, i'll be exploring some more of that. >> mr. tiefer. excuse me, charles tiefer? >> thank you, mr. chairman. thank you, mr. ambassador. i start by noting how much i respect chairman thibault's leadership in creating the research and investigative machinery. excuse my nostalgia, but i would not have believed when we held our first hearing which included

a good deal of state department content what has come true, which is that we've had over 20 successful, major public and televised hearings. and that is his, he built, he built the machinery. mr. ambassador, um, i have heard that the state department's bureau of research -- resource management is demanding repayment of a large sum from dyncorp. let me state the background. dyncorp has been conducting police training for, on a state department contract in iraq from the years from 2004. sigar went back and conducted last year this audit which shows the lack of proper support documentation. the sum i have heard that is, for which repayment is being demanded is $518 million, but i

would defer. i just would say it has been many years we've been waiting. has state finally demanded repayment of a sum certain from dyncorp for iraq police training? >> let me give you a two-part answer to that, mr. tiefer. we also picked up from bloomberg news service on friday this $518 million figure from, supposedly, cited to the bureau of resource management and the state department. we have queried every senior official that we can find in the bureau of resource management. we have no idea where that figure has come from. none whatsoever. it's, so we are continuing to pursue that. that's the first point. i have no idea what that -- >> all right. >> -- figure means. the second thing is that inl has been conducting 100% reck sill craig of all inl-funded iraq-related invoices going back prior to 2006.

inl has collected over $40 million, actually $40.8 million related to iraq and afghanistan invoices. and bees has an outstanding -- and has an outstanding request to dyncorp for another $37.9 million. so -- and, also, inl's rigorous review of afghan and iraq contractor support services has resulted in over $109 million in reduced billings. so this goes, i believe, to the point you're making and, also, to mr. thibault's point as well. >> can i just make sure i understand the figure you just gave? >> yes. >> you've already gotten 40.8 million, you have a demand now for 37.9, and there's a separate 109 million reduced billing? >> yes. >> okay. >> we are actively engaged. the state department ig, as i think some on this commission

would know, is, does not have a large audit staff, and we use entities such as dcaa extense i havely, and we -- extense i extensively, and we will continue to -- >> let me go on. i don't blame balloon bloomberg for that report, what i count is $200 million which either dyn is being told not to bill or is in the process. 200 million is not as much as one hoped out of a questioned $2.5 billion set of billings. but it is what it is, 200 million. let me ask a question about another sum, and this one i'm -- is a sum certain. my question is and then i'll explain the background, will you commit to publicly announcing this month a demand for recovery from first kuwaiti of $132

million? i think we both know the background. in 2009 the state department inspector general issued an audit report about the flawed construction of the new embassy compound in baghdad. state ig said to recover precisely -- this was their figure -- 132 million from first kuwaiti. i have not seen the public announcement of one step to recover $1 million, but what i have seen is that state continues to hand out contracts to first kuwaiti, and just a couple of weeks ago -- and this has not been in any print newspaper -- about the $122 million consulate in saudi arabia, first kuwaiti was given this contract, and their partner, their american partner blew the whistle on them in detail. told a lot of thing about their lack of competence and reminded -- this is a quote from aurora's statement, their partner's statement -- there are also u.s. taxpayers who feel

they were bilked out of $132 million. so my question is, will you commit to publicly announcing concrete steps to recover the 132 million? >> you've asked me two questions. let me take the second one first. we have no contracts with first kuwaiti in saudi arabia or in indonesia. we have contracts with a licensed and certified american firm, aurora, which acquired those contracts when it acquired the business of grumley walsh international which sold those contracts to the american company. it is correct that first kuwaiti is a sub, subcontractor of awe aurora. but we have no contracts with first kuwaiti. that is simply factually incorrect.

our contract is with an american company. the contract in indonesia is it about -- >> i didn't mention anything about indonesia. how about the $132 million? >> could i finish my answer to your question, sir? so we have no contracts with them. on the $132 million, we have asked the office of the inspector general on several occasions to provide us with a line-by-line breakdown of how they arrived at that $132 million figure. we cannot proceed against a contractor without specific details. the case would be thrown out in any court that i can imagine. we cannot just send them a letter saying, send me a check for $132 million. we have to have the details. we have asked for them. i can promise you that we will continue to ask for them. >> um, this question may well

have to go over to my second round, um, but i want to ask about a challenge to sigar's jurisdiction. the washington times covering ambassador has last's testimony to house foreign affairs last week headlined on page 1, your notion that sigar lacks jurisdiction to oversee congress' funds for getting iraq on its feet like police training, like what we were just discussing which i'm glad to hear you're going to go after or have already gone after 200 million worth. um, but it also includes private security for all of these, et, etc. a whole lot of money that's not brick and mortar. my question is, will you -- do you have or will you seek a written legal opinion, written, from the office of legal adviser to back up what you're claiming? >> i have not had an opportunity to read the transcript of that

testimony, but i was asked a very similar question by the house government affairs committee. and let me, let me tell you my answer to that question. that is, that is that the legislation underpinning sigir is very, very specific. it relates to reconstruction efforts. we have been fully cooperating over the years with sigir. sigir's latest request, as i understand it -- it was the request that was forwarded to me in this regard, i do not know how it was phrased to the ambassador, as i said -- is that they wish not only to inspect the reconstruction efforts, contracts awarded for reconstruction, they wish to inspect the state department's administration of the platform. they wish to inspect and audit diplomatic security, the medical contract, our award of the

contract for construction. we believe that that is outside, and the state department's legal adviser has so advised me that is incorrect. those activities of the state department operating the platform, not the contracts for reconstruction or police training, but the base platform contract are within the jurisdiction of the general accountability office, house surveys and investigation committee and the state department inspector general. the legislation divides the workload between the reconstruction activities and the state department platform, and i believe that's the way it should be. >> thank you very much, ambassador. we're going to go to robert henke, and we're going to do nine-minute question and answer. >> ambassador kennedy, good morning, and thank you again for being here. i've got a question for you related to, i guess it's an organizational or a structural issue. one of the recommendations in

our report was to create an office of contingency contracting. and i understand that the department does not concur with that idea as laid out in your response. let me, um -- the issue we're trying to get at there is that, um, is the organizational placement of a function in the agency and the fact that acquisition is critically important to state's mission. just by way of context, state does about $7.7 billion a year in contracting, 26,000 actions. um, it's up a big bit over fiscal '09. in fiscal '09 you did 6.8 billion and 27,000 different actions. so i want to explore with you this idea of the culture of state and the organizational placement for the acquisition function and whether or not it's at the table. i want to set aside our recommendation for an office of

contingency contracting and explore with you this idea of the current organization of your office of what it's referred to as state. as i understand it, the office reports to the assistant secretary for administration. >> that is correct, sir. >> can and it's led by mr. moser, who's here today. >> yes. mr. moser is the acting assistant secretary, yes, sir. >> oh. as well as the permanent deputy assistant secretary? >> he's been nominated by the president to, for an ambassadorship and will be departing shortly. the new assistant secretary for administration nominee has also been announced by the president. >> okay. the, you may know that the congress passed a law in 2003, the services acquisition reform act, that creates the title of chief acquisition officer at an agency. we've had chief financial officers for 20 years, chief

information officers for probably 15 years or so, and recently, as recently as '03, chief acquisition officers. the law directs that this person must be a, a non-career employee as the chief acquisition officer and must have as their primary duty acquisition. are you currently structured that way? your chief acquisition officer has as his primary duty acquisition? >> if one defines primary as the preponderance, i think so. the assistant secretary for administration is an executive-level presidential appointee that supervises three units, but i think acquisitions and part of our logistics operation is a significant part of that, and i would guess, yes, sir, it would meet, it would meet preponderance primary. >> well, i'm not sure i agree.

when i look at the list of functions handled by the assistant secretary for administration, i see a whole lot of different functions and ask activities. real property, facilities, supply, transportation, mail services, diplomatic pouches, library services, foia, privacy act printing, all, a whole bundle of different duties. it's hard for me to see there where the assistant secretary of acquisition who's designated as your chief acquisition officer can have as his primary duty the management of a $7 billion acquisition program. can you respond to that? >> yes, sir. i think that if you had asked me that question in a previous life, i might have said you're correct. i think, though, that it is really a question of can the officer involved, the assistant secretary of administration, count on a professional staff

that is sufficient to handle $7-$8 billion of material as you said. in 2007, shortly after i came back to the state department, i reviewed this matter and decided that we were not doing a sufficiently good job because we did not have the number of personnel assigned to the acquisitions office to keep up with the volume. we'd gone from about two billion of contracting to almost eight. >> okay. >> with nearly no staff. i changed the operating procedures in the department and placed our acquisitions operation under our working capital fund. >> right. >> that generates a volume of resources available to the office which is directly proportional to the workload they have. and in by doing this, we've been able to fund an additional 102 personnel in the acquisitions office. and so i believe now we have an

adequate acquisition, a corps of professionals which we continue to develop -- >> uh-huh. >> and that corps can provide the assistant secretary, the chief acquisitions officer, where the support they need and to allow them to do their job. >> in my mind that makes perfect sense because when inl or ds comes in with a multibillion dollar requirement, you can scale up to do it, right? you can then, mr. moser and his subordinates can hire staff to run, to execute or rather to award that contract. the problem comes when other bureaus may not have the resources to manage the contract, and that's what you're trying to get at with program managers and corps. now, they don't operate under a working capital fund, right? program bureaus. >> they don't, mr. henke. however, it is appropriate for them to oversee those activities. the chief acquisitions officer is not responsible for that

portion of program administration. >> right. >> contract, certain elements that are also described as contract management, contract oversight, contract closeout we now have the resources to make sure that we can do that as well as the auditing question that both co-chairmen thibault and mr. tiefer referred to. >> one of the things we've seen time and time again is resources, when agencies put precious billets, slots against a function whether they're general officer slots or senior executive slot, it's an indicator of what the agency values. just a rundown on your numbers, ambassador kennedy. in m you have approximately 9400 people, civil service, foreign service, roughly? >> i believe that's a little high, but -- >> what is the -- how many people work for you roughly? >> well, counting the -- i'm sorry. counting all the consular officers overseas and the

passport -- >> okay. >> -- it would come to 9400, yes, sir. >> okay. and you have approximately 206 senior executive positions? >> at the state. at the state department? >> no, in your office. in m. i'm told it's 206 senior executive and senior foreign service. my question, though, to you is how many senior executives do you have working in acquisition? >> um, we have two. >> two. that does not include mr. moser? he has other duties. >> that's right. you're asking for direct, and i'm saying two. >> and that's -- i know both of them. they've both testified before us. >> yes. correct, sir. >> so is that the right number? if you have in m pz 206 senior executive positions, is two the right number? >> i, i believe that with the performance and the quality of the personnel and the acquisition office it is -- the leadership is there. the leadership, though, needs to be supported by an

adequately-trained and adequately-funded work force. and we have moved -- and because of the implementation of the working capital fund, we have move inside that regard, yes, sir. so i believe that two is a good number. could it be three, could it be four? i think it could equally be three or four. but i believe that with the, with the package of support there are other entities that support that acquisitions office which is when you look at another agency -- >> uh-huh. >> -- when it has a stand-alone acquisition office that has to do their own space planning, their own management, their own legal, there is an officer in the bureau, there is a senior executive service lawyer in the office of the legal adviser who supports that, that office. >> uh-huh. >> we at the state department put all of our lawyers in one legal shop and then divide them up under assistant legal advisers at the senior executive service level, and there is one

who supports the acquisitions function. so we run a matrixed organization at the state department, and i believe it works for us, sir. >> okay. thank you very much. >> thank you, mr. henke. katherine she nazi. >> thank you, mr. chairman. welcome, ambassador kennedy, and thank you for your time this morning. i wanted to start by saying that i was really, um, very encouraged to see the secretary put together the quadrennial development and diplomacy review plan. i think it's long overdue. i know it was a really painful process, but i think it was, it will bear fruit. but i'm wondering what already has been done as a result of that. we've had the u.s. agent i for international -- agency for international development before us, and they have started taking action on some of the things, on procurement reform that were in that qddr. they are very much interested in continuous improvement, and goodness knows they have

problems with their contracting, but, um, but they're looking at the need for change. you know, in contrast when i look at your statement and i look at the state department's responses to our recommendation, there doesn't seem to be any recognition that things in iraq and afghanistan are any different. um, you know, in fact, comparing the model that you have as most effective and efficient, um, because it operates well in places like haiti and japan just strikes me as a little different than what the state department and the u.s., in fact, is, um, facing in iraq and afghanistan. so, um, for fy-12 the state department has requested over $3 billion for diplomatic and consular programs in the iraq. is that, is there anything comparable to that anywhere else in the world that you're operating? no. >> [inaudible] >> okay. >> only afghanistan comes close. >> okay. and we're going to have 4500-5000 security contractors in the iraq, again, putting

aside afghanistan? anything comparable to that? >> only, only in afghanistan. >> going from 8 to 17,000 civilians, you know, in a couple of years, anything comparable to that? >> well, that's double counting, ma'am. >> there's different ways toss come at what i think --? the 17,000 represents the aggregate of some of the numbers you've already used. >> i understand that. but more than doubling is what that, um, was supposed to get to. so, you know, those things, a $61 billion reconstruction program in iraq, those numbers seem to me to be very different than anything else the state department is doing, putting aside afghanistan for a moment. so, you know, when i look at the things that, um, that you are trying to hold on to, they've worked in the past. um, i don't understand why the difference isn't more significant than the similarity, um, to you. >> if i -- >> i wanted to ask you just a couple of questions about from your statement the contracts

that you have let, um, for the transition in iraq, the consulate in basra, these are some construction contracts. is there a representative assigned to that contract? >> yes, ma'am. >> and where are they located? >> basra. >> so they are forward located. >> all of our cors are forwardly located. >> and do you know what their training is? >> they are, they take a course at the foreign service institute, and they are professional architects or engineers. >> this cor in particular has had that training? >> i would confirm that in writing to you -- >> i appreciate that. >> -- but that is part of our requirement for foreign service. >> right. i'm trying to get to whether or not practice is actually reflecting policy here. is there a quality assurance plan for that contract? >> there is that, yes, ma'am. >> okay. and same thing for basra aviation hub? >> yes. >> is there a cor? what kind of training have they had? >> i believe the cor for the basra air vegas hub is the same.

the basra aviation hub and the basra activity are about less than a kilometer apart. it is one -- two contracts because of the different nature of the work. but there is one project supervisor on scene to do both. >> okay. rather than going through all of that, what i would like if you would supply that for the record is whether or not each of these construction projects has a contracting officer representative, whether or not they have received the required training, where they're located and whether or not there's a quality assurance plan. those are all requirements for cors that i know you're working toward. >> if i might -- >> i'd like to see how many are already assigned. >> you opened by talking about the qddr and about need for change, and can i respond to that question as well? >> let me get through the rest of my questions, and then i will, if i have some time -- >> ambassador, if you're willing to stay beyond 11:00, we'd be happy -- >> i'll stay beyond 11:00. >> and we won't take that off your time. let him respond now. >> okay. you could convince my chairman

of something i'm not sure i could. >> with well, he wanted to do it. >> yeah. >> the point is, it won't be off his time, and he will stay later. >> i see the 4:16 has been frozen on my clock, ma'am. >> thank you. >> the secretary is very, very concerned and interested in the question of contract administration, and be i think if you -- and i think if you, you know, if one looked at all the issues that the secretary of state faces in the world, to devote ten pages out of a 200-page document to contracting and contracting administration, i think, sets the tone -- >> as do i. that was why i made that comment at the start, yes. >> right. then second thing, though, and you asked what have we done in, since the secretary's statement. we have, as i said, we have elevated the status of contract oversight personnel, we have linked oversight duties specifically to the performance

evaluation of those officers, we have expanded training, and we have elevated the accountability for the planning and oversight of large contracts. and be i could go a long period of time into there, but i believe there's much more detail in my, in my full statement. the second thing you said is that we're trying to, in effect, trying to hold on to the past, and i'd like to just take a second of time to -- it would be a commission acquiescence. when you have a worldwide effort such as the state department must engage in, we believe that the way to do that is to take an award master contracts in washington that can be fully and openly competed and then have their task orders available. i mean, the best example is the worldwide protective services contract. we could go and have a contingency contract awarded in

xanadu for security there or a contingency contract awarded in shangri la. i don't think that makes good economic sense, i don't think it makes good management sense, and i don't think it is good for the american taxpayer. the award of a master contract, the worldwide protective security contract being the example i'm using here, with task orders under it which are then competed among the eight qualifying firms, i think, allows us to move quickly, expeditiously, efficiently and economically to meet exactly what this commission intends in the terms of contingencies. i could also say that the state department, in effect, is one contingency rolling out every day. every day. as chairman shays knows from the his former position. every day the world changes and requires us to act differently.

if i had to award a contract for each individual act that took place in the world, i don't think i would ever be able to be responsive. but by awarding master contracts, having a centralized and professional office staffed adequately now thanks to the working capital fund additional funding, we can respond urgently to any crisis that we have in the world. is iraq and afghanistan different as you rightly laid out? absolutely, positively. do i need to do a better job on contracting officer representatives, as the commission has well noted, absolutely, positively. but i don't submit that we are frozen in the past. i believe use of these master contracts that we've done for, in many fields, is exactly what we need to do to respond to urgent and continued operations. >> yes? okay. >> you have five minutes.

give you an extra minute there. >> thank you. and it's not the worldwide contract on which to award task orders that i'm talking about. i'm much more interested in how are you setting requirements, how responsive is a centralized bureaucracy not just theoretically, but how responsive has a qm been to the embassy in baghdad? and my information from interviews and direct discussions is not responsive enough, all right? so, obviously, there's going to be a difference of opinion there, but, um, aqm is really not aware of the urgency. and you are operating in continuous contingencies around the world, but, but there is not -- chairman thibault mentioned the sense in warn, well, maybe we can get the department of defense to look at it. the log cap contract that dod has asked for, i believe, it's

20 cors to manage that contract, and the department has said we can provide six. and the department of defense is now saying, well, with six we're not going to let you take log cap because it needs a lot more oversight than that. you mentioned mrap, that rock island is going to sustain that. who's setting the requirements for mrap? you don't just buy them, you need to have drivers, you need to sustain them, you need to maintain them. but the state department is not focused on a lot of the details because it does have that worldwide look, and it does have that, um, sort of old time approach to how contracting gets done. >> ma'am, i guess i have to just respectfully disagree. you've given a couple of examples. let me just for the sake of time pick the first and the last one. >> okay. >> on sense and warn, we've gone to dod, they are loaning us the equipment, and we are riding their contract for the

operations and maintenance of that equipment. i think that shows excellent contingency operations. i don't see that it serves the american taxpayer one whit to spend a lot of money to go out and compete a contract which dod has already competed to run that -- >> i'm not talking about recompeting the contract, i'm talking about how do you oversee the contractors, how do you manage it, you know, how do you get the support for it? that has to be, the state department has to be involved in that. >> that is, that is the responsibility of the diplomatic security service professionals that are on scene to oversee the operations of the contractors. those personnel are on scene. on the mraps, we have been loaned 60 mraps by the department of defense. the diplomatic security service will oversee their operation, it will oversee the maintenance of those vehicles. we are riding, again, a contract again through rock island arsenal because the department of defense has a contract for

the maintenance of those. they have specifications for exactly what you need to do per engine hour or per time in order to, in order to keep that equipment operating and available for use. and so we believe that we have the personnelling personnel ande talking about contracting, there's the contracting and then there is, obviously, the administration of the contract. and so i believe that we have both, both focus -- both items in a tight focus. we have meetings every week to -- >> i'm talking as much about the requirements too, ambassador kennedy. >> well the -- >> it's the end of the process. >> commissioner, can i add a little bit to that? >> uh-huh. >> part of the context of what commissioner schinasi's laying out is we're talking about road security, and a big part of the mrap purpose, you know, moving

individuals. the military mission with road security before wasn't -- contractors helped with the maintenance, thank goodness. >> right. >> but 100% of the drivers and then those individuals, we call them a squad, the military, six, seven people in the back because when you are doing road security, you come under fire sometimes, and you have to suppress that fire. that's all united states army. they didn't have contractors. so when you assume that portion of the mission and they all go home, you know, you have a different requirements planning contracting. and the reason i bring that up, ambassador, is you talked about operations and maintenance. i'm not sure you're spot on on the operations. i know you're spot on on the maintenance. >> let me address that portion of it, mr. mr. chairman, commissioner. using the mrap as an example, we have built in to the contract a

training unit meaning an mrap that will, that behaves as a simulator. we have a model there, the model is being upgraded. every security person who is going to be involved in the operation and use of those mraps will be run through that simulator to insure that they know, that they know how to operate, to operate it. your point about suppression of fire, you're right. the u.s. military is the greatest military in the world, but i don't have that option available to me after december 31st. that is why we are using -- >> so you're going to use contractors for suppression of fire. >> no, sir. >> you can't run if you're under fire. >> no, that is exactly what we're going to do, and that was the point i was going to exactly make, mr. chairman. there is a difference between the mission of the u.s. military

and the mission of the state department. the mission of the united states military is to engage the enemy. the mission -- >> ambassador kennedy, but chairman thibault's taken my time, and that was his question, so -- [laughter] i'm going to stop you right there, and you can come back on his second round and give him the answer to that question, if you don't mind. i just wanted to go back to the business as usual idea again. again, in your statement you talk about, you know, on an ad hoc basis being able to pull together the resources you need. um, i was reading the state ig report from october 2009 about the new embassy compound last night, and clearly, the emergency project coordination office that was set up would fit into your model set up quickly. and they point to that organization, the way that that project was organized and that ad hoc office as responsible for a lot of the problems. um, in the baghdad embassy. >> we don't, we no longer -- that was a one-op model set up

by the then-existing director of obo. that is not a model that had ever been used before. it was implemented along military lines, and that model is no longer used in the state department, it was used once on the baghdad project and has been, it was discarded by me when i became -- >> right. >> -- undersecretary. >> but i worry a little bit when i hear you talk about the ability, you know, keep what you have, and we'll just put something together when the need arise zs. this is what happens. i worry about that happening again without institutionalizing some stronger, you know, work force procedures, rules and regulations. >> i think -- >> on how to handle. >> i think what you're missing, ma'am, is the experience and the value of a centralized contracting authority that has worldwide expertise and that is appropriately staffed in order to get the job done. >> but the expertise that we need in iraq and afghanistan, as

you abreed with my statistics, is a little different than what the state department has, has encountered elsewhere in its operation. >> i disagree -- >> that's the end of my time. >> i disagreed on the contract. i disagreed, respectfully, on the contracting structure that i believe with the master contracts that we've set up we are responsive. >> you know, there'll be more discussion about this because i think we do have some major disagreements here. >> certainly. >> and so let us move forward with dr. zakheim. >> thank you very much, and good to see you again, mr. ambassador. you've been doing a terrific job since we worked together quite a few years ago. >> thank you, sir. >> you're showing the scars, and you're still in there which is great. good for the country. i want to ask you about a couple of state department responses to some of our recommendations, specifically 26a and 26b. these involve foreign prime contractors and subcontractors, and we recommended that these

folks consent to u.s. jurisdiction as a condition of award of a contract or a subcontract. 26b is less relevant to my question. your answer was -- or state's answer was this requirement will add cost-defined contracts would offsetting benefits. i don't know if you want to expand on that, or if you want me to go on with my line of questioning. >> i'd be glad to, i could be glad to go into that, or given the time i could also submit additional material for the record. it's your choice. >> let me pursue this, and then maybe you can wrap it all together. your testimony says that for the log cap contract you're, essentially, on an interim basis giving, using dod's log cap. and they'll give you some time to, basically, get your act together. which is fine. i want to get a sense of what state's going to do and, particularly, what you're going to do to avoid the kind of thing that has been written up in the new yorker, you may have seen this article, things that we've

heard about, that i've heard about for for some time that are pretty shocking. the article says that, of course, the vast majority, for instance, more than 60% of our contractors in iraq aren't, as the article says, hired guns, but hired hands. and these are workers from primarily south asia and africa. they live in barbed wire compounds on u.s. bases. they're employed by fly by night subcontractors who are financed by american taxpayers who often operate outside the law. they're called third country nationals or tcns. many talk about having been robbed of wages, injured without compensation, subjected to sexual assault, held in conditions resembling indentured servitude by the subcontractors and bosses. there have even been food riots over this. you're going to be taking over log cap. your response to something that drove part of our recommendation which is we cannot as a country

uphold our own values if we're allowing this to go on, and we want the oversight and the commitment by subcontractors, by foreign contractors and subcontractors that they're not going to do this kind of stuff. and state's answer was, well; it's going to add costs without offsetting benefits. to me, at least, it's a huge benefit if world sees we've cleaned up our act. so would could you talk to me a little bit about this, what maybe you intend to do something differently? this is a major scandal for the united states. >> two points, sir. first of all, when i, when i carefully couched, i believe, in my longer statement that we are using log cap only for life support. >> right. >> we have, the log cap iii contract that was in use in iraq included maintenance and other things. we have competitively awarded our own contracts -- >> but your next sentence says

dla for food and fuel. >> well, that's just using as you well know from your previous incarnation taking advantage of the the incredible buying power that the defense department has available. if i'm buying frozen chicken, i can buy frozen chicken. if i can get the dod price for frozen chicken or for a gallon of diesel, i'll take that anytime because of the cost benefit there. but let's -- so setting those aside because i believe those are appropriate -- go to your very correct point on the question of how a contractor operates in the question of the treating of its staff. our contracts for life support, both the dod contract and any contract we would award, would be only awarded to an american company. we would not award a contract of that nature to a foreign company.

>> yeah. but what about subs? >> we write into that contract, we do and i believe dod does as well, that adherence to and lay upon and privity of contract requires it as well as it should that we lay the responsibility for the performance and for the treatment of employees on the american contract or. i -- contractor. i think that gives us the best choke hold on that to insure that any employee working in support of u.s. government activities is treated appropriately. we have looked into some of these acquisitions. the state department inspector general has looked into them, the state department medical officer on scene has looked into them. the regional security officer has looked into them. and i testified before, i think, house government affairs on this as well. and i'd be glad to send you a

copy of my testimony in that if you wish. so we believe that we can enforce through those methods the situation that upholds the dignity and can the standards of the united states -- and the standards the united states holds dear. >> well -- >> by holding that on the primary, the prime contractor who is an american company and then looking over and across the operations on scene with the state department's contracting officers, representatives. it's insisted -- assisted by our medical staff, our logistics staff or our security staff. >> all i can say is that, obviously, it hasn't worked until now by definition. because if, in fact, as we know the defense department in particular has put the onus on the primes and the primes then contract out to subs who may contract out to second-tier subs and these things are happening, then by definition the system is failing. and that is why we made the

recommendation we made. and it seems to me that -- i don't want to get into a debate with you about this, but i would urge you to look at this again because, clearly, it has not worked. if it had worked as you had described it, this would actually put the onus, focus on the primes. then these sorts of things would just not be happening. >> i cannot address how dod or any other government agency may be enforcing their contracts. but under the system that will take place as the state department fully take over in january of 2012, these personnel will be living on our compound using the same food service, using the same medical services, using the same security services that we ourselves use. and i think that guarantees the dignity of life that, i think,

everyone agrees we absolutely must uphold. >> well -- >> and if i might -- >> yeah. >> -- we have, our maintenance is now done as i mentioned earlier not under logcap, but by a different american prime contractor who does employ nationals living on our compound and have been there, i believe, over a year. same dining facility, medical and everything else, and there are none of the problems that you have outlined when we're administering the contract on scene as opposed to who is holding the master contract. >> well, i hope so because, obviously, these things have gone on. um, a quick question as well. we made a recommendation to dual hat somebody at the nsc and omb in order to foster and really enforce the interagency contingency process. um, you said -- this isn't our, you know, we don't have a dog in the fight. this is nothing for us to

respond to. and i'm a little puzzled by that because if we're talking about making the interagency process work and as you well know sometimes it does and sometimes it doesn't, this we would have thought state would comment on this. is the no comment, does it mean you really just don't care, or the system works fine? i mean, what does it mean? >> it means, essentially, that the national security staff does not consider itself an operational agency. it will not engage in these, in this kind of oversight activity. it does not feel that it falls within its purview. and i know that because there have been other discussions during my tenure of activities related to your principle, not the details. the nss and also to a great extent the national, the omb will not engage in these. they do not feel that it is within their statutory mandate.

omb, at most, will lay down predicates, audit standards, fiscal standards. but they, neither of those agencies feel it is within their mandate to charter an executive office of the president agency to engage in these kind of operational matters and, therefore, we have to simply defer to nss or omb on that. >> thank you, sir. >> commissioner earvin, please. >> thank you very much. mr. ambassador, mr. secretary, thank you very much for being here. always a pleasure to see you. i did not intend to start with the two or three questions i'm going to start with, but it seems to me there were a few issues that have been left hanging by various exchanges that you've had with my colleagues, and they probably will follow up themselves in their round, but it occurs to me that i have the opportunity to do it, so i will. on this last exchange with dr. zakheim about this very

disturbing "new yorker" article, you said, if i understood you correctly, that the medical staff has looked into some of these allegations that the office of inspector general has done. i think you mentioned another office or two, perhaps, within the state department that's done so. to me the next question is, well, what's happened as a result of these allegations? were they sub substantiated by e inspector general or medical staff? >> we were unable to identify alaskas of these -- actions of these gross and horrifying natures taking place on units that were in direct support of the state department. i cannot, i do not challenge that it might have happened elsewhere, but our investigations to date have not identified activities of this nature taking place against third country nationals in entities that were directly supporting the department of state, sir. >> all right. this is a very important issue as dr. zakheim said, and we intend -- i think i speak for

the commission -- certainly i spend to follow up on this in the time that remains to us as a commission. i think it's tremendously important, and i hope that at least as to the state department there's nothing further to be reported here. >> if i might -- >> please. >> i fully agree that the question that dr. zakheim has posed of the requirement that the united states government promote human dignity is one of secretary clinton's highest predicates, and we would not ever countenance such kind of activities. and if we ever did find it, we would dismiss personnel and, potentially, all the way up to demanding changes more than just individual personnel who are engaged in that kind of conduct. >> all right. sure. >> just a quick one, would something like that be cause for revoking a contract? >> if contract was with an american company and we knew

that the american company was suffering and permitting that, i would go to my lawyers and ask that. but i suspect it was poor management on the part of the american contractor, and i would, i would first demand that the american contractor, um, remove from any activity relled to us their -- related to us their entire american management team. >> thank you. with regard to this first kuwaiti issue that came up in your colloquy with mr. tear if, you -- tear if, you said that you asked the office of inspector general to look into those allegations, $132 million as i understand it in the dispute, and you can't send a letter demanding it, that's certainly reasonable. but i'm surprised that the office of secretary general hasn't responded to your detail. they're refusing to provide that detail? >> i wouldn't say they're refusing, we have not completed whatever work we're doing. i intend to take the question back and pose it again to the

office of the inspector general and say this is a question i received from one of the commissioners on the commission of wartime contracting, and it is, it is a -- i think it's a fair question for us to ask, and it's a fair question to know that there is, there is information that backs up the $132 million or it doesn't. i mean, that building has now been in operation for multiple years, it is operating very, very well. there are no major issues. the compound has been rocketed a number of times, and the construction and including taking direct hits on those buildings, the construction has held, and none of our personnel have been injured. >> all right. and then third and finally, just follow-up questions. on this issue of sigir jurisdiction, would you be willing to submit, to join sigir in submitting to olc a request for a definitive, impartial third party ruling on the extent

of sigir's jurisdiction in this matter? >> sir, i am not an attorney. all i know is i have consulted with the state department's legal adviser who have told, who have assured me that the position that we have taken with regard to inspection of the platform be as opposed to inspection of the contracts for police training or military training or rehabilitation or development of construction, they have -- our legal adviser's position is that those are not within the jurisdiction of, um, of the -- >> sigir? >> -- sigir. they're within the jurisdiction of the inspector general, and, therefore, i simply must stand on what my legal adviser has told me. >> right. that leads me to -- as you would imagine, i'm particularly interest inside that recommendation in our report that goes to a permanent inspector general, so i want to ask you about that. i think we, the commission, would feel better about the state department's position that

no such new office, new officer is needed if we had a better sense of state support for the existing office of inspector general at the state department and for sigir. and we've just talked about sigir. as to the office of the inspector general at the state department, i don't expect you to have these figures at your fingertips, but for the record could you, for example, supply us with the state oig's request, budget request for the past, say, three years or so since the inception of the obama administration? and then the state department's response to that request? i'm trying to get a sense of how responsive the state department in recent years has been of the office of inspector general in its attempt to have adequate resources to carry out its jurisdictional mandate. can you just comment on that generally and then supply the information for the record? >> >> we fully, we fully support the inspector general. we believe inspector generals perform a critical function of calling attention to and highlighting issues that must be

dealt with. either, you know, warningsings warningsings -- warnings in advance or watching acts that should and must be dealt with summarily. um, the, the request for the inspector general's office for, um, fy-12 is $65.154 million. we carry sigar and sigir in the our totals, but i'm just giving you the state oig's in the president's request is $65.2 million. and their budget in, in fy-11 in the full year's cr was 56 million. so we have supported a request that amounts to almost a 10%, 9% increase. so we, we'll get the information for prior fiscal years in --

>> all right. >> the fy-08, for example, actual was 52, so they are going up because they have deployed, now, they have a regional office in the middle east whose major focus is working on iraq and afghanistan issues. and the department has supported their funding requests and supported their request bilal locating them very, very scarce office and sleeping accommodations in order that they would be close to the scene to do their jobs. >> now, in the time that remains i want to talk about your response, the state department's response to our recommendation of suspensions and debarment. i think one can argue that their, that reasonable minds can differ about a number of our recommendations including the ones we've just discussed, arguably. but the one, it seems to me, that one can't argue with or at least for the grounds upon which

the state department argued it is the notion that there should be written justifications on those occasions when a contracting officer recommends suspension and debarment and the management of the department of issue refuses to carry out that recommendation. and the rationale for opposing this recommendation by the state department was requiring written justifications would be an administrative burden on most agency's suspension and debarment programs which already have limited resources to carry out their existing missions. to me, the sum and substance of that is it's too time consuming to hold contractors accountable to the american taxpayer and to insure that our diplomats and military personnel, our development officers get the support they need. i was really shocked, i've got to tell you, by that response. >> can i think the distinction, sir, is in who makes the final decision on the disbarment. it is not the state department

management, it is the procurement executive of the department who is separate from the, from the head of contracting. so if procurement executive decides that the individual contracting officer has not made his or her case in law and equity, then it is a procurement executive. it's not me, it's not the assistant secretary for administration, it's not the deputy assistant secretary for logistics management. it is the quasi-independent -- >> right. but are you saying it would be an unduly burdensome burden on the chief executive officer, chief acquisition officer to make that determination? >> because it's not, it's not the determination of the chief acquisitions officer, it is the determination of the quasi-independent procurement extef. every -- executive. every agency has a semi-independent procurement

executive who does not issue contracts, who provides policy guidance and oversight to the contracting. and so if he -- and this happens to be a he at the state department -- makes that determination, it is a kind of independent interpretation and, basically, i feel that is exactly what it should be. we, we must insure that the american taxpayer spends a dollar and gets a dollar's worth of value. >> ambassador, we know that. we do know that you've got to do that. gentleman -- oh, you're all set? >> i am. >> i want to pursue this because i find this beyond silly. i find it outrageous that the department of state can say that when a contracting officer recommends debarment or suspension or even if dcaa or dcma, somebody is recommending

it, that there shouldn't be a justification for why when it is ignored it's ignored. it seems to me so basic. so you and i and the department and this commission and the department have a huge disagreement that we will continue to pursue. how many debarments, recommendations have been made in the last year? >> [inaudible] >> no, no. that's not acceptable. >> [inaudible] >> no. your mic is not on. >> i will have to -- >> let me tell you why it's not acceptable. you'll have to get back, but what's not acceptable is you don't know it, and yet you're saying it's burdensome. how can it be byrdensome if you don't know it? >> given your statement, mr. chairman, i will review the issue. ..

>> our recommendation not be done because it's burdensome. i would think either if we have so many that are ignored, that's a huge indication of a problem. and if we have too few, or a few that have been recommended, and the department is claiming it's burdensome, then we think it's a pretty outrageous response. so i appreciate you looking at that. i'd like to -- when you testified before the government oversight committee, you made

the point that all the activities of state were inherently governmental. would you explain to me why you made in the transition from d.o.d. to state? that everything you are doing in iraq, in the transfer, are not inherently governmental? therefore, you can use contractors? so i misspoke in the beginning. not inherently government. that is the claim. and in your statement you make it in your very first part of your statement -- you jump right in and say, the activities we are doing are is not inherently governmental. why? why are you making that claim? >> because, mr. chairman, certain of our activities are inherently governmental. law enforcement, the activities of consular officers, political and economic reporting, executive management, those are

inherently governmental. there are other activities that i believe are not inherently governmental. if you look -- if you look in the -- let's use security because that is one of our other commissioner's had commented on that as well. if you look at security, security is not considered inherently governmental in the united states. the united states government contracts for security personnel. >> there's security and then there's security. so it's a pretty broad term. so let me just ask you this, if you have an ied and you need to get a medic to deal with the injuries that are outside the embassy and/or you are under fire and you have to shoot your way out to get back to safety --

in either case you have to get someone there to attend attend to the wounded and you have to aggressively use force or you have to aggressively use force to get out, why do you think that's not an inherently governmental function? >> because i believe in -- even in those circumstances, security is not inherent in the government -- >> i'm not talking security. >> i regard that as -- there's law enforcement, which is inherently governmental. and then there is security. >> let me just ask you this ambassador, you use security that covers such a range. i really narrowed it down. >> right. >> so we have to fight our way in to get to people who have been injured. and we have to fight our way out to get away from it. >> right. >> we have to use an aggressive effort with guns, with weapons to do that. why is that not inherently governmental? >> because it does not meet the

definitions of inherently governmental. >> and what is that definition? >> the definition is only a governmental entity -- and i realize that's a circular -- a circular definition. >> let me take his example -- why then -- you say, okay, it's not -- and i can use a contractor. i propose you're using a contractor out of necessity because, otherwise, you know, there's a whole lot of combat medics both paying attention to this as well as -- army combat, navy corpsman, maybe there's some rolling around their grave and saying what's going on here? because the army and the navy have made the decision that combat medics are made by a military person. by default, that's inherently governmental. when they fly a chopper in, commissioner shays talked about being under fire -- if you have

an ied out there and call it what you want, they are under fire and someone is injured, they won't leave the injured, the army doesn't use civilians, government or otherwise? >> well, the united states army's primary mission is to project force in defense of the united states and its values. >> all right. that's projecting force. we're talking about a rescue mission and now you're picking up that has nothing to do with projecting force. it's lifesaving. >> and i'm saying that's distinction. projecting force is inherently governmental. lifesaving -- >> are you comfortable with that definition as you use it? >> let me tell you in response to the second part of chairman thibault's -- i'm confident with this definition, yes, inherently i'm comfortable. but secondly, there are 1800 and some odd state department diplomatic security

professionals in the entire world. i need, i believe, it's -- something like -- when all is -- when all is said and done, i'm going to need something maybe close to 7500 static, just static guards for both afghanistan -- >> ambassador, i know where you're going and i'm going to agree with you. the bottom line, necessity requires you to use contractors because you have such a huge need. that to me -- and let me say, you are a very candid witness so i appreciate the dialog. but a more helpful response to this commission and the others and to congress, guess what? we have no choice. we have to use contractors. what i fear is that you feel if you have to use contractors and admit you're using them for inherently governmental, that you are then breaking the law. it's not a criminal law but you're breaking the law. i think one of the recommendations -- and let me ask you this, one of our

recommendations may need to be that there needs to be a recognition on the part of government that sometimes we have to use contractors, nongovernment people, in inherently governmental situations because as your report talks about, in the qddr, that sometimes contractors are the default mechanism. and maybe you need that default mechanism 'cause i think that's where you were going with your answer. >> essentially, i know that i have a mission that's been given to me. >> right. >> lawyers that i have consulted with tell me that security as opposed to law enforcement as opposed to military force is not inherently governmental. if the commission makes -- says the process of that analysis should be changed -- i mean, i'm not going to -- i'm not going to object to that. i know what the basic number is.

and i know that there is a sign curve here that tomorrow, hopefully, i'm not going to need 7500 u.s. government employees to provide security. and in managing and recruiting that process -- >> we're hearing two things. and i'm going to agree with you. one is that it may not even be possible. >> right. >> to have government people fulfill these functions. and the second thing we're hearing for the record is, that you would have to build up to a point and then would you be able to use these folks later on when the contingency draws down. those are two valid points. >> correct >> what our commission feels is that it may be unfair to people like you to be put in a situation where you may have no choice but to use contractors, and then have to kind of claim that what they're doing is inherently governmental. and i'll just put that on the

record. okay? we're going to start with mr. thibault. we're going to do four minutes and i got to hold folks fairly accountable to that. >> all right. >> have you started my time yet? >> i haven't even said hello. we jealously guard our time and so i'm going to make a couple of observations. i think you've also been candid, ambassador, and i really respect the mission the state has assumed and i think parts of the mission you've been given and it's the summation of what we're seeing here is wrong. and that parts of the mission are those parts and we've given plenty of examples where those situations that have historically been united states military and they're the best in the world, you've been asked -- you know, and i'm not looking for comment. it's a fact. you've been asked to transition into accepting that and the use

of contractors is the only option. you don't have an option. and many of those functions your normal dss people if they are full staff and i can't say enough for them. but they're not there. my observation that i made and i'll sum it up is that in the year 2013 and we toss numbers around, but it's critical to get at this on the record, the dcaa backlog for all those years -- by their own estimate is going to be over $800 billion. $800 billion of unaudited, and it would take me longer than i have to state what the return to the taxpayer that's not evident now. i gave examples of contractors that have provided the missions timely and it can't be audited because there's no resource. dyncorp, i gave an example where contractors pulled it back because they know there's questionable costs in there. kbr and i've given an example where a contractor -- a new

contractor they've got it back in and they struggled and they got a good contract in. and my whole point is i propose you ought to become a more visible champion for d.o.d. assuring that your dcaa that you do on a reimbursable basis is fully staffed and they need 1,000 people so they can begin making a dent in that backlog by 2014. and i'm not here to make excuses for companies. but if i'm in charge of that function in a company and i have seven or eight years and that's what it will be that haven't been audited, i'd be worried about what's the impact. i've got the claims in. and so i believe that you can be a champion for that. probably the area with the biggest dollars we haven't spent much time on is logcap. you're going to transition to logcap. and you're going to use d.o.d. support initially.

that's in your statement. that's correct? is that a yes? >> for life support, not for maintenance -- >> okay, that's correct. is now is that transition going to be logcap iii or logcap iv? >> we are -- logcap -- our action under logcap iv is supposed to be awarded on july 31st. so it will be logcap iv. >> so you are, in fact, going to use logcap iv? >> yes, sir. >> where you've gone out and competed consistent with the manner we support. we kind of took too long but we fully support rock island army actions. you're using that? >> yes. we're using rock island. >> that's really important and i would suggest that as you go through and evaluate that -- i hope you're using past performances and you've got a company because of and question costs, and somebody should ask them, why did you pull that out? that's a fair question? what's in there when you had,

whatever it is, a senior vice president of finance that said i certify legally that all the costs are in accordance with the rules and regs and lo and behold they don't. so i have a gazillion other questions. my time is up. i do want to thank you. i may summarize those questions and provide to you, ambassador. one of the last things i want to say on the supportive side is you probably use or maybe you're fortunate -- i've seen the best transition, the four of you, grand slam folks over there in providing notes. i've seen that so often in our 20 hearings being in disarray. it's really nice to see people that know how to give notes to a witness. thank you. [laughter] >> i'm a great witness because i have a great team. >> all right. >> well, you're a good witness if you rely on your team, and that's a good thing to do. mr. tiefer, charles tiefer, dr. tiefer. >> thank you. and ambassador kennedy, normally these are combative questions.

your long-standing expertise and experience is acknowledged. i have three questions. i'm short on time and you can answer them. one is -- i was pleased to hear that you're going to take another look at the $132 million for the new embassy compound in first kuwaiti and i commend mr. ervin. he was a former inspector general and he knows there's more in a report than other people might otherwise. i hope it slightly adjusts that you'll not only ask again whether the state department i.g. has more information but more important because the report -- this report ordered and designed the construction of the compound at bag, iraq, in

2009, was extremely detailed. i would hope one could go through it and find the parts of that 132 million which are already just there because they may see we put what we have in the report. and that shouldn't be the end of the matter. my second question is, we went through that out of the police training money that went to dyncorp, you have collected 40 million. you're going to seek 37 million back. and there's 109 million in reduced billing. the figure out of the 512 million that i was one of the people who thought that that was a credible figure. and i don't want it to be wondering well, where could that have come from? and the reason was that the report, the sigar report on january 2010 of this report and

i quote as a result inl has no confidence in the accuracy of over $1 billion in charges. it's not so much that i'd like to find out. suppose sigar wants to go where did the rest of our $1 billion -- why did onto 200 million of that get into the final lap of the race? would it be okay if sigir figured out why they took 200 million out and not the rest of the billion? >> no. he doesn't have much time to answer but why don't you go through it real quick. on sigir being limited on what they can review of yours going on, you said you've gotten an oral legal opinion and in another point you said i must stand on what my legal advisor has told me.

that's oral. i'm a law professor at the university of baltimore law school. your legal advisor is a professor at another law school. it's pretty good. it's not university of baltimore. but -- >> charles, get to the question. come on. [laughter] >> we would like a written legal opinion public because this is a very important point. thank you. >> quickly, obviously, as i said, i will raise this again with the inspector general about the first kuwaiti. on the dyncorp police training contract, sigir is perfectly free to audit any -- they audited once. if they want to audit it again, my point that i have made to this group that i have made to the house government affairs group is that they're free to audit the reconstruction activities in iraq. they are not free to audit the base element of the state department. that is -- that is within the jurisdiction of three other

entities. on the sigir review, i will talk to a certain former law professor and ask him what his opinion is on this matter. >> thank you. >> thank you. >> ambassador kennedy, the first recommendation in our interim report was to have the agencies do a comprehensive risk-based manpower assessment for what they need to operate in the contingency. your response to us was along these lines. the state's qddr and the human capital planning process both identified the need to determine the organic resources, okay? that's the statement of identifying the need to determine the need for organic resources. i'm looking at your qddr and the section balance our work force, you told us enforcement is an

inherently governmental function. >> correct. >> on page 179 of the qddr, there's a statement when you read it with your mind open, it's a little jaw-dropping. you say here, build, direct and hire capabilities in two specific state bureaus. international narcotics and law enforcement, inl and information resource management. i guess those are the i.t. guys and they both work for you, right? both of those bureaus? >> inl works for the undersecretary for political affairs. >> okay. irm works for you? >> yes, sir. >> so inl works for p, political. here's the census that really floors you. this is about international narcotics and law enforcement. and i applaud you for being candid but we can't let this pass. given the importance of security secretary assistance to states' mission and the fact that inl's current work force comprises only 5% direct hire state

employees, rebalancing is necessary. to me that's just one of those statements that's -- you're telling me in the inl work force, it's 90? law enforcement, it's 95% contractor? that's what the qddr says? >> no, sir. is that what the qddr says? i just want to make sure we're on the same basis? >> yes, sir. but there is a major distinction between law enforcement, the power to arrest a citizen and training foreign law enforcement. so i do not regard the training of foreign law enforcement as inherently governmental. we do training it takes in many format. what the qddr also talks about, and this is a specific request to the secretary that we agreed on is we've been in numerous

consultations with other u.s. government entities, the department of justice being a primary one, to find out that in lieu of contracting for our training, could they have, could they put at our disposal and state and local governments put at our disposal foreign offices but still -- >> generally the answer has been no, we don't have the capacity. >> that's correct. >> so you're not billed for it and they are not billed for it so, therefore, you have to hire contractors or personal services contractors; right? >> correct. >> to oversee your inl contracts, is that a fair statement? >> correct. >> so the part of the -- the qddr calls for an in-depth cost assessment these two bureaus will be developed for work force balance and expertise. is that analysis complete? >> no, sir. the chief information officer is looking at what cost-savings

might be obtained by federalizing in effect part of her work force. >> but the cost-savings aren't relevant when it's inherently governmental? the governmental doesn't say it should be inherently governmental if it makes cost sense. it just says if it's inherently governmental we can have a discussion about that. it must be done by a fed? >> but what the full analysis of both of those is there -- those are being looked at to determine if we have any activities that are inherently governmental now being done by contractors. the examples of the cost-savings, though, run the gambit is it cheaper to bring it in-house -- >> would you share with us at the appropriate time, soon, the results of those analyses? >> i will be glad to. i'm not sure that they're going to be done within the commission's time frame, though. these are very complex issues given our worldwide i.t. >> i've got one last question.

i'll be brief. at some point in afghanistan, security at the embassy was provided by u.s. troops. at some point '01, '02 at the very beginning. >> at the very, very beginning, yes, sir. as it was in iraq. >> i understand the d.o.d. said not our mission. give it to state. at the point that that decision was taken, did state agree with that decision and embrace it and say, give it to us? we can do it. it's not inherently governmental? >> i was not -- i was not in a position that was involved in that. i'll be glad to check for the record. however, it is the consistent opinion of the department of defense that they will provide, and we are deeply appreciated of it, emergency assistance, for example, our -- in yemen with all the turmoil there, they have augmented our existing staff but i'll get something for the

record. >> get details for the record on that? >> yes >> thank you, katherine schinasi, no one is going to interrupt you in your four minutes. >> thank you, mr. chairman. have a couple quick yes or no's. in the request i made earlier about the contracting officer representatives i know in your response to our recommendations, you make reference to waivers for corps certifications which are available. that tells me maybe you've made use of waivers. so for that list of contracting officer representatives for the projects that you have put out, would you include waivers in that listing as well? second thing is, as you know omb and circular a01 to allows the chief officer to review its chief circulation. have you done that evaluation and secondly, if so, is it possible for us? could you submit that for the record as well? >> that is an internal document.

let me check with our lawyers because of the unique nature of the executive legislative branch of this commission. i think i've given you everything that you've asked for up-to-date. i just have to check on that type of internal document with our counsel. >> there's also the legislative requirement of the reform act that you monitor your activity -- >> and we do that. >> that might be another way to get that. d.o.d. has set up some training in afghanistan from d.o.d. has the state department set up that kind of planning cell for the contracting particularly in mind? >> yes, we have. >> yes, okay. >> and we are actually dispatching as our chief administrative officer, our chief management officer in kabul and an officer who has intimately involved in the same office working on the transition. >> my understanding was that had not been done yet so i'm glad to hear that. secretary gates sent to

secretary clinton in december of '09 a memo looking alternate ways to pool funds and resources for those missions that have become conflicted between the department of defense and department of state. where they're overlapping missions and authorities. do you know if the state department ever responded to that request from the secretary of defense for the proposal? >> that activity has been worked out between the secretary of state and the secretary of defense in between the deputy secretary of state, the deputy secretary of defense and omb. >> is there a formal or written memo? >> no, it was resolved -- it was essentially resolved in the fy12 budget request. what you see in the fy12 budget request what you see the collective administration position on that. >> is that part of putting everything in the oco account? >> no. the account is related but separate.

the authorities which invest in one agency or another are in the budget request the oco account that the state department is simply how we request that -- those sums either for our operations or for the results of the agreement and secretary of defense. >> it's expired and now there's something in the fy12? >> yes. >> okay. and then my last question, you make reference in your statement to the qddr's blueprint for elevating american civilian power. i think that's one of the things that we certainly have been looking at on this commission, you know, what is that appropriate mix for the work force with an eye toward some of the problems that agencies have had getting civilians overseas. we had ambassador herpes over a year ago to talk about it that has gone out of existence. dare i say it's a failure in the

fy12 budget. you know, there's support for that but i guess the request is for $92 million which is down significantly from the 120 million. what is your prognosis for being able to get civilian presence, not just the state department but clearly the other civilian agencies into iraq, later into afghanistan? >> one of the specific -- well, the state department has filled every state department position in iraq and afghanistan. and the other agencies, a.i.d. and i would like to note of assistance that was then came up in deploying personnel from all their units around the country so we are -- we are filling those jobs. the contingency issue that you raised is one that specifically called out in, in the qddr. there is a task force at the state department reviewing

structure, function way ahead for the -- for the civilian stabilization. a new bureau is asked for that i referred to. and the overseas -- >> so yes or no. i'll get a yes or no as a conclusion. yes, you are confident. you have been able to get the civilian representation that you have been given, yes or no. >> no. >> no. that's the conclusion. thank you. >> the conclusion -- the conclusion has to be specified. >> you answered and we have no but if you want to qualify the no. ..

>> i can't let that pass. we were, commissioners, chairman shays and i were in afghanistan, and we're told, for instance, that the agriculture department had left approximately 40% of slots unfilled, and of those slots that were fill bed, many for -- filled, many had no capability, no knowledge, no ability to deal with the problems in afghanistan. so with all due respect, mr. ambassador, i think what my fellow commissioner, katherine schinasi, is saying is, no, it isn't exactly as you're putting it. and the agencies are not fort coming-- forth coming, and i

insist on putting that in the record because that's what it's really like out there. i'd like to ask you about one of our recommendations regarding certification. we noted in our report that agencies have conceded that they just don't give priority to recording past performance assessments into the official databases. we've said, therefore, that this ought to be certified that a database has actually been used. state department says, no, disagree with that because accurate and current information, comprehensive coverage of contractors will make the database a sought-after tool. sure, if it's done. do you believe it's now being done? >> in, up until recently there was a split between defense agencies that used one tool and state agencies that used -- sorry, civilian agencies that

used another tool. we are now all filling in the new, the new dod tool, and i know the state department is populating that data base. i can't address other agencies, sir. >> but we're concerned about use, and the certification is we want to have certification that the database has been used. do you have any statistics at all to indicate that use has increased? that people are actually using the database? you know, what do you have to base your, as it were, disagreement with us that such a certification is not necessary? >> um, all i can tell you, sir, is that the state department checks, checks all available information and before we award contracts. >> well, it would be nice to get some set of statistics. i don't know if you can come up with that. i have another question in the minute or so that i have left to me. in your testimony you talk about the fact that you're achieving greater efficiencies through new contract terms.

you mentioned, for example, reduced acquisition timelines and timely options in the event the company fails to perform. could you give me a sense of the magnitude of the reduced acquisition timelines and what some of these timely options are, what do you mean by that? >> yes. taking the second first. for example, when you have a master contract at which you have prequalified eight firms and then you compete the specific task order, if for some reason one of those contractors fails to mobilize or for some other occasion cannot perform, the fact that we have eight qualified and we have their individual bids on the task orders enable us to immediately go down that list whereas before we would offer one contract at a time, you'd have to go out and recompete the contract. so that, that is, that allows us to -- i don't want to say

anything is instantaneous, but it certainly eliminates, you know, weeks, if not months of effort. >> and reduced acquisition timeline? >> i think, i think the fact that we are awarding the contracts such as the medical contract for iraq, the medical contract, the security contract, i mean, this goes to a very inherent point in the inspector general's report. inspector general's report was a snapshot done in the third quarter of last year. and he was absolutely right, it is absolutely right saying that on the date that picture was taken we hadn't awarded the medical contract, we hadn't awarded the security contract. as i outlined today and in my written statement, now on the sixth of june, we have done this and this and this and this and this. snapshots are good to call things to our attention, but this is a continuum. this is not a sprint. this is a marathon until we hit

midnight on december 31st, 2011. and when you look across that timeline, and this is one of the most difficult things we've ever done as the commission has noted, but we are making the hack marks as we go down the line. >> well, thanks. obviously, we have issues with some of what state does, but you're a good witness because you do a good job, and i thank you for that. >> thank you, sir. >> mr. ervin. >> thank you. i went back in the interim time to look at your full response to the state department's full response, and it's on page 27 and 28 of the department's response to our report. and, basically, what you say there is there are two kinds of agencies with regard to suspension debarments. there are those where the recommendation that the evaluation and the recommendation is made at a lower level, and then the determination of whether to suspend or debar is made within the agency.

there's somebody higher than the people making the recommendation who makes that determination. but the decision maker is somebody within the management chain. and then there are other agencies like the state department where the person who makes the ultimate determination given a recommendation is somebody who's quasi-independent. and you call it, that person the sdo, the suspension and debarment official. and your concern, sounds like reading the full response, by two things. one, the administrative burden and, two, with regard to the suspension and debarment official compromising that person's independence by requiring the agency head to sign off on the determination of the sdo. because we say in our recommendation that there needs to be written justification for it, and that has to be approved by the agent i head. now, we are -- agency head. now, we are happy -- i, for my part, am happy to modify that recommendation so the approval of the agency head is not required. that's not important to me and i

would argue that it shouldn't be important to the commission as a whole. the issue here is whoever makes the determination to ignore a recommendation or disagree with a recommendation to suspend and disbar, whoever makes that determination that person whether within the management chain or independent, ought to have a written justification for the file as to why that determination was made. and to argue that it's an administrative burden, to me, i'm surprised the state department has that position, and i would urge you to rethink it. >> as i, as i promised the chairman, we will look at it again. as you rightly noted, we did have a very great concern about compromising the independence of the procurement executive who has a statutory responsibility. secondly, we also want to make sure that anyone, especially someone on the outside, can bring a charge. if charge is truly frivolous or very spurious, simply giving it

the credibility of documenting its rebuttal rather than simply dismissiling it -- dismissing it -- >> right. just to stop you there, we're talking about a recommendation made internally within the agency that is then overruled by either somebody within the management chain or this independent sdo. and we're saying whoever that is who makes that determination to overrule a recommendation within the department by competent officials, presumably, to make that recommendation ought to be documented for the record. >> we had read your statement, recommendation 23, against a contractor officially recommended for the state debarment. that could be by anyone. and so with the qualification -- >> officially could be by anyone? >> from another agency from which -- yes. so we will, we will take the chairman's notes, we will take these two which i regard as

clarifications, maybe we misunderstood. but you posited two clarifications that i did not read when i read this and what the intent of your, of your recommendations were. that we would not have to put oversight on procurement executives -- >> fair enough. >> -- or an external/internal question. we will take those into consideration as the chair correctly asked me to do. >> thank you. >> ambassador, i have just a few questions, then we're going to let you close with any comment you want to make without interruption. um, commissioner hen ce was making -- henke was with making reference to dod kind of pulling the rug out from under you, and the department and saying you have to provide protection, security to your embassy in kabul. and it ended up that you hired

armor group. during that dialogue we had in '09, in the middle of '09, we realized that saying you had to get the lowest price contract instead of the best value. and so we jumped in to try to help you all deal with best value. what's disconcerting is that the armor group is still there. why is it disconcerting? it's disconcerting because they jeopardized, one, the security in our judgment of the embassy, secondly, they brought tremendous disrest piewt to our government because they, in a sense, were defending our government's embassy. and, thirdly, the whistleblowers that stepped forward, their lives were threatened. they're still there. now, one of the reasons why we recommend that there be a cadre of people who can step in is so

a contractor like this can't say, fine, find somebody else. and you can't find someone else, so you're stuck with them. my sense is you're stuck with them, and i want to know why you're still using them. september, since the photos came out in july, august of '09, our hearing was in september of '09, and they're still there. why are they still there? >> i think they're there for two reasons. one, we have just recently awarded the new worldwide protective security contract and are competing the task orders, and this gives us one of the examples where the original, the origin aloe bidder -- original low bidder for that specific task order did not mobilize in time, so that's why we're going to an additional replacement. this goes back to dr. zakheim's question of us having the ability to have the worldwide protective security contract

cover both static and movement security, then allows us when something to move to a replacement entity. >> we wonder why, though, there shouldn't be within your department, within dod a cadre of folks who can step in immediately to deal with a challenge like this because the contracting process takes too long, and it is highly imperfect. >> i think the issue, mr. chairman, is that by my notes we have, we have something like 4900, um, static guards in, um, in iraq. i'm sorry, in afghanistan. that is a very, very large number. >> when you travel -- >> and, and to do, and even that 4900 number you have to add about a 50% factor for training

and movement. >> well -- >> none of us are going to have in a s.w.a.t. team of that size, and so we really do have to work, and this goes back to -- >> well, we're thinking that that may be foolish. it may endanger our embassies, may endanger our goodwill, and we believe that the expense may be worth it to have a cadre that you can turn to quickly. because the bottom line is you're stuck with them. and that shouldn't be. let me just make an argument for you to rethink your opposition to -- >> if i might, i just look -- i read my -- it's 7 60. 4981 is a grand total for all overseas, so it's 760. but even that when you add rotation is over a thousand personnel, and we are simply do not, are not funded or programmed to have that kind of a reserve force available for

immediate -- >> you are not, and the question should you be and we would argue you should be. let me just make this last point for the record and then let you make your final closing comment. i find it difficult to understand the opposition to an independent special inspector general for contingencies. and that's based on my experience in congress. because, frankly, as republicans and democrats both realized, we were not seeing the kind of oversight of contingency contracting. and when we then got sigir in there, we began to see that the other inspector generals started to pay more attention. in fact, dod wasn't even in theater. and so one of the values was it kind of raised the attention for everyone. secondly, the very example that you are rising that sigir

doesn't have the legal authority, because when they were assigned, they were given only a certain chunk of contingency. we believe that they should have the full breadth so they wouldn't encounter the very thing that your legal people are saying, that they don't have the authority. we want a permanent inspector general that has the ability to cross different departments, to do inter and intraagency activities. we want them to be able to look at state, dod, usaid, one. and i just would suggest to you that we would like you to re-examine this in the light of the fact that huge savings could take place. um, you have a final word to close up. you can take as much time as you want. it's your time. >> thank you. >> and i'll just say, again, we appreciate the candid dialogue that's taken place between us, and we look forward to you getting back to some of the

things you said you would. >> just before i sum up let me just respond quickly, mr. chairman, to your question. i think you're entirely correct, that there was not a focus, the full focus, the full in-depth focus that should have been made in the very beginning. but i think the corrections that we have seen dod now deploying their personnel in theater, the state department opening a regional office in the region to do both iraq and afghanistan does address the question of focus. secondly, um, i think on your question about the breadth of the responsibilities of an inspector general, i certainly agree that we need full breadth. at the same time, when you are receiving a request such as i am from sigir to investigate not the activities --

>> i'm not taking that issue. you've already addressed that honestly. i'm suggesting that if they had been given the authority, you wouldn't have been even in this league of question. >> well, but i'm saying, sir, that i am opposed to having an independent -- a third party inspector general, so to speak, as opposed to a second party investigate the platform that the state department is operating on. one has to understand that platform, the general accountability office, the state department inspector general, house surveys and investigations understand that platform. and then there is what's riding on the platform. and i have no problem with that. if it's open to any inspector general, there are some 50 different united states government agencies operating overseas. and if i have to have each one of them -- >> that's another -- >> authorize to investigate my platform, i won't ever deliver any services under that platform, i will just be doing questions and answers. and i think that is a detriment

to the united states national interests abroad. >> let me ask you, though, state ig has recently closed their metro, their middle east regional office. >> no, sir, they have not. >> they have not? >> no, sir, they have not. >> how many people do they have there? >> they have not closed the middle east regional office, not that i'm aware of. >> okay. >> they're, in fact, just done another report. i mean, a report that you cited that they did last fall and -- >> we're talking about people there, not here. >> no. they're there. >> you have the closing word now. any comments you would like to make. >> commissioners, there is no doubt that the activity that the state department is engaged in iraq and will be engaged in afghanistan when the timeline is fixed for the withdrawal of united states troops is, is unusual, it is beyond the scope

of anything that we have ever done in the past, and that is acknowledged. on the other hand, the state department has historically stepped up to challenges. the fall of the berlin wall result inside the opening of 24 new dip plomatic and consular posts in the immediate aftermath of the fall of the wall, something that a number in a short period of time. and then there was the tragic attacks on our embassies in nairobi which caused additional funds to be appropriate today the state department, and now we have, i think, it is now 77 new embassies built in the past decade, 11 years. we know how to mobilize for this activity. we have the competence, we have the personnel, and we absolutely in this case have the full and unerring support and partnership with the department of defense from every level from secretary gates and chairman mullen all

the way down to, you know, to the e6 expendable and excess property clerks that we are dealing with in iraq now that have provided us almost 4,000 pieces of equipment. there is a lot of work to be done. it is entirely correct that when the inspector general takes his snapshot last fall there was a lot more to be done. but as i outlined in my oral testimony and in the longer written statement, many, many if not most of the issues raised by the inspector general -- correctly in that moment, that snapshot in time -- have now been resolved. and in the remaining six months we will resolve the remainder of them. we have the, we have the contracting vehicles in place, we are in the processover awarding them -- process of awarding them, those we have not already awarded. the congress has provided us

funds. not all the funds we might have liked, but we have adjusted the mission. not the safety or security, but we've adjusted the mission to comport with the dollars available which is what any executive branch officer does in our democracy. my last point is i want to thank the commission for calling attention to issues that we do have to address. your assistance a year or so ago in allowing us to make contract awards on best value was incredibly helpful and is part of the new worldwide protective security contract that we, that we have, that we have awarded the master to and we've already awarded several task orders under. it is a long road, it is a marathon. i mean, i think we have already crested heartbreak hill, and we have only so far to go. the time remaining is short.

anything can go wrong, and i am sure that something will go wrong. but with the teams we have, the executive steering group, the team in baghdad, teams at state, dod, joint teams and the staff that i brought with me plus many more staff who are there who have phone calls, i think it's three times a week at 8:00 in the morning with everyone in baghdad, we will deliver on this mission because it is in the u.s. national interest that we do so. thank you very much, ladies and gentlemen. >> ambassador, thank you very much. and have a good afternoon. and with that, this hearing is closed. [inaudible conversations]

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[inaudible conversations] >> later today we'll have political coverage from canada starting at 2:15 p.m. eastern. stephen harper are take questions from members of the house of commons. it'll be his first question period before the newly-constituted house with a new opposition leader. >> at 4 eastern the canadian finance minister will present the government's 2011 budget. it's expected that he'll pledge to balance the budget by 2014. both of those events from canada will be live on c-span. >> and more international coverage later with the french foreign minister at the brookings institution to discuss

political uprisings in the arab world. that's at 5 p.m. eastern live on c-span3. >> here's a look at the u.s. capitol today where the house will be out this week, but the senate is in at 2 p.m. eastern for general speeches. at 4:30 lawmakers will turn to the confirmation of a new solicitor general, a test vote on the nomination is scheduled for 5:30 eastern. you can watch the senate live right here on c-span2. >> blair levin, who led efforts in the development of the national broadband plan, assesses the status of broadband today as well as other pending issues before the fcc tonight on "the communicators." on c-span2. >> the head of regulatory affairs for the obama administration says that a recent small business administration estimate of the cost of federal regulations is depply flawed. in testimony to a house energy

and commerce subcommittee, cass sunstein also said that environmental or safety rules often benefit the economy. many republicans raised concerns that the regulations were hampering job growth. the subcommittee also heard from several advocacy groups during this hearing. >> good morning, everybody. oversight and investigation will come to order, and i'll open with my opening statement.n we convene this hearing of this subcommittee to get an update on how the administration is implementing president obama's executive order announced on january 18th entitled, quote,ect improving regulation and regulatory review, end quote.e to do so, we welcome backso, mr. cass sunstein, the head of the office of information and regulatory affairs or, as we call it, oira. within the office of management and budget. mr. sunstein testified before this committee at our first hearing on january 26th, a week

after president obama signed thg order and publicly committed to striking the right balancepr betweenes regulation and economd growth. mr. sunstein agreed to come back in three months to discuss how his office has improved the regulatory system to reduce burdens on the american economya is industry. president obama's executive order affirms that agencies must adopt only those regulatory actions whose benefits justifye its cost. that are tailored to impose the least burden on society, thatthe take into account the cost ofy cumulative t regulation, that maximize net benefits, that specify performance objectives and that evaluate alternatives to direct regulation., in addition, this new executive order calls on agencies tonew review significant regulations thatll are already in place.ati expanding upon this requiremente the president announced in aem "wall street journal" op-ed that this action, quote, orders a act

government-wide review of the rules already on the books to remove outdated regulations that stifle job creation and make oul economy less competitivea. now, this is incredibly important given that the federao register stands at an all time high of over 81,000 pages. in 2010 alone federal agencies added more than 3500 final priewls to the -- rules to the books.r i hope that mr. sunstein wille share with us a number of examples demonstratingi how this commitment has put intos action and how agencies will relieve expensive regulations andg promote job growth. this morning's report of the 9.1% unemployment rate with significantly less job creation in may than in april adds to the urgency of this task. after all, regulations total

1.75 trillion in annual compliance costs according to the small business administration. that's greater than the record federal budget deficit projected at 1.48 trillion for fy-2011 and greater than ab yule corporate-free tax profits which total 4.16 trillion in 2008.i in addition, i hope mr. sunstein can also give us a sense of how he is enforcing the other requirement of the executive order. of -- he's the traffic cop. enormously expensive regulation has sped through the review process on his watch with little or no opportunity for meaningfun public comment. this leads me to believe thaten. oira has either been left out ot the process or hasn't been effective. on may 18th, 120 days after the executive order was issued, each agency was required to submit to oira a draft plan including

oira a draft plan including an initial list of regulations that were identified in their retrospective analysis as candidates for reconsideration or review. agencies were supposed to consider all of the burdensome regulations identified by this stakeholders. in the private sector before submitting their planned. in the hearing january 26 on the agreed with mr. sunstein when he said that, quote, one idea we have had is that the public has a lot more information than we do about what rules are actually doing on the ground, in of quote. as i said before, however, it is important that rhetoric is mast with measurable results. the epa alone has received approximately 1,500 comments on its rules and regulations. the chamber of commerce weighed in on a roughly 20 regulation proposed or finalized over the past two years at the environmental protection agency.

.. that ruined almost all of the programs under the clean air act and clean water act and undertake about 90 percent of the enforcement actions. after reviewing the plan it appears as though epa officials overwhelmingly disagree with or simply ignored the folks that actually implement regulation that have been identified as burdensome. not only ignoring stakeholders, but also opposed over 900 new regulations on the state since

the beginning of this administration. spoken repeatedly about the need to create a new regulatory culture across the ticket to branch, and i think all of us agree. an unprecedented amount of authority has been delegated to the executive. new aspects of it all of american lives are being promulgated and this same plot system that produces the regulations are to depart today. hopefully we can take steps toward changing this culture and the court to the testimony of cass sunstein. with that i recognize the right gang member. >> thank-you very much, mr. chairman. in january of this year president obama ps it issued a directive for plans to improve the regulatory system.

he urges to agencies to expand opportunities to participate in the regulatory process and to look for ways to make regulations more efficient and effective. mr. chairman, you will be pleased to know that both sides of the i'll support the school. this subcommittee has a valuable role to play in the implementation of the order. i want to join you in all coming mr. cass sunstein back. the last hearing devolved into a criticism of individual regulations that individual members might disagree with, but i'd think it is worthwhile for this committee to continue to focus on the regulatory reform efforts of the administration and see if we can make real progress. i know we are taking away, once again, from your efforts to implement the program, but it is important for us to hear it

babies since our first hearing in january from what i have heard is executive branch agencies have developed preliminary regulatory review appliance that the administration has provided and posted on the white house website. my initial review reveals a range of efforts. agencies are streamlining and modernizing to save industry and government time and money. a more precise detailing in regulation to save money for industry, creating a broader opportunities for public participation in the design and implementation of regulation and are improving their review process. so i hope that we can hear about some of those things, but i also hear -- hope we can hear about what the in -- administration hopes to do next to streamline and take this input and

modernize and eliminate unnecessary regulation. having said that, i will say the administration appears to be working hard to implement a regulatory reform. after hearing the distinguished chairman opening statement and also the sad unemployment news of this morning i wish the majority, rather than complaining in vague terms about the regulatory reform efforts and unemployment rate, would sit down with minority and together develop a job bill. we have talked about this since january. if we want to reduce unemployment, let's stop niggling about the edges and craft a plan. that would benefit the american public. if we start now, we might be able to decrease unemployment by the end of the year, and i yield back. >> thank you. the gentleman from texas is recognized for three minutes.

>> cass sunstein, we welcome you back. we welcome the changes that are coming from some of the agencies. i want to hear more about what the administration is doing and if they're doing anything to slow the onslaught of regulation being implemented. we went to the white house earlier this week. the president said to us that he wanted to clear out the regulatory underbrush. i took that as a positive sign. he said regulations should not be obscure and difficult for people to understand. what is hard to understand is how the administration wants to continue to be anti-employer and at the same time be pro-jobs. it does not work out. businesses across the country are plagued with uncertainty as to what to do, what regulations will be and what regulations

will be handed down. ensure safety and promote the market, but you must know every day people come to washington to tell congressman of their fears about the avalanche of regulations that will increase compliance cost. i hear from business owners talking about how regulation coming from hhs, a dense, and more. and i don't see how this will be a deliverable and it will help them through problems they're having. and i might add, those problems are delivered by the united states congress. while some may be necessary, i feel many don't understand the effects that it has on jobs and job creation when cost goes up it cuts into the bottom line and that means jobs will be lost. i'm afraid this review has, perhaps, been the reaction of

political purposes, a president who does not understand how to create jobs. this is his attempt to appease jobs. the higher-ups' at the white house will have little interest in continuing, particularly after special interest groups and outside groups castigate the white house for reviewing regulations and the first place. the regulations coming out that the medical loss ratio, accountable care organizations, the federal government has taken something that was working in practice and proving that it cannot work in theory. these pieces would ensure more consumer benefits, lower-cost power and encourage coordination per patient improvement and financial savings, but because of the way regulations have been written, we still have great -- systems that encourage fraud. planned solvency will be at risk. there is the ultimate. if your plan goes bankrupt you

don't get much health care. accountable care, that is the unicorn that nobody believes exists or wants to adopt because it is so difficult and onerous. i hope that you folks managed the budget and your counterparts at the the federal trade commission will understand this and, perhaps, allow doctors to practice medicine. yield the. >> the gentle lady from tennessee. >> take you, mr. chairman. and you for being with us again. everyone will agree that the number one issue facing our constituents is jobs, and the greatest obstacle we are hearing about jobs is regulatory overreach, uncertainty through the regulatory process. this is not surprising. when you look at epa alone, they

finalized 928 regulations since the start of this administration with more than 6,000 pages of regulations released last year. seeing you want to get rid of regulations and issuing more is counterproductive to jobs. it is killing the growth of jobs. figures this morning attest to that. i encourage my colleagues to remember, you do not do a jobs bill to create jobs. washington does not create jobs. it is the private sector. it is our responsibility to create the environment for java code to take place. i have to tell you, all of the regulations coming out of this town are not helping employers, whether it is health care, painting, regulation from the ftc, the fcc, the epa, this must

stop. we look forward to working with you to get these regulations of the books and not add more. i yield. >> thank you, mr. chairman. i also want to welcome mr. cass sunstein back. i have questions about agencies and challenges as well as a bigger picture approach to see how we can get this executive order because one of the concerns i have as we have gotten over to a half years into this administration today's numbers show a dramatic decline from the numbers the test cannot in any. frankly, when i talk to employers of only throughout

southeast louisiana, but industry groups and represent employers all across the country one of the first things they tell you about the limitations is there inability to create jobs and the biggest impediment is nothing to do with protecting people or environment, but agenda is driven by bureaucrats in washington. that is not how regulation ought to work. we pushed regulations her to help create jobs that is a lingering in the senate, but you have the ability to go out and reform this process. i hope it is more than window dressing and look forward to our conversation. >> they cute. the ranking member of the full committee is recognized for five minutes. >> thank you very much, mr. chairman. the subcommittee is returning to the subject of the executive order on regulatory reform issued in january by president

obama and the implementation overseen by the office of affirmation and regulatory affairs. we are fortunate to have the administrator, cass sunstein, with us. he will be able to tell us about the regulatory review activity that has occurred since our last hearing. the stated focus of this hearing is to learn more about the agency plans for regulatory reform which the white house released for public review and comment. if we are going to have an honest review, we must consider all relative facts. we should examine cost and do so wherever possible. we also must give equal consideration to benefit. yesterday we were supposed to mark up a bill called the trade act which calls for analysis of the cumulative impact of epa regulation which was postponed.

it illustrates what is wrong with how we approach regulatory reform and this committee with this majority. it focuses nearly exclusively on the economic cost and amend its analysis of the impact of regulation on jobs, electricity costs, manufacturing and trade which is all appropriate, but it ignores the dangers of unchecked pollution on health, environment, and global climate change. one-sided approach is the antithesis of what we should be doing. this approach, i think, was so clearly illustrated by the opening comments of my republican colleagues. the greatest obstacle to jobs is regulation. i cannot believe that. no economist with suggest that the recession is not a major reason for having a problem with jobs. the regular editions overreach, that's not new.

i have heard by colleagues say that the president wants to a slow job growth which is absurd. no president wants a bad economy. this president inherited a terrible economy, in great part because of bad judgment and policies of the bush administration. we must look at both sides of the regulation. we must maximize the benefit while minimizing the cost. a good case in point is the clean air act which, along with health care, has become a republican whipping boy. we consider a proposal after proposal to weaken the clean air act on the theory that it is a job killer. well, we should not have to pick between jobs and clean air. that is a false choice. when that act was written in

1990 we heard horror stories about how the law would impose a ruinous costs on industry leading to widespread unemployment which to not turn out to be true. we asked for a balanced analysis of the cost and benefit. results show that the law has been a stunning success. epa found that implementing the clean air act creates american jobs and bolsters the global competitiveness of american industry, even as it lowers health care costs and protect american families from birth defects, elvis, and premature death. health benefits. in one year it prevented eight teen respiratory paralysis to 18,000 asthma attacks, chronic bronchitis, 205,000 premature

deaths. the benefits are projected to reach $2 trillion by 2020. is that something we should ignore? the implementation also creates american jobs. the environmental technology and energy -- industry creates $300 billion in annual revenue and creates over one and a half million jobs. i see the value over and over again. following the collapse of the financial markets, the economy after the deepest recession since the great depression. millions have lost there job. because -- the cause of the financial crisis was not regulation but the absence of regulation. the deep water horizon oil spill created widespread dislocation caused by too little oversight and regulation. we can identify and this is a regulations. they should be identified and

regulated. we should remember that sound regulation is vital to protect our nation's economy and well-being. >> thank you. with that, we welcome mr. cass sunstein, administrator of the office of of regulatory affairs. before we start that may make some comments considering your testimony. you are where we are holding an investigative committee and have the practice of taking testimony under oath. if you have any objection to testify under oath the chair advises you that under the rules of house and committee you are entitled to be advised by counsel if you so desire during your testimony. if you would please rise and raise your right hand the was were you when. to use where to tell the whole truth and nothing but the truth so help you god? you are now under of and subject

to penalties set forth. you may now give a five minute summary of your read statement. i think he need to put the mike on. >> thank you so much. thanks to you and members of the committee, not only for your strong commitment to the reduction of unjustified regulatory burden but also for your generosity and kindness to me and my staff of over the last months as which door to work on these issues. my focus on these opening remarks will be on the process of retrospective review of regulation, the look back, as we call it. i will devote a few words to the effort to the control regulatory burdens going forward. in the january 18th executive order the president referred specifically to two topics that

have come up, economic growth and job creation, central factors in the process. for the process going forward and with respect to new rules, i would like to underline the four elements of the ticket if order. first, it requires agencies to consider cost and benefit to ensure benefits justify cost and to select the least burdensome of alternative. central going forward and will be followed to the extent permitted by law. it the a executive order requires unprecedented levels of public participation. it asks agencies to engage with state, local, and tribal officials. there was a reference to cost imposed. affected stakeholders and experts in relevant disciplines.

i would like to underline the requirement that agencies act in advance of proposed rulemaking to seek the views of those who are likely to be affected. the executive order directs agencies to harmonize, simplify, and coordinate rules with a specific goal of cost reduction. the executive order directs agencies to consider flexible approaches that reduces burden and maintains freedom of choice for the public. those are directions for all of the store and forward. but many of your opening remarks focused on is the look back process. last week in compliance with the executive order 30 departments released preliminary plans to the subcommittee and public in an unprecedented process. to some outlined in these hundreds of pages have already eliminated

hundreds of millions of dollars in annual regulatory cost, including those imposed on employers. over $1 billion in savings can be expected in the near future. not to their aspirations, but concrete products that have either been delivered or will be delivered in the near future. over the coming years reforms have the potential to eliminate billions of dollars in regulatory burden. in many initiatives representative a fundamental rethinking of how things have been done. we have heard that red tape and paperwork and reporting burdens exerts a toll on the economy, including small business. there is an effort throughout the plan to reduce that burden. there is also aired effort to rethink rules of outdated

technology that may promote innovation. many of the reforms have already saved significant money. epa has recently exempted note and dairy industries from its oral special rule. the punchline of material is of of the next decade the note and dairy industries will cry, not at all, over spilt milk and save over $1 billion. the few additional illustrations, burden on employers. a very alert. personally very alert. last week occupational seven -- occupational safety and health administration will remove over 19 million hours of paperwork burden which will save over $40 million in annual cost and may be a lowball estimate.

in recent discussions that burden saving measure was highlighted as an extraordinary step forward. osha plans to a proposed rule that would result in half a billion annual savings for employers. not 40 million, over half a billion. to eliminate unjustified economic burden on railroad the department of transportation is reconsidering a rule that requires railroads to require equipment to create certain equipment that is expensive which would save potentially over a billion dollars over 20 years. these are just illustrations. there was a reference to a cultural change. the art tends to create that. while a great deal has been done

, an unprecedented effort and a substantial savings have been achieved, the agency plans are preliminary. they are being offered at all levels emphatically including the business community for view and perspective. suggestions are eagerly welcome. we need your help in order to make these plans as good as possible and do as much as possible to promote economic growth. agencies will be assessing comments before plans are finalized, and we have a number of weeks and months to do that. to change the regulatory culture we need a constant exploration, not a one shot endeavor of what is working and what is not. we need close reference to evidence and data and a very close reference