policy to swear in witnesses so if you would kind of stand and raise your right hand. if there any persons coming@@@@2 the winner will please reflect all of new witnesses responded in the affirmative. as all of you know, your written testimony will be placed on the record and accepted by the committee. at this time, we would give you the opportunity to make remarks for a 5 minute. -- for a five minute time frame. members of the subcommittee, thank you for inviting us to speak to you today about our interim report. we will keep our opening statements brief to allow for maximum time for discussions and questions. the zakheim. the precipitating event for

german tierney him fighting us is the official release of the interim report to congress in title, at what cost gum contingency qatar entity in iraq and afghanistan. reporter none fisa longstanding issues for awarding managing in auditing the vital contracts of support logistic security and reconstruction missions. these include shortages and the federal acquisition workforce, a poorly defined in executed contracts, inadequate planning, we provisions for accountability, unnecessary work and costly rework. problems that are undermining attainment of national objectives in wasting billions of taxpayer dollars. we will describe some of our preliminary observations. as congress intended the interim report is preliminary and handed it. at what cost provides an interim statement on key focus areas and results which are listed in the report.

since 2001 congress has appropriated, as was stated here, over $830 billion to fund the u.s. operations in iraq and afghanistan. for that period america's reliance on contractors has grown to unprecedented proportions, to support logistic security in reconstruction efforts. more than 240,000 contractor employees, about 80% of which are foreign nationals, no work in iraq and afghanistan, supporting the department defense. additional contractor employees support the department state and u.s. agency for international development. these 240,000 plus contractor employees actually outnumber u.s. military personnel in the two feeders. they provide critical support and like our military personnel many have paid a personal price for gold as of may 27, 2009, 4,973 men and women of america's military and at least 13 civilian employees of the department of defense had died in iraq and afghanistan.

it is less well known that more than 1360 contractor employees have also died. criticisms of the contingency contacting system suggested for reform in no way diminish the sacrifice of the military and those contractors that gave their lives. in discussing the major subject areas and at what cost will specifically address several issues of immediate concern, such issues matter now, right now. there-- they are so important that the commission is urging corrective action well ahead of our final report. first, management and accountability. the report's first chapter in management and accountability addresses a number of crosscutting themes. the linchpin of contingency contract in its human capital. acquisition, especially in contingencies, depends on its government workforce. the contract and officers representatives or what is referred to eliseo our's sorbic

critical will. their the individuals on the frontline of contractor performance. there in charge of making sure the contractor does what it is supposed to do. the monitor for instance whether reconstruction contractor works soundly or defectively. at what cost identifies the process for death igniting in training course as an issue of immediate concern. there are too few, there inadequately trained. warfighters often learn of their added duty of contractor supervision only after arriving in deetert. one of their field trips we were briefed by the tenth mountain division, technical oversight and they arrived in january to fight a war and the same time they were named to this corollary to be in simply were not trained at all in support of that request to the subject of financial accountability, the commission has done a large number of ineffective contractor

business systems, including management of subcontractors with a large number of unresolved findings. the commission analyze $43 billion in awards to 15 of the largest contractors in iraq and afghanistan. 50% of the contractor billing systems, the basis for requesting payment from the work, for billing the government in 42% of the estimating system used in the pre-award for contract proposals contained significant deficiencies. since the interim report was prepared for printing, a month ago, dcaa head audit agencies is further identified for more business systems at dyncorp international as inadequate, to include the labor and billing systems that are absolutely essential to document and reduce costs. the commissions may 2009 hearing heard that your fiscal year 2008, the dcaa has taken exception to over $13 billion in

unsupported costs. in short the informant in iraq and afghanistan has been a and continues to be susceptible to waste, fraud and abuse. additionally there is an immediate need for greater accountability in the use of subcontractors. subcontractors account for about 70% of contract work but the government has very little visibility into their operations. the commission has surveyed all the reports by the inspectors general and other oversight entities. it is interesting that there are 11 such organizations that have issued reports since the outset of the two wars. we have looked at a total of 537 and cross-reference those reports, and derives 1287 different recommendations over that period. many of these recommendations have not been fully implemented and a major focus of our near term activity will be to try to understand why they have not

been implemented and those organizations said they would take action, why they have not taken action. the u.s. government uses as its key logistic program in theater what is referred to as logcap, the army augmentation program. this is a multibillion-dollar contract over $30 billion to date that covers the myriad of services from vehicle made in. >> dining hall operation for the third iteration of this contract logcap free was awarded to kbr as the sole vendor. the logcap contract awarded in 2008 requires competition, competition among three vendors, kbr and dyncorp international but the president's logcap three still stores in terms of contract. dcaa director april stephenson stated that the commission's may 2009 hearing, the time in i don't think we are aware of

another contractor that it's had a significant number of suspensions or referrals for its recent response to that dca testimony this logcap three contractor kmiec kbr implied most referrals for possible fraud have been resolved by contacting officers. however dca has devised us that as of our may 4th hearing date, none of it is referrals for possible fraud had been resolved. a total of 32, 32 were still open and the resolution of suspected regular contact referrals would be performed by department defense criminal investigative service or by the department of justice, not by contracting officers. both the iraq drawdown and the afghanistan build up our-- raise serious questions about logistics' contrasting issues. for example the commission has learned american bases during this drawdown fuld more than 600,000 line items of property,

trucks, spare parts, clothing, tools and much more. because of the poor documentation in the early days of liar operations and a shortage of property management officers base commanders often do not know what property is on the base and as a point of reference the 600,000 line items, there are three certified and trained property managers that have that responsibility and another 12 that are part of the property management process that have not been fully trained and vetted to look at 600,000 line items as we draw down in iraq. the use of dollars must be moved to the region. handed over to the government of iraq, sold as scrap but the lack of information and resources and planning have set the stage for massive confusion and loss. as an issue of immediate concern, that drawdown of u.s. forces in iraq risk incurring enormous waste. the commission identified more

than $2 billion in new projects in iraq that are now being analyzed by us. a number of the projects in the pipeline may be necessary. for example, during in april, 2009 visit to camp stiltson in iraq the commission identified a 30 million-dollar construction contract to build a new dining facility being built near they recently expanded and upgraded facility. the new facility is due to be completed in december, 2009, somewhere between a year and two years where u.s. troops are required to be out of iraq. prong produce such projects in the pipeline could save taxpayers many billions of dollars in unnecessary spending. chapter 3 addresses the subject of private security contractors. one of the major subject set forth in the statutory mandate for good report traces to a significant events that shaped the subject from the beginning

about sourcing of security in the 1980's and 1990's to the incident of the killing of iraqi citizens by blackwater employees. after that incident the secretaries of defense and state, as well as congress, through their continuous oversight, implemented significant reforms. i think is important to note that the reforms appear to have worked in this case. the state department reported 11-- discharge of weapons, incidents in the month of july 2007 along. there were another nine deadly force incidents in the month of september of 2007. for the full year ending, due to the increase controls and visibility over security, for the full year ending may, 2009, there it been only two for that year, incidence of use of force that with proper attention, improvements can be made and our point is that there's an awful lot that is not getting proper

attention. the commission identified a number of specific concerns related to private security contractors as a result of our visit to afghanistan. in afghanistan, the armed contractor oversight division, or what is referred to as a con is the office of private security contractors, make sure they are complying with contract terms and conditions and such and it is a very large role. at the present, there is such a large role for a contractor, security contractor to support that that raises issues about conflicts of interest. the post of deputy directory, the prusnek breathe this when we were there, is occupied by a senior it is private security contractor official. the director position in the six military level equivalent, while it has been approved to date, it

is not been filled, identified unauthorized though even in contract terms for example, that there is the use of force incidents and there is mandatory coordination with the government of afghanistan that is identified the contractor, aegis will do that representative for the united states government. that is the current process. the commissions trip to afghanistan in 2009, underlined already a.q. khan tracking problems and reconstruction, another area where we are going to be focused intensely during the next year. siri shortages of u.s. government civilians are all too likely to trigger heavy reliance on contractors. for example the vital provincial reconstruction teams. >> thank you. >> i can imagine-- this the u.s. have one minute for mr. green? go ahead. >> actually it is just the two of us, sir. we have joint statements nbs

splitted up. they are all our experts. >> they are here for the tough questions. >> mr. shays, go ahead. >> aegis continue not chapter 5 entitled on the genest provides a summary of activities. the commission has in progress or slated for study in the near future. there over 30 bullet the items including a number of complex and far-reaching studies. the commission and encourages examination of the full list on pages 92 to 94, and i would like to just highlight, we would like to just highlight a few, says metz of remedying understaffing of contract oversight and audit functions and assess the effectiveness of current efforts to estimate the optimum numbers andypes of the acquisition personnel, assess what shortcomings in government knowledge and information systems undermined the compass and of the iraq drawdown and the

buildup and afghanistan. consider what processes and controls should be in place to manage governmental functions. consider how best to -- including affirmative consideration of performance and contractor performance of violations. that was under management. under logistics, it manages facilities once a contingency operation stabilizes. a identify reasons for the slow from logcap 324.security unders security examined the sufficiency of current or

crippen processes, background checks and training to insure that employment a possible psc personnel, a private security personnel. examine the potential use of civilian employees of the departments of defense and state in lieu of contract personnel and security roles including the use of temporary appointments and reserve components. under reconstruction, valley with the effectiveness of combat the building reconstruction projects and determine the extent to which stakeholder collaboration is an integral part of the acquisition planning, contract performance and project sustainability. ss the feasibility of establishing an interdepartmental entity for planning and coordination reconstruction projects in contingency operations. let me just end by talking about a few activities of full description of the commission's milestones in the report, appendix thee. in brief the commission members when named by july 2008.

the commission selected a professional administrative staff approaching 40 by january 2009. during september and october of 2008 commissioners receive briefings from more than 25 key organizations and programs. they also met with leading scholars in writing subcontracting issues and with contractors. on february 2nd, 2009 the commission held its first public hearing. the hearings featured tessman from the inspector general from iraq, reconstruction including the two year buckling study released today. hard lessons, they act-- iraq reconstruction. the second hearing focused on the multibillion-dollar logcap 3. commissioners and staff had made two trips to afghanistan afghanistan to inspect worksites, review documents, conduct interviews and receive briefings from officials on the ground. the first trip took place in

early december 08 with an itinerary that included agency briefings them baghdad anka bolles wallace reduce the construction of the baghdad police college in reconstruction -- for construction and repair of the bagram airbase in afghanistan. a-10 the investigative study in 2009 comprised of a 15 person group of commissioners and staff that broke into three teams. one team or deny iraq and the other two and afghanistan. they conducted more than 125 meetings, usaid, the military contractors working on a range of projects. the commission continues to develop a test for research and investigation to extend and deepen its knowledge and to cope with new change in issues. our plans include many more trips to theaters of operation, additional hearings and by the additional hearings and by the government agencies, academics and member of the

contrasting community and continued liaison with congress. ghaffari conclude we would like to see a few words about the commission staff. firstly, all of the commission staff are federal employees. some more detail from agencies and services including the army, the air force department of state and defense, u.s. agency for international development, the defense contract management, the defense contract audit agency and the u.s. army corps of engineers. some have served one or more tours and duty in theater including working for the special inspector general for iraq, reconstruction oris senior contracts in officers supporting the joined contract in command in afghanistan. others that served in congressional staff work, gao the fence and important positions in the commercial industries which are the focus of our study. they bring hundreds of years of combined experience and education in many fields to bear on their mission and a performed a valuable work for their

country. in conclusion the commission and staff of the commission on wartime contract and in iraq and afghanistan take very seriously the tasks that congress has assigned to us. we appreciate how important these tests are to improve support for our warfighters and their diplomatic employees. we sincerely thank you for the opportunity to describe to you today and pleasure best efforts to provide information, recommendations that will help make the decisions on contingency operations. mr. chairman, we thank you for your support of this commission but also as well your critical review. we know this committee will be looking at everything we do to help us do a better job and make sure we do a good job. >> i thank you both of you and the witnesses as well. you are right mr. shays, this is all about working together. obviously you have been that this only a few months. your staff tre plan together and i think you have done a

remarkable job in many respects and appreciate the interim report. i have a number of questions and will start up with procedural things. we will get to some of the other issues on that. but one comment mr. thibault made is there is a significant number of reports and recommendations coming from those reports, many of which it not been implemented. that should disturb us all. you also said later on there are issues outstanding that weren't getting enough attention and you indicated that in the context of course i was working in some respects the security incidents bing sichta finley down. ..

it's interesting to note one thing i mighthare, and it's something we are going to talk about and try to evaluate. we and now we are out on the field of four bases and camps and victory in afghanistan and, you know, joint task force 101, the universal, they were

supportive, but universally they said if there's anything this commission can do relative to the fact we have so many -- i site 11 organizations so it can be coordinated better because it seems like we are collecting information and then turning around and collecting the same information to months later updated for a different organization. each oversight organization has a vital job to do but contingency environment is you need from oversight because it is distance oriented and you have to place people on-site going back and forth. but that is a worthy area to look at. >> i will ask some questions later on how we go about doing that with personnel shortages. i think the capacity issues are serious. does the commission to what has enough in country presence in the theaters that you are investigating? >> the commission is debating right now whether we should have permanent representation in afghanistan and iraq and then

obviously our commissioners and staff will be going repeatedly and so that's something we will be able to get back to you very quickly on. but we know that we need to be there in both countries. >> thank you. mr. flake. >> thank you mr. chairman. i have the same concerns -- sorry, might waste is a little worse. you've had 1200 recommendations you say have been put forward. >> no sir we went through all 537 and sorted and cross referenced because we were tasked to build upon that work, not to recreate that work. >> so some of the 1200 come from the other investigative bodies that have put forward recommendations? >> all of the 1200i reference, sir, come from those organizations. >> and what remedy is there if these are not implemented? what are we to do or other

bodies to do if they are not implemented? >> i think that point is spot on in terms of the emphasis and if it's the subject of accountability and if someone says they are going to correct a major problem and they are going to corrected within a certain time period and they don't, one of the things we've run into for example because the turnover of staff and the aging so i didn't really understand that, you know, i picked up the responsibility but there is an absence first of all recording what is being done with it. some organizations, some of the i.t. organizations do but follow up with the actions just aren't getting accomplished to the extent government organizations have agreed to do. >> and talking with a lot of the agencies of other issues, we are often told we have a process by which we can't offer sole source contracts. we have to bid every contract

out, yet you mentioned kbr contract for certain activities. could that contract have been bid out? is there a process the department of defense has to go through if they don't get contract at, there is a jna that has to be issued. why are they able to still have these contracts sole sourced >> mr. flecha is an excellent question. it has been some years the department of defense tried to have a leader contract in which there would be -- later version which there would be three competitors, and they i think the talk about that goes back at least two years. they are now slowly phasing and

the successor arrangement that would have competition among the companies but it is still not inactivated in iraq. it is each task order under the contract still has only one vendor, kbr, and there has been some concern that the phasing in of a competitive of arrangement is going to slow. >> i know that your jurisdiction covers just wartime and theater, but it seems the problem goes beyond. as i mentioned on and trying for months to get access to some of the j in aid to justify why some of these contracts are not a bid out, and i haven't been able to get them yet. so i fink are some of these problems you see in theater, do you think they go beyond that or is it just because the circumstances inherent in wartime?

>> i am not tall surprised you are seeing similar problems back in the united states and domestic context. there is no special exception in the act for wartime sole sourcing, and the same exceptions that have been used in the past, used to date in iraq have been used in the domestic united states. you wld run into the same problems. >> is part of your activity asking for these jna's to see what justification was given for the sole source? >> we do look not just that the justification and authority, the jna, for these contracts, but at the subsequent documentation, and we have been going through following up. the miers' often very superficial. just well, it's the exception for existential circumstances or

this is the only available contractor and we followed those of tuzee whether it really has to be done without competition. >> i might add the plant that this was a very unique contract and you could maybe think about whether it was dysfunctional in terms of the way that was established but there was competition, that it is a ten year contract, cost type dollar for dollar ten year contract. once a year it can be rolled over. so you're talking about a contract in action with a sole supplier that dates back to the 2003i believe time frame and it's still in place because ten years haven't passed. so there is no competition anymore and that's why we are encouraged by the action to go to logcap for whether there are three vendors that would bid and

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