new projects. i've not yet gotten from the defense department what they're envisioning these new projects would be. what i'm envisioning is if we're starting new infrastructure projects in afghanistan as we're trying to pull out of afghanistan, we may end up with that reality that i think is very hard for americans to understand, that our military would by and large be gone from afghanistan, but we'd have a full force of contractors that we'd be paying on the ground for years to come on projects that we really would struggle to provide the security necessary for completion under that scenario. i continue to wait to find out what this new $400 million that has been requested is supposed to be building in afghanistan over the next two, three, four, five, six years. and hope you can spread the word over there that i'm drumming my fingers, waiting for this. >> yes. >> thank you all very much for being here.

>> i'll introduce these witnesses. lynn holbrookes, she became acting inspector general for the department of defense in december 2011. she joined the department of justice as an assistant u.s. attorney in 1991 and has served

as general counsel for the special inspector general for iraq reconstruction and general counsel for the d.o.d. inspector general. prior to her appointment as acting inspector general. served as principal deputy inspector general. harold giesel? am i saying that correctly? has served as the deputy inspector general for the state september since june 2008. he has more than 25 years of experience with the state department and previously served as acting inspector general in 1994. michael g. carroll has served as inspector general for the u.s. agency of international development since february of 2006. mr. carroll is a member of the senior executive service with more than 26 years of government service. prior to his appointment, mr. carroll served as the director of administration for the bureau of industry and security in the department of commerce. it is the custom of the subcommittee to swear all witnesses who appear before us.

do you swear the testimony you give before this committee will be the truth, the whole truth, and nothing but the truth, so help you, god? [ all: i do ] >> we will ask you to try to hold your testimony to five minutes. i must say that the attention you will get today is much less than your colleague, brian miller, will get this week, but that's probably a good thing. i'm not sure that we'll have any injuries of tv cameramen trying to follow you down the hallway, and if you're going to talk about las vegas, warn me ahead of time because -- i joke about this, but i must say, every once in a while something happens in the world of inspectors general that highlights your work. and for most of the time, your work is done in the shadows. no one pays a whole lot of attention. unfortunately, sometimes the agencies don't pay a whole lot of attention. it is very important to me that we get this legislation right from your perspective.

because you are the front line. and while there may be a hit every once in a while that gets the bright glare of camera, you toil away most of the time. in relative obscurity. most americans have no idea what inspectors generals are. and they don't realize the work you do. they don't understand the capacity you have to look after their interests. and they certainly don't get to watch those small but important battles that you wage every day with people who lead your agencies towards a goal of more accountability, transparency, and saving the taxpayers money. so as i always try to say to inspectors generals that i am honored to deal with in these hearings, thank you for your many years of service in this area, and you are great examples of public servants that are painted with a broad brush, overpaid, underworked, too many of you. there aren't enough of you.

and you'll never hear me say that you are underworked or overpaid. so thank you, and we will begin with you, miss halbrooks. >> thank you, chairman mccaskill. thank you today for inviting me to express our views on the comprehensive contingency contracting reform act of 2012. as the acting inspector general of the department of defense oversight remains me number one priority. i'm committed to continually refining and improving our oversight approach. last week i was in afghanistan and had the opportunity to observe firsthand how the oversight organizations currently plan, coordinate and deconflict audits and assessments. as the most recent oversight meeting i attended, ig staff from defense, state, usaid, log command igs discussed critical oversight challenges and

exchanged information in a productive and collaborative matter. i also met with senior commanders there to determine how the dod ig could continue in afghanistan. the senior commanders understand the need for transparency and oversight and the men and women serving deserve to know every dollar spent for their health, safety and security is spent efficiently and effectively. i believe the organizations that do oversight and the command are working well together to make this happen. to make this effort even more effective, we at d.o.d. ig have a special deputy inspector general for southwest asia who functions as the authoritative source to plan, coordinate, deconflict and facilitate effective oversight. he served as the chairperson of a principal forum to provide coordination and cooperation of comprehensive oversight. this group meets at least quarterly, is comprised of representatives from 25 d.o.d. and federal oversight agencies, functional components and command igs.

we as an oversight community have developed considerable experience in conducting timely and relevant audits, inspections, and investigations of overseas contingency operations. at d.o.d. ig we have the capacity to deploy anywhere in the world and are prepared to respond effectively, of course in coordination with other federal agencies and internal d.o.d. ig oversight offices to address future contingency operations overseas. with this background i'd like to discuss the comprehensive contingency contracting reform act of 2012. overall i support the legislation and in general support the provisions of 103 of the bill which call for a lead ig in overseas contingency operations. based on the strong working relationship that has evolved between the department of defense, state, and usaid igs, i do not believe there is a need as the bill is currently written for the chair of the council of inspectors general on integrity and efficiency to designate a lead ig in contingency. given the bill defines a

contingency operation as a military operation outside the united states and its territories and possessions, i believe the legislation should recognize the department of defense inspector general as the lead ig. alternatively, a determination of the lead ig could be made based on the amount of funding appropriated to the respective agencies. congress mandated in 842 of the national defense authorization act of 2008 the d.o.d ig in conjunction with federal igs and d.o.d. oversight agencies issue an annual oversight plan for southwest asia. i recommend the committee consider similar requirements to develop a joint oversight plan under the direction of the lead ig that would include a focus on strategic issues and contingency operations oversight. i would also like to work with the subcommittee further to refine the reporting requirements in the proposed legislation. while compilation of data on obligations and disbursements is primarily a management function an ig can add value by independently analyzing this data. therefore we believe a requirement to compile the data

should be assigned to each department and the igs should review the quality of that data as part of their oversight plan and use it to inform their work. we believe that a semi-annual or annual reporting requirement would provide congress with meaningful data and necessary transparency. finally, the provision of the bill authorizing the lead ig to employ personnel on a temporary basis would enhance our ability to move the right people in quickly to establish an immediate overseas presence. however, i believe the special hiring authorities would be ineffective if not time limited. with a few changes plus a funding mechanism to resource the hiring of additional staff the proposed legislation would be an efficient and effective way to ensure comprehensive oversight of contingency operations. thank you for your support of the community. i appreciate the opportunity to testify today and express our views and look forward to answering any questions you might have. >> thank you. mr. geisel. >> thank you, chairman

mccaskill, for the opportunity to discuss our views on strengthening oversight of government contracts during contingency operations. i ask that my full testimony be made part of the record. we commend the subcommittee for its leadership and tenacity in developing this critical legislation. madam chairman, we believe that senate bill 2139 is a positive effort to ensure that statutory igs have the tools needed to provide effective oversight in the most challenging overseas environments. the effect of the bill's provisions on oig would be broad, positive, and certainly manageable. oig agrees with and supports sections 101 and 103 in the bill with three suggested revisions. first, we recommend the small but important revision to section 101. we suggest an automatic percentage-based funding mechanism be included in the operations budget for ig oversight. igs will need immediate

additional funds to offset the unforeseen and unbudgeted costs of doing business in a contingency environment. a model for these mechanisms can be found in the american recovery and reinvestment act where funding for all the involved igs was provided to oversee the act's significant new appropriations. second, section 103 of the bill would mandate that the chair of the council of inspectors general on integrity and efficiency designate a lead ig for the contingency operation and resolve conflicts of jurisdiction between the participating igs. we suggested at the onset of a contingency operation the relevant igs would first determine which agency is expected to have the largest share of the operations funding and that agency's ig would become the lead ig. it would then follow that the level of funding would become the operation's associate ig. in recent years the statutory igs worked well together to oversee contingency operations. for example, conflicts on

jurisdiction and work deconfliction have been resolved efficient by the southwest asia joint planning group and the international conflict corruption task force. for work in iraq, pakistan and afghanistan. these groups which are comprised of all igs working in these countries meet quarterly and have been a success. this approach would save time and simplify the process during the hectic period at the onset of a contingency operation. lastly, we support the provision for semi-annual ig reporting. we do suggest one adjustment. that this reporting be scheduled to coincide with the oig semi-annual reporting cycle. however, the quarterly reporting provision in section 103 would mandate that igs provide detailed financial data, specific obligation and expenditures, a project by project, program by program accounting of incurred costs for investment and revenues, seize or frozen asset information,

agency operating costs and detailed program and grant information. all this data resides in the department or agencies, not in oigs. we suggest the participating departments provide a periodic stream of data to congress and to the participating statutory igs. we can use this information on a semi-annual basis to better plan and prior advertise oversight work. recent successes in oig are a result of the increased confidence in our work and the resulting congressional funding increases appropriated since 2009. these increases have enabled our oig to increase audit inspection reports by more than 56%. similarly, suspension and debarment actions based on our referrals have increased dramatically from zero in 2008 to 17 in 2011. and today we are operating in five overseas offices from cairo to kabul.

so when congress provides the necessary funding we delivered good results. that said, when you set out to rebuild an organization, take it to new regions and modernize its approaches, it's not always about the money. that's why we appreciate your efforts to provide the new hiring authorities and the legal framework adjustments that support more effective law enforcement. thank you, chairman mccaskill, for this opportunity and i'm prepared to answer your questions. >> thank you very much. mr. carroll. >> chairman mccaskill, thank you very much. thanks for inviting me here today. you may recall my impassioned plea the last time i testified before you in november of 2010 on behalf of the statutory igs. i said then that you had what you needed right here and nothing in the last 18 months has changed my mind on that. so this is truly i think a step in the right direction. the legislation not only on behalf of the agencies but performance and accountability,

but also giving us the resources and authorities we need to do our job in a contingency operation. so it's -- i really appreciate this opportunity today. i'd also like to thank you for the inclusive nature of the deliberative process, working with your professional staff on both sides. they've been really open to our suggestions and i think -- i'd like to think that's reflected in the bill, that there aren't a lot of major changes that we think need to be made. i think it's well down the road to be where it needs to be. we just have a couple of issues that we just want to mail nail down if i could. as it relates to section 103, i agree with my colleagues that based on the way you've defined the contingency operation, it's clear that the d.o.d. ig would be the lead ig in this particular case, then whether it's aid ig or state ig. on an associate basis. if somehow it came to pass sigi

was part of this equation, that would be able to inform the sigi committee on whatever needed to be done but we don't think there's a role for sigi in this process. on the funding and authorities, as you know, we're a foreign service organization. and our auditors and investigators are stationed around the world. we want to make sure that the authorities for dual compensation waivers not only address title v employees but address title vvii employees as well, retired foreign service officers, so we can reach back to our cadre of retired auditors and investigators to be able to do the job. there's one aspect not in the legislation that i'd like to propose. i know you asked that question to the previous committee -- previous group of witnesses. and that is, based on our experience in pakistan, we've had great success with a

national hotline on the kerry/lugar implementation. and i can share the stats we have and the successes we've had with you and your staff and i'd like to possibly work with you to include something like that. i've talked to my colleagues in principle, they agree. we could work through the jurisdictional issues and that sort of thing with no problems but i think it would enhance the oversight of whatever the programs are, the contingency situation. related to the agency and the agency's oversight, on suspension and debarment as it currently is written, there's an automatic trigger for suspension and debarment if there's an indictment. and i would say that we should talk about that. i think there are times when an agency has demonstrated already that they've addressed the issues that we've brought up in our investigations, even though there may be an indictment on a

criminal or civil referral. so i would ask that you just consider the possibility of that being a case-by-case basis rather than an automatic trigger. i think from an agency point of view, i'm not here to advocate on behalf of the agency, but i do endorse what miss crumbly has said. i think the agency has made huge strides since our audit of 2009 that was born out of a bit of frustration on our part, how the agency was proceeding with ow refers. i think the aed case in pakistan is a great example of the agency stepping and up making hard decisions even when it impacts potential program implementation. on tip which is very important to senator portman, i wanted to let you know that recently we met with the agency personnel responsible for trafficking in persons. we're attempting to, with our colleagues at state and d.o.d., to come up with a training package for our auditors and investigators. because this is not our sweet spot.

we're contract, procurement, fraud investigators and auditors. so this is different than what we normally do. we want to create a training package that we could implement at fletsi and sigi, the ig academy, that would train our auditors, investigators. i can also let you know that both for sustainability and t.i.p., they are standard audit provisions and audit objectives and each one of our audits, regardless whether it's in iraq, afghanistan, pakistan, haiti, those are two audit objectives we're always going to have in our audits. i appreciate the opportunity again and look forward to answering any questions you might have. >> it looks like all three of you agree that in contingency, the three of you should work together with d.o.d. >> yes. as lead? >> there's no reason to do the sigi decision and all that, that both state and a.i.d. acknowledge that if it is contingency, then in reality,

the vast majority of the resources that are going to be brought to bear are going to be coming out of the defense department, therefore in any kind of decision as to risk and work, it's all yours, lynn? >> yes, ma'am. we are ready to step up and assume that responsibility. i think the last few years have taught us all as an oversight community a tremendous amount about how to work well together and i think we'd be able to respond quickly and effectively. >> and let me just say, i think i should point out for the record, none of you are the official, full-time, appointed and confirmed igs. i guess you are, mr. carroll. >> no, i'm not right now. my authority's run out. >> that's right. so we do not have cigar, we do not have d.o.d., we do not have state, we do not have a.i.d. in terms of an appointed and

confirmed inspector general. let me say, in case anyone is -- let me disabuse anyone of the notion i'm not willing to criticize the white house. i find it appalling that these people have not been appointed. and there is a long list of qualified people to hold these jobs. and i'm sure that some of you are on those lists. if not all three of you. and i do not understand why this is taking so long. i mean, if you look at the world of inspector generals and the money that's being spent, how these positions can go vacant for this period of time is beyond me. and i'm hoping that the white house gets busy and starts announcing the appointment of some inspectors general. let me ask about suspension and debarment. as you know, what this legislation is trying to do is move a boulder. that there has been cultural reluctance on suspension and debarment. there's been cultural reluctance to not give performance bonuses

in government as it relates to contracting, and there's been a cultural predisposition to not suspend and debar. with the exception of the air force. i don't know what they're drinking at the air force but i like it that they're aggressive about suspension and debarment. we're trying to encourage aggressiveness. obviously this is controversial because several people have said they don't like automatic suspension and debarment upon criminal indictment. shouldn't we at a minimum require an assumption that there would be a debarment that would trigger a requirement to document why not? >> yes. >> miss halbrooks? >> yes, i think documenting the decision-making would be fine. >> i don't know, and i'm not saying that we would change the legislation at this juncture as it related to that. but there clearly have been bad actors where there has not even been a ripple.

and it seems to me that a criminal indictment of a contractor should be an event that requires some folks in that agency to take a hard look, do some scrubbing, and figure out what the problem is, and if the problem is an isolated bad employee, that that be documented thoroughly with some kind of formalized process. do you envision you all being engaged in that process? would it make sense to have a justification for nonsuspension or debarment in light of criminal or civil fraud, that that be forwarded to the inspectors general? >> i would want some time to consider that option. in a little more detail. but it would definitely sort of change the culture of the suspension and debarment programs which typically aren't about punishment. they're about making business decisions and making sure the department is working with responsible contractors.

i can say that i think in the case of a criminal conviction, at least from the point of view of our i.g. agents the defense criminal investigative service, we do play a role in that we're the referring entity often for a violation of suspension and debarment and we don't just wait until there's a criminal conviction. it's one of the remedies in our toolkit is to make a referral to the suspension and debarment authority. i don't think we need to play a role in management of that program. we should oversee it. we issued a report in july of 2011 on the service agencies in dla and dla was actually fairly aggressive in the sample we looked at in terms of taking the contracting officer's recommendations and proceeding. so i think that we have a role. i don't think it's oversight of the specific decisions that the sdo authority makes, but i do think that as a referring agency we can help to ensure that the departments are promoting the suspension and debarment program and training the contracting

officials properly in the process of how to make those referrals. absolutely. >> what about limiting the amount of time for contractors to respond to past performance reviews? do any of you believe that that makes sense? do you have any problems with that? that also has gotten some attention from folks, that they think that allowing contractors to respond to past performance reviews before they're submitted to the government's data base, lowering that from 30 days to 14 days is unreasonable. do you all have any view on that particular provision? >> i don't have any view today, but we could certainly look at that in more detail and provide you our opinion. >> i'd like to look as well and give you something in writing, but i would point out that you've used a word repeatedly which i think is very useful -- well, two words, which mean the same, actually, and that is waivers and documentation. and that's really what we're looking for. yes, a good law will always have provisions for what are we going to do now?

this is different. but it has to be documented. and so many people are much more inclined to do the right thing if they have to sign their name to a piece of paper. >> right. and besides that, it provides an audit trail, right? >> right. >> i remember. i liked it when we found documentation. this is a good day for an auditor. when there's no documentation, it's a problem. >> i like seeing that as the former auditor general of missouri. >> there you go. there you go. what about you, mr. carroll? on past performance problems and whether or not the contractor should be given time to respond before it goes into a data base. >> right. i think that they should. what the agency does with that information is up to them. i would think 14 days, 30 days is really not a material difference there. and i don't think it would have a material impact on an agency or on a contractor or an agency. so i think giving them the

benefit of the doubt, giving them the extra 16 days, whatever it would be, i don't see a down side to that. >> okay. for the state department the state department continues to say that it doesn't need the structural or organizational changes envisioned by this legislation. and they've also said that they can meet any demands that arise by relying on the working capital fund. do you believe that they're correct, that they don't need any organizational or structural changes from your position as the inspector general for the department? >> i definitely feel that they need tweaking. one point that came out here that i'd like to speak to them more about is, for example, whether they need a separate suspension and debarment official. what they have now, i agree now with what secretary kennedy said, the current person who is

in charge of suspension and debarment does not have a role in the acquisition except in the most general way. but i think anything we can do to encourage the department to focus on suspension and debarment is good. and we've seen progress. i think i'd give the department the benefit of the doubt, but i'd hold them accountable. >> okay. you all mentioned this in your statements, and i assume that all of you think it would be a good idea to have a percentage-based funding requirement for inspector generals in contingencies as we -- just as we did for -- that we would set aside sufficient resources to keep track of the money as we appropriate the money.

>> madam chairman, i would point out that when i came, i came to oig on june 2nd, 2008, and since that time thanks to what i assume is the good work we've done congress has doubled our resources, and as a result we've been able to do a much better job. and the best way to ensure that we don't have what happened in iraq, where there was a big delay, until we got the resources, to have an automatic mechanism i think serves everyone well. and it enables us to build up, but it also forces us to go down again when the -- >> right. that's what i like about it. because it doesn't build the agency beyond the capacity that is needed for -- permanently. it does it as it relates to the contingency. captions copyright national cable satellite corp. 2008