colleague senator mccaskill put and cementer webmy. statement in the record and just draw briefly from it in deference to senator collins who has an appropriations meeting she has to go to and to our two colleagues. the commission on wartime contracting was created by legislation sponsored by senator claire mccaskill and senator jim webb to investigate our reconstruction efforts in iraq and afghanistan. last month the commission issued its final, and i would say to me, very disturbing report. because it says that at least 31 billion and maybe as much as $60 billion have been squandered in waste, fraud and abuse in iraq and afghanistan over the past ten years. and those are, obviously, 31 to 60 billion taxpayer dollars. i supported the wars in iraq and afghanistan, i still do. i support the aggressive rebuilding efforts in both these

nations, and i still do. but, but -- and, of course, i believe that the ultimate waste of money and of the service and sacrifice made by our men and women in uniform would be to walk away and let iraq and afghanistan fall back into the hands of dictators and/or islamic fanatics. but that's not only no excuse, but even more reason why i'm so upset by the findings of the commission which are, basically, how sloppy and irresponsible so much of the spending was. some of the examples that particularly drove up by blood pressure, and i didn't have medication nearby so it was particularly harmful, u.s. tax dollars paid $30 million to taxpayers for $300 million to build a power plant in kabul,

afghanistan, that would supply the city with electricity around the clock. the whole idea build it and they will come, but the afghan government couldn't afford the fuel to run the pack and instead contracted to buy electricity from uzbekistan at a fraction of the price. and the power plant built with $300 million american dollars is now just an expensive back-up generator. another one that i thought was particularly outrageous was that $40 million of our money went to build a prison in diyala province in iraq that the iraqis said they didn't want and ultimately refused to take possession of. project was not only never completed, it was abandoned with $1.2 million worth of materials left at the site. so the commission report tells us. much of the waste identified by the commission stems from a lack of competition which, of course, should be the cornerstone of government contracting.

i will say that, finally, that perhaps my greatest frustration reading the commission's report is a general one which is that the underlying problems it identifies are not problems of first instance for us. we, in various ways we have seen these kinds of problems for years. and, in fact, at different time we've enacted as congress has enacted reforms legislatively that were supposed to address these problems. and yet here comes this commission report showing that billions of dollars, nonetheless, were wasted. so my response to the report is to thank the commissioners who we'll hear from next for their extraordinary work here, and also to see if we can't together find a way not to -- not because

we're too experienced, unfortunately, believe we can stop all waste and fraud forever, but we could sure do a damn better job than we're doing now, and i hope together we can find some ways based on this report to help make that happen. senator collins. >> thank you, mr. chairman. let me join the chairman in thanking the commission members for their report and the two authors of the legislation that established the commission. along with senator mccaskill and senator webb, i testified at the very first hearing of the commission on wartime contracting. at that time i noted that there are four categories of problems that lead to contingency contracting failures. first, unclear and evolving contract requirements.

second, poor management including an inadequate number of skilled contracting personnel. third, an unstable security environment. and, fourth, a lack of commitment by the host government officials to the reconstruction of their own country. unfortunately, the commission has documented all of these problems and more in our nation's wartime contracting efforts. it is especially troubling that our operations in iraq and afghanistan have been plagued by such a high level of waste, fraud and abuse. some of the examples are almost too astonishing to believe. for example, a july 2011 report by the special inspector general found that a dod contractor

was charging $900 for a control switch that was worth a mere $7. in some cases the ig found contractors overbilling the government with markups ranging from 2300% to more than 12,000%. now, i think we all understand that when you're contracting in this environment, there is going to be some kind of premium, but this was absurd. one solution to this problem is the establishment of a professional acquisition cadre. that's why i authored an amendment to the fiscal year 2009 defense be authorization -- defense authorization bill to create a contingency contracting corps. this year i've introduced two bills designed to further strengthen the government's acquisition work force, the federal acquisition improvement

act and the federal acquisition work force improvement act. i want to emphasize a point that was raised by one of the commissioners at a recent briefing about the report. congress should either enhance and improve the acquisition work force to handle these types of massive contingency operations, or we should rethink whether or not we want to run these massive operations. we simply can't justify doing major contracting without the necessary supporting work force as the findings of the commission's report highlight today. this is the point that i think often gets lost in the discussion of contingency contracting. the billions spent for development in big infrastructure contracting were invested in order to support

counterinsurgency efforts by winning the hearts and minds of the population and by establishing security. but with so many disappointing results, congress should ask are we fulfilling our obligations to the american taxpayers who are footing the bill for these projects? and should we really be surprised at the problems arising from attempts to run major development programs and embark on large infrastructure construction while we're in the middle of a war zone? the past ten years have taught us that we need to spend more time focusing on these broader questions before we get into another contingency operation if we hope to avoid repeating the mistakes of the past. as i stated at the very first commission hearing, how well we execute wartime contracting

helps to determine how well we build the peace. in my view, we can and must do better. again, i want to thank the chairman for convening this hearing and apologize to our witnesses that i do have to leave shortly for an appropriations markup. thank you. >> thanks, senator collins. we understand very well. thanks to senator mccaskill and senator webb for being here. it actually was the problems with wartime contracting which were part of the reason, um, why we created a special subcommittee of this committee to oversee federal contracting and why i asked senator mccaskill to be the chair of it, and she's done a great job. senator collins was ranking on it for a while followed by senator brown and senator portman, but you've remained right there at the helm with great effect for the committee and for the country, so i thank you for that, and i look forward to your testimony and then senator webb's. >> thank you very much, mr. chairman.

i want to thank both you and the ranking member for all the work you have done to improve contracting practices. you've been at this for much longer than either senator webb or i have been in the senate, and i want to acknowledge your work particularly senator collins deserves a great deal of recognition for all of her work in terms of acquisition personnel. it is so easy for us just to gloss over as we try to make the federal government smaller. it's so easy for us just to say, well, everything needs to be smaller. well, no, it doesn't. there's a few areas that can't be smaller. senator coburn and i talked this morning about the importance of fully funding gao, that our eyes and ears in terms of waste and fraud throughout government, and clearly the acquisition personnel, the at to teen of that work force has been a major contributor to the problems we're seeing. more than four years ago, senator webb and i began to advocate for the creation of the wartime contracting commission. at the time i was inspired by missouri's own harry truman who

as a senator headed a committee that investigated and uncovered millions of dollars of war profiteering, fraud and wasteful spending in world war ii. senator webb and i greed we needed a new investigatory body to honor the truman committee, to protect our tax dollars and bring better accountability to the way we do business while at war. you know, we use the cliche saying, well, they would spin in their grave, or they would turn over in their grave. harry truman, um, has been spinning for some time now, and he would be astounded at what this commission found. it is shocking that the commission has, in fact, validated, um, in many ways our worst concerns about the way contracting was ongoing in contingency. it is disgusting to think that nearly a third of the billions and billions we spent on contracting was wasted or used for fraud. frankly, i really believe that estimate is very, very

conservative. and it doesn't even begin to include the money wasted on projects that can't be sustained. very similar to the kabul power plant that you referenced in your opening statement, mr. chairman. i would like to take the opportunity to adjust one more anecdote that confirms how serious the problem is. shortly after i came to the senate, i took a trip to kuwait and iraq on contracting oversight. i asked not to see what most senators went when they went to theater, but i just wanted to focus on the way we were overseeing contracts. i particularly wanted to hone in on the logistical support contract that had been the subject already of a lot of negative headlines about the way we'd done business. it was a massive cost-plus contract, noncompete, that was supposed to provide all of the logistical support for our men and women that were serving us in iraq. i sat in a small room in a building on the outskirts of baghdad while many, many people in the room had lots of rank and

were military, one woman who was a civilian clearly was the knowledgeable one about the log cap contract. it was an awkward set of questions and answers because, clearly, i was asking very tough questions. i could not for the life of me understand how this thing had gotten so out of control. the moment i will never forget as long as i live is when i began to feel, you know, when you're pounding a witness on the stand as a prosecutor, you know when you need to let up. sometimes you do, sometimes i didn't. i kind of knew i needed to give this woman a wreak because, you know, all these guy guys were sitting in the room, and men and women were sitting in the room, and she was really being called on the carpet, so she had a bar graph and the requisite powerpoint that is required in every military briefing. there was a bar graph that showed the expenditures on the logcap contract, and it had started out in a number, i can't recall now, but in the billions and billions and billions. and the next year it had dropped

two or three billion. and be then it had kind of leveled out. so i'm trying to throw her a bone. and i said, would you mind telling me, how did you get the costs town the second year? as god is my witness, she looked at me and said, i have no idea, it was a fluke. at that moment i knew that this was something that had gone terribly bad in terms of contracting oversight. the commission's report and recommendations go to the heart of how we got into this mess, how we got to a place in iraq where we were spending billions without a clue as to where it was going. i applaud the commission for their thorough, comprehensive and bipartisan review and for the tremendous contribution that they've made to our understanding of these problems. we must know why we are contracting, who we contract with and what we are

>> we can't build things for countries that they cannot afford to operate. we can't build things for countries in a security environment that they are just going to be blown up after we have used countless, countless billions of dollars of america's hard earned taxpayer money. because of the commission's recommendations, we'll require fundamental changes to the way government operates. i'm planning to introduce comprehensive legislation this year. i'm working closely with senator webb on this legislation and look forward to working with the members of this committee as well. as one of the generals said to me when i was in iraq, you know, so much of what we're seeing on this trip in terms of mistakes were also made in bosnia. and by the way, we did a lessons learned after boss be any ya -- bosnia, except there's one problem: we didn't learn 'em. they forgot to learn the lesson. if commission's report becomes one more report sitting on

someone's book shelf, then we have failed as a congress, and we have failed our military and the people of this great nation. this is our chance, this is our chance to tell the american people that the government can spend their money wisely, hold people accountable who are entrusted with contracting in contingencies and make sure that the men and women in the military and civilian agencies get what they need to do their job. we cannot waste millions through fraud, abuse and mismanagement. we cannot outsource gaps and war planning to be done on the cheap. we cannot repeat these mistakes again. thank you so much for your opportunity, the opportunity to testify today, i do want to commend my colleague, senator webb. um, this would not have gotten through the senate, frankly, without the cooperation of the chairman and the ranking member and the hard work of senator webb. i think we've got something really good here if we don't take our eye off the ball. thank you, mr. chairman. >> thank you, senator mccaskill, for that excellent testimony.

i was struck by your reference to president truman wherever he may be today. i know you're keeping that alive. it struck me that if we could go and interview him about this commission report and then release the transcript, we would have to delete several exhetives. >> in fact, i'm really -- expletives. >> in fact, i need to say for harry truman, this makes me god damn mad. [laughter] >> i knew you wouldn't let me down. senator webb, thanks for being here. >> thank you, mr. chairman. and be senator collins and a special thanks to senator collins for her continuous involvement with this commission as it went through the hearings process and other members of the committee. purpose of this hearing is to allow the commission members to testify before you and to allow you to have an interchange with them, so i would like to, first, say i have a longer written statement which i would ask be

entered into the record and would like to summarize some of my comments from that at this time. >> without objection. >> i'd like to express my thanks to the commission members, particularly the co-chairs, michael tebow and former congressman chris shays, a number of their fellow commissioners and professional staff are here today. they did an an exemplary job. we talk in the senate and in the congress about presidential commissions and sometimes with a great deal of kept sit. but i think this -- skepticism, but i think this commission demonstrates the way these commissions should work. it was bipartisan, it was independent, it was high energy, it was composed of highly qualified people who were brought in for a specific period of time, and it's going to be sunsetted in a very short period of time having brought these observations and recommendations before the senate. when i came to the senate in '07, one of the real eye openers for me as a member of the senate

formulations committee was a hearing in which the department of state was testifying about $32 billion in funding for programs for iraq reconstruction projects, and i asked the government witness to provide the committee a list of the contracts that had been let, the amount of the contracts, a description of what the contracts were supposed to do and what the results were. and they couldn't provide us that list. we went back and forth for months. and they were not able to provide us that kind of information. as someone who spent five years in the pent gone and -- pentagon -- one as a marine and four as an executive, it was very clear to me that something was fundamentally wrong with the way that contracts for infrastructure reconstruction, wartime support and security programs were being put into place in iraq and afghanistan after 9/11. most of the companies who undertook these contracts were

good companies, and i think this commission was very careful to mention that in its report. and they were doing a great deal of good work. but there were also a series of major structural, procedural and leadership deficiencies in terms of the way that wartime contracting processes were supposed to be undertaken. you could look at the dynamics of what was going on particularly in iraq at that time and know that it wasn't out of the question to say that even then billions of dollars were being exposed to waste, fraud and abuse for a wide variety of reasons. and after many discussions with senator mccaskill who has great technical experience brought with her, great technical experience with her to the senate and who had expressed similar concerns as you just heard, we introduced legislation that led to the establishment of this commission. we had to give on some areas that we believed in strongly such as retroactive

accountability of some of the abuses that had taken place. we didn't get that provision. we weren't able to empower the commission with subpoena authority, but following close consultation with both members of the parties, we were successful in having this legislation enacted that put the commission into place, and we achieved a consensus that the commission would be independent, bipartisan, energetic, and it would come to us with the types of recommendations that might prevent the recurrence of these systemic problems and abuses in the future. and i commend the people on this commission for the intensive effort that they have put into satisfying this statutory mandate. they went to extraordinary lengths here in the united states as well as in iraq and afghanistan. twenty-five public hearing, full transparency. today's final report was preceded by two interim reports and five special reports, and i wanted to come here and express my appreciation personally for all the work that they have put

into this effort. thank you very much, mr. chairman. >> thank you very much, senator webb, for taking the time to be here and for your excellent remarks. we thank both of you for being here. i think we'll move on right now to the members of the commission. and so i'd call the members of the commission to the witness table at this time. >> i gather that, unfortunately, michael tebow, co-chair of the commission, cannot be here. as you all know, former deputy director of the defense contract audit agency and worked very hard on the report. i am delighted that mr. thibault's co-chair is here today, my dear friend and former colleague from connecticut in the house, chris shays, who

served during his time here as a senior member of the house oversight and government reform financial services committee and on the homeland security committee and had a particular interest in this kind of matter which is to say protecting taxpayer dollars. we also have, um, with us clark err visible, robert henke, is it -- you say schinasi? schinasi. charles tiefer and dov zakheim who is no stranger to us because of his time in the department of defense. ms. schinasi, i gather you've been voted the spokesperson. >> yes, that's correct. >> thank you all for the extraordinary work you did here. and i join my colleagues, the creators of the commission, senators mccaskill and webb, in thanking you for hard work and, really, an excellent report that gives us a road map forward. it's all yours. >> thank you. thank you, chairman lieberman, for, um, inviting us today and

members of the committee to give us an opportunity to talk about the work that we have done. as you mentioned, i am katherine schinasi, a member of the commission, and i am presenting this statement on behalf of the commission's co-chairs, christopher shays and michael thibault, and my fellow commissioners, clarke kent ervin, robert henke, charles tiefer and dov zakheim and grant greene who, unfortunately, could not be with us. if i may, i'd like to summarize my statement and submit the full statement for the record as well as a copy of our final commission report. >> without objection. thank you. >> thank you. it's fitting that this committee should be the first to hold a hearing on our final report as the senate rules give you the unique authority to inquire into the efficiency, economy and effectiveness of all agencies and departments of the government. including the organization of congress and the executive branch. the solutions to contingency

contracting problems that we have reported require a whole of government approach. we also believe the need for change is urgent, and let me give you several reasons why. first, reforms can still save money in iraq and afghanistan. avoid unintended consequences and improve the outcomes there. because, ironically, even as the u.s. draws down its troops in iraq, the state department is poised to hire thousands of new contractors there. second, new contingencies in whatever form they take will occur. one has only to remember how quickly u.s. involvement in libya arose to recognize that the odds are in favor of some type of future operations. and the agencies have acknowledged that they cannot mount and sustain large operations without contract support. third, although the u.s. government has officially considered contractors to be part of the total force available for contingency operations for at least the last 20 years, the federal government went into afghanistan and iraq

unprepared to manage and oversee the thousands of contracts and contractors that they relied upon there. even though some improvements have been made by the agencies involved, a decade later the government remains unable to answer that it is getting value for the contract dollars spent. and unable to provide fully effective interagency planning, coordination, management and oversight of contingency contracting. the wasted dollars are significant. as you pointed out in your opening, the commission estimates that at least $31 billion and possibly as much as $60 billion of the $206 billion to be spent on contracts and grants in iraq and afghanistan has been wasted. and many billions more will likely turn into waste if the host governments cannot or will not sustain u.s.-funded programs and projects. we believe that failure to enact powerful reforms now will simply

insure that new cycles of waste and fraud will accompany the response to the next contingency. and we also believe that these reforms could have wider benefits. in our work on iraq and afghanistan, we found problems similar to those in peacetime contracting environments and in other contingencies. this committee in particular will recognize many of the problems we discovered are similar to those that were contained in your 2006 report on hurricane katrina. and some of those are poor planning, limited or no competition, weak management of performance and insufficient recovery of overbillings and unsupported costs. the wartime environment brings additional complications which we address in our recommendations. for example, limited legal jurisdiction over foreign contractors and limited deploy ability of federal civilian oversight personnel into theater.

if i had to give you just one bottom line, it would be that the wasteful contract outcomes in iraq and afghanistan demonstrate that our government has not recognized that its dependence on private contractors, especially for services, is important enough to effectively plan for and execute those acquisitions. the commission has concluded that the problems, however, are multifaceted and need to be attacked on many levels. first is holding contractors accountable. federal statutes and regulations provide ways to protect the government against bad contractors and impose accountability on them including suspension and debarment from obtaining future contracts as well as civil and criminal penalties for misconduct. unfortunately, we found that these mechanisms are often not vigorously applied and enforced. and incentives to con train waste are -- constrain waste are often not in place. the commission's research has shown, for example, that inadequate business systems

create extra work and deny the government of, um, insight and knowledge on costs that we are being charged for the work done. fraud may go unprosecuted, recommendations for suspension and debarment go unimplemented, and past performance reviews often go unrecorded. one important check on contractor overcharges is the defense contract audit agency. currently dcaa has a backlog of nearly $600 billion which by some accounts could reach $1 trillion by 2015 is not addressed -- if not addressed. the dcaa has reported a five to one return on investment, that is five for every dollar invested in dcaa, the government recovers $5, and we would say that's a pretty important investment to keep in mind when we're thinking about how the fix these problems. the government hases also been

remisin promoting competition. although exigent circumstances may require sole-source or limited competition rewards in early phases of a conflict, a decade into an operation the multibillion dollar task orders that are being written with no breakout or recompetition of the base contract just defies belief. our report contains relations to bolster competition, improve recording and use of past performance data, expand u.s. civil jurisdiction as part of contract award, require official approval of significant subcontracting overseas. the second level we would attack is holding the government itself more accountable. both for the decision to use a contractor in the first place and for the subsequent results. even when the government has sufficient policies in place, effective practices which range from planning and requirements definition to providing adequate oversight of performance and coordinating interagency activities are lacking.

defense, state and usaid, the three principle agencies involve inside iraq and afghanistan operations have much work remaining to be done. we have recommended developing, for example, deployable acquisition cadres. elevating the position of agencies for acquisition officers and creating a new contingency contracting direct rate at the pentagon's joint staff where the broad range of contracting activities is currently treated as a subset of 40 gistics. contracting -- logistics. contracting has gotten to be much more. considering this committee's broad and interdepartmental mandate, i would call special attention to two recommendations embodying a whole-of-government approach that will improve efficiency and effectiveness in contracting. the first is to establish a dual-headed position for an official to serve both in the office of management and budget and participate in national security council deliberations.

such a position would promote better visibility, coordination, budget guy dance and strategic direction for contingency contracting. currently, national security decisions are not informed by resource implications generally. and that's particularly troubling and distortive in this context because contractors are considered to be a free resource. the second is to create, the second recommendation of an interagency nature is to create a permanent inspector general with a small but deployable and expandable staff that can provide interdepartmental oversight from the outset of a contingency. the special igs have done some important work, but they have been hampered by their limited jurisdictions and their costly start-ups. finally, our commission closes its doors in just nine days. our organization disappears, but the problems it has chronicled will not. action and in some cases appropriations will be required

to implement these reforms. sustained attention will be essential to insure that compliance extends to institutionalizing reforms and changing organizational cultures. that's really the gist of it. institutionalizing these reforms and changing the cultures. that is why our final recommendation includes periodic reporting to the congress on the pace and results of the form -- reform initiatives. in closing, i believe that the commission's work has demonstrated that contracting reform is an essential, not a luxury good. whatever form it takes, there will be a next contingency, and contractors will take part. planning now and putting the necessary structures in place will greatly increase the likelihood of having better options and making better choices. and that concludes our formal statement. my colleagues and i would be happy to take your questions. >> thanks very much for that excellent beginning. we'll do seven-minute rounds of questioning.

um, i wanted to ask you whether the contracting process be, in your view, improved over the years of our involvement in afghanistan and iraq. in other words, based on some of the things that are implicit in your report, but certainly in other ig reports and our own observations you could say, i suppose, or argue that some of the early waste resulted from, um, basically, the lack of planning and the rush to do it. andal the rapidly -- and also the rapidly shifting governance structure during reconstruction. but i wonder, in your investigation did you find any dividing lines between different stages of the wars and reconstruction? many and, obviously, i'm looking to see whether there was improvement and particularly whether we talked about lessons

learned from bosnia. did we learn any lessons in afghanistan that we applied in iraq or in iraq that we applied in afghanistan went on longer? i don't have a particular choice of commission members, so i'll leave it to you all to decide who feels best able to answer each question. >> let me just jump in for this first one to thank you, mr. chairman, and the members for allowing the full commissioners to attend because each of us is more than qualified to answer any of your questions. i think the simple answer is, yes, there was a notice blg improvement. noticeable improvement. but contracting became the default option, and we just did too much, too quickly. and when you have an emergency supplemental, it's not part of the regular budget. it ends, it's almost like a free thing to draw money on. so we just grew too fast. and then we didn't change after the first year. you've got a time where you say

you can't keep doing it the way you were doing it, and we kept doing it the way we were doing it. >> and if you had to give a reason why, why did we keep doing it the way we were doing it? even though people right there must have known it wasn't really working. >> it's an easy option to just keep relying on contractors. and when you have a contractor who's performing even if they're very, very, very expensive, you just want to keep going the way you're going. >> because they're doing the job? >> they're doing their job, but at an extraordinarily high -- >> great height. >> just quickly, having 15 people maintain electricity on a base when only three are being used, and they end up having so much free time that they decide to build themselves a clubhouse. they're working 12-hour days, and only three are working. and we did that for years. >> and nobody blew the whistle. i mean, it was pretty obvious that that was happening. let me pick up on the phrase you

used because you warn about the use of contractors as the default option in iraq and afghanistan. because, i presume, the government felt it lacked the ability to perform the capability and people they had working for them to perform many of these jobs. um, use of private security contractors and use of contractors to oversee other contractors are two examples of what you referred to as the default option. and i agree. um, what are some of the other, um, responsibility categories or functional categories that in your opinion have too often been placed in the hands of contractors, um, in the work that you do? ms. schinasi. >> i would look next at training, frankly. >> training? >> yeah. to see -- because that is a function we have almost totally

outsourced to private companies. >> i would also add -- >> mr. zakheim? >> i'd add, senator, if you look at aid in particular, that is an agency that year ago did it own work, frankly. it has becomal contract management agency -- become a contract management agency, and rajiv shah admits it and is trying to change it. but over the last decade they have, essentially, farmed out everything including, sometimes, managing the contracts. >> yeah. that's right. hire contractors to watch the contractors. we talked about that this morning on a bill we did on a markup -- a markup of a bill on homeland security, and, of course, this is not only in the war zones this happens, although the financial implications in the war zones was so high. so now i'm going to ask you because you had some hands-on experience in the department of defense, um, what can we do to

stop this? maybe i should ask, first, i presume what you're saying is you think we're overusing private contracts to fulfill government functions. >> i think we're all saying that, yes, sir. >> so, um, how do we draw the line? when do we decide that something really should be done by a full-time federal employee? >> well, the standard answer is if it's inherently governmental. >> right. >> that is to say it's something that the government should be doing. well, we write in our report, and we all felt very strongly about this, is that that's not really the right measure in a war zone. and the reason is it may be that there are some tasks like, say, involving private security that in theory a contractor could do. but in practice maybe it involves security issues, you know, contractors that might fire too quickly or feel they're being attacked or bribery or corruption. we have a photograph in our

study in our report, rather, of a bill, an invote that an -- invoice that an afghan insurgent group actually handed to a subcontractor, essentially saying if you want protection, here's the number to call. so there are going to be circumstances where the theory of inherently governmental doesn't fit. and so we felt that the measure should be risk. what are we risking here? and there will be cases where it clearly is not in the interest to have government to have a private entity taking on risks. >> so what are the risks? in other words, how do you define risk in this case? >> well, you could define risk, for example, if it's a very serious combat zone and you run the risk that maybe the contractors will be attacked or, alternatively, will attack first because they think they're being attacked. >> right. so final question because my time's running out, you've been inside. this is, seems like -- i mean, a question that a senator

shouldn't be asking, but i'm interested in your answer. why, why are we using so many private contractors to fulfill governmental respondents not only -- responsibilities not only here, in the area that you covered, but we recently heard testimony about the number of people working for the department of homeland security under contract. it's as many be as the regular, just about as many as the regular employees of the department. @really stunning -- it's really stunning. >> well, one of the reasons, frankly, and we allude to some of that in our reports, training. our people just aren't -- our civilians just aren't trained. you can get a degree and go into government and never have to take another course again. well, if you want to keep up with things, you hire somebody else to do it for you because you can't do it yourself. so that's one reason. another reason is that we cut back, it wasn't so much that we had too many contractors in some circumstances, we had nobody to manage and oversee them. and that was because in the 1990s we cut back very

seriously on just those kinds of people. so it varies with the circumstances. some cases we had just people doing jobs the government should have been doing, in other cases we didn't have the government people to oversee those doing the job. >> could i just make sure that we're clear -- >> yes. >> -- literally half of the personnel in theater are contractors. and there's a tremendous imbalance with a number of civil servants there that are there. and we didn't really address that the way we might have liked to have. but you have defense contractors and civil servants down here, and we seem to have to pay the civil servants a lot of money to want to go into theater. and i just want to make sure that we're also clear that when we talk about inherently governmental, if it clearly isn't governmental, the government shouldn't do it. but when we say it's not inherently governmental, the government still maybe should be doing it. >> gotcha. my time's up. obviously, i'm sure we'll come back and ask you if contracts

are cheaper which is one of the arguments as well. senators, as is the custom of our committee to be called in order of appearance, senators mccaskill, tester, coburn, levin and carper. senator mccaskill. >> well, i don't know where to start. there's so many things i'd like to talk about with all of you. first of all, let me once again say thank you. i'm not sure that america understands the kind of expertise that i have sitting in front of me. and, um, all of you brought to this work unique backgrounds that made the combination of your efforts so powerful. and i will tell you i will not rest as long as i'm here until we get this work done. so i don't want you to think that the time you have spent and the effort you have made -- and i will tell you i'm proud that you're shutting down in seven days because one of the arguments existence the legislation was, well, we never start one of these things -- in fact, i think dr. coburn has made this argument a few times, that we start these kinds of

things, and they never end. so i think you've done great work -- >> [inaudible] [laughter] >> i get that. i get that, dr. coburn. we have not stopped asmany of them as we should, but i'm very proud of the work you have done. um, i want to talk about something that i mentioned and you mentioned in your report, but i think it's something we need to flush out for this committee, and that's contractors being summit to the jurisdiction of the -- subject to the jurisdiction of the united states of america. heartbreaking incident in iraq that i'm sure you all are aware of where the negligence of one of our contractors killed one of our soldiers. and, um, in trying to find justice for that family, the contractor avoided the jurisdiction of the united states, and the most insulting thing about it was he then got another -- that company then got another contract. with our government. after they had used the fact that they were not subject to the jurisdiction of our country as a way to avoid justice for

this man's family, we then decided we should sign up again with them. by the way, they are now accused of also doing business with iran. um, so there's also some sanctions that need to be put in place as it relates to that. but talk, one of you, please, talk about the importance of anybody who wants to do business with the united states, and what are the arguments on the other side and why has the military been so reluctant to embrace this requirement. >> may i start that? >> go for it. >> senator, as you know, one of the huge issues that we've dealt with during the course of the commission in particular is the lack of visibility with regard to subcontractors. and this look -- lack of being subject to jurisdiction is our regulation for condition of being awarded the contract by the prime contract that contractors summit themselves by virtue of the contract to u.s.

jurisdiction. quite frankly, i cannot think of a contrary argument. this is american taxpayer money and, therefore, the american taxpayer is,s has a right to demand this level of accountability. >> senator, if i can expand on that answer. um, and i do want to mention the bill which, that you mentioned which has been nicknamed the rocky bare gone that bill -- >> right. >> shined a light into what is a complicated area to figure out how to deal with it, so it was helpful to us. we -- let me mention two examples. one is that mihm mihm, one is first kuwaiti in what our hearings found and our missions was complete irresponsibility, that is lack of responsibility by foreign contractors and especially subcontractors as commissioner ervin said. , the amimim came in front of a hearing of ours, and they basically laughed in our face. they said, go away, we're not going to give you records, we

weren't required to give them to dca, we're not required to give them to you on a subject called taints subcontracts. first kuwaiti which owed $124 million according to the state department ig, it's not paying. it's continuing to get contracts from it. t not paying. it's not paying. the argument that was put on the other side was that if you require foreign contractors to submit to jurisdiction, you will, therefore, lose competition out. i leave it to you to know if that's a likely prospect. >> well, um, at a minimum, um, should we be thinking about legislation that says to the united states government if someone has done business with us and owes us money and there e a foreign contractor, then that should equal suspension and debarment? >> that would be, commissioner shays was something of a pioneer

in strengthening the suspension debarment tool, and that would be a good use of it, yes. >> why -- what is it, and thank you so much, congressman, for taking this assignment. a lot of people were vying for your talents at the moment you decided to step up and help us here, and i'm really, um, so glad you did. tell me why you think it has been beyond trus traiting to me -- frustrating to me that not only are these guys not doing work under a contract, they are then getting performance bonuses instead of suspension or debarment? >> well, the real expert is right here in the commission. um, we, the one area we backed off a little bit was automatic suspensions. we do think that in the end there are other factors that need to come in play. but it's very clear that contractors don't think they pay a penalty. and one way they don't think they pay a penalty is that they're not going to get replaced because the process

takes so long. so they're going to still be around for a year, and it's one of the reasons that we recommended there should be a special cadre of government people, now i'm talking civil servants, what can come in and guard an embassy, and guard a facility, do something the contractors were doing. get 'em out right away and just bring in government people to replace them. i think that would do wonders, and that's one of our representations. >> so it's almost -- recommendations. >> it almost goes under the category we can screw up because they're stuck with us, because we're in a contingency, and they have got no backup. >> you've got it. >> and so if we could, um, convince the military concern we have redundancy as a system, and almost everything in national security. but we have no redundancy systems in contracting. and i think you've hit the nail on the head, that this has not been a priority for the military, and we would never think of not having a redundancy

in some of the core military funks that relate to the mission, and contracting has become one of those. thank you very much, mr. chairman. >> thank you, senator mccaskill. senator tester. >> yeah, thank you, mr. chairman. i want to thank senator mccaskill and senator webb for testifying before. this is a critical issue. um, i haven't decided whether i need more blood pressure medicine or a bot bottle of brown liquor to take care of this problem. >> both. >> yeah, probably. you're probably right. >> not at the same time though. >> you know, the issue of private contracting, i can't help to think didn't come out of the whole privatization of government thing from a decade or so ago, and we can see where that's got us. it's unfortunate senator webb isn't still here, i wanted to ask him about when war started to be thought for profit. i don't know that it's been an occurrence throughout our history, but maybe it has. but i will say one thing, it is long past the time where we start to bring accountability

and change to the way america contractors do business for this country. i can tell you this, in the private sector if i've got a contractor that owes me money, he ain't getting another contract. i mean, that's just the way it is. and i cannot believe, and i don't know what happened to the system that would allow justification for somebody, number one, to tell you you ain't getting the information, and that's the way it is, and we're still doing business with the person. it is incredible. ..

which don't need to have any discipline and our requirements process because we can always get more money and the corollary to that is that the contractors are also considered to be a free resources cash, so we never have to factor into our planning -- >> with the resources in the budget -- >> they are not required, the government itself is constrained by what is called fet, full term equivalent. so the number of government employees is capped so you can keep putting missions on in many cases these are new missions the agencies are taking on the didn't have anybody to do it so let's hire a contractor and by the way we don't have to count that anywhere. the money we spend or the people we hire. >> i think it was senator

mccaskill said the money spent was wasted. is that for the whole of war effort? >> the figure is between 30 to 60 billion. the argument we would make many of us is it is closer to 60 but even if it was 30 we are talking out of 206 billion. >> gotcha. okay, so retroactive accountability did not have the ability to look back? but yet i heard catherine or one of you say things got better because the german question time moved forward. do you think if we look back the waste was even higher than what it is over the period that you looked at? >> i wouldn't say that, senator. i think there was improvement. there's no doubt. one of the reasons being when i was in the department and was the beginning of the iraq war we let contracts called on definitize, that is a fancy word meaning we don't have the

specifics. and of course we've improved on that with time. but another area we did not and the fundamental problem is what my co-chairman just talked about. we didn't have the people to go out there hardly because they didn't want to go out there and i can tell horror stories about that one and so you had a situation where it was contractors by default. if you don't have your civil servants ready to go to the theater and you can't force them to go, military people go in the civil servants, some do, some don't. to give you an example of that, we were out in afghanistan and we were talking to people from the agricultural department. it turned out that the agriculture department could not fill its a lot of people to go to afghanistan. we are not talking about thousands, we are talking dozens come still couldn't fill the allotment and those who went came from the foreign agricultural service many of whom had never seen a farm in their life. so that's an example.

>> okay. you talked about, katherine, in your testimony you talked about the waste and fraud, waste in particular may even be higher if the host governments can't. were you able to do any projections on that? quite frankly when i was in afghanistan they didn't look like they were rolling in dough and so when that turns around and the troops can pull out, i don't anticipate these projects to go forward. do you do any projections on how much money that might be? >> we don't have comprehensive numbers on that. i can tell you the special the inspector general for the afghan reconstruction came before us and said the entire $11 billion we're spending on the national afghan police program is at risk. that is just one program and won a number but that is clearly -- we were -- we issued a special report on the sustainability because we were so concerned not only the projects already started that couldn't be sustained but we were thinking

about starting new projects that couldn't be sustained. >> okay. >> go ahead. >> we started out, and robert henke was making this point to us and got us focused on this. he said it's clear we have to oversee contractors better. we are not doing a proper job. and then we began if we can't see contractors better, then maybe we shouldn't be trying to do too many contracts. and it even got to the point as we have been working on this that we think we are trying to just do too much. we are just trying to do too much with the gross domestic product of afghanistan hovering around a billion dollars. we got about $24 billion in the government, and the economy now. we've totally distorted the marketplace. >> yeah. >> one little quick point, we were doing a wonderful agricultural program that befit the culture and people come and

then we had to spend money by the end of the budget year and we came in with 300 billion -- million, excuse me, to try to redo this program. >> look, out of time. my last question was going to be what do we do about this? i mean, you guys have recommendations about holding contractors available, the government for most competition. but when we are puti people involved in agriculture -- and that's something i'm involved in -- that don't know jack about agriculture, and expect to teach people who need to learn about agriculture to support themselves and they've got no way, no chance of being able to communicate any kind of information, because they don't have it in their head to start out with. who takes the calls on that? is this the head of the state department, is this the head of our military -- i mean, where is -- not too cold. but where does the buck stop all this stuff? we could be funded all. i'm not sure that's the right

method to use. but maybe it is. >> let me just quickly say we recommend some key positions. i mean, to head the national secure council decided to do things and not consider cost, that is why we want a dual headed position. someone at omb. we recommended, and senator levin, this is obviously very controversial but we think their needs to be a.j. ten. we have so many contractors as part of the military effort and there is no coordination as the joint chiefs of staff to deal with that issue. >> i've got to -- is it incumbent upon the joint chiefs to be able to consider costs when they are doing their job? now understand it's the protection of the country, but if -- ayaan, the head of the department of the agriculture could say you know, it's my job to make sure we have the security so i'm going to spend every dollar that i've got. i mean, really. isn't it -- >> yes. >> isn't it incumbent? i understand that it isn't it

incumbent on the people they're not to have a cop sitting in the room making sure they are following the rules? >> we recommend somebody as the assistant secretary level and above the key agencies including the aid, which would be the place the woodbury together with agriculture would worry about the kinds of programs you were talking about. somebody specifically in charge of contingency contracting issues. if you don't get the leadership of the top that is not going to follow. >> i just want to thank you guys for all your work. i very much appreciate it. and i met senator mccaskill and probably everybody that sits at this table, we have a big problem we've got to deal with. we are talking about cutting programs and people need to pay for this kind of garbage. thank you very much. >> thank you, senator tester. sadr colburn. >> for the first time in my life and going to be called to the previous question. [laughter] >> akaka you're just beginning. >> i would like to offer my sincere thanks for your efforts

on the commission's. often times the amount of effort that goes into that is not appreciated and the amount of time that is spent. so offering my thanks for it. i have a couple of questions. are we going to have a second round? i want to talk about a couple things. i'm a big fan of oig. i think generally they do a super job. in afghanistan is been a disaster. and i'm worried about one of your recommendations and that's the head of this new ig. simply because in lots of other areas where we have like a special ig force-iraq we got some good data l of there. a lot of what you know we learned through stewart bolin and a lot of his efforts. but i'm worried about creating another one when we are not managing in afghanistan the ones we have. and so, it is fraught with some difficulty because we are not --

we are not holding somebody to accountability and we haven't. our last ig in my opinion was incompetent, not the one that took general fields place but general fields actions didn't measure up at all at any level in the standard of that. so why worry about that and i would like for you to just comment on why you made that recommendation and how that contrast with holding the institutions we have, the special ig from afghanistan and for iraq and what was done and then i'm going to share my observations having been three times to afghanistan and what i saw change especially in the last two years especially since she came on because there is a difference with effective management. what you comment on that recommendation? >> i was the inspector general of this department at the beginning of the bush administration and i was the first inspector general of the department of homeland security sali was among the commissioners who first focused on that

recommendation. and i am speaking for myself i speak for the commission i think when i say that we completely -- i agree with you said i think stuart berlin with whom i served in the bush administration and the forehand and a texas state government has done an exemplary job and set the job very high for the kind of accountability that we should all the man with regard to these war theaters. i also agree with you that to put it charitably, cigar by way of contrast has been slow off the mark. there's no doubt about it. but it seems to me the contrast between the two proves the point manly we shouldn't leave of two -- knowing we are going to be involved with every like it or not or admit or not in the contingency going forward -- that we have that the exception of the contingency someone who is adequately trained, adequately staffed -- and we are talking about, as you know, and expandable office that would not have a huge staff how permanently, but rather would be able to scale and scale down as the circumstances require. of course come in under our recommendation they would go a ways away isn't as if there would be a third inspector general, there would be a

standing one that would work in concert with the statutory inspector general and gao. the final thing i would say about it is this recommendation is not intended to in any way denigrate from the work of the statutory inspector general, but as you know they are each limited in that their limited to the jurisdiction of the agency, and a specialist actors general, why they have the agency wide jurisdiction are limited timberlake and with regard to the subject matter. >> thank you. one of my observations when you go into theater as a member of congress is to get the briefing, and all the different groups or their. my first trip about 80% of them couldn't answer the questions, the people sitting at the table. much like -- i am talking about people responsible for the area. and that changed a little bit. but the first time that i went back, that the i actually knew what he was talking about and knew what they were doing and they were deployed and they had to be oklahoma national guard

because they were farmers from oklahoma, part of the guard that are actually farmers. there just wasn't enough of them and they were not in their long enough to make the continuity in what we do is important as well, but specifically want to compliment the head of the usaid. the point i would make is something we ought to be demanding because the problems you're describing didn't just happen over there. it happens every day here. we know it. you talk about contacting problems. my friend, the chairman knows we have big contract and problems on military projects, not -- have nothing to do with our efforts in afghanistan or iraq. but the difference is the director of usaid demands metrics now it is known going in if you can't give me metrics we are not going to continue the program. and so one thing i didn't see in your recommendation was in the

contracting to actually have a metric requirement of performance on everything we contracts for that would have presumed that you know with your body and so if you can't have ventured forth if you don't know what you're watching and i would like your comment on that because i see a big difference i could give u.s. aid for six years and i want to tell you i'm in love with the director because what i see him giving is effective management that makes the u.s. taxpayers' dollars a further and much more effective in the dollars. when we met with him privately as one of the most impressive meetings when he came and testified before us after omb decides what she can say is the staff decide what he can say publicly is not as helpful. one of the things the would be wonderful is to have the candid mess that he presented to us in

meetings you may have with him. if we in government for a little more candid it's not the fault of anyone in government now that contracting is bad. it goes way back and people are trying to improve it but we need to be honest with each other and admit that we've got a long way to go. >> let me deal with the metrics issue, senator. what she is getting right isn't metric. the dod will for us to believe good resilience of metrics at you. the issue is the right metrics. and shall understands and his people wonder since there are metrics in net metrics. so it isn't a matter of saying we need metrics. everybody who's on the contract will float metrics that you. it's understanding the right ones. and what he's doing is fundamentally changing the culture of the place. >> i can get a lot of contracts in afghanistan that have no metrics on them to respect that is worse of course. he's changing the culture so they think the right way about these things.

and one of the things -- one of our colleagues who couldn't manage to get here today has constantly emphasized we've got to change the culture, whether it is in dod, the commanders on the field, aid, state, what have you come in all the way they think about contracting. >> i'm out of time. thank you. >> thank you, colburn. senator levin. >> thank you very much mr. chairman. let me thank senators mccaskill and senator webb for their efforts to bring you folks into existence and their leadership on this is critically important. senator mccaskill came to this body determined that she was going to focus on oversight. she's done exactly that. it's been an invaluable to us. your work is very, very important. i commend you on it. your willingness to serve -- one of the things you point out is the overall reliance on private security contractors in iraq and afghanistan. that is not a new point. that is a point which has been

very dramatically present for some time. last saw timber the senate of the armed services committee released a report based on a yearlong investigation of the role in the oversight of private security contractors in afghanistan. we concluded that the proliferation of private security personnel in afghanistan is inconsistent with our strategy. afghan war lords and straw men acting as force providers to private security contractors of acted against u.s. interests and against afghan interests and widespread failures to adequately fed, train and supervise armed security personnel pose risks to the u.s. and coalition troops as well as the afghan civilians. i assume the commission is familiar with that report. first of all i am wondering whether you agree with the conclusions of the report. but secondly, before i ask you

questions about what legislation you're recommending following your report and interested as to your reaction to what legislation we have recently adopted, what recommendations which recently made to see where that falls short and then i'm going to ask what additional legislation if any. but first are you familiar with those recommendations and if so, do you agree with the recommendations i've just read? >> senator, i am familiar with that report. the commission is familiar with that report. i want to say our own report -- you in fact pass the ball along, and further investigations have been carrying -- have been going more and more deeply into it. we noted that our private security in afghanistan appears to be a major source of payoff to the taliban. our report has the first official statement that it's the second largest source of money

for the taliban. >> after drugs. >> after drugs, that's right. >> that's similar to our fight but here's what followed our report. the department of defense is published a number of task forces directed the remedial action be taken. and so the question is have those task forces been effective, are the operative of general petraeus himself told me about this importance of this issue. now he's kind of the most recent offer of the counter insurgency strategy and i just am wondering are you familiar with those task forces, are they effective, are the operative? >> well, one of them according to public sources came up with a figure of $360 million being paid to the taliban, so they are at least grappling with the issue. >> did you have a chance to interview those folks? >> i interviewed a group of analysts who sort of work for them or with them, and there is

one useful thing that's being done although it's not considered to be enough to control the problem. there is a type of vetting using intelligence information, which is that least going to keep the bad guys from being a direct contractors to us. that is obviously only a portion of the problem. >> we were briefed in afghanistan about this, some of it we can't discuss here. let me say -- and i believe -- i was with the co-chairman shays out there and they are clearly getting their arms around the problem. getting your arms around the problem isn't necessarily solving it. and a lot of this is still clearly going on, and it's going to take some work because, again, a lot of it has to do with what you heard earlier, visibility in the subcontract. >> i agree with that very much. as a matter of fact, in fiscal year 2008, the defense authorization bill at we had a section called section 862.

and what is required was government-wide regulations to be issued on the selection, training, the cooking and conduct of contractor personnel performing private security functions and iraq and afghanistan. so that was in fiscal year 08 offer my station. and i am wondering whether you can tell us whether the federal agencies have complied with the requirements of the section 862. >> i can. they've issued the guidance of the instructions and for the public comment the difference as you are well aware is the execution of that, there is a big difference between what the policy says and what being executed nine levels below on the field. also notably, i believe that section 862 meek six of two commission and the state department in the country whether they are following those

recommendations. and because of the technicalities i believe in the wall, i believe the state department would have a different view as to whether that applies to them. >> can you give us a recommendation or have you given a recommendation on that section as to any need to strengthen it? is that one of your recommendations? >> it's not specifically in the report. we can certainly discuss that with you. >> if you have enough days left to do that. >> yes. >> -- would be helpful to do that. >> center, one of the things from the defense authorization bill to require a definition of the term inherently governmental. two weeks ago when be published their new definition. long story short, it lists now for the first time the security function under the long list of what functions are determined to be inherently governmental. >> long overdue. >> i think i have time for one more question before my time is up. we have a provision in the 07 defense authorization bill which

required the department of defense to assign a senior executive to lead the program management and contingency contract in efforts during military operations. it to identify, quote, que deplorable cadre of experts with the appropriate tools and authority, end of "to staff the efforts to take specific steps to plan, train and prepare for such contingency contract. and i'm wondering whether or not that -- whether the department of defense has implemented the requirement of that section. >> i don't know. >> i would say we found the lack of program management to be a continuing problem. >> the way the department is done is it has some individuals who have responsibility for this in general, in policy-making. in osd. that is different to the

estimate is. >> it's very different. >> it is sickening its specific people. >> we did not find somebody who was so designated which is why we made the recommendation that you need somebody coming and it has to be somebody at the assistant secretary level. we think it has to be somebody senate-confirmed. schenectady alaska department of defense why they haven't complied with section 233 of the 2007 act? was that question asked, do you know? >> they've taken a number of steps in totality there are not enough. >> okay we will ask. that's for sure. >> thank you, mr. chairman. >> thank you. senator carper is gone. let's do a second round of six minutes. it's a second round. i raise the question at the end of my first round of questions which is our contractors cheaper as presumably that is one reason why contractors are called on to do these jobs.

in fact, the commission in its final report asked the question and offers the following answer. it depends. and because it depends on, continuing the quote, av factor many of them under the direct government control, the consideration of cost cannot be the driving factor in determining whether the contract or what to contract. >> senator? >> they are cheaper if you use them efficiently. they are cheaper if you use 3-cd when you only need three. they are cheaper when you hire 15 to do the work of trees. they are cheaper when you don't have a contingency and therefore you don't need several servants to be on the payroll. so they can be much cheaper, and it's one reason why we use them and they can provide outstanding work. you just have to make sure you use them when you need them and you don't use too many of them and then when you don't need them you no longer have them. >> so the key here is how you

manage them. >> more than that, senator. >> you want to take issue with the chairman? [laughter] >> i never did. eat the crumbs off this table. >> man. all right. what i was going to do is played out in addition to that there's another factor and it's one we talked about earlier. one of the reasons that they are cheaper. obviously local national is going to be cheaper. but then that is where so much of the corruption problems come plus very often we found in we've reported on this these people are exploited. this is the abuse side of the equation. we talked about waste and fraud. this is the abuse side so it is both of my esteemed co-chairmen -- >> you mean exploited by us? >> by their own contractors that hire them and so, those guys will be paid next to nothing can to force contractors are cheaper so it's both of the circumstances of the environment in which they work which is what

my co-chairman talked about, and the nature of the contract themselves for people doing them. >> so part of this, congressman, if all i understand what you're saying is how these people are managed. it's making the complicated matters simple but part of what you are saying is it can be cheaper if they are well managed. >> absolutely. what is really important is that we have experienced people that know how to see -- know how to oversee contractors even when we are not using them so that when we'd need to use them we know how to use them well. >> okay. let me get to that. i mentioned in my opening statement about how some of this, you know, it is déjà vu all over again and how do we stop it. you probably know this. in 2007, this committee reported a contacting reform bill and one

of its provisions which ended up being passed into law in 2008 as part of the armed services national defense authorization act required the ed administrator for the gsa to establish a contingency contract and/or whose members would be acquisition professionals from across the government to deploy the contingencies such as iraq or afghanistan or a major disasters such as hurricane katrina. it's an interesting history here which is that this contingency contract in court nominally has been stood up the only got nine volunteers malkoff. and now you have come along and i welcome it of course the recommendation number two that the agency should develop a

deployable condra for the acquisition management and contractor oversight to talk to me a little about this because this is one of the great lessons of hurricane katrina and why we have been doing so much better in responding to natural disasters since then also we have met katrina was catastrophic and because fema and the department of homeland security developed contingency plans of people and plans, so how do we do this with regard to this particular matter because these are contingencies and as compared to the ongoing contract in which and the department of homeland security to the islamic we explored this issue in one of our hearings because our thought was this sounds like a good solution to some of the problems that we were identifying incoming and the executive branch witness came back and said well, it really isn't appropriate for an overseas contingency.

and this really isn't going to answer the question. and we had the scrs, which was also the representative from the state department there, which was also to be a deplorable civilian based cadre who could actually go over and do the work cannot adjust the acquisition work force to supervise, but those to do the work. the agency's -- the other agencies involved are not forced to put anyone up and don't. >> mr. henke, did you to that? >> yes, sir, if i might. we had a great example of that issue. the fundamental principle is if you're going to have contractors carrying out parts of the foreign policy work where appropriate, you better have a vigorous government oversight. an example, military as tell which is a joint contract in command in iraq and afghanistan. that's a good step forward. it's about 400 people with a brigadier general in charge of it. they realize general petraeus comes in and realizing he wants more contracting oversight, so he goes back to the service and

says army, navy and air force, said the more contracting officers. they say we are tapped out. we don't have enough to read we've deployed them six times and can't break the force. so they try to get -- number one the failed on getting more military volunteers were not enough. number two, they ask for civilian volunteers. they can't find enough. they wound up staffing of the contract in command with contractors to provide oversight of the contracting. >> it's crazy and unacceptable. so i'm just going to finally in this line of questioning let's go forward to, three, four years. just as all of us want, we have wound down and our involvement in iraq and afghanistan, and maybe there is a continuing mutual defense strategic framework agreement. but we don't have many people there. and then some other contingency, some of their crisis occurs and we are required to deploy the

troops in all that they need to support them. so what do we want in place at that time to make sure in that new contingency wherever it is, we don't make the same horrific mistakes and waste of money as we have repeatedly in the previous contingencies'? >> may i start? >> yes search to the estimate having the deplorable cauvery of professionals as important, no question about it but it's only part of the equation. and my colleague, ms. schinasi, began to mention this and we said it explicitly, but quite equally important it is critical the government had a choice. and that means that there needs to be at least a small and expandable organic capacity on the part of the three agencies to reform them themselves so the next time there's a contingency the government has a choice between going with contractors and going in house and the determination can be made whether it is more effective to do it either way, whether it is cheaper to do it either way as

we said at the inception the government doesn't have an option, contractors are the default because this is the only option. >> is this something we need to legislate on or something you are going to talk to the executive branch about putting? >> we need both. but first in the quadrennial review they've got enough with service to the contracting. it was hardly mentioned. half of the great expenditure is not any more. it's on services and we have to get people to wake up to that. you need the jade ten. in the military they treat contracting seriously. you need the key management people. the assistant directors ditties to be in all the different departments thinking about contingency. you need to have a cadre of people who can oversee contractors and a country of people that can go in to do the work of contractors. if you do those things and have real competition we won't have

the same problems that we have had. >> my time is up. i hear you that we should be working on the legislation to implement what you are about, and i can assure you senator mccaskill and the subcommittee when you go out of business will try to take up the oversight of what you started. senator mccaskill, you our next. >> thank you. i think also the place we have to keep this up i don't think we can underestimate and i think most of the members will agree with me the culture of the contract in, and i honestly believe that at the war college contract and has to be one of the core competencies and i honestly believe that our flag officers it is anecdotal that this is true. it actually happens. a general said to be when one of my contract and oversight trips i wanted ice cream in the mess

hall yesterday and i didn't care what it cost. they see their mission as a military mission and contracting is not something that the military leaders have seen as part of their mission, and there was probably when most of them were trained and efficient what they would be doing a leader in their career they didn't realize to what extent the military would be relying on contract in. and so i think we've got to spend some time questioning in the armed services committee senator webb and senator collins, senator lieberman, me, senator levin we are all members of the committee and if we don't continue to pound the leadership of the military about contracting, we are going to expect more of the same. let me ask you a couple things can get first, let me ask it seems to me on the core -- by the way to follow-up on your question, omb is supposed to be standing of the contingency

corps. that is what our legislation directs, and they have fallen down in terms of doing that. but what i am wondering about is should we be looking at the guard and reserves in this regard? you know, sure what we talk about we need citizens that can be deployed when necessary. we have got a lot of men and women serving in our reserve and serving in the national guard that have the core competencies as it relates to contract in an oversight. should we not be trying to work with the guard and the reserve to try to identify certain units of the guard and reserve that recruit and retain and maintain a level of competency in terms of being a deployable during the contingencies as members of the guard and reserves because these are folks some of them may work as accountants in their jobs at de serve as civilians. it is a civilian court that can

wear the uniform and have that kind of stick in a contingency that maybe would bring more respect to this kind of work. any thoughts on that? >> some of the success stories that we heard in a theater of the interagency kuhl lubber initial on the projects and how things worked really well together often had a guard reserve member as part of that gain was because of the domestic experience, if you will come devotee of brought to that that may -- made the project successful. but it was almost by happenstance. there was no planning for it. there was no identification issue of what are the skills we need from the guard to bring to the agricultural product in afghanistan but where that did happen, we heard many examples of successful projects on the small level. >> it's also important that the same approach -- and you can't use the guard and the same way -- is taking place at the state

and a lady and we heard about a a ebit as you see they are going to be taking over a lot of the contract and what we cannot afford to let happen is the dod queens of its act as it were the other agencies do not command one of the concerns i personally have discussed you've got to give the people to go out there. it's not enough to rely on volunteers. if you're going to rely on volunteers you are always going to have a problem. >> let me switch because when you brought up relates to this sustainability to be as we transition back to the state aid from defense we have created some precedents in this committee that are unprecedented in the military history, and one of them is the notion we now have the military with a reconstruction fund.

that has never happened before in the history of america. for the first time this year and the defense budget, there is afghanistan reconstruction. i'm not talking about search funds. i'm not talking about the funds it is like they have more often to the military is going to build things. and that is where the whole sustainability peace comes in. if the military is making the decision about when to build things, i believe that's why power plants will happen likes kabul. i need recommendations that we could put in legislation. what should the requirement be around the sustainability? what kind of process should we force in place that they have to -- they are claiming now they are doing the sustainability analysis. i don't know if you saw any evidence of that. we have looked and can find no evidence of real analysis on the sustainability if the military

says they have it somewhere they can get it to my office anywhere they would like but i do not believe system of the analysis is going on in earnest and most of the decisions being made. i need guidance on should we be passing it off to the military in these contingencies to build things ever and pass it back to aid come and don't we lose some of the oversight sustainability as we do those kind of things? and how do we get at this issue that counter insurgency means we build the health centers and power plants and highways even if the security and sustainability are now those issues are completely unlikely to ever have to be able to occur. >> senator mccaskill we deal with that in two ways. the first is to talk about pushing development, traditional development projects and the key u.s. 80 on the counter insurgency timeline. it just hasn't worked. so i think that your concerns are inappropriate in terms of

who is it that should be doing projects and what is their mind set in terms of the time frame for that. the second is we have made recommendations although we don't have the metrics about the sustainability we have made recommendations in the special reports contained in the back of this report that says cancel the project if you can't demonstrate that we're going to be sustainable, and again, you would have to come up with senator coburn's net tricks about how we are going to do that but if you can demonstrate that cancel. >> should we put something in the law that says you can't go forward unless there is a written documentation about the sustainability analysis? are we -- this will drive you crazy because they are seeing welcome of the whole duty of the counter insurgency is how quickly we can move, which i have watched -- asking questions about 2007i have watched every year how it has gotten bigger and we started out with breaking windows and storefronts and that's the first year we are going to fix the broken windows. the next year we are going to

have a wing on to the hospital or we are building highways and now we have a 400 million-dollar front. >> nobody wants to take ownership and that is one of the reasons why we think we need to see that structure in place in the military, usaid and state as well. >> there is an element at aid that we discussed that's underrepresented and it's a small office called office of transition initiative and actually it's fascinating to read the entire office has only a think six government personnel. everyone feels is an individual consultant or contractor, whatever they want to call them. those are the only people that are geared to the kind of things you are talking about. and it seems -- this is my personal view. what they ought to do is create something that is to say you can go all the way to the top and get your budget money but he

won't compete with the dominant culture which is long term development but you will have people who now have a prospect the of moving up the ladder and therefore will stay. what we found in afghanistan was really remarkable. young people actually young women going out into these danger zones but then we are told well, you will do this for three years but then you can't come in because your contract is up so people knew what was going on. >> that's very weird. >> thank you mr. chairman. >> thank you, senator coburn. >> thank you. i think the commissioner mentioned the culture changes. the senator from misery and myself demanded the culture change and i don't know if we have gotten it or if you've done more follow-up hearings but we have had a change in the top but what we found was no truth of it experience. they didn't have any formerly

trained auditors it was a culture that goes with in the agency but you never have outside training or outside experience in terms of auditing and in terms of what you recommended. any other things he would recommend for the -- dcaa and water they doing in terms of what your observations were in your study? >> it's too bad the co-chairman is in here because he would love to speak on this issue. the one thing we did mention this if you have a 600 million-dollar backlog of bills paid but not audited, think of the records people have to keep and we pay them to keep those records. we pay tens of millions of dollars for people to keep records that we are then going to audit six or seven years later. the memory about them is going to be -- and so, one, the need for people. they need as senator mccaskill points out and you point out well-trained people but the need more people. they clearly need more people to

get at the backlog. >> one other question and then i will end, mr. chairman, is three or four years ago i was on the louis berger corporation for the incompetency. did you find out why some again did find $70 million still be able to contract? >> we looked into that. >> can you give a plausible common sense explanations of the average american can understand when somebody has actually cheated this and then find we would continue to use that when they have demonstrated that they are not competent, and number two, they actually over bill? >> i would give a three word answer from an answer in a few words is very good criminal defense lawyers for the company is how they are able to they worked out a deal with aid, that is louis berger's criminal defense workers worked out with aid that they promised they

would be good and have a monitor look them over and make sure they are improving and in return you would agree they wouldn't get one day suspension you might say why would aid make this deal? they love what they call their development partners. they love them too much to let go of them. they didn't want to do without not without him for a day. they didn't want to do without contracting the new contracts for one day. so the crucial opportunity to send the signal was -- with questions on aid at two different hearings we raised this issue and they stood by and the technique worked out with the civil defense lawyers, the type of plea agreement that was done unfortunately looks like it

is going to be a model for the future. >> so why would we as a congressman told whoever made that decision, usaid accountable for the american people? >> i think the very least you want to call them in for a hearing and question them quite extensively. that's how he would hold them accountable. >> by the way, the former finance minister of afghanistan who still advises the president and is in charge of a variety of things goes absolutely ballistic when you mention lewis perjure for that reason so not only is it a matter of cheating american taxpayers, it is a matter of undermining our credibility with the government we have to work with. >> did you see any other examples similar to that with other contractors we could learn from? who should have been disbarred or disbanded that weren't? >> that was the extreme example.

louis berger is the biggest defroster in the contingency area. nobody got up to the members of the criminal fraud that they did. having said that, what we found is that there's a great difficulty bringing a suspension debarment cases against companies for what happens in afghanistan because it's hard to get witnesses together, people rotate out, there are people from other countries who are a part of the allied effort who you can't possibly hold them and so forth and so what we did is we put some recommendations from making it possible just on contingencies to do the debarment. the reason this shoshoni even more recently than the report of the sort of test case to see whether you could do a successful the suspension

debarment through the normal full-scale trial in the united states, full-scale here in the united states i forget what the name is a hint to of ended up virtually in a win by the company. so, you do have to make it easier to do these proceedings or they won't happen >> so that is a recommendation we should be doing? >> is one of the written recommendations in the report. >> thank you. >> thank you, senator coburn and to the commission members. congressman? >> i would just allow me to thank senator mccaskill and senator webb on behalf of the full committee and senator collins and to you, senator lieberman because you have shown tremendous interest through the course of our nearly two and a half plus years and i would say that all of us would tell you it was a privilege to have this opportunity, and we really appreciate your interest. it's nice to be on this side and

be on the friendly side with you, senator mccaskill. >> that's a very gracious of you, thanks for your service. i recall that the beginning that senator mccaskill said that your services were being sought after and she was very glad that you agreed to take this on knowing that the commission expires in a week or so and i hope you can find a way to continue to keep busy and perhaps the involved in public service. >> thank you. [laughter] >> i thank all the members of the commission very much for your public service. we will call now the representatives of the defense department and the state department.