this legislation builds on the important work of the commission on wartime contracting, an independent bipartisan panel that you, chairman mccaskill created with senator webb. from his formation in 2008 until its sunset gang valuable insight we've taken many steps to improve our contingency contracting in work and our own lessons learned. we are now engaged with the general accountability office on its review of the iraq transition, contingency contracting and the cwc's final report. we have learned much from the iraq transition working closely with dod, usaid and interagency partners. on april 3, secretary clinton addressing cadets at the virginia military institute described the iraq transition as the largest military to civilian transition since the marshall plan. we are now taking the lessons learned in iraq and applying them to contracting, planning and execution in afghanistan. state centralization of acquisitions for goods and

services in our acquisitions management office which together with its regional procurement support offices handle 98% of our contracted dollars. the centralization of acquisitions obviates the need for the extensive policy guidance and oversight in a dispersed acquisition organization. we have hired 103 additional acquisition management staffs since 2008 using our working capital funds 1% fee on all procurements. this has enabled us to devote 37 contracting officers and support personnel to iraq and afghanistan. and we have trained and deployed more contracting officer representatives with 1008 certified contracting representatives in 2011 and 1,200 total projected by the end of this year. the requesting bureau must now ensure that adequate resources are identified early in planning. the cognizant assistant

secretary must certify planning and oversight is adequate for every service contract valued in annual expenditure of over $25 million and also verify annually that oversight continues to be sufficient. we have also increased accountability by mandating that contract oversight work elements including performance appraisals of technical personnel with contract management responsibilities. all cors and government technical monitors must now complete a 40-hour training course which we updated to be more interactive, skills-based and adult learning focused. a separate class session has been tailored for diplomatic security cors who deal with local guards and other security programs overseas, all department cors supporting dod-issued contracts for iraq mission take additional dod training in the contingency environment and any other specialty training related to that specific contract. this ensures that state personnel managing dod contingency contracts meet the dod standard.

to improve our suspension and debarment efforts we've issued detailed procedures and provided trainings to grants officers and contracting officers. suspension activities increased from no suspension in 2009 to five each in 2010 and '11 and 19 actions halfway into fy '12. debarment activity increased from no debarments in 2009 to six issued thus far halfway through 2012. this increase is due to a more active coordination between the department and our oig investigators, stronger referral activity and improved processes and focus within the suspension and debarment office. contingency contracts now require special vigilance against trafficking persons and -- excuse me -- issues have been undertaken at state to address tip contracting issues. contracting officers and cors are trained as our front line in preventing contractor tip and worker abuses. contracting officers tailor specific oversight requirements

on locale, service and contract type. contracting officers travel overseas to monitor performance at the site and enforce tip programs. in some locations we have hired a direct hire program manager or contracting officer representative lives on site with construction or security staff at their housing areas. new solicitation language regarding recruitment includes recruitment plans and submission of agreements to prevent maltreatment of workers. we continue to strive for zero tolerance of trafficking and all our contracts. the department has taken a significant number of positive steps to increase our function as the cwc recommended, we have strengthened contract administration and conflict affected states through hiring and training adequate federal personnel to provide strong governmental oversight of contractors. the bill you have introduced, s

2139 has many positive elements and we look forward to working with you on contingency contracting. thank you very much, and i look forward to your questions. >> thank you very much. i apologize for mispronouncing your name. mr. ginman. we'll take your testimony now. >> i've learned to respond to almost any pronunciation. >> i know the feeling. >> so chairman mccaskill, ranking member portman, i welcome this opportunity to discuss the proposed comprehensive contingency contracting reform act of 2012. the impact the legislation would have on the department of defense. i've addressed the department's position on each of the provisions in the proposed bill in my written testimony so i'll not repeat that now. senator mccaskill, you and senator webb also co-sponsored the legislation that contracted the commission on wartime contracting and i'd like to thank both you've for your leadership on this important topic. it spanned three years and their august 2011 final report recommendations are the basis for many provisions of this bill. the department maintains a scorecard to manage our progress against all of the commission's

recommendations. the government accountability office is currently evaluating the department's implementation of the commission's recommendations and we have been actively providing information on our progress to them. the department has been and continues to be focused on proving operational contract support. it has been a journey and we believe we are making good progress. the bill we are here to discuss today is another positive step in that journey. the department of defense concurs with many of the provisions of the bills -- of the bill, but we do have some concerns and we would like to work with the committee to resolve those. we are committed to enhancing the -- enhancing contingency contracting and is in favor of legislation efforts to augment the ongoing departmental initiatives to overseas contingency operations. we are especially appreciative of the 2012 ndaa coverage of no contracting with the enemy, access to subcontractor records and an overseas contingency operation. and the increased authorities provided to the reach-back cell that supports the joint theater

support contracting command. in closing, i wish to reiterate the appreciation for your continued commitment to improving operational contracting. unlike you, the department is focused on meeting the war fighters current and future needs. challenges remain. thank you for the opportunity to provide you the department's reactions to this bill. i ask my written testimony be submitted for the record, and i welcome your questions. >> thank you, mr. ginman. miss crumbly. >> chairman mccaskill, ranking member portman and thank you for the opportunity to discuss the potential impact of the comprehensive contracting reform act on the u.s. agency for international development. i will briefly summarize my remarks and ask that my full statement be entered into the record. madam chair, senator portman, as you know, the more than 9,000 men and women of the usaid work to provide effective economic development and humanitarian assistance in support of u.s. foreign policy goals. how we improve our contracting

practices including in contingencies directly impacts the success and sustainability of our mission. accountability to congress and the u.s. taxpayer for the funds we use is a duty. and it is a duty that we take very seriously. in november 2011, when usaid leader rajiv shah asked me to lead the bureau of management he knew i was a career civil servant with more than 20 years of experience making things work at the agency. throughout my career i focused on making our business practices more efficient and effective with the overall goal of enhancing performance while reducing unnecessary costs. so i understand the motivation behind this legislation very well. it addresses many of the management challenges highlighted in the report of the commission on wartime contracting that you, senator mccaskill, created along with senator webb. it also addresses some of the most important issues in our current engagements in

afghanistan and iraq, and those we could contend with in future contingencies. usaid has begun to implement the lessons learned from iraq and afghanistan. over the past two years, administrator shaw has instituted one of the most comprehensive reform packagize have seen in my time with the agency. our usaid reforms as we've named them are designed to ensure that we provide a more effective business model and deliver more sustainable and results driven development programs. implementation and procurement reform is a key element of usaid forward and i want to note that this reform agenda is complimentary to many of the recommendations of the cwc so usaid has already made great strides in enhancing the oversight and accountability for our acquisition and assistance portfolio. for example, we are increasing transparency. we have been working actively with our department of state colleagues to make foreign assistance data available to the american public. as a result, anyone can view usaid spending, including overseas contingency operations

online at foreignassistance.govv. we have been actively engaged in strengthening our oversight. in february 2011, we stood up a compliance division within the bureau for management's office of acquisition and assistance to serve as the central repository for any and all referrals of administrative actions, including suspension and debarment. in just one year, the division has issued 102 administrative actions and recovered nearly a million dollars in taxpayer funds. compared to eight such actions between 2003 and 2007. we are promoting enhanced competition and in 2010, we established the board for acquisition and assistance reform and in its first year alone the board's recommendations resulted in a 31% increase in prime awardees from 29 to 38. this is significant because it means we are broadening our partner base and reducing dependence on any single organization. usaid has instituted several cost-saving measures and our acquisition savings plan has

yielded approximately $170 million in cost savings or cost avoidance since 2010. while we've had some difficult challenges in iraq and afghanistan, we have also achieved some significant successes. as administrator shaw noted before the cwc in afghanistan, we've put more than 2.5 million girls back in school, helped rebuild the afghan civil service, aided farmers in growing legitimate crops and assisted in dramatically improving health care particularly among women. in iraq we've made significant contributions toward diversifying the economy and promoting women's participation in the market. with regard to your legislation, my written statement details comments and concerns that we have on specific provisions of the bill. and i am happy to address any particular section that you wish. but i'd like to take this opportunity to compliment you and your staff for your leadership on this issue and your willingness to engage in a

die lag on this topic, because we all share the same goal -- enhanced accountability and overseas contingency operations. again, thank you for the opportunity to be here today and for your support of usaid. i look forward to our discussion. >> thank you. i'm going to really try to make an effort today to take off my typical hat in this committee where i am kind of tough on folks and try to point out inadequacies and make a point by using the power of almost a cross-examination. and i'm going to really try because i really do want this to be about how we can get this legislation in a place that it's not going to be just something that is ignored or that is, you know, checking a box that we're completing the work of the wartime contracting commission. i really want this legislation to be a framework that is workable for your agencies. and so i want to underline my sincerity about getting your input.

and whether it's today in the give and take of this hearing or whether it's by members of our staff sitting down and slogging through the difficult process of going through phrases and going through sections of the bill and double checking, what i don't want to have happen is for us to get this legislation passed in its entirety or partially and then have a hearing, you know, several years down the line and realize that nobody paid much attention to it. so this is your opportunity. and with that will come the danger that i hope i or somebody who will sit in this chair will not let you off the hook or your agencies off the hook in a few years when you say, that legislation just wasn't workable. i don't want those words to ever come out of the mouth of you or your successors in your jobs as it relates to improving

contracting. so with that, let me get started on what is one of my -- i've got several overarching concerns about this. but in the interest of time, i'm going to hone in on some of my quote/unquote favorites. and i mean that sarcastically. let me start with debarment and suspension. i think the air force has provided such a good role model for everyone as it relates to suspension and debarment. i was interested to hear in your testimony ms. crumbly about how you all have really stepped it up in terms of looking at performance on contracts and whether or not a suspension or debarment is something that should be considered. just to give you some big numbers, according to the defense department, over a five-year period, we had -- let me get the exact numbers because i want to make sure i get it right.

in 2011, the defense department found that over a ten-year period, the department had awarded $255 million to contractors who were convicted of criminal fraud. and $574 billion to contractors involved in civil fraud cases that resulted in a settlement or judgment against the contractor. many of whom were never suspended or debarred. in 2011, gao reported that the state department had only had six suspension or debarment cases with over $33 billion in outstanding contracts. now look at air force. air force has had 367 suspension or debarment actions in a single year last year. the state has had six in five years. the air force suspension and debarment officer is independent from the acquisition chain. so somebody who is involved in

acquiring stuff is not involved in determining whether or not there should be a suspension or debarment. the state department sdo does not have those attributes. the state department suspension and debarment officer has other duties involved especially also in acquisition. why don't you speak to that, secretary kennedy, about any resistance or reluctance you might have to separating out the suspension and debarment officer from any duties, particularly related to acquisition. it's kind of hard to be in charge of buying something or buying services and then turning around later and say, you know, i really screwed up and gave it to a bad guy. it seems to me that separating that duty makes so much common sense. and i'm curious as to your input on that. >> senator, i fully agree with you.

but i believe that is the process we have in place at the state department now. we have a head of contracting activity, a senior career, senior executive service civil servant who is responsible for all of our contracting activities. it is her responsibility to buy, and it is her warranted contracting subordinates who do all our buying. we have a separate senior executive servant career civil servant who we call our procurement executive. he has no responsibilities to actually buy anything. he sets the policies and the practices of the state department but does not engage in buying. he is in charge of the suspension and debarment activity. so we fully agree with you, senator. we believe that it is absolutely correct to split the duty of buying from the -- in effect, the duty of oversight with due respect to our inspector general who also has the larger

oversight framework. and so it is our procurement executive who is the debarment official and who, thanks to his good work, we've increased the number of suspension debarment significantly as i outline in my testimony. so we agree with you, senator. >> in our briefing, we were told that corey reiner is in the office of procurement executive, an office that also assists state in contracting for supplies and services. that is incorrect? >> he writes the policies, ma'am. he does not -- he does not buy anything. he is -- he is a warranted contracting officer, yes. but he does not procure any goods or services for the state department. we have hired -- it was actually my predecessor who hired him -- someone with wide and deep experience in contracting because who better know how to set policies and to discover when you should

suspend or debar some one if you do not have that background. but he does not engage in procurement activities. >> would it make sense for you to have somebody full time just on suspension and debarment with the amount of money that is being contracted by state? wouldn't it be better to have someone whose full responsibility was just suspension and debarment? >> he has staff assisting him and that staff is a professional staff and so we believe we have constructed a pyramid in the procurement executive of professionals who know how to write the regulations so that we can hold contractors responsible. and then implement a full fledged suspension and debarment program should it become necessary for us to take that action. so we become necessary for us to take that action. so we believe that we are complying with both the letter and the spirit of what you put forward because we agree with you. it is our responsibility to ensure that every single taxpayer dollar is administered

and used to the best interest of the national security of the united states. >> okay. i am hoping that we can get you to have somebody that is at the top of the organization of suspension and debarment. i don't know whether you need assistance under him, but who has just that responsibility because we think it's that important in terms of setting the tone. but we can talk about the -- that going forward. another one of my big problems is sustainability in terms of projects. and i have -- we tried to do our greatest hits list here for this hearing, and this is examples of waste, fraud and abuse on projects in iraq and afghanistan. and i think if i ask all of you to guess three or four of the projects that would make this list, i am hopeful that you would know what they were without me reminding you because it's not good. and i think that the notion that

we have actually done a full bore sustainability analysis is not borne out by the results of many of these projects. and i think it's very important that this legislation include something that requires a certification on sustainability. i know under the foreign assistance act usaid is required to have a certification. you know, that is -- that is because a.i.d. has traditionally been the one doing these projects. and as we know it's a whole new world out there with afghanistan infrastructure fund and with what i call serp and son of serp and the way serp has morphed into something far beyond what was explained to me when i first arrived in the senate.

in a report by isaf. which i previously discussed, there's no response that it's fostered improved interdependent relationships. this legislation would impose a much more rigorous review of these projects. and i've circled several of them. i have a usaid project in afghanistan which is the power plant, $300 million power plant. clearly, whatever certification was required, it was flawed because that's not sustainable. i've got the coast guard's road in afghanistan. i've got the water treatment plan that the state department did in iraq that was almost $277 million that we know. found only operating at 20% of capacity because of the failure of the iraqi folks to knowing how to operate or maintaining it. i've got the fallujah water

waste treatment system in which was a state department, defense department joint project. is there any argument or pushback from any of you on the sustainability front that this has been a failure and that even going as we speak we're building things in afghanistan, that will not and cannot be sustained? >> clearly at least from the defense department perspective, we have not always covered ourselves with glory in this area. you've listed those examples. in august we did create the afghanistan resource oversight council. i think we're in our fourth or fifth meeting of that. it has been chaired by alan estevez, the assistant secretary of defense and basically filling in as principal deputy. mike mccord is the principal depp si and cfo. and by jim miller who is in his current acting role has continued to be the chair.

and sustainability has clearly been on the topic and the agenda in each of those meetings for what we can do or not do. i think when mr. kendall testified before the senate before with general bash, talked about what to do particularly in the corps of engineering when we were evaluating projects to ensuring sustainability, an issue that was discussed and addressed. i know as projects come through and were reviewed over $1 million, we're asking the question up front, what's the sustainability? have we done it well in the past? no, senator. are we attempting to do a significantly better job as we go forward? yes. have we put the structures in place to ensure we can do a better job? i think we've done that as well. >> i guess my biggest problem with this is that i know and understand that our military is the best in the world. because there is nothing,

there's no mission they cannot accomplish if we set our minds to it and put the power and the resources of this country behind it. and it feels like to me that in some room somewhere, there is not an acknowledgement that we are using fairy dust to really justify what this country can do when we leave. and what they're capable of doing when we leave. i'm not even talking about the security forces. i'm not even talking about creating an army for a country that's never had a centralized army. i'm not even talking about creating police forces that are capable of sustaining the rule of law after we leave. i'm just talking about who's going to pay to fix the roads. i'm just talking about who's going to operate power plants. i'm just talking about who's going to have the technical expertise on these water projects. and it's just hard for me to imagine with the gdp of this country, once you take out the huge influx of american dollars, they don't have any money.

and i mean, is somebody being brutally honest about going forward with these reconstruction projects as it relates to the reality of what this country is once we're gone? >> so again, from an eroc perspective, those three individuals are consciously looking at what are the current projects that are there, what do we think the long-term tale is? you see the people who are, in fact, overseeing the training, the training of the military forces and the ability to do it are participants in that discussi discussion. and from my standpoint,think we have got the right people together to in fact attempt to address that question and can we in fact afford it, and how is it going to be paid for in the future? >> we're building highways for a country that doesn't even have a highway department. i mean, they don't even have any revenue to support their highways.

they have no -- there's no fuel tax, there's no tax out there that would sustain a highway, and it just -- it's just -- i think this certification included in this -- what about the others in terms of sustainability? then i'll turn it over to senator portman. is there anything you want to add on sustainability? how did this power plant get built? who decided a dual fuel $300 million power plant was a good idea in taraq hill? i know that's not what it's typically called. >> i call it kabul power plant. >> i say it's in kabul somewhere. >> exactly. >> in essence, it was an interagency decision to move forward with the power plant. i do want to note that the power plant is working in terms of performing at peak or surge capacity. i know we were talking -- >> yikes. $300 million, that's one expensive generator in an emergency.

>> i understand. we have turned it over to what they call dabs, the afghan utility portion of the government. we are looking at how that can be sustainable in the long-term. so it is meeting some needs in the country. you noted that the foreign assistance act requires that we focus on sustainable development and we do do that in usaid programs. it's a key factor for consideration whenever we are developing program or projects. i would say we've had some work to do and we've taken seriously the cwc recommendations and, in essence, we have put together a sustainability policy in afghanistan. and actually i was talking with the deputy director of our office of acquisition -- sorry, of afghan and pakistan affairs. he noted when he was in afghanistan recently they're implementing the sustainability policy at the provincial reconstruction team level. we are taking it seriously, we are, indeed, putting policies into place, and

we're looking the longer term sustainability policy in afghanistan. >> anything from state, secretary? >> i would agree that there clearly are issues. we try to do a lot in very, very difficult environments and obviously we have not succeeded completely. i think my two colleagues have addressed that. the major state department activity in this regard is our police program. we are working very carefully with both the government of iraq and the government of afghanistan to ensure that we are providing them the kind of training that they need and the kind of training that will have a long-term positive impact in their police programs. we have a senior state department officer who is assigned in both iraq and afghanistan as the coordinator for foreign assistance to make sure that we are focusing on sustainability. just as the admiral said, there is a lot we can do better and i believe we've learned our lessons.