it does sound outrageous, but i'm not sure it's racist. if this is a white man and as a black police officer, does he think it was reverse racism? unfortunately, this is all too common. police abuse power. power corrupts and absolute power corrupts absolutely. .

to the democratic republic of the condo, kicking off her 11- day trip in kenya. this is the longest trip as secretary of state. we'll have secretary clinton and the prime minister of the jordan in a moment. until then, a preview of senate action this week from this morning's "washington journal." host: senator mike johanns of nebraska, thank you for being with us. everyone right now, the dialogue is about health care. what do you want to see with health care? where do you think we are at now? caller: guest: it is a mess right

there is not any question about it that things need to be done. i think some of those things are very, very obvious. there is some need for reform in the insurance industry. we should be insuring pre- existing conditions. we should give small companies and associations the ability to pull together to expand the base of the coverage in terms of the number of people. and you would get better rates. there's not any doubt about that. we should be emphasizing the tort reform. that'll help. i am not sure that it is the answer to everything, but that will help in terms of needless expenses. we should be emphasizing wellness and prevention. if you really want to make a difference in a person's life, get on top of obesity issues when children are young. if we can emphasize that --

another thing we have to do in terms of health care reform, we often times here this 47 million it that are not insured, but about 20% of that population qualify for an existing program. a could be as chip or medicaid or whatever. but for whatever reason, they're not in rolled. having been a governor, i will tell you that when i first came to office, we were the ones that rolled out our children's program, our kids connection program. we worked it very aggressively. we wanted every child a qualified to be on that program. but the reality is that it costs money and impacts state budgets, so kids to not get in world. when we debate in that earlier, statistics indicated you have 50% of kids in some states that qualify, should be enrolled, but

they are not. again, if you focus on how to fix these problems, you come up with a health care plan that makes sense. host: could you give us some concrete examples of what you would like to see incorporated in a health care bill? what can you actually do? guest: some of the things i have mentioned already. i think we need to focus on this population that is not insured. you need to aggressively go up there and get the state to sign them up, so that they have the protection that the government provides for them. medicate co pay is a program, once they are enrolled, it covers so much and does so much good. for whatever reason, it is not happening. i also believe it makes sense

for them next love of population that is struggling to afford health care, too literally by down the cost, maybe of private insurance premiums, company, deductible, and that when you can keep the private industry. millions of people do not want to lose their private insurance. yet, you are addressing the sure -the issue that so many people talk about it. then this idea about letting small businesses pulled together. even across state lines, i think that would be resisted. the reality is, in the industry, it makes sense. if you expand the base of the insurer, that will bring down costs.

about 75% of what we spend on health care unit goes to chronic conditions, debbie, heart disease. that comes about because people literally have such problems in our country with weight, lack of exercise. if we could somehow give people incentive to work on those issues, legal have a healthier population. then you will also have a better health-care costs. many of us a shot at safeway grocery stores. they have done some remarkable things. we spoke to their ceo, and they are emphasizing wellness. they have been able to flat line the increases in their health care costs. that is remarkable when everyone is having so much dramatic

increases. host: our guest is mike johanns from nebraska. call in with your questions and comments. democrats, 202-737-0002. republicans, 202-737-0001. independents, 202-628-0205. mike, on the republican line, from phoenix, arizona. caller: i am on state insurance right now. i have pretty much everything paid for but i get low-quality doctors which have to repeat certain procedures such as a spinal tap. i have had three so far and three years. -- in three years.

i have not been able to work for three years and i have not been able to get food stamps. this insurance that the government will be offering everybody, it drives away in the smaller insurance companies and puts them out of business. so the government will be taking on everyone's insurance. all the other countries in the world that have a government insurance, they say do not do this, it is bad. guest: he raises some excellent points. he is just hitting the nail on the head. no question, as you move into an arena where in -- is government-

run, what will happen is you will crush down the rates that are paid for in medicare services. i think that is obvious. the governm >> we're taking you live to the state department for the secretary clinton and the foreign minister of jordan. >> hello. let me start by expressing how delighted i am to welcome the foreign minister to the state department. we're celebrating 60 years of relations between the united states and jordan. and our partnership is based on mutual respect and mutual interest. and our work together enhances the security and prosperity of both our nations. and we hope, the larger region and the world. today, the foreign minister and i discussed a wide range of issues. i think the foreign minister for

jordan's leadership by any effort to achieve comprehensive peace for all the people of the it -- middle east. the vision and courage of the late king hussein continues to provide inspiration to all of us who knew him and who are still on the path toward seeking peace. and now, under the courageous leadership of his majesty king abdullah, jordan has continued to play a strong and vital role. the united states is committed to a comprehensive peace based on the two-state solution. we're working with the israelis, this palestinian authority, and the arab states to take the steps needed to make that possible. we discussed this effort, and i expressed our deep appreciation for jordan's leadership in working with other arab states to support peace with the deeds as well as words. i also think the foreign minister for the effort said jordan has made to build a stable, sovereign, and self-

reliant iraq, and especially the assistance they jordan has given to iraqi refugees. we're working to assist the iraqi government with the return to iraqis who left their country who now wish to return home and be part of a new iraq. we're grateful for jordan's hospitality and leadership. after six decades of relations, our partnership has proved both durable and dynamic. we will continue to work together in areas ranging from assistance with education, health care, and water programs the border security, and good governance, and a regional security. i look forward to continuing to work closely with the foreign minister as our two nations the been and strengthen our partnership, and that partnership then continues to demonstrate the way for word on a comprehensive two-state solution with the israelis and the palestinians. >> thank you very much, madame

secretary, for your gracious welcome and for your kind words. it is truly a pleasure to be here. and speaking of being here in the state department, i noticed that there welcoming other guests at the state department a couple of days ago. there was reference made by yourself as to how much time spent in this building, but may i say that i, too, spend a long time admiring this building, albeit from outside, when i was a young student at the school of foreign service and georgetown. i was wondering if one day i would be standing here and who i would be standing next to. it is truly an honor to be standing next to mrs. clinton, a dedicated public servant and committed secretary of state. madam secretary, when i was here with his majesty, the king, in april, we had excellent discussions, but that was not the first time i met you.

i met you on october 26, 1994. it was a hot day that was full of promise and hope. it was the signing of the jordan-israeli peace treaty. needless to say, there have been raised hopes and shattered aspirations and many ups and downs since that day. this brings me around to our discussion today. as you said, the relationship between jordan and the u.s. is one that can be described as beyond friendship but rather a true partnership in the search for peace and our commonality of vision and interests. this relationship has been to it -- has been put to the to as many times, but it gets stronger by the day. madam secretary, if you'll allow me, as you sit, we discussed a range of issues today, at the heart of which is the u.s.-led effort to relaunch the negotiations between israel and the palestinians within a comprehensive regent. the israeli conflict is the u.s.

and international interest as well as an arab and israeli interests. this is the only gateway through which we can collectively address and made other challenges and problems in the broader region. his majesty king abdullah and jordan have the realization of comprehensive peace for palestinian statehood and to ensure that israel allow security. this will bring about normal relations between israel and 57 arab and muslim states in accordance with that peace initiative. we're very grateful, madam secretary, the president obama, it to you, to senator mitchell, and to all our friends in the u.s. for your serious and a focus engagement from day one. we fully support these efforts and are committed to doing everything we can to work towards this noble objective. the leadership of the u.s. and commend it presents a true, real, and a real opportunity to finish this once the overall.

it is in word, action, and in demonstrating leadership for thisor and to ensure its success. our ambition should not be to move forward to get to where we were. this time around, it should be to move forward to where we should have been in the late 1990's as envisioned by the process of the beyond. the shape of a future palestinian state of the parameters for conference of these are quite clear. the adoption of all the arab countries in the muslim world for the peace initiatives and every arab summit thereafter emanated from collective recognition of those parameters and the collective commitment to them, too. now into doesn't, predicted that the night, many would say this and to redress -- chris burkett. in the middle east, in the past and present confidence-building measures, management techniques,

and arrangements, and an over emphasis perhaps at the expense of reaching the end date. his majesty scissors to met process and too little piece. a situation that is no longer sustainable in what is required and needed more than ever, to achieve peace. what we need is confidence- building measures, confidence- rebuilding measures, i should say. negotiations to create a conducive environment for launching negotiations. we need to focus on stopping detrimental actions more than just to looking at the factors. the continuations of activity and the appetite -- occupied territories is illegal and does not help restore faith third generate this needed environment. equally, other unilateral measures in the west bank and east jerusalem is not acceptable.

by the same token, inflammatory rhetoric on both sides of the divided equally counterproductive. all six action much into the stock. -- all such action must stop. there have been tried formats that have failed which should be would including piece mill approaches that have proven repeatedly to be confidence eroding rather than confidence building. this time on the restoration of faith and creation can only be achieved through clearly highlighting the end game and skillfully getting the parties to expeditiously crossed the finish line. regarding peace in our region and the speech in cairo last june, we have your support and your principal statements stopping the activity which is resonating very well and restoring faith to the arabs and muslims and the impartiality of the u.s. and of the great good that its value system represents. the principal the approach taken by president obama marks the

kind of needed changes we can all believe in, reflect on, and build upon. series and a committed benchmark in time i peace negotiations must be launched probably from the pointed which they had stopped and in which all bodies would be willing and encouraged to take the necessary concurrence steps to expedite the achievement of the desire programs. i wish to express gratitude for the invaluable u.s. support you have provided to jordan. the assistances facilitated are derived forward and expedited implementation of the ambition home ground transportation of the reform agenda. thank you very much for giving us this opportunity, to of this rich discussion, and i assure you that you'll find improvement in jordan and a reliable, sincere, and steadfast partner, alan, and a friend. >> thank you so much. >> thank you, madame secretary. a couple questions on iran.

the first one would be, do you have an update on the situation of the americans being held in iran? is this still correct that it is not officially confirmed by the iranian government? the the question would be, what is your opinion on this idea of having very strong sanctions which would include sanctions on gasoline and other refined petroleum products? >> well, as of a few hours ago, we did not yet have the official confirmation that the iranian government or an instrument of the iranian government were holding of the three missing americans. and we asked our swiss partner is to represent our interests in iran to please pursue our inquiries to determine the status of the three missing americans. obviously, we are concerned. we want this matter brought to a

resolution as soon as possible. and we call on the iranian government to help us determine their whereabouts of the three missing americans and return them as quickly as possible. with respect to the potential actions that might be undertaken by the international community, we are not going to be commenting on what might or might not be done. we have made it very clear that we wish to engage with the iranians in accordance with president obama's policy to discuss a broad range of issues. that would be a bilateral channels which we have communicated to the iranians. and we continue to engage in multilateral channels, most importantly the p5 plus one discussions. as you know, that representative put forth a proposal some months ago that we

still have not yet received a response to. so we are looking closely at developments in iran. i held a video conference this morning with a number of our diplomats around the world who have expertise with respect to iran, and we discussed what they saw happening, what they thought would be the responses coming from iranian government, what was going on inside iran. so we're not prepared to talk about any specific steps, but i have said repeatedly that in the absence of some positive response from the iranian government, the international community will consult about next steps. certainly, next steps can include certain sanctions. >> thank you.

i would like to ask you both about the issue of evictions from east jerusalem. these are steps that are taken almost a force the status quo in the territories that are disputed. and of the occupation continues to move so many arabs and make them very angry and emotional at a time when arabs are asked to take confidence-building measures. how much do actions like that disrupt the -- what the u.s. is doing? also, i would like to ask how that leaves arab nations and arab politicians try to push forward to peace? what can be done beyond this condemnation? thank you. >> well, i think these actions are deeply regrettable. i have said before that the eviction of families and the demolition of homes in east jerusalem is not in keeping with israeli obligations. i year urged the government of

israel and municipal officials to refrain set -- from such provocative actions. both sides have responsibilities to refrain from provocative actions that can block the path toward a comprehensive peace agreement. unilateral actions taken by either party cannot be used to prejudge the outcome of negotiations. and they will not be recognized as changing the status quo. >> thank you very much. first, let me thank the secretary for the clear position the administration has taken on this issue, particularly when talking about jerusalem. anything to change the current status quo in this city. again, with emphasis on changing the demographics. thus, looking at the outcome of the efforts currently undertaken to relaunch negotiations.

let me just say that the position is clear. east of jerusalem is an occupied territory. it is part of the territory that was occupied militarily in 1967, and it is very important people bear in mind that this is part and parcel of the discussions and negotiations. and any action on the ground that presents obstacles in this endeavor are not only unwelcome and condemned, but we hope they will stop and stop immediately. >> the prince said on friday the the question is not with the arab world will offer israel. it is, what will israel give in exchange to the arab initiative? how do you view his comments? is stored in planning to take some steps towards israel to push the priest -- is it jordan

planning to take some steps toward israel to push the peace process? >> jordan and israel have a peace agreement that was signed in 1994. like any relations between countries, it has had its ups and downs. for the peace treatment in the relations between jordan and israel to make regional and international sense, what we need is a comprehensive solution to the arab-israeli conflict based on the two-state solution being the core and the establishment of an independent, of viable, and geographically- continues palestinian state. i would clearly articulate that the arab peace initiative, which saudi arabia played a key role in launching in 2002, and which subsequent arab summits of reaffirmed as recently as the last summit in march, the arab peace initiative is very clear. it is the end of what you --

occupation, establishing palestinian state. after which there would be fully normal relations between israel and not only the arab world but also the muslim world. i think the prince was clear in articulating what that peace initiative stands for which is normal relations at the end of the game. but we all agree that we have to create a conducive environment to arrive to a solution. and the role of the u.s. is essential. >> madam secretary, how much damage do you think it does to your efforts to build confidence among states like jordan to have the israeli prime minister rejected u.s. calls to stop the development of east jerusalem? isn't this something that is seriously damaging to the

efforts to instill the confidence? >> well, i think everyone understands that there has to be sequential actions taken. and we're working very hard under senator mitchell's leadership and guidance to get to the negotiating table. and once there, everything concerning a comprehensive peace agreement is on that table. nothing is off the table. and we have been down this road before. we came close in 2000. there were renewed efforts in the last several years between then prime minister olmert and palestinian authority president abbas. so the parties will know what the outlines of this conference of two-state solution are. what is different in two ways now is, i think, the united states, beginning from the first

day of our administration, to say this is among our very highest priorities. and the commitment to the arab peace initiative, which did not exist in the 1990's and has been reaffirmed several times, so that the arab countries are at the table and in effect as well. look, we want both sides to refrain from any actions that might make it more difficult to negotiate our way through all of the issues that have to be resolved. there are what are called final status issues. everybody knows what they are. and everybody knows that neither side is going to get everything it wants. negotiations do not work that way. but working in good faith and being committed to the two-state solution and with the support of the arab leaders as well as the united states and other interested actors, i think it

holds a great promise i. that is why we're working so hard and believe we have a strong chance of achieving a goal that has long been sought. thank you. >> [inaudible] you say many times a this is an issue of good faith. is this an example of something that is not working that way? >> everyone needs to refrain from provocative actions that might interfere with the path forward. that is on all sides know what we expect. but we also know, and i was a lawyer in a prior life, very often people tried to stake out even more strong and difficult positions going into negotiations. we understand all of that and intend to continue on the path we are on, and we have a lot of support in achieving what will be a two-state solution. thank you very much. >> secretary clinton and the

jordanian foreign minister. the secretary leaves today on a seven-nation tour of africa. her long as darcy's journey to date. she will kick them off in kenya. it program update. we will take a live to the white house in about half an hour for the spokesmen to brief reporters. it is scheduled for 1:00 eastern. we will have it for you live when it gets underway. reno, an event with the education secretary. it is part of the department's annual drug-free schools conference in washington. his comments run 40 minutes. we will show you as much as we can until robert gibbs starts his news conference. >> so i am here. there are two things to enjoy your job. one is the people you work with.

the second are the people you work for. every job by half, how happy i am depends upon my boss. i can tell you, i have a very, very good boss in our secretary of education, arne duncan. he is a lifetime educator who has held start a school, who ran the third largest school district in chicago, and is now our secretary of education. there's something about his commitment to school safety. a lot of people do not know this. he understands the connection between safety and learning. he understands that the fact is that if a student does not feel safe, is digging cannot learn. every other thing we talked about in education, reading scores, maths words, at graduation rates, they all depend upon the work you do to make our schools safe. arne duncan new that in chicago. what he did in chicago, which is an inspiration for every district in the country, is that

he actually pulolled the students themselves about how safe they feel at their schools. he also put the results on the web, building-by-building. if you go to the chicago public schools website, you can find it directly from the people who know, the students, house if that child feels. you can compare schools to figaro which would you want to send your kid to. district in america had ever done something like that. no district committed itself to gathering the data is needed in the putting it on the website every child of a parent would the house if their school was before arne duncan. i am extraordinarily lucky to have a boss who walks the tarp in his work. who is willing to give this issue the priority it deserves and to make sure that it is invisible and transparent to every single person. it gives me tremendous pleasure to welcome my fantastic new boss, the secretary of

education, arne duncan. [applause] >> good morning. thank you so much for that introduction. we are lucky to have him as part of our team. please give him a huge round of applause. [applause] >> i am pleased to be with you this morning. i hope you agree two-day conference. i am preaching to the choir, but your work is never been more important and more challenging, frankly. our children have more temptations at an earlier age than ever before. unfortunately, many of our children have less family support than ever before. we have more public health challenges than any time i can remember. so the challenges are very real as we take our collective leadership, ingenuity, our

ability to innovate and collaborate to make sure that every child has a chance to be successful and fulfill their tremendous academic and social potential. on his first in the job, he captured a think this work is about. i always come at this first as a parent. i have two young children at home. what i want for my children is what i think every parent wants for their child. first, is my child save? second, is my child learning? it always comes in that order. if a child is not safe or cared for, they cannot begin to think about being successful academically. if we can create that foundation and a building block, our children have a chance to do extraordinary things. so your work literally sets the stage as the foundation that our country needs to make sure that every child can go on to do great things. we have a couple challenges. i want to talk about three of them specifically. we have h1n1 which is touched

all of us. i want to talk about bullying in school and keeping schools safe. then i want to close by talking about extending that sense of safety beyond our school walls and into the community. on h1n1, obviously, this is a significant public health threats that we dealt with the end of last school year. i thought people handle did extraordinarily well, but this year it will hit us at the start of the school year, in the fall. it means a couple things. we're going to close schools as a last resort. i think the community, the cdc, understood that when you close schools, it has devastating impact on families and communities. if we have to do it, we will. it will be a last resort. there will be schools that will have to close. as you go back to school and go back to your communities, please be thinking about those situations where we have to do it and how we keep students' learning and how we make sure

they miss a day or two days or a week that they're not just sitting at home. what plans to put together with the community to make sure every child continues to learn whether the school building is open or not. that is something we will do only if we're absolutely compelled to. signs say that is the right thing to do. secondly, in our schools, thinking about bullying, thinking about a drug and alcohol abuse. you have to agree claimants for every child to feel secure, valued, supported, and challenged. when it did continue to build schools and develop our students' social and learning skills and gives them a chance to be successful. starting in kindergarten, working through 12th grade, we have to teach conflict resolution skills, power all cells to do the right thing. we need to do the slippery slope between being harassed, being bullied, started to miss a few days, becoming a chronic truant, and ultimately dropping

out. for all the things we're trying to do academically to make our students successful and graduate from high school to go on to college, attendances of the heart of that. as i travel, you talk about 90% attendance rate. 90% on the test is a pretty good score. 90% attendance at the average school year is 180 days. if you missed 10% of those days, that is 18 days or a month of school. there is no with the best teachers in the world could be successful with students when they are missing a month of school. so what are they doing to make sure students are in school 96% to 98%. what do we do to create a climate where students want to be in school and feel safe, secure, and feel cared about? they have someone in the building that they can go to and talk to the have a problem and be successful. kevin has experienced much of this bullying and harassment is

a child himself. so this work is very personal to him. this is not just a theoretical exercise or an intellectual one. it comes from the heart. we're gong to push to do everything we can to make sure every child in this country is going somewhere on a daily basis and in an environment where they will not have to worry about their safety and the hallways of the bathroom. they can go to class and concentrate on algebra and biology and calculus and not take that next step on their academic career. there, along to doug but extended state the outside of school buildings and communities. we of talked about h1n1. while we should, as a country, and pointed to a public health epidemic that and try to control it, we should continue that. but there's another huge public health of the demint that we have been silent on. that is the public health epidemic of gun violence. i come from chicago. we moved to d.c. about six

months ago. in chicago, the rate of death was staggering. we had 508 children shot in the community, and none in schools, of the past 16 months. and 43 were killed in the last year. that it's a child each week. by far, the hardest part of my job is going out to those schools, talking to those parents, attending those funerals, and looking in an empty desk in a room and of trying to explain to children when this happens and what the adults did not do better job in protecting our children. the level of violence is so many of our communities has reached his academic proportions. there is a 9-year-old girl in chicago that i heard about who was on her way to and from school. their three points along that what our people have been killed. ibo's our new landmarks. what does that do to that child psychologically, every day to have to work to and from school

and see three points along the path were people have been shot dead? it all came rushing back to me that before i join the board of education i was on a small public board from the outset. one of our graduates to the great job and went on to high school. he was getting ready to go to college on tuesday, tomorrow. last sunday, she was a church picnic and was shot in the head by somebody at 5:00 in the afternoon. suspended decent amount of time with she and her family in the hospital. she was an innocent victim. she had done everything right. fantastic family, a great mother, a great father. graduated, doing the right thing. preparing to be the first and the family to go to college. and she was shot in the temple and is fighting for her life. i think communities have been silent on this and have not thought about how do disagrees a thin blue assignments in our schools but to go beyond that.

if our children did not feel safe coming to and from school and talked about if i grow, not when i grow up, how can they begin to be successful? there are a number of things that they will help address not just the gun violence but the bullying, lack of self discipline, lack of skills our children have to deal with challenges they have faced every single day. sometimes not just in school but often community and at home as well. >> first, are we teaching conflict resolution skills? are you systemically making sure every child is developing not just their academic knowledge of their social and emotional skills and the ability to resist a notation, resist bullying, and to calm situations down. we have to get dramatically better at bringing these skills. secondly gonn, are developing pe

clubs, helping to create a culture of peace in schools and communities that have been devastated by violence. third, are we creating resources as parents? parents are crying out for help to do the right thing but do not know how. how do we interact with parents? do we give them a chance to be part of the solution? fourth, how do we award good behavior? the vast majority of our children are doing the right thing every day, many of whom overcome extraordinary odds at home in the community to get than 90% attendance, to do the right thing. i think we fell to shine a spotlight on them and reward them. we fell to is to advise them. whether it is summer jobs for students who worked hard and a bargain grades, i do not think we can do enough around the country to shine a spotlight on the hundreds of thousands of students were beating the odds every day to be successful.

are we collecting data? we can trade case by case, h1n1 -- how many students were impacted? what we need to do going forward? i cannot tell you how many children around the country were shot this past year. i cannot tell you how many were killed. but we have to start to be transparent on this data. these conversations may be tough and challenge us, but it is very important to understand the facts. i year, unfortunately, i think chicago is probably not normal, more the exception -- as said that backwards. i fear that chicago is not the exception but more the norm of having a child killed almost every single week. that is an unacceptable rate of death. you have to collectively think about some things very, very differently. some other things that we can

try to do with the community to address these issues could be rewards being offered in the community to turn in guns. we got thousands of guns off the streets. if we can remove those guns, it makes our students a little safer. we also offered rewards when students were killed. there's often a code of silence when the community. we have to break the code of silence. we have to live their children now that their value. we care about them. we have to empower the community. you will hear from geoffrey canada later, the idea of the harlem children's zone. we want a record created around the country to create neighborhoods where children are safe and valued. we're going to pose significant money out there, hundreds of millions of dollars ultimately, to lead other communities

replicate that network of state to support profs. he is a tremendous speaker. we can learn many lessons from him. at the end of the day, we have to decide, as the country, it is every child's life value? it does not matter if they do not come from a lot of money. it does not matter about their race or socioeconomic background. as a country, i think we have not valued those children at the margins, those children and their disadvantaged. we, as adults, i think have moral and ethical responsibilities to give every child a chance to fulfill their tremendous potential. we have to work differently and push in different ways. we will try to put an president did discretionary resources to invest heavily in districts in communities in good shape --

states that want to challenge the status quo. we have never known more discretionary money. we want to partner with districts to lead as wear we need to go. i will close in a dig a couple questions. i want people to think about the big picture, this historic moment of robert kennedy. we know we have to be dramatically better. we did educate our way to a better economy. we have 30% dropout rate that is unacceptable. i would argue that today, in a chair of the drops out of high school, is condemned to poverty and social failure. our challenges are real and profound. but i think we of never had a bitter -- better opportunity to fundamentally break through. we have our president that is absolutely passionate about education. you hear him, despite fighting two wars and having it tough economy, he keeps coming back to education. for him, it is not an intellectual battle live there. he and his first lady and the leaders of the free world, not

because they were born with a silver spoon in their mouth, but because they received a grade education. they know how important this is. its leadership has been extraordinary. we have a bipartisan congress. everyone is coming together behind this issue. one thing we can agree on is our schools have to continue police -- continually improve. we need more good teachers, social workers, more good schools, more good districts than we have ever met. i always said that did not think all the good ideas come from washington. now that i am in washington, i know all the good ideas do not come from washington. the good ideas always come at the local level. great educators agree community leaders to help students become successful. we have an unprecedented resources, $100 billion in new money for education. it is staggering. early childhood, k-12, higher

education, unprecedented resources. our job is to listen and learn and see what works and, with best practices. we have to keep up with the data. when things are straggling, held them approved. when it is a disaster, challenged the status quo. we have a moment of opportunity that i do not think has existed for the past 10 to 40 years and may never happen again. it was a once-in-a-lifetime opportunity. if we can collectively work hard enough, work smart enough, work the lever to leave enough, learn from each other, we could dramatically improve the quality of our students lives. i see this is an economic imperative. we have to educate our way to a better economy. this is an issue so sold justice. it is the civil rights issue of our generation. it is around academic, education, and opportunity. and children from whenever background have a chance to go to great, state schools.

they will accomplish wonderful things. if they do not have that, we educators are part of the problem. we perpetuate social ill year. thank you for your extraordinarily hard work. thank you for your commitment. i want you to take a moment and think about the magnitude of the opportunity ahead of us. we have a chance to fundamentally break through, and i am convinced we can do that together and help many, many more students, millions more students in our country be successful and fulfill their potential. thank you so much. i will take any questions you might have. [applause] >> their microphones in a few places. --there are microphones in a few places. >> secretary, what do you

recommend for the school districts that have effective drug and violence prevention programs but lose their safe and drug-free school funding and are not lucky enough to have a safe school with all the students grant program? [applause] >> again, we're going to have unprecedented competitive grants out there. we will invest heavily in those districts in those states that have great programs and help them continue to grow and expand. we have never had more discretionary money that we want to invest in those districts to make a future district. >> but what about the districts that do not get a competitive grant? >> it is a challenge. but again, the point is to reward excellence. we have never had more discretionary resources on the table and one of those districts doing a great job -- that is what we want to invest in. we have to scale it up to see what works. >> thank you. >> i love what you're saying

about social, emotional learning and the need to feel safe before children can focus on the academic test-oriented demand. so the classroom, rather than putting it the other way around, however, you say k-12. i am wonder preschool could ever be included or is it a different department? we do this as early as preschool. >> think that is exactly right. i should have said preschool. we have $5 billion. whether it is 3 and 4-year-old, we have to start as young as we can. you will hear about baby college at lunch. we're starting with infants. absolutely. >> that is great. thank you. >> you mentioned conflict resolution and social and emotional development. is it going to be put in the doe

curriculumcarrie i -- is that going to be put into the doe curriculum as something important as math? >> our job is to make sure that those ideas, those best practices were we have stated that has demonstrated difference in students laws, we want to share those best practices. the larger question that you raise, which is intriguing, is as we go to note child left behind reauthorization, how do we make sure we do not narrow the curriculum? how do we look the things besides math and reading test scores? will be thoughtful to do that and reward those districts in the schools while looking at the whole child and not just a single test. [applause] >> one other question. i have worked in cities like

portland, ore. were 98% of the city is white. but you have schools there were 29 different languages are spoken in at one school. what do you see in terms of the impact of that in terms of making schools safe? >> i think there are lots of schools around the country where you have 29 or 49 different languages spoken. i have seen some extraordinary work done in those schools. those are some of the safest schools. i have seen schools with an integrated population that is new to the country and striving to fulfill the american dream. there are some specific challenges to address, but it is my experiences some of those schools to wonderful job of building a culture of collaboration and making sure it every child is successful. >> thank you for your words of wisdom. we appreciate it. i want to know by your strategic planning for getting superintendents and of the board

of education understanding that the third prong of school reform has to be this learning support component and that it cannot be marginalized or only three grants. it has to be embedded to the whole construction of the district. [applause] that is a great point. it happens all too often, but it is based upon a few grant dollars, not build into the culture and of the fabric. the annual budgets of the districts are supported. when it does not 7, the grants are not enough money to make it work. it has to be in gray and in everything the school districts do. everywhere i go, i tried to be consistent. there is the national governor'' association. a was part of the council of state school chiefs. i continue to push the message heart. this is the foundation, the building blocks. we will continue to use the bully pulpit, use our resources. i have confidence in the

leadership. we're going to try to build a culture were people fundamentally understand that if you're not doing this well, nothing else matters. >> ok. let me add a piece to this. what about the fact that dropout is truly a public health issue? it is not just an education issue because it affects our economic life styles and our health disparities and more. how is education reaching out to the middle of world, the public health world, the pediatricians -- to get them to be better partners with us in helping families overcome their barriers so that their children, their next generation, can succeed? i am a first-generation high- school graduate myself. >> congratulations, first of all, to you. we have a huge opportunity to collaborate in the behave differently. this is that the federal level, state level, local level.

often, these adults stay in the comfort zones. children are not served well that way. part of the challenge we have had is resources. we get $100 billion on the table, and it is never enough. part of what has heard children around the country is when i called adult dysfunction, adults not talking or partnering. money has nothing to do with that. we have to be a by different ways and collaborate in different ways. we put our institutional interests aside. we're doing everything we can to be the partner. the department of education has been part of the problem. we're trying to change our own culture. we're pushing our own team and will push other people to come to the table together. there is tremendous interest because the president's leadership. there is tremendous interest and rallying behind everybody. >> so we can look forward to its strategic plan from your office to help us do this work? >> sure.

that is the next assignment. [applause] >> i work with a federally funded program in at new england, one of 10 centers founded the mid-1960s for civil rights act. we became equity assistance centers of the name change from the desegregation center sometime in the 1990's. our big concern in schools is that with the democratic changes, students and the slower change among the teaching staff and administrators of schools, the issue of cultural competency, which is the current term to describe issues of bias and prejudice that we might have called it a while ago, but the whole issue of cultural confidence among educators is an enormous one. i have noticed at this conference there is one workshop on that topic. yet, when i go out to schools, i see if there's all over the region that i am in for more

understanding in a more information to work with kids from backgrounds that are different from the teachers in the classrooms with them. how you feel that the department of education can further support that kind of work so that educators can feel more comfortable and more confident in working with children that come from different backgrounds than they're wrong? >> that is a great question with a couple different spots. i have been to 24 states. i am a meeting with young teachers, a veteran teachers, good and bad teachers. i am consistently hearing for a great young teachers how they were not thrilled with the preparation the received from their schools of education. part of my job is to push that in a couple areas. it is the cultural confidence that is the hands-on skills to go into communities that maybe they did not grow up in it and be successful. i think the school of education is behind on the use of data and assessments. we have a chance to push the

envelope and try to do it. a second challenge is that we need more cultural confidence. we need to improve african- american and latino teachers to come and teach. if we do not do that, the consequences for all children are profound. one is to make sure that the schools are doing a better job and make sure we have the resources. but how we make sure the students have role models and mentors to look up to, i think we're falling further behind their right now. if we're not producing the next generation of teachers, we're not producing the next principals and administrators. this problem could get worse. >> please do not forget the old folks like me who have been in education for over 35 years. many of us have a lot of experience of of of been out of teaching preparation programs for a long time. so older teachers are people out of school also need the kind of

support. i am talking about professional development. so do not forget that part. the in service and not just that service. >> thank you so much. i appreciate it. i will do three more. .

>> it is a tough time financially. the states have never been under more financial dress. it is interesting to me how people in times of crisis handle that. there are some folks who are paralyzed and are making bad decisions. other folks are being innovative. one of the -- one of the biggest things our students need is more time. our school day is too short and our school week is too short and our school year is too short. some people have left out summer school. budgets are tight but that is a huge step in the wrong direction. one school area in ohio has added a fifth quarter. this is a time of real -- a real test of leadership. rahm emanuel says," do not waste

a crisis. " if we are laying off counselors, children will get hurt. this is a time where we will seek those districts, those states, those counties that are thinking to go to the next level. we will see other folks who are paralyzed by the challenges. these are rural, a city, american and challenges. these are international challenges. it is similar to what is going on in australia and england. this is not specific to the u.s., other than the level of gun violence which is greater here than other places rural areas, suburban areas will have a chance to compete. they want to make sure their children are safe as well this

transcends race and class and impacts all our children. we want to get a fundamentally better. last two -- >> which you discuss the role of mentors and mentoring programs in schools? we have seen a shift in funding from the department of education to the department justice. do you see this as an educational issue as opposed to an issue of justice? >> you are absolutely right there. [applause] this is not about who is funding watch. -- fundingwhat. whether it is early childhood funding, these relationships have been far less than functional, historically. we can partner with the department of justice in certain

ways and health and human services. you have leadership at the top that is working together. i cannot be more impressed the leadership across the agencies. we had a retreat just this past weekend. it is amazing how committed people are. to hold me accountable, worry less about what the funding source is. there are lots of places where we can pool resources and work together in ways we have not. i am very optimistic about our ability to do that in a better way. mentoring, role models are extraordinarily important. from middle school on up, every child has to have an adult in the building they have a personal relationship with. when children do not have that,

something happens. they start to fall through the cracks. two months later, they are chronically truant. when children have adults in their lives that care about the, they accomplish extraordinary things. making sure systemically that every child, particularly the children who are at risk, have an adult in their lives who is a stable force so they can go to them in good and bad times is hugely important. where schools are doing that systemically, we see the results. i think there's a huge opportunity to get dramatically better. last question. >> as a fairly -- as a fellow chicagoan, it does me proud to have you as the part the part -- as the person leading the the part of education. i'm aware of your work in

chicago, particularly in the area safe schools. the rems grant is one of the most significant grants to ever come out of the department. there are people from the country doing extremely good work with that brand. is there going to be funds available? you spoke about rewarding initiatives that are successful. will there be sustainability funds under rems grants to keep our schools saved? >> i think secretary page at $80 million in grants. we head north of $10 billion in discretionary grants. it is a whole different level. money is not the answer to everything. i want everyone to think about the big picture and the opportunity we have. we had the $4 billion from the top. we had $3.5 billion in

improvement grants. we have unprecedented money in title 1. there has never been more discretion resources on the table. we want to make sure that folks are thinking comprehensively and holistic play. we do not want folks to take about incremental change on the edges but fundamental, dramatic change. we have 2000 high schools around the country that produce half our nations drop as proposed 2000 high schools are producing 75% of our properties -- other dropouts from the minority communities. we have to think differently. there is an unprecedented opportunity for you to work with your schools to think about where we have real challenge is and how we challenge the status quo. we want to go to the next level and invest very heavily in those places that can lead the country where we need to go.

>> bless you and your great work. >> thank you, all of you for your commitment to our children. [applause] have a great conference. thank you so much. >> the education secretary from earlier today -- we will hear from the press secretary and a couple of minutes. there's a briefing from the white house live on c-span. part of "the washington journal per-l." host: tells about your organization. guest: we represent 5000 community banks in every state in the country. the mission of our association is to represent them here in washington in the congress and the agencies and to provide them with services, group buying that

we do in many areas, credit cards, mortgages, many other things that we offer our members. we help them politically and economically. host: how you define a community bank? guest: it is not a technical term. it is a focus on local ownership. often times, the regulators will say if you have less than $1 billion in assets, that is a community bank. for some purposes, even higher amounts work. it is a local focus on local decision making that is critical to being called a community bank. host: how has the role of those banks change in the last decade? when we talk about banking reform, we think of the big national banks. how is your role different? guest: our role is to make sure that people think less about the

big national banks and more about the local banks. in their communities, they are steady as you go, providing local credit to local businesses and people for their household needs, mortgage loans. we have stepped up our mortgage lending in the past decade or so. that has become more of a factor. i wish more people had gone to their community banks for their mortgages instead of two others. the wood of got a better product and we would not have many of the problems we have today. host: how have community banks been affected by that? u>ñguest: we are having a severe recession. that is the kind of thing that is damaging to community banks and small businesses of all kinds. there is that fact.

we had some bank failures. it is kind of the psychological effect. people have differentiated between the community bank and the big national banks. people think that we're the good guys. it is nice to be the good guys. it is our job to turn a good feeling into actual legislative change. that is my job and the job of the rest of the people in the group in washington. host: let's talk about the proposed consumer financial protection agency. it would consist of a five- member regulatory board and those people would be appointed by the president and confirmed by the senate. they would work with state regulators? >> right. the new agency could have beneficial effects for community bankers and their customers. community bankers are very worried about anything that says

that there will be new regulations. they are quite concerned about that. we are hoping and we are working with the chairman of the banking committee's so that instead of this being a negative for community banks, the agency will be directed to cover the unregulated mortgage brokers and others who do not have bank examiners coming in and on a yearly basis. if the agency can focus on the on regulated banks, that would go along way to persuading -- to dissuading the concern about community banks. it would be beneficial to the consumers. host: the consumer financial protection agency would educate people about finance and regulate overdraft protection plans and monitor banking industry practices. to some of those things sound good to you?

guest: we hope the focus will be, in terms of supervision, un regulated folks. the way it will likely come out is that the rules they write will apply to everyone. we are hoping that our bank regulators, who do a pretty good job in the compliance area, but they are very thorough, very tough on bankers, we hope that they will continue that practice and that the new agency's examiners can go out into other areas. host: this was from last tuesday, small banks of the center of an overall debate. the biggest banks have taken most of the blame, but the fate of the president's overall the financial industry could rest with the small banks. they have remained out of the

national spotlight. the country's 8000 community banks are powerful lobbying force. have you found yourself at the center of this in the sense that the bigger banks are looking to ally with few and the consumer protection people are looking for your ear? guest: we have heard from the larger banks. i called the consumer groups would reach out to us more. i think we could have some common ground. they should be concerned about regulation of the systemic risk institutions. we would like to improve the already good obama administration plan. we think the consumer group should join with us in toughening the regulations on the largest institutions and toughen the regulations and supervision of the non-

regulated votes for it we would love to work with the consumer groups in that area. up to now, i am concerned that they might put us in the same group as the big banks. we are working with the chairman of the committees. that is welcome on that score. the big banks will have to fend for themselves. host: let's take a call from someone, alabama. caller: good morning. the money that went out to the banks i think was the first. guest you can watch>> we go to e and the briefing with robert gibbs. >> the previous a scheduled event for today to honor nascar

champion had to be rescheduled because the race yesterday was rained out. that event will now be august 19 here at the white house. the second announcement is the senate democrats will come down to the white house tomorrow and have lunch here with the president. that will be all of them. >> we are all invited? >> why are they coming? >> they will continue to talk about priorities that they have, to talk about what has been accomplished in the first six and a half months of the administration. it is the president paused birthday and chuck e cheese was

booked. >> i got it. >> that did not cause you to laugh. i was joking about that. it is not the president paused birth that. -- president's birthday. >> the president wants to cut the birthday -- cut the budget in half in a decade. he also promised no tax increase on the middle class. is there a point where you say to that of three is in bad? can you get all three things done. >> the president is committed to doing those things. the president was clear in the campaign about that. in some ways, those goals overlap. we will not make progress on the deficit without dealing with

health care. some of those goals actually work into -- tandem. will not get the deficit under control until we get the economy going. the president believes that health care reform is important. the president was clear during the campaign about his commitment about not raising taxes on middle-class families. i don't think any economist would believe that raising taxes on middle-class families would make any sense. >> why didn't secretary brightener and dr. summers say that they could not raise taxes? >> i read some of the transcripts. they allowed themselves to get into the hypothetical back and forth.

this is important for all of us to understand. throughout the time that we've been here, we have talked about this. we have big structural deficits that are going to have to be dealt with to meet the present's commitment of cutting the deficit in half and getting us back on a path of fiscal responsibility read there's no question about that. what they both talked about was that we will not be able to recovery until we have a path toward fiscal responsibility. they also said that should not be done as a way of burning middle-class families. -- burgeoning middle-class families. the president's position on this is clear. we are looking at ways to cut wasteful spending as part of health care reform. the president has identified half a trillion dollars in spending he thinks can be cut.

he is looking in a program like the f-22 and cut that. yes ma'am? >> is the u.s. discussing with its allies the possibilities of steep sanctions on gasoline and other refined petroleum products? >> the p-5 +1 have announced an invitation for the iranians to come to the table. the president strongly believes that we should not buy lap -- not allow the iranians to acquire a nuclear weapon. that invitation has not been responded to. we will evaluate, as part of the

g-h process, where we are on that engagement in september. i do not want to get into discussions amongst allies, hypothetical as we get toward those dates. >> what do you mean by that? >> we think it is important to do what has to be done in order to prevent iran from acquiring nuclear weapons. there are a host of things beginning by engaging directly with them so they can live up to their responsibilities. hopefully, they won't pursue that technology. >> in terms of weapons treasury secretary tim geithner and larry summers spoke about, it was not hypothetical. the rest of the cut was possible to do deficit reduction.

>> we can quibble about whether the word possible was used. >> is it possible to do everything the president wants to do without increasing revenues for the middle class? >> i want to state again clearly that the president has made a clear commitment to not raise taxes on middle-class families. >> if economists, including the president's and economist, do not think it is possible to do so without raising taxes on middle-class, how was that dealing candidly with the american people? >> there is a series of things that have to be done. you will hear an announcement from treasury later this afternoon about how much money has to be borrowed verses what they thought would have to be borrowed as a result of financial stabilization. that is in terms of cutting the amount of money that is needed

-- the president has been clear on this. the first thing that we can do -- the most important thing we can do is to get our economy growing. we know that part of the reason the deficit is up right now is the economy has slowed down so much, the tax revenues, because that is what happens in an economic slowdown, have regressed the lot. -- a lot. we will have to make decisions down the road on some of the president's legislative moves. this is something congress wants to do, to evaluate how we move toward a path of fiscal responsibility. >> did treasury secretary tim geithner and larry summers go off script? >> i don't know. i know the president has been

clear. >> there is no real scenario where middle-class taxpayers might be hit with a hike? >> the president has been very clear. >> could i make that more precise? the president has been precise about >> the present boss clear commitment is not to raise taxes on those making less than $250,000 per year. >> any conclusion is flatly wrong? >> the president is clear and i think you heard him reiterate that. he said that read outside in the rose garden. >> people took that yesterday as than trying to open the door. >> i hope you'll take my reiteration of his clear commitment.

>> the door is closed? >> i am reiterating the president was clear commitment on the clearest terms possible. >> did he speak to them about the fact that they raise this? >> we talked about a number of economic issues this morning in his office. >> will everybody be on message now? >> that may be a bar that is too high to leap over. >> but that is the goal? >> the goal is to get our government back on a path toward fiscal sustainability, too little long-term foundation for long-term growth. one point that i forgot that is important -- within the very first month, of the president taking office, 95% of americans receive a tax cut.

that is everybody in the middle class. the president ran because for eight long years, the middle class had taken the brunt of bad economic practices. even when jobs were being created, even when you saw a positive economic growth, for the very first time in our history, you saw wages, for the middle class, a decline. that is one of the reasons why the president wanted to run for president. he wanted to protect the middle class. he wants to cut their taxes, which he did. he went to make sure that their voices were heard in the economic policy making of this country. >> the door is not open even a millimeter? >> i hope you'll take what i say seriously. >> do you have an update from senator baux-ñ? >> i don't. i don't think during calls over the weekend.

not that i know of. >> do you feel like the friday gdp report -- every time they reported number, there is a revised #. lately it has been revised downward. are you worried that the gdp number is a positive step forward? you have any reason to believe it will -- will be revised downward? >> one of the things that was released on friday were revisions based on new work economic models. i certainly do not believe that all of this point. the number is not more than a week and all. they feel confident the one thing that we do know now that we did not have as clear a hand on is the sheer depth of what we

were facing economically. the positive growth that you saw in the second quarter of 2008 was revised down sharply. the first quarter of 2008 when from the time of supposed economic growth to economic contraction. the death of the third quarter and 2008 -- the death of the third quarter in 2008 shows how -- the depth of the recession in the third quarter went deep. it showed that the recovery plan has had an impact, it is saving and creating jobs.

we understand we will get new jobs figures friday. i don't think there is anybody who does not believe that we will see several hundred thousand more jobs lost in this economy. >> the confusion on the tax thing, is this something that summers and geithner got caught up and? >> i am sure there is a confluence of that. >> is the administration looking at fort leavenworth as a possible site for detainee's for guantanamo? >> i do not know that they have gotten into specifics yet. there are certainly no final decisions of any sort we have made progress on dealing with a number of the issues that the executive order needed to be dealt with.

they are reviewing the case files and deciding who can and should be transferred. there is no final decision on that. >> the 10 letters a day that the president gets from the correspondence office, does he get letters critical of this policy? >> yes. he gets letters that are critical. i would characterize most of the letters he gets -- what he wants most of all to see, to get a representative sample of what people are concerned about also it is a way of stepping out of -- outside of the presidential ball and seeing and hearing from people about the challenges they face. they might have a small business and are struggling with the ability to get credit.

they want to be able to borrow money and meet a payroll. you get letters from family members who have loved ones serving briefly overseas and our military. the president talks about a lot because they have a profound impact on what he hears and what he thinks. when he reads a letter that he thinks we should all be aware copies and making sure that we see those letters, as well. >> does the administration consider an extension of unemployment benefits a stimulus? >> i do not know that i would get into what to call at accept to understand -- to call it -- over the course of the next few

months, you will have people that will exhaust the benefit cycle that they are written. on december 31, you will have an expiration of some of the recovery act parts that extended unemployment for those that were dealing with the recession long before washington became aware of it. the president and the economic team believe that extending those benefits and ensuring that the unemployed can get what they need and continue looking for work is tremendously important i do not think -- i don't know what to call it a except taking care of those who have fallen on hard times. >> are you concerned about the jobless report? >> were read out? >> concerned about the numbers you will see? >> i don't tickets any mystery.

you have heard the president said even on friday that the expectation is that there will be more job loss. one -- there'll be several hundred thousand jobs lost. you probably will have the unemployment rate ticked up. the president remains concerned that we get this economy moving again and creating jobs for the millions of americans that lost them in this recession. that is what he will continue to work on. welcome back. >> it is great to be back. >> you are welcome. >> it is also great to be away. were you in the morning meeting on the economic issue? who else was there? >> larry summers, peter orszag..

>> did either of them volunteered the hypothetical back-and-forth characterization? >> i made up all by myself. >> that's how you interpreted it? >> i read the transcript a few times. >> did the president seek an explanation? >> we talked about as an issue. this was not a school is in type of thing. >> why were there no -- why were there will be no -- why won't there be any republicans at the meeting tomorrow? and i'>> i think there will be a number of topics.

i am not getting it today. [laughter] i am trying. >> we are with you. >> i would look at this as the president speaking to the democratic caucus. they have a regularly scheduled colchis lush that happens every tuesday. it is just that we are having lunch at the white house. that explains talking to senate democrats. >> the whole topic is health care. >> i think you will hear -- i don't doubt that health care will be discussed. i believe the economy will also be heavily discussed. the numbers that we're talking now, the numbers we will see throughout the week, employment,

manufactured reports. in general where the economy is. i think they will go through and discuss energy legislation. in some ways, one of the things that will be discussed is the continuation of the president posh push to continue the cash for clunkers program, which without help from the senate, in terms of moving the $2 billion from the recovery and reinvestment plan into this account will likely mean that the program will have to be stopped by the end of the week. the president will also use it as an opportunity to talk about the benefits of what the program has done. the initial analysis of a group of applications showed that the transactions were generating a

61% increase in fuel economy. vehicles purchased under cash for clunkers is 25.4 mpg the average fuel economy for trade and was 15.8 mpg. in gas alone, that will save the typical customer 700-$1,000. it is good for consumers. it is good for dealers and auto manufacturers. ford talk about their sales being up as a result of this program. it is good for our energy and environment. >> it is an artificial incentivizing of the automobile acquisition. how long will that be around? >> the original proposal we had laid out was for $4 billion for this program. we have seen the benefits of

what that means in terms of savings for consumers, a decrease in fuel usage. this is good for our environment and our economy. congress appropriated and the president signed $1 billion. we think another $2 billion could take the program through september. >> what is your guidance from the senate on that? do you think you will get that this week? >> we are very hopeful. if it does not happen this week, it is on likely that we will make it to the weekend with a program that can continue. >> your message to those who are contemplating buying probe -- buying cars this weekend, what is your message? >> the program is up and running. if they meet the requirements of the program, the certificates that are filled out at the dealerships, will be honored. >> even if the senate does not

pass the extra money? >> it the senate does not act by the end of the week, we will look at what we have to do with the program. likely, if the senate has not acted by next friday, -- this friday, i would not give people the same assurances of going into a dealership over the weekend. >> so by the weekend you can expect it sure cert filled out? >> yes. i don't think there's anything specific to senator harkin than a courtesy call. >> you initiated the meeting? >> yes. >> what will the president to celebrate his birthday? >> i can get you more information on that. he spent a little time with some friends over the weekend at camp david. he was playing basketball end had dinner and was bowling and

having fun. >> what did he call? >> 144? >> who was keeping score? >> was that hypothetical? [laughter] >> you a good bowler? what do you call? >> does this mean we are throwing down? >> you seem to doubt the president. i watched some of the game, three strikes and 89. a nine. >> outcome of a bowling scores but not the mid-session review? >> the bowling happened in front of me. there are whole bunch of people working on the mid-session review.

>> this morning the president is out of george mason. he talked about the gi bill for 9/11 veterans. he goes on about the age of responsive -- of irresponsibility. he said that while some people were working for the quick buck, others were heading out for a military tours. what is he actually talking about? >> i did not talk to him specifically about that phrase. the way he has used many of those phrases in the past, if you juxtapose the service that men and women in uniform in iraq and afghanistan in this country and overseas to in protecting our freedom, if you contrast that with other irresponsibility that we saw over the past few years on wall street, i think

you get a very different vision. one of the important points about this new gi bill was that it rewards and invests in the human capital that is so important for our country's security and its economic growth. the president's grandfather took advantage of the original g.i. bill many years ago. what this legislation did was to update that program for the 21st century. it is not only worthwhile program but it underscores the deep commitment that we all should feel towards investing in those who have so selflessly protected us. >> was also talking about washington? >> i think so you probably don't have to go far into the newspaper each day to find

candidates for irresponsibility, for trying to make a quick buck. those actions have put the economic fortunes of many and economic security for all in jeopardy. it has cost us hundreds of billions of dollars. i can ask the president. one of the reasons we are talking about deficits and what to do about them is that we have, for far too long, basically tried to sustain something that is not sustainable. decisions will have to be made. >> when the president talked to the team this morning, it should

have been cleared? >> we talked about this going forward. christina romer talked about recent numbers and international manufacturing. >> the president reiterated his position on taxes? >> yes. >> to make sure there was no confusion, because there had been? >> yes, welcome back. >> the source of the information on the trade-in's -- is the president satisfied that enough of those trends are going to american detroit manufacturers and not some of the foreign car companies? >> we will get to an updated sheet. it is based on an analysis that was done by our folks with applications pretty late in the weekend.

nearly half of the new vehicles purchased under the program are from the big three auto makers. 47%, -- 45% is what their most recent market share was. it is slightly larger. the top-selling vehicle in the program is the ford focus. i think we have seen this as something that will be a big benefit to domestic oil makers. >> why do foreign car makers at all? one of focus on detroit? >> you have trade implications that would make that difficult/illegal. >> what kind of car does the

president have? >> when they let him drive, he has a ford escape hybrid. >> you offered assurances to buyers who might go into the showrooms by this friday. is it the same assurance to dealers? >> the transaction is on them. we feel confident as i stand here, that this program is continuing, it is working and working quite well. for this program to be extended, for meat -- to be able to give assurances later in the week, we will need to see the senate to act. that is what the president wants to say. >> health care -- there are a number of polls that have come out in the last 10 days or so and the general interpretation has been that the president's

job approval rating is drifting downward and that public sentiment approval for the main elements of the plan on the hill are sliding downward. is that the basic analysis? do you guys draw a different lesson? >> there were many different polls. you can look at conflicting numbers within the polls. you have seen polls where a broad description of the program and its costs and what it means for the american people is a winner. we have been in an environment where we have been focused on the process of health care reform. i do not think that has not been the most popular thing when

people watch it on television. what the president takes from these polls is that we have to continue to redouble our efforts to ensure that people are getting all the information that they need to make a conclusion about the fact that this will help families with insurance, give access to insurance for those who do not have it, it will cut their costs. it will help the businesses they work for. it will finally put an end to some discrimination by insurance companies, if you are too sick or have a pre-existing condition. all of those are messages that the president needs to be delivered. >> he has not laid out any of

the real priorities and health care. >> i think he was quite clear on the priorities he believed that the congress should focus on. he is committed to those priorities. many of those i just outlined. what we are dealing with this misinformation from the other side. that is what the president has hoped to tried to do with of the past few days. >> i would like this conversation recorded when you say that the president does not pay attention to polls. >> i can tell you that the president has not gone over those polls, himself. >> you said misinformation is one of the major causes of the draft in numbers. is that the main cause? is that the main reason? >> there are competing goals.

i think the president has been out there trying to make his case. he will continue to do that. we have to continue to go out there and talk to the american people about the benefits of this important legislation and how it will lay the foundation for long-term economic growth. one of the things we have to do is talk about what happens of health care reform does that happen. we have to understand what the status quo means. we know this. we know that in the next nine years, at least, your premiums will double. if we do not do anything and if we fail to act, that will happen. thousands will live there -- lose their health care -- health insurance today, tomorrow. people will be discriminated against because of an insurance company deciding they have a pre-existing condition. we know all those things will

happen if we don't act. the president believes that now's the time to do so. >> foreign policy -- secretary clinton is headed to africa. she will be in somalia and will talk to the somalian transitional government head in kenya. can you talk about what the mission is for somalia from the united states' view pointpoint? >> somalia is a place where we have seen people like osama bin laden set up camp before. the president has talked about, even before he ran for president, he talked about his trip to africa in august, 2006.

you have instability, you help law less desperate you have the breeding grounds for terrorism in places where there is not a government structure, where there is not somebody insuring that the loss are being followed. making sure that people have the basic necessities to survive. atlas all lessth allat lawlessness can read the worst in extremism. kenya is an important ally. when the president discussed strengthening those relationships and insuring that as we strengthen those relationships, the kenyans and all of africa have certain responsibilities.

somebody wants to start a business there, they don't have to pay a bribe to do it. >> is very thought that the u.s. military presence is needed in somalia? >> i don't want to get ahead of a determination one way or the other on that. we have taken steps around that region, particularly as it relates to pirates, as it relates to safety for vessels travelling in that area. >> is a common sense for americans to cross borders? what is the warning from this administration.

to people going close to borders. >> we have seen reports in the iranian media. we are working with the swiss and the swiss ambassador to confirm the information that we have seen in the reports. i don't know anything beyond that. >> what about the potential crossing borders of north korea and iraq? >> this is not a comment based on this case. the warning is to take great care and make sure where you are. >> taxes -- >> i was sure those already covered that. >> let me take one last crack. is there any time limit? >> this is the hypothetical

game. the president was clear. he made a commitment in the campaign and that commitment stands. >> he will never raise taxes? >> that commitment stands. >> i could be committed but -- blacks you ask me of the president barack obama will make a commitment and i am saying that he is making the commitment. >> he may not do it. >> ignore everything i have said in the last 45 minutes. > the president made a commitment during the campaign and he will keep it. item number -- i don't know how much clearer i can be very >> why didn't treasury secretary tim geithner and larry summers say that? >> they left it to me. >> senator john mccain

complained that the demonstration has not been bipartisan in health care in seeking a solution. the presideó has talked to some republican senators. has he personally talked to senator mccain about health care? >> they talked about a range of issues when they met back in chicago in december. krupp >> recently? >> i don't know if they have talk specifically about health care. i am not sure i would subscribe to the comments as a whole for several reasons. the president has spent quite a bit of time working with members of both parties to get a solution, particularly in the senate finance committee. i don't think it makes a lot of sense. one of the things the president will hold up as an accomplishment, something that was not able to happen in this town in years past is working with democrats likto not end toe

f-22 program. that was a boat that was done on a strong buy bipartisan basis a few weeks ago. the didn't want to add another $2 billion to the program. on bipartisanship, i would say that it is a two-way street. the president has but overtures and offers and has worked with republicans. there is an interesting vote we will see in the next couple of days on the supreme court. we will see where everybody is on bipartisanship. thank you. >> robert gibbs got several questions about the u.s. senate.

he mentioned that the democratic senators would meet with the president tomorrow at the white house. he also had questions about the clash for clunkers bill which passed on friday in the house. the senate will double in in a couple of minutes for agriculture spending, for fiscal year 2010. you can follow senate coverage on c-span 2. tomorrow, they will begin the debate on the nomination of sonia sotomayor to supreme court justice. there will be video from the hearings available at our website, c-span.org. the senate hearing today looks at bonuses awarded to government contractors. senators will be in from the government accountability office and the departments of defense, home and security, and energy. live coverage begins at 3:00 p.m., eastern, here on c-span. >> david: is with comcast.

-- david cohen is with comcast. that will be tonight on c-span 2. starting tuesday, the full senate debates the nomination of the sonia sotomayor for supreme court justice. coming this fall, tour the supreme court. >> how is cspan funded? >> i have no clue. >> maybe some government grants? >> i would say donations. >> advertising products? >> public money, i am sure. >> my taxes? >> palle cspan funded? america pause cable companies created cspan as a public service. there is no government mandate and no government money. >> let's take a look at space exploration including a human landing on mars. in asset agent talks about the

progress. -- a nassau agent talks about the progress. -- a nasa bp;h and talks about e progress. >> let me tell an anecdote about our next guest. i am a lawyer for nasa and people wonder what lawyers do at nasa. one of the more interesting acts best is to give preventive advice in advance on whether our civil servants can accept the award surprises from outside organizations. many years ago, i had been introduced to john and had to do an analysis as to whether he could receive a particular word from a particular institution. we looked to see if there were standards in place and whether the awards were given pursuant to written standards so there is no appearance of impropriety. it is a straightforward analysis.

the facts change from time to time. we look at the regulations and the government books. one of the examples listed in the essex regulation -- and the ethics regulation is the u.s. support of agriculture could accept the nobel prize of offer. after reading john's book, it is not out of the realm of possibility that someday we could do this for you. being the man that he is, he explained that those sorts of things take a long time. there's a time that the nobel committee waits on discovery to see if they are legitimate. after steven hawking call some of the results from the kobe spacecraft the greatest result of this century, it gives one pause and thinking is that this could happen one day

it is a very interesting experience for arrest. without further ado, let me bring up my colleague and distinguished scientist, john mather. [applause]

>> david, thank you for that lovely introduction. i remember my ethics instructions saying every year that i could win a nobel prize. it did not happen durin. i am going to concentrate -- although you may have heard that was going to talk about the cosmic radiation. i thought you would rather hear about planets, live, and life around other stars. ok, the computer is coming alive. this takes a moment to do the

sequence of events. something is appearing on the screen, i hope. something is happening. tadam. we have to make sure that we have it setup correctly first. is that good? not so good? i guess we can get better pictures, right? let's try that.

>> i think we are ready to go now. ok, here ago. i wanted to talk about how we can learn about our own history and how we could learn about it with telescopes. i am good to talk about some basic stories we have heard about the earth. this is not my own work. i have worked on tectonics background radiation for a long time. let me concentrate on something that is a little closer to home and was more surprising for me. i grew up knowing about the big bang theory. it was already part of the lord when i was a kid, the cosmic microwave background radiation was discovered.

what has been more surprising to me is the possibility of learning as much as we think we know about the birtdearth and hw much lower can -- about the written what we can clean up how it came to exist. we have an astonishingly precise measure date for the beginning of the solar system. it is the age of the earliest little bit of sand that we can find orbiting the sun. we either pick them up from the rocks on the moon or from bits of comment that we bring home or we find them on the earth. we have this astonish late to find a date. the early formation of the solar system was quite quick.

a few remarkable things are supposed to have happened. this has been worked out by people studying the solar system. it is the question for many decades. why is the man that we have so different from other missions in the solar system? how did we get it? the current theory is that has to do with the arts. with the earth. everything was melted from the surface to the bottom and huge amounts of material came flying back out into space, orbiting around this of debt, combined earth and moon. from the debris, a rock was formed again and turned into the moon. i didn't know if it was formed from the vapor or chunks of rock

that came out of the arts. some -- that came out of the earth. it is a very fascinating place to go if you want to learn more about the early history of the solar system. all of the lightweight elements, like hydrogen and carbon that we're very fond of here, is that it may have dispersed back out into space because everything was so hot. if that is true, then the early earth was rocky and hot and there were no chemicals of like candy. that might mean -- there were no elements of light handy. perhaps the oil we have underground could be deposits directly from space. that was an idea at one time.

but then the earth was probably a little bit cool because the sun was not as bright as it is now. recently, the people that still your mechanics, the motion of the planets around the sun, have been doing simulations and a common result is that jupiter and saturn have switched their ordered twice. in a long time ago, there was an annoying character who said that the world had been colliding all the time. the specifics were probably pretty disastrously wrong. now that we're getting into the details, the general idea that the solar system has not always been stable and has not always been like it is, seems to be coming quite clear. you might remember that generations ago were very upset because isaac newton give us a clockwork universe and everything was supposed to go into a regular person forever. nowadays, even without the benefits of quantum mechanics,

we can calculate for the particles will go and it is quite chaotic. life on the earth formed shortly after the bombardment. we do have some signs of that. i have a few things to say about the earth itself. obviously, the things that may volcanoes on mars, they did so here on earth as well. there is compound came out and the conditions for life here on the surface were variable. the continents moved around quite a lot. the names of the few of the early ones appear on the chart. we have information on how the earth as magnetite and how the rock strata manage to stay together.

there is a series of things that have been happening. migrate school history teacher said see how the continent of the americas fists together with africa and asia -- sorry, africa and europe. we can see this. i don't know what the scientists cannot see it. my grade schoolteacher could see it. we kept wondering where all the scientists were on this. this had not been noticed for a long time. the continents had been moving and we have had a huge number of ice ages modulated by a volcanic activity. there's even the possibility that, before the great outburst

of live, what we call the cambrian explosion, there was a time when the earth might have been frozen solid. all of the oceans were solid ice. this kind of dramatic -- to think about the series of events, i don't know how to interpret this. it is a known fact or something worth thinking about or working on a moment. you get closer to the current time and you say, how did human beings get here? the population was down to about 600 individuals living somewhere in africa, possibly on the south coast, read about the time of what is called the wrist glacial period. as a result, we are all closely related. we have had 600 ancestors altogether, which is pretty remarkable. the jumping ahead a little bit, 400 years ago, hill ladot

pointed a telescope into the sky. -- galileo pointed a telescope into the sky. it is possible that all of this wonderful light that we have is going to put all of the carbon dioxide that is in the air into rocks. and it will happen within the next few hundred million years. this is not immediate. there will not be damaged greenhouse gas to keep the reform and all. it will be called. -- it will be cold. we have a certain temperature. [laughter] -- we have a certain time pressure. [laughter] before the end of the solar system, the sun is exposed -- is supposed to expand to about the size of the earth's orbit. around that time, we will be orbiting within the service of a bright red star in this will

definitely be too hot. if we're going to go traveling, we better try to figure it out. some people think that the future of space travel is that we're going to build a silicon light with transistors and equipment and it will go traveling through the universe. we do not know. why are people so excited about all this? when i was a kid, i said, dad, how did we get here? he was a geneticist. he could tell me about evolution. chromosomes and genes. if you want to know how you got your personally, you can learn something more than you might have. i just sent my $100 to the national geographic and they can tell me where my life came from. i think it is a cool product. i want to put in a little plug for that. not that this is pastrami, but -- not that this is astronomy, but this is something we're all interested in.

i think we have a very deep compulsion to know how we get here and where we are going. you can learn more than you thought. i want to illustrate a few key events in the history of the universe. i am supposed to be able to show you a movie. this is the object blowing upon that mario described to you. it is a star in the process of some disastrous collapse. it is showing material coming out towards us at close to the speed of light. this relativistic extreme collision is releasing material pointed at us. once in awhile, they are aimed at us. that is why they're so bright. the record holder for the most distant object ever discovered is one memory burst seen this year. it is that a shift of 8.2.

this subject was 600 million years old or 700 million years old. this matters to us in another way. things like this probably created the chemical elements that were then released into space to produce the first possibilities of life in the early universe. mario has also shown you in a bit about the galaxies. we have a simulated movie of to galaxies colliding. galaxies do collide. we're kind of expecting your nearest neighbor to come in desperaafter us.

we better get going, again, on space travel. a few years ago, the andromeda strain was a popular story and we thought that bacteria for mothers coming at us. it is not just bacteria. [laughter] we would like to know how did we get here. we have lots of pictures from theorists' saying how we think that stores and galleries may have formed -- how we think that stars and galaxies may have formed. it takes maybe tens or hundreds of millions of years for orbits of the planned to set up and for the rocks to get cleared up so that life forms can exist on the planet like birth. this is the evil nebula wherry star has been born and are burning away their homes.

i want to show you a different view of the same thing. this is the same place as a scene with infrared light. infrared gives you a different view. there are stars on this picture taken from the ground with a very large telescope in chile that you could not see in the previous picture. you couldn't see them because the dust grains in those clubs were too opaque. but the infrared light will go around that with this much impediment. you can see stars and that were not there in the of the picture. the important reason for studying infrared light is this. this is a very important message about looking into where stellar birthplaces.

>> whoever has a telescope could possibly make any progress -- we already have many 327 plants have already been discovered. plans going around the store will pull back and forth around the star and we will see the changes. with great care, the people working on this message have discovered the velocity down to 1 meter per second. this is getting close to fundamental limits. some plants that are not much bigger than their possible to see if you get to see them close into their apparent stars were the poll is strong. -- for the pull is strong.

that is one of the most abundant population of stars found. i will show you some sketches of how we work on that. i have another massivmethod cald micro-lending. there are so many stars in your line of sight that one will cross in front of another almost. when this happens, the one in the middle can bend the light of the most distant star and what we see is that a distant star will get brighter and then fainter. now it turns out that you're very lucky. if there is a planet in the middle of this start, it will make its a little blip on the earth. one of them happen to have two plants that could be seen this way. it is a very complementary techniques.

this has all been done from the ground. it can do even better from space. maybe we will do that one of these days. we're beginning to learn. most recently, we have been beginning to make direct images. finally, timing -- which have a few points that have been discovered orbiting pulsars. that is a nasty source of immensely intense radiation. you don't live there. once in awhile, plants are created from the debris or are leftover from beforehand. this year, we have recently watching the kepler vision.

it was just launched a few months ago to be pointed at the cygnus' region of our galaxy were has the possibility of seeing the most possible stars at one time. there will be monitoring about 100,000 stars continuously for several years. the purpose of this is to see if any of them blink. the calculation says that they should discover a handful of planets like earth around stars like the sun if they are numerous at all. of course, thousands of easier targets are likely to be found as well. some u.s. -- so you will see what they see. it will take them while. obviously, if you see one the, you do not know what happened. you have to wait another year to see if it is another earth around another son. you have to watch this many times before you can be confident.

over the next few years, we hope to hear from them that there are many places like home over there. how much like, that remains to be figured out. it requires more measurements. we have an illustration here about how the planets kind of obscure light from the star and you see that the star will get a little more faint as the plan it goes across it. when the planet was behind the store, something as will happen. if the stars are bright enough, you will see that the total light of the system is diminished. this has been done already with the sisters based telescope which has been in operation for some time.

more of these deductions are likely to happen. what can you learn from these kinds of things? some of the lead from the star will go through the atmosphere from the planet to your telescope. that will enable you to study the characteristics of the constituents of that complementary atmosphere. another possibility, with enough sensitivity, you could even detect the effect of a mood around a planet if you can do this. if you're very lucky, maybe you will be able to tell if the plant has water in its answer, depending on temperature and many other things. in a very long term, we have many hopes for the technique. the first technique that has been effected to learn details about the atmosphere is of the planet -- we can illustrate another way of going about things.

a system like the sun with its planetary system will be visible from a distance because of the dust. we saw with the hubble telescope that there is a ring of dust orbiting around that started a long time ago, -- around that star. why is there enough standarcentn the star. we figured that a planet had to be there. sure enough, a few years later, it was figured out that there is a plant over there. it is inside the ring of dust. presumably, is the one responsible for making the death have that particular bit. since then -- presumably, it is the one responsible for making the dust have that particular orbit.

the one in the upper right is done with a very large telescope and adapted optics. we have been able to wait long enough to see the move. the purple one with the red thing in the middle, that is not the star, but the leftovers from the oppositic. that is what it looks like to our in perfect optics and the atmosphere of the earth. europa is an interesting place in our own solar system. we have heard about how mars is a good place to look for life. there for places known in the solar system. both of these have oceans covered with ice.

you can see that europe has an amazing structure that looks like ice floes with muddy water coming up between the cracks. i think we have recognized for a long time -- this picture was taken by the galileo mission, by the way -- how waterworks in the solar system and see it if that material has organic chemistry in it. it is difficult go through the ice into some real water underneath. it will be hard to really learn if there is pond scum under the surface. in the system around saturn, there are two pieces of that are live. there is a mechanic coming out that's goes through these pictures.

there's also tightened, where we landed a probe. it has a surface basically made out of ice. the surface of the acat has been shifting. how was that so? it is floating on something. the surface of titan is made of ice and it is floating on water underneath. what else can we learn about our own solar system? [laughter] we now have eight planets in our solar system, but there are hundreds and hundreds of things out there in the distance. pluto was demoted because he was about to be out-classed. this is with the known ones look like way added to the outer

solar system. there's already one that is bigger than. . -- bigger than. pluto. you can see some of them have their own little satellites. that is a remarkable study that can be done. these are presumed to be remnants of the early solar system. if we want to know why the earth is like the way it is, this is a perfect place to go looking. find those rocks, see what they're made of, and learn what you can about their orbits. so where are these objects? this is an up or a diagram that shows you where they are. the horizontal axis is the distance from the sun.

the vertical axis is the inclination of the object. these things have been picked out of the plane. but there are a lot of them out there. i am sorry, pluto, you are a dwarf. but that is okay. you have many friends. the james webb telescope will help work on this question of how the planets got here and how did we get here. i mentioned earlier that we want to study infrared for a number of different reasons. one is that the infrared light will pass through or around the dust grains that will obscure our view. another reason is that the infrared is the place look for the early universe. but we will concentrate on plans today. another is that infrared is room

temperature. infrared tells a different things. this is the james webb telescope. it does not like any telescope we have ever flown. it is an energy galaxy concentrator. it is focused on a secondary mayor that has a triangular tower and then goes back into the instrument package. [unintelligible] the long gray thing that you see there is an umbrella and has

five layers. all a show you how it influenceunfolds. it is bigger than the rocket. this is the first time that we're trying to put up a giant the struggle telescope and make it function the way it as it should as a proper telescope. nasa is leading the partnership in this project. we have big contributions from europe and canada, including that europe is supplying the commercial launch vehicle to carry the payload of there. i am not going to be able to tell you the whole story about what we want to do with this, but i will shoot for the telescope goes. many of you heard about l 4 and 05 because there are stable places in the universe but they're far away. we let this little l2 point.

it is 1 million miles away. it is about four times as far away as the moon and is an unfavorable orbit point. here's how big is the telescope. this is about one-tenth of the world wide engineering team and signs team that is working on this mission. it is a very large collaboration to do this. people might say that it takes a village to build the telescope. [laughter] i mention that this is larger than what the rocket can be. on the other hand, we could make a bigger rocket. this is about 10,000 times faster than it really does. first, we enfolded the solar panel and the supplementary dish. now we have erected the

telescope on its tower and we are about to unfold in the sun shield. in real life, the sun and earth will be below so that the telescope you see here will be protected completely from the heat of the sun and it will be able to cool itself by radiation from matters base down to 40 calvin. -- 40 kelvin. we did look to see if it was possible to put to the telescope closer to earth and cannot find a way to do it. the earth is too warm. there are five layers of the sun shield. that is what it takes to protect it welcomed the sun protection factor is about 1 million. the telescope will be adjusted after the launch to be the right shape.

we had to invent the mathematics that are exactly the same that we need for the fine adjustments. it will function as one giant parabolic mirror. some said that that is hard to do. how can you imagine doing that? this is a tremendous challenge for a mechanical team. how're we going to make this work? we're going to rehearse the lot. we're going to do a lot of testing. the company that is building this, northrop grumman, they tell us that this is not the most complicated thing that they have put out. [laughter] if people are watching you, that is good. [laughter] this is the optical test we're good to do. the apollo astronauts rehearsed for their trip to the man with this vacuum tank in houston.

we find that it is the right size and shape for our test. we're going to put the engine addition of the top. it turns up at the center of the curvature of the mayor is centered at the top. this will soon become the world's largest helium cooled tank. we have to make the whole interior of the apparatus come down to near 20 kelvin. it has an operating temperature of about 40 kelvin. it will be launched according to plan in 2014. i would like to wrap up with a few speculations about what might come next so that we can think about the planets around other stars. here is a sketch of an idea called new world observer. this is a way of seeing planets

around other stars. is different from ways we have tried before. you may say, can we not point a telescope at a store and look for a ton next to it? you can, but there's an awful lot of where in your telescope. the earth's view from a distance is 10 times more famous than the sun. if you're going to see the earth next to the sun at a great distance, you have to get all of that sunlight and figure it for your good to put it appeare. this looks like a pointed sunflower we need to put it above 50,000 milekilometers from the target. if you can do it, you can cast a shadow of the star on the telescope.

the shuttle will be big enough to put the telescope entered the planet that you're hunting for should be yet to decidto th. this is one idea. we studied it quite a lot for the last two years. my colleagues said that they could build it. will they build it? that is a whole other subject. this is not easy because the shield that is that there has to be something like 50 meters across. we have not to build something that large with a the kind precision that is required and we would have to learn how to do that. in principle, -- i should not say that -- it might be easier than building a perfect telescope within optical methods. this is called the terrestrial planets finder.

this is a very difficult project to do. this one has four telescopes in a row, all collecting light from the start and sending them to the combined device. there's a fifth observatory with flying in formation. this is also difficult, but, when i would like to point out is that the made you can build this one, there's a possibility that you can see the signs of life in the atmosphere of another planet this way. though little graph shows you what the infrared spectrum of such an earth-like plant would be from a distance. you could see that there is water, ozone, and carbon dioxide. that is because that is what the earth looks like. our job on earth is to make carbon dioxide. from a distance, we can make an observation that can tell us if

it planet is a lot like kurds. it would not tell you if there are people living there. could another light system make oxygen? it might. the early earth could have been alive without producing as much oxygen, but maybe not. i would like to rep. -- i would like to wrap up. we will show you how this would carry its way out to the lagrange point with a telescope to look for whatever you might want to look for. a telescope carried in the moon rocket would not have to be folded up the same. you could have a nice piece of glass. the moon rocket is capable of carrying about 16 metric tons.

the james would telescope would be about 6,000 kilograms. it enables you to design quite different telescopes for looking for distant light or anything else that you might want to look about about the early universe. i will close with some places you can get more information and think about this all. this telescope looks a lot more light the telescope you might be expecting.

so it could happen. so we are counting on the nation to continue. if you want to pursue details, we send them lots of white papers to the qaeda center for astronomy. -- tijera kato center for -- to the kato center for astronomy. thank you very much. i am happy to have a few questions if we have a few minutes. [applause] >> we have time for, like, to

questions pierre >> you talk about the jupiter and saturn changing positions. what is the mechanism that caused that? >> the orbits of the system are not necessarily stable. the more that we know about gravity systems, the more unusual it seems to be that a set of orbits like our solar system would be stable. this is just the mutual gravitational attraction of the planets. as i said, newton davis said clockwork version, but it is not a clockwork -- newton gave us a clockwork version, but it is not clockwork. it is chaotic. [unintelligible] can you tell us about the far

side of the moon as an observatory? >> the retroreflectors that tells about gravitation that we have had since apollo, those need to be upgraded and those could help us set the dark energy and dark matter. an observatory on the doorstep of the moon is certainly a gleam in their eye. -- a clean and the hour -- a glm in our eye. eventually, we need to go there to do the next step. >> it is quite a leap from life to intelligence, but there are optical telescopes searching for laser signals. >> it is definitely worth

looking. thank you, all. [applause] >> from mars to capitol hill, the senate committee hears from bonuses awarded a pyramid contractors. [unintelligible] a that is live beginning at 3 eastern here on c-span. >> david cohen will speak tonight on his take of the future of broadband in america. starting tuesday, the full senate debates the nomination of sonya sotomayor. watch live on c-span 2 and

seized and order -- and c- span.org. >> senate democratic leaders are promising to push through a health care bill. chuck schumer said that their contentions that will be considered as a last resort. this morning, washington journal spoke with mike johanns about the health care debate and other issues. host: senator mike johanns of nebraska, thank you for being with us. everyone right now, the dialogue is about health care. what do you want to see with health care? where do you think we are at now? caller: guest: it is a mess right,

but regardless of the spin that is put on it. some of the things are very obvious. there are need for reform in the insurance industry. we should be injuring pre this thing conditions. we should be giving small companies and associations the ability to pull together. that would expand the base in terms the number of people and he could get better rates. we should be emphasizing tort reform. that will help. i am not sure that is the answer to everything, that will help -- but that will help in terms the need less expenses. in terms of wellness, if you want to make a difference over their life, get on top of obesity issues when they are

young. another thing we have to do in terms of health care reform, we often hear about this 47 million that is not in shepherd. the reality is, 20% of the population qualifies for an existing program. it could be schip, medicaid, but for whatever reason, they are not involved. having been a governor, when we first came to office, we rolled out our children's program. we worked on that very aggressively. we wanted to reach out to qualified to be on the program. reality is, because it costs money, i can do not get enrolled. when we debate in that earlier, statistics indicated you have 50% of kids in some states that qualify, should be enrolled, but

they are not. again, if you focus on how to fix these problems, you come up with a health care plan that makes sense. host: could you give us some concrete examples of what you would like to see incorporated in a health care bill? what can you actually do? guest: some of the things i have mentioned already. i think we need to focus on this population that is not insured. you need to aggressively go up there and get the state to sign them up, so that they have the protection that the government provides for them. medicate co pay is a program, once they are enrolled, it covers so much and does so much good. for whatever reason, it is not happening.

i also believe it makes sense for them next love of population that is struggling to afford health care, too literally by down the cost, maybe of private insurance premiums, company, deductible, and that when you can keep the private industry. millions of people do not want to lose their private insurance. yet, you are addressing the sure -the issue that so many people talk about it. then this idea about letting small businesses pulled together. even across state lines, i think that would be resisted. the reality is, in the industry, it makes sense. if you expand the base of the

insurer, that will bring down costs. about 75% of what we spend on health care unit goes to chronic conditions, debbie, heart disease. that comes about because people literally have such problems in our country with weight, lack of exercise. if we could somehow give people incentive to work on those issues, legal have a healthier population. then you will also have a better health-care costs. many of us a shot at safeway grocery stores. they have done some remarkable things. we spoke to their ceo, and they are emphasizing wellness. they have been able to flat line the increases in their health care costs. that is remarkable when everyone

is having so much dramatic increases. host: our guest is mike johanns from nebraska. call in with your questions and comments. democrats, 202-737-0002. republicans, 202-737-0001. independents, 202-628-0205. mike, on the republican line, from phoenix, arizona. caller: i am on state insurance right now. i have pretty much everything paid for but i get low-quality doctors which have to repeat certain procedures such as a spinal tap. i have had three so far and three years. -- in three years.

i have not been able to work for three years and i have not been able to get food stamps. this insurance that the government will be offering everybody, it drives away in the smaller insurance companies and puts them out of business. so the government will be taking on everyone's insurance. all the other countries in the world that have a government insurance, they say do not do this, it is bad. guest: he raises some excellent points. he is just hitting the nail on the head. no question, as you move into an arena where in -- is government-

run, what will happen is you will crush down the rates that are paid for in medicare services. i think that is obvious. the government went on the house side would cut $500 billion from medicare. but it does not pay its own way now. if you start losing people from the private insurance area, which is where this difference is made up, then that population trends and more people move to the government- run health care plan, which will happen. companies could decide it is cheaper to put people on the government plan. in our country, we do not have the power to prevent that. what he points out is right. more and more people on a government plan and quality of

care is going to go south. it simply is. i do not know what plans he might be on. he sounded like medicare, but he sounded younger. one of the things i saw with medicare as governor is, reimbursement rates are so low, and they are not taking the patients. another thing that some thing people have not thought about, we have a lot of world, critical access hospitals. if you push down the rate on a 25-bed hospital, they would go out of business because they do not have the flexibility of a larger center. if you reimburse them last for medicare, or their medicaid patients, they cannot survive. then healthcare would disappear

from that area. you would have doctors my age -- i am married, 60 years old -- and they look at this and say i do not want to work for the government. if they have the financial ability, they will do something else in their life. it would be very difficult to replace that doctor. they would not be replaced, as a matter of fact. host: let us talk about the confirmation of sonia sotomayor. where do you stand on that? guest: i already indicated a would not support her a week ago. when i met with her, i was impressed. i have said that publicly. her confirmation hearing was not a good performance, in my opinion.

i think her responses were the day's end. when she was pressed on difficult issues, it seems that she was trying to move all around. it concerned me. then, of course, these comments that she has made in the speeches. it has been a number of times. it raises the issue of fairness. to me, and the most important characteristic of a judge is that blind fairness. rich, i, porn guy, it does not matter. -- rich guy, poor guy, it does not matter. unless there is a bombshell, and i do not think there is, it appears she has plenty of both to be confirmed. those were my concerns. host: do you think we will have debate and discussion on the

floor? @@@@@@ i think the questions have been very tough, but also very fair. it has not been personal. i don't think you're going to see personal tax. but you will see a debate on the pressurissue. does that remove the blindfold from justice? host: let's go to julia. good morning, julia appeared callerjulia. caller: why not fixing medicare,

first? they are going to take our health care away from us. right now, i am on medicare. i have another insurance. they give me the right to go and have my tests. they pay for them. i do not have to pay for them. i can go to an exercise class. they already give me all this . thirdly, i know what they're doing about this october thing. the democrats fixed it so there will not have to be the 51 votes. talk to me about some of this. i am very upset. thank you. guest: julie raises some very interesting issues.

they had used special on was or as ourcsars. they operate beyond the ability for congress to have much control. that oversight is enormously important for a democracy. . she says to fix medicare, first. that is important. this is a system that has served our senior citizens very well but the reality is that that the policy plan and the president obama plan, it cuts medicare by $500 billion. instead of taking that money to stabilize the system that is quickly going insolvent, it takes that money away from medicare. it puts it into this plan, whatever it is, this government-

run health plan, which is so enormously unfair to senior citizens out there. i have a resolution. i am hopeful we will get to work on it this week. it is an amendment that basically says we can generate medicare savings. .

>> we are going to take you live now as a senate subcommittee will be examining the effectiveness of government agencies aligning monetary bonuses with contractor performance. this first panel before the government accountability office. senator carper shares at the hearing. we have live coverage on c-span.

>> hearing will come to order. wellcome -- welcome. we are glad that you are here. ed you are selling your jobs in the hope that there is plenty of work to do. as i sat down, i tried to raise your shares higher. sometimes i like to come early and raise my chair higher than the other chairs. i really look like a chairman and then. we will be joined by several of my colleagues today. i think senator mccain is on the

senate floor. i am told by staff that's we have a presidential nominee to the supreme court as we speak. maybe this will start on the senate floor this afternoon. we will see. this is really important what i am going to talk about. i am delighted the panel is here. the second panel will join us, too. we look forward to having a chance to go back and forth and kick around some ideas with each of you. i think it was a year ago that senator coburn, a believed it was senator sanders, and i ask the government accountability office to look at whether government agencies awarded fees to contractors and whether contractors really deserve them in many instances. in the private sector, those would be publicly declared bonuses.

in essence, the award fee can be described as extra profit the contractor me turn if they save our government's money and deliver -- may earn if they save our government money and deliver a superior product. this can lead to excellent results if used appropriately. several recent controversies in the financial sector have shown that awards and incentives not properly aligned with outcomes can lead to failure with dramatic consequences. unfortunately, government agencies have made some of the same mistakes as private firms we hear about in the news. much to my disappointment, it seems a number of agencies continue to struggle in managing how to award fees appropriately. i would add some that were not

doing such a great job not long ago have taken steps to maybe show the way for the rest of our agencies. some agencies continue to hand out hundreds of millions of dollars to contractors for reasons that, at least a first blush, do not make a lot of sense. in one interview the gao conducted, and air force official said a contractor would have to do "a pretty bad job," just to receive 85% of the potential bonus. meaning, i assume, a good job may warrant 100% of a bonus. contractors who were cited for "agrees is behavior -- egregious behavior" are often cited an award fee.

they are often given chances to win the awards, despite repeated shortcomings. this rollover is supposed to be used in limited situations where contractors are not able to deliver for reasons outside of their control. unfortunately, rollover has become a rule instead of the exception. not always, but in too many instances. what is more troubling to me, senior management does not seem to be examining the results of award fees to see if they are incentivizing contractors to perform well. instead, agencies continued to hand out millions, in some cases billions of dollars, assuming they are getting the best results for american taxpayers. for instance, gao reported the department of defense in a partly paid $8 billion in 2008 alone. -- and appropriately paid a billion dollars in 2008 alone.

the situation led many of us to question, during a time when many households are tightening their budgets, government agencies continue to award extra profit to companies as if it is expected and not earned. it is as if one went to a restaurant, and you go to a restaurant as a customer, and your waiter or waitress forgot your order. they spilled your food on new, charge you for items you did not ask for. -- they spilled your food on it you, charged you for items you did not ask for. some agencies are giving contractors who perform just as poorly pretty much everything those contractors could want. let me pause and tried to be clear. it is strongly believe that appropriate incentives can lead to better performance, but i worry at the end of the day, agencies are not aligning

profitability in too many cases with performance. in most cases, when a contractor fails to deliver, there needs to be consequences. agencies cannot keep giving contractors a second bite at the apple. we cannot keep giving them too much money and getting too little in return. that said, i believe there are some possible solutions we can discuss and pursue. for instance, after gao expose the department of defense contractors were giving continued for wharf fees, the use of this dropped dramatically. the rollover practice was once used in many of these programs. this should be expanded to many other agencies. i do not see the logic of using award fees to incentivize contractors when we do not know whether or not they work.

i get the sense that agencies using these types of contract thing do so because they do not know what they want out of the contractor. let alone know how their performance should be delivered. instead of taking the time to lay out objective cost schedules and specific performance measures, the agency may be using wasteful bonuses as a crutch. in closing, i am looking forward to hearing what the witnesses have to say about the ongoing efforts to get these issues under control and indoors other possible solutions that will rain in -- rein in contractor abuses. we are joined by it senator coburn. we have been talking about -- i think it was senator sanders and i -- we were among the people who said these work fees are troublesome.

i appreciate your leadership on this and a number of other issues. in just a little bit ahead of you. i'm going to go ahead, and then we will yield to senator coker. i am delighted to have both of you. i am grateful. thank you. >> thank you, mr. chairman. i would like to commend you, mr. chairman, for holding this hearing today. the importance of this issue cannot be overstated, especially during these economically- challenging times. it is more important than ever that we end wasteful spending associated with federal contracting. moreover, we need to fully embrace transparent practices that will ensure taxpayers that their money is going to be used for a good use. i look forward to hearing more about the use of the award fee contracts, and the steps that

the office of budget management and the gao are taking to reduce wasteful spending. we need to make sure contractors receive payment only of the projects they are hired to complete. we cannot continue to use taxpayer dollars to pay for work that does not meet contract requirements. i have a few questions. thank you very much, mr. chairman. >> it is not your birthday today, is it? " today is my birthday. >> you are kidding. >> happy birthday. >> around here, you are a teenager. >> i am 72 today. >> happy birthday. delighted to share this day with you. >> senator cockburn is probably as much as anyone i know --

senator cockburn is probably as much as anyone i know, he is -- senator coburn is probably as much as anyone i know against waste and abuse. >> thank you, mr. chairman. americans think we do not get another year. a look at what we do in terms of priorities. i want to enter into the record a list of bonuses that were paid across almost every agency, but let me just highlight a few -- medicare and medicaid pay out more than three of $12 million for quality care bonuses to nursing homes that had significant health and safety violations. department of defense 8 $8 billion for bonuses to contractors for weapons programs that had severe cost and performance problems between 1999 and 2004. nasa paid bowling a bonus of 24

-- paid boeing a bonus of $24 billion. yet we paid $25 billion in bonuses with the contractor running late. a $6.5 billion satellite system supposedly to save the american people money. it was supposed to be launched in 2008. the project budget has doubled. performance has been deemed unsatisfactory, yet until 2005, we gave them $23 million in bonuses. hand-held devices to collect census data was $198 million over budget. in spite of th, we gave them $14.2 million in bonuses. the sponsored mortgage enterprise better known as

fannie mae sponsored billions of dollars in losses last year and requested billions of dollars in taxpayer assistance. yet it plans to pay $4 billion more in bonuses. billion dollar budget shortfalls threatened the care of thousands of veterans returning from iraq and afghanistan. the treasury abandoned a computer project intended to detect terrorist money laundering. it was over budget, but the vendor, eds, was awarded bonuses. the tennessee valley authority nuclear reactor went over budget, but they paid an extra $42 million in bonuses and other fees.

i will just add the rest into the record, if i may. >> without objection. >> i look forward to your testimony. i know that omb is aware of the problems and will get it right. i look forward to the testimony. >> thank you. one of the things we have talked about any number of times -- that is the idea that the job is to manage in a cost-effective way. part of the job of gao is to make sure that agencies are doing their jobs in a cost- effective way. part of our job is oversight. we'd really like to, in the subcommittee especially, which dr. coburn has a chaired every

once in awhile. i get to terror now. -- chair it now. we have to put a spotlight on wasteful spending. while we try to spotlight is bad behavior. and we like to spotlight good behavior. in an effort to hold up those agencies, the agencies that are behaving appropriately, setting examples. i think we will have the opportunity to hold some folks up, we appreciate what you're doing, and you're are some lessons you can learn from those that we hold up. -- and here are some lessons you can learn from those that we hold up. our first guest is the first ever chief performance officer. we are delighted he has taken on this responsibility. we are happy. jeffrey zients comes to the

government with an impressive resin made -- resume. he has worked with economically- disadvantaged young people in job training. our second witness on this panel -- no stranger here -- mr. john hutton. he began his career in gao in 1878? [laughter] is that a typo here? he has worked in projects in iraq and afghanistan. again, our thanks to both of you for your work and your expertise, and i will ask that you began curia of your entire statement will be a part of the record. >> thank you for the opportunity

to discuss award fee contacting and strategies to eliminate waste and extract maximum value from these contracts. i would like to insert my statement into the record. >> to have our permission. >> thank you. i was confirmed last month as the deputy director for management at omb. it is my responsibility to help lead efforts in performance, making sure that taxpayer dollars are being used effectively and efficiently. this is especially critical during these difficult economic times. i believe this can play an important role in driving down costs. as demonstrated by the president's march 4 memorandum on government contracts thing,

the administration is committed to creating such a system, which is currently accounting for more than $5 billion in annual spending. we created a set of guidelines to help agencies improve the effectiveness of their practices and the results achieved from contracts. these efforts are designed to save the taxpayers at least $40 billion a year. the president's memorandum identified agencies -- agency's selection of contract type is a key area. the selection of an award the contract can be an effective way to boost strong performance from a contractor and mitigate risk in circumstances that would require it to diffidently -- to measure objectively. fees must be linked to cost timeliness -- cost, timeliness,

and quality. the amount of fee and agency pays must be commensurate with the level of demonstrated performance. an agency must not pay an award fee when contract performance is not satisfactory. omb laid out these basic tenants in 2007. unfortunately, agencies have not consistently achieved good results from these award fee contracts. in part because these have not been incorporated get into the federal regulations. -- inc. yet into the federal regulations. we are working with the far council to expand the award rules. the award contracts will be a corporate contact -- contract type under the circumstances. the new regulations will help

agencies differentiate performance and the correspondence with the available awards that could be earned. equally important, there will prohibit or fees for performance that is just unsatisfactory. finally, the rules will provide clearer guidance in the use of rollover. secondly, we will bring more agency management attention to bear on contract activities, i incarnation with the five agencies that represent 95% of the total dollars spent on award contracts. most of those agencies are in your second panel. one area will be the monitoring of internal practices. we will work with the agencies to put the appropriate mechanisms in place to determine award fees have been made in accordance with the approved award fee plan. we will compare award fee determinations' to agencies with

valuations of the contractors overall performance. this will make sure that feet by elations accord with performance. finally, we will look at how data collection can be improved. one option we are considering is decentralized collection of contracts into the same system that serves as the central repository for information. this consolidation would have the added benefit of an additional source of analysis for agencies to create an additional source of selection. we will also focus on a training the workforce. for this reason, it is critical that the new guidance is supplement to tailor training that reinforces the skills that are essential to achieving the performance under award fee contracts. in summary, we will begin an

aggressive effort to address the award free -- the award fee contracts. possibly, these reforms will lead to a government that awards fees wisely and with care in delivering for the american people. i appreciate the subcommittee's work on the subject and look for to working with you as we strengthen the overall acquisition system. >> good. i will be asking you to comment on the steps just outlined. you're full statement will be made a part of the record. -- your full statement will be made a part of the record. >> thank you, mr. chairman. from 2004 to 2008, agencies spent billions of dollars on a war fees. over 90% of those were spent at

five agencies in 2008. the department of defense, energy, homeland security, nasa. in 2007, omb issued guidance aimed at improving award fee practices. my statement is based on a report on contracts and i would simply like to discuss award fee guidance. first, what have agencies done to revise policies and practices reflecting guidance? second, the steps for using award fee contracts consistent with the guidance? and third, the steps that agencies have used to help evaluate? what have agencies done? dod and nasa have revised guidelines and are generally

consistent. for example, the guidance reserves for exceptional circumstances the practice of offering contracts as a second chance. emphasize the linkage between award fees and desired outcomes. it prohibits the payment of a were fees for unsatisfactory performance. nasa's guidance now requires a documented cost-benefit analysis. in efforts to incorporate dominance in doe and dhhs have varied. while representatives of these agencies admitted it would be helpful, they have been inconsistent. on one hand, we found that using practices were not inconsistent -- were not consistent with guidance. one contractor received a contract on process-oriented

criteria, whereas omb policies call for demonstrated efforts. at doe, contractors receive as much as 84% of awards fees for not meeting expectations. they have in some cases, they have applied the revised guidance. 40 of the cases reviewed were for 2005 work. we estimate that dod will pay less on eight of those cases to which the new guidance has been applied. our program was better able to evaluate contractor performance. at agencies that collected data, they shared information about the use of award fees.

only dod collects data on contracts, and none has created a way to a body which performance. no formal networks exist for agencies to exchange best practices, lessons learned, or other strategies. instead, information is shared to informal networks, if at all. this has created an atmosphere in which agencies do not know what is being used effectively, and positive practices are being isolated. what should be done? we recommended that agencies update their guidance and provide instructions and definitions on developing criteria, developing outcomes, using a were fees in combinations with incentive fees, determining when rollover

fees may be justified, and establishing factors to motivate contractors to excellent performance and prohibiting the payment of a war fees for unsatisfactory performance. in addition, we advocate reviewing contracts before guidance is in effect, revealing new opportunities for improvement. we also recommended that the agency's create a work group -- that the agencies create a work group. the agencies noted our recommendations and noted that creating such a worker could be leveraged. mr. chairman, i look forward to addressing your questions. >> thank you. mr. zients, he laid out several

things that were promulgated by omb in 2007. that was that on the words he should not be awarded if performance was unsatisfactory -- that an award fee should not be awarded if performance was unsatisfactory. can we fast forward to what you said here today, that what should be done is being done -- how does it work together as a package in terms of getting us closer to best practices? practices we would applaud rather than despair? i just want you to comment on what you laid out as the road ahead. >> mr. chairman, i do point out that omb is to the memorandum in 2007, and it reflected a lot of the key findings in our work that we did back at the d.o.t. -- dod back in 2005.

once that report was issued, they quickly modified guidance. that was one positive step taken. get -- yet omb coming from behind to make it better for different federal agencies -- congress has pushed dod to put more detail in their guidance, as well as ask them to incorporate many of the things that we pointed out based on our 2005 work. this is clearly an example. as we said at the outset, gao a spotlight on this. this is a case where putting the spotlight brought some heat, and he brought some change. >> let me go back just a little bit. you believe that the guidance that omb now provides is appropriate? are there some aspects --

>> for dod? >> for dod or the awarding of the award fees? >> what this has shown, even this most recent report, the word has not gotten down to all the different agencies. as you pointed out, some of the agencies like hhs and doe have not incorporated all those attributes into their own guidance. i think there is room for improvement there. dod has taken steps were we see improvement. it is not across the board yet. there are initial steps. you have to ensure the steps are taken and pushed down across the agency. >> omb's guidance is generally pretty good? and better over time. some of the agencies, including

dod, maybe nasa, are doing a better job adhering to that guy is. we have the obligation to try to back you up. when you point out activities that are really defendable -- in some cases it is to encourage. what is the right role of inspector general in this? do they need to make sure that the omb promulgates guidance? what is the role of the inspector general in this? >> gao has look broadly across the government. some have evaluated the use of work fee contract. unknown nasa released a report not too long ago. i believe dod did the same period -- i know nasa released a

report not too long ago. i believe dod did the same. >> there was a remarkable turnaround. maybe nasa and other agencies -- i think you said in your testimony that 95% of these awards these were made by five agencies. that is actually helpful because you cannot have to worry about the rest. that is not a concern. why is it that the agency, an agency like the department of defense, they have made the motions. the other agencies that have made relatively little? >> i think we highlight cases where you have seen these improvements being made, but i also point out that it has not gone up throughout the organization. i think leadership, embracing the gao findings is a major step

in seeing changes made. >> any comments on that? >> also on the omb guidance. my understanding that incorporating this will lead to much greater adoption. this process is almost finished with. within 30 or 60 days we should be publishing the final set of rules. we will ensure that this is front and center in all decision making, and it will be much more clear, much more granular, if you will, and guidance as to what should and should not be done. i think, going forward, not that we have not gone far, this will help mitigate the set of problems. >> in your testimony, you talked about training. the training of men and women whose job is to oversee

contracts and make sure we are doing the right thing. i think one of our other witnesses has spoken to the lack of training. these agencies are not prepared to do this part of the job as well. can you tell us what needs to be done to better insure uniformity of training? >> my perspective is we have a set of work force challenges with large here, in terms of the number of people and training and capabilities, that we really need to focus on. when you talk about an area like this, where there have clearly been and shortcomings, the idea of tailoring and training to award the contract thing starting with is it appropriate to begin with, all the way

through to what is the appropriate award means to performance -- that hold think, if you will -- that will be valuable in supporting work force development. i think it is part of a larger issue that we have on work force capabilities and training, but i think given the importance of the problem, we should be focusing on tailor training. >> the department of human services did not send a witness. i am disappointed with that. are you in the position to tell us how they are doing in this regard? >> mr. chairman, our work has shown that hhs is one of the agencies that has the least specific guidance as far as

contacting activities and perhaps any agency. pretty much, i think their reliance on the rules, and that will be expanded and provide more detailed in terms of how to utilize the contrasting apparatus. i think they still need to look at guidance and the extent to which there are folks are grounded in the key principles pointed out in the morale memorandum. -- in the memorandum. >> my guess is that somebody thatdod -- at dod, may be a deputy secretary, said we would have to do something about these award fees. my guess is that the turn of an aircraft carrier like they have to do ads dod, someone fairly

high of said, let's get to work on this. they are doing day to day work on apposition contacting. they have people saying this is important as well. dr. coburn? >> thank you for your testimony. i want to deal more background. if you think about using award fees, it is usually something we have not done before. if you look at nasa, dod, the census bureau. the whole i see in that is that we have no capital at risk by those people who are bidding these jobs. -- the hole i see. when you have no capital of your

own invested, and you have no incentive to deliver the budget on time. i just wonder -- can you give me history of how we got here so that now anything we wanted to new, all the risk is taken by the federal government, even though the company providing the services is going to handsomely profit from that? my question is why should they not have risk? >> i think appropriately implemented, these contracts can achieve what you are discussing. if there is no award fee, that should be a contract that the contractor does not make any money from. the problem is, if you have a satisfactory performance and you are paying held the award fees, and the government is not protecting itself. but the structure of the contract could be used to protect the government so if performance is not strong -- and

one would prefer to have objective measures of performance of fraud and tax incentives -- performance up front and incentives -- then these fees should not be paid when performance is not strong and contracts suffer as a result, having lost the capital opportunity. >> let me go a bit further. even the things we are trying to do that have not been done yet -- what is wrong with having a competitive bid on that? they cannot do it if they lose? if they do do it, they win. we know the price up front. what is wrong with that? what is wrong with that scenario where we put some of the risk on those other going to benefit from having the contract? >> could not agree more on fees

and competition. where possible, you want fixed rate contracts. there are probably some situations where you cannot do that, in he would have to do cost-reimbursement contracts. you would want to agree on objective measures of front. -- up front. if you cannot, award fees may be the right way to incensed good performance -- incent the performance, that you have to tie that to the percentage of the award fee you are paying. >> we spend $64 billion on i.t. contracts, and a large percentage are nonperforming. the reason for that is we do not know what we want. i know the cfo's are involved in that.

i appreciate the obama administration in that. there is waste every year. had we did it to the point on these things that we have not done with the bureaucracies do not change routinely, regularly the requirements so that we are chasing a moving target instead of saying, ok, this is that. this is what we're going to get. after we get this, we will have another contract. the fact is, what happens is we keep changing the goal post. what i am wondering is -- you all have done a great job of looking at problems in the system. i am not sure that is a great system. i am not sure that the system -- when is rolling over towards these justified? that is like saying my dog ate the homework, but i get andan

a -- an a tomorrow, even though i didn't bring my homework the first day. i agree with incentives and parameters and good measurement indicators. i think we ought to move toward capital risk for those -- if you look at the major contractors for the federal government, they are doing ok. matter of fact, they are doing more than ok. they are making a ton of money off the taxpayers of this country, and they are providing a needed service. i am not unhappy they are making money. i am on happy we do not have a system that was their risk, which will drive innovation on their part. if they do not have capital risk, they do not. that is human nature. when is it ok?

why should they ever be rolled over? >> i think as the latest guidance mentions it to be, these are exceptional situations, and although that is not defined, i think one consideration is the contractor did not have an opportunity to earn a fee because of some event that did not occur at that point in time when everyone expected it to. the award was tied to a particular event. that is a decision that the judgment of the company would have to do. i am not saying that is the best answer, the only way, that you would think it would be an exceptional situation. >> my problem is -- what you want to do is have them come in with a contract and say there is no out for me on this. we have to perform. is the age old story on venture- capital less.

they fired half the people that the venture capital had. you know what happens? it either gets well or they withdraw all the funding. i think we have taken an attitude that we have done it this way, and we probably ought to look at, you know, a very stiff challenge, and an exception that only omb can approve of rolling over award fees, and saying, yes, there is something. this is not a problem in terms of purchasing. i would like to see those very much limited. it will change behavior. the fact is in the contrasting community, awards are easy to get. we ought to change it. we ought to go to the incentive that you are talking about with clearer guidelines so there is no question.

>> on rollovers, i think there are is one of two pads. one is an outright ban. if it is not a band, it has to be truly an extraordinary -- if it is not a ban, it has to be truly an extraordinary event. >> we are joined by the senator from missouri. we are delighted to see you. we have also been joined by dr. jerome lewis from the university of delaware, who was one of my professors when i was a young m.b.a. student. her daughter just recently graduated from university of delaware. delighted to have you here.

let me recognize senator byrd. >> -- let me recognize senator burris. >> thank you. mr. chairman, were those 2005? 2007? thank you, senator. what is the biggest concern that gao came away with? what are the recommendations for turning that around? for example, in your testimony, the gao found the agencies had not found and mechanism for evaluating effectiveness as a tool for contractor performance and achieving desired outcomes? >> that is right, senator.

that was one of our recommendations that gets at the heart of the issue. if you are using this as a vehicle, how you know this is incentivizing the contractor to perform as you would like. one of our biggest concerns -- in part, we have seen the cost plus award fee contracts being applied in a way that is not in the best interests of the taxpayer. we found that, one, we talked about having unsatisfactory performance in getting nothing or something. we have found in cases where they perform satisfactorily, one to get up to 85%, 95% of the award fee. in the situations, what is left to incentivize contractor performance? that is not much of an incentive if you are paying them over 90% for satisfactory. i think our report points to the way the this is being applied

across the agencies -- this is one of our biggest concerns. i think the guidance needs to be improved at the agencies. this will reflect a lot of the commentary in the 2005 report. we are getting a lot of the key things that need to be done. do not pay a contractor for unsatisfactory performance. rollovers should be on an exceptional basis. frankly, really what we have asked is the agencies themselves figure out what would make the most sense, because we are hard- pressed to find examples of where it might make sense. i think alimentation has been a big focus for us -- implementation has been a big focus for us. he will not have satisfactory resolution until some of these agencies and has guidance as well. dod has shown in cases where they have produced results. >> dod was able to make

significant improvements after implementing recommendations from gao in 2005. what is inappropriate time line for other agencies to get on board with these practices, and what kind of guidance is can we in congress provide? should there be penalties associated with this? >> this goes to some of the work i have done in the private sector which is to take the best practices of one organization and apply them to others. i think dod's leadership on this -- change can happen and it can happen quickly. we are benefited in there are five agencies that represent 95% of the dollars. having those agencies' work closely together to share best practices -- having those agencies' work closely together to share best practices --

having those agencies were closely together to share best practices, we can codify and teach and improve as quickly as possible. >> what role can we in congress -- >> i think holding them accountable, the way you are today, is the best way to do this. five agencies represent more than 95%. >> being the former fiscal officer of the state, when you do that there are certain penalties you must pay. i do not know if those are federal rules or not, but having dealt with the state contract king arrangement, certainly, you cannot over-spend those nine items, or if you do, there is a transfer of funds. how does this take place? >> it is a train i do not know a

lot about. i can look into it. >> thank you. >i am done, mr. chairman. thank you very much. >> i think we're fortunate to have a couple of members of the panel have been auditors, attorney general's for the state. the expertise that you bring to us is very much appreciated in value. thank you. welcome. >> thank you, senator carper. >> can you give us some perspective on how we drove on in this ditch in the first place? it is striking that there is this sentence that reads as follows -- "this is now prohibits the payment of the award fees for unsatisfactory performance." where i come from, that would be

a head scratcher? how did we get to the point where we began paying award fees for unsatisfactory performance? how did that happen? >> it is difficult to generalize, the one thing that we noted, just in recent work, as some lovell, it becomes the way we do business. i know in one particular location, an air force contractor had been getting fees. and the government said they were not going to give the fees and roll it over to the next evaluation period, and the contractor can back and said, you know, can you roll it over? they said no. there is a culture change with respect to how this particular contract vehicle is being applied. >> it is interesting to me. culture change would never have happened in the private sector. there would never have been i have it over the years that would have paid for bad

performance. i remember my first encounter with this was in the armed forces committee. i kept going "huh?" it was an amazing revelation to me. there was actually a formula they were using. i tried to get to, who decides what this formula is? it became obvious to me that it was just one of these regulations that was put in place that no one was taking seriously. they were going through the motions of doing some kind of contract valuation -- evaluation, but there was always the same outcome. there was this mentality that there was this paperwork we have to do, but once we get there, we do the paperwork we have always been doing. are you saying that has changed at the department of defense, or have they put more regulations in place? >> i think they have improved

their guidance, and based on initial steps and things that we look that -- we looked at, we did see the ship starting to turn, so to speak. is solely concerned that our work showed that the job is -- i am it also concerned that our work show the job is not done. we need to train a work force and make sure that contract activities are executed with the guidance. >> one of the many challenges, as you report found out, you know -- dod makes an octopus look like it does not have many legs in terms of contracting. they are not in sync. they are not following the same guidelines. they are not observing the same rules and conduct, based on -- just in the air force you have

different confecting commands that are not doing the same thing. -- different contract in commands that are not doing the same thing. in your work, did you find a contract where they were denied a performance bonus? >> yes, i did. i would probably have to go back to the record for specific examples. i believe we did have some. >> that is good news. because that has been typically anneal in a haystack -- a needle in a haystack. are you all clear, as you prepared for your challenging job, are you aware of any contractor for any -- of any contractor who has successfully sued for performance bonuses after being told no? >> that is not something i have looked into. >> are you aware of any? >> it is my understanding that

the use of award fees is unilateral, a situation with the government where the government looks to incentivize in certain areas. it is a unilateral decision on the government whether they pay a fee or not. the contractor may come back and say they have more information, but is a government decision. >> would there be something that would be too radical about saying we are not going to do anymore award fees in government unless it is based on objective criteria? mr. zients? >> my instinct is there are situations where they do apply. >> can you give me a list of objective criteria? >> something that is research- focus. if you had a fixed-cost contract, it would be 100%.

if you were to take 85%, and put a piece at risk, so if the contractor underperforms, you pay 85%. if, however, the potential is 25%, you routinely paid 25%, then you have not protected the government's interests. when applied correctly, by putting some of this at risk if there is unsatisfactory performance or only satisfactory performance, the government should have protected its interests by paying less than it would have under a fixed-fee contract. i think you want to minimize these in only apply them to situations where you cannot define the objectives of fronts and measure them. i think we have to be careful, because it is easy to default to a contract of this type, so we have to make sure these are only used in these situations where you cannot define

objectively up front. >> if i can add to that, some of our past work has also indicated that. you have to go through the kos -- through the thought process of risk assessment, whether this will give the government better opportunities to enhance performance. you also have to consider things like administered the costs, do they always the benefit of using this type of vehicle? we have done work in iraq where an award fee was used for certain types of contracts, and there was difficulty in having the award fee and being able to discuss whether the contractor had performed enough. you have to understand the environment you're going in. . .

>> in the hearing i sat through the day that i thought the top of my head was going to pop off of my body because i was so frustrated and angry -- it was unbelievable. it was just unbelievable, this hearing about the contractor's performance and what they have been paid as performances. if it is not a time consideration -- we are getting help on the cost here if it is cost plus. under what circumstances would they be -- >> they have an award bonus component to them. if it is not linked to performance, we should all go

get very angry. that does not mean that there is no place for these types of contracts. then, they have to be implemented in a way where the award fee is tied to the contractor's performance. >> i think the best example -- i am not sure if you have talked about this -- there have been a number of hearings about it. the company that acquired the showers that killed our soldiers -- they got a performance bonus for that contract. the managed to kill american soldiers. if there is any dated you get discouraged about how important your work is, we have to change the way we do contracting in our country on behalf of the public, think about that example. it will keep your passion where

it needs to be. thank you, mr. chairman. >> thank you for joining us and for your passion in this. have you had a chance to look at the testimony from the senate panel? >> no. >> yes. >> you might not be here when they speak, but if you have a comment that you would like to share with us, we would welcome that. >> i will repeat what we said before, which is it is very focused, five agencies. there are varying degrees of progress overall. there are some best practices and there are some worst practices. we should take it vantage of the fact that there are only five agencies. we should figure out what is not working and teach that and make sure that we eliminate that as fast as possible. >> in my opening statement, i

mentioned the airforce issue that said that a contractor would have to do pretty badly to receive less than 85% of the award fee up for grabs. i think beyond that, when department of homeland security official gave a contract award fee despite saying that the actions were egregious. my staff tells me that the agencies pay contractors on average more than 85 -- more than 85% of the reward fe. the agency must still expect that they will be giving contracting award fees in almost every. . the question is whether they get a couple more dollars tea or their print this will be the last question i am going to ask you.

if this is true, are they being used the way that they are intended? >> performance is not at the far end of expectations. 85% would correlate with a strong performance. that is clearly not the case. tying these award fee percentages more toward the exact performance is essential. >> why do you think this persists that a number of big agencies or departments? >> our work clearly put the spotlight on the department of defense back in 2005. i think it is a situation -- some of the people at the agencies had not even see the guide -- had not even seen the guidance that was there.

i would say that is a major factor. the work that we have done in 2009 has raised the issue more broadly. 95% of the dollars -- i think this type of forum where we are discussing these issues -- your point of another panel where the agencies are appear. there are able -- ample opportunities to look at what they are doing with response -- in response to our recommendations. >> if you look at department of defense, sometimes we think of the secretary is the person who basically is making sure that it is running on schedule. the deputy secretary is probably more responsible for that in the secretary. the person who is deputy

secretary of defense in 2005 was the night -- was not the same person who was deputy in 2007 or 2008. what we have in a lot of these senior jobs, we have a fair amount of turnover. maybe somebody is a deputy secretary in a fairly senior position that is responsible for this area. they may not even know of the concerns that have been raised. it is the kind of thing that you have to be very persistent on. >> i think that is right. i also think that we need to make sure that we wire in these changes that they last -- so that they last from changes of leadership. setting the tone of the top is absolutely correct. once we have changed, we have too hard wiry in through better training and education so that

as we do have turnover of senior positions, we do not step backwards in any way. >> i was talking to one of my colleagues in talking about how over the last eight years, we have increased our nation's debt by adding more than we actually increased in the first 200 years of our nation's history. it is important for us taxpayers -- for the taxpayers to expect that we're good stewards of their money. the omb cannot do it by itself. the inspector general's cannot do it by themselves. we cannot do it by ourselves. to the extent that we're working on this together, making sure that we have clear guidelines from all when the, making sure

that we have appropriate training for people managing these contracts, making sure that there are best practices from one agency to another and we can share among the relatively small group of agencies and making sure that we're doing our job in terms of oversight. taking to test those who are not. the word far has been used as an acronym. it reminds me of an old canyon saying if you want to go fast, go along. if you want to go far, go together. we want to go far in terms of making reductions in the appropriate award fees. we appreciate your presence here. and we continue to ask you to

keep up your efforts. thank you for your time. i am going to ask our second panel of witnesses to come to the stand. thank you, gentlemen.

>> it looks like you are going to get some water to drink out of this. that is about all we have to offer you today aside from a warm welcome. our first introduction -- if i pronounced your name correctly -- i hope so. mr. assad serves as deputy undersecretary for acquisition and technology for the department of defense.

the naval academy graduate 1972. those are great credentials. we thank you for your service to our country. mr. bill mcnally, associate -- assistant administrator for procurement and deputy chief acquisition officer. a 26-year-old military career at the united states air force. working on military procurement issues. have you ever in to dover air force base? >> no, sir. >> we thank you very much for your previous service in the air force. our third witness, acting chief

procurement officer for the department of homeland security. one of the largest and most complex acquisition programs in the department of homeland security. thank you for joining us. our fourth witness is mr. edward simpson, director of the office of procurement and assistance management for the department of energy. you have been there since 1979. you have worked in a variety of contracting and procurement- related departments for the industry. our final witness is mr. alan chvotkin, executive vice president and counsel of professional service council. your entire statement will be made part of the record. try to sum up in about five minutes.

thank you for coming today. senator? >> i would like to know how long they have served in their respective positions. >> if you begin your comments, please. briefly incorporate that into your comments. please proceed. >> members of the subcommittee, i have been the director of defense procurements since april, 2006. that is when i came on board for the department of defense. members of the subcommittee, i am the director of defense procurement and acquisition policy. i mostly serve as the deputy undersecretary for technology. i want to thank you for the opportunity to participate in today's hearing, examining whether federal agencies are effectively using cost plus to

incentivize contractor performance. the department recognizes it is important to the taxpayers that we effectively deliver assistance and services that exceeded expectations. over the past few years, there has been a sea change within the department in the way award fee contracts are employed. spurred by the general accounting office regulations, we started making changes in 2006 and 2007 and made the necessary improvements to our award fee practices. we have instituted the statutory provisions enacted by the congress that require us to link award fees to outcomes, to define the circumstances in standards for paying out award fees based on contractor performance and ensure that no

award fee is paid that is less than satisfactory. as secretary gates has testified, we must write contracts that incentivize proper behavior. to the extent we continue to use a war fee contracts, we're focused on outcomes and results and not on process. when important safeguard is a requirement that we establish that all costs plus award fees must be justified. by elevating the approval to this level, we insure the senior leadership have thoughtfully considered what should be selective use of cost plus award for the orangemen. the requirement for a thorough review of incentive arrangements, particularly

awarded by fee criteria. in the prewar timeframe, we looked to ensure structures of that objective criteria will be utilized whenever possible to measure contracts performance. most begin by engaging the program manager to understand that appropriate incentives are built into the contract. in the post-awards time friend, we look to ensure award incentive fame's consistent with policy. the department is without doubt, moving away from the use of purely award fee contracts and 60 use incentive contracts that include a mixture of incentive and reward fees. our analysis of the 2008 award fee data, there were only [unintelligible]

in contrast between 2004 and 2006, each year, at least 65 award fee contracts were awarded. in those limited cases where cost plus contracts were appropriate, only subjective the violation criteria are possible or it is not feasible to have predetermined objectives are criteria, award fees must be linked to desired outcomes. thank you for the opportunity to address the use of award fee contracts. >> thank you very much. we will be asking you -- you talked about the declining award fee contracts over the past couple of years. one question we will be asking you is, is there anything that those relatively few contracts awarded in the last couple years -- what are they appropriate? >> please proceed.

>> in answering the question about my time at nasa, i came to nasa and october, 2005 to be a special procurement advisor for the exploration system that was just starting. in august 2007, i assumed the position i currently have as assistant to administrator for procurement at nasa. nasa is unlike civilian agencies. we involve space exploration systems and space operations. we have one thing in common. they are high-risk. this is because nasa is pushing new boundaries of technology and science. there are many challenges involved in managing an performing high-risk projects

and missions. they are full of uncertainty and challenges. they involve high-risk acquisitions. nasa utilize his award the contracts. nasa uses award fee contracts when important elements of confirm -- of performance cannot be objectively measured. in this case, most elements of contractor performance can only be evaluated using these criteria. the actual award fee of earned by the contractor is determined by rigorous process. a performance evaluation board made up of many functional disciplines is established to evaluate the contractor's performance. this board submits in a valley which report to the fee determining official who determines the fee for a particular award fee. under nasa procurement policy, a contractor will not be paid any award fee or base fee for less

than satisfactory overall performance. nasa's policy requires an approval process to be determined before an award fee can be used. a cost-benefit analysis compares the additional costs against the expected benefits. nasa's policy requires that award fee contracts contain clear, and ambiguous, and measurable technical performance requirements of the contract. the linking of award fee contract criteria to acquisition outcomes and ensures that the contractor has the incentive to control costs while providing a high quality supplier service to the government in a timely manner. nasa has implemented tracking of

award fee as part of its baseline performance review process. this review is an independent monthly -- monthly assessment of selected nasa program and projects. it updates the nasa senior leadership about contractors performance as measured against the approved baseline for the acquisition. as part of this review, the award fee ratings on selective programs and projects are explained and discussed relative to current performance levels. this review is done to ensure that there is consistency between the performance of the projects and programs with associated award fee scores. nasa is part of an interagency working group that will be evaluating the effectiveness of award fees as a tool for improving contractor performance and achieving desired outcomes. this working group is also developing methods for sharing information unsuccessful incentive strategies.

we are actively participating on this injured-agency working group in our looking forward to implementing the eventual recommendations from this group. thank you for the opportunity to appear before the subcommittee today. i will be happy to respond to any questions you may have. >> thank you so much for your testimony. >> members of the subcommittee, thank you for the opportunity to appear before you to discuss the department of homeland security contracting program and in particular, its use of award fee contracts. i have been the acting chief procurement officer since this january. previous to that, i can to the department as a deputy chief procurement officer last may, may of 2008. as the acting chief procurement

officer, and the late executive responsible for the administration, oversight of the acquisition programs. in that capacity, i support and procurement offices. the mission of my office in conjunction with their respective contracts in offices has been to provide the needed products and services to meet the mission. the threats we face are variable. the acquisition program must be able to adapt and identify a variety of solutions. similarly, the contracting officers must assess each procurement and determine the right kind of contract. based on various factors including the complexity, the contracting officer selects a contract and type that recognizes performance risks to successfully meet the program's objective to include cost, scheduling performance, or a combination thereof.

one of my priorities is quality contracting. the office of chief procurement officer is responsible for the development in the establishment of procurement policy for the operational contract activities. the regulation in homeland security acquisition manual were published in 2003 and have been updated to reflect current statutory, regulatory office of federal procurement policy and mandates. these two documents provide the foundation for procurement policy that is adhered to by the region by each of the 10 policy organizations. the contract type working group and the incentive working group are included. with respect to our policy,

karen guidance is effectively consistent with guidelines. it includes an emphasis on criteria of performance, successful performance, and exceptional use of rollover. it is not effective unless the work force is understanding the implementing guidance. we utilize the full variety of contract types prescribed for in support of our acquisition program. the preponderance is because of fixed price. it includes 70% of awards and 50% of our dollars. however, not all requirements are suited to fixed-price contracts. in those instances where it is difficult to determine objective performance measures, they provide a business strategy that allows the government to develop

areas of emphasis and establish ofworthy pool to meet the government's requirements. the fee structure includes a base fee structure that comprises the total potential fee to be harmed by the contractor. if the government's of body weight and is positive, a percentage of the award fee pool will be awarded based on the criteria. as a result under a properly structured contract, the contract that performs significantly may are in the same or perhaps more fee it may have used. conversely, a contractor below satisfactory will or only a base fee which is significantly less than what they would have burned if it had been a sphinx -- a fixed fee. it is a positive and negative incentive. a contractor may earn substantially less than a fixed fee contract would have

possessed. i thank you for the opportunity to testify before the subcommittee about our use of award fee contracts and i'm glad to answer any questions. >> i have been at the department of energy since 1979. i have been in my current position since february, 2006. i serve as the senior procurement upset -- executive for the department of energy. >> please proceed. >> mr. chairman and members of

the committee, thank you for the opportunity to come before you to present the views on the recent u.s. government accountability report entitled federal contracting, guidance and reward fees has not consistently been applied. i want to talk about how we have implemented the guidance and the appropriate use of incentive contracts. it is the largest civilian contract agency based on fiscal year 2008 obligations or approximately $25 billion. a central element of the contracting structure are the central contracts. they have their origins in the manhattan project. these contracts for the management and operation of government-owned national scientific engineering and

research facilities are unique in all of government and require a special authorization by the secretary of energy. many of the scientific and research facilities are also federally-funded research centers. the laboratory contracts were the focus of the review of doe. because of the scope of these contracts, they are cost- reimbursement contracts. we award other contracts that represent the full range of cost reimbursement contracts for goods and services typically acquired by most federal agencies. in the study, gao noted to positive aspects of the cost plus award fee contracts. limiting the use of rollover,

supplemental guidance is in accordance with omb guidance. gao noted that doe should strengthen its policies, emphasizing says factory performance. shortly, we will issue a policy that strongly emphasizes performance results. it is language that is unambiguous. the policy for the use of award fees and its major contracts in appears to federal acquisition regulation requirements. there is, however, came before consistency and ritter. we should incentivize the contractor to perform as an excellent. i support the recommendation that it has established definitions of performance, associated fees, and skills that motivate performance and

prohibited award fees for unsatisfactory performance. in closing, the department's procurement policy insurers it is effectively using contracts to incentivize excellent contract performance and is in line with the omb guidance from to her -- from september, 2007. we will address the concerns raised by gao and recognize that major program fee requirements need to be tailored to the different mission portfolios and contract objectives. specifically, we will issue expanded guidance on choosing the contract type, defining rating categories, defining standards of performance, and the fee paid for meeting the standard. we're committed to work with and participate in an intra-agency working group to be established to determine how best to evaluate the effectiveness for improving contracts performance.

this concludes my formal remarks. i would be happy to respond to your questions. >> thank you. >> thank you, mr. chairman. i have been a congressional services council for nine years. prior to that, it has been 10 years as a single -- as a senior counsel for an organization that is now part of united technologies. thank you for the invitation to testify before the subcommittee today. our association members employ hundreds of thousands of workers in all 50 states. performance matters. both government agencies and contractors need to understand contractual -- contractual relationships. it is also appropriate to look

at the business relationship between the government and contractors. fortunately, there are many fallacies about awarding the contracts. this myth ignores the incentive nature when used properly. a second myth is that the award fees paid even for a contractors satisfactory performance. this ignores key elements of a plan that structures the outcomes to be achieved. it fails to recognize that prior to recent legislative and regulatory changes, satisfactory performance often meant that the contractor fully perform according to the award fee criteria, not merely complied with basic contract requirements. these are different contracts to

compete for. the challenge for the procuring agency is to describe the minimum performance of the contract and describe a the corporate motivational objectives, whether they be quality, timeliness, cost management, or others. second, the award fee plan must be directly related to the objectives to be accomplished and measure the intended performance objectives. finally, there must be governmental personnel. a contracting officer does not normally have these skills. this is yet another example of the skill shortage that is too often evident. here's another important factor to put on the table. a federal acquisition regulation provides an award fee contract should have to important components. a base fee and an award fee that a contractor may earn. according to the federal budget

scoring rules, when an agency provides a base fee, the agency must score that amount has an obligation. over the past several budget cycles, they were directed to minimize their contractual spending. they shifted funds away from traditional base fee amounts. the allocated more funds in the award fee portion of the contract that would be obligated only after the fee determined. simply put, budget rules helped to drive contracting practices. finally, once the award feet was established, it must be adhered to by all parties. the government has a responsibility to fairly evaluate the performance against the award fee plan, make a

justifiable determination and pay accordingly. too often we hear about a disease delaying their review of the submission or failing to make any determination. by breaking faith with the contractor over the award fee, the agency has put contractors and greater financial risk. in conclusion, cost plus award fee contract in is inappropriate contracting tie. an agency should have the flexibility to accept this contract types. agencies must also have the flexibility to implement that guidance in a manner that takes into account specific requirements and market needs. the five agencies identified in the report should insure that the december guidance is

implemented. and sent for the regulations already in process, we should give these agencies an opportunity to take the administrative actions they took today, implement their own guidance, and give the acquisitions process a chance to work. i look forward to any questions the subcommittee might have. >> thank you for your testimony and giving us a different perspective on this important issue. i'm going to ask this of each of our panelists. i would ask you to go back to what the witnesses in the first panel had to say. is there anything that they may have said that you disagree with? think about that for a moment. one of the department's that we invited to participate today is the department of health and human services.

i'm wondering if any of you can share with me who might have been inappropriate person to come from hhs, may be the chief procurement officer. >> they have, i believe, a management-type level. in the department of homeland security, we have an undersecretary for management. they have a chief procurement officer for hhs. >> that is a great coincidence. actually, she is your wife. you could wear both hats. next time, she could come and testify for both agencies. of those a great coincidence that we had one family representing both of the departments.

is there anything that you would like to revisit? >> mr. chairman, not really. we kicked off the change that we did because of the gao findings. >> anything that you take issue with? >> no, chairman. the two issues that i will bring up that are really critical is to establish a consistent policy, which we are going to be working on with the senior agency working group and set up guidelines in the federal regulation. then comes practice. what do agencies actually do with the guidance that they have? of the one thing that i would ask is that agencies to allow to

practice the appropriate type of contract based on their missions that we continue to be allowed to appropriate contracts based on those. >> anything that you would take issue with from the first panel? >> i do think one of a larger challenges would be in the area of trying to figure out a way of determining or evaluate the effectiveness of these contracts. that is something that we will have to find out. what will the data truly show us is going to be a difficult thing to get through. >> we find in some cases, federal agencies collect a lot of data. the question is, what do they do with it. anything that you would like to speak to? only if you want us to hear you.

>> we agree with recommendations. in looking at the regulatory framework that is under development, there is always a risk in creating such a prescriptive regulatory framework. a contract is a business relationship. agencies do need the flexibility to manage those with rigor. the other issue that would confirm -- concern me is creating an over-burdensome system. they are already burdened with a number of responsibilities. i think the i information is good to get. i think we need to be careful that we are not creating more work on an already distressed workforce. >> thank you. >> i am not sure i know where to start. i think primarily tthinkhe gao

continues to perpetuate the answer that there is a difference between performance of a core requirement and incentives that agencies are trying to achieve it through an award-fee process. if we talk about mixing contract performance with performance against an award fee plan, they mask the real differences and the intention of that whole process. i think performance matters. the selection of a contract type is critical. it is evident that only five of all of the federal agencies are using 95% of them. blunt objects spread across all federal agencies might not be what is necessary, to take your point earlier.

four of the five agencies are sitting right here. we may not need a lot more regulations to assemblage the objectives to 95% of the government. it might not be worth the effort. >> one of the things that we discussed in the first panel was this idea of creating an informal mechanism to share best practices. you suggest that perhaps there already is an institute. nasa is participating in it and it is already beginning to work. would you just clarify that for me? >> there is an intra-agency working group. i have a member of my staff who is on it. right now, they're actually

waiting to look at the federal acquisition regulation change to then decide what further guidance should be put out to supplement the regulation. even internally in some agencies, there is a challenge of getting out best practices. with our technology that we have available today, there is no reason why we should not share best practices among our agencies, but also across the government. as mentioned earlier, if 95% of award fee dollars are with five agencies, we should be getting together and sharing best practices, not just on award fees, but also performance incentives as well. >> my time has expired. senator burris coming you are

recognized. >> thank you, mr. chairman. the reason i ask for the time periods, i was assuming that the gentleman here were relatively new at their positions and that you would begin to undertake these major changes, hoping you would see some major improvements once you all began to wrestle with or begin to implement some of the suggestions. mr. mcnally, i was a little bit concerned. there was never given about how many award fees the department of defense had been dealing with. he gave us a percentage of 70% of firms fixed, which is about 50% of your appropriated dollars. do you have a number of how many contracts their work -- not a

percentage, but a number. >> in 2008, we had 183 contracts that were active award fee contracts. >> out of how many? >> out of 2120 contracts. >> in the same time frame, as far as action, 68% or fixed price actions. >> under the highway structure, i recall in illinois where when we repair all of our expressways, there are bonuses that are paid for early completion of projects. i'm just wondering, in any of these arrangements, are there any penalties involved -- in

those contracts, there are also penalties involved. you have probably an offset. i just wondered whether or not there are any types of penalties in putting to any of these contracts that you deal with four light performance, ms. performance, or inadequate performance. are there any type of penalties that are put on these contracts? >> senator, i think you would see very few -- i would be surprised if there were more than a handful of award the

contracts that had penalties associated with them. we are looking across the department at the appropriate use of what you would familiar larry call liquidated damages or penalties for late completion. we're looking at that right now. >> anybody else? >> in an award fee contracts scenario, i have not seen the use of an actual penalty. in the area of an incentive fee contract that the value waits cost performance, you can see scenarios where the contractor not only can make money, but they can lose money. >> you mean take away from what would be their profit that will end up -- >> it would be on the negative side if they performed so poorly. that is in objective scenario.

>> we have a contract clause entitled conditional payment of the. it is linked specifically to the environmental safety, health, and security matters that provide a graded approach based on severity of the infraction that regardless of what the contractor turns during the rating against the performance rating plan, the fee determination official can take a portion or all of the fee based on the severity of the infraction for that rating for violations of safety, health, and certain security aspects. >> this is a general question as well. in terms of budgeting, how do you cover the cost overruns? if you get a budget line item or

budget item or a missile program or a jet fighter program and the program's start going into the millions of dollars in cost overruns, do you use supplemental appropriations to transfer funds? how do you cover these in your budgets? >> that is problematic. in fact, what happens is, other well-performing programs are sometimes crippled because funds have to be transferred from one project to another. other times, we have to request additional funds for contract performance. so, contract overruns, especially in significant amounts are particularly problematic. >> i heard senator coburn read off a list of cost overruns. it just happened recently.

are any of those in your agency? >> he mentioned the international space station. >> i believe he mentioned a contract back in 2004 from the department of defense. >> did you have to come back to congress to get more money or were you there when that took place? >> i was not there. >> i was not there during that time. >> a good time not to be there, right? how about you? >> i did not hear any dhs contract listed. >> i did not hear doe mentioned? >> i am not saying that we do not have contracts with cost overruns.

>> i practiced his name for days. >> just a word of caution on cost overruns. again, the implication is that all of that falls on the contractor side for the cost overruns. while the gao report and some of the items had big numbers, many of those are a result of program changes, schedule changes that the government makes. some of them are quantity changes. there is a mutual responsibility. not all that falls onto the contractor. i'm certainly not suggesting that contractors have no

responsibility for performance. >> just one question, mr. chairman. does the contractor have to eat those -- >> they bear the full cost of performing the contract according to requirements for that price. >> i'm not talking about change orders or any agency that is ticking on a different direction. that loss is absorbed by the contractor. >> yes, sir. 70% of all of the contracts are awarded on a fixed price basis. >> thank you, mr. chairman. >> thank you, senator burris. to have senators like you year,

i thank you. let me turn to the issue of rollovers. contractors are given maybe three bites out of the apple. let me start with you, mr. assad. your experience with rollovers, is it less frequently? >> it is definitely trending to be less frequent. >> all right. >> nez a's policy and practice prohibits the use of rollover. >> how long has that been the case? do you know? >> i do not know. >> since before you arrived? >> yes, sir. >> i share the same concerns

with respect to the use of rollover. i actually recently issued guidelines that said it would only be used if approved by myself. >> mr. simpson? >> doe has a similar provision that requires my approval to use rollover feet. it should not be used to give the contractor a second bite at the apple. there may be appropriate uses of rollover if there are accelerated and new requirements. it is in the agency's interest to use that fee to moderate gain -- to motivate the contractor. >> we have had hearings in this room before in talking about among other things, cost overruns in it projects. one of the things we have

learned is that sometimes, agencies are outlining what their needs are. it is not very clear at the outset. they might not have a very good idea of what they will need for a contractor. their objectives initially stated get modified as time goes by. you have a contractor who might be chasing an objective that continues to change. sometimes, we use award fees when they have not done the job that they should have. they changed the scope of that project. to try to find a way to compensate contractor for chasing that moving target.

does that sort of thing go on? is that conjecture on my part? >> that is not conjecture at all. i think that is one of the fundamental reasons why you are seeing a significant reduction in the use of award fee contracts in the department of defense. there are numerous contracts that you can go back and look at historically. you see that particular situation that you are describing occur. we're stepping back from these things and insisting that contract planning and a real outstanding understanding of the risk structure before we get under contract. what you have described is the reason why -- in fact, the use of an award fee contract at the department of defense will be the exception rather than the rule. >> does anyone else want to make a comment on that? >> yes, mr. chairman.

there are three important for imports of setting up a contract. the first is to identify, what is your true requirement. at nasa, what we have set out is, we call it zero base requirements. in other words, we identify what outcome we want. we only put requirements in that support that outcome. we are not spending money on requirements that really needed. the second thing is to have the available resources. stable funding to support what you want to do and what you want to buy. the last thing is to select a vendor who is going to do the work that you set out within the contract. to me, those are some of the three important things on any acquisition. >> i have also heard that a fourth criteria would be to have people at the agency who are capable of monitoring