relief on some of those sanctions. that is very interim type approach to it. certainly sitting in israel, you're looking at existential threat you're looking at something different. >> that brings me to my last question. do you feel iran abided by the terms of agreement? >> i don't have particulars on that. according toey iaea, the iae is much more positive report than i've seen in the past, with the exception of the weaponnization and militarization. >> if they don't abide by that what should we as a nation do? more sanctions, preemptive strike, prepare for the day they do get a nuclear bomb? . . to prepare for the nuclear bomb? >> sanctions are big and have impact. >> i appreciate your time. >>.

>> the key to the ranking member. i have been very critical of the deal i thought it was a mistake but first we should have gotten the final deal that negotiated the interim deal with first should have made sure there was no path said we could negotiate the interim deals because the sanctions were working. i voted to ratchet up do u or do you want to function in the economy? we will continue to press the sanctions into the didn't have a functioning economy. i think that would've been the right way to go. but now we are here and we are here, and they think it is a very dangerous situation we are in. i think we'll get to july 20, and for sure that will want more time. that's what we feared at the beginning. i think that's the case. then what do we do? into we say we will not negotiate and make us look like

the bad guys? it's hard to put sanctions back on again. so where do we go from here? i do want to comment, i couldn't agree with you more wholeheartedly. if it's a five year deal, if it's a 10 year deal, if it's a 20 year deal it's not ideal. that is a bad deal. this is a situation where you have to make sure you can force them to comply all the way out. because otherwise they will simply play cat and mouse and outlast as tenures and then he'll get on with their nuclear program. so where do we go from here? we are approaching this point i don't think -- >> on the market interpretation, there's no question about it. we talk about unfettered access, anytime anyplace. access to all the facilities, concerned about covert facilities, concerned about weaponization. these are things that need to be drill down and pursued indefinitely. >> but i believe we'll get to the six-month, assume for a second we get to the six-month and they want more time. what do we do?

>> i think it's pretty clear if we reach the six-month point without having reached an agreement on a comprehensive solution, that will be a six-month extension. the gta says it will take up to a year to negotiate. so even drafting the gta, they went to spreading potentially a six-month extension. i did want to pick up on one thing you said. you think the right thing to do was negotiate a final agreement and then come back and fill in the details. you know, it pains me to say this but i think in fact that is what they did. i mean, the jpa doesn't specify the final agreement. the final agreement is that, i read it earlier, the final agreement is that upon the expiration of a comprehensive solution, the iranian nuke the program will be treated and cement as that of a non-nuclear

weapons state to the npt. so the in state, the final state is no sanction, no restrictions on their ability to do whatever they want in the nuclear area, no ordinary safeguards -- >> if i could interrupt. i met the issue to have any type of enrichment program, any type of way for them to be able to reach that ability to infect create a nuclear weapon. heavywater -- >> that's there. >> i know what you're saying and i'm not disagreeing with you but i think in the final agreement what i would say is that if you're going to let any kind of nuclear power program, that it had to be one that was so tight there was no way around it that you had to have the fuel coming from someone else moderate closely, you would have to have unfettered access to the country where they could potentially be hiding things. that's the deal i mean. because i agree with you, that's why, i've been very critical, i think the people associated with this deal were very goodhearted and attempted to negotiate with

a western type of nation and found out that that's not who they are negotiating with. it was very naïve. mr. lauder, could i have you comment on that? >> i think to the extent to which the negotiations continue, the opportunity that needs to be seized with ambassador detrani in the spectrum is used that time to push even harder to expand the monitoring provisions that iran will need to undertake. iran is different. they have violated international norms over an extended period of time. they have not been complied with international agreements. it is, it is a reasonable thing to expect and iran should need to undertake additional, additional monitoring provisio provisions, to build confidence in the international community, that they are changing their path. >> thank you. my time is expired. i want to say i think iran is

like north korea. if they get a nuclear weapon, they will also threaten to bomb los angeles, or else -- i unfortunately think they might have the nerve to do it. thank you. >> we go now to mr. george holding of north carolina. >> thank you, mr. chairman. i think we can all agree that if the obama administration is different to draft a final agree with iran that it would be a huge foreign policy win, at least in the eyes of the administration. foreign policy whim, a political win. told in an environment, an administration that is somewhat bereft of foreign policy. my concern is that if the achieve what they consider a win, that they will lack the political will to risk tarnishing that win by calling out a violation that we find

subsequently. so my question, i'm going to just run down the line and have each of you all respond to this is, what in who controls are there there, that would ensure that the politics trying to salvage this foreign policy when don't trump good sense in the white house as far as calling out a violation? mr. rademaker, take 30 seconds and let's go down and by the time anyone has done that i'll be out of time. >> i don't know what checks might be within the administration. every president can structure decision-making on foreign policy in his initiation into what he sees fit. i'd like to think that their people and the defense department that are vigilant, people in the intelligence community drawing attention to problems but i don't know. i think the ultimate is the united states congress, and this

committee -- >> perhaps that might have been helpful as the president was considering exchanging bergdahl for five taliban terrorists. >> well, the. >> well, the good news here a thing for the congress is that i think one of the things that arenas are demanding is in all your sanctions. in fact, they were promised that in the jpa. i don't think the president has the authority unilaterally to get rid of all of the sanctions. eshe has some waivers, has authority not to enforce certain laws but i think at the end of day there are certain things that only the congress can be able to do. and so for them to fulfill their commitment to the iranians, they wanted this committee and this congress to pass legislation, and that will afford you an opportunity to pass judgment on the entire arrangement. and for that reason, you know, i think it would behoove the administration to follow closely with you now to make sure that you are prepared to accept --

>> indeed. >> i don't know if that's happening, but ultimately they need to persuade you that they have struck a deal and if the details of your unhappy about, it's probably better to let them know that now rather than after they promised things to the iranians that they will not be able to deliver. >> mr. lauder? >> i agree that perhaps the most effective red team for this will be the u.s. congress. you will have the opportunity, i'm presuming to say this as an outsider, but this is not a treaty but you will have the functional equivalent of a resolution to ratification when you do with the sanctions question. and that is an opportunity to express the congress' views about the types of capabilities that need to be for marta, they need to be nurtured and use government and need to be funded in the u.s. government. and you could ask for a periodic compliance report. to the extent with which iran is

complying with the agreement, what types of anomalies are being detected, what has been done to resolve that, they ask for both a periodic unclassified and classified report. that's certainly been a feature of other agreements in the past. i didn't use to like and what is in the executive branch because they were a lot of work and it led to a lot of internal debate. but i think it's something to make sure that the iranians understand their compliance is going to be very important to the united states, across all branches. >> thank you. mr. heinonen? >> thank you. i agree with mr. loud. i think the best red team is the public opinion that you make the deal. open compliance reports. this deal is important but it's important not onto the street of the united states of america but regional security and set the

benchmark how we're going to deal first option future with north korea. this will have a look of ramifications and they don't hunt up here spent mr. ambassador? >> i believe ground troops will be the mantras in the field, i believe it's the foreign governments but also access and unique insights into what's going on there. i think a strong case can be made if they can speak to compliance issues and if iran is gone on their own way in cheating, i think they'll come forth. i do think anyone will be able to conceal that aspect to it. >> thank you. thank you, mr. chairman. >> thank you, mr. holden. we thank all of our witnesses for the adjustment today. you've given us a lot to consider. i am deeply troubled that, as mr. rademaker put it, this agreement puts iran on the path from nuclear pariah to nuclear partner, and i don't think any member of the committee is

comfortable with that, given the supreme leader's comments in may, in particular about expectations that we might try to limit their ballistic missile program, as i quoted earlier, he said this was a stupid, idiotic expectation. but i didn't give you the rest of his quote, which to me is very revealing. he said the revolutionary guard should definitely carry out their program and not be satisfied with the present level. they should mass-produce ballistic missiles. he said, this is the main duty of all military officials. now, he's not referring to a space program here. and when you combine that with the call of ahead of iran's atomic energy program to add 30,000 centrifuges last month to iran's existing 19,000, ignoring

what the iranians officials and what their leader is saying on this subject of, you know, as they move forward with their program is very concerning to me. and especially want to thank mr. dingell and the other members of the committee and our witnesses for the chance today -- mr. angle. to take a good hard look at the ongoing negotiations. and you all very much and we stand adjourned. [inaudible conversations]

[inaudible conversations] >> the obama administration is weighing u.s. response to iraq, insurgents there have seized large chunks of territory in the sunni heartland and threaten to take the capital. we have a conversation on our facebook page about the situation. the question is, should the u.s. intervene in iraq? ron irvine writes, i say let all the inputs nature to them well regulated militia end quote to want to defend their patriotism go. they have enough guns and ammo to fight a war. greg henderson response, look at what is going on in iraq now. the same basic violence will take place here, eventually. funny how the las left twist the dialogue around to demonize constitutionalists.

that's greg henderson responded to let us know what you think at facebook.com/cspan. the conversation on iran continues his have been as the washington institute hosts a panel that will analyze the escalating violence with speakers include former u.s. ambassador to iraq, james jeffrey. c-span will have live coverage at 12:30 p.m. eastern. on c-span2 will be live at 1 p.m. eastern with today's defense department briefing. press secretary where admiral john kirby will answer reporters questions. then at 6 p.m. eastern hillary clinton recounts her tenure as suggested as she talks about in a new memoir, hard choices. she speaks with a former speechwriter at the george washington university here in washington, d.c. we will have live coverage here on c-span2. >> when i started covering congress, you had people like senator russell long, wilbur

mills, danny rostenkowski, howard baker, people who were giants in their own way. a couple of those guys got themselves into trouble. but overall, these were people who knew -- they were all very intelligent. they knew how to craft legislation. they knew how to do a deal and they all worked with whoever the president was weather was their part or the other party. yes, there were politics but at the end of the day they found a way to come together and make decisions for the good of the country. today, you just don't see that anymore. first of all i think the quality of the members of congress, the house and the senate come in terms of their intelligence and their work ethics, has diminished. there are still great people and they shouldn't malign some of -- there are wonderful members on both sides but i think they are a majority -- minority. i think people are driven by the politics and by the own self

survival, and i think the hardest work they do is raising money. not learning the issues, not crafting deals. it's making speeches and positioning themselves to get reelected spent any award-winning journalist and investigative reporter lisa myers is leaving washington, d.c. behind. find out why sunday night at eight on c-span's cuban day. >> special inspector general for afghanistan reconstruction, john socko, told the house foreign affairs subcommittee this week that a lot of money spent on afghanistan reconstruction objects has been wasted. he says there is no estimate of how much because record-keeping was so bad. that hearing a and it's about one hour and 15 minutes. >> [inaudible conversations] >> the subcommittee will come to

order. after recognize myself and ranking member dutch for five minutes each for our opening statement, we will then recognize other members seeking recognition for one minute each. we will then hear from our witnesses and we thank them first of all for your patience and your understanding, and that goes for the audience as well. we had 16 votes so we thank you for the time. and the witnesses prepared statements will be made a part of the record, and members may have five days to insert statements and questions for the record subject to the length and limitations of the rules but before we begin i would like to express my most sincere condolences to the family and friends of the five american troops who were killed in afghanistan just yesterday recently. no words can adequately express the debt of gratitude that we go

to those brave troops and our thoughts and our prayers are certainly with them and their families at this troubling time. the chair recognizes herself for five minutes. last year, the subcommittee convened a hearing with special inspector general for iraq reconstruction, sigar, on the lessons learned from the united states stabilization, relief and reconstruction operatio operatin iraq. the purpose of the hearing was to examine safeguard's final report to get a better understanding of how the u.s. approaches reconstruction efforts. and where we can improve so that we won't be confronted with the same problems and repeat the same mistakes. the major takeaways from that hearing, in addition to the billions of dollars in wasted taxpayer money was that the

united states government was unable to adequately plan, execute and oversee such large-scale operations. so have we learned any lessons from iraq? have we learned to use our assistance more effectively and more efficiently backs while we may have implemented a few reforms as a result of the recommendations from these oversight entities in front of us, sadly it seems we still have a long way to go to be good shepherds of taxpayer dollars. having seen previous gao and sigar reports, related to oversight and accountability of u.s. assistance in afghanistan, several things are strikingly obvious. one is that gao and sigar have undertaken an important task, keeping congress informed on the status of our operations there, but now with the troop presence

winding down, their abilities will be severely restricted due to the security situation and lack of access. this will make it difficult for them, and subsequent for us in congress, to keep proper tabs on all of the u.s. funded projects in afghanistan. another is that for all of our efforts and desires to do good in afghanistan, we have some very glaring deficiencies that must be addressed. the u.s. has allocated over $103 billion to afghanistan relief and reconstruction. however, the afghan government is still not capable of handling such a large infusion of money, of goods and that equipment. and it is incapable of achieving long-term sustainability. this is particularly telling with many of our infrastructure

projects like in the health sector where oftentimes usaid would fund projects that are way too large and way too ambitious, and leaves the afghans with facilities that are larger and more expensive to operate, like the card is and the carrot top hospital. and then these hospitals go unused and unstaffed because the afghans can't find the funds nor the staff to operate them. these efforts are not economical and on a practical. as a result it is a waste of taxpayer dollars. the result of this large infusion of money to incapable afghan system is twofold. our report, commissioned by general dunford and conducted by the joint coalition operational analysis, jt away, determined that the vast influx of money --

j. coa, overwhelmed the afghan government's capacity. this helped foster an environment of corruption that has worked against our interest from the start. and as general allen once said, corruption is the existential strategic threat to afghanistan. the of the result is that created an environment in which we are not tackling the root cause of the issue. the only way for afghanistan to maintain and sustain the progress it has made under these relief and reconstruction efforts is to continue to rely on donor contribution to fill the revenue gap, and that is not sustainable for afghanistan nor is it is sustainable for us in the united states. or we risk losing all of those games. in 2009 the administration decided it was going to pledge to provide 50% of the

developmental aid to afghanistan indirect assistance. in fact, gao reports that we went from 470 million in 2009 the over $1.4 billion in 2010. however, that same year, double reports including one commission directly by usaid, side had decidedly ill equipped the afghan ministries were to receive direct assistance. both gao and sigar raised the warning flag, and recommended that usaid identified and assess the risks associated with direct assistance but sigar is now reporting that usaid has ignored these recommendations and may have approved direct assistance without mitigating these risks. so how are we to conduct proper oversight of state come of usaid, of dod to ensure that

they are fully complying with the recommendations of sigar and gao, and the rules and regulations laid out by congress to ensure u.s. taxpayer dollars are put to their best use. sigar identified several major lessons that should been learned in iraq that should be applied in afghanistan, these included they need to implement better interagency coordination, and use our funds wiser, more efficiently and more effectively. if we are still running into the same problems in afghanistan as we did in iraq, now that we are transitioning, it -- is a time for congress to re-examine how we conduct these operations and consider implementing the much-needed reforms? the obvious answer is yes, of course yes. and with that i'm pleased to

yield to the ranking member, my good friend, mr. deutsch, a florida. >> thank you, madam chairman. i also would like to send my condolences to the families of the five troops were killed yesterday in afghanistan. we spent a lot of time here talking about what our government does, but it is ultimately the men and women who serve our government in tough places that we need to keep in mind. and on this day we keep in mind their families of the five. today's hearing comes on heels of the present announcement of the next 600 american kids will remain in afghanistan and till 2015. after almost 13 years, trillions of dollars and thousands of american lives lost, the news was met with a mixed reaction to we've come to expect and we talk about afghanistan. we cannot bear the thought of even one more american life sacrificed for those who believe it is our response both remain at protect our national security

interests, a recent gallup poll found for the first time since the war in afghanistan began more americans now view the war as a mistake. after the united states has given so much in blood and treasure, what do we have to show for it? have our resources been wisely spent? have we strengthened u.s. security at home and abroad? the department of defense, the state department and usaid all contentious significant civilian presence and projects throughout afghanistan. agency said done tremendous work in the extremely challenging environment. the civilians on the ground working to rebuild and reform, put their lives in danger every day. they deserve to be commended for the work that they are doing. as our presence in afghanistan draws down, are we putting the necessary measures in place to ensure that the programs of institute and ever structure rebuild to strengthen afghanistan's security capability, governance and civil society are sustainable in the

remain in place long after we leave? accounting for billions of dollars across multiple agencies is no easy task. i believe that the good folks at state and usaid has taken significant steps to deal with corruption within a 10 -- afghan government. an additional independent oversight of the government is welcome to great programs that run as efficiently as possible. in 2008, congress established a special inspector general for afghanistan reconstruction with a goal of not just tracking waste, fraud, and abuse but to recommend more efficient and effective methods for completing the enormous task of reconstruction in afghanistan. thanks to the work of sigar as well as oversight investigation conducted by gao, they have identified a number of key challenges such as the limited capacity of the afghan government, and the persistent, and many persistent sector to challenges. it's clear evidence of these challenges can be seen throughout our footprint in

afghanistan. gao identified numerous weaknesses in energy seek ordination and overlap of funding accounts between dod, state and usaid creating the potential for duplication of projects and programs. while gao recommend the creation of a shared database and 2010 it appears the little progress to advance that recommendation has been made. in 2012, gao went so far as to recommend that obstacle it is an action to require that u.s. agencies report information on the development related activities in a shared database. while usaid agreed with his recommendation, dod did not. sigar has also raises concerns over state and usaid's ability to determine when contractors are found insurgent or an opposition force but agencies laclacked the authority to swify terminate, restrict or avoid a contract award to a person or entity identified as supporting the enemy or opposing u.s. forces. under existing law the agencies

will likely have to pay up to the full cost of any contract to complete a termination. implementation of these broad reforms and other recommendations will help maximize our assistance and achieve greater results. unfortunately, on a micro level sigar has also been numerous examples of wasted funds like the $12.8 million utility equipment purchased to meet urgent needs in support of the counterinsurgency strategy that sat unused in storage controlled by the u.s. army corps of engineers. i know our witnesses today will highlight other examples of concern but i would like use the remaineremainder of my time to n how we can better coordinate a candidate before. are develop and work in afghanistan will not end when the last american troop leaves in 2016. many of our ongoing programs have been tremendously successful. we've made great strides. instituting esplanade health programs and to medical increasing access to education especially for women. how can we sustain these programs going forward with the

ultimate goal of course being to one day transition of them to complete afghan control? with a decreased footprint on the ground will we be able to provide needed oversight to make sure our projects stay on track? usaid has developed an extensive remote monitoring process has been used successfully in a number of other challenging environment. i hope that our witnesses will address today critical components required for this monday programs and whether they believe this type of remote monitoring can be successful in afghanistan. any development work of this scale will face fair share of failures and successes. it's my hope today's hearing will shed light on how we can continue to ensure that congress, state, dod and usaid are working together to ensure that aid is providing the most effective and efficient way possible to thank you, madam chairman. >> thank you so much. so pleased to yield to mr. chabot, our subcommittee

chairman. >> thank you very much madam chair and the typical and this hearing to continued his subcommittee's oversight of u.s. reconstruction efforts in afghanistan. and the of us have ongoing concerns about the future of afghanistan. president obama's recent announcement that he was told that all but 9800 just troops out by year's end and then having that in 2015 and employ all our troops out why the end of 2016 is troubling. announcing a departure date, no matter what the conditions on the ground, just tells the taliban how long they have to wait for us to leave before they can then, at least in their mind, take over the country. this announcement puts at risk i'm afraid the sacrifice of our men and women in uniform have made in that country, not to mention the billions of dollars the u.s. has invested in stabilization, relief and reconstruction efforts. i fear we may see something similar to what we saw in iraq when we all thought that there

would be a number of troops that would remain there. they were all pulled out. fallujah we see a fall to al-qaeda. we now see rather than a u.s. ally there, we have extreme iranian influence. i would hate to see a repeat of the. so thank you very much for holding this. >> thank you so much. mr. higgins of new york. >> thank you, madam chair. obviously, this situation relative to afghan reconstruction is sobering at best. $103 billion commitment over the past 12 years and to look at the condition of that country. you get the afghan economy at about $20 billion. in one year we spent 75% of that, some $15 billion in reconstruction. $75 billion for a turbine in the southwest, $230 million highway project in the east. $4 billion in training and equipping afghan security forces. and i think any assessment of

the condition of all of those projects is one that requires a lot of explanation. when we consider that congress last year approved $53 billion to rebuild the roads and bridges of america, a nation of 300 million, and yet we spent $89 billion over a 12 year period rebuilding the roads and bridges of afghanistan, a nation of some 31 million. so at the very least, the corrupt nature of the government, the inadequacy of the afghan security forces, does not justify the commitment that we have made. i look forward to listening to the work of the inspector general and the rest of the panel in exploring these issues more deeply. >> thank you, mr. higgins. mr. weber of texas. >> thank you, madam chair. i'm going to be short. let's go. >> thank you, sir. mr. sosa leaning.

>> thank you, madam chairman, and ranking member deutsche for holding today's hearing. i want to extend my simply symptoms of the five soldiers were killed yesterday in afghanistan. as we begin drawing down combat operations in afghanistan i think it's important to say again that the responsibility rests with the afghan people to operate deals and maintained on civilian and military capacity. the united states has built an important foundation for afghanistan's future long-term security and sustainable peace in the region can only be accomplished when the people of afghanistan take on these responsibilities. some have argued that helping to rebuild afghanistan schools, bridges, roads and hospitals has been important to our mission and some like me believe it's time for us to return our focus supporting our own schools, bridges, roads and hospitals. but hope that all would agree that we need to ensure that whatever funds have been used and will be used, are used wisely and go to programs that are sustainable and institutions

that are sustainable. but as mr. higgins said, i think there's a lot of explanation that needs to be provided when you look at the magnitude of the resources that have been invested in the urgent need to enter own country. i look forward to hearing the two witnesses today and i yield back. >> thank you, mr. cicilline. ms. mann -- ms. mann spent thank you for going this important hearing. it is important that we conduct this oversight in order to ensure that the american taxpayer dollars are being used appropriately and to ensure that our phrase agencies and departments are working efficiently here and making use of best practices. without appropriate oversight, money will go to waste in afghanistan. i also look forward to a discussion of how we discussed with the american people the issues that are the subject of this hearing. afghanistan is an emotional issue for the mapping people as we have seen this past week with the case of sergeant bergdahl.

as we finally afghanistan, we need to make sure we are communicating effectively and honestly with the american people about our departure and what will come next. thank you. >> thank you so much. and so now we are pleased to introduce our witnesses. first we are pleased to welcome special inspector general for afghanistan reconstruction, john sopko. mr. sopko has more than 30 years of experience as a prosecutor, congressional council, and senior federal government adviser. he spent over 20 years on the hill, poor thing, serving in the senate and house of representatives, including on the house select committee on homeland security, and in the senate permanent subcommittee on investigations. mr. sopko was sworn in as a special inspector general on july 2, 2012. secondly we welcome mr. michael johnson who is a senior executive and director of

international affairs and trade at the u.s. government accountability office, gao. in his role he assesses u.s. senators and and secured efforts focusing on afghanistan, pakistan, and other terror safe havens. prior to this position, mr. johnson was an assistant director in gao homeland security and justice team, and he also spent a year detailed to the house of representatives homeland security committee. we thank you, gentlemen for your patience, ma for your expertise, for waiting around, and we are so pleased to yield to you now. we will start with mr. sopko. >> thank you very much. chairman ros-lehtinen, ranking member deutch, members of the subcommittee, it's a pleasure to be here today to discuss my agency's oversight of reconstruction efforts in afghanistan. today's hearing as you have noted is very timely.

as you are well aware we are in the midst of a pivotal transitional year in afghanistan. the ongoing military, political and economic transition will undoubtedly shape afghanistan's future for many years to come. for instance, this week's presidential runoff election could result in the first peaceful democratic transition of presidential power in afghanistan's history. likewise just a few weeks ago the president announced his plan to reduce our military presence to approximate 10,000 troops by the end of 2014, and by the end of 2016 the u.s. presence in afghanistan will be reduced to a normal embassy operation in kabul with a small security assistance office. these events may lead many to incorrectly assume that the reconstruction effort is also coming to an end when, in fact, it is likely to continue for the

foreseeable future. this is largely due to previous commitments made by the united states and the international community at the chicago and tokyo conferences, in addition to the weak state of the afghanistan's economy and a limited capability of the afghan government to collect revenue. since 2002, congress has appropriated roughly $103 billion for relief and reconstruction in afghanistan. this is more than the united states has ever spent to rebuild any single country in our history. to give this number in some context. by the end of this year we will spend more money on afghanistan reconstruction than we did to rebuild europe under the marshall plan after world war ii. and this year alone we plan to spend more money on afghanistan reconstruction than we spend on the next four countries, that's israel, egypt, pakistan and

iraq, combined. and unforeseen consequence of this historic investment by the united states and our allies is that we have built infrastructure and is a cody ford and a national government that the afghans cannot really sustain on their own. for example, the afghan government generates roughly $2 billion a year in annual revenue, while it needs as much as $10 billion annually to cover all government operations, including the important afghan national security force is. as a result, for many years to, the afghan government will depend on external assistance from the united states and the international temerity to meet this budget shortfall. accordingly it is critical that effective management and oversight remain a top priority for all u.s. agencies as we prepare to enter the post

2004-14 ground in afghanistan. this is extremely important given that roughly $18 billion in authorized and appropriated reconstruction funds remain to be spent by u.s. agencies as of march 31, 2014. including approximately $7 billion by the state department and usaid. today, sigar and oversight of comrades at gao and the other igs are already contending with a restricted oversight access. in fact, based on our best estimate it is likely that far less than 20% of afghanistan will be accessible to civilian u.s. oversight personnel i december of this you. that's more than a 50% decrease since 2009. despite these challenges, sigar is committed to its oversight mission and is developing innovative methods to adapt to the evolving security environment. given what that does to given at what's at stake, sigar believes oversight must be, to use a

military term, mission-critical. if it is not, the historic investment we have made to date and the billions more yet to be spent on reconstruction will be significantly vulnerable to possible waste, fraud, and abuse. thank you very much for the opportunity to testify and i look forward to your questions. >> thank you so much, mr. sopko. mr. johnson. >> madam chair, ranking member deutch, members of the subcommittee, i'm pleased to be here to discuss the issues in afghanistan. since 2003 gao has issued over 70% would a special publication in 2013 highlighting key issues for oversight. we've also participate in numerous congressional hearings and briefings on u.s. efforts in afghanistan. during the course of our work we've made over 150 recommendations on a range of actions that should be taken to improve program planning and implementation, management and oversight. today i would like to highlight a few key issues.

among them are the need to mitigate against the risks of providing direct assistance to the afghan government, the oversight and the candidate of your is department projects, and as the chair noted, including the need for comprehensive database and the need for contingency planning as the u.s. transitions to predominantly civilian led presence. regarding direct assistance, in 2010 the u.s. along with other international donors pledged to provide at least 50% of its development assistance support through direct assistance. this was contingent upon certain controls been in place. we reported in 2011 that the u.s. fulfill its pledge by nearly tripling its awards during the first year, going from about $470 million in fiscal year 2009 to about $1.4 billion in fiscal year 2010. we also reported that while -- comply with financial and internal controls it had not always assessed the risk of

providing direct assistance. although these they took steps, use it took steps come we have since learned cigars on findings that were approved direct assistance to some afghan ministries without mitigating against all identified risks. regarding oversight delegation of youth development project with respect to afghanistan, since 2002 u.s. agencies have allocated over $23 billion. in response to prior review, usaid continues to insist upon performance management procedures, and fallen short in maintaining institutional knowledge in some areas estimates to strengthen its oversight of its contractors. addition as the ranking member noted, in his opening statement, to avoid the potential for overlap and duplication and ensure a full accounting of usaid, dod and state funded

development projects, gao has made multiple recommendations and actually getting back to 2008, including suggestions for congressional action to account for u.s. funded projects. although state and usaid have taken some steps to designate a database, nearly six years later we continue to report on the need for a database. this is due in part to the lack of dod action. regarding the need for contingency planning, and february 2013 we reported while circumstances in iraq is somewhat different from those in afghanistan, potential lessons could be learned from that transition. when you transition from a military discipline led presence. as we reported program implementation of oversight and canada in afghanistan have and are very likely to be to continue to become a multiple factor including a dangerous security front, presence of corruption and limited capacity of the afghan government. as we've also highlighted, it is

critical to successful transition and to ensuring that the environment is conducive to carry out operations and to also carry out oversight. the plans to invest billions more in afghanistan, the challenging working farm and uncertainty of the bilateral security agreement underscores the contingency planning and continued oversight of u.s. efforts. in closing, i would like to personally thank the dedicated gao members who put their lives on the line in carrying out oversight. i also thank the congress and members of the subcommittee for the support and for calling this hearing on key issues, note gao century just as congress and the administration in ensuring that there's oversight and government of this partnership in afghanistan. i thank you for the opportunity again to testify. this concludes my statement and i would be happy to answer any questions you may have. >> thank you, both, for excellent testimony. i will begin with a question and answer segment of our hearing.

corruption is so systemic. it's so pervasive in afghanistan that it only serves to exacerbate the already difficult obstacles facing the governments ability to govern effectively. not only that but it undermines the security of both the international forces and the afghan people. get the roads the people's confidence in their government. -- it the roads. while it leads to distrust in which the waste of billions of taxpayer dollars. yet for all of these warnings and all of the reports we have had about corruption in afghanistan, we have yet to develop an anticorruption policy. even karzai, karzai, if you can believe it, acknowledged that this is a major obstacle to progress. how is it even possible that we still don't have an anticorruption policy, even as

we are sending billions of dollars in direct assistance to afghan ministries despite all the warnings? do we have any insight into updated amounts of direct assistance? and sticking with the direct assistance issue, after the assessment that the afghan ministries were not ready, were not capable of receiving direct assistance, and after recommendations from gao to mitigate all identified risk before proceeding with direct assistance, usaid apparently continued anyway without regard to these warnings. why did u.s.a. to continue to provide direct assistance despite the warning -- usaid? and of any of instances where usaid has ignored recommendations? also, how would you characterize your relationship with usaid,

and what does congress need to do to ensure that usaid is in full compliance before going forward with these high-risk programs? i'm also greatly concerned about the duplication of efforts where we see overlaps between state and dod on infrastructure projects. because there's no central and comprehensive database. i know that one thing you both would say is fiercely lacking and something that we need to address, what else would you say congress needs to do to ensure that usaid, state, dod, are all accountable to the billions of dollars that we're spending in afghanistan? and what tools do you need us to give you to ensure that you have everything you need to continue to do your work? i know it will be extremely

difficult for you with the troop drawdown and the uncertainty over the bsa, but we want to help you keep you safe while you continue to perform your duties. thank you. >> madam chairman, starting with your last point, and that is on assistance that we can meet, i think it would be useful for congress to respond to the very valid recommendation that gao has made about a centralized database. i don't know if that's authorization like which or appropriations language. one of the hardest problems we have, and i'm certain gao, and i know my colleagues in the other igs have come is we don't even know where the money has been spent.

so you start with that problem. and by requiring the agencies to put together that database, that would be extremely useful. we are starting to do that ourselves. i think in some of the background material we gave you we are act would try to collect this information. but it really isn't the role of the inspector general to be the first one to collect this. this is something that should be done. as for the issues about direct assistance, i think a serious problem here was that aid had finally done some really good assessments. and we praise them in our audit that came out earlier this year about the direct assistance. they assess the afghan ministries, and what we would've hoped they would've done would have been to actually use that as leverage to bargain on conditionality, to get in place, particularly in the future where it's going to be more difficult to go out there and kick the

tires of the programs, but, unfortunately, they waved it and we don't have an answer on why they waved it. >> i can chime in with some updated numbers. first, about corruption. corruption as we all have significant women in challenge and has been one of the biggest challenges that the u.s. and other states and operating in afghanistan. with regards to correct this it's funny, the latest figures we have is roughly the amount is 800 million for 2012, a proximate 909 in 2013 in direct assistance. that's shows a drop off from 1.4 and it' is closer to the targetf 50% but not quite, has not met that goal. it has come down somewhat but it's still pretty significant. in terms of what congress can do, i would agree as was suggested that you consider mandating that there be a shared database or a comprehensive database, especially given over $23 billion that's been invested

of taxpayer money. as i mentioned earlier, they have taken action. afghan info is designated as the official database, but department of defense and others have basically not agreed to return to put a stop in the database automatically sure that database. use that database or any other database for that matter. so basically suggested congress may need to mandate that given the funding, all the potential funding that exists there. we looked at this and more in depth comparing those three programs to the usaid funded efforts under esf or development assistance. we didn't necessarily find exact duplication but we found 53 cases of potential duplication and overlap between the agency. the reason why we couldn't definitely say that because the data dod was maintaining did not go down to the level it needed to go down to of capturing data on the villages that were receiving assistance.

we think a shared database would encompass all that information. i think continue holding hearings like you're doing today will put the attention of the congress on the agency requesting money every year, additional funding. with respect to cooperation with gao in the oversight committee as well, i would say over the last two years or 18 months there have been some significant challenges in terms of our normal operation with usaid to a previous have been one of the more whopper to the agency but we have run into major challenges in trying to carry out our mission for the congress. >> thank you very much. yes, mr. sopko. >> if i can just add, i echo the statement by my colleague from gao, in that although we have had very good support from dod on cooperation, particularly under general dunford, general goal and and a number of those colleagues over there, we have

had some problems with aid and getting access, particularly through overclassification, and we think improper classification of some material has unclassified, census but unclassified. but can i just add to my colleagues in numbers? i think he was focusing on the state and usaid direct assistance, but we have to keep in mind the biggest player in all of this is dod. so the direct assistance, dod is giving approximate 4.2 billion right now in direct assistance, and that is going to record to the minister -- history of injury and defense. and also going to some of the trust fund. so that is the biggest play. although we're focusing on the aid mr. assessments, the still has there been a ministerial assessment on the ministry of interior and the ministry of defense and we've highlighted that as a potential problem. >> thank you very much.

our ranking member is recognized. >> thank you, madam chair. mr. sopko, did i understand can you said there's been more money spent on afghanistan reconstruction than the marshall plan? >> by the end of this year, taking into consideration inflation, et cetera. >> what's the total amount? as you analyze the data, which the total amount spent by this country on afghanistan? >> the appropriations on afghanistan reconstruction is $103 billion i believe. >> and for both of you as you analyze -- as you analyze what we refer to as waste, fraud, and abuse, but fraud and abuse ultimately is waste as well, from all of, mr. johnson, from all of the good reports that you've put out, is there a total? is there a total amount of that

$103 billion, is there a total amount that's been wasted? >> i'm not in a position to give you an exact figure on that. that's something we haven't looked in depth at in terms of range of figures but we do know there's been various inefficiencies. there's concerns about is there really an inventory of everything works the biggest problem is that many of the agencies weren't keeping good performance metrics to look at whether or not the money had been used for its intended purpose and met its goal. >> mr. sopko? >> i agree. we can't come up with an estimate. it would take us -- we would be spending over time can figure out what was lost in the past. we are looking forward. i think it's safe to say a lot of money has been wasted. probably more wasted than actually stolen. and that's the problem. i think going back, if we don't even know where the money was spent, it's hard for us to come up and quantified, particularly

gagas standards come how much money was wasted spent explained again can we don't know where the money was spent, how much of that 103 billion we don't know what was spent? >> out of the $103 billion that's authorized and appropriated, as a mentioned 18 building is still in the pipeline. so that money is still safe. it hasn't gone out and been obligated yet. the vast the duty of the money, over six to present i believe, was spent by dod. so that could be on cerp programs, on numerous programs. i'm not saying that's wasted but i'm just saying that's where the money -- mainly dod. dod is that they put in afghanistan reconstruction. >> i also want to look forward, but for everything that you looked at, auletta reports, there are plenty of examples that you pointed to, right? where, because of lack of systems in place, because of lack of oversight, because of

contracting, everything, all the myriad of reasons we discussed. there's been some significant amount of waste. it would be helpful if there was some range, even of the reports that you have done, even the review of done where you know -- here's my point. i want to look forward, too. but as we deal with this issue of a shared database, it's a whole lot easier to convince all of our colleagues here and those who may not be inclined to support a shared database why it's important if beyond speaking generally about the types of problems that exist, we can point out that of $103 billion in taxpayer -- of $103 billion taxpayer dollars, that x. percent has been wasted. ..

we have lowered the standards of the capability ratings initially we were trying t to berate the u.s. way to get them to operate the way the security forces operate. that wasn't deemed to be asking right or first so we wasted a

lot of money in the beginning by a u.s. type of equipment and that they couldn't maintain or sustain and build a force that to the government cannot stay to makmake a sustained but continuo support the u.s. contributed 90% of the afghan public expenses the united states has paid for that. we are the largest secured her that would be the message there. they were going to go in and above the road perhaps the dod had already done and that's why you need the database. they want to know what they leave behind. >> what is the biggest impediments to the database as you proposed it? >> we don't see a major competitive in the position that

they are concerned about the security of the database itself in the sufficient firewall to prevent others from getting into show that would not be a problem. i honestly think it is reluctance on the part of the dod to engage and complete a database that has been put in and it gives them i think it is every month or so or every two or three months. but it isn't readily available. >> finally, does the dod stem away from -- is there a concern about what we see going forward? since 60% of the $103 billion is the funding and we are not in a position to identify the total amount of waste is there a concern going forward some of what you described mr. johnson i

would suspect that our friends at the dod would d view differently than the way that you described it in terms of changing standards in the way that the standards were changed. what do we do to help convince them this is ultimately necessary? and again i go back to where i started. i would urge you for all of the analysis that has been done it would be helpful for us to have a conversation on just about going forward but if we can't acknowledge that we spend $100 billion we know billions have been wasted that we can't even really identify some ballpark range of where that comes from it makes it even harder to support. it makes it harder to support the continued funding if we are not able to identify where the problems were to start with.

>> thank you so much. now i am pleased to yield to a real war hero in both iraq and afghanistan. >> thank you madam chair and thank you all for being here. the important thing you did at the top of this is to remember why we are in afghanistan in the first place and that is it was a beautiful day in september and we were attacked in the united states of america when we thought we were completely defensible. thousands of americans lost their lives in the since that day thousands of americans lost their lives to carry freedom for the afghan people and i think importantly thousands of afghans lost their lives and we see today in the kind of postal war mission in afghanistan and the afghan security forces are really stepping up to secure their country. it is going to be a lot of

challenges. the president announced a plan to withdraw all american service members from afghanistan at the beginning of 2014 combat mission ending at the end of 2014 it's going to leave in place 98 service members and those numbers will be reduced to the amount necessary to provide security at the embassy in kabul. i know this is the purpose of the hearing to note the parallel that happened in iraq and what the president has outlined for afghanistan. today i read the news and found out a placa place that i had bee times has fallen to extremists and we see what happens in a post-american situation. with that sai said that the reduction is going to place significant demand on national security forces between the fiscal year 200 2002 and 2013, nearly 65% of the funding went to words supporting afghanistan

security in areas such as developing the security forces and counter narcotics effort. questions arthe questions are ig u.s. troop drawdown moore is going to be placed on the afghan national security forces to maintain the stability of the country. a large portion we have invested has gone to the security. are they prepared to take the lead and can they help sustain an environment in which development and infrastructure projects which we put in place will succeed and this is important because for 13 years we fought to create an environment and i want to make sure at the end of the day we are not in a hurry to just fulfill the campaign promise that to the efforts by the american and afghan people doesn't go to waste because the history books will judge very harshly if that is the case. i will go with you first. is there an environment where they can succeed clicks to make

the answer to that is yes. of course they can succeed. there have been great success with the military. you have seen them pull their own over the fighting season and i think everyone is hopeful that they will continue in that robust fashion. there are major concerns that we've highlighted and i believe the general has highlighted. if there is a likelihood there will be -- make we can assume that there would be. >> we are hopeful. i have no inside information but that's what i've read in the press. both candidates said they would sign it but the second issue that i think again i can't speak to the general he is the expert on the military capabilities, but it's basically about backend

for its detail of the salaries and the support and buildings getting them to understand and how to do that which is what he is working on and i think the vast majority of the assistantse going forward would be trying to make that military capable to do that. we looked at spare parts and fuel and literacy and in all of those areas there are serious problems. so we have to make sure we get those right. >> i understand you're not a policymaker so i am not putting this on you but i think my biggest concern is in 2016 the president put out an outline is that counterterrorism is a good fashion advising and supporting the government is a good mission in 2016102 20161027 isn't a goon because we will pull all of the troops out for embassy security so my question is presuming now that we have basically two years

to miraculously bring them to where they can operate without american assistance is a lot of progress that has to be made. if they happen to be out today what do you think would happen to the future of afghanistan and the reconstruction project projs that whaifthat would happen todt gives a benchmark of where we need to be. >> i would have to refer to the testimony of the general that was here in the house armed services committee or maybe it was the senate armed services committee where he said if we pulled it out today that would be a collapse. i have to rely on his expertise. we haven't done a study on that. >> i think the point is if all of the terms were out and we had seen another collapse instead of having a mission the next couple of years where we are focused on the withdrawal and pulling out it might be smart to have a

mission past 2016 in which we have the long-term gain. >> thank you for being here and i will yield back. >> mr. connolly of virginia is recognized. i know you want to look forward to that before we do that, we need to glance backwards and to see what we have learned or not learned. reading your reports and the press stories including press stories referring to you and listening to your testimony i've got to tell you one has a sense of déjà vu all over again. in vm on for example there was a lot of money thrown in the mission. there was no aspect of life, we were not helping to finance and the waste and fraud and abuse

and lack of metrics to show what we did or didn't do as an echo in your testimony today. as the chairwoman does i used to be the staff member of the foreign relations and we used to have a chart that would be a helpful one shoving all sources of assistance to the united states to the map to direct assistance and others. when you refer to $103 billion of the total reconstruction funding is that all spigots? does that include all of the money? to make it doesn't include the war fighting. this is just reconstruction so 103 billion from the entirety of the duration of the war. and only u.s. funding.

>> would that include serp? >> yes it could. >> tell me how much you are comfortable with and looking at it that you think actually performed very well. we have to have some tricks he here. i would love to tell you 50 or 60%, 70%, whatever, but i live in the world of the generally accepted government accounting standards and i can't say that. and i know that my colleague in the iraq reconstruction came up with a number and it was later shown to be wrong or nothing supported it. i can't say that. i look at specific programs that succeeded or didn't succeed or they run a risk. a lot of times we are going in and of alerting people that you run a risk of waste or fraud or abuse and so i assume my

colleague has the same. we can't say that they've lost x. amount or they've succeeded. we have identified some success and i asked him to the last time i testified before another committee i said they sent a letter to the secretary of state and said give me your success stories and why and i thought we could use tha that in our analys of the lessons learned but i can't answer that question because i don't have a basis. >> let me tell you the consequence of not being able to answer that question. it says to the public by implication all of it was wasted. if you can't fight the matcher x., 30% absolutely went to the purpose intended and is performing well. another 20% is in the category

and then 50% is wasted or whatever the matcher x. may be that if the answer is i can't answer that at all then it suggests to the taxpayer $103 billion of reconstruction was down the drain in afghanistan. 100%. >> i think every inspector general whether it's the department of energy, the va from hhs they couldn't answer that question so i don't know if they jump at the response or the answer that all of the money is being wasted. you cannot give us enough money to answer that question. we've spent all of our time trying to highlight what works and if you look at our legislation and you look at the 78 act and my act is not to find out what has worked.

my grief is given to me by you is the highlight problems, not the highlight success. >> but you also answered in my colleague's question how much is wasted. so we are not -- we can't put a metric on how successful we have been and neither can we apparently have a matcher it about how much do we feel confident was wasted in rich respect. >> the biggest problem that we face as the entity is that there is poor data being collected and i will give you an example that we looked at the alternative development programs with the agricultural program. it was coming in from the implemented partners. they didn't assess the data and it requires them to improve their partners and indicators into targets.

>> i appreciate your answer. this is 2014. we have been running the programs since immediately after world war ii. this is not a new subject what do you mean we are just throwing money and they have no records to be able to evaluate the efficacy of the problem. >> in the recommendations we have made in the congressional action perhaps others would be more accountable in terms of when they come up and ask for money and they don't have metrics. >> something that bothered me when i was in afghanistan and iraq was served because it is in a category of and a sense it was

well-intentioned walking around money s for the military officer commander could see a problem and fix it on the spot and see the bridge is out with me helped prepare it. that program, however, became an enormous equivalent bilateral program run by the military who are not experts in economic development and its all cash and so one worries in the category of what could go wrong with that. i wonder if you could just share your observation in the program. >> you are highlighting an issue that we have various concerns with. i think if we can make a comment probably a little bit out of my league i think it was a wise decision that in your consolidated appropriations bill of 2014 i think it is pretty well cut.

but there was nearly $2.9 billion obligated of which 2.6 billion has been dispersed. once it is done i'm happy to report back to you and the other committees on what we are finding. even taking that money some of it actually worked. you are just taking the serpent is $22 billion to do that for every one of these programs it's going to be very difficult to say what percentage worked and what percentage didn't. you have to get the metrics and apply their metrics with my

colleague and i are saying is we aren't giving the metrics or they don't use the metrics. so how would do we determine whether it works or not? i have been berated by the dod for either questioning the syrup proposal because it saved lives. i don't know what that means. maybe it did save lives and that's what they wanted to use but it's hard for me to then take that saving lives and say the $2.2 billion was wisely spent. thank you so much mr. connolly. while some of us may say when i was in iraq or when i was in afghanistan here is a man that was really in iraq as a veteran who is still serving our country valiantly in the air force reserve. mr. collins is recognized.

>> i appreciate that. we are getting ready to disagree wholeheartedly right now because you've pointed out some things anthat i'm going to get to those in a minute but if anybody is here or you're watching by camera the only way is if bees that are supposed oversight is being spent tell me that they are not getting the metrics to spend money. they are not getting the metrics on how to even evaluate these programs created then maybe it's time to cut the money off. maybe it's time to say let's stop if you can't handle this because this is a problem i've seen so far and i'm for being another kerry we've got to help the country. i have no problem with that, but i have a huge problem with no accountability into the people in georgia do not get it.

we are not spending monopoly money. we are not spending money that just pops out of the air and somebody says free healthcare, free this. it comes out of our back pocket and its tax dollars. we have this problem we are blowing money and we don't even get the matcher x. company can't even do their job? are you kidding me? this is amazing to me. i feel for you. you're trying to do a job in which they state does spend it and see if it works or not we are not going to provide you the message and if they get upset at the question so what i send them to me and they can get mad at me. this is ridiculous. i submitted language in the bill forcing the state department to take a closer look at the funds

that it's allocating. frankly as we said over 100 billion what promise do we have if we continue this and i agree there are some things we need to do to hopefully keep this country stable and not have to send our sons and daughters back in a matter of a few years or send others. but how can we take it seriously if others can't even provide the tricks because they don't want to? how can we have that affect? >> that is definitely difficult and that's part of the way we do our work we need to measure against the strategic goals and objectives and we absolutely need metrics that need to be collected routinely and not every so many years but they should be collecting those

depending on the type of program it is throughout the lifetime of the program and making those available to us. they should be approving the metrics they are asking the partners to carry out and quite frankly we did find several in that area. i think it probabl probably canp to yocame up outof you collect t information in a war zone? they were done in other locations where they collected the data using other alternative means to get the data and have those metrics so don't think it's something that can't be done you just need to commit to doing it. >> can i add something that the congressman needed to and that is why since learned from iraq and vietnam. i cited a report done in 1988 and it is a lessons learned

report on the operations in afghanistan from 1950 to 1979. i couldn't find anybody in our embassy who had ever read it. this is 12 years. if i were being assigned i think i would want to read my lessons learned report from 1950 to 1979. i spoke to a very prominent generals have said i'm in the army and we do less insular and by going to the bathroom. we write them like crazy. the problem is they are not applied and i think one of the things you can do is mandate that each of the service i servo these lessons learned report but more importantly that the aid and the state do that and in the future as we all know this would be a government approach to the problem and that means we need

to mandate that they state and the dod and any of the agencies involved in the community do come by and lessons learned report on contingencies. remember under goldwater nichols you created a purple. you haven't created a purple in the contingencies. you're not requiring state and aid to do the same analysis and wesson's learned that all of the various. i know that you understand the reports. you're not seeing the combined doctrine coming out on the next contingency so i throw that out if you want to make certain we succeed maybe not for afghanistan but we have learned from our mistakes before we do it again and that's something you may want to consider. >> if you would indulge me for just a moment what bothers me is looking at this as a simple business plan you don't get

money -- i have an idea let's throw money is there a way that we can say the metrics have to be applied first before the money is transferred? because once the money is gone it doesn't matter so i think the problem that we have here i think i come from a background where either or so if you tell me nothing has happened i would discount it immediately. something is in the middle and is done wrong but when we look at this repeatedly, the people in my district want the truth and the honesty of what's going on and they will accept it even if it's hard but they will not accept in confidenc him competes simply incompetence. it may be unveiled in the community service committee may call it whatever they want to call it. anybody else because what they want but it's incompetence, plain and simple and i don't

understand how we continue to do this and frankly it disturbs me and i don't think we learned about less and. we have to do the wash is when i transferred out of iraq and they had to tell the person taking my job it wasn't just a lessons learned it's where is the defect. it had to do with what we found on the ground and how you worked it out. i applaud your work into the country ought to be ashamed of what we are doing in this area because we can do better. if we want to work if we can do better. the agencies i'm talking today at 513 can in come and explain your competencies to me. >> thank you very much and just in conclusion as the memo points out as of march 312014 the

accumulative appropriations for the relief and reconstruction in afghanistan totaled approximately $103.17 billion in fiscal year 2002. this is more than the united states has ever spent to rebuild a single country. to measure and evaluate the performance towards the strategies go they've reported on systematic weakness and the monitoring and evaluation programs carried out by its implementing partners in afghanistan. they've continued to inconsistently applied the performance management

procedures maintaining the institutional knowledge and it needs to improve oversight of contractors. the subcommittee will continue to do its work and we think the gentleman for appearing before us. with that, the subcommittee has adjourned. [inaudible conversations] we are going to take you now to the pentagon for a briefing on the defense department acquisition process that will explain a report on the from the department efficiency and its purchases and technology. reporters will hear from the undersecretary defense and an assistant navy secretary. live coverage on c-span2.

>> they are here to provide an update on several defense acquisition initiatives. i would like to request that when you ask a question would you introduce yourself and affiliation we will have about 30 minutes so i will turn this over for an opening statement. >> i will take a few minutes. i am here to update you on what we are doing to improve acquisition outcomes and i hesitate in fact i do not use the term mac positioned reform as i think that is misleading in that there's dramatic things we can do to significantly improve acquisition. it's much more about a process of continuous improvement. four years ago we started the better initiatives, the first ground and we put a label on what is a process of continuous improvement and about two years ago i introduced 2.0 and it's

time to update to that and think about where we are going from here. a lot happens in the evolutionary all the time. we have a couple of significant events if you will in the terms of progress we will talk about today. i wrote an article i think you have a copy of so we can give you a copy of it anyway. the report on 2.0 and how we are doing all of this so i will let you take a look at that and ask questions if you would like. i want to talk about the categories of things we are working on and we will highlight a couple of specific things. working with the congress on that right now there is improvement or reform efforts. we had a letter from the senator mccain asking for that and we set them in the process. but a couple things that could be done to help us there the

first and foremost is to get rid of the sequestration. the thing that is hampering the efficiency right now is the uncertainty about the future budgets and that is driven by the threat of the sequestration so that would be helpful. the other thing that is related to the buying power is to help us improve the tools to grow that talent and make that more reflective so i'm going to walk through very quickly. first is to achieve affordable programs. i think we've made a lot of progress here on most all of acquisition categories have a affordability targets that are being added as the programs come through the system in the various steps in their lifecycle and we are in the process of enforcing those. at this point of 30 or so 30 ors have acquisition of affordability targets all of them are within two or three exceptions into those are very

close and we are working to get those asp. controlling the cost of the acquisition lifecycle the second major category and one of the things is measuring the performance and learning from our ex- aryans. this is the second edition of the performance of the acquisition system report which is a volume that we will be publishing every year that we will be adding additional data and expanding some that we already have and tracking how we do in learning from that and there are some important things that confirm what many of us felt about the intensity of the incentives, but into contracts that work that is encouraging news. we don' don't always and fully e as effectively as we could and in some cases they are not effective at all and in others they are counterproductive so we have to look at that carefully.

we are also reporting more than we have in the past in this year's addition on the profitability of the industry is making profits and the relationship between that and the work they are doing which is important for the industry to understand and for us to understand so we can align the profitability of the performance that we want. i have a number of things going on to improve incentives across the board using the contract types more flexibly and the appropriate contract types and i think we are going to have success with that. we had to use certain types of contract all the time and i think that we have a lo law to educate the workforce and train them to be thoughtful and think critically about the right type of contract to use. one of the other things we are doing and this will he talked about in a moment to incentivize the industry is to recognize better performers.

we try to d tried to do this une better buying power and we were not able to work our way through the bureaucracy and the difficulties of how do you do this. rather than introducing the system at that time, we decided to give the navy and opportunity to do the private program in that area and this originated from the navies of the last year or so we have been working on that and we will be talking about the introduction results in the first round of far superior supplier program and i've already directed the army and the navy that they will expand on the same methodology basically going forward so we year from now all of them will have to publish results on the superior suppliers and identify those suppliers. we continue to try to promote effective competition which is the next major area. we are not increasing the global direct competition and i'm disappointed in that. i think that is partly the result of a budget situation that we are in.

there are enough opportunities there but i think we can do better to focus on a going forward. improving the services in the next major category we are making progress but we still have a long way to go and that is the greatest area of potential improvements still and then last but not least is the professionalism of the workforce. we just left the award ceremony for the exceptional performers and this is acquisition across-the-board not just major programs but it's facilities, contracting, sustainment that fall in the acquisition and we don't do enough to recognize the professionals and as i mentioned in the response to the senator. with that i'm going to turn it over to sean. >> i will outline the

initiatives that were described earlier. in the industry best practice is to recognize your best suppliers and to strengthen your relationship and we looked at this as an opportunity in the pilot program specifically for the navy this year to provide the recognition which by itself is a strong incentive and then following on to that recognition for those suppliers to sit down across the table to determine what additional incentives that we could work across the contract would be appropriate to give consideration for that sustained performance. so the first challenge is how do you in fact identify who the suppliers are and we are looking for a method that is objective and that is understood by the industry and the public at large and we will be explaining this to the congress and one that is fairly simple to manage and in

fact we have a system that is in place today that we use across all of the programs on the review system that is objective and gets the opportunity to comment on and so when we use that as a basis of evaluating the performance it's well understood and we don't expect to much debate. with that said, determining how do you draw the field and the contractors on the review we started by picking the top 30 corporations and when you pick the top 3 30 corporations infect you capture great greater than 85% of the supplies and research development and then we went to the next level and broke those down into their business units and ended up with about 80 different suppliers that were evaluating and then we took the top 30 where we are looking at based on our obligation data and

we ranked those and broke out from that total pack nine companies or business units of the corporations that stand out above the rest in terms of their sustained performance over a three-year period as evaluated by the program managers or contract organizations that they support in diabetes everyone has been handed a press release that outlines who those corporations are. we will be announcing that today and then we will be and aged with those suppliers as i described earlier. to take a look at what do we give across the contract that in fact drives the cost into their performance that when you look at the sustained performance you may determine it is not necessary given their overall performance and value to the

department of the navy. this is a pilot and we expect a lot of feedback from the winners and we also expect feedback from the rest of the field and we will take that feedback and shape this going forward as we look forward to the 2015 the words. >> i think we will take questions. can you talk more in detail about what those incentives are quick >> it's financial. what we see in the results is based on a large body of individual contracts. there are cases when you look at the cost into the margins in the company when they were actually paying the same profits they were to receive as a margin at the lower levels or greater performance essentially it is a subset but if there are enough of them to get your attention

and we need to make sure that we are aligning profitability with good performance and not bad. one of the things the report laments is the budget constraints that drive the ability to have increased competition but it says you are looking for creative ways to artificially insert the competition in places like production what are some of those things that are on the table? >> that refers to the environments for people, so you can do the competition at different levels. the government can break out department said it's getting to direct competition at a lower level but there's also the idea of creating the environment. you can start some of the alternatives on the technology. there is a report that shows when we give the award we get

less effective results than the threat of competition. i think it creates a climate where you are going to work to make sure you hang onto it and that's the result that we are after and the variety of things we can do to create those environments. >> you may explore something right now. >> that is exactly the type that they were talking about. in the environment it seems less and less you are being more precise about what we want. are you concerned about the consolidation that's happening

and the number of companies are talking about absorbing the suppliers to the quality to tackle those costs. what do you make of this bigger picture swirling around you? >> of the industry is still dealing so it's hard for them to plan. that is a situation that existed a couple of years now we are seeing some where people try to represent themselves how they see the future and i think that is a healthy marketplace activity. there are some cases where they are buying suppliers to keep them viable and there are places that benefits the department. at the same time it can restructure the future so we have to be mindful of that so on a case-by-case basis it hasn't changed but at the top tier we think we have seen as much consolidation as makes sense and

see what the effect on the critical technologies and so on is. >> you talk about the margins and to see that in some cases the savings are not shared with the government and sometimes -- can you walk us through the margin discussion? >> no one creates motivation for an industry like the fixed-price contract and in particular they are a lot more motivation. we are doing better in our initiation family have in the past. that's one area we are having some success. but when they have that opportunity and they get to the entire return of the cost savings that they make that is a higher motivation for them to invest up once we have locked them into that scheme we do not get a return of beyond that so the incentive vehicle that is usually between administering the government work for the

overruns and if the companies are going to get great returns we want them to get a great return and make that investment but we would like to share in that return. they also give us the information that makes better decisions about what the cost structure is. >> you have talked to the head of defense trade initiative in india. in this position what are they going to do? >> we are going to continue the work that i started with deputy carter. i've been working on the trade initiative for well over a year now and i made two trips for that purpose. i will be probably going again this summer. we have had set up a specific yet. you want to give the new administration a way to get in place.

we have a number of offers on the table. there is a groundbreaking offer to share in the next generation of the code development and we had to make encouraging advances but we haven't gone from where we're talking about the possibilities yet. we also had good discussions about the technology cooperation so to some extent people continue the work that we already started but we are looking for additional opportunities so there is a lot of potential and we are incurred by what we hear so far. i spoke to the ambassador and he was divided we are continuing this initiative. so we are much more specific now but we won't get too far unless we have a chance to talk with our counterparts in the government. >> do you know who the counterpart is now? >> i'm not sure who it is now.

>> can you describe or quantify what does it mean to not to be a favored supplier in these programs going forward? i think we are trying to let the industry know what the customer is seeing so i think for the industry part of those are not in the top tier. the recognition of where you are i think it's going to be an important incentive for them to find out for the customer with the problems are and do something about it. typically they get that feedback on a contract by contract basis and now when you roll it up at the company level you start to see a pattern broking breaking out and as i described it as a strong incentive in more than ever if you want to say you've been a good performer supports figure out what we can do in the contract within our regulations that makes sense.

>> some critics of the adjustment said it's kind of cyclical week a we get the same suggestions that may be good like workforce improvement that don't tackle the real problem. my question is how do you measure your progress here? i know it is a long process but maybe in each authorization bill or that sort of thing and the related question is are you prepared to treat them different from the system that was posted to you and it doesn't make sense to have the checks on it that something similar might be in the works. >> i assure your views on the efforts in the past and that is the reason that report that we are publishing access so that we

can start looking at the data to correlate the results to the policy and we found very few correlations when we did that number of different variables analyzed last chair and they also later that if we are not doing very well right now what we are doing right now we are going back and forth a few times to look at the other point that i will make about that is the acquisition could be complicat complicated. you have to get a number of things right to do them well and you can have poor result. the business deal is bad. the management is bad or just kind of the big picture things.

so you have to get all of that right and that requires professionalism to cover those that are engaged. we have a number of rules right now for different types of things. we have rules for the system and acquisition programs and the rules over the it specifically. i think we need to simplify that the body of labody of law and nt more complicated. he's working on both sides of the aisle and we are trying to come up with the reform that will simplify the body of law that we have. it's also pervasive. it's in everything so you start to write the rules you are writing for everything.

in the business systems they were different in others like the command and control systems that tend to be military specific in that we develop ourselves whereas the business systems we buy the system and modify it introducing them to the field is different. you generally take out th up a e and putting the old one. but for the business system you have to keep the old system running until you get the new one up and running at the same time so it is a different category if you will and we need to manage these in a particular situation and in general i will post the rules that tend to be inflexible and imposing best practices because we have such a complicated body of work that we do the rules that don't allow us flexibility are not helpful frankly. >> but we see the work on the hill and in the legislation. >> we will have something in the

next cycle. >> of the list doesn't necessarily surprise a lot of these things that are known and considered the top contractors in general. we talk about how this is to incentivize and yet doesn't seem like maybe it will be less of an incentive because the companies feel like they can to break into this no matter what they do. does it set up a preferred suppliers list and then everybody else is left out? >> i think people will respond and the people that responded the most are from the bottom. they want to get out and that is the kind of behavior that we want to see from people. >> i described 30 countries breaking down to the business units or companies. what you will see is a lo a lotf familiar business units of corporations but not all of the business units so i suspect that

incited a major corporation the business unit a. and b. are having discussions about why one is and is not on the list and in addition to the other companies that are going to be striving to get across the line. >> we want to recognize the good performance and notifies those that are not in the list and that is what this is all about. >> can you elaborate as clearly as you can with being on the list means versus what it doesn't mean yet. will that impact source selection criteria when this was first outlined there were tangible benefits in the profit of better treatment and profit guidelines. a lot more tangible than the discussions in the companies which i acknowledge is important but it seems it has been reduced or pared back. can you get the rationale for that and i had a separate

question. here's what we think is a good incentive we want to engage in a dialogue with the companies over what makes a difference to them. what is it that we do that drives cost into their programs were their systems or other processes so that we can back that off and by backing that off we can help reduce the cost that should return the profits to them. so let's have the discretion to figure out what makes the difference. the actual first question with getting on the list of verses not getting on the list. is that an accurate perception? >> no but yes and here's why because we are using the system to rank the suppliers at the business unit company level.

all of those same parts are also a central element of the past performance criteria that is present in all of the competitions so if you are not on the list and you are competing against somebody that is on the list that is a clue that they outperform. >> it is not a check mark on the source selection. >> of the reason it took so long is because of the difficulty of doing some of those things you talked about. we want the competitions to be fair and we didn't want this to influence the source selection so this is about past performance. it is an element in the past performance but that is unchanged and this does let people know that standing on that. we tried to get the public information.

it will tell them where they need to improve which is a good thing that we are looking at things we can do without a legislative change that allows us to reduce some over overlooked perhaps which would be beneficial for all of the competition based on the fact that they have consistently performed well. >> it was one of the higher subjects. you've got these task force reports recommending a new program to replace this end jeannette has performed well. what is your thinking and going forward in this? >> it is an interagency issue. we have the need for national security launches and others as well so it's been a very valuable input. we've done some based on the report but we are still in the process of considering all of the options.

but we are motivated if we can do it to remove the dependency that we have. we haven't forgotten exactly how to get there. going back to the competition, we heard earlier that there were some high-profile contracts that only had one better. there is another one coming out that isn't. the army helicopter training program now is going out and buying. i wonder what your thoughts are that i'm wondering how it fits with the culture that you're outlining. >> one of the reasons that we have the cases, i came up earlier and didn't address it is that we are trying to define the industry more than we have in the past that constitutes the best value for the department and i think that we need to do that. it keeps the competitors that have no shot that's just wasting

their money. it still allows it to have a competitive environment and in the cases where that has happened we have been able to get good prices and the competition and i would rather communicate to the industry what the real needs are and how we value the different levels of performance to make intelligent decisions. it's also designed to stimulate innovation. if people know we are going to pay up to a certain amount for performance, then the motivating figure is how to do that force. the history for the department is when we put out the requirements the industry knows we aren't getting any credit. we are just taking the threshold at the lowest price basically.

we will and we should pay for more value we just have to stay within. i think that is the right thing for us to do. .. to extend this to small and