of 304 de-scoped positions, only one-third of those were what we would call faces with outpaces. two-thirds of them were actual people. -- faces with ouout faces." two-thirds of them were actual people. is that correct? >> i am not sure. >> it is correct, but when you do a de-scope of a function, and in this case we were doing de- scopes, you not only take away

those people that are currently there, but you also take away those positions that are not billed as a part of a de-scope. that is what that means. >> i think that supports the auditor's position. those are the only figures that you provided at any point on this particular subject. in order to make a comparison in mr. deficit -- in mr. fitzgerald's statement, the comparison would be that where the dcaa asked you to make 193,000 -- excuse me, $193 million in savings, the kbr

plant made only $27 million. that also was a correct comparison as far as the time. dthe dcaa wanted you to make $3 million. kbr would only make $27 million. >> i just do not have the context of the specifics of what you're talking about. i would be glad to -- >> it is page 14 of his statement. he says that your projected labor drawdown plan would achieve a reduction in labor costs of approximately $27

million. you would not know whether that is the scale of what you are going to do? >> i have a better perspective. that figure did not compute in this whole thing. now i understand. this goes back to the original audit that was done in august and october of last year, 2009. they made the statement that there could be a cost savings of $193 million. that particular -- >> i am not asking about their figure. was your figure just $27 million? >> i do not know the answer. >> ok.

here is a question you should not mind that much. it is your testimony that there is a business case analysis that would stop cold the competition. i am going to ask you a two pronged question. first, you must have your proposal in the works, and i would like to ask if you think you have a very good, attractive proposal? secondly, if your proposal won because it was attractive to the government, do you think there would be that much turmoil in transitioning kbr, considering that you are doing that right now?

>> per se of, -- first off, i always believe we have a winning proposal, or i would not submit it. the problem with this proposal, from your perspective, is the solicitation stated that the country will be split in half, north and south, and there will be two different companies on life support. regardless of how it turns out, we are either going to transition half the company -- country to somebody else, or we are going to transition all of the country to somebody else. the current plan that we are preparing for tells us that that is going to happen, and we will do it while we are cascading down and closing camps.

>> i believe your plan says, as dcaa says about it, that as a final head count in august of supported people, this is where the troops will come down to 50,000, and including them, there will be about a hundred and 89,000 people supported -- about 189,000 people supported. >> the planning factors in our plan for the in state population to be supported are working with the army's estimates. those are not our numbers. >> you are working with 189000 is what you're saying.

thank you. >> i do not know why i feel inclined to say this, but you seem to have a real chip on your shoulder, and i just want to explain something to you. in this commission, i have never seen an inch, a fraction of partisanship. on this commission, we have a former controller, we have an inspector general for both state and homeland security, the former no. 2 at dcaa, also the deputy comptroller at the department of defense, we have one member of congress, a high ranking gao official. we have another member who was at the department of defense, national security, and number three at the state department. we take our jobs very seriously.

we have never seen any partisanship. i want to say that your company, in the end, find a way to cooperate with us, but sometimes we feel like we take you clicking -- kicking and driving to the altar -- dragging to the altar. we rarely have to deal with attorneys in other offices, but we often have to deal with attorneys in your operation. you have been helpful and had people come down, and we appreciate that, but on a scale of 1- 10, you are somewhere in the middle in terms of other contractors. i fully, and the commission fully respects your 29 and a half years of service in the

military. i have traveled to iraq more times than i can count because i get a fix from being in the presence of the people from -- people like you. we all point out that contractors are an essential part of this operation. we could not do without them. a lot of them are former service people. i was at a public hearing when you had blackwater totally criticized, and to provide some balance, i pointed out that you had never lost any of your people. everyone of them was former navy, former air force, a former army, a former marine. they were all military people who just happened to work for a private company. you do not have an enemy on this side.

but we start to react when you seem like you do not know things that you should know. i am just trying to put it in perspective. the perspective is that you got incredibly low marks not just from dcaa but also from the inspector general in relation to one part of your operation. it was frightening, given that you knew that dcaa was going to come, that you were not prepared. your people should have reviewed and told you what they submitted. if they did, and you are pointing out that this is the first time you heard about it, that makes me suspicious, candidly. i just want to say to you, does it matter, and should it matter to you, that on that part there was such a low utilization of 10%?

i am talking specifically about the clss and the maintenance facility. does it matter to you? >> mr. commissioner, it matters very much to us what our contractual requirements are, and what our delivery of those requirements are. it matters whether we are meeting our internal standard and whether we are meeting army standards. the element i tried to point out was that this data was collected from one data collection element which is not a total encompassing system of all the work that is done. more particularly, this work, much of this work was "be prepared" type of work.

you were on standby, on the call. normally, if you have maintenance unit, they are in the motor pool and working from 8 in the morning until close. >> i am going to yield my time, because i need to pursue this. i would have found it more healthy and reassuring if you would say, we are not perfect. we made mistakes. this is an area we made mistakes in and we are on top of it. instead, you almost want to get into a dialogue as to whether all of the inspectors were wrong. i do not know why you would go in that direction. the bottom line is, it was not 85% and 65%. it was 85% and 10%. 10% utilization. it is too much of a margin for

you to say that that is where you want your line to be. had you simply said, yes, we were underutilized, this is why it happened, this is why it shouldn't happen. that would have been a better response. explain to me what can present time is acceptable. >> -- explain to me why 10% is acceptable. >> it is not. it was not acceptable to us, and that is why we went to the military and said, look guys, we are concerned. we have all of these people here. we do not have work. here is the data. we went in july of 2008 and said, here is the data. then we went back in either august or september and said, here is more data. we are still concerned.

>> so your testimony is that you were aware of it. this is not a surprise, and you went to the government to tell them you had a problem. what was their reaction? >> to my knowledge, it was, we've got it, we understand. i personally was not involved in the communications because i was not there then, but in january we did the same thing again. we went back to the government and said, look, it is underutilized. not only are we concerned about it, but we want to sit down and talk about a better way to utilize this work force. we have a contractual requirement to provide it, and we were just as concerned that you were -- it just as concerned as you work that we were not using that capability.

i do not know, and i do not want to second-guess what the military knew that we did not about cheaper operations, about capabilities they wanted to retain and whether or not they specifically excepted the excess or not. >> would you disagree? >> i agree with what he said. the position i was taking was to try to clarify the nature of what is being measured. you can go down that same road if you try to evaluate firemen. if firemen are not fighting a fire, their utilization rates do not look good. but they have to be there. >> you are almost are doing against your own argument. your counterpart told the department of defense and that there was a problem.

you're coming back and saying that you needed that utilization. if the department of defense said they needed 85%, why would you make an argument that 10% was acceptable? >> i did not say that. >> that is what it sounded like. >> what i said was that the basis of what you are measuring needs to take into account that part of our work was to be on copy, much in -- was to be on call, but in the way that firemen are on call. >> i am during two different positions from you. i am comfortable accepting that you told the department of defense there was a problem, that your underutilizing. then you say that you need to have whatever needs to be in place. yet, the contract was clear. you needed 85% people -- he

needed 85%. let me quickly give you the opportunity to discuss the last paragraph in your letter. during the upcoming discussion of contract interpretation issues that have arisen from audit activities, pending these discussions, kbr aspects that you advise -- kbr asks that to the performance evaluation boards step down. tell me about that. >> that is referencing the fact that kbr believes that at certain locations we are being given incorrect directions to de-scope elements of work rather

than de-scoping work itself. during the time of that letter, where i elevated the issue to the contracting officer, we would not respond down at the lowercase allowable with requests to comply with what we believed were incorrect procedures. >> do think it is proper for you to tell the army to stand down? >> i was asking that the government to direct those particular people to not hold against us, in a negative way, their evaluation of our performance while we were seeking clarification. >> i read it differently. i read that you're basically saying that they needed to stop

and decease. >> for fear of beating a dead horse, a horse that is going to get pulverized, i will tell you what i want to go back to. in this discussion about what to do, you said, when asked what your responsibility is, you said the statement of work to limit the number of people at each site. you said that you need communication from the military with some form of direction. you went on to say four times that, for the record, can you

provide the nature of those four occasions -- of those four notifications and the form that they tech -- that they took? >> i am surprise, given that you knew that this would be an issue at a hearing, that you cannot just handed to us. >> but did not know that would be the right thing to do. >> to be prepared. >> we will do that. >> building on that, we got tens of thousands of an kbr contractor employees at a couple of hundred locations, maybe more.

i cannot believe that this is the only case open. i do not believe it. i do not believe this is a shooting star. if it is, tell me this is just an anomaly. for the record, i am interested, because i think it is very important, i know you do not want to make a big deal out of it, but i kind of do. your point throughout this has been at your hands are tied. what i would like from you, and if you do not have it on the top, you have, in terms of communication, a really effective organization. i would like some sort of statement, you know, we have been able to locate 26 other cases where we have been notified the government the we

had cases that warranted their attention. that is critical. you have said we have to work together. i could not support the mark. to me, that is really important. you've heard me this morning say that the company, i believe, has an equal obligation as a signatory to do these types of things. like i told the army, they are making ground on what they are trying to do, and we want to see evidence that the company is making ground on what it is trying to do. i am going to hang onto this efficiency, because to me, it is quality control. i will say for the record, every time we have gone out and asked about quality control, forget

the electrocutions, and you can, but that aside, things have been very, very positive. give us an education. if you want to come back to us and say, we would like to educate you on where reran at -- where we are adding -- where we are at, you know, it is the old story about watching your feet instead of your words. well we would like to see where your feet have gone. >> part of the documentation on at the meetings were in the report, but we will pull it out and provided to you. >> these days you live in that theater?

>> yes. >> may be sometime when you're coming home to treat your managers, we can all look at it together. no one said this was going to be easy, and it wasn't. i will yield the rest of my time. >> thank you. are you going to pass? >> we talked before about the uncertainty associated with the drawdown and the final idea of what the end state is going to look like. it seems to me that is always the case in contingencies, but in this contingency we also saw that price. we saw that in the initial invasion and also again in the the search. there was -- in the surge.

there was uncertainty about what would happen in different departments. is there any way that you could approach this as drawdown differently in respect to uncertainty? it seems like you are operating under the same kind of conditions, not knowing what the and state is going to be. >> madam commissioner, this is very different. this time we have a specific task, which is to conduct logistic support for the drawdown. before, we had a specified task to provide an -- to provide logistic support surge. not having had any other

direction, we have had to fold that into this, and it has made it very complex. >> so what you're saying is that you are prepared to transition, because that is what you have planned to do? >> we have successfully transitioned every element to date. >> the last time we talked, we were into the theater, and you were back early in the morning. at that time, we had just become aware, and i think you personally had just become aware of at 7100 people at the subcontractor level in iraq that you had not previously been aware of. you asked us for some time to figure out exactly what had happened. it is now 12 weeks later. can you tell us a little bit

about how that condition came to be? >> throughout the contract, we have provided it is deliverable reports. we give a daily personal report to the government on the status of our personnel strengths. we were asked to provide a report on the people doing work, and that is what we have been doing. when we started analyzing the camps for drawdown, and we got into the life support areas of our subcontractors, and analyzed their camp make up, and their camp components for drawdown, we realized that the subcontractors have their own overhead elements, residual within their camps, taking care of their

internal business. they are not taking care of the specific deliverable of our work, and so they had not been showing up on our reports. as soon as we realized it, we brought it up to the government and said, ok, here is a group inside the theater that is in fact, in essence, their overhead, and we have not been aware of their population strength. we immediately had a discussion with the government about it. we decided the right thing to do was to pick up control and accountability for those people. that number has driven down from what we roughly guest initially was 7000. that number has gone down to write at four thousand as of this week. that is what happened. i believe we were pro-active in bringing it to the army's attention when we discovered it. we are tracking it as a report

item from now on. >> is that because 3000 people have left or because the original number was wrong? corrective -- expressed -- >> the initial number was inaccurate. >> did you have to direct the government to do that? did they have to direct you to do that? >> we got the right thing to do was to account for these people, because when we draw down, we have to make sure they get out of the theater. >> is that a practice that you expect to be a good business practice going forward? >> it is not a cost impact to the government. >>