investments because as we are looking in the department of defense but also state department and usaid how they position themselves in the future for fewer resources this is the perfect time to say we can make investments and allocate our resources to try to prevent this and get a better return on the investment we make and taxpayer dollars we spend. i would argue this is the time to make these allocation decisions. >> i thank the chairman for his kind remarks and i assure him his editing improved the product. the good stuff gives the report. let me give you an example where if we had the personnel with a limited amount of money we could save a lot of money. we have a giant contract that come to an end and we should

complete them. we have a service contract that came to an end because we didn't have the personnel to move fast enough to compete now. that got extended on a sole source basis of $4 billion expansion because the agency wasn't ready to compete at that point. >> thank you very much. my time has expired. >> now recognize mr. langford for five minutes. >> thank you for the long work and tedious work you have done through wonderful conversations. the section in chapter vii is interesting with the section and debarment. i don't know who focused on that information but want to talk about how to resolve that. a couple questions initially. when dealing with the complexity of the environment with a foreign contractor or u.s.

contractors or both. >> dealing with both but we did not deal with domestic non war contractors. we wanted strong reformers but for overseas contract in, techniques that reduced the procedure but we were not trying to impose them on on wartime contracts. >> did you have recommendations on this? this brief report -- recommendations on how to resolve that because it is not just an issue to deal with but government-wide, suspension and debarment issues we had on the complexity of the process and recommendations out of this as well. >> there are several. i will name one which was inappropriate cases it should be possible to suspend or d bar on a documentary record without holding a mini trial as required

domestically. we have seen instances where it is impossible to pull together witnesses from afghanistan to do a suspension trial. >> to elaborate. with your permission. when i served on this committee i was stunned by the rights we give contractors when they work with the government. even when we overpay it may take a year to adjust to pay them what they should be paid. if a private business wants to engage a contractor their limited by the contract but don't have any privilege before that. we give privilege before contract or during a contract and after a contract. this committee needs to examine in times of war should we be giving contractors so many rights and privilegess that can

drag out the decision for a year so what the government agencies decide to do say it is not worth it and we keep them. >> did you run into situations where it was a sole source and you would see a need for a suspension or debarment instead of actually the barring and they are essential and we know they are a bad actor but we don't have any other folks? how do we get around that? is that a matter of we don't have competition or we are not raising up or something inherently governmental we are trying to outsource? >> all those things. lack of organic capacity so we don't have any alternative but to use contractors and there's limited competition among contractors and very limited oversight on the part of the government, inspector general, that is why these recommendations are pieces of the package and it is important

to put these together to solve problems. >> other comments on that? >> you remember the september of 2009 incident where contractors party in and drinking and having a great time and embarrassing the nation. they were providing security at the embassy. because they didn't have the option of saying go home tomorrow, we are bringing in our own people to provide security. that contractor stayed for 18 months after that incident. still in place and billing the government and operating. >> that becomes fulfilling the rest of the contract which is a different set of issues. was there a process in place to say we are they barring him? >> i don't believe state pursued

that and the contractor -- state is required by law to have contract for securities at embassies. >> you have an extensive section on foreign contractors using human trafficking. that is a very stark, and on the work in iraq and afghanistan done with slave labor and people compelled to work for whatever amount. our extensive do you think that is? >> it is really quite extensive. they bring people in, hold on to their passports and lock them up as prisoners. it is virtually slave labor. >> and we are aware of that. people on the ground are aware of that. >> at a minimum everyone is aware of it after a report and a lot of people were aware of it before. to get to the point about suspension and debar are we going to bring witnesses from

these companies? we have to use the rules that are available to us and modify them slightly and suspend these people. they are not even americans. >> if we had more time i think we would have gotten into the trafficking issue. there's more to this story than any of us confronted. >> i recognize the gentleman from massachusetts for five minutes. >> we could be here the rest of the week on this. you did a great job which we asked you to do. i want to make a number of points. thank you for continuing the argument. i'm trying to convince my fellow chairman his name would be of value as a sponsor on that bill and i want to add the point, this person would be able to cross different agencies and they overlap and that is essential. the other thing is lessons learned. we failed to learn the lessons

of iraq when we set up a different body in afghanistan. they took nothing from iraq over and the contingency inspector general would be able at the outset to go in with knowledge of lessons learned and up repository of them maintaining -- that is important. >> i completely agree with that. that person would be in place at the outset. >> somebody was going in was smart they would use the advice on how to set up, not overseeing. you make a great point about organizational restructuring that needs to happen in state and all of those and part of that means giving value to those positions. people think it is bookkeeping or accounting, we have to find a way for those agencies to give a value to that position because it has value in more sense than the dollar. we will be looking at your work

on that to see how we can work with departments and change that factor. overriding that if we try to do too much and don't have people to man it or resources to manage or oversee it we have to rethink the mission. whether we should be there or not or the way we are it will be dictated on what the capacity is to do it well and to do it right. the accountability aspect we ran into on one time risk-management we were dealing with the other day. we recommended debarman. of they went and we found out not so much. they basically had a slap on the rest saying they couldn't do trucking contracts that were doing them anyway. the war lord god of a flimsy

notion of not understanding what people were talking about but the department never went in and held its investigational. we have a lot of work to make sure this accountability and competition and the notion of food and oil and lack of competition and a problem with confecting and we haven't done a good job getting contracts that are meaningful. when you have a situation in the trucking matter where there was no insight or a vision they contract did for a bunch of middlemen who did not own truck for security agents, we didn't retain the right to look at those subcontractors or get any information to them. you were helpful in going on that. so thank you and kudos to all those areas. my question is on sustainability. what does congress have to do to make sure we don't invest in contingency areas that can't be sustained by those governments?

>> it relates to your point on the mission. sustainability was important enough but we have an entirely separate special report in that we make a recommendation you should be canceling projects that are not going to be sustainable. that is something that will happen right now. we recommend you go when and evaluate projects we are putting money into and you cancel those you cannot guarantee sustainability for. that is a short-term immediate dollar value task the agencies can take on. >> this is essential to your concern. annual reports about the contingency contract in would give you a vehicle on sustainability. if for some reason a project got started and slipped past, you could catch them. you have an opportunity every

year to catch them. >> what is stunning to us is the number of ways we determine $30 billion to $60 billion, we do think the non sustainability question will equal a $30 billion plus. it is another amount you would need to add to the figure and it is a very real figure. could i just respond to your special id efforts you are making? in support of the special ig act of 2011, you are in the best position to see this because you know the armed service committee because of the relationship they had with the military isn't looking at things they need to look at.

sometimes the foreign affairs committee isn't going to get at something you need to look at because of the relations they had. the its in the department developed relationships. there are certain things they are willing to do and things they are not willing to do unless you are like mr. ervin and don't care what they thought. it is the club. a lot don't want to offend the department they are in. that is why you need the competition. i will end by making this point. when i was chairing this committee we didn't look at something i've wanted to look at and the armed services looked at it and it was a cute issue. thing goodness they looked at it and sometimes we looked at issues they didn't look at. i think the chairman is in the best position to see the value of this. >> the to the inspector general

-- they have a full plate. without contingency operations they have a full plate with the amount of money they are in charge of. your issue operations like a different ball game. >> one of the things we learned is the state department set up in 2005/2006 a middle east regional office to work overseas they had such a demand for. they set it up and two or three years later they did a review to see how their audit quality and they don't flexed a new unique circumstances. >> one last comment besides my undying gratitude for the work the commissioners have done. this committee ought to consider using our members well and tackle the recommendations to see if we need to translate into legislation and do follow-up

with the agency's so this is not just a product that sits on the shelf. the work was too good for us and fit so squarely in the overarching -- gives us something we can work on together that would be a great example for congress. i ask you to entertain that thought. >> i recognize mr. walker for five. >> thanks to the commission for the work you were asked to do and that you did do. we trust that it will have beneficial outcomes as we tackle it. along with the cost and problems with the contracts, while they are in operation the gao released a report in september documenting that 58,000

contracts in fiscal year 2003-2010 need to be reviewed and closed out. delays in the contract close out waste millions of dollars as improper payment, waste, broad -- fraud almost impossible to detect because file the loss. memories fade and contractors disappear in the contingency zone. let me ask this question. how important are timely contract close outs to prevent waste, fraud and abuse? >> extremely important. if you don't close out a contract you can in theory and practice most of the time spend money. that money probably should not be spent. it is taxpayer money and it is probably going to wrong way to the wrong people and we have seen cases where contractors are

using their people one fifth of the time and being paid full time because it takes so long to close out. when you look at thousands of thousands of contracts that have not been closed out which means they haven't been properly audited -- >> no oversight or anything. >> exactly right. that is what commissioner shea said earlier. if you are not auditing contract and the government is paying for the timeigug ta$woulds oose this rld d the government is paying r in between the audit having to take place the taxpayer is being hit with a double when me and paying for the time not being covered because the audit hasn't been done. >> based on that and good to see you again. what steps should dod be taking to accelerate this process? >> i may not be the best one to

answer that question but just look at the numbers and congress needs to share this burden. it is not just the administration. congress needs to be advocating these positions be filled. >> who would you suggested answer this? >> i will take that. i wouldberust emphasize the nee to hire more people, more auditors. bou don't have auditor don't do audits. >> we are not talking thousands of people. d.c.aa is auditing -- hundred auditors in 2013 to attack this backlog of work. something the committee could look at is making that entity on

a fee basis rather than discretionary appropriations to perform the work they are being asked to do. >> let me add, commissioner tebow worked very hard on the specifics of the personnel and scale of the contract. what we found was dcaa was responding to necessary priorities and they had a choice between auditing the backlog or u andle real-time responsibilities such as when up billion dollar contract is awarded they're supposed to audit the proposals to make sure it is right.

so in effect they sad letting the backlog grow and grow. they met the cllarent but not te old needs. >> is the obama administration e rare of thiwhat >> i think so and i hope congress is as well. >> we will recc.nize the gentleman from virginia for five minutes. >> one thing i find interesting in this discussion is congress almost never takes responsibility for our contribution. when you were in congress we have leadership in the armed services committee that pooh-poohed the idea of the need for more expertise in hiring of

contract ma engers, procurement and acquisition expertise. we quadrupled outside contracting but increased personnel by 3% and now we are surprised weekend account for the dollars we are appropriating and does anyone disagree? i heaon b one of the answer is what we need more capability to account for those dollars we are appropriating. one reason this commission was so bipartisan is we realized the e aault was with both pamore ie. >> we had a mindless dialogue in this congress about the need to shrink the size of government but whenever talk aisaut the ned to invest on a substantial payoff down the road. we could have saved the $60 billion that has been wasted

through fraud or loss. whatever we invested in additional personnel would be returned back. i ass> ie that is your testimon as well that those modest investments up front would have big payoffs in helping what your report documents. >> pamore of the problem is we have to play catch up. the blame flies everywhere. it started in the 1990s with the peace dividend and turned out a chunk of that cut the very people you were talking about. there is some blame there and there is blame later in the early part of this decade when lape e contracts were not definitive. one could go on and on.

the point of our commission repomore and where we all agre regardless of our politics is something neele, to be done now and in the interests of this country and as taxpayers and politics don't enter into it. >> politics do enter into it when you decide what ioffestmens you will or will not make. i wish politics didn't enter into it but they very much do. i would like to bring the floor of the house to wayofh our plonsate. we often know the cost of everything and the value of nothing. the estimate of loss is $31 billion to $but w billion. that is quite an array. why such a wide array in your repomore ? the second point is how much would you attribute that to lost money where you are hiring local

trucking companies and they lose the fuel? >> we apply a broad dle inition of waste. how much money you could have spent on other things and we included in our definition excessive reqd not adjusted after words. we include work that was required on poorly doneberobs. we include pork projects that didn't fit ly val culch ures or politics. we include an anticipated security costs. bou discover you have high-security because of a dangerous ariane and questionable payments to contractors and more oversight as waso itentioned the earlier. we donnit igerlude sustainment costs. ã why such a wide range? bou cannit do a bottom because we don't have

information on these contracts. you heard 58,000 hadn't been finalized so we donnit have enough information to build a bottom up number although as was mentioned we found an e rful lo of examples in chapter iii. a top down estimate is insufficient. if you want a proper estimate, 10% to 20%, if you want the parameters you couldn't do it because it would not capture the ind weridual projects. fraud which is based on another estimate by the certified fraud examiners which is the c werili side, that one doesn't work because of the pme tnt . ã we don't know how much has been siphoned off by these d is hard toout.et to and it goeso

something the commission is lity over subcontract. you probably start page 73 of the report. ã we show a bill we were given a copy of in afghanistan. these were a bugerh of d saying if you want protection here is the number to call. something out of hbitics >> one thing that extended the array of waste was the change from iraq to ned ghanistan. in 2008 iraq was the big contract in prpsplem. bou pay off protection insurgents in afghanistan. they led the way in irgha. you have a country that is so

poor in afghanistan that it has lihey le absorbent capability which means they can't sustain what we are bd gone. iraq wasn't for the way ned ghanistan is. ã we have a new set of problems. >> thank you. i recc.nize theout.entleman fro idaho. >> thank you. congressman, i found your comments to be faso n enting. i was wondering a little bit we are doing too t. ã we syou.d the one thing -- recommendation is we're doing so much. -- we have to ma enge these contracts better and if we ma enge thexcbehey er we won't e waste. then we realized it was more than that. if we couldnnito itanage them

better we couldn't do as much because we cannito itanage thatd we began to realize even if you can manblee them, we began to se so many things happening. when you have a wonderful contract in ned ghanistan that cost $18 million feeding their culture and dme tng agriculch u ã work and the federalout.overnme increased the program to reas50o itillion instead of 1fg whatever it was but much less

how we are wasting the money of the american people and i am frustrated. i am frustrated when i hear from members on my side of the aisles that we can't do anything about fraud, waste and abuse. we should look at other areas that can't do it in the military. it blows my mind. the recommendations you gave, do they address this issue? that is what i am concerned about. i read these 25 recommendations and i see better management. i don't think we can manage because i agree we are doing too much. which of the specific recommendation hits at the heart

of your concern? >> i will answer it this way. everybody takes the blame, nobody is responsible. we tried to have people responsible so the dual headed person that would have to be approved by the senate but would have a right to make decisions in the nfc, that person at the top would have to answer about waste and the money we spend. somebody with in the joint chiefs's focus on the contracting and when contracting doesn't turn out right they go to that day 10. having the key management positions we advocate in state and defense and usaid the person in charge of this, they will feel responsible for saying we

are doing too much and wasting money and it will fall on my desk and i have to take the hit. they will start to force accountability. >> your hope is they say we're doing too much but it seems we're doing nothing on our side. we are doing nothing to tell the military or other agencies we're doing too much. do you have -- >> one value of this committee is this committee is willing to look at dod in a fresh way and say you are part of the mix. not quite addressing the answer -- >> if i could add one thing that might be helpful. i think our present fiscal situation as dire as it is is helpful in this regard. the fiscal situation the country finds itself in is very

different from the way it was ten years ago. we cannot afford to undertake the range of missions we could ten years ago so this kind of question whether it is contractors or oversight will be preceded by a question of whether we should undertake it at all given the state of our finances. >> i agree and thank you for your answers and your work and being here. i wish i would see that more in members of this congress. i see too many members of this congress saying we need to give the military past. when we get reports like yours. >> i recognize the gentleman from vermont. >> thanks for your good work on this and i appreciate the cooperation you and your predecessor have shown on this.

mr chase, welcome to you and the contractors. you have done a great job and it is refreshing to have content we can put our arms around and find common ground to get something done because most of us would prefer to get something constructive done and you established a platform. i want to make one general comment. the general comment is if we assign this huge job like the war in iraq and afghanistan to the military and they have limited resources the contract allows the illusion that there's a capacity that doesn't exist because we just have to throw money at the problem and obviously it doesn't work. the real discipline has to be on what it is we expect, what we impose on the military and if we are unwilling to address the

capacity question you identified that will result in failure no matter how much oversight we have on the work of getting that bottle of water here through pakistan through afghanistan, a journey you have taken many times to that forward operating base and whatever has to be done by the military to get that bottle of water to our soldiers on the forward operating base their going to do and deal with all the chaos and mismanagement and wasted money afterwards. understandable but that is the problem. thank you for focusing on that. as you know we are going to be transitioning in iraq and among the tasks we will be asking the state department to do, activities traditionally done by the military and by most of us

as a governmental function they will be serving as a quick reaction force to rescue hostages or respond to attacks on the road. i asked mr. henke, does the guy at the supply to the state department and contractors? >> yes. does. the devil is in the details of how they interpret the words. the short answer is the question becomes what do agencies do with that guidance? they put security in a combat zone on the list. states will argue we don't do combat and we don't support dod who does combat. that is well and good but leads to the conclusion that state would offer that the embassy is like any other embassy anywhere and can be provided by --

guarded by contractors if it is more high risk but still appropriate. omb guidance would disagree. >> what about the hostage rescue team? would that be an activity that is a governmental function? >> if you rescue people in combat that is correct. >> what about convoyed security through in surge and controlled territory in afghanistan? would that be appropriate under the new guidance? >> the words in the guidance our security operations on the list, security operations performed in support of combats, providing military articles are in direct support of combat operations. >> i want to thank each and every one of you. >> one thing getting lost that we don't want to get lost.

inherently governmental means the government should do it. if it is not inherently governmental doesn't mean the government shouldn't do it. the hole point in our chapter is we look at risk at the risk is high, we would be leaning toward suggesting that the government do it. what is disconcerting about ambassador kennedy's response is dod is leaving iraq. they are transferring their responsibilities to state. and state is saying we're doing it but it is not governmental. they are saying that. we fear they are saying it because they don't want to appear they are not abiding by the law. >> thank you very much. i thank all of you. i look forward to being a lieutenant for you and the ranking member. we have a good issue here and a good committee to work on it.

>> recognize former chairman of this committee, mr. burke for five minute. >> good seeing you again. wish you were back. i have one question. i don't want to be redundant. you may have answered this before. you said there ought to be a commission to oversee these issues and it seems to me, mr. tierney -- it seems to me that seems like another layer of bureaucracy we have to deal with. if the people who are supposed to review these contracts, if there is a buddy/buddy relationship it seems to me that we ought to get rid of them and replace them with somebody that

is not biased in any way but to come up with another layer of bureaucracy to oversee the one that may be bunny/buddy with contractors doesn't make sense but these things mushroom. i want to get your comments on that. our committee on government reform and oversight, if we had commissioned it like you to talk about specific problems with an agency where they are not policeing properly we could make the request that that person be replaced so there wouldn't be the buddy/buddy relationship you are talking about. i would like to get your comments on whether we should have this new layer of bureaucracy or commission to oversee this. >> i will take a shot at that.

commissioner shea referring to individual igs getting too close to the management of the agency. >> i understand that. >> what we saw in the contingency operations are multi agency flavor. not just one agency spending money but all across the government there are 17 agencies spending money in afghanistan. what we are looking for in a special inspector general is not another layer as much as an individual who has the authority to look across different agencies so we rephrase the special inspector general for iraq and afghanistan. those offices have done good work that individual agencies were not able to do because they didn't have the authority. it is meant to be an efficient way to look at the money the

u.s. government is spending. >> that is the only question i had. thank you very much. i will recognize the gentleman from illinois for five minutes. >> thank you very much. it is always good to see you and to know that you are involved in public interest and public service and by want to thank you and all the other members of the commission for the tremendous work you have done. looking at this report sort of a firm's a lot of things i thought but didn't have information or data to go on. i thought it and then when i read it, that is kind of the way

is. in some societies and some communities and some neighborhoods throughout the world saying that something about this is just sort of the way the culture evolves. it seems to me there are a lot of people in these countries who become involved in one way or the other to see this as an opportunity to feed from the trough and if there is an opportunity that just can't resist, they can't not do it and so my question becomes whether or not this is almost seen as policy, that we hire especially

if we are in different countries and we have war taking place do we hire all of these contractors as a way of mollifying some of the elements met -- that might be there that makes it more possible to function and operate? >> we do have policies as you describe them called iraqi first and afghanistan first and you hire local. the first problem is it is wanting to hire locals and another to flood a country with money. my colleague commissioner teefer mention that. when you are putting as much money into afghanistan or the gross domestic product and six times as much budget, you have a

problem. there is money coming off of trees as far as the afghans are concerned. maybe you should look more carefully at how much a country can absorber before you start pouring the money in. if you are going to have local contractors and you're going to have them because you have a policy to have people not alienated by your presence then supervise them and that is what we heard recommended in our commission report, whatever the circumstances in the united states or elsewhere at peacetime when you are involved in a contingency and you are using local subcontractors the united states government should look at their books and if there books are not clean we throw them out. >> commissioner zaccheim is right about the afghan contract and the iraqi contract.

i would say in our report, recommendations of stronger control over foreign contractors because the kuwaiti contractors, we depend on them for the iraq war and they took us to the clean air. a bill from american business. someone was going to go on wartime it could have been an american. relatively small kuwaiti business with large signs, public warehousing corporation which currently has an indictment where the press has estimated it would cost $750 million. ..

>> i recognize mr. murphy for five minutes. mr. murphy from connecticut. >> thank you very much, mr. chairman. let me add my thanks to congressman shays, your long service to our state of connecticut but also for your great work on this committee. i know how streusel you took this were. i think we're all incredibly pleased to see some real concrete proposals before us. it's not often this committee gets to see this kind of volume of good forward looking work. i want to build on representative tierney's questions about sustainability because i think this is key. i'm so glad you focus in on this issue, but your suggestion in some ways is a pretty radical

suggestion, because your first ballpoint says essentially what you already repeated that we should examine completed and current projects for risk of sustainability or take action to cancel or redesign these programs. a couple pages earlier you point out that just in the next year we are going to spend $13 billion on building up security forces alone, and the total revenue coming into the afghan government today is $2 billion. not enough to even cover 16 of the investment alone. i think there's a lot of hope for some long-term new revenue sources related to mineral production. that's a real long-term high in the sky prognosis. so i guess my question is what are we really, what are you recommending your? a suggestion that you cut off all programs that can't sustain themselves is perhaps a

recommendation to stop funding the buildup of the afghan national security forces. it's a prescription to essentially end support for a lot of the main core missions we've been doing here. you know the other side of this is to just admit that the american taxpayer is on the hook for a lot longer than we are. that's the other side of this, is that maybe we just have to of a clear understanding that we are going to be in good thing particular security forces much longer than the american public may understand. but i guess i'm trying to get my hands wrapped around how radical a recommendation is the idea that we should and projects that are not sustainable? >> why don't i start a? i think your analysis is spot on, serve. there's no question but that a lot of these projects, you talked about the security forces in particular cannot be

sustained absent continued an american investment. i think we have to be honest about that. we have a choice to either the united states can continue to undertake these projects if we ultimate conclude not within our fiscal situation they are critical to the national security of the united states or we determine they are not critical to the united states government national security and we have to stand down. >> general caldwell has already said that he's planning to ratchet back the cost of training the afghan forces. that tells me that, again when the government wants to respond, it can be spun. now, as commissioner ervin says it's still going to cost us money, we might as well be honest about it. but at least if we focus much more carefully on these projects and we decide we do need them as we need to train the afghan forces, then we can cut these projects down to size. that's exactly what general caldwell is doing. >> i want to add my voice. this is a tremendously insightful question, and i think really what we are saying is

obviously we can't just eliminate everything that we think they can't sustain, but we have to reduce the amount or size of project if it our capability to sustain them in the future. >> let me just drill down in my remaining time to one specific issue you raised which is, when i was in afghanistan last, it was a particular point made by our commanders in the field how important these surplus were to them. in terms of building out their support amongst the committee. but i think you raise a very important point that there's a very different analysis and whether it's important for the here and now building local support, and it can be sustained in the long run recommendations are ideas of how we better control the usage of cerp funds because this is going to be a major debate here and i would be interested to see if their specific recommendations to make sure that sustainability is part

of the commanders decision-making process are part of the approval process. >> i would recognize cerp for what it is and i think it's dod's willingness to say we can do that, just give us the resources to do it, even if it is not their core mission. when cerp was originally brought about it was on the order of 150, $180 million worth of seized iraqi assets. no one thought it would grow to be a $2 billion program where we are buying a generator complex in kandahar for $240 million. number one, look at the capacity of the agencies who should be doing those things, diplomacy development missions, they have the mission, they don't have the money. dod has the money and the ability to send forces to go do that. so number one look at the existing agency who might be doing that mission if they were more fully staffed. and don't let things like cerp

get out of control. no one thought that it would be used to be basically a de facto development program, a long way from $100 per door, $300 for a new well, let's the old a quarter billion dollar powerpoint and candor. >> we spent a lot of time during one of our hearings pursuing just this question. we asked the question of the different agencies have you all come together to talk about the military timeline is today, today, today. the developer timeline they are trying to work on is much longer. the projects are totally out of sync and we got no answer back from the agencies, are you all working together to bring the knowledge to the resources, as mr. henke just said, that we need to, to get done commission. but cerp is certainly something we found was one of those missions where you just throw more money at it and it will be fixed when that is clearly not the case.

>> thank you very much, mr. chairman. >> i recognize the gentleman from new york, ms. maloney, for five minutes. >> i want to thank all the members of the panel who served on the commission on wartime contracting, and especially my good friend and former colleague, christopher shays. just yesterday the bill we worked on went into effect for the victims compensation fund for the 9/11 workers. i appreciate your tremendous leadership. thank you for your service in so many areas. i compliment you on this report, and you make a number of recommendations which i think are important. so many reports come back to us and they never say what you should do, but you are clear in your recommendations to increase competition. and in your written testimony you decry the fact that even after eight years in iraq, there are still multi-billion dollars contracts that have never been effectively competed. and you state that you believe

there is 30-$60 billion loss in contract waste, fraud, and abuse. so it seems like some of these contractors are being treated like they are too big to fail. i financial service committee, we passed legislation to end too big to fail. we can't afford it in this country. we cannot afford bailouts. and in your report it almost sounds like a bailout or a gift, giving sole source huge contract for items that are easy to produce and get to the troops, such as food, fuel, logistical support. this isn't a high-tech, high difficult things. these are things that i think many of my constituents in new york and probably yours, christopher, former ones in connecticut would like the opportunity to bid on the opportunity to provide these services. so my question is you have some

recommendations. mr. chairman, let's start implementing. let's redid some of these contracts and see if we can lower the costs for the american taxpayers. in the city of new york, we found in our studies there were sole-source contracts. and when we bid them competitively to the lowest responsible bidder, you had to have a record, you have to be doing it well, it saved literally hundreds of billions of dollars in the city of new york. so i think in the federal government where it says that you are spending 200 billion in contracts alone in logistics, that we could save a lot of money. and this is within the jurisdiction of this committee, and my question to you, mr. shays, is there any understanding of how much this would save taxpayers money if we were able to competitively bid them? bid them now. when they expire, for fuel, for

food. how difficult is it? we have people moving food and fuel all of the country. why not let the taxpayers, other taxpayers have a chance to bid and see if they can provide it at a lower price, probably more efficiently and effectively? and i agree with your report that it's ridiculous to give the sole-source contracts. once you get it, you have a for life. that's not the american way. and particularly in afghanistan and iraq we should be watching every dollar. i agree with commissioner tiefer who said these contracts should be going to an american company, they should be providing the services and growing american jobs. but let's put some competition in the system. so my question, commissioner shays, have you done any studies on what would happen if we competitively bid, oh say, the delivery of fuel? it would probably bring down the cost by billions. >> being the wise men i am i'm

going to ask the expert on this issue to respond to the question, mr. tiefer, who will i think give you a good answer. >> thank you, and ms. maloney -- >> it better be a good answer. >> times that for i will start by saying there's a great bipartisan tradition about competition. this is the committee that wrote the competition in contracting act itself which is still the loads are the principal for competition. >> but they didn't use it in iraq and afghanistan. >> they have gotten around it. >> but now i can see where you're going in an emergency, but now when we are looking to save dollars, there's absolutely no reason why we can't redid all of these contracts and save taxpayers money. >> we used a figure of 11% as the amount of money that would be saved, because the army had used that in its decision which unfortunately went the wrong way. about whether to give a sole source extension to logcap contract in iraq for last year.

among the particular things that concerned us, which, loopholes in effect in the competition and contracting act, is that the logistics contracts in afghanistan, the one that is held by only two companies, they have a five year long contract spent when user logistics, does that include fuel and food when user logistics? what is logistics? >> it's not bulk commodities but it's the dining halls, the preparation of the food, the providing of the food to the troops and civilians. >> so that is just providing the food. what about importing food or buying the food? is that part of it? >> that is separate. there have been scandals in the supplying of the bulk food. that's what the $750 million in diamonds, the public warehousing was. there have been scandals in

providing the fuel. that's the kurdistan scandal about how we make payoffs to the family of the corrupt ruler. but the particular of the logistics contract, which is the single biggest contract, is that it won't be competed for an entire five years because the agency says it doesn't have the personnel to compete it in three years, which is absurd. >> well, i agree it's absurd, and if they don't have the personnel to compete it than i think this committee could direct that personnel be shifted over there. so that we can compete it. but other of the contracts that we could compete and see if there are savings? and it's ridiculous to give a sole source in this situation. >> to add a perspective, what was most disconcerting for us was when you start the process,

you will want to do with one contractor and you will not want to let out a lot of bits. but after you in the second and third year they wanted to see a lot more competition. so we have evolved weather is a lot more competition. the sole source is not the rule. it's the exception but it seems to be the exception on the bigger dollar items and, you know, causes us concern, just to provide a perspective spirit why don't we change that, commissioner shays? this commission could direct, competitively bid the larger contracts. i believe you would save money by the billions, i really do believe that. we are in a financial crisis. >> we were concerned that it would go to logcap iv soon after, that they allowed it to continue and iraq. we voiced our concern. we don't have the clout that you all have, and you all can continue this, looking at what we've done, looking at what we recommended, look at what we

argued for, looking at where we have had success, looking for -- >> who stopped when you try to make these changes? >> well, dod or state that basically says they are comfortable with his contract, and that's the bottom line. we are at war, and so be it. >> thank you. we're going to start a second round pick if you want to come back i recognize you again, but i'd like to recognize myself here for just a couple of follow-ups and i think will be pretty will close to the end. there is something dramatically wrong, particularly it strikes at the department of defense. we've been doing this for a long time. we talked about don't want to offend people, and they get too cozy in their relationships. i just want to go a little bit deeper, and having done this, commission, maybe you can start, what specifically do we need to do to get into work? it's always use more money, they

have hundreds of billions of dollars in the department of defense, perhaps they're not prioritizing that properly, but the numbers are absently staggering. what, and i know you have a whole report here, for this hearing, what else can we do to get these igs to actually do what they are charged to give? >> right. well, i guess it's a number of things. personal we need to fill the vacancies that exist with regard to the statutory igs as we discussed earlier at state department. secondly we need to make sure that those three statutory igs are effectively resource, that have the necessary resources, money, so they can hire not just the numbers of people, auditors, investigators come inspectors, but also the people with the expertise. i think this is another example where our present state is helpful because there's lots of people out there he used to be employed by the private sector that are not employed now that we do terrifically good jobs in these positions. all that having been said, we

all still believe it's critical that there also be complemented early a special inspector general position for a number of reasons as we said before. that person would have and agency jurisdiction which the statutory inspector general does not. unlike the statutory inspector general, that inspector general would focus specifically and exclusively on contingency operations. so as i said before, all these recommendations are, it's a complete package so i think we need to do all of this at the same time. we would say the government ultimately if we were to do it. >> i would like to add a different perspective, a little modification of that. we clearly support, as my colleague just said, they need for the oversight. but i would also argue that better management would help a lot, and you wouldn't need as much oversight if you could get the better management. and because of that we have

recommended new positions be created and executive branch to realize that managing contractors and managing contracts, decided whether not to actually use a contractor workforce to care the mission mission of the government is something that is part and parcel of the core mission for the government. it's not the back office administrative business who cares, let them take care of it. it needs to also be incorporated into management. >> the obama administration is about to see a major surge in contracts in iraq, 17,000 contractors, 5500 private security contractors when the military goes way. are we playing a shell game your? are they prepared to deal with what is going to happen in less than 90 days from now? >> our recommendations were that they needed to pay more attention to getting this contract is in place, and then overseeing the operation. >> we have been following this closely for some time, and i think it's fair to say we are

very, very worried. and as you heard earlier, we think that there needs to be oversight. >> what are those worries? >> the worries are very simple. i mean, what's going to happen -- i can give you the worst case. the worst case is you have another niece are square thing which is to say, as happened in iraq, some contractors go after somebody they think they shooting at them. there's a mounting, the contractors are killed, everything spins out of control. coming, it's a nightmare. and when you have 17,000 of them as you say, you are asking for trouble. and without oversight they can't hire them. your that. >> so if you're a contract in iraq, one of the 5500, who is your commander in chief? who do they report to? >> in theory they are reporting to the embassy. but, you know, the deputy chief of mission and ambassador is not going to be operating.

you've got to have people accompanying them, government, civilians who will keep an eye on them and ensure that nothing untoward happens. and without that we are simply asking for trouble. it's going to happen spent i think, commissioner shays said early whatever takes blame nobody is responsible, did i get that quote right click so let's talk about these 5500 security contractors. who is ultimately responsible for those people? >> e. in theory it's the ambassador, after the ambassador the sector in state. good luck. >> a legal point here. there is a giant loophole as far as legal accountability, as far as prosecuted building of security people for doing something. the current statute current covers the military who are outside the united states. the contracting industry has

taken the position though the statute, it's called the military territorial jurisdiction act doesn't apply to state department contractors. and so we recommended that, we are not the first, this is a recommendation that goes back in 2007. we recommended to just within the military act to cover state department civilians. well, you're going to have a private army in iraq which in theory, the people there cannot be criminally prosecuted even if they committed homicide. >> one of the things the state department did that made a lot of sense a few years ago we just had contractor providing all security for state. and we had problems. so the state can put in charge at ds agent, one of their own agency in charge of every convoy and so on. that the state was involved.

the amount of incidences were reduced significantly. but they can't do this. they're being asked, in fairness to stay, they are being asked to do something that i don't know how they're going to do it. that being asked to basically do what the military did. my complaint with what state is doing is they are not acknowledging that is something the government should do. and by not acknowledging, you all are not getting the information you need to say my gosh, we've got a very strange problem here. they said no, none of this is inherently governmental. that's simply wrong. it is entirely governmental. they're asking people to do something they should be doing. >> well, the rest of my meeting the members here, this is one of the concerns that we have. we can see it coming. we know it's about to happen. we are playing a bit of a shell game but bringing back up physically forces through contractors. and i truly do worry about it. we have an upcoming, we'll have

a hearing about the transition and we will continue to provide some oversight. i'd like to recognize the gentlewoman from new york, if she has additional questions, otherwise i think we will -- >> i do have questions because i feel that if we are in these countries come personally i think we should bring our men and women home, but given the point that you say that in the contract they don't just for the ability to competitively bill in the future, should the impact on future competition be factored into decisions about how to design the unusual contracts, mr. shays question we do a contract from the beginning that requires competitive bidding in another year? with that, particularly in areas that are less complicated than troops such as food, fuel and logistics. how hard is that? i could even run the food.

i could when the logistics. >> i think it should be the rule but there will be some exceptions in the beginning of an operation. >> in the beginning but you could put a timeframe on it. and your testimony you argue that the wartime environment brings tremendous additional complications, just what you are saying. yet the same rules apply whether an agency is contracting for laundry services, and how month or ball bearings in kansas. it's the same basic rule. and so do these additional complications suggest the need for special contracting regulations tailored to the wartime environment? >> yes. >> you believe so. and do you see any reason why we couldn't take, take, for example, a food contract. why can't we take the food contract and competitively bid if? >> we support that very much.

one of, and in terms of, by the way length of time, there's a specific nuance in our chapter three i want to bring out here, which is the current practice has not only been that the contractor gets whatever the term is in the contract, and virtually automatically gets option years, we found no serious review of decisions whether to give the 40 or the figure out of a three-year plus two option your contract. but the extension contract, and we had $3 billion level examples is sole source to the contractors who headed the previous five years, to take the translator contract which hasn't been mentioned all, although the food service works the same way, translator contract was extended in two, 500 million-dollar slices, sole source to the contractor who held a previously. we could very well put a

contractor, a contract strategy in place that would not let that happen. >> let's go over what the contract strategy would be. first of all it would be to make a list, advertise, and make a list of, say, 10 qualified bidders. these are people that are providing services in the united states, they are successful, they have financial resources. they need to have a qualified list. then let the qualified list did on the contract, and the lower bidder would win. and i would bet my arm, right arm we would save billions of dollars under that scenario. is there any way you improve that, that roadmap? >> i just would say that they are providing, in the case of cafeteria, they may be providing food but there provide it in an area where the logistics requires them to have some unique capabilities.

and so, and we wouldn't always advocate the lowest bidder. we would want a little bit -- >> lowest responsible bidder. >> exactly. and so i just make a point that i would the dash that i would field terrible acting like providing food in afghanistan and iraq is the same as providing a summer else. it isn't. and so there are -- >> but commissioner, in the rfp, or in the request for proposal, you could put the specific requirements and. do you believe that other american companies are not capable of providing translation logistics, fuel speak with you and i do not have a basic disagreement. i just want to qualified your comment to make sure we realize that there are some unique parts, otherwise i think the commission would look foolish in making an assumption like it's just like doing it in new york city or somewhere else. >> what i think we should do,

i'd like to do things and not just talk, could we see if the commission could take one area of the $3 billion contracts they're giving out sole source, one area, probably the simplest with the less complication -- >> we -- >> and go forth and see if we can competitively bid if? >> we no longer exist. we ended our work this september and now we are onto new things. spent congratulations on your report. >> thank you spent i now recognize the chairman of the committee from california. >> i think the chairman. and i want to follow up on what i've heard while i was in been in the back. professor tiefer, commissioner, cj, i do see there's bipartisan support for reform, but isn't there a bigger problem that when americans come or somewhere not

american, but under the american umbrella, operate overseas, we don't have a uniform standard today, period. our military men and women have one standard, our state department covered employees have another. our contractors have yet another and we go into a couple other derivatives. in any reform we do, not just closing the loophole, not just assuring that a contractor who violates law overseas can be held accountable in the u.s., but shouldn't we also try to have a uniform presentation of what an american or agent of america would expect in a foreign nation while doing the bidding of the american people? >> on the main aspect of what you're saying that is exactly right. it is currently a patchwork system. it's been moved to dissuade at one time, a different direction another time, another direction

of their time. so yes, there is no uniformity and consistency as if it had been thought out. but i'm going, let me mention why -- >> it was a rhetorical question to get you to go further. >> okay. thank you. why would we want to put up a hatchet on a particular hole right now? because right now there is no immunity from iraqi justice for the security personnel that we have in iraq. now, why we have military people doing that, the iraqi had an attitude as elsewhere, well, they will be controlled, they will be prosecuted, they could even be court-martialed under american law. that's fine with us. >> heck, they could be court-martialed for not being there just gets. we have a pre-strong u.s. cj spent i would much rather be in civil court than in court-martialed.

but what's going to happen if there are incidents involving these civilian security contractors with the state department, is that we're going to have this choice. we can either let iraqi justice proceed, and my sympathy is for the contractors faced in that situation. or we can hustle him out of the country before the iraqis get in which will not aid in our relations with the iraqis. >> good point. i want to follow-up on one last question, and i think this probably goes to the commissioner henke and to commissioner zakheim. and i will start with you, commissioner. you made a point of getting those people from dod to state if that allows us to have this inherently governmental job be done by trained, experienced, prepared government people who understand wilson engagement and can make such adjustments. if you could elaborate a little bit on, let's assume for a

moment as a model not just in one country where we agreed to move our uniformed armed forces, but taken to all other aspects -- hotspots in which the state department is using alternatives to come if you will, their own forces. how could we do that in a way that protected that status of forces, if you will, that normally the uniformed military has when there's a gun to to the state department? >> well, as you just heard from my colleague, commissioner tiefer, it's just much too comforted when you're dealing with civilians. our whole approach to civilians is so outdated, and i'm speaking person but i know the commission is our but we been speaking as a commission. i'm to speaking as -- >> once the commission always a commission. you just can't make recommendations to we are still living with the 1883 civil service acts with chester allen's act.

it's great. one of the problems we face is that we simply have not updated the role of civilians, 21st century. so your concern is part of that. we had to be able to have some uniform code of the civilian justice, give it a name, that applies to all civilians wherever they're serving, whoever they are serving. what you do that it becomes a lot easier to augment the state department or any other agency for that matter. in a variety of contingency situations. and we don't have that. we have as commissioner tiefer said a patchwork and nothing more. >> i think i'll end with probably commissioner henke. you have seen duty and your two roles. i was taking, commissioner zakheim at a different point, which was these are active duty military personnel who would like a military liaison officer workforce and ambassador, would, in fact, run garrison, if you

will, potentially out of uniform but still active duty military. that's the only instant fix we would have that i can see for replacing dod uniformed people in our current situation of 5500, promised in needed, but promised not to be uniformed military. do you see any way for us to come if you will, about the i or turn a circle into a box? because i am very concerned and i think both sides of the aisle should be concerned that another square somewhere in iraq could turn into a real problem for the state department with some of the city 500 people? and then the question is, are these military or at least federal employees, who have the full faith and someone in the chain of command mistake, or is it quote, you hide a bad contractor and now have to deal with the clicks and it goes beyond the question of who tries

them. it's a question of we are going to be responsible for those people even if they are contractors, how are we going to assure that all the way to the secretary of state and the president, there's some accountability for an army that is larger than most units i served in any army myself. >> mr. chairman, i think there has to be a way to figure out along the continuum of embassy that state has. there are some that are low threat, low risk, some that are medium, some that are in a high risk. and as long as the management controls are in place, all contracted security, and they are fed contractors and trained and certified contractors, there's this idea out there about a third party certification for private security. that makes a lot of sense. another idea is to require in law the state department to choose, that they must choose low price loaded contracts or

security. give them the ability to say, i want to do best value security in that high-risk circumstances. when it gets beyond high-risk and it gets into combat, that's the province of the military. and state and dod have to be able to figure out, without supporting the state, to duty and making it an armament. nobody wants to do that. there needs to be a way to operate a separate agency but recognize that gate guards at the kabul embassy who attacked on september 13, that says look, security and combat is purely governmental, there's a list of other ideas. the day after the kabul it was he was under attack for four, five, six hours and zero people were killed, if that's not combat i don't know what is. and i would state, and dod have to figure out a way to operate

or seamlessly for us to have an effective foreign policy apparatus. >> any of the guidance you can give us on something we may legislate? from any other commissioners. >> i would just add something on this question that is beyond what we look at while we were operating, but there's an awful lot of other trained acidity forces throughout this website of the u.s. government. one of the things we saw in looking at iraq and afghanistan is really the rest of the civilian government was not participating in a way that we thought was useful. or what is a common u.s. policy. >> thank you. thank you, mr. chairman. >> would the gentleman yield? >> in line with the gentleman's question, and i think commission, he raised a lot of good points. combat is very, very different, and i'm not going to question the standards, but what happens when we have a multi-million dollars contract to that is exclusive provider for an essential service that is needed?

and, say there's some serious abuses that were alleged against some of its providers, that they were very, very serious and we had hearings on them, specifically blackwater, but what happens when the contractors, professional people, but there's some serious abuses? then here is accountable in that? >> contractually? >> yeah, so you have a contractor providing essential services and then there are serious abuses that become almost international outcries, and who is responsible been? the contractor or how do you handle it? you know, in certain cases, this is where private contractors and they just completely, no one was accountable. such as one of answer is. >> where we had the cards who

were cavorting off duty, the contractor was responsible. the government overseers were responsible, but, you know, ultimately they besmirched the reputation of the united states. and that's why, to me that's the very definition of high risk and where we don't want to have our foreign policy outcomes at risk because of the way a low bid contractor performs in a combat zone. >> thank you. thank you, mr. chairman. >> thank you. again, on behalf of the committee, united states congress, thank you for your great work. an awful lot of time and effort and talent is going into this. i would like to give you an opportunity, any of about how much you'd like to share. >> thank you, mr. chairman. i would love to jump in for just a second and say first, the congress and the general public wanted the military to be passionate we put all our resources to say, you fight the

fight. and that's i think make sense. it does mean that you can't go to work without contractors. so this commission is not besmirching the fact that we have to depend on contractors. that was by design. what is of concern is that the qdr, quadrennial review of the military, hardly makes mention of the fact that we depend on contractors, we need to integrate in any way that is effective. we are saying that we think we are over depend on contractors, that's another issue. that we clearly understand that we have them and we need them. my colleague, ms. schinasi, made his reference to the fact of concern about the number of civilians. and the fact is we have a huge number of military, a huge number of contractors, and i was really stunned by the low level of civilians, government employees who are actually in

theater. there such a difference. and then i became even more stunned by, and stunned is the word, we have to entice civilians, civil servants i mean, to go there by doubling their salary, giving them hardship pay, oversee pay, overtime. and it is amazing the number of employees who make twice plus what they made here. and that's an issue i think we didn't really fully undressed, but what do we do to get more civil servants taking a role in that area? and then if i could add and if i could get the attention of mr. isaac, i would love it. mr. chairman, i just want to say to you in closing -- >> thank you, mr. commissioner. >> i want to thank you for opening doors, how gracious they were. i want to thank you for your concern about this very issue

that you have worked with others on both sides of the aisles to get waste, fraud, and abuse on a bipartisan a way. i appreciate it, the commission appreciates the work that you've done. we also want to thank mr. tierney. years ago reaching out to the republican side to establish this commission, which then leads me to my final comments that i will make as a commissioner. michael thibault, my co-chairman, did a terrific job. he encountered a huge serious illness in his family that caused him to take great attention to the. he lost family members. he has missed both hearings because of being with family at a time of some great grievance. and so he didn't have the opportunity to present here. i just want to be on record as saying how much we value his work. and then to say that i have never had such an easy job being a co-chairman, because i worked

with such extraordinary people. and so in conclusion, i just thank congress for giving me this opportunity. the speaker for giving me the opportunity come and mr. mcconnell for allowing me to be the co-chairman as well. and thank you for allowing me to put that on the record. >> thank you, but i did know that you think you got an upgrade in your colleague after leaving congress. >> you know, i tell myself going there and i thought i better back out. but i should also say we do have one criticism of this committee. we had a very fine council named rich beutel who was working, and the next thing we knew he decided to raise the status of his position and work for this committee. but we missed him. >> we don't pay a lot but we offer long-term employment, something your commission couldn't. thank you. [laughter] thank you again albeit we appreciate it. the committee stands adjourned.