video. i'm not pining on either one. i think the entry price is going to be out of reach for most americans, and so there will have to be a change. i have a feeling that change will be driven by economics, not by a change in the law, driven by the economics of everyone timely realize -- finally realizing you cannot start at $100 a month or whatever the number is. whatever the number, it's too high for tens of millions of americans or it could be changed with netflix. that's where i think that debate will go. >> host: eliza krigman, time for one more question. >> guest: okay. do you see a follow-up to the over the top video as a complement to traditional cable? >> guest: right now, a complement. the question is what happens longer term?

when i got there, it was a complement, not a substitute. i think that will be driven by economic decisions. i think by the producers, the content creators, the studios how they want distribution to work. it's a very tricky question because they could end up cannibalizing existing revenues, but if they don't cannibalize their own, somebody else might. that's the challenge. >> host: thank you for coming on and bringing an update. we look forward to having you back. ileanaeliza krigman, "politico," thank you. >> guest: thank you so much. >> in a few moments a secretary general and in 40 minutes the commission on wartime contracting in iraq and afghanistan, after that, a discussion of the government's approach to school lunches and dietary guidelines, and later, a

hearing on terrorist groups in pakistan, yemen, and somalia. >> nato secretary general says the two month nato mission in libya will be extended an additional 90 days and he'll encourage more support from ally nations at this week's nato defense minister's meeting. this briefing is a little less than 40 minutes.

>> the secretary general was stopped with a reduction, and we'll be happy to take questions. >> thank you, good afternoon. it is now just over two months since we launched the operation to protect the people of libya under the threat of attack. we have an historic united nations mandate and the contribution of several partners including from the region. together, we have made considerable progress. we have take p the momentum. we turned the tide of terror up leashed by the gadhafi regime. we have saved countless lives, and we have seriously degradeed the ability of the gadhafi regime to attack civilian, and we have relieved the pressure on

cities. the figures speak for themselves. since nato first took action to protect libya's people, we have kept up high operation of tempo with over 10,000 soldiers. we have damaged or destroyed almost 1800 legitimate military targets. that includes around 100 command and control sites which gadhafi used to organize attacks on civilians. it includes over 700 ammunition stores which are used to supply his attacks, and almost 500 tanks, armored perp kneel carriers and rocket launchers at

which he used up discriminantly -- indiscriminantly against his own people. our air crews conducted operations with the utmost care and precision to avoid civilian casualties, and the effect is clear to see. gadhafi has lost his grip over much of the country. every day those closest to him are defecting and desserting, and -- deserting, and his regime is increasingly isolated at home and abroad. thanks to our operation, a growing number of people in libya can return to normal life without facing the daily threat of sheering. aids flows in from the north, the east, and the west, and across libya, people can begin to plan a future founded on

freedom, not on fear. however, gadhafi's regime still poses a threat. last week, the united nations commission of inquiry reported that his forces have committed widespread and systematic war crimes and crimes against humanity including murder, torture, persecution, and sexual abuse. it is an apelling catalog of crimes, and those very same forces are still launching indiscriminant and illegal attacks against cities. that's why we agreed to extend our mission by a further 90

days. we have intensified our military pressure, and we are determined to continue our operation for as long as it takes. our measure to the people of libya is clear. nato and partners are protecting you. our measures to the gadhafi regime is clear. we started this mission, and we will complete it, and our message to the international community is also clear. we committed ourself to implementing the united nations mandate, and we are keeping our commitment. our operation is paving the way for a political solution so that the people of libya can shape their own future. on wednesday, defense ministers

of nato and our contributing partners will take stock of the progress we have made and to look ahead, and i expect us to begin discussing how we prepare for the day after gadhafi goes because that day is coming. gadhafi is part of libya's past. the future belongs to the people of libya. >> translator: this is why we should all plan and prepare for the future. the international community must be prepared to help the libyan people ensure a peaceful and

orderly transition to democracy. let me be clear about one thing. once our mission is completed, i do not expect nato to play a lead role. i'm convinced others have the capabilities and the required expertise to assist with libya's transition following the conflict. the united nations will be in the lead of the transition. nato, however, can play its part. we could support a post-gadhafi

libya in building modern and democratic security forces that will protect the people, not attack them. many allied nations went through similar reforms some two decades ago. we are ready to provide our stance if we are asked to do so. the debate will not end this week, but we do need to start the debates now because the tide has turned against gadhafi, and we all need to prepare for what comes next.

>> ready for your questions. >> and please don't forget to introduce yourselves. we'll start. >> translator: secretary general, you just said that you could not maiming nato playing a dominant role following a cease fire. what do you mean by this? do you mean that it would be the u.p., the after -- u.n., the african union, or anyone else, but nato would provide the controllers, the observers on the ground required for verifying the implementation of a cease fire? >> translator: allow me to underline the following. firstly, it's about the libyan

people, and it is up to them to shape the future of libya, but they are to do so in conversation with the international community and more especially with the united nations, and my answer to your question is this. it is up to the u.n., the european union, and the african union, the arab league too to assist the libyan people. nato will focus on the implementation of the u.n. mandate, then we can assist a democratic government in libya,

and as i've said already, we can provide assistance to a democratic government in libya when it comes to developing the security and defense sectors to gear it towards a more democratic system, but the -- it's on the libyan people to shape the future of the libyan country. >> the jeer mapp press agency. secretary general, two questions if i may. on wednesday evening you are probably going to try and force a consensus on the command structure reform which is an internal, but nevertheless important question.

since you're probably not giving us a look at your proposals to ministers, can you at least say that you are confident to reach an agreement this wednesday evening about the future command structure, and second question, you have deplored on your recently the inability to reach the 2% defense spending target. how worried are you that future operations might not be possible if nato members in their vast majority are not able or not willing to step up to the plate? >> firstly on reforms -- by nature i'm an optimist so i think we can reach an agreement during the defense ministers' meeting. as you will recall, the nato summit in lisbon last year approved a framework for a

reform of our military command structure, a framework according to which we will reduce the number of posts in the military command structure and reduce the number of headquarters, and in addition to that the we're taxed to present a proposal as to how we could locate head jr. quarters geographically. that's exactly what i'm going to do, and hopefully we will achieve consensus and that we will need cop census. -- consensus. it goes without saying that we all know there are national interests at stake, but i base my on optimism on the facts that heads of states and government made an agreement in lisbon, and

it's my clear impression that all governments of all 28 ally ies stick to -- will stick to the agreement we achieved in lisbon last year. on a defense investment, defense spending, yeah, it is, of course, a matter of concern. we have to make sure that allies make the necessary invest wants in military capabilities that are fit for a purpose. on the other hand, we are also faced with economic realities, and during a period of economic austerity, economic defense ministers will have to streamline their budgets, and this is a reason why i have launched a concept that i call

smart defense, the essence of smart defense is to make more efficient use of resources so to speak, get more for less by cooperating by going for more national solutions, and i think that's the only way forward that allies pool and share resources, taking intoing the that individual allies will be faced with difficulties in acquiring expensive military capabilities, but in cooperation with others, they will be able to acquire necessary military capabilities. so my point is there is a way forwards also during a period of economic austerity by

strengthening multinational cooperation. >> coming back to libya operations, i have a question regarding the use of helicopters. will you be asking this week for more nations to provide helicopters, and do you think that their use during the air strikes that are happening now and in the coming days or weeks will be -- they will play a major part in the air strikes or sort of an additional part or what role are they playing in air strikes by nato? >> we are constantly adapting our operation to the evolving situation on the ground, and this is the reason why helicopters are now used in the operation.

in dimmer terms, i will request a broad support for our operation in libya. if possible, increase contributions. if possible, more flexible use of the assets provided for our operation. as regards to the specifics, it's for the military to work out what is actually needed, but i think for the stainability of our operation, it is essential to ensure support for our operation that is as broad as possible. >> mr. secretary general, you said in your remarks today that gadhafi is part of libya's past, and you also gave some figures

on the military assets which have been destroyed now so do you think that june will be a decisive moment? >> i'm not going to guess about the time frame, but what i can see is a clear progress. firstly as i mentioned, we degraded gadhafi's war machine considerably. secondly, we see the opposition advancing in libya. thirdly, we see the regime being more and more isolated every day, and recently the g8, including russia, requested gadhafi to leave power, and as

we -- we have also witnessed a number of defections from his inner circle, and all these elements puts more and more pressure on the gadhafi regime, so it is not a question if, but when he'll have to leave power. >> we go back to the first row. >> yes, from the german press agency. related to the question from my colleague. i think in a recent spheech you said -- speech you said that you were satisfied with the political support from allies to the operation in libya, but you were somehow disappointed by the willingless to commit the necessary resources. can you expand on this and say what is missing? what are you looking for from

allies to give to libya in addition to what is there already? >> yeah, as already mentioned, we have been quite successful in our operation, and the good news is that when i called on allies and partners to contribute more, the foreign ministers meeting in berlin some weeks ago, allies and partners actually stepped up to the plate. they increased their contributions. they allowed more flexible use of the assets, so in that respect, i have been, and i am still very satisfied. now i'm looking to the future. we have, as you know, decided to extent our operation beyond the first 90 days mandate, and

obviously, some of those allies and partners carrying the heavy burden start to ask whether it would be possible to broaden the participation a bit and that's the point i will focus on at defense minister's meeting because i think that's also the essence of our alliance that allies that actually have the necessary as sets at their disposal also contribute those assets as based on the principle of solidarity. >> right here. >> secretary general, you spoke of a falling capital of crimes. does that mean you think mr. gadhafi's future is in the hate? did you support the persecuted to seek arrest or on the contrary, you believe that this

kind of future will only make him speak more to the power? >> yeah, well, but the yiewbted nation -- united nations security counsel already answered your question because it's part of the u.n. security counsel resolution that the acts of the gadhafi regime may amount to crimes against humanity, and we also know that the icc would like to issue arrests warrants so it goes without saying that this is the clear position of the u.n. security counsel. >> dubuc? >> translator: al ger iring's

an -- al lgerian newspaper. the war someday will come to an end -- okay, so i was saying the regime is doomed and operations will come to an end in libya, the problem arising today unfortunately is observers are talking about some large amounts of weapons traveling to the south, especially how it's a risk of instate or a security risk after the end of the war, won't there always be a security risk in libya? doesn't the end of libyan regime automyically also mean that peace may not be secured at the end of the war because of large amounts of weapons that are traveling south wards, and you know al-qaeda is also very

reactive so with this risk of instability taken into account? >> translator: well, let me say this is a risk, and this is why i encouraged the international community to initiate preparation for the post-gadhafi era. we must ensure a peaceful transition towards democracy, and as was already underscored, i cannot imagine a premier role for nato. this is something for the u.n.,

the e.u., and other organizations, international and regional organizations; hence, we have to initiate the preparation without any further adieu. >> npr and other media. i want to turn to afghanistan, please. how concerned are you by reports that the obama administration may be considering a faster draw down than had previously been envisioned related in part to the death of osama bin laden, and how do you cashes their relationship -- characterize their relationship right now between isaf and nato, president karzai, the relationship with the president, thanks. >> first on the question -- actually, i am confident that all decisions to be taken by the

u.s. president will take into account the security situation on the ground, and i feel confident that the u.s. will not take any decision that will have a negative impact on the security situation. we outlined a clear road map for transition to lead afghan responsibility at the nato summit in lisbon last year, and according to that road map, we will start transition to lead afghan responsibility already next month in seven prosinces and districts representing 25% of the afghan population, actually a very significant start of that process, and hopefully, it will be completed by the end of 2014. we speak to that timetable, but obviously during that process or

transition, you will see a gradual change of role that our troops play in afghanistan from combat into support, and you may also see some withdrawals, but such reductions in the troop level will take place in an organized and a coordinated manner according to the principles all 48isaf partners have agreed. i'm not concerned on the cop trair. i think we are on track. i am encouraged by what i saw, and all 48 allyies stick with

the timetable we outlined in lisbon last year, but within that time line, you will, as i said, see a change of the role our troops play in afghanistan. the relationship between isaf and president karzai, i think we have the very best relationship. i had meetings with president karzai when i visited afghanistan a couple of weeks ago, very positive meeting actually where we focused on the future of afghanistan and our future partnership.

that our presence is a prerequisite. >> german television. >> secretary-general, you just pointed out that nato doesn't want to play a major role in the post khaddafi area but can you give us an idea of when the final two when he is arrested or dead, and does that mean that nato is hunting after mafia gadhaffi because the net will be over? just give us an idea what you

are hunting for and when the final curtain falls for nato. >> first let me stress we do not target individuals. we are targeting critical military capabilities that could be used to attack civilians including of course command and control centers that could be used to plan and organize such attacks, but we do not target individuals. having said that, nato allies and partners in doris gadhaffi to step down. you will recall that the international contact group called on gadhaffi to step down. you will recall that the g8 group repeated that it has been endorsed by nato allies and

partners. it's the foreign minister meeting in berlin. you have the mother to retract, and we have defined three very clear military objectives for our operation. first, a complete end to attacks against civilians. second, with a drawl of gadhaffi forces and paramilitary forces and immediate and unhindered human access to people in need in libya, and we will continue our operation until these are met. in a parallel political track for the international manatee has put more and more pressure on gadhaffi and his regime, and

i also think it is hard to imagine a complete end to all attacks against civilians as long as gadhaffi remains in power. so in that respect, you might see a link between the two tracks. the need to track is a military track. we have defined the military objectives and fully implement the u.n. security council resolution no more, no less. >> we have time for two very quick questions. >> defense news. on a smart defense, could you explain if you are going to prevent specific proposals to defense ministers and if you expect any agreement in particular and also how large working with the european defense agency?

>> we have outlined a road map according to which concrete proposals would be resented the to presented to the defense ministers in the meeting in october so what we will do this week is to have a preliminary discussion based on a briefing from the allied commander transformation in norfolk, and we will receive the response from the defense ministers and on the basis of that, we will elaborate more concrete proposals up for approval in october. but on will add to that that is an ongoing project, and i am also working on that project with a view to the nato summit

in may next year because i attach a very strong importance to this project. to my mind, it is the answer to the economic challenges we are faced with. and the second part of your question? >> have you planned to link up with what the european defense agency is doing? >> we have contact with the european defense agency, and it goes without saying that if we are to live the full potential love the national corporation, we also need operation and coordination between nato and the european union. within the european union

defense ministers have launched a project of sharing resources and actually these projects are very much in line with each other and take into account when one countries members are for those organizations, it is common sense to ensure corporation between the two organizations, but as you also know, but corporation must take place within what is called the agreed framework which unfortunately also maintains some restrictions as fort re to help close and intense we can make that, but it's clearly my intention to ensure between nato

and the european union that we avoided waste of taxpayer monies >> they refused a settlement on afghanistan and killed 35 pakistani troops. isn't a lot of sanctions in pakistan society is it d'alemberte to just put more heat on pakistan to cooperate? >> not in the way you described it, it's not to put more heat on pakistan to cooperate, but it goes without saying that we need a positive engagement with pakistan if we are to resolve problems in afghanistan.

the cross border activity is a matter of concern, and of course it is not acceptable to have sanctuaries just across the border from which the enemies of afghanistan can launch their attacks on international troops as well as on the afghan people. and to that end, we need a close cooperation between afghanistan and pakistan and between i -- isaf and pakistan. i think there is a potential for even closer cooperation. >> thank you very much. i'm afraid we've run out of time. hope to seal all wednesday at the meeting of the defense ministers.

>> the commission on wartime contract in in iraq and afghanistan was created by congress to find waste, fraud, abuse and mismanagement of u.s. contracts in those countries. the panel is scheduled to deliver its final report to congress next month. at today's commission meeting, undersecretary of state patrick kennedy said the state department will be ready for the

plan october 1st handover of responsibilities in iraq. this is two and a half hours. >> good morning. i am christopher shays, co-chairman of the commissioner on a wartime contacting in iraq and afghanistan. the other commissioners are my fellow co-chair commissioners clark tener flem, robert hendee, charles t. fer. today's hearing focuses on department of state contracting and u.s. contingency operations like those in iraq and afghanistan. the commission is interested in three major topics. first, the department of state response to the commission's report to congress. second, the treatment of contingency contract in in the most recent squadron heels the diplomacy reva development review and third and final,

transition issues and iraq and afghanistan. the commissioners may of course raise additional issues as the question period unfolds. 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 on many issues that concern this commission. we appreciate the informed and helpful testimony he has provided another appearances before the panel and welcome him back. we also appreciate his informal response is to work as well. before we hear the investor kennedy's testimony, i will comment briefly on our three main areas of interest. first, it's the state department's response to the request for comment on recommendations in our february, 2011 second interim report to congress. that report called at what risk

correcting the over reliance on contractors and operations made 32 recommendations for statutory, policy or administrative changes. at our request the department of state provided responses to the items that would affect it. we appreciate that. to be candid however, we saw some of the responses while others struck us as logically dubious. for example, we think the departments resistance to our recommendations for permanent government white inspector general for contingency operations did not pay dueled regard to the interagency two dimensions of these operations, or to the drawbacks that setting up special i she shops after boots have already hit the ground. as experience in iraq and afghanistan has shown a great deal of waste, fraud and abuse can happen if oversight isn't deployed along with the troops to platts and reconstruction officials.

the state also disregard -- disagreed with our recommendation that suspension and debarment officials documents the rationale for not taking action against the contractor official recommended for suspension or debarment. states response said that would be a burden. a burden? that response approaches the borderline of the government negligence toomas to read as cognizant oversight officials have recommended that a contractor be suspended or barred from receiving taxpayer 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 ignored that recommendation. our second main topic is the treatment of contingency contracting and the state department quadrennial diplomacy development review which includes operations of the u.s. agency for international development. to its credit, the department

notes in the tvd are that contract and has real benefits for the government. but it's often been the default option, a term we also used to work around agency staffing and budget constraints. the que dvr calls for rebuilding the core capabilities in critical areas creating more competition in contracting and strengthening the contract oversight and accountability. these are all truly excellent points. we might also note that the department of state has given contracting broad public print than the department of defense displayed in their most recent quadrennial defense review, the qdr. none the less we hope to continue in early discussion on the qddr to judge whether it gives appropriate weight to the importance of contracting to the mission's success and to the need for the good stewardship of tax payers' dollars.

that thought leads to the third main topic, the defense to state transition in iraq and afghanistan. concerns about the planning timeliness, resources and risks of those transitions has figured in the previous hearings and in two 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 1st of this year, the state will take over responsibility for the u.s. presence in iraq as u.s. troop strength droll's down to essentially zero by december 31st, 2011. we have noted that this transition requires the state to econ or contract for hundreds of functions ranging from medical care and air transport to construction and pest control all of which expands its presence to post 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 that, quote, several key decisions have now been made. some plans cannot be finalized and progress is slipping a number of areas. viag 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 helped by the new office of the iraq transition coordinator. the state department of ag also says 5,405 projects valued at 15 billion have been transferred to iraq but with security concerns and poor contract performance being major hindrances to project completion. those are the quotes from the

report. the ig report underscores the concern featured in this commission's special report and sustainability risked and that we released friday morning quoting the ig investor officials noted that dillinger of getting local and provincial governments and the government of iraq ministries to readily assume responsibility for some transferred projects, and of quote read as we have said repeatedly, even the best u.s. funded projects can turn into waste if the government doesn't have the money come supply commit trained staff or the will to sustain it. so we will certainly talk about these issues with the ambassador kennedy. we are also interested in and will explore planned an ongoing contract awards and related oversight. these awards are the core of the commission's responsibility. questions are being misconstrued as lack of appreciation for the

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 get asked the state to conduct extensive diplomatic development and reconstruction operations in countries where governments cannot provide effective customary security. there are no front lines, and terrorist organizations are trying to kill our people and anyone who works with them or cooperates with them. we truly appreciate the dedication and encourage the state department people who served in iraq and afghanistan and have nothing but the highest respect for them. we want to ensure that the contingency contract in vital to their work is being conducted in ways that supports the state mission while economizing the use of taxpayers' money. we've asked the ambassador kennedy to offer a ten minute summary of his testimony before

we move on to questions from the commissioners. the test of the ambassador's written statement will be entered into the record and posted on the commission's website. we also ask that the ambassador provide within 15 business days response as to any questions for the record and any additional information he may offer to share. investor now if you would rise and we swear you mean as we swear and all of our witnesses. raise your right hand, do you solemnly swear and affirm the testimony 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 responded in the affirmative, and ambassador and commission members, will come today. >> thank you for a much command structure and, fellow members of the commission. your time and as the department has been planning for and of planting a robust civilian presence in iraq for over two years. it's occurred since

september 2009 when i last appeared before you. i will focus on the current status of contacting efforts in iraq as your invitation requested about an hour lessons learned also apply to afghanistan. as you noted, we have submitted a written response to each of your for regarding use of contractors as the military drawdown in iraq and state increases civilian presence we are relying on contractors for certain functions which are not inherently governmental. we use contractors for both routine and contingency operations when it makes sense and is cost-effective as opposed to building a permanent u.s. government direct staff to read our iraq contracting strategy addresses life support, security, transportation facilities to read as security improves we will transition to a more traditional mode of operation. we've already begun this effort where 62% from a static and guards are local nationals.

the department experience continues 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 a administration. this model was most effective in supporting contingency situations during natural disasters like haiti in japan as well as ongoing stabilization reconstruction as iraq and afghanistan. based on our experience, state doesn't see the need for a separate contingency office. we deploy our experience contracting resources as necessary and our working capital fund allows us to surgeon to dedicate resources to the specific contingency operations as required. we agree with the commission observation the program offices need to plan effectively for contract and officers representatives. the state also agrees the contracting officer should consistently enter past performance information into the

federal database which will prevent the words to the firms haven't performed well. however we do not believe certifying the database to use is necessary. timely input and candid performance assessments for all contractors will suffice. your interim report noted the training is not standardized across the agencies for contingency acquisitions workforce and the defense acquisition university recently develops the contingency related contracting courses. states foreign service institute and procurement executive are offering development court mission support planning to see if the content is useful to the department and by routinely offering several other courses both on campus and via distance learning on contracting. mindful of the valuable insights we have received for the commission of their entities we are taking additional measures to ensure proper u.s. management over the increased number of contractors. force-iraq our primary contracting team is located in

washington drawing on the headquarters expertise and in iraq there are multiple levels of technical oversight depending upon the contract and complexity. since we charge the bureau a 1% fee for all contracting services, we have the resources to surge and a tired 102 additional staff. the private security contractors to protect our diplomats and high risk environment perform any central a legitimate function that enables american diplomacy to be conducted where it is most needed. as under secretary, i worked to enhance the state oversight. diplomatic security is further developed its plan for oversight and operational control of the personnel. for the world wide protective services contract has increased staffing to more than 200 direct hire personnel to ensure contract compliance of approximately 5,000 contractors. the key elements of the plans are outlined in my written

testimony, so why only note briefly that on lessons learned we believe it enhances professionalism and operational controls to provide greater cultural sensitivity achieves grade contract efficiencies. the state has also been working on improving legal accountability. we strongly support enacting easily exterritorial judicial jurisdiction act to expand extraterritorial jurisdiction over federal employees and contractors operating overseas as well as a document and the international code of conduct for private security service providers. in december, 2010, secretary clinton issued the inaugural qddr aaa and elevating the sicilian power to advance the national security and better partner with the u.s. military. the qddr sets out for outcomes for the state in the u.s. aid. one of these is working smarter to deliver results for the american people. using the qdr blueprint which

have begun hands on implementation. in early 2011, we issued department notices reminding the staff of work elements for the cor and gtm and critical work elements for supervisors to include in those employees performance plans. we launched a skill based cor in may 2011 that brought also adopted the certification contracting officer represented requirements for initial and continuous training and contract at fenestration. as part of this process, we institute a requirement for the assistant secretary of any bureau with a service contract exceeding 25 million per year, certified that adequate contract administration resources had been identified to manage the contract to our iraq funding was reduced below the request in 2011, but we have been able to meet the critical operational needs by deleting the selected contract and through the judicious use of funds from

prior years. funding for afghanistan is also reduced because the cicilline platform there is relatively stable, the current funding levels we will be sufficient to cover the operations for the year's end. our military drawdown in iraq is critical in our transition to supporting an iraq that is sovereign, stable as self-reliant. we are working to achieve the strategic long-term partnership between the united states and iraq. state and defense have been collaborating at unprecedented levels for more than two years in washington and iraq. we are making very good progress. the 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 you 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. secure, all u.s. personnel and

contractors in iraq will be under the chief mission of 40 and security arrangements have been worked out between the state and the dod. on september 29, 2010, the state announced the award of a base contract for world wide protective services to eight companies. task orders are being competed among the basic contract awardees and awarded on the best value basis thanks to the assistance of the commission. awarding multiple companies that are offering increased competition for the task order thereby controlling costs and providing increased capacity to perform crucial security services and contingency environments. it also gives the u.s. government timely options and even to the company failing to perform. several test orders for the static and movement security had already been awarded including separate static guard movement security task orders for in the c. baghdad, task order for static and movement security in basra and movement security at embassy kabul. to the maximum extent possible,

we are repurchasing existing dod infrastructure property for each of our sites. we've let numerous as of these, contracts in iraq, the status of those efforts is outlined in my written testimony. on medical contract was awarded for iraq on may 15th. we are leveraging the dod resources and theater where the dod has superior capabilities. an example was all cap iv which is attested support mechanism. use on an interim basis is giving states the time to solicit it's on life support contract to be another example is the use of the defense logistics agency food and fuel contract. also for gmt we are supplementing their oversight with subject matter from dod and discussing a deploy contingency staff of the defense contract management agency to read diplomatic security is founded in a surge to devotee which provides a temporary increase in the polygraph operators, investigative assistance and interpreters. this will aid in more rapid

betting life-support contractors required for the transition. with regard to the state and defense cooperation on equipment, the joint dod state board is identified more than 3,769 individual pieces of equipment worth approximately $209 million to be given access, sold or loaned to the steve including medical, i.t. come serial port and fuel support by a metric input as well as 60 mraps. they will allow biometric confirmation of identity through a dod database, state department security officers can verify the employee identity in that prospective employees. ..

>> the department is taken 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 is further strengthened our oversight of contractors, particularly pfc's. we fully understand that we will have challenges ahead as we carry out a pipmatic mission in iraq, afghanistan, and other locations where we rely on contingency contracting, but we instituted a sound foundation to

carry us forward. thank you for vieferredding me this opportunity to testify and for your ongoing support for the department of state. i'll be pleased to take any questions you might have. thank you. >> thank you very much, ambassador. we'll have you out of here at eleven o'clock. we appreciate you spending time with us, and we're going to begin questions. we'll start with eight minute questions starting with my chair, mr. tebow. >> thank you, mr. ambassador kennedy for coming up here. i want to make a statement that your department has been exceptionally responsive. it's not a perfect world, and we follow-up on different things but for the record every time we needed information, you've been responsive, at least from my perspective. i thank you for that. i'm going to bounce around a

bit. i'm a contracting guy, so i'll be interested mostly in contracting, 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 -- end of 11, start at 12? >> end of 11. >> okay. here's my point, and maybe you intend to do it or maybe it's something you ought to think about. the part is plan and execute. the staff needs to be in place. you need to plan how you utilize the staff, and then execute and

effective in getting the job done. you can have a secretary say i found the resources, and from my take maybe that assistant seg tear at the end of the period should put his reputation on the line saying i have an adequate plan for it and i certify that, and it's been executed effectively. what hasn't been executed effectively, # is that something you intend to do or just certify resources? >> it is our intention to add this to the annual certification that every deputy secretary of state submits to the secretary with intent of certifying -- >> so it's accurate then you intend to include the plan and execute effectively part of that also, and not just -- i found the $4.2 million budget figure or something like that? >> no, absolutely. our intention is to ensure this is a soup to nuts process. >> okay. i'd like to talk briefly about

simpson morn, the early alert system. >> i'll have to get you that, i don't have that off the top of my head. it's a dod contract we are writing, mr. chairman. >> okay. okay, so -- >> since dod has the expertise and they loan the equipment to us for our use after they leave, they have a contract that they executed, and we thought it made perfect sense for us to ride their contract. >> you're going to work with the considerater on that contract and you're work with them on traditional contracting methods? >> yes, sir. >> and when we were recently in afghanistan, some -- and this was not a sizable base, but it

might fit your counsel. it looked like large equipment, like a tennis racket with an end on it. it's what allowed, and we had a couple episodes at that base where they have a protocol for when something's coming in, but it -- it -- one round came in, and you ask them, do you ever get more than one round, and say say no because our counter battery is on them like the kickens, and i know when we were here before with various state people, there was a question about counterbattery, and at that time, it was that maybe you'd didn't see it in your mission. i'm looking for clarification. is there a counter battery process envisioned? >> no, sir. the state department does not envision themselves as firing

155 millimeters back at targets. we will -- we have established tight relationships which we continue to expand with the iraqi police service and the iraqi army, and we are -- >> all right -- >> and have them -- >> you've said that before, but you've -- your statement says and that october 1 you assumed full responsibility, and them the united states military is scheduled to be out of there totally other than foreign military sales by the 31st of december. i'll just tell you i continue to find that troublesome because every instance when i've talked to the military that run this very effectively, the united states military, principally the army, they stated the reason they only get one round is because the bad guys know there's going to be a magnitude of force on their head immediately, and they have

visual after visual of how they do that, so i'm just making a statement. 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 administration and audit? is this something you're comfortable with? the level it's presently scheduled and planned for? >> we are in discussions with the defense contract audit agency for deploying a unit of their personnel forward. we use defense contract agency audit agency, personnel extensively. the answer to that is i believe it is true, but everything comes into the -- >> okay. okay. i want to lay that ground work out -- >> i if might, mr. chairman, we have $10 million committed this year, this fiscal year --

>> and obviously -- >> for their assistance. >> i'm 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 the costs flowing through you know and do flow through you are audited by dcaa, and it's critical on two things, do they get an adequate submission, and do they do the audit it is timely? are you aware in the case of the last year that dcaa completed an audit was 2004. are you aware that at kbr log cap, the last year they completed an audit was 2003. are you aware triple canopy they have yet to complete a year of up curred costs? now, yes or no?

>> i am certainly aware that dcaa has not executed every request on a timely basis. >> okay, okay. i know you working with them. you said that, but then i would say are you aware that picking those same three contractors, that dine corp. submitted, you know, done their part according to dcaa for those years that are open. you know, we're talking five, six, seven, eight, nine, ten, a lot of open years with billions and billions of dollars with historically there have been audit results, but i would say then are you aware that kbr recently, they had their certifications on hand, and they were on paper or on the view adequate submissions, but they've withdrawn 2006, 2007, 2008, 2009 because in their words, they want to relook at

built expenses and cost accounting practices, but in the company's quote to dcaa, they need to amend previous expense assumptions. now, those are a lot of words, but to an auditor, it means they are concerned they have unallowable costs. they pulled them back 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. they are feverishly working on it. the entire point on that is it's of the highest risk possible, and in my second round, i'll be exploring more of that. >> thank you, mr. chairman, and thank you mr. ambassador. i start by noting how much i

want the leadership in creating the research in investigative machinery. excuse my nostalgia, but i would not have believed when we started our first hearing with a good deal of state department, which has come true that we've had over 20 successful major televised hearings. he built the machinery. mr. ambassador, i have heard that the state department's bureau of resource management is demanding repayment of a large sum from dyne corp.. let me state the background. they are been conducting police training on a state department contracting in iraq from the years 2004, figure went back and

conducted last year this audit showing the lack of proper support documentation. the sum i have heard that for which repayment is being demanded is $518 million, but i would defer and say it has been many years we have been waiting. has state finally demanded repayment of the sums certain from dyne corp. for iraq police training? >> i mean, i have a two-part answer to that mr. tiefer. we also picked up from bloomberg news service this $518 million figure supposedly cited to the state department. we queried every senior official we can find. we have no idea where that figure has come from, none whatsoever. we are continuing to pursue that. that's the first point. i have no idea what that figure means. >> all right. >> the second thing is that inl

has been conducting 100% reconciliation of all iraq related up -- invoices going back prior to 2006. they collected over $40 million, actually $40.8 million related to invoices with an outstanding request for another -- the $37.9 million, and also inl's review of afghan and iraq contractor support services resulted in over $109 million in reduced billings so this goes i believe to the point you're making and also to mr. tiebot's point as well. >> let me understand the figures you gave. you have a demand now for $37.#

million with a separate $109 million reduced billing? >> yes. >> okay. >> we are actively engaged. we have -- the state department ig as i think some on this commission would know does not have a large audit staff, and we use entities such as dcaa extensively, and we'll continue to use them. >> okay. let me go on. i don't blame bloomberg for running that report. what i count is there's close to $200 million which either dyne is being told not to bill or is in the process, $200 million is not as much as one hoped out of a question $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 is a sum certain, and my question is, and then i'll explained

background. will you commit to publicly announcing this month a demand for recovery from first kuwait 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 come popped in baghdad. state ig said to recover precisely, their figure, $132 million from kuwait. i have not seen the public announcement of one step to recover $1 million, but what i have seen is the state continues to hand out contracts to first wiew wait, and just a couple weeks ago, and this is barely detected yet, not in any print newspaper, about the $122 million consulate in saudi arabia, and first kuwait had the

contract and the american partner blew the whys m on them. it tells a lot of things about their lack of competence and reminded, this is a quote from aurora's statement, and there's taxpayers felt they were out of $132 million. will you commit to publicly announcing concrete steps to recovering the $132 million. >> you've asked me two questions. i'll take the second one first. we have no contracts with first kuwait 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 walsh international which sold those contracts back to the american company. it is correct that first kuwaiti

is a subcontractor of aurora, but we have no contracts with first kuwaiti. that is simply factually incorrects. our contract is with an american company. the contract in indonesia is about the -- >> i didn't mention anything about end knee stha. >> can i finish my answer to your question, sir? >> 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 break down 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 asked for them. i promise you we will continue to ask for them. >> this question may well have to go into my second round, but i want to ask about a challenge to figures jurisdiction. the "washington times" headlined on page one your notion that lacks jury diction congress' funds for getting iraq on their feet like police training, like what we were just discussing which i'm glad to hear you have already gone after $200 million worth. that also includes rule of law, services, private security for all of these, ect., ect.. a whole lot of money that is not brick and mortar. my question is 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 transscript to that testimony, but i was asked a very similar question by the house government affairs committee, and let me tell you, my answer to that question. that is -- that is that the legislation underpipping figure is very, very specific. it relates to reconstruction efforts. we have been fully cooperating over the years with them. the latest request as i understand it, it was the request forwarded to me in this regard. i don't know how it was phrased to ambassador as i said. 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 and wish to inspect an awe zit of diplomatic security or the medical contract, our award of a contract for construction. we believe that that is outside the state's department legal adviser has so advised me that's incorrect. those activities of the state department operating the platform, not the contracts for reconstruction or police training, but the base contract, the base platform contract are within the jurisdiction of the general accountability office, house surveys and investigation committee, and the state department inspector general. they divide 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 questioning. >> ambassador kennedy, good morning, and thank you for being here. i have a question related to the organizational or structural issue. one. 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 -- the issue we're trying to get at there is that is the organization noel 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. it's up a big bid over fiscal 2009. in -- 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 and set aside recommendation for 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 that handles acquisition reports to the assistance secretary for administration? >> that is correct, sir. >> and it's led by mr. moiser who is here today? >> yes. >> he is the acting assistant secretary, yes, sir. >> as well as the permanent deputy assistant secretary? >> he's been nominated by the president for an ambassadorship and departs shortly. the new assistant secretary for administration nominee has always been announced by the president. >> okay. the -- you may know that the

congress passed a low in 2003, the services acquisition reform act that creates the title of chief acquisition officer at an agency. we had chief financial officers for 20 years, chief information officers for probably 15 years or so, and as recently as 2003, chief acquisition officers. the law directs this that person must be a non-career employee as the chief acquisition officer and must have as their primary duty acquisition. are you currently structured that way that your chief acquisition officer has as his primary duty acquisition? >> if one defines primary as the per pond rains, i think so. the secretary for administration is an executive level presidential appointee that supervises three units, but i think acquisitions it in part of

our lo logistics operations is a part of that. yes, sir, it would meet per ponderance. >> i'm not sure i agree. i see supply, transportation, mail services, diplomatic pouches, lie bare services, foya, a bundle of different duties. it's hard for me to see there where the tans secretary for acquisition 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 would ask 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 the administration, count on a professional staff that is sufficient to handle $7-$8 billion in material as you said. in 2007, shortly after i cam 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 acquisition office to keep up with the volume. we'd gone from about 2 billion in contracting to almost eight with nearly no staff. >> okay. >> i changed the operating procedures in the department and placed our acquisitions department administration under our work capital. >> 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 have been able to fund an additional 100 personnel in the completed an acquisitions office, and so i believe now we have an adequate acquisition core of professionals which we continue to develop, and that core can provide the assistance secretary, the chief acquisition officer with the support they need and to allow them to do their job. >> in my mind, that makes sense because when a program office, inl or ds has a multibillion dollar requirement, you can scale up to do it; right? you can hire staff to run it 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 out with program managers and cores. now, they don't operate under a working capital fund; right? >> they don't, they don't.

however, it is appropriate for them to oversee those activities. the chief acquisitions officer is not responsible for that portion of program administration. contract, certain elements that are also described as contract management, contract oversight, contract close out, we now have the resources to make sure that we can do that as well as the audit in question that both koa-chairman and mr. tiefer referred to. >> one thing we've seen time and time again is when agencies put precious slots against a function, it's an indicator of what the agency tends to values. just a run down on your numbers, ambassador kennedy. you have a approximately 9 # ,000 people? -- 9400 people roughly 1234 >> i believe that's a little high.

>> how many people work for you roughly? >> well, counting -- i'm sorry, counting all the counselor officers overseas and the passports, it comes to 9400, yes, sir. >> you have approximately 206 senior executive positions? >> at the state department. >> no, in your office, i'm told it's 206, senior executive and senior foreign service. my question is how many senior executives are working in acquisition? >> we have two. >> two, does that include -- >> you're asking for direct, and i'm saying two. >> and that's -- i know both of them, they testified before us. >> yes, correct, sir. >> so is that the right number? if you have nm206 senior executive positions, is two the right number? >> i believe that with the

performance and the quality of the personnel and acquisition office, the leadership is there. the leadership though needs to be supported by an adequately trained and adequately funded work force, and because of the implementation of the working capital fund, we have moved in that regard, yes, sir. i believe that two is a good number. could it be three or four? i think can could be, but i believe with the package of support, there other entities that support that acquisition office which when you look at another agency with a stand alone office, they have their own legal. there's an officer in the bureau, a senior executive service lawyer in the office of the legal adviser who supports

that office. we, at the state department, put our lawyers in one legal shop and divide them under legal advisers at the senior executive level, and there's one who supports the 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. >> 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 very encouraged to see the secretary put together the development and diplomacy review plan. i think it's long overdo. i know it was a really papeful process, but i think it will bear fruit, but i'm wondering what already has been done as a result of that? we had u.s. agency for international development before us, and they have started taking

action on some of the things of procurement reform. they are very much interested in continuous improvement and goodness knows they have problem with their contracting, but they are looking at the need for change. you know, in contrast, when i look at your statement, and i look at the state department responses to our recommendation, there doesn't seem to be any recognition that things in iraq and afghanistan are any different. you know, in fact, comparing the model you have as effective inefficient that operates in haiti and japan strikes me a little different than what the state department and the u.s. is facing in iraq and afghanistan so for fy12, the state department requested over $3 billion for diplomatic and consulate programs in iraq. is there any comparable to that anywhere else in the world that

you're operating? no? >> only afghanistan comes close. >> okay, and we're going to have 4500 contractors in iraq putting aside afghanistan? anything comparable to that? >> only in afghanistan. >> going from 8,000-17,000 civilians in a couple years, anything comparable to that? >> well, that's double counting, ma'am. >> there's different ways to come at what i think -- >> the 17,000 represents the aggregate of the other numbers you used. >> i understand that, but more than doubling is what that was supposed to get to. you know, those things, $61 billion reconstruction program in iraq, those numbers seem to be very different than anything the state department is doing putting aside afghanistan for a moment. when i look at the things you are trying to hold on to, work in the past, i just don't understand why the difference

suspect more significant -- isn't more significant than the similarities to you, so i wanted to ask you just a couple questions about from your statement, the contracts that you have left for the transition in iraq. the consulate, some construction contract you list. is there a contracting representative aassigned to that contract? >> yes, ma'am. >> they are forward located then? >> yeah, all of our cor's are forwardly located. >> do you know what their training is? >> they are -- they take a course at the foreign service institute, and they -- they are professional architects or engineers. >> this four in particular had the training? >> i will confirm that in writing to you, but that's part of the requirement for foreign service. >> right. i'm trying to get to whether or not practice is reflecting policy here. is there a quality assurance plan? >> there is that, yes, ma'am.

>> same for the aviation hub? >> yes. >> what kind of training have they had? >> i believe the corp. for the aviation hub is the same. the hub and the bosra activity are about less than a kilometer apart. it is one -- there's two contracts because of the different nature of the work, but there is one project supervisor on scene to do both. >> okay. what i want to do rather than running through all of that, if you can supply that for the record whether there's a contracting officer represented and whether or not they have received their required training, where they are located, and whether or not there's a quality assurance plan. those are all requirements for corp.s that i know you're working towards, but i'm interested in seeing how many are assigned. >> you talked about the qddr and the need for change, and can i respond to that question as well? >> let me get through rest of my questions, and if i have time --

>> let me say something, if you want to stay beyond eleven o'clock -- >> i'll stay beyond. >> we won't take that off your time. if he wanted to do it, the point is it's not off your time, and he will stay later. >> i see the 4:16 is frozen on my clock, ma'am. >> thank you. >> the secretary is very, very concerned and interested in the question of contracting the administration. i think if you, you know, if one looked at all the issues that the secretary of state faces in the world to devote 10 pages out of a 200 page document to contracting administration, i think sets the tone -- >> as do i. that's why i made that comment to start. >> yeah, second thing though, and you asked what have we done

since the secretary's statement? i said we elevated the status of contract oversight personnel. we have linked oversight duties specificically to the performance evaluation of those officers. we have expanded training and elevated the accountability for the planning of large contracts. i can go a long period of time into there, but i believe there's more detail in my full statement. the second thing you said is that we're trying to -- in effect, trying to hold on to the past. i want to take a second of time, it would be a commission acquiescence. when you have a world wide effort such as the state department must engage in, we believe that the way to do that is to take and award master contracts in washington that can be fully and openly competed and

then have their task orders available. the best is the worldwide protective services contract. we can go and have a contingency contract awarded for security or a contingency contract awarded, but i don't think that makes good economic sense, management sense, and i don't think it's 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 his former position. every day the world changes requiring us to act differently. if i had to award a contradict 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 and additional funding, we can respond urgently to any price -- 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 as well noted? absolutely positively, but i don't submit we're frozen in the past. the use of the master contracts

we've done in many fields is exactly way we need to do to respond to urgent and continued operations. >> yes? >> you have five minutes, an extra minute there. >> thank you. it's not the worldwide contract on which to award task orders i'm talking about. i'm interested in how you set requirements, how responsive is a centralized bureaucracy, not just theoretically, but how responsive have they been to the embassy in baghdad, and my information from interviews and direct discussion is not responsive enough, all right, so obviously there's going to be a difference of opinion there, but aqm is really not aware of the or urgency and you are operating in continuous operations around the world, but there is not -- chairman mentioned the simpson

warren, well, maybe we can get the department of defense to look at it. i would -- the contract asked for 20cor's to manage that contract, and the department said we can provide six, and the department of defense is now saying, well, with six, you're not going to get -- we're not going to let you take log cap because it needs for oversight than that. you mentioned the m wrap that rock island is going to sustain that. who is setting the requirements? how don't buy them. you need drivers, you need to stean them and 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 sort of old-time approach to how contracts gets done. >> ma'am, i guess i just have to respectively disagree. you've given a couple examples. i will, for the sake of time,

pick the first and last one. on simpson-warren, we've gone to dod. they loan us the qiement, and we are writing their contract for the operations and maintenance of that equipment. i think that shows excellent contingency operations. i don't see that it receivers the american taxpayer one to spend a lot of men to compete a contract which dod already competed to run -- >> i'm not talking about recompeting the contract, but how do you oversee the contractors, how do you manage it, how do you get the support for it? the state department has to be involved in that. >> that is the responsibility of the diplomatic security service professionals that are on scene to oversea the operations of the contractors. those personnel are on scene. on the mraps, we have been loaned 60mraps by the department of defense, the diplomatic

security service will oversee their operation. it will oversee the maintenance of those vehicles. we are writing again a contract through rock island arsenal because the department of defense has 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 cape that equipment operating and available for use, and so we believe we have the personnel and that -- what you're talking -- when you talk about contracting, there's the contracting, and then there is obviously the administration of the contract, and soic that we have -- and so i believe we have both focus, both items in a tight focus. we have meetings every week -- >> i'm talking about the requirements too, ambassador kennedy. contracting is the process. >> commissioner, can i add a little bit to that?

>> part of the context of what commissioner is 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 -- the contractors help, but 100% of the drivers, and then those individuals, we call them a squad in the military, six to 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 requirement planning in contracting, and the reason i bring that up, ambassador because you talked about operations in maintenance. i'm not sure you're spot on on the operations. i know you are on the maintenance. >> let me address that portion

of it, mr. chairman -- commissioner. using the mrap as an example. we have built into the contract a training unit meaning an mrap that behaves as a simulator. we have a mod embassy there, the model is being upgraded. every security person involved in the operation and use of those mraps will be run through that simulator to ensure that they know how 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? >> no, sir. >> you can't run if you're under fire. >> no, that is exactly we're what we're going to do and that's the point i want to make. there's a difference tween the ignition of the u.s. military and the mission of the state department. the mission of the united states military is to engaming the enemy. the mission -- >> ambassador kennedy, but chairman has taken my time, and that was his question so i'm going to stop you 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 and go back to the business as usual idea again in dwrr statement. you talk about, you know on an ad hoc basis pulling together the resources you need. i was reading the state ig report from october 2009 about the new embassy compound last night and clearly the coordination office 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 is responsible for a lot of the problems in the baghdad embassy. >> that was a model set up by the then existing director that is not a model that had ever been used for. it was implemented along military leans, and at that -- that model is no longer used in the state department. it was used once on the baghdad project, and it was discarded by me when i became undersecretary. >> right. i worry a little bit when you talk about the ability, keep what you have, and then we'll put something together when the need arises. this is what happens when you put something together. i worry about that happening again without constitutionalizing some stronger work force procedures, rules, and regulations on how to handle it. >> i think what you're missing, ma'am, is the experience and the

value of the centralized contracting authority that has worldwide expertise and that appropriately staffed in order to get the job done. >> but the expertise we need in iraq and afghanistan, as you agreed with my statistics is a little bit different than what the state department has een countered elsewhere in operations. >> i disagree though -- >> that's the end of my time. >> i disagreed on the contract, and disagreed respectfully on the contracting structure that i believe with the master contracts we set up, we are responsive. >> you know, there's more discussion about this because i think we do have some major disagreement. >> certainly. >> let us move forward. >> thank you very much, and good to see you, mr. ambassador. you've been doing a terrific job since we worked together a few years ago. >> thank you, sir. >> you show the scars which is great and good for the country. let me ask you about a couple

state department responses to some of our recommendations, specifically 6a and 26b. these involve foreign prime contractors and subcontractors, and we recommended these folks consent to u.s. jury diction as an award. 26b is less relevant to my question. your answer was or state's answer was this requirement will add costs to foreign contracts without offsetting benefits. i don't know if you want to expand on that or if i can go on? >> i'd be glad to go into that or at the end, i can submit additional material for the record. it's your choice. >> okay, let me pursue this, and may believe you can wrap it all together. your testimony says that for the log cap contract, your essentially an interim basis using dod's log cap, and they give you 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 that i've heard about for some time and it's 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 living in barb wired compounds by u.s. bases and are financed by american taxpayers who operate outside the law. they are called third country nationals or tcn's and many talk about being robbed of wages, objected to sexual assault, and held in conditions and there's

been food riots over there. 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 subcontract res, by foreign contractors that they are not going to do this kind of stuff and state's answer was well, it's adding costs without offsetting benefits. to me, it's a huge benefit if the world sees we've cleaned up our act. can you talk about this? what you intend to do something differently? this is a major scandal for the united states. >> two points, sirs. first of all, 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 three

contract in use in iraq included maintenance and other things. we have competitively awarded our own contract. >> but your next sentence says free food and fuel. >> well, that's just using as you well know from your previous up carnation taking advantage of the incredible buys 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 any time because of the cost benefit there. setting those aside because they 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,

are only awarded to an american company. we would not allow contracts to a foreign company. >> what about subs? >> we write into that contract, we do, and i believe dod does as well, the adherence and lay upon and privity of contract and 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. i think that gives us the best choke hold on that to ensure that any employee working in support of u.s. government activities is treated appropriately. we have looked into some of the acquisitions. the state department, inspector general looked into them, the state department medical on scene looked into them, the

regional security officer looked at them, and i testified before, i think, house government affairs on this as well, and i'll be glad to send you a copy of my testimony in that if you wish so we below that we can een force through those -- enforce through those methods the situation that upholds the dig dignity and standards of the united states holds dear by holding that on 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 insisted by our medical staff, our logistic staff, or our security staff. >> all i can say is obviously it has not worked until now by definition because if, in fact, as we know the defense

department in particular put it on the primes, and the contracts out to subs who may contract out to second subs, and these things are happening, 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 about this with you, but i urge you to look at this again because clearly it has not worked. if it was as you described it, this would put it -- choke the primes, and then these thoughts 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 state department fully takes 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 log cap, but under another contractor who employees third country nationals living on our come popped and have been there for i believe over a year, same dining difficult, medical, everything else, and there's none of the problems that you have outlined when we are 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. a quick question as well. we made a recommendation that the dual hat at the nfc and omb, and in order to foster and

really enforce the interagency contingency process. you said, this is in our -- you know, we don't have a dog in this fight. this is nothing for us to respond to, and i'm pows led by that because -- 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, we 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 also to a great extent, the omb, will not engage in these. they do not feel it's within their statutory mandate. omb at most will lay down predicates, audit standards, fiscal standards, but they -- neither of those agencies feel that 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 irvin, 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 starting with, but it seems to me there's a few issues left

hanging from various exchanges you had with my colleagues, and they will probably follow-up too. on this last exchange about this very disturbing new yorker article, you said that, if i understand you correctly, that the medical staff looked into allegations that the office of inspector general, and i think you mentioned another officer too perhaps with the the state department that had done so. the next is what happened as a result of those investigations? were these allegations or anything sub stanuated by the medical staff? >> we were unable to identify actions of the 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 up vest gageses today -- investigations today do not identify activities of this

nature taking place against third country nationals in entities directly supported the department of state, sir. >> all right, this is a very important issue as was said, and we intend, i think i speak for the commission, and i intend to follow-up on this in the time that remains to us as a commission. i think it's tremendously important, and i hope at least at the state department, there's nothing further to be reported here. ..

what something like that because for revoking a contract? >> if the contract was within 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 contractors and i would first demand that the american contractor would remove from any activity to us their entire american management team >> with regards to the first issue that came up in your colloquy with mr. tiefer, you said that the office of inspector general to look into those allegations $132 million as understand and dispute and you can't send a letter demanding payment, that's certainly reasonable, but i am surprised the office of inspector general apparently has

no response. he made the request and they are refusing to provide the detail? >> i wouldn't say they are refusing. would we just have not completed whatever work they were doing. i intend to take the question back and oppose it again to the office of the inspector general and say that this is a question i received from one of the commissioners of the contracting and it is i think it is a fair question for us to ask and it's a fair question to know that there is information that backs up the 132 million or it doesn't. the building has now been in operation for multiple years. it is operating very, very well. there are no major issues. the compound has been a rocket hit a number of times, and the construction including taking direct hits on those buildings construction is held and none of our personnel have been injured. >> fair and finally follow-up questions on the issue of the

jurisdiction would you be willing to submit to join cigar for the definitive impartial third party ruling on the extent of the 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 has assured me that the position that we have taken with regard to inspection of the platform as opposed to inspection of the contract for police training or military training rehabilitation or developmental construction the legal adviser's position is that those are not within the jurisdiction within the jurisdiction of the state department inspector general and i simply must stand on what my legal adviser has told me.

>> that leads me as you imagine i'm particularly interested in that recommendation and our interim report that goes to a permanent inspector general so i want to ask you about that. i think the commission would feel better about the state department's position that no such new officer is needed if we had a better sense of state support for the existing office of inspector general what the state department and for cigar. we just talked about cigar to the office of inspector general of the state department i don't expect you to have these figures at your fingertips but could you supply us with the state request, budget request for the past say three years or so since the inception of the obama administration and then the state department response to that request? i'm trying to get a sense of how responsive the state department has been in the office of inspector general and its attempt to have adequate resources to carry out its jurisdiction mandate can you

comment on that generally? >> we fully support the inspector general. we believe inspector general's perform a critical function of calling attention to and highlighting issues that must be dealt with either the warnings and advanced or catching acts that should and must be dealt with if similarly. >> the request for the inspector general's office for a flight 12 is $65.154 million we carry cigar and cigr i'm giving the president's request $65.2 million, and their budget in fy 11 in the full year was

56 million. so, we have supported a request that amounts to almost a 10%, 9% increase so we will get the information for the prior fiscal year -- the fy oa for example was 52 million so they are going up because they have deployed, 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 by allocating them very, very scarce in order that they would be close to the scene to do their jobs. >> in the time that remains, i want to talk about your response, the state department response for the recommendation about the distance and in the department. i think one could argue that

reasonable minds can differ about a number of our recommendations including the ones we just discussed arguably. but the one and it seems to me at least for the ground upon which the state department argued is the notion there should be written justifications on those occasions when a contracting officer recommends suspension and debarment in the management of the department issue refuses to carry out that recommendation. and the rationale for opposing this recommendation by the state department was required earing written justifications would be an administrative burden on most agency's suspension and debarment programs with already have limited resources to carry out their existing missions. to me the substance of that it is too time-consuming to hold contractors accountable to the american taxpayer and ensure our diplomats and military personnel

and development officers get the support they need. i was shocked they don't tell you about that response. >> i think the distinction is 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 head of contract in. if the procurement executive decides that the individual contracting officer hasn't made his or her case in law and equity that it's 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 because i independent procurement -- >> are you saying it would be unduly burdensome burden on the chief executive officer, chief officer to make that determination?

>> it's not of the chief acquisitions officer it is the determination of the qualified independent procurement executive. every agency has a semi independent procurement executive who doesn't issue contracts to provide policy guidance and oversight to the contract in. and so if he come and it happens to be a he of this department makes that determination, it is a kind of independent interpretation, and basically are a field that is what it must be we ensure the taxpayer spends a dollar and of value. >> we do know the you've got to do that. >> i find it is beyond silly. i find it outrageous that the

department of state can say when a contracting officer recommends debarment or suspension he when the dca or gcm a semidey is recommending it there shouldn't be a justification for why when it is ignored its ignored it seems so basic you and i and the department and the commission and the department have a huge disagreement that we were continuing to pursue. how many departments recommendations have been made in the last year? no, no, that's not acceptable. your microphone is not on. i will tell you why it's not acceptable. what is not acceptable is you don't know it and yet you are saying it is burdensome. how can it be burdensome if you don't know it? >> i will provide the information for the record and give in your statement, mr. chairman i will review the

issue. i would also consult with other u.s. government agencies who were obviously impacted by this as well. >> we know the dod has and maybe its burdensome because they have so many expect, but if this is the among the administration to kind of say we don't want to do it have any recommendations there are and get your department is recommending that our recommendation not be done because it is burdensome. i would think even if we have so many that are ignored that is a huge indication of a problem, and if we have too few or few that have been recommended and the department is claiming its burdensome, then we think it is

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 states were inherently governmental. deutsch you explain to me why you made in the transition from dod to state that everything you're doing in iraq and the transfer are not inherently governmental, therefore, you can use contractors so i misspoke in the beginning. that is the claim. and in your statement, you make it in the first part of your statement to say the activities we are doing and are not inherently governmental. why? why are you making that claim? >> because, because, mr. chairman, certain of our

activities are inherently governmental. all enforcement, the activities of the consular officers, political and economic reporting , executive management, those are inherently governmental. there are other activities i believe are not inherently governmental. if you look -- let's use security because that is one of the other commissioners comment 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. >> their security and then there's security, so it is a pretty broad term. let me just ask you this. if you have and all ied, and you need to get a medical to deal with the injuries that are

outside the embassy, or you are under fire and have to shoot your way out to get back to safety come in either case you have to get someone there to attend to the wounded, and you have to aggressively use force to get out why do you think that is not an inherently governmental function? >> because i believe even in those circumstances security is not inherent in the government. >> i regard that as there is law enforcement which is inherently governmental, and then there is security. >> if i could ask you this, ambassador, you use security to cover such a range. on an eroded down. as we have to fight our way in to get to people that have been injured and fight our way out to

get away from its. we have to use an aggressive effort with guns, with weapons to do that. why is that not inherently governmental? >> because it doesn't meet the definitions of inherently governmental? >> what is that? >> it's something that only a governmental entity -- i realize that is a circular definition. >> flat and take his example. why then you say okay it's not like a user contractor. i propose me using a contractor out of necessity because otherwise there's a whole lot of combat medics both paying attention to this as well as army combat navy corpsman some rolling around in their gray of saying what's going on here because the army and the military have always made the

decision that combat medics are done by a military person. by default that is inherently governmental. when they fly h. hopper in and commissioner shays talked about being under a five-year. if you have an idea out there, callable you what it's under fire they can't remove it, no one leaves the injured, they have lifesaving the united states army doesn't use civilians. government or otherwise. >> the united states army's primary mission is to project force in the defense of the united states and its values. >> we are talking about a rescue mission you're picking up that has nothing to do is projecting force. it's lifesaving. >> that is the distinction, projecting force is inherently governmental, lifesaving. >> are you comfortable with that definition has to use it? let me tell you in response to the second part i am comfortable with this definition, yes,

inherently i'm comfortable. but second, there are 1800 some odd state department diplomatic security professionals in the entire world. i need on believe its something like when all is said and done i am going to need something may be closer to 7500 static, just static guards for both afghanistan -- >> i know where you are going and i am going to agree with you. the bottom line is necessity requires you to use contractors because you have such a huge need. that to me, let me say you are a very candid witness, so i appreciate the dialogue. but a more helpful response to the commission and the other to congress would be guess what we have no choice we have to use

contractors. what i fear is you feel if you have to use contractors and admit you are using them for inherently governmental then you are then breaking the law. it's not a criminal law that you are breaking the law. i think one of the recommendations, and let me ask you this, one of our recommendations made need to be that there needs to be a recognition on the part of government that sometimes we have to use contractors, non-governmental people and inherently governmental situations because as your report talks about in the queue qddr or the default mechanism and maybe you need that default mechanism because that's where you were going. >> e essentially i know i have a mission that has been given to me. lawyers i have consulted with tell me that security as opposed to law enforcement and military force is not inherently

governmental. if the commission says the process of that analysis should be changed, i'm not going to object to that. i know the basic number is, and i know that there is a sign curve here that tomorrow, hopefully some indefinite tomorrow, i am not going to need 7500 u.s. government employees to provide static security, and managing and recruiting that process. >> we are hearing two things and i'm going to agree. one is it may not even be possible for you to have government people fulfil these functions and the second thing we are hearing for the record is you have to build up to a point and then would you be able to use these folks later on when the contingency rostow? estimate 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 what they are doing is inherently governmental, and i will just put that on the record. we are going to start with ms. tiefer, i have to hold folks fairly accountable to that. >> i haven't even said hello. okay, we jealously guard our time so therefore i am going to make a couple of observations. i think that you have also been candid ambassador and i really respect the mission the state has assumed and i think part of the mission you have been given and that is the summation of what we are seeing here is wrong and that is part 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 are the best in the world, you have been asked, you know, and i'm not looking for a comment on it is a fact you have been asked to transition into accepting that and the use of contractors is the only option. you don't have an option and of many of those functions people are falstaff and can't say enough for them, but they are not there. my observation that i made, and i will sum it up is that in the year 2013, and weak toss numbers around, but it's critical to get this on the record that these caa backlogs for all those years, by their own estimate is when to be over $800 billion, $800 billion of unaudited and it will take me longer than i have to state what the return to the taxpayer that is not evident now. i give it samples contractors that have provided submissions timely and can't be audited

because there is no resource. leyva exit poll were contractors pulled back because there is questionable costs in there. and i've given examples where a contractor, a new contractor conscientiously difficult in 2006 that they struggled to get a good submission and that is an experience base. the dca -- my whole point is you ought to propose to become a more visible champion for the dod assuring that you are doing a reimbursable basis is fully staffed, and they need a thousand people so they can begin making a dent in the backlog by 2014 and i am not here to make excuses for companies that if i am in charge of that function and company and i have seven or eight years that haven't been audited by would be worried about what is the impact? i have the claims. so i believe you can be a

champion for that but probably the area with the biggest dollars we haven't spent much time on is logcap. you're going to transition to logcap and use dod support initially. that is correct. >> for life support, not for maintenance or other -- >> okay. okay. that's correct. is that transition going to be logcap iii or iv? >> logcap -- our action under logcap iv is supposed to be awarded july 31st. >> so you are in fact contused logcap iv -- >> yes, sir. >> -- where you have competed in consistent with the manner that we support. we kind of went along but fully support rock island army action. you're using that. >> we are using the rock island. >> i would suggest as he went through and evaluate that, many of i hope you are using past

performance carnage if you get a company out because questionable cost someone not to ask the question why did you pull those out? it's a fair question. what's in there that caused you when you have a question what it is a senior vice president finance that said i certify legalese that all of the costs are in accordance with the rules had been planned behold they don't. so i have a brazillian of their questions. my time is up. i do want to thank you. i may summarize those questions and provide them to do. one of the last things i want to say on the supporting site is you probably use or maybe you are fortunate i've seen the best transition for the for a few grand slam folks providing notes i have seen that so often in the 20 hearings being in disarray it's nice to see people that know how to give notes to a witness. >> i am a great witness because

i have a great team. >> a great witness if you rely on your team. that is a great thing to do. >> mr. charles tiefer. >> investor kanaby although these are combat of questions, door longstanding expertise and experience is acknowledged. i have three questions i'm going through on the table because i'm short on time and you can answer them. i was pleased to hear you are going to look at the met $132 million for the embassy compound and i thank commissioner ervin for hyping up on that because he is a former state department inspector general, so he knows there's more in the report of there's than other people might realize and i hope you will not only asked again whether the state department has more information but more important, because this

report in the sign of the construction of the new embassy compound at baghdad iraq in 2009 was extremely detailed. i would hope one could go through and find the parts of the 132 million because they may just say we put what we had into the report, and that shouldn't be the end of the matter. my second question is we went through the police training money that went to dinosaur you have collected 40 million, you're going to 63 million back and there's 109 million of reduced billing. i hope to confirm that once again because that is what the public will be hearing. i want to say that the figure that one out of the 512 million i was one of the people who felt that that was a credible figure

and i don't want to be wondering where could they have come from and the reason was that the report of january, 2010 on the subject said, and i quote, as a result, i am l. has no confidence in the accuracy of over $1 billion of charges. so, i would like to find it's not so much i would like to find out, suppose cigar says where's the rest of that $1 billion? like italy 200 million of that get into the final lap of the race? what it be okay with you if it looked and followed up the previous audit and found out why they took 200 million out to follow-up and not the rest of the dillinger and? am i faeroe and last question -- >> why don't you go through really quick. >> okay. on cigar, being limited in what

they can read you what's going on, you said you've gotten an oral legal opinion and i must stand on what my legal that pfizer has told me that's oral. i'm a law professor at the university baltimore school, your legal but pfizer is a professor at another law school it's pretty good it's not the university of baltimore, but -- >> 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. on the line cord police training contract, cigar is perfectly free to audit -- if they want to audit again, the point i made to this group that i need to the

house government affairs group is they are free to audit the reconstruction activities in iraq. they are not free to audit the base element of the state department. that is within the jurisdiction of three other entities. >> on the review i will talk to a certain former law professor and ask him what his opinion is on this matter. >> thank you. mr. henke, thank you. >> investor kennedy, one of the firm's recommendations in the interim report was to have the agencies do a comprehensive risk-based assessment for what they need to operate in the contingency. your response to us was along these lines the state secure qddr and the human capital process will identify the need to determine the organic resources. okay, that is a statement identified the need