you can get it at a 5% interest rate and reduce the principal by $50,000 or $100,000 to get closer to the current value of the property. >> the whole issue of the interest-rate is a fascinating one. we are price stretching it too much. i am hoping that everyone considers the fact that if we do in fact move to 2% loans for a large segment of the population, financial difficulty, etc.. i want to point out that someone will be holding those notes. when interest rates suddenly go to bloom in the next few years, whoever is sitting on that paper will have catastrophic losses. fannie mae, freddie mac is

ensuring this. we have to be very careful of the implications of what we're doing. >> the people who are holding those notes have been the greedy ones. i don't mind them losing because they get greedy and the first place. >> if pension funds and the federal reserve are the greedy ones. >> i don't think so. t not what you call the greedy folk. it's going to the folks around the world who suffer when we get inflation and interest rates going up. >> okay, thank you. >> next the chair recognizes mr. miller for five minutes. >> thank you mr. chairman. i was puzzled by mr. royces questions that would have on voluntary modifications. the congress did something very similar in 1986 to what we've proposed with respect to how

mortgages. to allow modification of mortgages on farms. and it would reduce the amount secured to the value of the collateral, the value of the forum which is all that really is secured anyway. treating the rest has been secured and then set a term and interest rate that's a little bit above prime. my impression from that. is that the modification voluntary modifications took a huge spike and that the total number of modifications by courts with a relatively small percentage but it provided a template for other modifications. ms. morgan was very tip and volunteer modifications? >> no, there was not a dip in volunteer modifications. in a number of states around the country, until a supreme court decision on this topic ministates permitted the right, the so-called koran down a principal residence mortgage debt and bankruptcy court and

those states didn't have any different situation with respect to the cost or availability of credit in the states that didn't have it. bankruptcy is a very difficult process for an individual or a family. chapter 13 bankruptcy is onerous. you have to live under very strict plan. you are monitored by the court for five years. this is not a choice that anybody chooses lightly. we have two situations now. we have the situation and that the voluntary modifications are not happening and that it is all utterly out of control of the home over. they have no last resort that they can initiate themselves which can serve kind of as a backstop to the servicers responsibility to help them try to address whatever problems they are facing with the mortgage. so on the one hand, having the ability of the bankruptcy judge to help a homeowner out if a homeowner a last resort. we have another situation and

that many of these distressed homeowners are distressed generally and already are filing for bankruptcy. they are already in bankruptcy court. it's just that the judge doesn't have the power to do the main thing that will actually ultimately make them successful and chapter 13 and able to continue to pay back all of their other consumer debt that they owe. which is that the judge doesn't have control over their principal residence. for those homeowners, one thing that's especially important is right now most hamp participating in servicers aren't permitting folks who are already in bankruptcy to do a hamp modification. so they are really stuck. they can't get the voluntary modification because the servicers don't want to do it for people in bankruptcy. but the bankruptcy judge can talk them out to there so those people are really locked out of the process. >> ms. gordon, you mentioned studies based upon the

differences from jurisdiction to jurisdiction between 1978 and 1994. there was a study by a fella named ludington at georgetown and i think he is a co-author who i think was that columbia. i think they were both economists and lawyers, bankruptcy lawyers that looked at the differences and found no difference in the availability of terms and creditors. were there other studies? >> there are not that many studies on this particular issue, but there are a number of studies, some of which we've done at the center for responsible lending, some of which have been done at unc and other research institutions. on related issues, the fact is that every time there is a program -- there's an idea to help homeowners, the mortgage industry will come back and say, well this program is going to impact the cost and availability of credit. and for every one of those -- every time that's been asserted,

studies have demonstrated it's not the case. >> and in eighth grade math class, we had to show our work. we just couldn't give an answer. we had to show how we got there. and i understand that the graduate level that's referred to as peer review. you have to set forth what your assumptions are, which are methodology was, what facts you allowed and then and walked to the analysis. and other scholars in the same spirit can look at it and test those assumptions. mr. sanders, can you give me a citation to a published peer reviewed study that shows judicial modification makes volunteer modifications more difficult? >> that's a very good question. and i will send it back to you saying that we are, as laurie has testified to, such uncharted waters that all that matters is that a 50% decline in house prices will see how this works. no, i have no evidence that ms. gordon was referring to that this was going to be terrible.

however, when we are with high unemployment and this far upside down then ministates or ten states in the united states believe that when i'll see it. >> professor sanders, isn't it true that on the bankruptcy laws every other kind of that is exactly the same way that the legislation we talked about last year would modify how mortgages? every other kind of secured debt? >> that is true. >> thank you. >> but there's a reason why mortgages were not included in knots. >> that's the only reason? >> i didn't say that's the reason. i'm just a mortgages are not included here that the statement did not a reason. >> okay. >> gentleman from georgia. >> thank you, mr. chairman. let me start with this because we are in just a terrible

situation here. i have had difficulty since we've been in this crisis understanding why there has not been the sense of urgency. now, we moved in good measure to save wall street. i had no argument with that. the credits were frozen up, we had to do that. but we did it with urgency. we did it with abundance. we did it with $700 billion. the fed came in with another $1.2 trillion. but when we get down to the homeowner, we cringe and we crunch and we worry about these things. we got outside the box to save the american economy, focusing on wall street. and did a good job with that, no question. but when it comes down to rescuing the homeowner, which in

large measure was the core cause of the problem, we stay in this box. why is it that we can't intelligently look at what i think is the foremost issue here? and that is reducing the principal. why is it, what is it about this? here we are at the end of this year. we will lose 2.5 million homes to foreclosure. right now two out of every nine homes are in foreclosure or default. this is a problem of catastrophic means. why can't we do that? why can't we stop the foreclosure procedures while the modification process is going on? these are simple things. i just have a problem understanding why we can't do

this. why can't we look at this whole modification program affordability program and understand that maybe 31% is too high, especially when people are losing levels of income. can somebody help me with this? let us start with the reduction of the principal. i'd like to know from each of you why we can't do that. what is the problem here? >> and i just ask one thing. i think the question to servicers in the model when they look at the affordable payment do they have the process in place to do the principal reduction as well as the interest rate reduction and then when it comes to be a major pro-program or hamp, why don't they encourage the principal reduction versus just the interest rate reduction because we see very few of those up there. >> well, there are a few

structural reasons of interest why servicers may not do this. one is that the biggest servicers than the one the service the vast majority of the loans are owned by the same banks of those who own the leaves of these homes, so they have a conflict of interest in terms of writing down the principal. servicers are generally making most of their money from their monthly servicing fees, which is a percentage of the outstanding loan principal balance so they don't want to write on the principal balance. there are a number of other financial conflicts, to that have to have a right to residuals or buybacks or any number of structural things in the servicing industry that push against this. and so the real question is why have we not been willing to require that this happens if we just leave it up to the bank's interest, the banks have

different interests. congress is going to need to require that this happens. and you are completely right that we have not put the energy into this issue, you know, the foreclosure crisis has basically been something of a 50 state katrina. you know, money out of the communities and leaving husks of neighborhoods in its way. >> ms. goodman? >> i want to second what julia gordon said. the conflict of interest between the borrower and the second lien holder is huge in terms of writing down rentable. and in order before you can have a successful principal reduction program, you have to explicitly address the second lien. and there's no other option other than extinguishment. you may want to pay the bank to distinguish the second lien. you may want to let them take a loss over a period of time, but that simply has to be done. another problem that is often come up in terms of installed

reduction is the moral hazard or strategic default problem. how do you keep borrowers who otherwise could afford to pay their mortgage from strategically defaulting or trying to take advantage of the principal reduction plan? and there's no single option here, but we have to think outside the box as you mentioned. yet you think in terms of shared appreciation features reducing all principal mortgages to be made with recourse. introducing an impact on credit scores, limiting future access to credit or ability to borrow against the property. you have to consider a wide range of ideas, but certainly strategic default ratio plays a very prominent role in people's minds. >> thank you. my time is expired. >> gentleman from texas. >> thank you mr. chairman. and the witnesses for appearing. the 327 and 228, are we still having a significant number of them to come to the process?

>> the bulk of those payment jocks are behind us. it's a pay option arm payment shocks that are left to come. >> and are we now finding that persons who had conventional loans, reasonable rates, are also starting to default? >> absolutely common negative equity is just a huge problem at this point. >> and is the problem one that you can with some degree of anecdotal evidence indicate that certain communities have experienced to a greater extent than others? >> absolutely. >> can you identify communities by way of empirical evidence that have had a greater shock

than some others? >> yes, but i also added that this is across the board in virtually every community and in every state. >> being embraced by every community and state, kindly identify communities that have have been hit by others. >> or the majority of the populationñi are hispanic. also in the committees where the median income is less than 80% of the median. >> whether by accident or design, these impacts that have happened to people, what will happen in terms of recovery for

these communities without some intervention? >> absolutely devastating. >> tell me about the loss of wealth. >> it is massive. there are other people who can actually empirically identify that and they should say. some empirical evidence. >> yeah, our research reports show what they call a spillover effect of the foreclosure, really in the hundreds of billions of dollars. and there's two types of spillover effects. there's a general reduction in everybody's property. >> are you talking about the communities that were referenced by mr. marx? >> gas. >> for the record, i need for you to identify the communities that you are talking about. >> largely communities that are african-american or latino communities are of lower income communities. the more lower, middle -- >> will these communities recover without some specific

intervention? >> absolutely not. >> is there an opinion -- to someone else have an opinion that you'd like to give with reference to this? anyone else? this is the moment. this is the moment to speak truth to power. you hear that phrase used quite a bit. people fear speaking truth to power. somebody has got to tell the truth about what's happening to certain communities in this country. this is your moment. ms. sheehan? speak truth to power. >> we have established our motor ship in the most hard-hit communities and are there to help people through those centers, in person, and address their needs. and that's the process we have used to think about how we can

best be useful. >> do you agree that certain communities are being devastated if not obliterated by virtue of what happened? whether it was by accident or design that this is happening? >> i don't have that kind of data here. >> without data, you do have anecdotal evidence. you are involved in this process, true? >> we are involved in the process. >> what is your anecdotal evidence connote? >> what are evidence and experience has taught us is there a communities where we -- >> are you afraid to say it, ms. sheehan? our minority communities being devastated more? >> minority communities are having problems. we know that. >> are there problems? >> i'm going to yield three of my minutes to the gentleman from texas so he can continue. >> thank you, mr. president.

ms. sheehan, let us not be euphemistic about this. let us not let our addiction prevents us from telling the truth. this is a moment in time when people need to hear the truth because we have people who are suffering. some are suffering more than others. if the minority community suffering more than some other communities? >> we know that we have an obligation to all of our communities including our minority communities. >> so you subscribe to the notion that a rising tide all votes? >> we have an accountability to help our customers. >> i assume this is true. let me ask you this, if a rising tide raises all boats and i'm putting these words in your mouth you can extract them if you so choose. why is the titanic still on the floor of the ocean? a rising tide -- i'm bringing this up because this is a prevailing theory that if we do

across the board to write a, we will help everybody and we don't seem to understand that some are being left behind, even with the best of intentions. we are leaving people behind. and this is something that i think god the nn are going to monitor and report on. because the way for peace persons to tell the truth we may not get the entirety of the truth. for whatever reasons we don't want to face the facts, whether by accident or design, some communities are suffering more and they are not going to recover without some sort of specific intervention. that's the truth. anybody different without truth, raise your hand. let the record reflect that no one has raised a hand. my final comments, mr. chair, if i may as this.

i beg you friends, let's get beyond splitting hairs and let's talk about how we are going to save this country. it's really weaker than any one group of people. it's about this country and we've got to do better. we've got to do better. all of these banks have got to do better. if you don't do better at some point you're going to force congress to drastic action that some would call an moral hazard because we have to have some means of having these servicers take the responsibility and do something to help people who deserve and merit health. thank you, mr. chairman. >> i just want to take ten seconds on this. it's also been my view that while the rising tide may raise goes for those people who can't afford a boat the rising tide is very bad news, in fact. the gentleman from missouri. >> thank you, mr. chairman.

thank you, mr. green. i am interested in order that i can read it and become more familiar with it, professor sanders, was there an administrative order or some kind of congressional vote that directed fanny and freddie to make bad loans? >> no, i don't believe there is any administrative order in asking them or requiring them to make bad loans. >> the only reason i ask that is because earlier you in responding to one of my colleagues accepted in your comments that have happened and went on to describe how troublesome it was.

we can try to get it read back. it was a question from i think mr. royce. you don't remember? >> i don't believe i would say that. i don't think danny and freddie purposely went out and made bad loans or were ordered to do so. is that what your question is? no, i wouldn't have said that. >> so that has to come up today since you've been here? >> i think danny and freddie were only mentioned and that's what i said. i think the comment was that mr. wirth said something like they had obligation with 50% of their product and subprime nep data problem. that's the comment i believe he said. i think it was to give subprime and all that if i remember right. >> and we did not have a chance to rebut the ongoing incorrect assertion that's been rebutted

by everyone from the board of governors of the federal reserve on down that the toxic loans that cause this housing crisis were primarily private loans that were securitized and the private securities markets. >> yeah, and are seen that. i hear over and over and over again that somehow either congress or president bush or somebody forced sani and freddie to bundle and securitized some bad mortgages. >> actually sir we had testified on september 12 of 2005 in front of congress saying that fannie and freddy should not be allowed to get in those products right there. no one forced them to do it and certainly the entities you don't see are the new centuries, the first franklin, in all those who abandon the forefront forefront of the predatory lending.

>> it doesn't matter how many people get thrown that notion that people are going to continue to say it. is that what ms. gordon, is that what you believe? >> yeah, it's hard to know how to stop that from coming up over and over when it's just been clearly debunked as a reason. >> mr. schakett, you know this whole term halo, another word hail it actually originated because west side of jerusalem for the landfill where they burned the trash the interpretation comes out of hail that is the first feel of what humans would be, burning and constant burning of the trash. and there are people who tell me they go to phone tree hell when

they are trying to talk with someone about, you know, their mortgage and trying to you, you know, get some kind of modification that they actually go to phone tree hell and that they are being their concerns their interests, their desire, their frustration of being burned standing on the phone. do you believe that we have been able to read out the fire in hell? >> no, i don't agree that we've put out the fire yet. our customers have had the ability to give the right answers. so i could appreciate your constituents being frustrated with that process. we continue to add resources and training and try to improve --

>> let me give the additional one minute and a half for biblical exegesis. [laughter] >> thank you, rabbi. i'm just concerned -- i'm wondering if the phone tree hell is one of the reason that 25% of the borrowers who come in for modification end up losing their homes. they can't even go through the three payment trial. and they lose their home right off. is there a reason for that or can the phone tree hell be part of the reason, either you or ms. sheehan. >> i certainly believe the phone tree problems are clearly frustrating for our customers. the only good news about that if it doesn't take them through foreclosure so although we may not answer the phone timely,

although we may have frustrated him, all those people are on foreclosure hold so no one is getting foreclosed because of it. that doesn't undermine that there's not huge frustration and we need to improve that. our most recent mailing that were mentioned earlier was we sent out 50,000 letters to try to say exactly what worse a missing from his customers and what it did to comply. so we took an attempt to make sure customers who didn't handle it knew exactly what we needed to down and give them an easy way to respond back to us to get these modifications complete. so again i appreciate that we frustrated our customers that we have not foreclosed on them in the meantime. >> gentleman from florida. then i'll just take my last minute i have to say this. we are terribly frustrated by what's happening. we will move forward on the unemployment. amassing a fossil of problems but i do think this is helpful and a bill that comes to the floor will have $3 billion to be

advanced to people who are unemployed to help them avoid it. we will continue but the most important thing is the point that the gentleman from california has consistently made. i went forward, this committee will make a very high priority has been legislation early next year that will prevent us from being and trapped in this again. it will have to be for any residential mortgage one-party that is solely, fully regally responsible for these decisions and people who want to invest in mortgages, people who want to make secondly in love, people who want to invest in the securitization will do so going forward, knowing that those rights are subject, whatever they have, to the responsibility of one individual to make those decisions because it is a terrible example of our violating a principle that to exist in the

system. you should not have things that are not easily identified by everyone. we will work with many of you going forward to make sure that we have that so that we will not have this shifting of the blame back and forth. beyond that, we appreciate this hearing and we will continue to press people in the administration as we will in this panel to act on some of the suggestions. we have statements to put into the record without objection. the ranking republican wanted to put in a statement. we also have a from the home ownership preservation, the nansenational council of la rza, the association of faith-based organizationsñi.

without objection, the panel's dismissed. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2009] . . conversations] [inaudible conversations] [inaudible conversations]

[inaudible conversations] >> we need people to leave take their conversations outside so we can get the panel going. no one should be standing still. they should either be walking or sitting. we will now turn to our second panel. we appreciate the attendance of the public officials who are responsible. and i did not follow you who are proceeding to asking the public officials to testify first.

it is not out of any lack of respect for their commitment and integrity of which we are appreciative but it did seem to me today would be very useful if we had heard from some of the questions, criticisms first and then could have them respond to them. and i ask people at the door to please leave. and we will now begin with herbert allison was the assistant secretary for financial stability at the apartment of treasury. >> chairman frank and members of the committee, thank you for the opportunity to testify today about the treasury department comprehensive initiatives to stabilize the u.s. housing market and support homeowners. the administration has made strong progress or anti-mapmaking home affordable programs. but even though the number of homeowners being halt continues to grow, we recognize that home affordable modification program or hamp faces challenges in converting borrowers to

permanent mortgage modifications and in fostering effective communications between servicers and borrowers. our most immediate challenges converting trial mortgage modifications into permanent modifications. services reports that about 375,000 trial modifications will be more than three months old and due to the decision before december 31. treasury has launched an aggressive conversion campaign to increase the number of permanent modifications. we have streamlined the modification process and required conversion plans from the seven largest servicers. treasury and fannie mae have assigned teams to work with each service are and to report daily on their progress. we are engaging all anyone hunted field offices and hundreds of state and local governments in the effort. we have enhanced our website to provide borrowers with a simplified way to navigate the modification process using instructional videos, downloadable forms, and an income verification checklist.

next week we will hold our 20th borrower events connecting servicers, housing counselors, and homeowners. in addition, we have brought in executives from the servicers four times to washington on including just yesterday to discuss ways of accelerating conversions. another challenge is helping unemployed homeowners. hamp is designed to enable many unemployed homeowners to participate. borrowers with nine months or more of unemployment insurance remaining are eligible to include that income for consideration in their modification request. we recognize however that some unemployed borrowers will have trouble qualifying. treasury is actively reviewing various ideas to improve program effectiveness in this area. while remaining focused on helping borrowers as quickly as possible under the current program. a third challenge is preventing foreclosures of homeowners eligible for hamp.

during the modification trial. , any foreclosure sale must be suspended and no new foreclosure proceedings may be initiated. we prohibit foreclosure proceedings until the borrower has failed the trial. india's been considered and found an indelible for other foreclosure prevention options. we are working with stakeholders to review, improve, and monitor compliance with our roles so no borrower being evaluated for hamp is subject to foreclosure during that process. a fourth challenges transparency. on august 4, our public monthly reports began including trial modifications by each service are. october's report added data on trial modifications by state. upcoming reports will show permanent modifications by servicers and measures of servicers responsiveness to borrowers.

we are requiring servicers to send notices that clearly explain to borrowers why they did not qualify for a hamp modification and how they can ask for a second look at their application. we will also provide additional transparency of the net present value or npv model and key component of the eligibility test. we are increasing public access to the mvp which includes the methodology. we are also working to increase transparency of the npv model itself so counselors and borrowers can better understand how the model works. hamp is on track to provide a second chance for up to 3 million to 4 million borrowers by the end of 2012. based on a recent survey of servicers we estimate that as the beginning of november at 21.5 billion homeowners are eligible for the program meaning they are both 60 plus days the link went and likely to meet the hamp requirements.

to put the current stage of hamp in context, we should compare the 1.5 million eligible homeowners to the more than 680,000 borrowers who are in active modifications and are included among the 900,000 borrowers who have received offers to begin in trial modifications. on average, borrowers and trial modifications have other payments reduced by over $550 per month, down roughly 35% from their prior payments. hamp has made great strides since modifications began in may, but we have a long way to go. we will continue to work closely with housing counselors, state and local governments, servicers, homeowners, investors to enhance the programs performance and to help keep americans in their homes. thank you.

[inaudible] >> chairman frank and members of the committee thank you for the opportunity to testify in the ftse and government response to the mortgage foreclosure crisis. mortgage is going to discuss and declining prices have been fundamental causes of absurdity. structurally unsound mortgages and historic were recruited financing has led to unprecedented increases in mortgage foreclosures. chairman bayer recognize the problem early on and strongly advocated for a program of systematic modifications in 2007. her proposal rested on a central premise. simply foreclosing would involve loans and would only add to the excess supply of housing, push down home prices and making mortgage credit problems worse. for a sustainable modification can be achieved, they reduce loss compared to foreclosure. it is only good business to

modify the loan. unfortunately, the crisis is shown that the large-scale modification that we need is hampered by contradictory and adequate resources and far too often a failure to take action as we approach to working with borrowers. in 2008, the fdic needed to implement these proposals advocated by chairman bayer when it was the federal bank which had tens of thousands of delinquent mortgages on its books. the goal of the fdic is modification program was to achieve the best recovery is possible by converting distressed mortgages into performing loans over affordable and sustainable over the long term. today, almost 24,000 borrowers have received ossification due to this program. the problem nationwide however is missed. while some servicers have been affected much more have been done. last fall the fdic in the gated we call mod in a box.

earlier this year the fdic applied as practical experiment and low modification and working with treasury and other agencies on recommendations for the home affordable modification program or hamp. the fda supports hamp as part of the solution. in addition, we continue to remain open to new approaches that may be necessary to respond to the scope and changing character of the mortgage problem. our loss share and agreements for failed banks require either the fdic model program or we have to continue to push for responses. for example, we burst temporary forbearance for borrowers that lose their jobs in recession. we also will provide gloucester in finance to support principle breakdance to the guys that values. the ftse's experience has provided a number of lessons learned that we would like to share with the community. i would like to emphasize one key points. laws that make good business sense and help consumers maximize recovery on troubled

mortgages. first, and foremost early communication and modification efforts give the best chance of success. success is much for likely if you contact the borrower earlier, give a mod offer and give them on for an experienced delinquency. effective communication with borrowers acquires an effective technology infrastructure, thorough staff reading and a consumer report or consumer service focus. second, the more affordable the modification below were the default rate. until recently, far too many mods actually increased the monthly payments. no wonder they often failed. we also matched must address the lanes as part of the problem. third, close working relationships includes borrowers bonds and modifications to success. not surprisingly, counselors have much more credibility with our worse. fourth, lenders and servicers must be flexible to address new challenges, problems caused by

job loss or water loans, we will employ new approaches. finally modifications should be kept as simple as possible so that servicers can apply a streamlined approach and borrowers can understand their options. throughout the financial crisis, the fdic has worked with consumers and many others to reduce unnecessary foreclosures in the devastating consequences they impose on our communities. low modification, refinancing, temporary forbearance for over borrowers and principal reductions are all tools to achieve these goals. we continue to support treasuries hamp as a major part of the solution but we all know we must remain open to new approaches for unemployment and increasing numbers of under water loans. above all, the fdic remains committed to achieving our core mission of protect the the policies and maintaining confidence in our system. thank you for the opportunity to testify today and i would be happy to take any questions.

.. in 2008, we initiated the mortgage metrics project to gain comprehensive, reliable, and comparable data on the performance of mortgages serviced by national banks. our mortgage metrics report, which is based on validated data from 34 million loans, assesses the performance of many foreclosure process these, including information for loan

modification efforts. it is a valuable tool. for example, in march 2009, in response to hire a default rates on modifications, we directed the largest national bank servicers to review their modifications and policies for future modifications to improve their sustainability. subsequent to that direction, we have seen both of the volume and quality of loan modifications and payment plans improve. during the second quarter, home retention actions, payment plans and loan modifications increased by more than 20%. we are still finalizing our next report. but we expect even greater increases by nearly 7% in the third quarter. ven greater increase in nearly 70% in the third quarter. actions taken under the administration's, affordable

modification program represent a portion of the homeowner assistance provided to date. national banks also help homeowners through programs that do not require taxpayers supporting incentives. between january 1st, 2008, and june 30th, 2009, national banks and thrifts is implemented more than 1.8 million helm retention actions. of these less than 115,000 were made under hamp. hamp numbers increased in the summer and fall of 2009 but still represent only a portion of national banks homeowner assistance efforts. in addition to the increasing volume the character of comb retention actions is changing. more than 70% of modifications made in the second quarter of 2009 reduced the borrowers monthly principal and interest payments. as a result delinquency rates subsequent to modification are improving in more recent

vintages. improving sustainability of modifications and returning far worse to a positive cash flow reduce the eventual foreclosures , provide homeowners and opportunity to keep their homes and minimize losses to banks and investors. the occ fully supports service participation in hamp and administration secondly modification program, but regardless of the types of programs implemented, national banks have an obligation to ensure that the regulatory ports and financial statements accurately and fairly represent their financial condition. on monday we issued guidance to our examiners stating that we expect banks to follow generally accepted accounting principles and maintain adequate allowance regardless whether a loan is modified. adherence to the sound underwriting practices including adequate documentation of the borrowers qualifications for and ability to repay modified

mortgage is essential. while home retention actions are improving we hear too many consumer complaints of lost paperwork, bad guidance, long waits and difficulty simply contacting servicers. the volume of complaints is unacceptable. we have directed national banks to improve operational efficiency to keep up with volume, improve their internal process these and answer the customer's concerns accurately and promptly. is part of our ongoing supervision, our examiners assess banks complaint resolution process these and require corrective action for identify deficiencies. at the same time, server servers need to improve operations other factors contribute to the low number of hamp charnel plans being converted to permanent modifications. servicers report consumers often feel to the kafeel to provide necessary verifiable documentation of ability and willingness to repay their debt. in some cases loans are already

considered affordable under hamp's debt to income guidelines and in other cases cannot demonstrate a valid financial hardship. increasingly the financial condition of many borrowers has deteriorated. so far that is not possible to modify a loan and meet hamp's net present value requirement. while hamp and others show progress we must be realistic about the continuing effect of high unemployment and depreciated home values. these macroeconomic factors weigh in on the performance of the residential mortgage portfolio and drive delinquencies and foreclosures. in these difficult economic conditions effective loan modifications will be an important tool to help responsible homeowners applied preventable foreclosures, but they will not help everyone. as a result, we will see further deterioration, low performance in the months ahead. my written testimony provides additional dcgggeóggggeógógóñmoc

i did have an opportunity to hear your testimony. i heard you describe the efforts that have been put forth by the treasury to talk with the services and to encourage them to do better.

mr. secretary, do you not think that is a waste of time? >> congressman waters, thank you for your time and your tremendous interest in this program. no, we do not think it is a waste of time. first of all, let me say as i had said in my testimony. we're not satisfied yet with how this program is unfolding. we still have a lot of work to do. the servicers have a lot of work to do and we're holding them accountable for their performance. i think we need to look at this program in stages. in the early stages, our main emphasis was on bringing in as many people as possible to this program to help keep people in their homes. now, the real challenges to migrate them from trial modifications to permanent modifications.

>> that does not appear to be working very well. >> we are not satisfied with that either. we have a relatively low number of permanent fremont vacation. >> -- permanent real modifications -- permanent read- modifications -- permanent remo difications. >> but it is a voluntary program. they denied doing, what do you do? >> we can take actions. >> such as? >> not paying them. >> you think that $1,000 is one to be a deterrent? >> we totally agree with you that we have to take whatever actions we can to assure that they are going to make these

modifications permanent. right now, we have a program where we are in with the services, in their offices were there doing the modifications, to watch exactly what they're doing. we have freddie mac is auditing this process. we are publishing monthly reports on performance. we are going to be expanding those reports to deal with how rapidly they are achieving modifications. we have targets for everyone of them, which we outlined again yesterday to make sure that they have all documentation. they will complete those modifications or at least the decisions by the end of this month. about a third of the trial modifications are ones where the services already have all the documentation is. there's no excuse for them not to go forward. >> we appreciate that. however, these foreclosures have been going on for a long time they'll pick an awful lot of people have lost their homes. while we appreciate the stages,

people are out of their homes. we are concerned about principal reduction, for example. what have you done about that? >> that is not what the understood. at the 22 do a better job at communicating this. -- we need to do a better job communicating this. we are talking with the servicers about the needs to take a broader view about what is the best solution for each home owner. for some, it can be a principal modification at the outset for a combination of principle modification and interest reduction. that is another area that we will be looking at. are the servicers looking widely enough? >> let me say to fdic, barney

frank and i signed a letter to the administration because we were very pleased when you took over indymac. at that time, we thought that it should be organized in a way that you guys should be in charge of. -- in charge of the loan modification program. can you identify for us what you have discovered that really works? do not have some ideas of how we can do this better? i know that -- i hope that all of the agencies are talking to each other and you have had some opportunity for input, but it is not evident. what would you advise? what have you done to make these loan modifications real? what should be done? >> thank you, chairwoman waters. we do support the treasury's following up with the programs. certainly, there are * for crete

-- there are times for creative thinking. i think the lesson is that we learn that indymac, which i believe we are working to make them even more so, include things like early on getting a dollar amount of modifications in to the borrowers hands, making sure that, if possible, you were able to get the information to begin the verification of income immediately, the first payment for the borrower, as well as a signed agreement so that the borrower knows what their obligations are i think it is very important to have continuous and early contacts with the borrowers to make these programs work. i think that servicers are learning now that they may not have understood fully the need for a refocus of your whole lost

mitigation process. it is a consumer-oriented process where you should reach out to the borrower. we found counseling groups to be a positive tool at indymac. >> let me interrupt you for a moment. one of the things they did was to send out notices to the borrowers and you show them in the notice what you could do for them. for example, when some of the services -- when the notices went out early on -- it would ask people to comment. we want to talk to. people said, nope. i am not going in. they want to tell me they will take my home but when they noticed a notice that says that you 0 x amount of dollars on your loan and we have a loan modification program that can help reduce that long by some percentage and this is how it works or something and you get more people responding. is that true?

>> that is absolutely true. we got a response rate with those types of notices with an actual dollar amount for ramifications -- for remodification of about 70%. >> has that been adopted by the administration nor the banks are the servicers or anybody as a way by which to get people coming in to talk to you about a loan modification and not being afraid that this notice is only sent to take away their homes? >> i believe that a number of servicers have begun to adopt that approach. but many have not. >> what have you not included something like that? -- why have you not included something like that? >> we are reaching out by it a much more specifically to a. >> this is pacific.

they have not received a notice that says, this is the fdic and this is what we can do for you. >> they sent out more than 9000 offers to homeowners with the terms, in many cases, indicated. people have an opportunity to see what the benefit to them will be from participating in the modifications. i think that the outreach is going much better than it was. the challenge now is to convert these trial modifications, where people are benefiting. we have almost 700,000 people who received reductions in their monthly mortgages on average of $550. we have all of those people benefiting today. the issue now is to convert them to permit modifications. >> you're right. that is a big issue. it is a huge issue. i have more than use the my

time. i am going to yield to the gentle lady from west virginia. >> i missed your testimony. but i have certainly read through most of it. one of the questions that i think is complicating this issue and that we have not really -- i am interested to see what kind of innovations you are working and how your addressing the issue of a second lien. most people who are in danger of being foreclosed upon have probably run their credit cards up as far as they can to keep the payments going. they have a home-equity loan going. they have other issues with their finances. i know the second lien issue is complicating these loan modifications. could secretary else and talk about that or any of the rest of you? i would be interested to hear your ideas on how we get to that issue.

>> thank you very much. that is a real concern. i know the occ is providing guidance to the banks on accounting for the second lanes. that is a major step for coming up with a more comprehensive solution for homeowners who have a first and second lane. -- a first lien and a second lien. there could be some kind of a clearing house so that banks could find. has there mortgage on a particular homeowners house. -- banks could find out who has the mortgage on a particular homeowners hous's house.

and the requirement for ham is to provide information about bank, for residents, the heart to the affidavit, and so forth. -- the hardship affidavit and so forth. >> i have a couple of points to deal with your question. first, on examiner guidance, we send the guidance to examiners. we did not send it to the industry because the modification effort being so significant, we many times will go to the examiners with guidance. we have passed the exam is to share it with their banks, but it is not a broad distribution. it was examiner guidance, not a banker guidance, but we did share it with the bankers so

they were aware of our expectations. that was simply to remind and clarify for our examiners that gap and existing supervising policies and should be followed in working with bankers and make sure that the quality assessments are done with quality and sound banking policies. >> something we do not hear from the servicers is that there is an in addition to -- but in addition to modify the first when there is a second. -- in additiothat there is an inhibition to modify the first when there's a second.

to mr. allison's point, but there is a complication. sometimes, the servicer who is in the modification on the first and then the bank that is holding the second may be different parties. it may not be evident unless it is brought up by the borrower. everything they should do, as they hold that second lane, and they're not any -- the second lein, they have to do their best to ensure that they have done diligence to seek the existence of the first lane and appropriately account for these

-- the first lein and up properly account for the second lein. >> thank you very much, mr. greene. >> thank you. i think the witnesses for appearing. france, -- i thank the witnesses for appearing. although the art of the moral universe is long, it bends toward justice. i believe that president kennedy was right when he said that here on earth, god's work would truly be our own.

use refinement, onin my opinionó -- you 3 fine man, in my opinion, are doing god's work today. i start by asking you this. are you familiar with the term "desperate impact." you are. mr. rosen -- mr. allison, tell us what that term means. >> the impacts more on some segments of society than on another. >> that is unacceptable definition. with reference to the foreclosure crisis, is there a desperate impacted? >> yes, sir, there is. tel>> to tell us in the sector of society that is experiencing the impact. >> folks in lower income communities have been more

devastated by the crisis. >> the fine for me who are these people who are most likely to be in the lower income communities. >> mostapha, they are 9 dougherty's. >> -- most often, they are minorities. >> the fine minorities. >> african-american and hispanic. -- define minorities. >> african-american and hispanic. >> do you agree with what mr. allison said? >> absolutely. is apparent that there is disparate impact among minorities. >> defined minorities. >> ethnic minorities -- >> define ethnic minorities. >> african-americans and hispanics and other ethnic minorities.

>> assuming that we do 100% of what has been called to our attention, that we are efficacious as humanly possible, will this negate the desperate impact that we discussing currently? >> i don't believe that these programs by themselves are going to negate the desperate impact on those communities. >> thank you. >> no. when i did work with indymac, as communities throughout southern california that were already infected. -- already impacted. >> thank you. >> there is a lot more work to be done. we are nowhere near the solution. >> if we're going to abandon the arc of the moral universe toward justice and the work of god is truly our own, would you agree

that we must and should do more to negate the-desperate impact -- the negative disparate impact upon some committees? >> i would agree. >> i would concur. >> i agree. >> do you agree that a way can be forged if we have the will to do it, a way can be found to negate this disparate impact? >> yes, sir, i do. >> i do. there are difficulties, but there are ways to overcome difficulties. >> i agree. there are challenges, but you have to keep going after it appeared >>. >> the ultimate question is this. given that we acknowledged the

conditions and given that we know that solution can be forged, what are we going to do about it? what will we do beyond using the rising tide raising all boats ferrietheiry which we've find -- theory? >> first of all, we have to recognize that this is a real problem. >> yes, sir. >> and we have to focus on them and devote ingenuity. >> i appreciate what you have said, all three of you. but when you say "we," define "we." who is the "we?"

>> there are government representatives and people in the administration who are working very hard that, with this program, we are reaching people who need it the most. thatñi is why we're working with state and local officials and community groups, as well as counselors, to reach the areas most affected. many of those are minority communities. >> my time is expired. i thank you, madam chair. i will not be impolite and encroach on the time. >> thank you. >> i do not think any of you are the villains here. i think you represent agencies

that -- i think you represent agencies that are probably fulfilling those responsibilities. do you believe that the mortgage companies and the banks are doing the best they can? >> congressman cleaver, i think the banks have a long way to go to get to their full potential to help alleviate this problem. they have been making progress, to be fair. we have people from treasury and from fannie mae in the offices of the top seven servicers right now. they are stationed there, working with them, finding the facts as to why this program is not working even better. we are not satisfied by any means. they are on notice that we are not. we will publish more and more information, as fast as weñi ca, about their performanceñi so tht

the public and the congress can judge for themselves. but more has to be done. >> we have, legislatively and administratively, forced them to work with homeowners who are in trouble. we forced the line to lie with the lamb -- we forced the lion to lie with the lamb. but when the lion gets up, the land is missing. and we're left calling, "to become a ke"kitty, kitty." if the helena does not comply with the requirements of the

mortgage company, -- if the homeowner does not comply with the recurrenrequirements of thee company, they lose their home. çóif the mortgage company does t comply with the requirements of the congress, what do they lose? >> first of all, we do have some financial remedies that we can apply to these servicers. we can deny them payments. we can call back fire payments. if they do not seem to be following rules of the program. i think it is extremely important to shine the light of the performance of every one of these banks. that is exactly what we are doing. i think one has to also recognize that the servicers, until this year, were in the business of collecting payments and foreclosing on people. they are having to change their entire business model. they have to engage with homeowners. the half to help homeowners. that means that they have to

change their systems and retrain their people. they have to move in that direction. we are constantly pushing them in every way possible to do the best possible job. >> but maybe your system up pushing is not working. i have twin boys and i found out early on of that, if i spanked one of them when they were doing them, the other one would straighten up. it had an impact on the other. i just think, in this situation, we have not spanks anybody. i have -- we have not spanked anybody. i have come to the conclusion that spanking is not on the agenda. i do not miss hearings. i am here. we are here. i have been to a lot of these hearings. we have asked these questions over and over again.

we at tables packed with witnesses and witnesses sitting behind them. we go through this over and over again. and i have to tell you that, as we move through this holiday season, this will be the second holiday season that i have been asking these questions, that we have been asking these questions. nothing has been answered. why cannot something happened to these lending institutions who took taxpayer money? they took our money. and they say we are issuing guidance and reaching a to them and giving them cope and water. why cannot we do something to one of them? excuse me. i was approached last night by somebody who is about to lose his business because the bank is now requiring more of him. i m frustrated and i get even more frustrated because you guys

can say that the next time we find somebody who is not doing theirñi job, we will recommend that the money be taken away from them, the top money. thank you, madamñi chair. >> may iñi answer you, congressn cleaver? let me speak very clearly about this. we have worked with them to try to get them up to speed. we have freddie mac auditing their performance. are they following the rules? are people being denied a mortgage modification who should get one under the plan? as we move forward, we're putting them on notice. and then we will exact penalties of them and be publicly outspoken as to who is performing well and who is not. ñiyou're absolutely right. we are going to move to the point where we are disciplining the banks if they do not perform better than they are today. while they're getting better, it is not nearly good enough and it is not fast enough. we have given them clear it targets for how many

modifications they need to make permanent by the end of this year. in every case, where they have existing documentation, there is no excuse to not get that modification done by the end of the year. >> mr. scott. ñi>> let me ask a couple of questions. in the program, why can we not stop foreclosure proceedings while the modification is going on? >> congressman scott, the way the program works today is that these servicers are prohibited from foreclosing during this process. and we are enforcing that and we are auditing bad to make sure that they do comply. -- auditing of vathat to make se

that they do comply. a council composed of foreclosure attorneys and government officials and others with an interest in this process is needed to try to see what we can do to help avoid people being frightened by a foreclosure process under way at the same time that they are being considered for a modification. there is no doubt that this is confusing people and scaring them unnecessarily. i think we have to find a better way of dealing with the the problem that you are rightly pointed out. >> to be clear, my information sesamsays to me that the forecls are continuing to go ahead even while the modification is going forward.

is that not an accurate statement? >> i think that is the case, that there may be a procedure under way at the same time as the person is being considered for a modification. that is the issue that we need to engage further about, right? and to see whether more can be done to provide assurance to the homeowner that the priority is to modify the lone. >> here are the major complaints with the program. first of all, it includes a lack of transparency about the criterion, the net present value test used to evaluate a borrowers eligibility. the lack of capacity of servicers to process loan modification requests on a

timely basis. there is nobody there to respond in the person of a live person. in this most critical, this must be special needs, a family going through the process -- this most essential of unease, a family going through the process gets a computer when they call. the people most affected are people at the middle-to-lower economic stream and they get a recording, no live person. and, in cases where the foreclosure action is taking place while the homeowner is going through the hamp approval

process. we have to come to the conclusion of that that is an area that we need to address. do we need to address that area in at least stopping the whole foreclosure procedure? does that require legislative action on our part to? is it something that you all can do? this program, in order to be effective, should do that. now maya the question, another area, we used -- now my other question, another area, we used 31% had we get that number? 31% of the monthly income is the criterion for this program. in these tough economic times, that income, in many

cases, those 20. -- goes to zero. is there a way that we can lower the 31% threshold? >> thank you for those questions, congressman scott. let me go down the list one by one. in terms of the lack of transparency of the program, we are making more information available every month. we're also providing information on line. we intend to make the mpv model available to counselors in the first quarter of next year, which is coming up very soon, so that they can see how the model works and work with homeowners to see whether they would qualify. this is a call -- this is a complex issue. we want to make sure they are

properly acquainted on how to use the model. in terms of the capacity of the servicers, we are looking at the relative capacities of the different servicers, comparing them, seeing who is doing a better job with their capacities, how many people they have devoted four and eligible mortgagee, so that we can evaluate them on best practices. in terms of the person answering the phone, i think that has been -- in terms ofno no live person answering the phone, i think that has been a real problem. we can work with the servicers to make sure that they are being heard. in terms of foreclosure actions taking place while the person is still up in the air over whether

they're going to have a modification or not, as i mentioned before, we have convened a group to work on that issue. foreclosures cannot take place before people have a decision about their mha modification. nonetheless, the process may go for a while they're being considered. that is the issue where we want to work with servicers and see what more can be done to provide more assurance for people that there will be considered. and lastly, on the 31% income ratio and the fact of the know many people are unemployed, the program today provides that, if they have at least nine months of unemployment insurance coming their way, they can qualify for a modification. that is if all of the other requirements are met. there are people who will lead people to qualify ibecause they have lost their jobs.

that is something that we're looking at now. we're looking at alternatives, such as the pennsylvania model, and others to see what else might be done. >> thank you very much. i request unanimous consent for one minute. this is very important. you gentlemen at the table understand that we are very unhappy. our constituents are in pain. our communities are at great risk. you talk about all of the things that you are going to do, how you're going to improve. we have been listening to lawn. fdic, we are appreciative for what you have shown can be done. i don't know who is talking to him, but it appears to me that some of the advice the fdic should be given to others in

trying to deal with the foreclosure issue is advice that needs to be shared. for occ, i do not get a real sense of what to do. you do advisory's. you look at what is not being done and then you issue information that says what should be done or what could be done. this is not good enough. we did not hear a lot. do you know about the legislation tomorrow, h.r. 47173? the consumer protection act? do you support that, treasury? mr. allison? >> yes, ma'am. we are working closely with the staffs of various leadership members in the congress on that

legislation and others. >> whether but you? do you support -- what about you? do you support that? do you agree with the portion that the deals with the unemployed? >> i have to apologize. i am not familiar with that specific provision of the bill. >> nor am i familiar with the bill. i cannot comment. >> we will build taking a strong look at what we do with people with emergency medical problems and the employed. what we want to hear from you is what you are going to -- and the unemployed. but we want to hear from you is what you're going to do about principle write-downs. we need to here create proposals. -- we need to hear create proposals. we did not hear that. we heard a lot of talk about how

you will encourage the banks. the banks thumb their nose at all of us. they denied care about what we're saying. the reduced credit limits and increased credit rates. they said, we will pay you your money back and did not tell us what to do with bonuses and pay practices. we are not encouraged at all when you talk about working with them and the servicers about doing the right thing. some members may have additional questions for this panel wished they may -- which they may wish to submit in writing. we thank you. this hearing is adjourned.

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>> i would like to call the meeting to order. i am christopher shays. co-chairman of the commission on wartime contracting in iraq and afghanistan. thank you for attending this hearing on contractor training of afghan national security forces. this opening statement is made on behalf of my co-chairman, michael tebow, who is not here because of a family emergency. our fellow commissioners and myself. the other commissioners at the dais are grant green to my right. to my left, charles tefer and

also participating is robert dixon, the executive director who heads our staff of 50 and deserves your sympathy for having eight commissioners who are the bosses. our hearing could not be more timely. after eight years of throwing the taliban machine that it sheltered al qaeda terrorists, the united states has about 70,000 troops in the country. our president has decided after consulting with military leaders to send another 30,000 americans there.

the congressional research service estimated just this week that the troop surge in afghanistan could raise the number of d.o.d. contractors working there to between 130,000 and 160,000. we would note that those numbers striking as they are, do not include the thousands of department of state and u.s. a.i.d. contractors in afghanistan.

considerably speaking, then, the total war fighter and contractor work force in that country will likely skied 300,000 by the end of -- exceed 300,000 by the end of 2010. the u.s. military in -- presence in afghanistan is large and growing but we must note the challenge there is also large and becoming more acute. afghanistan is nearly the size of texas. but unlike texas, is mostly mountainous and subject to brutal extremes of weather. the afghan population is estimated at 29 million. they are mostly rural, mostly poor, mostly illiterate. these conditions and a mounting insurgency pose great challenges to military operations as well as to the governmental, nongovernmental and contractor organizations that provide security, reconstruction, logistical, and humanitarian assistance. it is safe to say none of the

country's -- countries assisting afghanistan and -- wants to have a long-term military presence there. certainly the united states does not. that is why building well-trained, well led, and law-abiding national security force in afghanistan is a vital mission. that mission is daunting. afghanistan's military was severely degraded durk the soviet occupation and the civil war that led to the taliban regime. the beleaguered afghan national army numbers about 105,000. about half the size of iraq's army even though the two countries' populations are nearly equal. the afghan national police and border police have their own problems. the congressional research service said in an august report the afghan national police are riddled with corruption and short of equipment and no one could argue with that.

in september, "the washington post" published a confidential commander summary from stanley -- from general stanley mcchrystal, the top u.s. and nato commander in afghanistan, that depicted broader problems. the general wrote of the weakness of state institutions. maligned actions of power brokers, widespread corruption and abuse of power by various officials as well as errors by the international forces. despite all these challenges, the united states and other countries with a presence in afghanistan are working to promote a stable and democratic afghanistan while preventing al qaeda or other terrorists from resuming operations from havens in that crinlt. from that perspective, training the afghan national security forces is the ball game. regardless of the issue under debate, the end game must be creating self-sufficient afghan army, national police, and

border police forces that are free from corruption and are able to provide adequate security. from fiscal year 2002 through 2010, the u.s. department of defense will have spent nearly $30 billion on training, equipping, and supporting the afghan national security forces. as a point of reference, this effort is exceeded only by the theaterwide logistics support program. this commission does not want a program of this size with its various contracts to get mired in the same welter of problems that the commission has documented in log cap. meanwhile the u.s. department -- has obligated more than $1 billion for counternarcotic and basic police training. unfortunately, as the general accountability office reported last month, afghanistan security situation has

deteriorated significantly since 2005. affecting all aspects of u.s. and allied reconstruction operations. an increase in search and activity, combined with weaknesses in afghan national security forces, has caused delay or abandonment of some reconstruction projects. disrupted already tenuous supply lines. undermined anti-narcotics programs. and hindered training of afghan government forces. all of these facts show the growing importance and the growing challenge of training effective afghan army and police personnel. the department of defense is committing the fourth brigade of the 82nd airborne division, a company of military police, and the 48th brigade combat team to the training effort. and will be taking over the national police training mission from the department of state. but there aren't enough military trainers to do the training. contractors like z, m.p.r. and

dime corps play a significant role in the u.s. training effort in afghanistan. and as we noted earlier, contractors' roles -- role is likely to grow as the buildup of afghan army and police ranks continues. considering all these facts, we need to ask, how well are the training contracts being drafted and awarded? how effective is contract management and oversight? how good are the results, particularly for key metrics like recruitment and retention? what mix of military and contract trainers is optimal? and from a broader perspective, how proest is it to have armed forces training administered by contractors, however much military -- however much military experience and structural skill they may have? these questions converge in large part on the combined

security transition command afghanistan, commonly caused -- stica works with the afghan government and international forces and organizations to promote security and stability in afghanistan. this includes managing a $404 million contract to train and support afghan national security forces. to understand the critical role in theater, this commission has met with both its former commanders, major general richard formica andñi lieutenan general william caldwell who also commands the new nato training mission in afghanistan. we are grateful for the cooperation provided by these fine officers. unfortunately, the july 30, 2009 report to congress by the special inspector general for afghan reconstruction said c- stica does not have the capability to ensure that u.s. funds are managed effectively

and spent wisely. the report in which cstica concurred, the technical representative in country for the contract, had limited experience and had been unable to make field visits to check performance. more resources have since been applied to this problem. but significant questions remain to discuss in this hearing, not only for cstica and d.o.d. but also for the department of state and for the holders of federal contracts. we are fortunate to have the assistance of three panels of expert witnesses to help us assess the challenges of training afghan security forces. our first panel mass a single witness. ambassador kenneth morefield, assistant inspector general, special plans and operations, department of defense. the second panel has three witnesses, major general richard foremicah, u.s. army, former commander of security transition command, in other words, david t. johnson,

assistant secretary of state international narcotics and law enforcement and counternarco technology program officer, department of defense. and nihon keizaier son, program manager, afghan national security sector, development and field program of the mpri division of l-3 communications. although the contractor panel is last on our schedule, contractors are not last in our thoughts. as a member of congress, i've traveled to iraq many times and returned 10 days ago with other commissioners from afghanistan.

we are aware of the challenges in the u.s. contracting process and have previously highlighted instances of ways waste, fraud and abuse by some contractors. but we have also observed that contractors supporting american military and reconstruction efforts in both iraq and afghanistan gets high marks from our troops in the field. and that contractor employees include large number of experienced hard-working and patriot americans. patriotic americans. their work is vital. we have met contractors who have been in theater five years or more providing continuity and institutional memory that is difficult to sustain in a six-month or one-year deployment by u.s. military or civilian employees. we are aware that many contractor employees have died in support of mission -- in the mission in afghanistan. it is troubling that no one can

provide specific, reliable numbers to document the deaths and injuries they have suffered. as if somehow their deaths and injuries don't matter as much.çó let me say for the record this commission deeply respects the work and honors the sacrifice of government contractors and appreciates hearing their views of the situation on the ground. today'sñi distinguished witness have been asked to summarize their testimony in five to sevenñi minutes. we will allow it in some cases to go over. in order to ensure adequate time for questions and answers. we also ask witnesses submit responses within 15 business days to any questions for the record and any additional information they may offer to provide. the full text of their written statements will be entering into the hearing record -- entered into the hearing record and posted on the commission's website. on behalf of might have fellow

commissioners we thank all of today's witnesses for participating in what we view as a very important hearing. after the swearing in we will begin by hearing from ambassador moorefield. and let me just state for the record we've encountered somewhat of a perfect storm with some of our members when we rescheduled this hearing. not able to come. and particularly for my co-chairman who this morning was planning to come except for a family emergency. so with that, if you would, ambassador moorefield, would you stand and i understand that two others may respond to questions so if they would stand, raising your right hand, do you elmly swear or -- do you solemnly swear or affirm that the testimony you give before this commission will be the truth, the whole truth and nothing but the truth? note for the record that our primary witnesses responded in the affirmative and if the other two are called to testify, we'll make sure their

names are given for the record. so ambassador moorefield, i understand your statement may take about seven minutes, if it runs over a little bit, i'll just let you know. but i think you'll be able to give it in the fashion you want. >> thank you, chairman shays, distinguished members of the commission. good morning. thank you for this invitation and the opportunity to appear before you today on behalf of the department of defense, office of inspector general. i would like to share this morning our experiences in -- and views at your request regarding the challenges and risks associated with contingency contracting in support of the training and mentoring missions specifically in the development of the afghan national security forces. as commissioner shays pointed out, contractor assistance has provided the u.s. military an

indispensable resource in building afghanistan's security forces. contract personnel have played many roles, augmenting the u.s. combined security transition command, afghanistan, and contractor support of management systems development and senior leader development has been key to the institutional development of the ministries of defense and interior. who are responsible for the afghan national army and national police. are embedded. in the afghan army at the coor level and below and provide mentoring training teams that rove across the entire afghan army. serve with police mentoring teams assigned to the province and district headquarters and there they develop civil policing skills and provide a positive role model for their

afghan counterparts. contracted companies are also essential in constructing training and basing facilities across the country. in addition to contributing specialized skills many contract personnel have been in afghanistan far longer than their military or civilian counterparts. their continued presence has provided a significant degree of continuity and stability in support of the training and mentoring mission. but the mission to develop an effective ansf faces ue nookly complex problems. because of afghanistan's remarkably difficult, uniquely difficult i should say operating environment. illiteracy is in excess of 70%. extensive poverty and related endemic corruption are a pervasive reality.

outside of the national and regional capitals of kabul, kandahar, irat, gardez, there is still relatively little infrastructure to support widely dispersed army and police operations. buildings if they exist at all are often little more than mud huts. the transportation system is marginal. and severe weather conditions make building or even accessing remote mountain bases virtually impossible during the winter. wind roads can be built to supply military and police bases and outposts. much of the construction material including cement has to be brought in from outside the country. any piece of land suitable for construction for a new army or police facility or base first has to be demined. and then conflicting claims of ownership among sometimes numerous competing individuals and families can delay projects

for over a year. increasingly moreover, improvised explosive device attacks by taliban insurgents on the main roads have disrupted construction convoys. taliban extortion, kidnapping, and murder of construction personnel have discouraged contractors from operating in many areas formerly considered secure. since there are few afghan companies with the infrastructure, construction experience, to meet contractual timing and performance requirements, the u.s. army corps of engineers has had to rely primarily on u.s. and third country contractors for construction support. even then, projects are often delayed or stopped altogether. especially in areas found to be insufficiently secure. early they are year, our deputy inspector general gave congressional testimony stating that the size and skill of the

d.o.d. acquisition work force in southwest asia had not kept pace with the growth of its contract oversight responsibilities. expeditionary military operations have placed extraordinary demands on the d.o.d. contracting system. which was you may know significantly reduced in the 19 90's. the result was a relatively small number of d.o.d. contracting personnel, had been assigned responsibilities for an unreasonably large number of contracts. a report, the office of the inspector general issued, this september, validated that concern with respect to afghanistan. particularly with respect to the train and mentor mission. it found that the lack of sufficient, well-trained, and experienced contract oversight support for cstica and the u.s. army corps of engineers had resulted in an ongoing failure

to ensure that contractors selected had the expertise to meet performance standards. moreover, rapid turnover of contracting officers and contracting officers' representatives, after three to six month tours, had prevented oversight continuity and hindered effectiveness. d.o.d. contract oversight is progressing, however. in response to concerns expressed in this office of the inspector general report, the defense contract management agency reports that it has realigned its resources in theater. significantly increasing personnel assigned to afghanistan. the afghan]2z9? iw37f>çb9u%!óñ of the u.s. army corps of engineers also has increased its growing construction additionally, the joint contracting command, iraq, afghanistan, has had its own

personnelçó surge to support contracting in afghanistan including for the buildup of the a. ansf. -- for the ansf. if i could now please turn to the issue of the pending transfer responsibility from the department of state to d.o.d. for the police basic training program contract in afghanistan. since 2005, the state department has managed basic police training through its contract with dinecorp international. the funding for which d.o.d. provided. early they are year the senate appropriations committee requested a contract audit of the administration and expenditure of d.o.d. appropriated funding. the joint d.o.d. state department team conducting this audit anticipates, conclude being its final report by the first of 2010. however, the state department has already agreed to transfer responsibility to d.o.d. for

the police training contract once it expires. we understand that this decision was based on a mutual recognition that creating a single unified chain of command responsibility for police training would enhance more flexible program implementation. to facilitate transferring contract responsibility, the audit team recognized establishing a joint transfer oversight working group, formed in august of this year. which is currently addressing the transition issues. among them, government property disposition, training center management, logistics support and future contracting. in closing, let me please note that providing oversight support for d.o.d.'s mission in afghanistan including the -- to build the capability of the country's security forces is a top priority of our inspector general. we are currently deploying

additional o.i.g. personnel to the region and to afghanistan specifically. to reinforce on the ground oversight capability. including for contingency contracting in support of training and mentoring of the afghan national security forces. thank you, and i would welcome your quegs. -- welcome your questions. >> we're going to do 10 minutes or less. >> thank you, ambassador. i think -- everyone in this room and in our country recognizes the value and the necessity of using contractors in iraq and afghanistan for a variety of functions. not the least of which is training. which will down thedly increase -- will undoubtedly increase as we expand the afghan national

army and the national police. i would like your thoughts on the influence of tour lengths of our military. in pushing us more and more toward reliance on contractors. in the area of training. >> thank you, commissioner green. the issue of tour lengths by our service personnel in afghanistan was addressed in our september report on the progress being made in the train and equip mission in afghanistan.jf it was our view then and our recommendation in the report that tour lengths be extended to a minimum of one year for all military services. in addition, i noted in my remarks that contracting

officer representatives had been serving only three to six -month tours which created less than stability in their carrying out their oversight responsibilities. so we have been on record and are on record for maintaining that longer tour lengths and consistent tour lengths amongst the military services has significant value and such a complex operating environment where particularly if you're in a training and meant york mode, just getting to know your counterparts is a very challenging process and developing a relationship is everything. that takes time. it takes an investment up front. and the results are seen down the road. so we have received some favorable response to this from

the military services. i believe the air force has already indicated that they, at the request of centcom and cstica will increase it to one year. on the contract and oversight personnel side, i have no specific information as toñr commitments to extend tours. but we are mindful that these are civil servants, not military personnel, primarily. they're performing these functions. and they cannot be ordered to serve longer tours. but we understand that incentives are being built in to their assignments to make it more attractive to serve longer. and that there is a trend toward volunteering to serve longer than three to six months. >> thank you. do you see the incentives that have been developed so far and

adopted so far have had any impact on civilian tour lengths? >> i can't give you any concrete response, commissioner, as to how many personnel are now serving longer tour lengths. it is our understanding, however, that there is a general trend, a positive trend in terms of willingness to serve longer tours because of the various range of incentives that have been put on offer. i would defer to other speakers this morning, other panels perhaps, who are better qualified, or in any event, certainly take your question onboard and get back to you with a written response. >> thank you. what do you view as the benefits and the limitations of

using contractors in a training role? aside from tour length, we've already heard from commissioner shays that we've run into a number of contractors who have many years in country and obviously that is a benefit. that continuity is a benefit. but what are some of the limitations and benefits in your mind of using contractors in this role? >> thank you. in terms of benefits, i would note that, for example, in the police training mission, they bring uniquely necessary skill sets to the table. obviously our military personnel are not generally, although some may have in the reserves of theñr guard,ñi have civilian police experience.

but these are individuals in the police mentoring teams, for example, are uniformly drawn fromçó retired civil policing personnel from the united states and civil policing is one of the critical functions that's being trained and mentored to build up]ánbt national police and moreover, their very presence there and the way they conduct themselves provides an appropriate professional model if you will and ethical model of how a police officerñiw3 should condu himself in performing civil policing operations. at the ministry of defense and interior, i believe the government contractors that we have worked with discussed various issuesñk?$áq&ated to th development of those ministries over the last three years. are exceptionally well

qualified in terms of systemsjì+ development. and these are major challenges of course in terms of building up these ministries is for them to have the capability to manage themselves and to manage the army and police respectively. and without getting any specific company names, clearly they are capable of mobilizing these -- the special expertise, these unique skill sets, to perform a critical mission such as that. i was about to just add one, there is a limitation. i understand in terms of theñr embedding of police trainers. and it is due to the security requirements or limitations in the way they -- their contracts are written and the way they perform their duties.

and therefore it may well be that they will not always be there with the rest of the police mentoring team, for example. and not there in the performance of every aspect of their duties. so they may not be able to goñr that extra mile. nonetheless, i believe they still have been performing a very important mission. >> last question. if you were king, how would you build this training force today? unlimited resources, how would you build it? >> i hesitate to jump into the breach on that question, commissioner. because it suggests an on-the-ground operational experience that i'm not sure that we can bring to the table.

and i have no doubt that the cstica former commander could respond much more precisely to that. train-equip mission for at least three years. so that i can remember. in fact, let me go back. five years. and in terms of my own experience. and it was very clear in 2005-2007, 2008, that this was y and inym fighting theñiçó othe the train-equip mission and the first pick of resources. rc ere underresource. it was evident that they did not have sufficient personnel to

deal with the scope and complexity of the challenges in that context. they had access to contractor resources. nato did not step up to the plates either. i believe they will make at the margin is significant difference with the commitments under the new nato training command. i am sure they will be well used from the most single level down through out at our training in the mission. but it is probably true that it is not well understood generally how difficult and help vital that mission is, even though it was underscored in the president's recent quality statement with respect to afghanistan that we must develop a capability to operate

independently and secured the country. it is little known how many casualties the mentors have taken, including contract mentors in the country. and therefore it is probably has been underestimated the quality and extent of resources required to accomplish that mission. going forward, even though i am fully well aware that there command -- they are cognizant of the degree of challenge they face as it expands, and we're not sure of the full extent of the expansion yet. but already you can see it over the horizon. they areñr already -- but there are already bottlenecks needed to contend with in growing the army to 134,000.

>> thinking, mr. chairman. i do want to pick up on this note the for the last several years the training program has focused on the national police and has been under resource. i'm looking in particular at finding you made on page 125 of your september 30 report about just how far back we are and how long it will take. i want to ask you why. he took one of the major programs, the focus district development program, and you said he that to date, of the 365

districts in afghanistan, and unix. about this program, it takes them one by one and goes through all the districts, only 56 -- camions 56 are done. they had entered or completed that focused district development process. what you found was that this until late 2012. i think you're talking it will be completed even if we were not expanding the force. is that right? or would that far behind? is it because we have been under resource backs will really take that long even to process if we were not growing the police force? >> thank you, commissioner. i think it is the case that it has been significantly under

resource in terms of their developments. there was an army, so to speak, in afghanistan to build upon. in fact, the army is probably the most respected institution in the country. the police have largely been created from whole cloth. it doesn't have the background, the doctrine and the performance standards imbedded institutionalize, if you will. the emphasis was on growing the army initially and not the police. dod took over the responsibility in 2005 and at that time it was recognized it would take a much more comprehensive and resource-

intensive effort to get the police up to speed and that they were critical in the surgeons in fight at the front lines with the population, as it were. the program which has been producing superb results is intended to provide very high- quality intensive training or retraining as the case may. for police at the district level. i believe the have also been getting some in that regard. and also, the border police have a focus development program. we made our projection in the report based on their resources that were known to be available pursuant to be available in afghanistan at that time. we were there in march of this

year before it was issued -- the report was issued in september. i cannot say it has not progressed. with respect to being able to ramp up of the program. to the best of my knowledge, the rest up and a determination of the actual size in the next phase of expansion. i think there somewhere around 96,000 or 98,000 right now. will they go to 160,000? i do not know. i believe there will -- they're planning for a number in that range. i will be surprised if in the planning aspects it has not already been taken into consideration what sort of resources will be required per i refer back to the nato training mission which i do believe will

have an impact on our capabilities to grow the police and grow the more rapidly. >> i was interested that you noted the goal of the program, and i might say the training program in general is to produce a very high quality force. i would like to ask you both to recap what are the huge problems in the way of producing quality graduates of either the basic training or the ftd program? what are the problems in the way? and what kind of pressures on the training program achieving a high goal might produce?

>> well, if i may take your question backwards. i do believe there is a risk in over expediting the buildup of either the army or the police. issue is not just quantity but quality, which is why the ftd program was created. to go back and raise the level of quality and professionalism of the police and hopefully to work to sustain the standard. >> so there is a risk if you go too far too quickly you'll compromise the building quality and professionalism in an effort to get more police on the beat, so the speaker. you spoke about challenges. police are taking three times

the killed in action right as the afghan army. . is a high-risk profession, so the speaker. salaries have recently been increased to a belief basic $250 a month, which is much more attractive than it was. nonetheless, if you're killed in the performance of your duty, you'll not be able to support your family. there are trade-offs their and unless and until they're better capable of defending themselves in a tactical sense, and equipped a properly, they will remain as vulnerable as they recently have been. in addition, commissioner shays mention the high rate of

illiteracy. to train people who cannot read or write to even in their own language is a real challenge. @ @ @ @ @ @ @ @ @ @ @ t4@ @ @ å

to develop literacy. that it's considered to be frankly a national priority. i spoke with the minister of interior last spring. and he said that this was one of his primary objectives, is to get the police literacy levels up. because he recognized that to produce a more professional and responsible police capability, they had to be able to read and write. nd write. >> you took the two points. let me ask you -- let's take one proxy try equality of the training and that is the wave of the program of instruction, which currently is 80 week week. i teach at the university of baltimore law school and i would

not let the quality upper teaching to go down. how would you view it in to pressure to get too high numbers was placed on the beat. get them on the beat regardless of quality. program of instruction with shortened to some of the number. >> thank you. i think one of the considerations and it is a debate that is ongoing for some years is, what are the responsibilities of the police? if you define them to beat civil policing and the need to conduct themselves appropriately, defend themselves at a minimum if not the population in some respects against taliban extremists and

al qaeda, the half to have trading that includes creating the technical capability similar to what basic army recruits we see. so i think that is a pretty densely packed program as it is. cutting it i think would be probably -- this is just my gut feeling -- may be ill advised. maybe compromising a capability that is core to their being able to perform effectively, perform their roles both in terms of law enforcement and maintaining civil order and also in the counterinsurgency sense. correct my time has expired. thank you. >> thank you. >> mr. dixon has the floor.

>> good morning. i want to begin by thanking you for your distinguished service and in your current responsibilities. i want to come to this subject for a little different stamp. in terms of contract accountability. we recognize the military and the joint contract. of command in afghanistan and iraq have a tough job. the commanders have to strike a balance between achieving results, and measuring performance, but at the same time ensuring accountability. and following the rules. this involves simultaneously managing programs in the field under the difficult conditions that you describe. at the same time, guarding against fraud, waste, and abuse. i want to go back to the

september 30 report the you noted earlier in terms of what you noted, was dod noted as oversight for the contract but has been reflected in the failure to ensure the contractors were basically in meeting standards. the concern i have is that we just returned from afghanistan. we saw there was the president announced the increase of 30,000 troops within the next year. we saw the nato training missions stand up as a three- store command. we saw the isap still ended up. there is a tremendous amount of change and growth. the framework that you described in your september 30 report dealt with conditions prior to september 30. the question is, is the current

framework adequate from program management stamp. to sustain the kind of increases and changes we're talking about? >> thank you. it's a tough question. when we were last on the ground and in our follow-up work during this year, it was clear to us that there were already bottlenecks that were developing, if i can call them that, in terms of expansion of the security forces, the training men in the mission. there were public manageable but it already suggested that additional contract oversight management personnel work required. as i pointed out, a member of the organizations in vault -- a

number of organizations involved and others have attempted to get ahead of the curve. but for one thing, i do not think we know where the curve is going. the gulf post is going -- the goal posts are going to move. they're doing additional planning to prepare for that. there was testimony the year before the pickup -- there was testimony here before the congress yesterday. speakers spoke back to the preparations that were being made to increase the size for anticipated future contract oversight responsibilities. conceptually, i believe that the challenge is out there and recognize. the full extent of it and the

complexity of it is difficult to grasp. it is going to take a lot of vigilance and consistent attention. i did not think it will be possible to declare victory precipitously in this respect. >> you mentioned the challenges were the dangers involved in over expediting in terms of trying to do too much too soon. and yet the time lines and the program plans that we see are ambitious. so i want to get your view on the ability of commanders to strike the right balance on an urgent basis to stand up and face to ever increasing demands and then to reach back for the increases for dcma and the other agencies that are needed in the field to provide the contract

oversight. it does not seem to square that in the time lines projected that we can match it with the framework for management and accountability. >> well, there's unquestionably a dynamic fare between meeting the needs of the war fight and the war zone, making the right operational decisions on day-to- day decision may take a longer view on insuring and appropriate accountability and controls are maintained, whether they are construction programs or equipment or maintenance, personal services across the board. we have spoken earlier this hearing about the challenges

this expeditionary force has proposed to the oversight system of the department of defense and that it was understrength initially and outgunned, if you will, in terms of meeting. that afghanistan was a secondary priority to iraq. there is a need to dig out of a whole. there has been a lot of thought and attention. as to what kind of efficiencies could conceivably be gained by reviewing the current contract. oversight requirements and procedures that the military commands and their civilian counterparts have to meet in afghanistan, i would defer to the commission on what might be done as results of any

comprehensive review there. i mean certainly, our priority is to make sure that fraud, waste, and abuse are prevented and that program performance meets dod's needs. but having said that, we understand the other is a constant struggle over limited resources in an extremely complex and high-pressure environment. that needs to be taken under consideration. >> a final question. you made reference to a defense department task force associate with overseeing the transfer of the program for basic police training. i assume that includes the contract managing the transition as well. do you have any visibility on the current status of the program? is achieving its current objectives?

-- is its achieving its current objectives it? " the short answer is no. i will say that have been in contact with our audit team on the inspector general saw on this joint audit effort and we're fully well aware, having been in contact with them that the oversight is taking place and is ongoing and has not hit the wall in terms of the transition of the contract. what made -- what may be going on behind the scenes in this reporting process i cannot speak to because it is only report at this juncture. it will soon be issued and it all be transparent in a prime- time >> thank you very much.

that concludes my question. >> you have had an interesting career and you're in a great position to be able to provide helpful information. you started out with the military and then went into the foreign service and now you're under the peril of the military again. we thank you for your service. i'd like to take advantage of your knowledge in addition to your responsibilities. there is the general theory that you need 20 security per 1,000 population. and if we took -- we thate at one time -- thought at one time afghanistan was 34 million but it's 29 million and my math says we need 580,000. there is the general concept we had in iraq that we have in afghanistan, as you stand up, we stepped down, we leave. and while it is a policy issue

and we're not going to get into the policy part of it. it does raise some interesting points. because we don't appear to be training enough security for us to ever be able to step down. that's what it appears. and my point in asking the question is, it seems to me that we will tinley having to be -- will continually having to be ramped up how many we train. so i want to first look backward. not dwell on it too long. but we -- and the brits, we basically invaded afghanistan because of their failure to enable to stop the harboring of al qaeda. that was in october, 2001. we've been there a long time.

why has it taken us so long to train the pitiful number that we've trained and why have we not done a better job in training them? >> it sounds like one of those career-ending questions. >> i don't want it to be career ending. that's funny. that's an interesting way to approach the answer. i don't want on my -- want to bear the burden of ending your career. but what i do want is a candid dialogue. what are some of the things that have made it -- you've said what it's difficult. but has it been we haven't put enough resources? we rely too much on contractors and didn't rely enough on contractors? mean, the question deserves an

honest answer. i think we will respect your honesty. covering the incredible complexity and difficulty and challenges inherent in trying to create a professional army and police force. >> so one is underresourced? >> yes. absolutely. i think you're going up against certain historic and cultural challenges too. i don't want to make too fine a

point of this but this is a very top-down bureaucratic, you know, model, authoritarian model of governance, whether it's the army, the police, civil service or anywhere else in the country. the soviets helped reinforce that but to get them to even accept and understand the concept of delegation as we understand it and responsibility being taken as lower levels in the chain of command, it impacts everything. decision making, logistics, the entire capability of the organizational culture to perform at what we could consider an effective and responsive way to meet the security challenges. security challenges. >> i am not quite sure i get why a top-down is a negative. >> let me give you an example.

their supply chain. at the end of the day, the whole purpose is to get bullets, food, and medicine to the front line troops. but there is a history of leaders, if you will, influential people being measured in their importance in terms of how much stock they have a crude, how much material to have under their control. relinquishing that and allocating and passing that down the supply chain -- >> might inference of what you're saying took a lot of delegation. people are not willing to delegate, unwilling to go up some authority and power. that affected the mission of training. >> i think it iaffects the mission. the leadership is still the

older generation. >> you triggered something. parenthetically, our hope in afghanistan is what we're able to do. the elders want to hold on to the past and the young can see the advantage of learning to read, see the advantage of a better life if they could see it differently. harder to train police or harder to train our military? >not their military. which is more difficult? >> i think the military culture is better established, more professional, and more ethical on balance. also more literate and has been considered a more attractive profession if you're going to a security -- >> because othe cost of trainine

military -- should we have military training -- who should train the contractors? mr. a benefit or is there a combination? is there a negative in having contractors trained in their military? >> well, i believe that, and this is my own view. i've never thought this through to this extent. but now you posed the question. there is an inherent responsibility for our military to manage all aspects of the training and mentoring mission. therefore, i believe that our military personnel have to be there and need to be running am responsible for the operation. but a fusion of our military

professionals and contractors who have specialized skills and provide unique resources that they bring to the fight including increasing nato personnel is probably a model that we're going to want to use because it gives us a mix of capabilities. >> how about with police? it seems to me that we have to be even more reliant on contractors for training the police given there is a difference even with national police. there is a difference between a police responsibility versus military responsibilities. >> i am not sure -- >> is it intuitive, is it this logical or not logical that you need people with expertise that are closer to police training.

therefore you will have to rely may be on mp's, but possibly rely on contractors more to train the afghan police then you would have to train the military? >> yes, i understand. i'm not sure it is either or because the police responsibilities in afghanistan has become increasingly apparent to not only include civil policing capabilities, law enforcement capabilities, but because the brunt of the insurgent attacks that they have been having to contend with. there are the most vulnerable aspect of the security forces and at the interfaced with the population. they have to have a tactical capability to defend themselves

and defend the population. so you're going to need an army training model, if you will, to develop that tactical capability. at the same time, you need a civilian police experience -- >> so you need the combination. tell me, if you could come at an example of where someone not being the direct makes the job more difficult to train. >> well, you know, there are relative degrees of illiteracy. >> let me be blunt. what we use 30% literacy, it is closer to 20%. then i am told the 20%, you may be are talking fifth or sixth grade capability, not ninth, 10th, 12th-grade capabilities. we're talking about a few folks

with real literacy but capabilities. what is the challenge? >> i think the challenge is that in any normal training model that i am familiar with, you rely heavily on written materials, presentations, on a blackboard, or on a slide presentation. the police in particular have exceptionally high degrees of illiteracy in their own languages whether it is p ashtu or others. their ability to communicate even in their own language with illiterate afghans is significantly limited and that places a special challenge. they are not going to be able to

go back to their barracks and look at the training books. >> i get that. one more question. are we going to be able to reach the numbers that we're hoping to given the capabilities we have now? do you think that we will reach the numbers? what you believe the numbers to be again in terms of police? by when? military by when? and you think we can reach those numbers of those dates? >> the only decision that i know that has been made is with respect to increasing the army to 134,000 by august 2010 i am not aware of any decision to increase the size of the police. i believe our military command has requested certain numbers.

i've heard 160,000 for the police and as high as 240,000 for the army. >> by when? >> i do not recall for those projections. i am not trying to avoid your question. it depends in part on how quickly you want to produce these forces and what level of quality. and what your resource -- and what resources your willing to commit to accomplish those objectives. >> that begs the question. can you describe to me the level that you think, a minimum level that needs to be obtained? and you think we can reach that number? let's take the military, 134,000.

>> i can only speak to a general perception that i have detected amongst both our senior military personnel, including nato, but also among the senior ministry of defense and joint staff's officers in the afghan army that they need to be made significantly robust to be able to take the lead in a fight and especially in the most threatened parts of the country. they're not capable of doing that now. >> would you council this commission to be skeptical to do that? >> at the current level of resources? i would say it is highly unlikely they will be highly unlikely to be able to accomplish that mission. >> mr. tiefer.

>> ambassador. what we're hearing this morning is that, and i want to make -- i am looking at the incumbent contract of dyncorp and their recommendation. they have their own reasons to make their own recommendations. we're not endorsing their position. the do have recommendations as the current contractor. one of them is focused on quality of police being trained and not simply on quantity produced. what we're hearing and correcting from wrong, there is a risk in over expediting the expansion of the force, a risk to quality. we might be compromising the core capability. we might be sacrificing quality and professionalism.

i will ask you this but will also ask you at the same and dyncorp's position is we're sacrificing competition over quality. but also there is a simple bricks and mortar issue recovered in your report. the have a recommendation, the current contractor, to increase the capacity of the central and regional training centers and expand the number of afghan instructors and u.s. mentors and advisors. did you study this question and find the was a substantial impediment in the capacity of the places, the buildings, the facilities in which we do the training? >> thank you. i think our observation was the

training centers at the time we were there were operating at full capacity, so to speak. this begs the question if you were two significant increase the basic police training program, what infrastructure growth will be required to reach what level of expansion of the police and in what timeframe. those were serious issues the understood they were trying to grapple with. as far as sacrifice and all -- in quality, it is our understanding that the transference of responsibility for this basic police training contract has in part to do with an effort agreed to by both the

state department and defense that there needed to be the unity of command and unity of effort in terms of police training to provide sufficient flexibility in implementing the training program and tailoring to the variable needs in the war. so hopefully those deficiencies will be gained with appropriate oversight of the contract. i am not sure it is necessary at all to sacrifice quality. indeed, i think the effort at least from our understanding of dod's vendors. is to increase quality and their capabilities. >> who will still be monitoring

this program? >> we are planning on going back in 2010 afghanistan. >> that is 12 months. i would just request that you stay in touch with us on this issue. we're all working out of the same playbook. we want this to succeed. we're looking to find ways where we can help them, those at have to a minister of the program to do it as well as possible. this is the ball game. you're nodding your head. >> we look forward to that corporation. >> great. thank you so much for your testimony. we will get to the second panel. our second panel is richard formica. david johnson, assistant secretary of state. and michael strain, a program

executive officer, department of defense. would you come to the dais and i will swear to you in. is there anyone to respond to a question or are we all set? if you would raise your right hand and speak up. do you asphalt -- do solemnly swear the testimony you will give it is the truth, the whole truth, and nothing but the truth? our witnesses have responded in the affirmative. it is my understanding, mr.

strain, you did not have a written statement, which is disappointing. you had one prepared but it has not been submitted. you'll be giving a statement, correct? >> it was my intention to give a statement. >> good. we will start with you, general, and then we would just go down the line. >> thank you. >> is your microphone on? there were go. >> how about now, sir? >> they're go. " it's great to have all three of you here. >> good morning, german shays and -- good morning chairman shays. i was in command from 2018 until just recently in 2009. thank you for the opportunity to

appear before your commission. i think you for the work you're doing to assess the alignment of wartime contract with mission objectives tourist important time. we appreciate your visit to afghanistan. i am aware you make a second trip there recently. soldiers worked tirelessly and faithfully to fulfill their mission and to be good stewards. we appreciate you came out to see that for yourself. i have provided the commission with a written statement for the record. i would like to address five points. first, it is a complex command. is a challenging environment. it is not iraq. i am not suggesting iraq was easy. second, the task is to build

sustainable capabilities with the afghan forces. when i left command, the army was at 96,000 soldiers and program to grow to 134,000 of the end of october, 2010. it has its shares of problems. it is on track to achieve its goals. we have proposed to grow to 240,000 by the end of 2013. it was about 94,000 personnel and authorized to grow to 96, 6,800. we are committed to growth and a proposed to grow the national

police to 160,000 by the end of 2013. our approach was to explore the momentum of the development of the ama while we had a significant focus. excuse me. third, we are aware of the importance of good stewardship to support this mission. good stewardship is critical to the mission's success and it is of strategic importance. over the past several years, the mission to train security forces has been supported with funding by the united states congress. the high demand has outstripped the supply of properly trained forces, which creates a demand to fill gaps in training and training support. the command requires the support of contractors in the

development of the afghan ministries of defense and interior. contractors often spent existing capabilities. to bring unique skills and provide continuity to the mission. fifth, over the last few years, as the size of the security forces continues to grow, the number and size of contracts increase. this dynamic situation created a challenging oversight in varmint which required continuous efforts to improve management of contracts funded by afghan security forces funds. we have steadily improved our stewardship and oversight of contracts. measures and controls we have implemented improved capability. their visits and findings and observations made by this commission are delineated in a

written statement. in summary, with knowledge more work needs to be done to enhance the management efforts. through accountability and confidence the improvements that will implemented will lead to more effective development and ultimately operational success in this critically important mission. it was my honor and privilege to have served the many braved and dedicated men and women in the command effort and i am privileged to have this rare opportunity to work so closely with the brave men and women of the afghan security force. we're grateful to the american people and the united states congress. i think you for your efforts to make us a better command. >> thank you, general. >> thank you. thank you to the rest of the

commission for the opportunity you're giving to me today to testify on the use of contractors to mentor and trained afghan police. i initiated our program in 2003. we current support a list mission funded through the o50 account. inl has been working with dod to deploy officers to afghanistan to train and mentor them. inl has complemented with this contract with dod. the united states this parking to help the afghan government developed a professional police force capable of providing public security and enforcing the rule of law. the development of this is

challenging. the police training programs we initiated in 2003 are aimed at addressing these issues. building on the estoppels police training program and in light of needing more forces, the defense department was given authority by an agreement over all u.s. efforts to organize, train, and equip the afghan security forces. in 2007, congress responded by funding exclusively through appropriations to the department of defense. dod determines overall program requirements based on policy guidance. .

we have deployed in support approximately 800 civilian advisers to train and buys -- to train and advice. right now, hundreds of former civilian police officers from the united states are embedded with our military helping local police improve their skills. to streamline their training, the contractual responsibilities are scheduled to transfer as early as march 31st of next year. after this transition,

ambassador -- the ambassador will continue oversight and direction. inl and dod are assessing of advance trading class's and mentoring for specific programs or they might continue to play a role. the transfer of a contract responsibility is an effort to eliminate a management layer so we may speed up executions. the department of state will continue to play a role in oversight and overall direction through the ambassador. we're working closely with the dod to achieve a sufficient transition and working toward a transition plan. we also take into account a de- mobilization effort as well as transitioning all assets and inventory used in the training programs to the following contractors to be chosen by the department of defense.

the plan also outlines how to de-mobilize trainers and integrate new ones hired by the new contractors currently run by dyncorp for inl. some of the trainers might well be employed by the next contractors but we cannot predict how many that will be. the globalization and life support at each of the 10 sites including termination of their subcontractors are laid out in the state plans. finally, it addresses the need to address securityxd at the following sites to the new contractors. this will lead it to amass a transition plan that will develop with d.o.t. and its contractors what's the identify and award the following contract. we're committed to supporting a smooth transition process.

we will not allow them to terminate any aspect of the contract until a following contractor is in place and prepared to assume responsibility. we have a fairly staffed office in kabu andl washington to support this transition. inl and faugh dod have weekly coordinating conference calls. our personnel works together on a daily basis in kabul. the coverage of approach to oversight has provided a sound infrastructure for managing our police programs as well as others. as in afghanistan, we is contractors worldwide to implement justice sector programs. but as we often need to mobilize or hot de-mobilize quick the, contractors lettuce meet those guidelines. further, they enable us to rapidly hire large numbers of former police officers and -- with the recent experience which

allows them to return to jobs in the united states when their jobs are completed. three experienced in programl rise in washington provide program oversight. -- free experience programmers in inl proved oversight. office is based in kabul and washington are supported by a team of oversight staff. we currently have 7 in lake country representatives, five of them are filled with two more writing in january. additionally, there are working to add four more to be recruited to the process which would bring the complement to 11. it is located in washington to minimize the number of staff. 28 u.s.-based staff support

these presents is by reducing invoices. mr. chairman, they give for providing me the opportunity to discuss these issues with you. i look forward to addressing your questions. >> thank you, ambassador. >> good morning. i think for the opportunity to be here. -- i thank you for the opportunity to be here. we're currently in his selection process for incoming contractors to support in conjunction with the afghan national police. in addition to that, we are also in the middle of the gao anddod is working -- and dod is working on a response to that. i cannot respond to anything with regards to that. as such, i am happy to answer any questions you have consistent with what i have

outlined above and look forward to our discussion this morning. >> mr. chairman, i would like to say it would have been advisable for you to have a written statement that would allow you to talk about other elements. i realize this is not your decision but i want to go on record saying it is unfortunate that you were not able to come with a statement. the statement is in writing there for you do not get in trouble because it is approved and we could have covered a number of areas 3 make our job more difficult by not having a statement -- a number of areas. you make our job more difficult. you have not done the commission a favor. we appreciate the times he had that with the commission and had been cooperative. i does want to let you know our disappointment of the and not having a statement. this makes our job more difficult. with that, we will start with -- excuse me.

before you go, i want to clarify something. we hear so many different numbers. i want to be clear as to what i am hearing you say. with the military, the goal is to have 134,000 by the end of october 2010 and then to have another 106,000 by the end of 2013. that is the goal stated. >> if i could just be clearer in wording created the program is 4 1/3 to 34,000 by the end of 2010. -- the program is for adoption 134,000. that has been approved. there's a proposal to grow the afghan national army. that has not been decided on

that specific number. >> all right. the goal is by the end of this year to have the afghan national police to be an 96,800. it has been proposed that we reach a total number of wonder and 60,000 by the year 2013 but it has not yet been proved. -- a total number of 160,000. >> general, first of all, thank you for your servers particularly in this last year on an assignment that i now had to be extremely challenging and may be frustrating at times. congratulations on your upcoming promotions. you will be moving too beautiful hot still, alabama. we have danced around -- he will

be moving it to be a full huntsville, alabama. i would like to take this to the next debt. counterinsurgencies is very leader, jerk -- leader-centric. there are many who believe we should do more to improve the officer and an c.e.o. court -- and nco corps as opposed to bring them to fast. what does this have to do with training? obviously, we create a need for additional mentors and so forth. i would like your ideas on the rationale behind the decisions, if those are final, in creating additional ones that as opposed

to increasing those in existence. >> thank you for your question. as you allude to the challenges is seceded with a growing and developing afghan national security forces, it includes the challenges with developing leaders. we have focused on developing leaders, officers, and noncommissioned officers as part of our program. when minnie the recommendation to read the afghan national army to 134,000 by october of 2010 we took into account four areas that are concerning. the development of the leaders, the ability to provide equipment, the ability to build the appropriate infrastructure, and the appropriate number of mentors. to get to that number by october

2010 is no doubt a challenge to achieve. we think it is achievable. the approach that we took working with the minister of defence, who also has asserted it was achievable, but the approach that we took was first to grow in strength without additional structure. in that growth to 134,000 7500 were soldiers without additional structure to reinforce the readiness much like the 22,000 recently approved by congress to improve readiness and soldiers without structure. that requires the were leaders, fewer demands on equipment, and no additional challenges to the infrastructure. the second thing we did to get to that number was to build

small units in the existing forces. in the 44 battalions that are resident in the south and east and each of those will get an additional company. that company gives you more strength, improves the readiness and capability of existing units, puts a reduced demand on a leader development, equipment, and infrastructure and on mentors because you are putting a company in a battalion that already has existing members. in the subsequent part of the gross, we will growth the the times required to create two additional brigades. we think doing that in the third phase of the growth to 134,000, gives us the ability to ramp up.

to have those two grades -- two brigades having the right numbers in the battle space. the decision was made to build an infantry centered force at this point up to 134,000 and in so doing you reduce the requirement for equipment. you reduce the training burden because you are not going to do the more complex trading associated with the combat support skills and artillery engineering. we are going to delay that and it will simplify the development. >> thank you. there has been discussion, and i do not know how far it has gone, about creating seven entities, afghan public protection programs, local militias, etc.,

in the western part of the country. how far have those progress? how are they going to be trained if we're going to have a training requirements with them or do we just issue them an ak- 47 and say your mission is to protect your village? >> at the risk of sounding offensive, i am a little dated. some of those initiatives were pretty well being developed as i was leaving. i cannot speak to where we are today. i would prefer not to and rather than be taken for the record and be provided by the staff because -- i would only say during the time that i was there, there was no effort to create local militias. there were efforts to use

experimental growth with the afghan public protection force in one province that was being developed over the course of the late spring and summer. it had different levels of success in different districts. that was being re-evaluated by them as i was leaving. >> is it your sense that there would be a training component by either us or allies with whatever is put together? >> it depends on the mission they would have. there are some responsibilities to either train or mentor them in the execution of their assignment or duty, whenever it may be. >> one last question. how would you characterize the level of coordination between you and inl in the transfer of responsibility for basic training? >> we are working very working

veryinl -- very closely with inl as we did. we are working to build and sustain that relationship. we have met regularly metinl -- we have met regularly with inl staff. i would characterize it as good and getting better. >> thank you. >> thank you, chairman. i appreciate the members of the panel who represent the highest level who have been managing this program. the problems we face in this program are not of your own making. you bring great skills to coping with them. general formica, you have commented, and i quote, the afghan national army is i would

say five or six years for a long in development and the police. you are not alone in saying this, but why? why are the afghan police five or six years behind the afghan army? >> i would just say simply that the first part of my response, resources, attention, and the focus the we had dedicated to the army preceded the resources and dedication that we provided to the national police. it was for that reason that we made the judgment to carry on the decision made by my predecessors. to characterize our approach was it to sustain an now accelerate the positive momentum we had with the army and add significant focus to the police. in might diminish require more

focus. i would submit that some of the challenges were really focused on developing an institutional base, and institutional training base, for the afghan national army. that takes a long time and decisions made by my credit -- my predecessors three or four removed. we have not made the same kind of focus on building the infrastructure with the national police. >> in general, let me ask a similar question in another way. -- general, let me ask a question. we put this chart at. this is the quarterly report that found that out of the 559 units in the national police, 437 thought as -- got the lowest

ranking as far as their capacity inñi accomplishing operational missions. only 24 that the highest rating that they were capable of operating independently. -- only 24 got the rating. why is it that after all of these years of the seeming to train, there is a vast bulk of the units in the national police who are getting a low rating? >> i think that was back to the conversation you were having with the ambassador. -- i think that goes back to the conversation on trading the national police. the development program was created by my predecessor to create the training forum for the afghan national police, one district at a time. in any one cycle we would train between 5-10 districts depending on the resources available to us.

it was a result of that focus on development efforts that we then alignedñi these mentor teams to districts. we were then able to make some requisite judgments as to their capability milestones using the systems we had in place at the time. but this really reflects, as to your question, the number of districts who had not been through that training. if i could just add on, i know you did not ask this question, but to carry on the conversation you were having, if the decision were to grow the number of the national police, the number of districts does not change. it does not add to the problem of the focused district development read that has its own challenges. i think it is more like 64 today with 20 in trading as we speak.

they would come in trained and joy in their districts. >> ambassador, among to ask you are aware of something we knew had taken place at a subordinate level in inl. has there been a discussion, not a decision, not a recommendation,ñr but was therea discussion as possibly shortening the program for the national police currently at 8 6 to six weeks? >> i understand there have been frequent discussions on how the program might be reshaped and improved. one of the things under consideration at one point was whether it could be shortened in order to increase the number of

individuals going through. my recollection is that after consideration of that issue, some of the things would have to be removed in order to compress what was essential. the eight week program has stayed in place. that is relatively abbreviated compared to other training programs around the world. >> he supervised in iraq a training program. -- you supervised. in iraq, the training program there is 12 weeks. the afghan program which deals with a lower level of literacy in their recruits is only eight weeks. the i read program has a higher literacy of records. >> that is correct. -- the i wrap program has a higher literacy of records. >> in addition to capacity and

skill, they are moving individuals to the program and getting them deployed as rapidly as possible. >> by the way, and i do not mean to test you on a closed book exam on the spot, my students at the university of baltimore law school but have sympathy for you if i did that. the civilian police or civpol program in the different countries you are talking about those two police training, yes? >> that is correct. >> besides dying court -- besides dyncorp, are there other contractors in the civpol that do that major trading? reaching tarining? >> there are others who hold an

umbrella contract. we allow those 3 to bid on individual tasks under the various contractçó opportunitie. >> what are those three? >> this is a closed book test. civilian police internationl and pacific architectures and engineers rejected think is a subdivision of lockheed martin -- and engineers, i think it is a subdivision of lockheed martin. >> i'm trying to figure out what your people do. the contract that is going to be given out is done by the space and missile -- the handling of the contract for the next contractor to do the training

for the afghan national police is going to be done by the space and missile defense command in huntsville. what do they do there? >> the space and missile defense command actually conducts the contract work and self. the senior contracts and officers there -- >> substantively, what kind of contracts to they may leave you there? they do not do navy contracts. what do they do? >> be on the contract i currently have with them, i do not have a good familiarity with the contract on going with the command. >> you, yourself, you are called centpol, the "t" is for technology.

do you -- what do you mainly due? you have like 150 task orders. what are they about substantively? >> they are used in conjunction to support counter narcotics and counter narco-terrorism around the world. we support the office of the secretary of narcotics and leveled threats. we support some of the military services. we provide support to local law- enforcement agencies, domestic as well as for and. in terms of acquisition supportr as well as technology development. >> i think everyone knows that in hunts will they do rockets. -- in council -- in hawsehole --

hopper aviation and technology is the heart of it. it would not make sense when you are working with them of the 164 task orders. >> aviation is a part of what we do, yes, but it is not the majority of it nor is the technologies and development a majority. we have done a variety of activities in support of training as well as technology development as we referred to previously. we have done straight procurements of equipment. >> let me ask about the training. i am not talking about the limited number. there are a limited number of your task orders that are debate -- in debate. i am not partial to dyncorp. apart from the limited number in the day or in the discussion, -- in debate, mostly your training

programs do not have to do with things like cops on the beat. it is trading that has to do with training in dealing with narcotics. >> we have currently 17 test orders related to training and where from afghan border police training which we are currently conducting at four sites in afghanistan. >> i have gone way over my time. >> thank you. >> i have questions for all three of our panel this morning. i think it is noteworthy we have eight and wrote comprised of view because in the and all this have to work together in order to achieve our security

objectives. i would like to start with the general formica. general, we have been meeting -- meaning for some time to talk through the war fire to ensure that, first of all, we thank you for your service and again congratulations on your promotion. we think the servicemen and ñiwomen on their service to our country under extraordinary circumstances. the one question that we need to ask about the war frieder is how contractors at historic levels -- war fighters were contractors exceed the number of military personnel on the ground right now, how does that affect your planning and operations as a member of the military? how doesñi it make your job easr or harder to haveok contractors and the vault -- involved?

>> is your microphone on? >> thank you for your question and thank you for your kind comments. the development of the afghan national security forces, as you suggest in your comment and ñiquestion, in fact requires a civilians, we use international civilian police in our expertise in our headquarters, and contractors. we require the blend of those, as i said in my statement, contractors really augment our capacity and the bring in a unique skill. we would identify the kinds, the ways that we would approach military trainers and we take into account those drinks to the

contractors bring. for instance, a contract traders are particularly good with training support, development, programs, and structure. having the right contractors in the right place enable us to take advantage of their strengths and reduce the burden on the military's we can use them in places where they would be most effective. there are obviously some considerations with contractors from integrating them into the battlefield, and ensuring, as theçó ambassador referred to in his testimony, having the right level of inventing embedding so that a team has the right mix of military soldiers who can train for military and policing and to have the honor and professional that the contractor

brings. one of the things we had to deal with was getting them embedded the right places and at the right level and ensuring they were. that was sending we were wrestling with even in iraq. -- that was something we were wrestling with. >> the fact that we are using contractors so extensively, does that change the way you interface with the allies or the afghans? in our recent trip to afghanistan, i bring this up because the afghans basically, to them, contractors or the military, we are all americans. there were not making the distinction that if we were helping them it seemed to be a team effort. >> the distinction for the trainee, the kuala -- the quality of the training that they're provided whether they are getting that from a military professional or a law enforcement and factional who happened to be there as a contractor, they were interested in quality of training and the

environment in which they needed to learn it. >> thank you, general. ambassador johnson, youn >> i think the plan is largely in place, but in order to have it where one is handing together, you have to have the other partner. the general mentioned in response to a previous question all the things that have been done to repair the inventories

and things of that nature, the joint work between us and his team in order to lay out every single thing that we can devise ahead of time. we are doing everything possible. it is not as though we are waiting for the partners to be identified. there has to be some closing efforts that take place when the other partner has been identified and how things will go over, but tasks they will be undertaking, and what sort of requirements they might have of us -- we might not be aware of. >> is there anything that stands out as a major issue that needs to be addressed more so than others? >> with the things are referred to is who among the individuals that are employed by the current contractors might be required or desired by the future contractor. that will be decisions they have to make. how that integrates will require the identification of the following contractor and individuals that are going to

execute those contracts. >> thank you, mr. ambassador. when the time comes and you aware of the following contract, i would like to talk about how you plan to manage it to ensure accountability, oversight, control, and basically insecure that the transition is handled with all those things in mind. under what i understand are without a doubt extraordinarily difficult situations in the country. >> first, understand that we have been working with them hand in hand with the development on these task forces to make sure we have the full understanding of all the requirements as well as how that will impact our ability to manage the oversight. as such, i recently established an office in kabul. that office will be wrapped up significantly to provide oversight necessary. -- that officer of ramped up. this will be at four levels.

we will be providing personnel, and then training teams -- embed training teams. second, i will have a series of in place personnel who will be focused strictly on the execution of the contract. i will have individuals at each of the campsites. i will also have a third level roving personnel and subject matter experts who will be going around from campsite to campsite to ensure, again, that there is the proper manage -- management and oversight. we will have those back in kabul as well as here. on my own, i will probably put some 25 people or more who do nothing more than contract management. >> in general formica, --

general formica, i would go over the numbers again. i want to be as clear as i can be. by november to the house and nine, we have about 96,000 army. by october 2010, we think we will have 134,000 and that has been projected and approved. it is proposed that by the end of 2013, the police now have 96,800. it is proposed 160,0 propose00 by the end of the year as well? >> yes. -- it is proposed to have 160,00 by the end of the year? >> what is the goal of police by october 2010? is there a goal?

>> there is not at this point because we do not have approval. i do not having never in my head. if we get approved to go to 160,000 then there would be a brand to get you to that number. -- a ramp to get you to that number. >> it to go from 96,000 to 134,000, that is a ramp. if you kept that in existence, what would your number's been by the end of 2013? -- numbers be by the end of 2013. >> 96,000 in november 2009. 134,000 by 2013 is a ramp.

if we continue to use whatever we are going to use additionally from november 2009 to 2010, does the ramp it is up to that number or will we need to add more resources? >> the ramp to grow the army will need to be increased to achieve the number we propose. >> i will spend one half hour on this if i have to. we presently have 96,000 in november. you will get by october 134,000. that is an increase of 38,000. you have to ramp up, correct? if you use that same line, what would get us by the end of 2013? >> i think my answer is that in

order to get to 240,000 by 2013 we would need to increase the rate of growth. >> you are saying we would need to add more people to get to that number from 113. but you would knowledge that if we kept the same progression -- he would acknowledge that you would be higher than that number by the end of 2013. >> if we kept the same progression, we would be ahead -- >> by the end of 213? you just do not know what that number is? -- end of 2013. we are -- we are a commission on contracting. in today's military, we know

that in order to succeed we need contractors to build things, contractors to move things, contractors to train coming contractors to guard so our military does not have to do that. we know that and value it. what we are wrestling with is our capability. the implications of getting to a higher number, speaking as a former member of congress and i will be delicate with this, we do know we need more than 134,000 said there has to be a higher goal. the question we're looking at is, what kind of contractors are you going to need to get to the higher gold that is going to be approved both for the army and police? going back to the number of 20

security for 1,000 populace. we would need around 560,000 in order to have the full number they need. let me ask you -- i would like to ask all of you this question. it is generic. what are the pros and cons of allowing a contractor to protest in the time of war? in times of peace, there is one implication. what are the implications of allowing this? walk me through the process of a property process of a process not talking about -- but just walk me through what is publicly

known about a protest. a protest is made. how long do they have? what is the process? how does that delay the ultimate efforts to get to the numbers we want? >> to be honest with you, my understanding and knowledge of the protests are somewhat limited. the contracting office at the space and missile defense command actually receives the information from the fao. -- gao. i deal with the delays that it will inherently cause. >> let me talk about that. what does the protest do in terms of the numbers you have told us? >> i am not sure you understand -- i'm not sure i'm understand about the numbers. >> let me put it this way then.

let me get into this in a different way. we will get to the answer. we are moving the responsibility of training the afghan police from state to d.o.t.. -- d.o.t.. -- dod. contra responsibility for police training is an effort to eliminate a large management layer so that resources funding and other management issues for this large-scale training mission are more efficient treated the transfer is not intended to alter the type of training provided. the department of state will continue to play role in the afghan law enforcement training for program, policy, oversight, and overall direction for the cleese programs from our ambassador. that is the statement. do you concur? >> as far as i understand the

situation, yes. my dealing with this is strictly relating to the work we are doing with them and how they interact with inl. i am not privy to that. >> you are taking over the responsibility of training the police, correct? >> as they has -- as they have laid it out to us, yes sir. >> is your responsibility to train the police. is that correct? -- it is your responsibility. >> yes. >> how often have you met with state? >> the first time was -- that i personally met with them was october of this year. we went over to their office and maintains the contract and began that process of working with them. i had my two program managers who have been working full-time on this have been working with the department representatives

with respect to the transition on a contractual level. >> how often have in that? >> sir, i do not have the answer to your question at this time. they have been engaging in regular conversations. i do not know the extent to which they have met or the frequency to which they have met. >> how is the program more -- how does the program work when it becomes the responsibility of the ambassador? in other words, there is a point to which dod will no longer be responsible for training police because it will come under the jurisdiction of the ambassador, again, correct? >> as far as i know, yes. >> do you respond to the ambassador? >> we certainly hope we will get to a point in afghanistan where the need to have a combined effort between the military and police -- we will have achieved such security on the ground and

we would anticipate that. try to put a dot on the calendar for that is impossible. >> candidly in what is causing this question is when we were in afghanistan, we did not get a warm, fuzzy feeling that there was a good relationship between state and defense in this transfer. quite frankly, we got the feeling that they did not see the logic to it. it did not give us a sense that there was good coordination. there is the issue now of that we have given the existing contractor two more months at what the $34 million per month? what the $34 million per month? is that the right >> i don't have that figure in front of me, but i would be glad to get those numbers. >> we are pretty close. >> so their view, what we got from the 0 d was they did not

need this contract to continue for two months. the view we got from state was that you need it. there was not this feeling like you all were in agreement. would you say that you all see eye to eye on this, or are there still disagreements that need to be worked out? >> with respect to the extension that was added on, it might work with cstca to ensure that we have a solid requirement base on which we could develop a sound proposals and put good people in place to do the work. it was me that actually started pushing the extension. i asked for it because i wanted to ensure that there was enough time to do this thing correctly and to make sure that we had a sufficient transition time, looking for approximately nine days of transition from the incoming and outgoing so that we

would be able to address the issues that arose. we knew the complexity of this and want to make sure that we addressed the issue so that at the end of the day, the afghan students were not impacted by the transition. >> i'm good to come back in my next round of questions to talk about the impact during wartime of protests. i would like one of you to be able to tell me this. if you cannot, it is pretty shocking you would not be able to. i would think you all would be thinking of the impact. your the one that has to run this program. i would like to think you could tell me the impact. i would like to think you have asked those questions so you would know. mr. greene. >> thank you. ambassador johnson, please describe as best you can with the continuing role of the inl will be in training specialized

police to include footprint and funding? >> i think at this point this is a speculative discussion. we have engaged with our colleagues as to how this program will be handed over and whether or what aspect they would prefer for us to retain or expand our presence in. we have had some back and forth. at some points earlier in the discussion, the desire by us in is that they would handle everything totally. if we had our continuing engagement, they looked at a couple of things where there are continuing to review.

they had access to take over the family centers. we are making provision to do so. as i mentioned, there might be some higher and training specifically related to gender issues -- higher end training. those are not finalized. we are open to that. as i have conveyed, we want to be a responsive partner to our military colleagues. that is the spirit to which we have extended this effort. >> as the footprint and funding been resolved? -- has it been resolved? >> the entire scope of the effort has been resolved. the funding would continue to come from the department of defense and we would not come at this point, alter the way the funding is managed. >> what is your best guess as to when these issues that are unresolved become resolved?

>> quite early in the new year if we stay on track for the award of the new contract. >> thank you. i do not know if this is directed towards -- in regards to this combat vehicle for police training, was anything consideration given to the dodig's criticism to their ability to lead manage and administercentpol idiq contracts? >> the report you are referring to from december, the audit occurred in august 2008 treated during that time, they look thatcntpo.

-- they also looked at cntpo. it revolves around the lack of personnel. that has been addressed. my own organization has 2 increased has 250% in size. the contract and support has increased by all 300%. >> could you give the numbers? >> i have gone from 11 to 30. the contract support has gone from 3 to 13. a significant increase, which was designed and done specifically at the identification of a discrepancy that was identified, and that is how we have adjusted. >> in general, you may not know this since you have gener -- general, do know what number of

the surge of the forces will be involved directly in training and mentoring? i am not talking about as an ancillary duty while they're connecting combat operations. how many of them will be devoted to training? >> thank you for your question, commissioner. i do not know the exact number. it may have well changed from the time that i left. i would just say that the approach that general mcchrystal is taking is more than ancillary training while but they're conducting operations. it really is a mission statement for the units involved in partnering and mentoring. i would suggest that most of those forces that are going over

there, especially the belgrade -- brigade combat team, will have a role in training security forces in the thatwe are operating. >> but not necessary -- but not necessarily in that same matter? >> condi 48 and -- how the 248 and [unintelligible] will continue to provide teams. they have been given a mission to do embedded partnering and it will partner with army and police in a way that we have not done in the past. >> i just saw something recently that referenced the field

artillery battalion. it referenced the artillery battalion of the 101st who will be directly involved in training. >> this is something very new. the regional commanders are going to use this and they are all providing mentoring. that part -- that team is going to partner with not only the national army units but also the police districts in that space as well. >> when they need to understand better that i think it is driven by the desire of the commanders, but what is the difference

between the 48 and 482 and those combat teams? we need to understand that better and i don't expect to resolve that today. one last question for all of you. in the commissioner's opening statement, the referenced significant increase of the contractors related to the surge. have any of you see -- and when we were formed, one of the basic questions was we had too many contractors. comparing this to all sorts of wars in the past, whether we do or not is not what we are here to solve today. have you seen any attempts to reduce the number of contractors? >> yes. >> i would be happy to take a

stab at that answer. we absolutely value the role of the contractor 3 >> we do, too. -- of the contra. >> we do, too. >> to enhance our capacity and to bring the enforcement skills, we absolutely value their role. we struck line by line and the number of mentor trainers that were required in each ministry and the number of traders required out in the battlefield. -- the number trainers. as we increase the number of units that are doing it are now partnered with police. there is a requirement to increase the number of please contractors so we could provide

at the platoon level or whenever the commander chose to organize these mentor teams. we had to increase the number of mentors to accommodate that. at the same time, we were charged in the ministries in how we could eliminate any duplications that occurred in evolve over time. as we took advantage of the increased number of coalitions provided, please mentors, we actually did reduce the number of police mentors, contract mentors, and there was some reduction as a brazil of the role of the -- has a result of the role they provide. >> thank you. mr. green was given 11 minutes. we are going to do 10 minutes. here we go. . .

>> is it true that in terms of it being a crash program, that he only found out the transition to this program to defense department in july, and it was only formally approved at the end of august? >> the first time that i personally found out about this particular transition was on 24

june of 2009, followed by my first conversation on 30 june. 24, 2009, followed by my first conversation on june 30. >> if it had stayed at the state department, i have the impression if it were on the contract vehicle they had, there would be at least two other major competitors, cpi and [unintelligible] one has this been given to you? why not open competition? to the extent you can explain those in general terms, not the legal answer. >> to answer your first question, i received the direction to work on this from

the secretary of defense office. that is who i respond to. they asked that i work to make this a reality. as it relates to your question on competition, that goes back to the acquisition strategy. >> let's get that. ambassador johnson, i am trying to find the highest level of the two departments that made the decision to shift the training program to the defense program to the defense this was a high level decision. this is not the kind of thing that is decided at the ground level, yes? >> i should know the answer to that, but i don't. i may in fact be the highest level official to decide it, but the senior levels of the

department were made aware by meat of a discussion that was going on. as i tried to make clear in both my written testimony and in response to previous questions, we are working as an active supporting partners to our colleagues in cstca, so this is not the kind of thing we push back against. we seek to find out whether we can continue to play a helpful role and where we can respond to their desires for perhaps a more adroit way of accomplishing this task. cracks were you aware of the participation of higher levels in the defense department? >> i was not personally, no. >> would there have been a decision document making its way that would explain their justifications for the decision? >> the documents that i can recall now were in the form of memoranda and cables coming from

embassy kabul that were making known to us the desires of our colleagues in the military and how they wished to shake this in responding to them from kabul. them from kabul. >> i may have questions on that subject and for the entire panel. we are admonish to note this. in the attempt to meet the current target of 160,000 that comes to you, there will be decisions on the program of instruction. would you expect there would be

modifications in that program of instruction? >> thank you. from a personal perspective, i would expect there to be modifications. based on my own history in the military, i cannot envision we would continue without going over and lessons learned. one of the requirements provided to us as we began the to us as we began the development was th of the contractor to execute changes into the poi. >> so they have left room for lengthening or shortening the program in the requirements it gave you for the program? >> as far as lengthening, all i ask is that we have flexibility

with change. >> they could change it to the same thing. that is true. are you familiar with the issue that -- of what would happen if the program instruction would be shortened, considering everyone has said in order to meet the fact there is a high level of casualties they have to receive more weapons training than they have in the past, which eats up some of the eight weeks. what would have to happen if it was shortened it? -- if it will shortened? >> that is a question for them because i just provide them the ability to execute whatever requirement they come out with. i am aware that a high level of the various discussions, but i

don't engage in conversations or the decision process. >> i will go to them in a second. embassador johnson, i will ask a question about blackwater because it is one of the five competitors. i realize you are in inl, so i might be asking the wrong person. will stay be passing over to dod information about the past performance of blackwater on the major contract it has performed for the state department, which would be the personal security contract? >> i will ask if i could take that because i want to give you

an accurate answer rather than anything speculating. inl has never had a contractual relationship with whitewater. the way that our colleagues -- relationship with the black water. i should consult with them on this rather than speculating about what that would be. >> that is very inappropriate you would not handle it. i do not note the significance that blackwater currently runs the border police training program, so it is not just drifting through the competition. it is a significant competitor. general formica, you were fingered as the person to ask on this. you have said the goal is 160,000 afghan national police.

suppose trying to reach that goal affected the quality of the police? one of the ways to attempt this would be to shorten the program of instruction while dividing time to weapons -- while devoting time to weapons. what you think about the target of 160,000 in that bind? >> i would say that that was our proposal. that has not been accepted by the dod and by afghanistan, so it is not yet a goal. we have reviewed the program of instruction for all of the training we do on a regular basis. there is no doubt the current

training for police was eight weeks. we have looked at whether it six weeks was achievable. it was done in a committee -- a civilian police professional. they are looking at the program of instruction to see if we could not reduce the amount of training but compressed into six weeks the amount of training required to turn and a police of the same quality. one of that is will were training days, -- one of that is warmer training days. -- one of that is longer training days. there was some compression in the time required to train. we also referred to the balance

between counterinsurgency training. in the eight week poi, it is about 45% of the kind of training that will best prepare a policeman for higher end activity for police enforcement training. the rest was more in administration of general train. >> thank you, and i am done. >> thank you, sir. general formica, i realize you left command on november 21. this is framed in the context of the day you left. did they have the appropriate resources necessary to handle

taking on the management of the afghan national police training through the use of contractors? it you have what you needed to do that job? -- did you have what you need it? >> we had the responsibility from the day that i took command. we were never afforded the resources that were required to provide police mentors when the decision was made before that, so once they adequately resource the afghan security force, the answer is no current i think general mcchrystal transition to the line of operation [unintelligible] it was transferred and the

training teams that go with it to the [unintelligible] that responsibility given to the regional commanders so that he was going to take full advantage of the capability but those combat teams brought not only to the concept of combat operations, but their ability to role model and train the afghan national police. in that regard, things were getting better. i would submit 30,000 additional shoulders only improves that. -- 30,000 additional soldiers. >> had a properly lined up resources necessary to manage the contract peace? >> as i indicated, we have not

matured that capability as contracts group. that was something we identified, it was clear the observation and we appreciate their recommendations and help. it was something noted in the report. we've reorganized them to create a contract management cell and changed our document to increase that capacity. we took some soldiers out and realigned them against that task. when i left they had not been filled because we only recently changed the document, and that takes time. >> thank you.

>> we talked about the transition plan and mr. strain was the head of this requirement for the handoff from state to dod. sometimes we get numb to numbers because we talk about $16 billion spent on training afghan national security forces from the beginning of hostilities. even in that window, if we were to go to the rate of $34 million a month, that is $100 million worth of activity that needs to be coordinated between state and defense. how effectively they stand up brings into question the potential of waste as we transition with the handoff,

will the plans you talked about ensure that the resources are effectively managed and we don't have waste? >> the activities executing the plan will be accomplishing just that. while 90 days is the right numeral, we have sought to make that as effective as we can buy front loading things we can already start to do. in order to make this as smooth as me can and have neither of burlap or overlap. -- neither underlap or overlap. so we don't drop the baton. >> there is the potential to have duplication of effort,

multiple payments and an inefficiency aspect that could creep in if you don't manage this the way you are describing. i want to talk about the question of any obstacles other than the legal process currently underway. you stated it very ambitious goal of awarding a contract in a matter of a few weeks. take that out of the equation and get back to some point where you are able to proceed. are you sure you have all the obstacles out of the way that obstacles out of the way that would enable you to award a task >> thank you, sir. there would be no foreign to

suggest that i have taken every aspect of every obstacle -- i would suggest that we have a multiple people that have been reviewing, looking at, and engaged in trying to figure out where the risk points are. one of the initial risks in my previous discussions with the commission was the risk of the time frame that we were initially looking at. one of the risk mitigation factors was increasing the time frame of the current conference. we would conduct a more thorough, reasonable, and accurate -- as well as insuring that we had completely understood all of the requirements from cstca. we ultimately rewarded that task, and had an understanding that we were -- can accomplish this. >> one of the things we have

observed in our visits is how tough is to do things in afghanistan. you mentioned having a presence of 25 personnel that will oversee the management of that contract to inshore accountability and that the contractor delivers. will they have adequate facilities, a place to live, the ability to travel to do their jobs in the timeframe you are contemplating? >> yes, sir. i commented on respect to establishing a full-time presence in kabul. we have access to our own vehicles and a wide amount of capabilities to get out. that was done purposely because of the oversight i have in that

region. we established a capability that allows us to move independently and do the oversight required. the types of support they will provide in terms of building for personnel. the transportation involved to ensure we can move personnel back and forth. establishing a rotation so they don't become too embedded in a camp, so there are fresh eyes and an ability for lessons learned. we spent a lot of time to make sure we can operate in the environment. >> thank you very much. >> there is an irony in this

hearing. we are on thin ice not for significant reasons. the life and death issues we should be talking about are ignored while we tread so carefully on the contract issue and the fact there is a protest. i will tell you what my observation is. you have come to our office and made us feel this transfer can happen like that. you had made us feel it will be an easy process. we hear comments from dod and state and see body language could not see if we were communicating via e-mail that says this has been an awkward transfer. it does not give me a warm

feeling to think you have only had one contact with state and you are in charge of the program. as a matter of public record we know the existing contractor has done a good job. that is not alleged one way or the other. in transferring this in order to move quickly, five contractors can do it and the existing one cannot. what we can address this understanding during a time of war, does this process makes sense? do we risked the lives of our troops because we have a process that doesn't work properly? in a special report we may say

this is crazy. a protest season -- the protest needs to be looked at differently. you cannot tell me your knowledge of the protest because it impacts what you do. if it takes longer it will impact you. if it is a 100-day process. it could be waived. i would like to thank you would know the other parts to it. i would like to think he would make a recommendation. the ball game is whether we can train enough afghans in their army so that we can leave. ben the irony is, if we can leave it goes back to state. i it would love to hear the

logic of giving it to dod. what is also troubling is that we know right well -- we know right now we will have 140,000 if we can train them on time. we are transferring a contract over. we are at 94,000 and at the end of the year will be at 96,000. i would like to know more, like a request of 160,000 has been acted on. we are sending our troops in but we don't know if we will train more afghan police. all of this is troubling.

when we were in afghanistan it was emphasized how corrupt every part of the system is. one part i think we would want to make sure is not correct was that the soldiers and police get paid. that impacts our contractors. we had an incredible conversation speaking to people who have been there five years and we are learning some of these people are not getting paid. i would like to think that we could have covered more territory with this panel. i think it would have been helpful to understand the protest process.

are you willing to give me any concept of what you think about the protest and whether it should be different during war, and if we have the regulations to make it different, whether we should utilize it. >> i have a couple of comments if we have time. from my perspective, as the former commander that felt responsibility for developing the national army. we would want to be able to continue existing contracts or transition from one to another. the imperative is to do that without interruption of the quality of that training. how that process supports that are the two objectives. i don't know if that answers

your question, but we would not want to seek an interruption in the conduct of training. i would like to make a point. we spent a lot of time talking about transmission of the contract. the observation i made -- this is one facet of the approach to improve the strategy to develop the afghan national police. the first element was to create a police training command, something that the minister of interior has some level of responsibility for. we are there to provide him resources to do that. just like the national army, it is commanded by a two-star

general. that has been established and is effective. we don't have anything like that in the afghan police. their training is done by the minister of interior. to create a training command, it has that responsibility for the conduct of training -- >> what is the second one? >> to establish a training group inside the needle training mission to take advantage of the trainers that will come who are responsible for training training command, which includes trainers at the regional site. the third was to transition the responsibility for managing the

contract to the organization that was responsible for developing the police so that we would eliminate going to the department of state associated with that contract. you've had one organization responsible for training the afghan police and is responsible for oversight of the contract so that you have a unity of command. >> do you want to jump in on this as it relates to the issue of being able to do a protest? >> i am not familiar of the protest process, so why will approach this from the point of view of the citizen. -- so i will approach this.

apropos of everything from the truman commissioned to it today, we need a process so that if there are things that need to be dealt with through a protest, that there is a way to do that. >> i will let each of you make a closing comment. one of the things that was revealing to me -- to hear contractors -- this is why we will interact with contractors and will not tolerate someone attempting to suggest that we are interfering with the process, but we will learn. what we learn from contractors was for the folks running it --

every one of them said we are professionals. if we work for someone else, the irony is 80% of folks doing training under different contracts maybe the same people. that is one of the ironies to this. it was impressive to see the amount of dedication to a cause that superseded a company. there was a sense that we are doing something important and would like to continue to do it even if it meant they might be under a different management. it spoke well to the intentions of these folks. i would invite you to respond to

any question we did not ask that we should have were any comment based on questions asked. >> i would like to thank you for allowing me to be here to have this discussion. the comment he made with respect to making it sound easy, if it came across like that i apologize. i understand the many land mines that exist with this process. we have put a lot of effort into this and will continue to do so. u s a previous question with respect to the challenge process. from my perspective,