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PRIVATE SECURITY FIRMS STANDARDS, COOPERATION AND COORDINATION ON THE BATTLEFIELD

HEARING

BEFORE THE

SUBCOMMITTEE ON NATIONAL SECURITY,

EMERGING THREATS, AND INTERNATIONAL

RELATIONS

OF THE

COMMITTEE ON

GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

SECOND SESSION

JUNE 13, 2006

Serial No. 109–214

Printed for the use of the Committee on Government Reform

(

Available via the World Wide Web: http://www.gpoaccess.gov/congress/index.html

http://www.house.gov/reform

(II)

COMMITTEE ON GOVERNMENT REFORM

TOM DAVIS, Virginia, Chairman

CHRISTOPHER SHAYS, Connecticut

DAN BURTON, Indiana

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

JOHN L. MICA, Florida

GIL GUTKNECHT, Minnesota

MARK E. SOUDER, Indiana

STEVEN C. LATOURETTE, Ohio

TODD RUSSELL PLATTS, Pennsylvania

CHRIS CANNON, Utah

JOHN J. DUNCAN, JR., Tennessee

CANDICE S. MILLER, Michigan

MICHAEL R. TURNER, Ohio

DARRELL E. ISSA, California

JON C. PORTER, Nevada

KENNY MARCHANT, Texas

LYNN A. WESTMORELAND, Georgia

PATRICK T. MCHENRY, North Carolina

CHARLES W. DENT, Pennsylvania

VIRGINIA FOXX, North Carolina

JEAN SCHMIDT, Ohio

——— ———

HENRY A. WAXMAN, California

TOM LANTOS, California

MAJOR R. OWENS, New York

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

CAROLYN B. MALONEY, New York

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

DANNY K. DAVIS, Illinois

WM. LACY CLAY, Missouri

DIANE E. WATSON, California

STEPHEN F. LYNCH, Massachusetts

CHRIS VAN HOLLEN, Maryland

LINDA T. SANCHEZ, California

C.A. DUTCH RUPPERSBERGER, Maryland

BRIAN HIGGINS, New York

ELEANOR HOLMES NORTON, District of

Columbia

———

BERNARD SANDERS, Vermont

(Independent)

DAVID MARIN, Staff Director

LAWRENCE HALLORAN, Deputy Staff Director

TERESA AUSTIN, Chief Clerk

PHIL BARNETT, Minority Chief of Staff/Chief Counsel

SUBCOMMITTEE ON NATIONAL SECURITY, EMERGING THREATS, AND INTERNATIONAL

RELATIONS

CHRISTOPHER SHAYS, Connecticut, Chairman

KENNY MARCHANT, Texas

DAN BURTON, Indiana

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

STEVEN C. LATOURETTE, Ohio

TODD RUSSELL PLATTS, Pennsylvania

JOHN J. DUNCAN, JR., Tennessee

MICHAEL R. TURNER, Ohio

JON C. PORTER, Nevada

CHARLES W. DENT, Pennsylvania

DENNIS J. KUCINICH, Ohio

TOM LANTOS, California

BERNARD SANDERS, Vermont

CAROLYN B. MALONEY, New York

CHRIS VAN HOLLEN, Maryland

LINDA T. SANCHEZ, California

C.A. DUTCH RUPPERSBERGER, Maryland

STEPHEN F. LYNCH, Massachusetts

BRIAN HIGGINS, New York

EX OFFICIO

TOM DAVIS, Virginia HENRY A. WAXMAN, California

R. NICHOLAS PALARINO, Staff Director

KRISTINE FIORENTINO, Professional Staff Member

ROBERT A. BRIGGS, Clerk

ANDREW SU, Minority Professional Staff Member

(III)

C O N T E N T S

Page

Hearing held on June 13, 2006 ............................................................................... 1

Statement of:

Solis, William M., Director, Defense Capabilities and Management, Government Accountability Office; Shay Assad, Director, Defense Procurement and Acquisition Policy, Department of Defense; Greg Starr, Deputy Assistant Secretary, Bureau of Diplomatic Security, Department

of State; and James Kunder, Assistant Administrator for the Near

East and Africa, U.S. Agency for International Development .................. 14

Assad, Shay ................................................................................................ 35

Kunder, James ........................................................................................... 51

Solis, William M. ....................................................................................... 14

Starr, Greg ................................................................................................. 44

Taylor, Chris, vice president, Blackwater USA; Major General Robert

Rosenkranz, U.S. Army, retired, president, International Technical

Service, Dyncorp International; Ignacio Balderas, former CEO and current Board of Directors member, Triple Canopy; Doug Brooks, president International Peace Operations Association; and Alan Chvotkin,

senior vice president and counsel, Professional Services Council ............. 83

Balderas, Ignacio ....................................................................................... 135

Brooks, Doug .............................................................................................. 142

Chvotkin, Alan ........................................................................................... 156

Rosenkranz, Robert ................................................................................... 94

Taylor, Chris .............................................................................................. 83

Letters, statements, etc., submitted for the record by:

Assad, Shay, Director, Defense Procurement and Acquisition Policy, Department of Defense, prepared statement of .............................................. 38

Balderas, Ignacio, former CEO and current Board of Directors member,

Triple Canopy, prepared statement of ........................................................ 137

Brooks, Doug, president International Peace Operations Association, prepared statement of ........................................................................................ 145

Chvotkin, Alan, senior vice president and counsel, Professional Services

Council, prepared statement of .................................................................... 159

Kunder, James, Assistant Administrator for the Near East and Africa,

U.S. Agency for International Development, prepared statement of ........ 53

Rosenkranz, Major General Robert, U.S. Army, retired, president, International Technical Service, Dyncorp International, prepared statement

of ..................................................................................................................... 97

Shays, Hon. Christopher, a Representative in Congress from the State

of Connecticut, prepared statement of ........................................................ 3

Solis, William M., Director, Defense Capabilities and Management, Government Accountability Office, prepared statement of .............................. 17

Starr, Greg, Deputy Assistant Secretary, Bureau of Diplomatic Security,

Department of State, prepared statement of .............................................. 47

Taylor, Chris, vice president, Blackwater USA, prepared statement of ...... 85

(1)

PRIVATE SECURITY FIRMS STANDARDS, COOPERATION AND COORDINATION ON THE

BATTLEFIELD

TUESDAY, JUNE 13, 2006

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON NATIONAL SECURITY, EMERGING

THREATS, AND INTERNATIONAL RELATIONS,

COMMITTEE ON GOVERNMENT REFORM,

Washington, DC.

The subcommittee met, pursuant to notice, at 2:13 p.m., in room

2247, Rayburn House Office Building, Hon. Christopher Shays

(chairman of the subcommittee) presiding.

Present: Representatives Shays, Marchant, Platts, Duncan,

Kucinich, Maloney, Van Hollen, and Lynch.

Also present: Representatives Waxman and Schakowsky.

Staff present: R. Nicholas Palarino, staff director; Kristine

Fiorentino, professional staff member; Robert A. Briggs, analyst;

Robert Kelley, chief counsel; Phil Hamilton, intern; Jeff Baron, minority counsel; David Rapallo, minority chief investigative counsel;

Andrew Su, minority professional staff member; and Earley Green,

minority chief clerk.

Mr. SHAYS. A quorum being present, this Subcommittee on National Security, Emerging Threats, and International Relations

hearing entitled, ‘‘Private Security Firms: Standards, Cooperation,

and Coordination on the Battlefield,’’ is called to order.

Last week, the leader of al-Qaeda in Iraq, Abu Musab alZarqawi, was killed in an air strike. His death is significant. This

man beheaded people, he had thousands murdered, he blew up

both churches and mosques. His goal was to prevent Iraqi democracy. We congratulate the Iraqi people, and especially our military

forces and all others who participated in bringing an end to his

reign on terror. Although Zarqawi is eliminated, the difficult and

necessary mission in Iraq continues.

Even with the appointments of the ministers of the defense and

interior, and increasing role of Iraqi security forces, we can expect

terrorists and insurgents to continue their efforts to prevent establishment of a democratic government.

Iraq is a complex operational space. Military forces, civilian U.S.

Government agencies, international organizations, contractors, nongovernmental organizations, and a diverse local population all

share a common geographical area amidst those who would do

them great harm. It is difficult to distinguish friend from foe. Included in this complex arena are private security firms.

2

The Government Accountability Office [GAO], estimates there

are over 60 private security firms operating in Iraq employing approximately 25,000 personnel. Other estimates indicate there may

be as many as 180 firms employing close to 50,000 people. These

firms provide security for convoys, personnel, both government and

civilian, including visiting dignitaries, bases, housing compounds,

and reconstruction projects. The nature of their job puts them in

harm’s way. The most publicized private security firm casualties in

Iraq came when four Blackwater employees were killed in Fallujah

and their bodies hung from a bridge. But there are others. General

Peter Pace, chairman of the Joint Chiefs of Staff, said private security firms, ‘‘are doing a great job for what they have been hired to

do.’’ But if they choose right now to not report, to not let people

know where they are going and they get into trouble, it is very difficult to be able to respond to them.

Today we ask: What are the evolving roles and missions of the

private security firms operating in Iraq? What standards and capabilities are private security firms required to have before being

hired by our government? And, to what extent do private security

firms coordinate with the U.S. military and other government

agencies operating in Iraq?

The mission in Iraq is far from complete. Only time will tell the

impact of al-Zarqawi’s death. Iraqi ministers are in place and Iraqi

security forces are becoming more and more effective. As these

forces take control, private security firms are presented with a new

dimension, the coordination with not only coalition forces, but with

Iraqi forces as well.

We sincerely thank all the witnesses for taking the time to appear before us today, and we thank them all for their efforts to

bring peace and stability to Iraq. At this time the Chair would recognize the ranking member, my friend, Mr. Kucinich.

[The prepared statement of Hon. Christopher Shays follows:]

3

4

5

Mr. KUCINICH. Thank you very much, Mr. Chairman.

Hussein is in jail, Zarqawi is dead. Now we should leave Iraq.

Zarqawi represented a small portion of the large and growing antiAmerican insurgency in Iraq, a sliver of the non-Ba’athist insurgency while Ba’athists make up a majority of armed insurgents. So

his killing is unlikely to end the violence in Iraq. However, the administration is intending to stay in Iraq for the long haul, which

is why this hearing has some relevancy.

The committee will get an opportunity to take a closer look at

the rapidly growing industry that hasn’t gotten much attention.

The use of private security firms has grown exponentially in recent

years, and it is due to one reason: The U.S. invasion, occupation,

and reconstruction of Iraq. Rising security costs is the primary excuse for delays in reconstruction projects in the oil, water, electricity and sanitation sectors, and why the administration continues to ask Congress for tens of billions of dollars in additional

funds for Iraq.

There is a great need to protect key personnel and contractors,

to guard military bases, supply convoys, and critical infrastructure,

and to train the Iraqi security forces. This is truly a gold rush era

for the private security firms. It is estimated that more than 25,000

personnel working for some 150 private military firms in Iraq have

essentially become the second largest armed force there after the

U.S. military. But, of course, there are so many opportunities, so

much money at stake, and so few controls one inevitably finds corruption, mismanagement, and war profiteering in this wild west atmosphere. Millions of dollars worth of security-related contracts are

awarded overnight, many of them without competition or cost controls. There simply needs to be greater transparency and accountability over private military contractors.

We all know about the tens of billions of dollars in contract overruns that Halliburton’s Kellogg Brown and Root unit has deferred

to the American taxpayer in Iraq, but few know about the fly bynight startup firm Custer Battles that somehow managed to win a

$13 million contract to provide security at Baghdad Airport despite

having no security industry experience at all.

This firm was so corrupt that, when contracted to buy trucks for

the military, Custer Battles scrounged up any and every truck they

could, even if most of them weren’t operable. One Army general

called it the worst case of fraud he had seen in 30 years. So it is

little surprise to anyone here that neither the Coalition Provisional

Authority nor the Pentagon nor the State Department nor the

USAID, which all relied heavily on these firms have any idea what

these security firms are actually doing in Iraq.

It seems that nobody in the administration has been keeping

track of who is in Iraq. There are few, if any, international or Federal laws which regulate their actions, and few standards for hiring

and vetting these contract personnel. Almost anyone could startup

a security company in Iraq and start carrying around weapons.

And, unlike enlisted military personnel, private security firms

aren’t held accountable for any crimes they commit. There isn’t any

military chain of command, any military justice, nor does there

even have to be training and/or respect for the Geneva Conventions. We all know about Private Lynndie England and Specialist

6

Charles Graner’s role in the abuse of detainees at Abu Ghraib prison, but many of the interpreters and interrogators present during

the abuses were private contractors hired by the firms Titan and

CACI. Many of them have yet to be prosecuted or jailed like their

military counterparts. Instead, a few may have their security clearances stripped away. That is it.

Finally, I would like to draw attention to a problem that greatly

concerns me, the detection and treatment of psychological industries of private-military contractor employees. Psychological injuries caused by the stresses of war take many forms, including alcohol abuse, drug abuse, anxiety disorders, social phobias, PTSD, and

commission of violent acts. The gold standard study on this question was mandated by Congress a decade after the end of the Vietnam War. It was called the National Vietnam Veterans Readjustment Study. One of the most important findings of the study was

the likelihood of violent criminal behavior by veterans with a PTSD

diagnosis and who experienced wartime high stress. This study’s

investigator surveyed veterans for a number of violent acts committed in the last year. Nearly one fifth of the individuals with PTSD

suffered self-reported committing 13 or more violent acts in the last

year. The studies also found a very high incidence of criminal behavior among veterans whose war experience was high stress. The

implication is that the diagnosis of PTSD does not capture all the

psychological injuries that can result in the commission of violent

acts. Violence on such a scale implies criminal activity such as

armed robbery, gang activity, and assaults. It is not confined to domestic violence.

So, finally, the detection and treatment of psychological injuries

in both our uniformed personnel as well as the private military

contractor employees is an important public health measure. We

should care deeply about the health of the employees of private

military contractors, about the people of Iraq that they work

among, and the American society they return to. Thank you, Mr.

Chairman.

Mr. SHAYS. I thank the gentleman.

I would like to just take care of business and make a motion of

unanimous consent that Ms. Jan Schakowsky, a former member of

this subcommittee, a very active member of this subcommittee who

frankly has followed this issue, I think particularly, closely be allowed to participate. She has made the mistake of going on to Energy and Commerce, and wants to come back to this committee at

least for this hearing. We welcome you. And, without objection, you

are more than welcome to participate.

At this time the Chair would recognize the vice chairman of the

committee, Mr. Marchant.

Mr. MARCHANT. Thank you, Mr. Chairman. I appreciate your

leadership and foresight in holding this hearing. The testimony

today will enable us to more thoroughly understand the critical and

constantly evolving nature of private security firms and their role

in the war on terror and, more specifically, in Iraq, and how they

coordinate with the U.S. Government and nongovernmental organizations in providing security, security planning, and intelligence.

7

I was very fortunate last July to participate in a trip to Iraq and

witnessed first-hand the private security firms action on the

ground.

To each of the witnesses today, I want to thank you for being

here and providing us with your respective testimony on roles of

the private security firms, their standards, their capabilities, coordination, recommendations, and codes of conduct as it relates to

PSFs. I appreciate your being here to shed light on all the private

security firms and their capability of accomplishment. I also appreciate your determination to work in concert with our forces and

contractors on the ground. I believe each of us here today wants

to see the security intelligence concerns on the ground in Iraq addressed in the most efficient, logical, and effective way. Most importantly, I hope this hearing today will address how to improve

our capabilities and coordination on the ground.

Thank you, Mr. Chairman.

Mr. SHAYS. I thank the gentleman. I think the committee may

be aware, we are going to have three votes. If we can hear from

Mr. Waxman, the ranking member of the full committee, and then

we will come back and finish statements. And we will try to give

you all an idea of how long it will be. I apologize that you have to

go through this process.

Mr. Waxman, you have the floor.

Mr. WAXMAN. Thank you, Mr. Chairman. I appreciate your calling this hearing on private security contractors in Iraq. Most Americans would be amazed if they knew the role that private security

forces are playing in Iraq. Earlier this year, the director of the Private Security Company Association of Iraq estimated that approximately 181 private security companies are working in Iraq with

over 48,000 employees. That is more than three Army divisions.

These private security guards protect Federal officials like former

head of Coalition Provisional Authority Paul Bremer, and our current Ambassador to Iraq, Zalmay Khalilzad, and they guard U.S.

companies doing reconstruction work. They have become, in essence, an Army for hire. They regularly engage in combat with insurgent forces. And, like our brave troops, they, too, have lost their

lives to hostile forces.

There are many important questions Congress needs to ask

about these security contractors. One fundamental issue is whether

outsourcing what is essentially a military function, protecting U.S.

officials and citizens from hostile attacks, is in our national interest.

Another question is what rules apply to these private forces.

When our troops commit crimes or atrocities as happened in Abu

Ghraib and appears to have happened at Haditha, there is a well

established body of law that governs their conduct and provides for

military tribunals, but nothing like this exists when private contractors are hired as subcontractors to provide security services.

They appear to be immune from Iraqi law, and they aren’t subject

to the Uniform Code of Military Justice.

And a third key issue is, what are the costs to the taxpayers? In

my remarks today and in my questioning, I will focus on this last

issue, the burdens being placed on the taxpayers.

8

The cost of paying for an army of private security forces operating in Iraq is enormous, and it is one reason the reconstruction effort is failing. Rough estimates are that a quarter to a third of all

reconstruction funding now goes to pay for security. When an Army

sergeant provides a security detail, the taxpayers pay about $104

per day to cover his salary, housing, and subsistence. But when a

private contractor is hired to provide the same services, he can be

paid up to $1,000 a day, 10 times more. And due to tiering of security contracts, the final cost to the taxpayers may be far higher

than $1,000 per day.

I wrote to General Jerome Johnson of the Army Field Support

Command about this issue on November 30, 2004. We are here on

June 2006. I raised the concern that, under some contracts, there

appeared to be as many as four layers of subcontractors between

the taxpayer and the individual actually providing the security

services. As I explained in my letter, it appears that each contractor takes a cut of the profits, magnifying the cost to the taxpayer,

but not offering anything of value. According to one account I cited,

the final cost to the taxpayer could be inflated by 150 percent or

more.

I asked specifically for a cost accounting that showed how much

tier each tier of subcontractor was charging, but I also asked for

copies of all the contractor subcontracted documents to find out

why this was happening, but the Department would not provide

the information.

This is an intolerable situation. The Bush administration is

spending literally billions of dollars on private security contracts in

Iraq. Yet, when I ask a basic question about how much these services cost and whether the taxpayer is getting ripped off, I get

stonewalled.

Because this hearing is about this issue, as a member of the committee I am entitled to ask for a subpoena motion to get this information, because I think we are entitled to get the information. I

have had a discussion with the chairman of the subcommittee; he

feels as I do, that the subcommittee and our committee is entitled

to this information. I could offer that motion, but that is not my

purpose. I want to engage the chairman in a colloquy.

As I understand it, you agree that we should get this information. You will join me in a request for the information, and we will

use the full powers of this committee should that request not be

granted in a reasonable period of time to insist upon the information.

Mr. SHAYS. Well, my view is very clearly that, when a committee

requests information, even when the minority requests it, there

should be a response; there should be a clear indication of what can

be provided and what won’t be. My view is that this needs to be

taken on by the full subcommittee. I will gladly help you get this

information and join with you to get this information. And if we

fail to get this information through the proper requests in a very

short period of time, then we would have to use the powers that

are available to us to demand that information.

Mr. WAXMAN. And that you would support that, if necessary?

Mr. SHAYS. Absolutely.

9

Mr. WAXMAN. Well, I think that is an appropriate response, and

one that I very much welcome.

Mr. SHAYS. And I also want to express my disappointment that

it has taken so long for this information to be provided.

Mr. WAXMAN. Thank you. Well, we have learned that we need to

insist on accountability. And for that reason, I am very pleased

that you are calling this hearing today. I have other points I was

going to make in my opening statement, but I will bring it in in

the questions, because I think there is a better path than the one

we have been following.

Mr. SHAYS. I am very sorry, but probably not until about 10 of,

at least 15 of or 10 of. So you have 15 minutes clearly to be away

from this committee and maybe a little more. Thank you. We stand

in recess.

[Recess.]

Mr. SHAYS. The subcommittee will come to order. I, again, thank

our witnesses and do apologize for the delay. This is part of the

process.

I think this is an extraordinarily important hearing, and I think

we are going to learn a lot of important information, so we do look

forward to hearing from our witnesses. I think it is also important,

though, that Members state where they are coming from, and I

hope the witnesses are listening so they can incorporate comments

they hear whether in their statement or in answers to questions.

So I do think it is an important process both ways.

At this time, the Chair would recognize my very good friend,

Congressman Duncan.

Mr. DUNCAN. Thank you very much, Mr. Chairman, and thank

you once again for calling, as you said, what is a very important

hearing. I have people waiting in my office and I am supposed to

preside over the floor of the House shortly, so I don’t know how

much I am going to be able to be here. But I did want to at least

make a brief statement. And I am having a pollen or allergy attack, so I think it will be brief.

But I remember a year and a half or so ago when David Walker,

who was then the Inspector General of the Defense Department,

testified in front of this committee and said that the Defense Department had misspent or had lost to waste, fraud, and abuse $35

billion in Iraq, and that there was another $9 billion on top of that

that had just been totally lost and couldn’t be accounted for at all.

And I think the reason that more people weren’t horrified by that

is that $44 billion is almost a figure so large that people just almost can’t comprehend it.

Now what we have, it may shock some people, but there is waste

even in the Defense Department. And yet some conservatives seem

to think at this point that we can’t criticize that and that we have

to give the Defense Department every single thing that they ask

for and we shouldn’t ever question any of the expenditures that

they do. But some conservatives are getting to the point where we

are wondering if this misadventure in Iraq is not more about

money for defense contractors and others than it is about security.

And I probably respect Chairman Shays more than anybody or

as much as anybody in this Congress, so I will state real quickly

I know he does not agree with me on this. But William F. Buckley,

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the godfather of conservatism, he wrote in 2004 that if he had

known in 2002 what he knew then in 2004, he would have opposed

the war. And then last year, he wrote this. He said, a respect for

the power of the United States is engendered by our success in engagements in which we take part. He said a point is reached when

tenacity conveys not steadfast and purpose, but misapplication of

pride. And I think we have reached that point. And when I read,

as I read in the briefing by the staff on this hearing today, currently according to the Department of Defense there are 60 private

security companies operating in Iraq with approximately 25,000

personnel. However, the Baghdad-based association believes there

may be more than 150 security firms with as many as 50,000 personnel.

Well, I know that people down my way, and I come from a very

conservative, very patriotic, very pro-military district, but they

don’t want to see money just wasted continuously. We are getting

to the point with an $8.3 trillion national debt which is headed up

very highly, we are not going to be able to pay all of our military

pensions and civil service pensions and our Social Security and

Medicare and so forth in not too many years from now if we don’t

stop spending hundreds of billions of dollars in other countries for

things like this.

I heard a general at the Pentagon say that al-Qaeda was now

down to less than 3,000 troops and had no money; yet, we keep

spending just ungodly sums over there. And then we find out that

we don’t even know exactly how many private security firms are

operating in Iraq. And then I think people down my way would

think that is kind of ridiculous that we don’t know that. I think

they would find it ridiculous that we are having to hire private

firms to provide security for our troops, because they are in the

business—that is what their business is, is security.

And then also, what they would find the most ridiculous of all

is that we hire a foreign firm, a British firm to provide security for

our own military. And in one of these briefings, it says a Britishowned security firm provides security for the Army Corps of Engineers. And then this article that was in the Washington Post 2

days ago, that they got $293 million, the largest contract over

there. But I am told also by staff that we don’t know exactly how

much money we have spent on private security contracts.

And I don’t know if that is the case or not, but somebody should

be finding out. And so I am glad you called this hearing, but there

is a lot of frustration out there about this whole deal. And yet, on

our side, it seems that we can’t say anything about it. And the

other side has constituency like, if we said we were going to spend

10 times on public education what we are, the other side would immediately attack us and say that wasn’t enough.

We need to get past these constituencies and do what is right for

the American taxpayers. Thank you, Mr. Chairman.

Mr. SHAYS. I thank the gentleman very much. And I would just

point out, when Members had left, Mr. Waxman had made a request. And as I read this letter, it is not a credit to DOD that they

received the letter November 30, 2004 asking for basically the

same kind of information, Mr. Duncan, you would want. And they

received a letter back from Jerome Johnson who it was sent to, the

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Commander of U.S. Army Field Support Command, basically saying he has referred the letter—and this is dated December 21,

2004. He had referred the letter to the Office of Congressional Legislative Liaison.

I just think it is very important for this committee to support

that letter and that request for information, and so this will be

made part of the record, without objection, and the Department

will be very aware of what we are asking for. It was in your letter,

Mr. Waxman.

Mr. WAXMAN. Thank you, Mr. Chairman. I think you will get

more attention from them than obviously we did. And if we act together, we will get the information the Congress is entitled to.

Mr. SHAYS. Well, it is a matter of legislative responsibility, and

we do need to work together on that.

At this time, the Chair would recognize Mr. Van Hollen, who has

had the opportunity to visit my district and knows what a wonderful place it is.

Mr. VAN HOLLEN. Thank you, Mr. Chairman. And you have a

wonderful district, Mr. Chairman.

Let me just say, I think this is a very important hearing for us

to have. If you remember the lead-up to the Iraq war, Lawrence

Lindsey, who was then the President’s chief economic policy adviser, predicted that the war would cost between $100 billion and

$200 billion. At that time, he was laughed at by other members of

the administration, including people at OMB. They said that is way

too high. We can recall also then Deputy Secretary of Defense Paul

Wolfowitz saying, well, Iraqi oil revenues will easily be able to pay

for the reconstruction phase and quickly.

Well, we now know that both the Wolfowitz prediction was

wrong, that the Lawrence Lindsey prediction, for from being was

too low was too low, and the efforts in Iraq are costing hundreds

of billions of dollars to the taxpayer. So it is important that we hold

the people spending those moneys accountable.

As we have heard from others, we have already heard of millions

of dollars that are wasted as a result of fraud, abuse, and other

forms of waste. And so it is important that we have an opportunity

now to look at one sector of spending, which is on the private security contractors.

Now, in and of itself, there is nothing I don’t think that is intrinsically good or bad about having a private entity involved. It depends on what they are involved in and the rules under which they

are operating. But it is clear that in Iraq there have been failures

and breakdowns in both those areas.

I just want to draw attention to one example that was highlighted by GAO, the Government Accountability Office, independent nonpartisan agency back in April 2005. They talked about how

the Army was looking for interrogators, people to conduct interrogations. And rather than do that within the Army or within the existing military force, they decided to contract it out. Where did they

go? To the Department of Interior. And through some complicated

contracting procedures they essentially contracted out to a private

vendor interrogation. And the GAO found, and I am just quoting

from their report there, that: Because the officials in Interior and

Army responsible for the orders did not fully carry out their roles

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and responsibilities, the contractor was allowed to play a role in

the procurement process normally performed by the government. In

other words, the Federal Government essentially turned over the

responsibilities, governmental responsibilities to a private contractor.

That is wrong. That is an abuse of the responsibility of the Federal Government. It leads to bad results. We need to make sure we

have procedures in place for proper oversight. If you are contracting out to any private entity, you need to have oversight so that

the final decisionmaking authority is somebody who is essentially

responsible ultimately to the public. That is one issue.

The other issue. There are some things in my view that are intrinsically governmental functions, like interrogations, and just

should not be contracted out. We don’t want to contract out all our

military operations. So there are a number of very important issues

on the table I hope we will get to the bottom of. Mr. Waxman

raised some issues about what rules apply to contractors. There are

two sides of that coin. For the contractors’ own protection, in some

cases, you want to know whether there are rules that make sure

that, if something happens to them, that they have recourse to a

judicial process.

At the same time, if they do something wrong in Iraq, it is important that the same rules apply so that the people who have been

wronged by them have recourse to judicial process. Two sides to the

coin. And right now, I think this is an area that has been out of

control, improper oversight. We have seen waste of billions of dollars, I think hundreds of millions of dollars in Iraq. And the lack

of oversight over private contractors has been a big part of the

problem, and I think it is characteristic of the overall lack of competence with which the war in Iraq has been conducted. Thank

you, Mr. Chairman.

Mr. SHAYS. I thank the gentleman. At this time, the Chair would

recognize Ms. Schakowsky. Welcome, and nice to have your participation.

Ms. SCHAKOWSKY. Thank you, Mr. Chairman. I really do appreciate your allowing me to participate, not just sit in but participate

in this hearing. I thank Ranking Member Kucinich and the ranking member on the full committee, Mr. Waxman, as well.

Over the past decade, private military contractors [PMCs] have

become a key factor in U.S. military operations. U.S. military logistics, combat assistance, and security services are increasingly

outsourced to private entities. Civilians have taken on many of the

responsibilities and duties once performed exclusively by uniformed

personnel. As a result, today advancement of key U.S. foreign policy goals relies far more on private non-state actors than at any

time in American history.

Regulating the responsibilities and accountability of taxpayerfunded private actors on the international stage is one of the most

important policy challenges that the Congress needs to address in

regards to our foreign policy. Yet, while the PMC trend is having

a profound impact on the planning and conduct of modern warfare,

there has been almost no scrutiny and less oversight in regulating

the U.S. PMC relationship. In fact, when I offered an amendment

to the fiscal year 2007 defense authorization bill that would help

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provide better congressional oversight on military contractors in

Iraq and Afghanistan, the Republican majority refused to allow me

to include language asking for: The number of contracts in existence; the total cost of these contracts; the total number of contractors in Iraq and Afghanistan; the number of dead and wounded

contractors; a report on the laws that might have been broken by

contractors; a list of disciplinary actions taken against contractors;

copy of contracts issued in excess of $100 million. None of those became part of the law.

That Chairman Shays and ranking member on the committee,

Mr. Waxman, have to estimate the number of contractors there are

serving right now in Iraq is absurd. These are taxpayer dollars. We

are funding those. And that we don’t know how many even that

there is, I think, a dereliction of our duty.

The Bush administration support for the privatization of government functions coupled with the wars in Afghanistan and Iraq has

accelerated the demands for private security services. Contractors

we know compose the second largest force in Iraq after the U.S.

military. And, to date, more military contractors have been killed

in Iraq than non-U.S. coalition soldiers, we think. We can all acknowledge that military contractors require the same stringent accountability and oversight standards as the U.S. military. After all,

private contractors often serve side by side with our brave troops,

and these same U.S. troops are often tasked to protect our contractors who are paid with billions of U.S. taxpayer dollars.

Several high profile scandals have exposed the challenges we

face with PMCs. Contractors have been implicated in financial,

legal, and human rights abuses, including illicit trade, drugs, prostitution rings, allegations of fraud, human rights abuses, and,

worst of all, unprovoked civilian deaths. These events have highlighted the challenges that arise when nonstate actors are employed in active war zones and are not sufficiently regulated, or

when enforcement of existing laws remains weak. The private military contractor business is the war business, and for-profit companies may not share the same mission-based goals as the U.S. military. They are in business for profit.

As the Iraq experience makes clear, a more transparent framework for monitoring and regulation of contractors is urgently needed.

I want to thank the Government Accountability Office for the

scrutiny that it has given. But you have asked more questions than

we have gotten answers for, and I hope this hearing today will

shed more light on the questions that you have raised and the

questions that I have been persistently asking. So I thank you very

much.

Mr. SHAYS. I thank the gentlelady very much, and we appreciate

having her expertise. That will help our committee get the work

done that we need to.

I am just going to make this point that what we asked the witnesses to do today is to talk about PSF, private security firms, basically body guard type work, what I would call Secret Service type

work. So we have not made the request from these groups to focus

on private military contractors which can be beyond that. But

Members are free to ask any question they want, but in terms of

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the expertise that we have asked to be presented today. And it is

possible that we would broaden it to go beyond the private security

firms in our work.

Let me welcome our witnesses. First let me take care of some

business that we need to do. I ask unanimous consent that all

members of the subcommittee be permitted to place an opening

statement in the record, and that the record remain open for 3

days for that purpose. And, without objection, so ordered. I ask further unanimous consent that all witnesses be permitted to include

their written statements in the record. And, without objection, so

ordered.

At this time, the Chair would recognize our four panelists. If

there is anyone else that you may turn to to respond to a question,

we will ask you to ask them to stand up and be sworn in so we

don’t have to do it more than once.

We have Mr. William M. Solis, director, Defense Capabilities and

Management, Government Accountability Office [GAO].

We have Mr. Shay, without an s, Assad, director, Defense Procurement and Acquisition Policy Department of Defense.

We have Mr. Greg Starr, Deputy Assistant Secretary, Bureau of

Diplomatic Security, Department of State.

We have Mr. James Kunder, Assistant Administrator for the

Near Far East and Africa, U.S. Agency for International Development.

As you know, we do swear our witnesses in, and we would ask

you to stand at this time. Is there anyone that you would suggest

be sworn in as well?

[Witnesses sworn.]

Mr. SHAYS. Note for the record our witnesses have responded in

the affirmative.

What we do in this committee is we request that you be 5 minutes, but we let you roll over beyond that. So we would prefer that

your statement be what you want it to be, but obviously not to be

more than 10, but preferred closer to 5. But whatever, we appreciate you being here, Mr. Solis.

STATEMENTS OF WILLIAM M. SOLIS, DIRECTOR, DEFENSE CAPABILITIES AND MANAGEMENT, GOVERNMENT ACCOUNTABILITY OFFICE; SHAY ASSAD, DIRECTOR, DEFENSE PROCUREMENT AND ACQUISITION POLICY, DEPARTMENT OF

DEFENSE; GREG STARR, DEPUTY ASSISTANT SECRETARY,

BUREAU OF DIPLOMATIC SECURITY, DEPARTMENT OF

STATE; AND JAMES KUNDER, ASSISTANT ADMINISTRATOR

FOR THE NEAR EAST AND AFRICA, U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT

STATEMENT OF WILLIAM SOLIS

Mr. SOLIS. Chairman Shays, Ranking Member Kucinich, and

members of the subcommittee, I am pleased to be here to discuss

the use of private security providers by U.S. Government agencies

and contractors that are helping to rebuild Iraq. It is the first time

that the United States has depended on contractors to provide such

extensive security in a hostile environment, although it has preVerDate 11-MAY-2000 12:19 Mar 30, 2007 Jkt 000000 PO 00000 Frm 00018 Fmt 6633 Sfmt 6633 C:\DOCS\33252.TXT HGOVREF1 PsN: HGOVREF1
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viously contracted for more limited security services in Afghanistan, Bosnia and elsewhere.

Today my testimony will followup on some of the issues we

raised in our 2005 report on private security providers as well as

our preliminary observations from an ongoing engagement on the

processes used to screen their employees. Specifically, I will address three main points: The extent to which coordination between

the U.S. military and private security providers has improved since

our 2005 report; the ability of private security providers and DOD

to conduct comprehensive background screenings of their employees; and the extent to which United States or international standards exist for establishing security provider and employee qualifications.

With regard to my first point, we reported in July 2005 that coordination between the U.S. military and private security providers

had improved since the establishment of the Reconstruction Operation Center in October 2004. However, military officials we recently met with in Iraq and those that have recently returned from

Iraq indicate that coordination is still a problem. For example, private security providers are still entering the battle space without

coordinating with the U.S. military, putting both the military and

security providers at a greater risk for injury. And, U.S. military

units are still not being trained on operating procedures of private

security providers in Iraq and the role of Reconstruction Operation

Center. In our 2005 report, we recommended that a predeployment

training program would help address the coordination issue. DOD

agreed with our recommendation but has not issued any guidance

or conducted any training with regard to working with or coordinating with private security providers on the battlefield.

Regarding my second point, our preliminary observation suggest

that private security providers and DOD have difficulty conducting

comprehensive background screening when data are missing or

unaccessible. When doing background checks of those living in the

United States, private security providers use public information

available at the county, State, or Federal level.

They also search criminal information repositories and commercial data bases, such as those that collect information on incarcerations. None of these types of searches, however, guarantees a comprehensive background check. Additionally, screening host nation

third country national employees can be difficult because of inaccurate or unavailable records in some of these countries. In addition, officials from some background screening firms told us that

foreign laws restrict access to some criminal records.

Finally, DOD’s biometric screening of most non-U.S. contractors

including employees of private security providers accessing U.S. installation in Iraq is not as effective as it could be, because the data

bases used to screen contractor employees include only limited

international data.

My third and last point is that no U.S. or international standards exist for establishing private security provider or employee

qualifications. As we reported in our 2005 report, reconstruction

contractors had difficulty hiring suitable security providers. For example, we found that contractors replaced their security providers

on five of the eight reconstruction contracts awarded in 2003 that

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we reviewed. Contractor officials attributed this turnover to various

factors, including their lack of knowledge of the security market

and potential security providers, and the absence of useful agency

guidance.

Consequently, we recommended that agencies explore options

that would enable contractors to obtain such services quickly and

efficiently. Such options could include identifying minimum standards for private security personnel qualifications, identifying training requirements in the key performance characteristics that these

personnel should possess, establishing qualified vendor lists, or establishing contracting vehicles which contractors could be authorized to use.

State Department disagreed with our recommendations, citing

concerns that government could be held liable for performance failures. State determined that they could best assist contractors by

providing information on industry best practices and other security

related material. As we stated in our 2005 report, given the significance of contractors in achieving reconstruction objectives and the

mixed results they encountered when selecting their security providers thoroughly, exploring potential options to assist contractors

in obtaining these services quickly and efficiently would be prudent.

Mr. Chairman, this concludes my oral statement. I will be happy

to answer any questions you or the members of the subcommittee

may have.

Mr. SHAYS. Thank you, Mr. Solis.

[The prepared statement of Mr. Solis follows:]

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Mr. SHAYS. Mr. Assad.

STATEMENT OF SHAY ASSAD

Mr. ASSAD. Thank you, Mr. Chairman. Chairman Shays, members of the committee, Madam Congresswoman, I am Shay Assad,

and I serve as the Director of Defense Procurement and Acquisition

Policy in the Office of the Undersecretary of Defense For Acquisition Technology and Logistics. Prior to taking this position in April,

I was the Assistant Deputy Commandant for Installation and Logistics in Contracting. I was the senior contracting official in the

U.S. Marine Corps.

To give you a little background, I spent 25 years in industry

serving in a number of operational and staff capacities primarily

with Raytheon Co. My experience includes serving as a senior vice

president of contracts. I was president and chief operating officer

of a major operating division, and I was last an executive vice

president, chairman, and CEO of one of their major operating companies. I am a graduate of the Naval Academy, and I started my

career off as a naval officer in serving two tours on Navy destroyers, and last, as a Navy procurement officer at the Naval Sea Systems Command.

Thank you for the opportunity to appear before you today to participate in today’s discussion on private security firms. I would like

to take a moment to thank the committee for its support of our

troops and all you have done to help with their mission. I would

also like to thank the men and women who serve our great country. When I say men and women, I mean our military, our government civilian, our coalition, and industry partners. None of us

could get the job done without the other.

I am continuously impressed with the cooperation among all

those contributing to the mission under very adverse conditions in

Iraq and Afghanistan as well as other operating locations around

the world, and I am committing to doing what I can to assist them.

Mr. Chairman, our industry partners provide essential support to

the deployed military forces that enables our forces to focus on

their core mission. The Department of Defense acquisition team

strives to provide our war fighters the support they need, consistent with responsible management and stewardship to our taxpayers. We strive to effect timely acquisition planning, contract

execution, and responsible contract management oversight in order

to provide our war fighters the contract support they need to accomplish their mission. We are doing everything it takes to make

our soldiers, marines, airmen, and sailors and ensure that they are

provided with the safest, most dependable, and highest performing

equipment available within fiscal constraints together with the logistics and material support necessary to ensure performance

whenever and wherever it is needed. We will continue to work

every day to improve the service that we provide our men and

women in the Armed Services.

I know your invitation letter had asked General Webster to respond to specific questions based on his personal experience. I cannot speak for General Webster, but I can tell you from an acquisition and contracting point of view, my focus with regard to activities in Iraq primarily rests with supporting Major General Darrell

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Scott, U.S. Air Force, the commander of the joint contracting command.

In addition, I support a number of other contracting agencies,

such as the Defense Contract Management Agency, the U.S. Army

Corps of Engineers, and the gulf region division. These men and

women are doing great work under some very trying conditions.

You had asked about the roles and missions of private security

firms operating in Iraq. The activities of private security firms include but are not limited to protective security details for government employees and dignitaries, site protection of buildings and

other facilities, and operational staff work that directly support reconstruction and relief operations in a complex contingency.

You asked what policy directives apply to provide security firms

on the battlefield. The governing DOD policy is found in DOD Instruction 3020.41 entitled Contractor Personnel Authorized to Accompany the U.S. Armed Forces. This instruction establishes and

implements policy and guidance, assigns responsibilities, and

serves as a comprehensive road map of policies and procedures concerning DOD contractor personnel authorized to accompany our

forces. Chapter 6 in particular addresses armed contractors. There

are also various other service regulations that cover the use of

armed contractors. The Army has prepared a CONUS guide for

supporting contingencies within the United States and supporting

overseas contingencies from CONUS locations as well as a guide

book for all CONUS contingency contracting.

The committee has also asked what standards private security

firms are to meet before being employed by the Department of Defense. First are the general standards of responsibility that apply

to all firms entering into a contract with DOD. These are specified

in the Federal and defense acquisition regulations as well as specific agency regulations.

More specific to armed contractors, DOD instruction 3020.41 prescribes standards that apply to contractor employees to include

medical standards, background checks, contractor direction and

discipline, as well as country entry requirements.

The committee has also asked what types of training security

firms provide their employees before being assigned to the battlefield environment. I cannot speak for any particular company with

regard to the types of training that particular company would provide. That would have to be answered by that company. I believe,

however, that specific training required of such firms would depend

upon the nature of the security provided and upon the individual

contract statement of work.

For example, training for a company that is hired to provide protective security details to senior leaders would be very different

from a company hired to provide static security such as gate

guards.

Some standard training for all armed contractors is described in

chapter 6 of DOD 3020.41. Other standards for training can be

found in DOD handbook 2000.12, the protection of DOD personnel

and activities against acts of terrorism and political turbulence.

However, any requirement to train according to these standards as

well as any other mission specific training should normally be included in the statement of work for a particular contract.

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In closing, Mr. Chairman, I thank you and the members of the

committee for your interest in our efforts, and I will be happy to

answer any questions that I can that you may have for me. Thank

you, sir.

Mr. SHAYS. Thank you Mr. Assad.

[The prepared statement of Mr. Assad follows:]

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Mr. SHAYS. Mr. Starr.

STATEMENT OF GREGG STARR

Mr. STARR. Thank you, Mr. Chairman, committee members.

Thank you for giving me the opportunity to present a short opening

statement on the subject of private security firms and our ongoing

operations in Iraq. Your letter to the Secretary requesting our appearance also included six specific questions. I will address the

questions briefly in this presentation, and we will provide you with

a more complete written response for the record by the end of this

week.

The Department of State diplomatic mission in Iraq was reestablished in July 2004. Diplomatic security crafted a comprehensive

set of security programs to meet the high level of threat in this theater of operation. The programs were a combination of physical and

technical security upgrades at our facilities, procedural security

regulations, and close personal protection operations for off compound requirements. Staffing for security programs in Iraq includes nearly 50 diplomatic security special agents, marine security

guards, approximately 1,500 third country national local guards,

hundreds of U.S. coalition troops protecting the international zone

and regional embassy offices, and nearly 1,500 highly trained contract personal security specialists.

The security specialists in this latter category referred to in the

GAO report as private security providers have been critical to our

efforts to create a safe environment for our U.S. mission personnel.

This effort has not been without great cost and personal tragedy.

We are all aware of the number of U.S. military personnel who

have lost their lives or who have been seriously injured in this effort, and we honor their memory.

In connection with programs conducted by U.S. agencies under

chief of mission operations, we have lost 119 civilians including direct hire employees and contractors. Diplomatic security has lost

two special agents and 23 contract personnel security specialists

killed in action in Iraq since July 2004. Six other contract personnel security specialists have lost their lives in our service in Afghanistan and Gaza. These men and women and their family have

paid the highest price in support of our efforts, so it is with the utmost respect that I am here to brief you and answer your questions

relating to these companies who provide us with these fine Americans.

The Department of State primarily utilizes private security firms

in Iraq for two major functions. The first is static guard services

at our facilities. These contract security operations are similar to

local guard contract programs we utilize at our embassies,

consulates——

Mr. SHAYS. If you could suspend for 1 second. We are going to

have two recorded votes. If we only had one, I would send one

Member out now so we could just keep rolling, but we will go for

another 10 minutes and we will hear your statements. Thank you,

Mr. Starr. Keep going.

Mr. STARR. As I said, we used the private security firms for two

primary functions. One is the local guard programs, and we utilized these typically at our embassies and consulates and resiVerDate 11-MAY-2000 12:19 Mar 30, 2007 Jkt 000000 PO 00000 Frm 00048 Fmt 6633 Sfmt 6633 C:\DOCS\33252.TXT HGOVREF1 PsN: HGOVREF1
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dences around the world. The second contracted functions are private security companies providing personnel security details and

security escorts.

When the U.S. embassy was activated in July 2004, we found a

number of CPA contracts for personal security services in place. As

the GAO report pointed out, they varied in capabilities, costs, and

level of training. We worked to immediately reduce the number of

different contractors and imposed uniform standards for operations.

Individual contracts were superceded by using our worldwide personal protective security contract. This is a competitively bid contract for personal security services with multiple awardees. These

contractors operate in very dangerous environments, and their actions, equipment, and methods of operation are specified in our

contract requirements. Rules of engagement developed by the embassy and approved by the chief of mission and diplomatic security

govern their use of deadly force. The companies also operate under

our contract guidelines, but since the establishment of Iraqi sovereignty have also complied with Iraqi legal requirements to register their companies with the appropriate ministry.

Diplomatic security has carefully crafted the very high standard

these companies must meet in order to effectively compete and win

awards. The personnel of these companies must provide, must also

meet high standards and be capable of obtaining a security clearance. Fitness, previous experience, integrity, and the ability to

meet security criteria add up to a very selective personnel screening process.

High training standards are another important factor demanded

by our contract. We prescribe the course criteria, vet the training

facilities as well as the instructors, and monitor our contractors to

ensure that these security specialists are trained to counter the

dangers that they will face in these high threat environments.

Feedback from on-the-ground operations is incorporated into training regiments and to provide replacements with the most up-todate information on tactics and techniques.

Overall, because of the high standards we set, insistence on high

caliber training and close oversight and management of the contract both on the ground in Iraq and in headquarters, we have

achieved a very high degree of capability in a short period of time

with few problems.

The services we provide are primarily for the protection of U.S.

Government employees and staff. We do not provide security services for private companies, nongovernmental organizations, or implementation partners. However, we are willing to share our contract requirements with those organizations supporting our effort

through the Overseas Security Advisory Council [OSAC], either domestically or in Iraq.

In closing, I would like to say that our ability to provide protective operations on the scale required in this environment would not

have been possible without using private security contractors. The

number of personnel security specialists we utilize in Iraq alone is

more than all the diplomatic security agents we have globally. We

could not have trained and hired new agents to meet this requirement as rapidly as the contractors met the requirement even if we

had the funding and FTE available. Meeting this relatively short

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duration requirement using competitively bid contractors along

with establishing high standards and requirements is the best possible solution for these circumstances. Thank you.

Mr. SHAYS. Thank you very, Mr. Starr.

[The prepared statement of Mr. Starr follows:]

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Mr. SHAYS. We are going to finish with you, Mr. Kunder, and

then we are going to start with Mr. Marchant and ask questions

when we get back. But you will finish up before we adjourn.

STATEMENT OF JAMES KUNDER

Mr. KUNDER. I will be very brief, Mr. Chairman.

Mr. SHAYS. Make your statement as you need to. Don’t worry

about what I just said.

Mr. KUNDER. Essentially, I’ll summarize briefly what I said in

my statement. I will take this opportunity to provide a little context on why we’re using security personnel and the various arrangements that actually take place in the field when we’re doing

a reconstruction effort. If you would take a situation where the

U.S. foreign aid program is taking U.S. taxpayer dollars to, say,

build a health clinic somewhere where we would immunize children, what we would normally expect to do is send our personnel

out ahead of time, make sure it’s not a swamp, talk to the local

villagers, make sure it’s a place where they would want the health

center, would it be useful to them and to make sure the construction takes place appropriately, any medical supplies are used appropriately, not stolen effort so all that requires a lot of trips by

U.S. Government personnel or our partners, contractors or NGO

contractors to get out to the site. What I find in those circumstances is that while we’re talking about personal security

firms here, what we’ve tried to do is adapt a number of techniques

to make sure the U.S. taxpayer dollars are spent wisely. In some

cases, that means using our local employees. For example, in Iraq,

we have more than 100 Iraqi professionals who often are able to

blend in more effectively and get out and take a look at these

project sites. In the West Bank, in Gaza, we’re using television

cameras to make sure construction is done effectively and efficiently. In areas where we can’t move, we are sometimes using armored vehicles. We’re trying to use a range of cost-effective techniques. Hiring of security personnel is not always the first option

that we would take to make sure taxpayer dollars are spent effectively. The second point I try to make in my testimony has to do

with a range of relationships, a range of security relationships that

take place in the field because if you’re going to get into discussions

of regulation and so forth, I think it’s important to understand the

range—of the range of relationships that we’re dealing with.

While Iraq and Afghanistan are coalition environments, most of

the operations we’ve been engaged in reconstruction in over the

last several decades have tended to be peacekeeping operations,

whether it’s Haiti, Bosnia, Somalia and so forth. In those situations, we tend to rely more extensively on military forces, peacekeeping forces. On the far extreme, some of our NGO partners,

even those operating in Iraq, do not use foreign personnel at all.

They hire either local security or attempt to operate below the

radar screen essentially so they’re not visible. They use either

Iraqi-Americans or Jordanians or other employees so there are a

range of relationships between service providers and—and security

firms that take place in the field. Very briefly since several members have talked about cost, we are spending probably about on avVerDate 11-MAY-2000 12:19 Mar 30, 2007 Jkt 000000 PO 00000 Frm 00055 Fmt 6633 Sfmt 6633 C:\DOCS\33252.TXT HGOVREF1 PsN: HGOVREF1
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erage 22 percent of the money that we’re spending on programs for

security purposes—am I breaking up?

Chairman SHAYS. No.

Mr. KUNDER. And that money—frankly, we’re not at all apologetic at USAID about the expenditure of those moneys. If I’m trying to immunize 4,000 children against measles at a health center,

and if medieval sadists are willing to blow up the people immunizing the children and the children who are lined up, I essentially

have two choices. Either I can immunize 3,000 children and spend

the other 25 percent for security purposes, or I can give up and not

immunize any children. Clearly, I would prefer—and I’m sure the

committee would prefer and I think every U.S. taxpayer would prefer—that I spend 100 percent of the money and immunize all 4,000

children, but the reality of the circumstances in which we’re dealing is that we have to pay these security costs in order to deliver

the services that we’re asked by the Congress to deliver under the

Foreign Assistance Act.

These are the kinds of contextual issues I tried to summarize in

my hearing—in my statement. I’m more than glad to answer any

questions the committee has. Thank you, sir.

[The prepared statement of Mr. Kunder follows:]

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Mr. SHAYS. I thank all four of you gentlemen. I think you have

put into play a good opportunity for the committee to ask questions. I think we have a range of expertise at our panel, and I

thank you for that. And as someone who has been to Iraq 12 times,

I just want to say I’m deeply impressed with the work of so many

of the folks who provide security. So I will be interested in your responses to questions. I will first be interested in the questions my

colleagues ask and your response to them.

Regretfully, we have two votes. I didn’t estimate its time very

well last time, but we have two votes, not three. We’ll be here probably a little after 3 to 4 p.m. Sorry. Is that right? Thank you. So

we stand at recess, and we’ll get right back here. I hope all the

Members can come back and participate.

[Recess.]

Mr. SHAYS. This hearing is called to order. Again, apologies for

having to recess for a little bit for votes. We’ll start with Mr. Waxman. And I’ll have questions. I prefer to ask mine toward the end.

So Mr. Waxman, you have the floor. I think we will do a 10-minute

round. So you have the floor.

Mr. WAXMAN. Thank you, Mr. Chairman. Mr. Assad, as you

know, last year, GAO issued a report concluding that the Defense

Department could not adequately determine how much it was

spending on contractor security services. To address this deficiency,

GAO recommended that the Defense Department track contractor

security costs, and the Pentagon agreed to do this. In order to gage

the Pentagon’s progress over the past year, I want to focus today

on just a single contract. The biggest contract in Iraq, which is the

LOGCAP, the Army’s contract for meals, housing and other

logistical support for the troops. Halliburton currently has this contract, which is now worth about $15 billion in Iraq alone. I’d like

to know—what I’d like to know is this, how much of this $15 billion

in LOGCAP funding went to pay for private security contractors?

Mr. ASSAD. Mr. Congressman, unfortunately——

Mr. WAXMAN. I don’t think your mic is on.

Mr. ASSAD. Mr. Congressman, unfortunately, I don’t have those

details, but I would be happy to get that information for you and

take it as a question for the record, sir.

Mr. WAXMAN. The Pentagon letter concurring with the GAO recommendations was signed by your office on July 19, 2005. And

your letter says, ‘‘the Department of Defense will collect readily

available data on incurred security costs under existing contracts.’’

Those are the Department’s words. This is a year later. Is it—you

don’t know how much U.S. taxpayers are spending for security

under the biggest contract in Iraq? Or you just don’t have it with

you today?

Mr. ASSAD. I just don’t have that information with me today, Mr.

Congressman.

Mr. WAXMAN. And didn’t you think this might be asked?

Mr. ASSAD. On the LOGCAP contract? No, I didn’t, sir.

Mr. WAXMAN. I’d like to put up a chart if I might. According to

the investigative reports, security costs under Halliburton’s

LOGCAP contract have spawned multiple players of subcontractors

all taking their cuts in successive rounds of mark-up. Let me walk

through this.

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According to the contract documents cited, the individual em- ployee performing security services under this contract earned $600

a day or $180,000 a year. Blackwater, U.S.A., the company that

employed this person then tacked on a 36 percent mark-up.

In addition to this amount, Blackwater also separately billed for

all of its overhead and costs including insurance, room, board, travel, weapons, vehicles, office space, administrative support and

taxes. But it didn’t end here. Blackwater was a subcontractor to a

Kuwaiti company called Regency Hotel, reportedly run by a retired

U.S. Army officer. Regency was apparently billing up to $1,500 a

day for that same single employee, but Regency was still not the

top level. Regency was a subcontractor to a German company

named ESS. We don’t know how much ESS charged, but we do

know ESS was a subcontractor to Halliburton. And we also know

that Halliburton’s contract with the Army guarantees that its costs

will be fully reimbursed. So they contract. As we can see, this

layering of contracts here guarantees Halliburton a fee of 1 percent

of those costs along with an opportunity for an additional 2 percent

in award fees. So if this information is correct, the bottom line is

that the U.S. taxpayers are paying hugely inflated prices for these

services.

Mr. Assad, do you know whether this report is true? Are there

really five tiers of contractors?

Mr. ASSAD. I do not, sir. But I will find out.

Mr. WAXMAN. If we can cut to the bottom line, the biggest unknown here is the total amount of mark-up. How much does Halliburton charge the American people for this $600 a day employee?

Mr. ASSAD. Mr. Congressman, I don’t have that answer, but I

definitely will look into it.

Mr. WAXMAN. Well, I’m asking not for—not a new question. I

raise these in a letter to General Jerome Johnson of the Army

Field Support Command on November 30, 2004. He wrote back

saying that the Office of the Secretary of Defense would provide a

formal response. The Defense Department has now had over a year

and a half to answer these basic questions, and the only conclusion

I can draw is that there is a concerted effort to keep Congress and

the American public in the dark, and since we’re the people who

pay the bills, that’s simply not acceptable. This goes to the questions that the chairman of the subcommittee is joining with me in

asking, and we would like that information to be provided for us.

Mr. SHAYS. Would the gentleman just yield a second?

Mr. WAXMAN. Certainly.

Mr. SHAYS. Mr. Assad, in terms of looking into it, what we would

want is a response——

Mr. ASSAD. Yes, sir.

Mr. SHAYS [continuing]. In writing to these questions that the

chairman has asked.

Mr. ASSAD. Yes, sir, Mr. Chairman.

Mr. SHAYS. And that can be provided in the next 2 weeks?

Mr. ASSAD. I will make every attempt to do that, sir.

Mr. SHAYS. Thank you.

Mr. ASSAD. Yes, sir.

Mr. WAXMAN. Mr. Assad, I would like to ask why the Defense

Department has not provided private security contractors with

59

greater assistance and guidance. In testimony later this afternoon,

the subcommittee will hear from an official from the Professional

Services Council. This is the leading national trade association for

companies that provide professional and technical services to the

Federal Government, including securities services.

In its testimony, the Professional Services Council says that they

recommended back in March 2003 that the Defense Department

take one of three actions. One, set standards for private security

firms operating in Iraq. Two, establish a qualified list of firms. Or

three, directly contract for securities services and have reconstruction contractors reimburse the government. But the Defense Department failed to take action on any of these recommendations.

Why was that the case?

Mr. ASSAD. Sir, I can’t answer to what you may have heard from

the Professional Services Council, but I can tell you that in a number of our contracts now that are being issued joint contracting

command, there are several provisions which we’re including in

those contracts that address the matters that you’re talking about.

All our contracts include DOD instruction 3020.41, which lays out

requirements for medical, lays out training requirements, lays out

firearm requirements, we include DOD instruction 5525.11.

We now require DD Form 2760, which is an arms qualifications

form and training form that we require. We require each employee

to sign in writing that he or she is complying with those training

responsibilities and conditions with regard to firearms. And while

I know we can improve, and there certainly is room for improvement, sir. I won’t deny that. We are making an attempt to make

it clearer for our contractors to understand what their requirements are, what their qualification requirements are, what the

training requirements are, and we will continue to do that, sir.

Mr. WAXMAN. Let me ask, Mr. Solis, is this adequate? GAO made

the same recommendations in your report, and GAO recommended

that the Defense Department explore minimum standards for private security companies, a qualified vendor list, a bigger government contract for securities services that could be reimbursed by

construction contractors. I assume that’s right, and do you feel this

is adequate enough to meet the request?

Mr. SOLIS. It may. It may, but it’s not clear to me when we talk

about the instruction that Mr. Assad’s talking about, that, I think

refers to contractors that are accompanying the force. I’m not sure

that directive would necessarily apply or be applicable to private

security contractors. It does lay out some aspects of the role of the

military in respect to contractors that deploy with the force, for example, like contractors who repair vehicles and things of that nature, but it’s not clear to me whether that will satisfy the requirement for private security.

Mr. WAXMAN. For private security. Couldn’t the Pentagon’s lawyers have placed qualifications on the list to make clear that they

were not endorsing any specific company, and in that way at least

let the contractor who was looking for security protection to hire

one of the authorized private security contractors?

Mr. SOLIS. Well, actually what we said in our recommendation

I believe was that they need to not only just DOD, but the State

and aid explore different options in terms of setting these kinds of

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standards, and we laid out different qualified vendor lists, different

contracted vehicles, I believe, and so that they could explore different options without necessarily being prescriptive about what

they should do because of the environment that was out there.

Mr. WAXMAN. Mr. Solis, let me just conclude by asking, what impact did the Department’s lack of action on these recommendations

that you, at GAO, had made. In your report, you discussed conversations you had with the contractors themselves, and you find

that the contractors believed that they could have used the additional information, and the additional guidance that you were recommending. How could the Defense Department have helped private security contractors to do their jobs better? And how would

that, in turn, have helped the government do its job better?

Mr. SOLIS. Well, I think there’s some potential—and again, we

haven’t looked at what they were currently doing, but until that’s

corrected, there could still be some potential vulnerabilities with

the type of contractor and the qualifications of those contractors,

and until that’s squared away, there may be some issues there.

Mr. WAXMAN. Thank you. Thank you, Mr. Chairman.

Mr. SHAYS. At this time, the Chair would recognize Mr. Duncan.

Mr. DUNCAN. Well, Mr. Chairman, I’ll be brief, and I wasn’t able

to be here because of other meetings for most of the testimony, but

I did refer earlier to this staff memo which says that there are 60

private security companies operating in Iraq with 25,000 employees, but that a Baghdad-based association says there may be more

than 150 private security firms with as many as 50,000 personnel.

Did we clear that up? Can anybody help me on that? Do we know

how many firms there are and how many personnel we’re talking

about?

Mr. STARR. No, sir.

Mr. SHAYS. I’m sorry. We need nice loud answers just so the recorder can record them. The question is, again——

Mr. DUNCAN. Well, the question was—it comes from the staff

briefing. I think everybody understood the question. And that is, as

I just would like to know if we know whether this is right or

wrong, the staff memo that says that some people say there’s 50

private firms with 25,000 employees and others say there’s 100,

maybe more than 150 private security firms with as many as

50,000 personnel. And I’m just asking, did anybody clear that up

in their testimony while I was away in my other meetings? But apparently not because everybody’s—I’ll just note for the record.

Mr. KUNDER. Sir, Mr. Duncan, we did not answer that question

specifically. I just would like to make one observation. One of the

issues is not just a data collection issue, but it’s a definition issue

because as the GAO report says, security in Iraq means a whole

bunch of things. It means security for static positions. It means security for convoys. It means private security details for individual

senior officials and so on and so forth. And that means that some

of our firms hire Iraqi subcontractors. Subcontractors from other

countries, and what you end up with is a broad array of security

firms across the country, some of whom are Iraqis providing local

security, some of whom are Nepalese or Colombian firms, and so

what you’ve got is a broad array of firms, and my answer would

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be part of the definitional issue or the reason some people are

using different numbers is they’re defining the pool differently.

Mr. SHAYS. Could the gentleman yield?

Mr. DUNCAN. Yes, sure.

Mr. SHAYS. I think this is kind of like when I was doing my

statement and I said between this number and this number, I was

kind of embarrassed to have to make that statement, and so I

would like, on the gentleman’s time, and I’ll be happy to give him

my time too, I would like each of you to tell me, do you know how

many security guards we have in Iraq? From you, you, Mr. Solis,

to you, Mr. Assad, to you, Mr. Starr, and to you, Mr. Kunder.

Mr. KUNDER. I cannot give you an exact answer. There is none

that—there’s only estimates from what we’ve been able to get.

Mr. ASSAD. Sir, I can’t give you an answer. I can tell you that

approximately through contracts we’ve awarded joint contracting

command 3,400 private security contractors that we’ve contracted

for through the joint contracting command. I can’t speak for the

Department of State, and I can’t speak obviously for AID, and that

does not include for contracts for other work where contractors

themselves would go off and subcontract for private security contractors. That’s just the contractors that we would award to.

Mr. KUNDER. Mr. Starr, would you just——

Mr. STARR. Mr. Chairman, I can tell you how many contractors

the Department of State has. I can tell you what the companies

are. And we can tell you how much it is and how many there are,

but like my colleague, Mr. Jim Kunder, has said, I don’t think we

could give you an accurate number of how many other contracts

are out there in support of nongovernmental organizations.

Mr. SHAYS. Mr. Kunder, is that your answer?

Mr. KUNDER. Sir, if you want to define the term—I’m not playing

games. I’m quite serious. If we can say on a given date because

we’re constantly changing what we’re doing in Iraq in response to

the situation on the ground. But if we can specify the date and a

definition of what you mean by, you know, international or local,

I can tell you exactly how many firms we had at any given time.

Yes, sir.

Mr. SHAYS. I’m just going to thank the gentleman for yielding to

me. I happen to be a big supporter of private security forces, but

I am pretty surprised that we can’t do it, give the number because

they’re basically all paid by the government, and it’s just surprising

to me that we can’t have—that there’s not one person who says,

this is what we’re spending. I thank the gentleman for yielding.

Mr. DUNCAN. Well, thank you, Mr. Chairman. Let me ask this.

This Washington Post story that came out 2 days ago said that this

British firm, Aegis Defense Services, got a $293 million security

contract. Is that the only contract that company got? Can anybody

tell me the answer to that? Does anybody know the answer to that?

Mr. ASSAD. Sir, I don’t know if that’s the only contract they got.

No, sir.

Mr. DUNCAN. Does anyone know how much total—we’ve determined we can’t tell the number of employees, but can anybody tell

me or give me a rough guess as to if one contract was for almost

$300 million, can anybody tell me a rough guess of if—how many

billions I assume that we’ve spent on private security contracts

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total from all the departments and agencies of the government

total in Iraq? Just out of curiosity.

Mr. KUNDER. I can say, sir, we divide the way, we spend the

money appropriated by the Congress into operating expenses, that

is to say our own staff, putting them on the ground, feeding them

and so forth. We’ve spent approximately $309 million since the beginning of operations. This is staff salary, staff housing and so

forth. And about $105 million has gone to security costs or about

one-third of the total. If you go to the other way we account for taxpayers’ dollars which is the program, that is to say building

schools, building clinics, building roads, building sewage treatment

plants, we’ve spent about 5.1 obligating about $5.1 billion of the

earth funds, and we estimate that 22 percent, or, say, a little bit

under $1 billion has gone for security costs. I could get you the precise numbers if you want.

Mr. DUNCAN. But you are speaking now just for the Agency for

National Development. Is that correct?

Mr. KUNDER. Yes, sir.

Mr. SOLIS. Congressman, if I can just add one of the recommendations we did make is, you know, for the agency to track

these costs better down to the subcontractor level, and I think

therein lies the problem in trying to get an answer to your question. I think the State aid committed future contracts to begin

tracking those kinds of costs, and we had some initial estimates

when we did our report based on some of the contracts that we

had, but I think the problem that we ran into is that you could not

track these costs, particularly down to the subcontractor level. But

I believe State and aid are making some adjustments and detract

those costs from new contracts.

Mr. DUNCAN. Well, let me just say this. You know, one of the

most famous quotes of all time was in the President Eisenhower’s

farewell speech when he said, when he warned us against the military industrial complex, and I’m convinced he would be shocked at

how far we’ve gone down that path. And the International Herald

Tribune had an article back a couple of years ago and they called

it the revolving door at the Pentagon. All the defense contractors

hire all the admirals and generals, and then they come back and

they get from their friends and their buddies these sweetheart

deals, and you know, and then we see things like this chart that

Mr. Waxman came up with, saying some former military officer,

who I guess had a friend in high places, $1,200 to $1,500 a day for

a hotel.

These things would shock my constituents, and I don’t know how

anybody can call themselves, legitimately call themselves a fiscal

conservative or a conservative Republican if they’re not just horrified by things like that are on this chart. It’s just getting ridiculous. Thank you, Mr. Chairman.

Mr. SHAYS. Thank you. I was wondering if the gentleman would

yield me the balance of his time.

Mr. DUNCAN. Yes.

Mr. SHAYS. Mr. Solis, tell me how we would sort this equation

out. I mean, each has their own responsibility. DOD is funding its

folks, and you have State Department funding its folks. But walk

me through, and you have the USAID funding its folks. But walk

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me through what would be involved and why we wouldn’t want to

be able to get this information fairly quickly.

Mr. SOLIS. Well, again, I think when we went back and started

looking at——

Mr. SHAYS. Excuse me. Let me just interrupt. I’m just taking the

balance of his time, correct?

Mr. SOLIS. When we went back and started looking at individual

contracts, we could only go so far in looking at what those contracts

in terms of where the money was being spent for security contracts.

Mr. SHAYS. Are most of these contracts cost plus?

Mr. SOLIS. I think it’s cost plus and fixed from what I understand.

Mr. SHAYS. I mean, in other words, when the private contractor—and I have no problem with them making sure that their folks

are protected and making sure that they hire security people to

protect them, but what I’m asking is, it seems a logical thing for

us to know how much we’re spending on security and how much

people are being paid, and so what I am asking is, help us sort out

how we would go about doing that or how DOD, or is it the fact

that we have two basic departments involved in this that makes it

more difficult? I mean, tell me.

Mr. SOLIS. I don’t know that it’s because—you’ve got two, three

or four whatever number of departments that are involved here.

Again, when we started looking at where security—what the totality of the security costs were, for example, when subcontractor

might have a bill for whatever services they had, there only might

be an invoice for whatever they were doing say for, you know, reconstruction, but it also had buried in there somewhere security

costs.

Mr. SHAYS. I don’t like the word ‘‘buried.’’

Mr. SOLIS. It was part of the invoice, but we could not determine

or break down how much of that was for security versus for other

services. So what we’re saying in working for was a delineation of

what those costs were when an invoice came in.

Mr. SHAYS. Do we need legislation to make that happen? Or can

we request that it be done by the departments and that they would

then do it? Mr. Starr, can you answer that?

Mr. STARR. Sir, I believe it was Congressman Waxman that sent

in a separate question, but concurrent with the GAO report or following the GAO report, State Department did meet with USAID,

and we have, in fact, issued something called a procurement information bulletin which is specifically giving guidance that the costs

for security within contracts that are awarded must be tracked. I

have a copy of the procurement bulletin that was issued. This is

on the recommendation of——

Mr. SHAYS. When was that done?

Mr. STARR. This was very recently, sir.

Mr. SHAYS. Very recently is not helpful.

Mr. STARR. No. I understand that, sir.

Mr. SHAYS. Very recently could be 6 months ago.

Mr. STARR. I don’t have—June 1, 2006, sir.

Mr. SHAYS. We should put that in the record. Tell me about that

DOD. Wouldn’t it make sense for them to make the same directive?

64

Mr. ASSAD. Yes, sir. And when I started looking into this, frankly

getting prepared for this hearing, I issued some direction within

my office. And I’m working with the Army as we speak to develop

some guidance for the joint contracting command to ensure that

takes place.

Mr. SHAYS. Well, maybe when you respond to the other question

Mr. Waxman has requested, you would tell us how you’ve progressed. Hopefully you’ll be ready to make that an agency-wide directive. That’s one of the reasons frankly why we have a hearing

like this, that gets us to focus on things, and I realize there are

a lot of things to focus on. So thank you for doing that. At this

time, the Chair would recognize the ranking member of the committee, Mr. Kucinich.

Mr. KUCINICH. Mr. Assad, when were the first private contractors put into Iraq?

Mr. ASSAD. I don’t know the answer to that, sir. I could find out

for you in terms of the first contractors that we contracted for, but

I don’t know that.

Mr. KUCINICH. When the Department began its contracting process—in connection—did the Department ever issue any guidelines

or rules of conduct for the contracting companies?

Mr. ASSAD. Subsequent to the GAO report, Mr. Congressman——

Mr. KUCINICH. No from the time that you started to——

Mr. ASSAD. No, sir. I think that it was the first—there was individual contracting clauses that were included in some of our contracts, but 3020.41, which was the true guidance that we gave our

folks was issued in November 2005.

Mr. SHAYS. Just for the record, could you let us know when you

began to take on this task?

Mr. ASSAD. Yes, sir. I took this position on April 3 of this year.

Mr. SHAYS. OK.

Mr. ASSAD. 2006.

Mr. SHAYS. Thank you. That’s helpful. Thank you.

Mr. ASSAD. You are welcome.

Mr. KUCINICH. My colleague, Ms. Schakowsky, points out that

contractors started to come in before the war. Is that—and so the

men and women who serve our country in the uniformed armed

services, when they go into a foreign operation, are they given rules

of engagement?

Mr. ASSAD. Yes, sir. They have rules of engagement.

Mr. KUCINICH. I wonder why it is if our troops would be given

rules of engagement in a hostile—under hostile conditions, why the

Department didn’t have rules of engagement for the conduct of private security people. Can you explain why that wouldn’t happen?

Why it didn’t happen?

Mr. ASSAD. I can’t explain why it didn’t. I can tell you that the

guidance that we’ve provided to the joint contracting command now

is that they include rules of engagement, rules utilizing force, law

of armed conflict and it has to be signed by each employee of the

company that we’re doing business with, that they’ve read the rules

and that they understand them. I can’t answer, sir, why——

Mr. KUCINICH. Do you know what the statute of limitation for

murder is in the United States?

Mr. ASSAD. No, I don’t.

65

Mr. KUCINICH. There isn’t one. Now, if someone connected with

a private contracting company was involved in the murder of a civilian, would the Department be ready to recommend their prosecution?

Mr. ASSAD. Sir, I’m just not qualified to answer that question.

Mr. KUCINICH. Anybody here qualified to answer that? And if

they’re not, why are you here? With all due respect. I mean, this

is, Mr. Chairman, as late as June 11th, 2 days ago, the Washington

Post filed a story that said that no security contractor has been

prosecuted for killing—indiscriminate killing of civilians. It says, in

part, because an agreement forged soon after the U.S. invasion of

2003 that made it impossible for the Iraqi government to prosecute

contract workers. I mean, I’d like to submit for the record the story

from the Washington Post, contractors cleared in videotape attacks.

It says the Army’s criminal investigation division cleared these individuals. The investigation’s not being released or publicly discussed. It said lack of probable cause or belief that a crime was

committed in what was an attack that was allegedly videotaped.

Further discussion of this story was in this article on November 27,

2005.

Mr. SOLIS. Congressman, if I may try to answer your question

and I’m not an attorney to get into the particular details of the

process, my understanding is that individuals could be prosecuted

under War Crimes Act. There is also another act, and I know the

acronym, I don’t know the exact words under MEJA. But I don’t

believe at this point anybody’s been brought forward under those

particular laws, but it is my understanding that those would be applicable for private security contractors, but I can’t——

Mr. KUCINICH. Back to the Department of Defense. Would the

Department of Defense be prepared to see prosecution preferred

against any private contractor who was demonstrated to have unlawfully killed a civilian?

Mr. ASSAD. Sir, I can’t answer that question. I would have to

take it back, and we will answer it for the record.

Mr. KUCINICH. Wow. Think about what that means. If private

contractors can get away with murder, and in some cases, they

may have. It’s not an adequate response really. And you know, this

is one of the problems here that these contractors do not appear

to be subject to any laws at all. And so therefore, they have more

of a license to be able to take the law into their own hands. We’ve

had a great discussion occur in this country and around the world

in the conduct of U.S. troops in certain incidents but those troops

will have to be accountable. There doesn’t seem to be any accountability with respect to private contractors and it’s—it really—since

the administration is more and more preferring in certain instances private contractors, it would seem that notwithstanding

your protestations that subsequent to these reports you are trying

to get into a new level of standards, the basic question of accountability is accountability before the law. And accountability of someone is unlawfully taking another person’s life that has to be the ultimate accountability, and you know we don’t hear that it is unless

you can enlighten me as to some new development that I may not

be aware of. Any of you.

66

Mr. STARR. Mr. Congressman, I believe that in our contract,

we’re very specific about rules of engagement, use of deadly force.

I’ve also checked with our legal people and unlike the Department

of Defense, we do not have the legal recourse should our contractors commit a crime that would be prosecutable back in the United

States. However, I would like to make it a matter of the record

that every shooting incident, every incident that’s gone on in Iraq

in a very, very volatile and very dangerous situation, essentially a

war situation where we are putting civilian contractors, we have

looked at the situations where they have, in fact, employed deadly

force, and found that there was——

Mr. KUCINICH. How many of those incidents have there been?

How many shooting incidents have there been by private contractors that you’ve had to look into?

Mr. STARR. The Department, sir, I can’t comment on the Department of Defense. The Department of State has—the Department of

State I can get you the number for, I don’t have it off hand.

Mr. KUCINICH. Ten?

Mr. STARR. I think about a dozen, sir.

Mr. KUCINICH. And Department of Defense, how many shooting

incidents do you investigate with respect to private contractors killing innocent civilians?

Mr. ASSAD. Sir, I don’t have it for you, but I will get it for you

and answer the question for the record.

Mr. KUCINICH. So you don’t have any idea at all?

Mr. ASSAD. No, I don’t sir.

Mr. KUCINICH. Have you ever canceled anyone’s contract because

their workers engaged in indiscriminate killing of civilians?

Mr. ASSAD. I have never had that situation occur to me but I can

tell you, Mr. Congressman, as Mr. Solis mentioned the MEJA Act,

that’s the Military Extraterritorial Jurisdiction Act, that is another

law that we are including in our contracts now as we place them

through our joint contracting command. So we’re trying to address

the issue that you are addressing, sir.

Mr. SHAYS. The gentleman’s time has run out, but I would be

happy to just allow him and I to just pursue this issue just for clarity, if we could. It’s my understanding that if you are a DOD contractor, you come under Defense Department rules. The bottom line

is, legal companies fulfilling contracts with DOD are subject to the

military chain of command, but not the uniform code of military

justice absent a congressional declaration of war, and their personnel can be prosecuted by the Department of Justice under the Federal law as a result of Military Extra Territorial Jurisdiction. My

understanding, though, is State Department is not. Is that accurate?

Mr. STARR. That is my understanding, sir.

Mr. SHAYS. OK, so, if you would just clarify for Mr. Kucinich and

me both, what do your employees—your contractors come under?

Mr. STARR. Sir, I do not believe that we have the capability of

prosecuting them back in the United States. This is something that

I would have to more closely check with our legal section, but in

discussion with our legal section prior to this hearing, it was a

question that was raised prior to the hearing. It is something that

we need to look at. But our efforts are controlled by specific rules

67

of engagement, approved by the chief mission as they are at all

U.S. Embassies and missions around the world.

Mr. KUCINICH. Refer back to the Chair, but I guess what it

amounts to defer is whether either the Department of Defense or

the State Department, when they hire these private contractors, if

any of them guided when it comes to civilians by the fourth commandment thou shalt not kill. I mean it just seems there’s no rules

here. It just seems that people can get away with murder.

Mr. STARR. I don’t agree with that, sir. My people do not get

away with murder. That’s not why they’re over there. I think

they’re tightly controlled. I think it’s a well-written contract. I

think that we have special agents on the ground that look very

closely at all the activities. Every shooting incident is investigated

and looked at. This is not a case of getting away with murder, sir.

Mr. KUCINICH. You know——

Mr. STARR. This is a case where we have a very difficult situation in a war zone where people’s lives are at risk.

Mr. KUCINICH. When innocent civilians are killed, we have to ask

the question—you just told me both of you said that you have incidents that you’re going to forward information to this committee

about. I think it would be important for us to go over each and

every incident to see if anybody got away with murder. Then we

can go back to your testimony.

Mr. SHAYS. Mr. Starr, I think you’ve made a point that’s important to make, and I think it’s been made. Thank you. At this time,

the Chair would recognize my colleague from Maryland.

Mr. VAN HOLLEN. Thank you, Mr. Chairman. And I want to

thank all the witnesses for their testimony here today. In my opening statement, I pointed to the gross wrong predictions early on

with respect to estimates of the cost of the war, again, when, Lindsay Lewis, the chief economic advisor to the President, said it may

cost $100 to $200 billion, he was sort of dismissed by others. In

fact, Mitch Daniels, who was then the CEO director, put the number between $50 and $60 billion. We now know it would be well

over in the hundreds and hundreds of billions of dollars, the cost,

and the question is, how did we get that so wrong? We know we

got the weapons of mass destruction issue wrong. We now know we

got the costs wrong. We apparently didn’t listen to the advice of

many military people in the field with respect to the number of

troops that would be needed to maintain stability in a post-invasion environment. We got that wrong. So I just want to go back a

little bit with respect to the cost issue because we’re now focused

on the question of the cost to the taxpayer, of the contracts that

were led and the war effort in general. And I would like to ask you,

Mr. Solis, because I found in your report you concluded that agency

officials expected that the post-conflict environment in Iraq would

be relatively benign and would allow for the almost immediate beginning of reconstruction efforts. We now know that those predictions, those feelings were not accurate, were not true. You go on

to say during a discussion with DOD, we were told that this expectation was based on determinations made at the most senior levels

of the executive branch, and the contracting officials were bound to

reflect that expectation in their requests for proposals. How is it

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that the administration bound the contracting officials to exclude

the costs of providing security in that post-invasion environment?

Mr. SOLIS. As we were vetting our draft report for final comment,

we got many comments from many different people. And as we

were running it through the acquisition community, this is something that they wanted to put in context in terms of an understanding as to why things were done the way they were. That’s

why we indicated that and wrote that in our report.

Mr. VAN HOLLEN. So let me just make sure I understand. You

are saying the administration officials instructed people putting together their cost estimates to assume that there would be very few

security needs. Is that correct?

Mr. SOLIS. No, I think what I am saying is in terms of the context of the environment, the benign environment or permissive environment, that’s the context that they were going to be operating

under or assumed they would be operating in, and in terms of

when they did the different contracts, whether it was private security contracts or for others, that’s the environment that they assumed we would be working in.

Mr. VAN HOLLEN. Are you, or is any of the gentlemen here aware

of the fact—I mean, State Department officials had been studying

the post-war, potential post-war environment in Iraq for many

years. In fact, they put together quite an exhaustive study, which

was essentially thrown out the window by the Defense Department

when making its analysis. Did your review come across that, did

you ask questions to the administration officials about that particular issue?

Mr. SOLIS. I don’t believe we came across that particular report.

Mr. VAN HOLLEN. All right. I mean, I want to give you a

quotation, because I think it’s instructive with respect to the total

failure of the administration to anticipate what should have been

something that anyone could anticipate. ‘‘It is not clear what kind

of government you would put in. Is it going to be a Shia regime,

a Sunni regime or a Kurdish regime? Or is it one that tilts toward

the Ba’athists or one that tilts toward the Islamic fundamentalists?

How much credibility is that government going to have if it is set

up by the U.S. military? How long does the U.S. military have to

stay to protect people that sign onto that government? And what

happens to it when we leave?’’

That’s a quote from Dick Cheney when he was Secretary of Defense, explaining back in early 1991 why the Bush administration

decided not to go into Baghdad after the invasion of Kuwait. It was

an explanation that I think made sense to lots of people, and it’s

one that came back to haunt this administration and this government now because the predictions he made in 1991—anyone who

followed Iraq knew very well that this is exactly the type of situation that could develop in Iraq, and so I guess my question to you

as someone who went in as an independent individual talking to

people in the administration, how did they get it so wrong? You

had an opportunity to interview people. You have Dick Cheney, you

know, many years earlier predicting this kind of chaos following an

invasion of Iraq. How did they get it so wrong with respect to the

security costs and the real possibility of an insurgency?

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Mr. SOLIS. I can’t tell you the specifics. I can only tell you that

the environment did change, assumptions going in did not always

pan out. And I think that then there shows the increase or the reasons for the escalation particularly for private security costs. It was

assumed that it was going to go into a particular environment.

That environment did not occur, and hence the need for security

forces.

Mr. VAN HOLLEN. I guess the key word—I mean, I’m not—you

weren’t there obviously, you just had an opportunity to talk to

folks, but the fact that they assumed that is extraordinary, given

the fact that people who are experts in this area at the State Department and others had looked at it and had come to option conclusions, people at the CIA had come to option conclusions with respect to the challenges we would face in a post-invasion Iraq, and

anybody who had followed Iraq, including now, Vice President Cheney, when he was remarking on this back in 1991, should have

known full well the potential of what would happen when you took

the lid off of Pandora’s box and unleashed forces that have existed

in Iraq for a long time between the Shia, the Sunni and the Kurds.

And I just find it amazing, amazing case of gross negligence that

people did not take that into account in planning.

Let me just switch gears a little bit, if I could, and ask Mr.

Kunder a question with respect to Afghanistan. And getting back

to Afghanistan gets us back to where the original threat to the

United States came from. Of course, Osama bin Laden planned the

attacks of September 11th. They were executed by him and alQaeda with the cooperation of the Taliban government in place. We

have now taken the appropriate action to go after the al Qaeda and

the Taliban, but we face a serious challenge in Afghanistan in reconstruction. I know you testified back in January, I believe, before

the House International Relations Committee, with respect to problems in southern Afghanistan where you have a resurgence of

Taliban, and since activity—and since your testimony back then as,

you know, it’s gotten even worse.

Can you just talk about the challenges we face with respect to

our reconstruction efforts in southern Afghanistan? Because I think

if we’re not successful at reconstruction and rebuilding and democracy efforts in Afghanistan, we do run the danger of another failed

state. We do run the danger of a resurgence of the Taliban, and

with that, the possibility that al-Qaeda can, once again, feel free

to operate in there. We know Osama bin Laden’s probably across

the border in Pakistan, but I think it’s a very real worry. If you

could just talk about the challenges and what it’s meant for our reconstruction efforts and your efforts there.

Mr. KUNDER. In general, sir, not specifically in terms of private

security firms.

Mr. VAN HOLLEN. Well, in general, but I know I believe you also

have some private contractors operating in terms of development.

Mr. KUNDER. Yes, sir. Yes, sir. Sir, there’s no question that the

number of security incidents has gone up in southern Afghanistan

since I testified earlier this year and increasingly over the last

year. I think the big question for everyone working there is what

combinations of factors has been driving it. While in the media, it’s

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generally been characterized as a Taliban resurgence. My frank assessment is it’s a much more complex series of events.

I mean, there are very, very isolated areas in Kandahar,

Oruzgan Province. Some of the most isolated places on the face of

the earth. I don’t want to slap a smiley face on everything, but to

some extent, what we’re seeing is a push back because some of the

road construction projects and education projects and so forth have

actually taken place in very isolated areas. We’ve had a spate of

burning of school buildings where girls have been asked to go to

school. Well, if there weren’t girls schools built, there wouldn’t have

been any girls schools burnt, so part of this is just a reaction by

very xenophobic, isolated people.

Part of it is clearly related to the increased pressure on the drug

trade. The eradication efforts. While the eradication efforts have

not been as successful as we had hoped, there are aggressive eradication efforts. So you get some kind of criminal element working

with in this as well. And then you do have some Taliban elements

that are trying to reorganize in the south as has been widely reported. So you’ve got a whole range of effects going on in the south

and the sum total, or the bottom line, is that the working environment has become more dangerous for reconstruction efforts in

southern Afghanistan. The U.S. Government’s trying to respond to

that both in terms of more aggressive patrolling and use of private

security firms and all the other techniques that I referred to earlier, but the bottom line is that it has become an increasingly dangerous place to work in recent months.

Mr. VAN HOLLEN. Well, let me just followup, if I could, Mr.

Chairman, General Maples, the head of Defense Intelligence Agency, did testify in front of the Senate a few months ago about the

resurgence of Taliban activity, and I think if you look at recent reports, it is a combination of factors but clearly there is an upsurge

in Taliban activity.

And I think that we should look at whether or not we really

want to reduce the total U.S. force presence in the southern Afghanistan area, which is currently what we are planning to do, but

I guess my specific question is, what impact has it had on our reconstruction development efforts there? Have we had to withdraw—I mean, I thought your testimony a few months ago suggested that we’d have to reduce our efforts there because of a lack

of security. I’m just curious as to whether or not we have been able

to get back in there or whether the situation security’s still too

dangerous.

Mr. KUNDER. Yes, that a very fair question. And it’s very relevant to the topic of this hearing because what we do in these circumstances is both on an area basis and a time specific basis, we

will withdraw relief workers or reconstruction workers, or put additional security in so for individual areas, specific areas for specific

periods of time we have had to pull people out. But the honest answer overall is that we’ve managed to maintain most of our efforts.

The road construction efforts that are going on in southern Afghanistan have continued. We have lost a lot of local Afghan guards and

local Afghan construction workers along the way, in excess of 200

people working for USAID.

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So there is a price that’s paid by—I would say by brave Afghans

themselves who are trying to rebuild their country. The alternative

livelihood programs the alternative to poppy production have been

shut down in individual areas for certain periods of time, but those

folks have always gone back in. So that what you are seeing is a

slowing of the reconstruction effort, but it is a continuation of the

effort throughout southern Afghanistan.

Mr. VAN HOLLEN. Thank you. Thank you, Mr. Chairman.

Mr. SHAYS. I thank the gentleman and at this time the chair

would recognize Ms. Schakowsky.

Ms. SCHAKOWSKY. Again, thank you so much, Mr. Chairman, because I have been trying to drill down on this issue of private military contractors, security contractors for a long time and have been

stymied at every turn. I want to associate myself with Mr. Duncan’s remarks about how shocked the constituents in his district

would be. I represent a very different district, and they would be

and are shocked as well by the astonishing lack of accountability

for literally billions of dollars that are being spent on private security contractors about which we know so very little, even when inquiries are made. Let me just say that right now—in the 3 hours

of this hearing, about $33 million, has been spent in Iraq. It’s about $11 million an hour, 24/7, day after day after day in

Iraq, and we need to—in Afghanistan, we need to get some questions answered. And I don’t know what you may have thought that

this hearing was going to be about. If we can’t answer questions

about what are the number of security contracts in existence, total

cost of these security contracts, maybe you can and maybe you will,

the total number of contractors in Iraq and Afghanistan. I’d like to

know the number of dead and wounded contractors because that’s

not part of the calculation right now in deciding whether or not

this war is worth it, whether it’s successful, we ought to not just

be counting the 2,500 or so of our Armed Forces, but also know

what is the loss of life for civilians, for Americans who are working

in this mission?

I want to know a list of the disciplinary actions taken against

contractors, if there have been laws that are broken, it’s hard to

imagine with the numbers, whatever they may be, of contractors

that there haven’t been any laws broken because I’m unaware of

any legal action that has been taken, and if there are disciplinary

actions, I would like to know as a Member of Congress what those

are, and in asking whether or not Congress—Congress should be

told at least of contracts over $100 million. I’d like to know. Can

I get, Mr. Assad, a copy of the contracts with Blackwater? Can I

see them?

Mr. ASSAD. Ma’am, Madame Congressman, we didn’t do the contracting with Blackwater. I think that was either the State

Department——

Mr. STARR. I don’t believe there is a problem with that, but I

would check with our procurement people. I will get an answer for

you on that. It is a publicly bid contract, competitively bid contract.

Ms. SCHAKOWSKY. I have had very little luck. Do you know anything about that, Mr. Solis? I have had very little luck being able

to see the contracts. I was told that if the agency doesn’t release

them, then the committee of jurisdiction has to subpoena that inVerDate 11-MAY-2000 12:19 Mar 30, 2007 Jkt 000000 PO 00000 Frm 00075 Fmt 6633 Sfmt 6633 C:\DOCS\33252.TXT HGOVREF1 PsN: HGOVREF1
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formation and that it is all—I can’t take any notes on it. I can go

into a secret room and look at those contracts. And it would seem

to me, if these are taxpayer dollars, I want to see those; I would

like to see a contract.

Mr. STARR. I can tell you that our worldwide protective services

contract was a competitively bid open contract.

Ms. SCHAKOWSKY. No, I want to see it, though. Can I see it?

Mr. STARR. I would have to ask our procurement executive. I personally wouldn’t have any problem with that, but I really do need

to check with the procurement person to give you an accurate answer on that.

Mr. SHAYS. If the gentlelady would suspend a second?

That is obviously an honest answer, and you will check it out.

You can’t promise something until you know, and you have people

above you. But let’s make sure that you communicate with the

committee with either, yes, of course you can, or, no, you can’t. And

then please give us the reasons. Because I believe my colleague is

right in saying, you know, we need to do our job, and we should

be able to look at these documents.

Ms. SCHAKOWSKY. Has the GAO seen those contracts?

Mr. SOLIS. We have seen some, and we’ve had some access to

some of those contracts through our work.

Ms. SCHAKOWSKY. Have you been refused to be shown any of the

contracts?

Mr. SOLIS. I don’t believe so.

Ms. SCHAKOWSKY. You know, I was looking at this, and also then

if you could provide me either now or later an answer to those

questions: the number of security contracts in existence, the total

cost of those contracts, the number—and subcontracts—and the

number of dead or wounded of the contractors, laws broken, disciplinary actions and contracts in excess of $100 million. Can I get

those from each of you? Can you answer me affirmatively?

Mr. KUNDER. Yes.

Mr. STARR. Yes. In fact, I just didn’t copy down all the questions

quite that fast.

Ms. SCHAKOWSKY. I will get that to you.

Mr. ASSAD. Yes, ma’am. We will respond. I will take the question

for the record.

Mr. SCHAKOWSKY. Also, Mr. Assad, I am looking at——

Mr. SHAYS. If the gentlelady will suspend, and she will have

time. I realize I am jumping in here. Just be clear as to the questions you’ve asked again, if you would just ask it again, because

they were writing it down. I am sure staff behind them was as

well. What are the questions?

Ms. SCHAKOWSKY. I’ll tell you what. Why don’t I provide it in

writing?

Mr. SHAYS. But in the record, just read it one more time.

Ms. SCHAKOWSKY. The questions are: the number of security contracts, the total cost of these security contracts; the total number

of security contractors and subcontractors in Iraq and Afghanistan

under those contracts; the number of dead and, separately, the

number of wounded contractors; a report on any legal actions that

have been taken against contractors or their employees; a list of

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disciplinary actions that have been taken against the contractors;

and a breakout of the contracts issued in excess of $100 million.

Mr. SHAYS. And how we will proceed? I realize again that it was

many questions. Provide us with that request in writing; we will

put a cover letter over so it is the committee’s request, and we will

make sure that you get the answers to it.

Ms. SCHAKOWSKY. I appreciate that so much.

Mr. KUNDER. May I ask one clarifying question? As we were discussing earlier, there are contracts for the protection of U.S. Government personnel, and then there are security contracts that are

part of—for example, we have a fully competed contract with Bechtel to build power stations. As part of that work, they hire their

own security personnel to guard their workers. I assume your question refers to the class of direct U.S. Government contracts that

have to do with the protection of U.S. Government personnel. Because if you are asking the latter, it’s much more complex.

Ms. SCHAKOWSKY. Let me ask, Mr. Solis, you have a definition

here, static security personnel. You defined in your GAO report

what you meant by security. I am wondering if we can just use

that definition that was on page 5 of the GAO report?

Mr. SOLIS. It may be a starting point. That’s what our understanding is in terms of defining the types of security out there. But

it could be something that could be used by these folks to try to

delineate the kinds of security services that are provided.

Ms. SCHAKOWSKY. So if that can be a working definition, which

would include static security, security for housing areas and work

sites, for example.

I wanted to ask, Mr. Starr, Mr. Solis’ testimony talks about how

the State Department disagreed with our recommendations. This

was on exploring options that would enable contractors to obtain

services quickly and efficiently and the various options for contractors. And it says that: The State Department disagreed, citing concerns that the government could be held liable for performance failures.

Now, if we are using our own military, clearly the government

is liable for performance failures. Are you saying that with the billions of taxpayer dollars that are being spent on these private security forces, that the United States of America is not responsible?

We want to put them at arm’s distance here and are not going to

take responsibility for performance failures? This is not our problem? Who’s responsible for performance failures if contractors with

our taxpayer dollars make mistakes? Shouldn’t some liability fall

on the State Department if you contract with people who aren’t

doing what they should be doing, aren’t trained appropriately, etc?

Mr. STARR. I think the answer—the formal question to the answer—the formal question or the answer that the State Department gave you was because we believe that there are so many different types of operations in Iraq that for the State Department to

write one set of standards that could possibly cover all of those

things wouldn’t be——

Ms. SCHAKOWSKY. I understand that part. But I want to tell you

that I am very concerned that we have operations going on in Iraq,

sensitive operations, and that, in fact, the U.S. Government doesn’t

want to take responsibility for those, wants to push them off on

74

someone else. And I think this notion of accountability and liability

and responsibility falls directly on government agencies, particularly given my suspicion that not a single contractor has ever been

prosecuted under any law. I just want to raise that concern.

Mr. KUNDER. Ma’am, I understand your question. But the logic

in general—when I sign something on behalf of the U.S. Government, our contracting guidelines—and we are listening to the Federal Acquisition Regulations which follow law passed by the Congress—instructs me not to engage in selecting subcontractors or

getting too much into the relationship with subcontractors for the

very reason that I do want to protect the taxpayers’ interests.

If I contract with your firm to build a road, you are responsible

to the taxpayers, to me as a Federal officer, for every element of

that road, getting the right kind of concrete, making sure the concrete is not cheap, making the sure the foundation is right, etc.,

getting security for the road. If I start getting into your business

and telling you as the prime contractor to the U.S. Government,

now, I want you to get this kind of concrete subcontractor and I

want you to get this kind of security firm and I want you to get

this kind of matting for the concrete, what I am doing is setting

up the taxpayers for a suit from you which says, well, I could have

built the road just fine——

Ms. SCHAKOWSKY. I hear you.

Mr. SHAYS. Hold on a second. The gentlelady’s time had ended,

but I want her to be able to respond. So it is not like we are just

going to click here.

Ms. SCHAKOWSKY. And I understand what you are saying. But

one of the recommendations that they had was identifying minimum standards for private security personnel qualifications, training requirements and other key performance characteristics.

Myself and, I believe, my constituents don’t think it is too much

to ask for the Federal Government to say, we are going to set some

criteria for people who are carrying out sensitive missions in Iraq

and that for the response to be, well, we don’t want to do that because it may create some—the government could be held liable for

performance failures, to me, is completely unsatisfactory.

I have a lot—as you can see, I have a lot of questions. This is

a whole area where the Congress has been completely separated

from oversight over thousands, tens of thousands of people conducting important activities in Iraq. We just need to open that up and

shed light. And I am looking forward to your answers.

And I thank you again, Mr. Chairman.

Mr. SHAYS. You are welcome. And you add value to this hearing,

and so we are grateful you are here.

Mr. Solis, I would want you to kind of maybe respond to some

of her points.

Mr. SOLIS. If I could. In our recommendation, we said to thoroughly explore. We weren’t necessarily trying to be prescriptive.

But, for example, when we said to come up with vendor lists, there

are some examples where, for example, I believe it is TSA has developed vendor lists of what they consider qualified baggage screeners for airports. It is a list. It is not a list that says you absolutely

have to use any of the particular ones, but it is a list from which

have been screened and gone through. That is an example.

75

But I think the operative word was, we are in a new environment. You need to explore some different alternatives and different

ways of potentially doing business——

Ms. SCHAKOWSKY. But the State Department said they didn’t

want to explore that, is my understanding.

Mr. SOLIS. That’s our understanding. But, again, we still think

our recommendation——

Mr. SHAYS. Let me, before having Mr. Marchant respond, I just

want to say—and I want to have this clarified if it is not true—

that, basically, those who work directly for DOD, those who work

directly for State, directly for AID, there are standards. Where we

kind of get into this question about standards is when the private

contractors that AID hires, when they go out into the field and

bring in their own security folks. And I would like to know first,

Mr. Solis, is that accurate from your standpoint?

Mr. SOLIS. I believe State has fairly high standards, and I believe—I have to think about AID a little bit. But it is not clear to

me that DOD has a set of standards, clear standards, that would

go across the board in terms of the types of contractors in terms

of qualifications and things of that nature.

Mr. SHAYS. And Mr. Assad, I want to just make sure that I am

not giving you a pass here, but I want to be fair. You have taken

on this assignment as of April. Were you the No. 2 person in this

area and so you have great familiarity, or were you brought in from

a bit outside?

Mr. ASSAD. No, sir. I was with the Marine Corps prior to this position.

Mr. SHAYS. So what I would hope you would gain from this is

that, if DOD has a little catching up to do, you are going to be paying some keen attention to this.

Mr. ASSAD. Yes, sir. I can tell you, Mr. Chairman, that with regard to our contracts that we are letting now out of our Joint Contracting Command, we are flowing down these clauses to their subcontractors. We are requiring our primes to flow these clauses that

I have talked to their subs. Now, unfortunately, that may not have

been the case a year ago or 18 months ago, but as we speak, we

are taking the actions to flow these clauses down in our private security contractors contracts.

Mr. SHAYS. Not only will this committee be watching, but so will

GAO be watching as well, and we will be asking them to monitor

this. And you can be assured Ms. Schakowsky is going to be watching as well.

I would like to just clarify as well before we get to Mr. Marchant,

in the area where you have the privates hiring, is it being funded—

are these folks that are working for DOD, State and AID, for just

one of you or all of you? Do you know what I am asking, the question?

Mr. STARR. Sir, the WPPS contract that we have in place covers

all direct hire personnel under chief of mission authority in Iraq.

That includes USAID personnel and personnel from the other Federal agencies that are in Iraq.

Mr. SHAYS. That’s an important question to answer. I didn’t ask

it well, so I am happy you answered that question. What I am trying to ask is, when we hire directly by DOD, directly by State, that

76

is one issue. When we engage a contractor through AID, who then

hires? Is this problem going to be mostly seen in AID? Is that

where we are going to see a lot of the contractors who are hiring

on their own?

Mr. KUNDER. In that case, sir, the way you asked the question

first is correct. We would each be contracting for each of those sets

of services. DOD would do some. State would do some. USAID

would do some.

Mr. SHAYS. But now you hire a company to build an electric generating plant. They are the ones who go out and hire somebody.

That, we would not see in DOD. Right? We don’t have this same

issue with DOD, or do we?

Mr. ASSAD. Yes, sir. Any prime contract that we have where a

contractor is performing in theater, if he is going out and getting

his own security force——

Mr. SHAYS. So in all departments. OK. I am asking a question

that basically—I am going to answer it myself. What I am hearing

you say is, with all our Departments, State and Defense, we are

hiring contractors who then are engaging in their own hiring of security folks.

And I am seeing and the record would show that all are responding affirmatively.

Mr. Marchant.

Mr. MARCHANT. Thank you, Mr. Chairman.

One of the most encouraging things that back in my district we

see is the fact that we are training more and more Iraqi security

forces. I don’t think that our people in the United States understand exactly the differences between the State police, the city police, the regional police, and what would be the highway patrol or

whatever, all of the nuances of that. But we see the increased number of people that are being trained. And our eventual goal is to

have enough soldiers trained, enough security trained so that our

withdrawal begins to take place and the Iraqis step forward.

I am very interested in how, as this is happening—and it is happening today, the private security firms who have been interfacing

with our military and our diplomats, how now you are going to

have Iraqi security forces there and how the transition, how this

interface is going to take place, how that transition is taking place.

How do you foresee it? Even when our troop presence is significantly less, I see the reconstruction will continue to take place.

USAID will still be there; we will still have a large private security

force presence. Has there been some kind of a transition plan put

together to see how these forces are going to deal with each other?

And I think, Mr. Assad and Mr. Starr, a question for you.

Mr. ASSAD. Mr. Congressman, I am not aware of a transition

plan, but I will take that question for the record and respond, sir.

Mr. STARR. Mr. Congressman, we don’t have a formal transition

plan, but it has been something that we have been discussing. As

Iraqi sovereignty continues, as the military and police forces are

trained and continue to take over, we will do as we do in many

countries; where we see a return to a more stable environment, we

will slowly draw down on our security efforts. We may lower the

profile first, we may cut the numbers. We may ultimately decide,

and hopefully, that instead of having either American forces on the

77

ground or third country national forces protecting us, that we could

rely on the Iraqi forces to protect us.

So as we see the situation improving, we will take stock of the

situation and make decisions in terms of lowering our profile and

lowering our presence.

Mr. MARCHANT. And do you find that the Iraqi security forces—

what level of respect do they have for the private security firms?

Is it at the same level that they have for our Armed Forces? Have

our Armed Forces and our military been able to say with authority

to them, these people have authority, too, you need to respect

them?

Mr. STARR. The authorities that the private security firms have

are the authorities that the U.S. Government and the Iraqi government give them at the moment. Should the Iraqi government decide that they are going to start withdrawing authorities, we will

of course be respectful of those things.

I think, to answer your question, the best example I can give you

is that one of our major contractors, Blackwater USA, brought in

a series of Iraqi speakers to speak with all of our personnel security specialists and give them training in how to deal with Iraqis

and how to work closely with them. And some of our forces have

Iraqi translators with them; some of them are relying on other

Iraqi specialists as well. And I think the level of respect that you

earn is essentially what you get. I think we take a great deal of

time in trying to train our security providers that they must be respectful of the Iraqis, and I think that they get the encouragement

and the cooperation in return for what they give.

Mr. SOLIS. Congressman Marchant, if I could only add, and again

asking about the transition plan, and I am not aware of a particular transition plan, but I think in terms of the things that we have

stated in terms of coordination and the training that Iraqi forces

would have to have in terms of interfacing with private security

contractors as U.S. forces draw down would be similar, because I

think those things are going to be needed in terms of making sure

that the issues that we have raised with the U.S. military and private security contractors don’t occur with the Iraqi army and private security contractors as that transition begins.

Mr. MARCHANT. On June 11th, there was a Washington Post

story on a military investigation of a shooting by a private security

firm in Iraq. It talked about several crimes that had been reported.

In the case of the Washington Post article, what criminal laws

were considered as applicable in the investigation? And that would

be for either Mr. Starr or Mr. Assad.

Mr. STARR. I am sorry, sir, I am not familiar with exactly what

incident that is. I would have to know exactly which incident, and

then go back and pull the files for it.

Mr. MARCHANT. OK.

Mr. SHAYS. He’s making reference to the Washington Post story.

Mr. STARR. There were two incidents in that story, sir. One was,

I believe, in February or March of this year, and one was in April

of last year.

Mr. MARCHANT. This was talking about a DOD private security

contractor that was shooting at civilian vehicles driving on the

highway.

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Mr. STARR. I can’t answer that one, sir.

Mr. ASSAD. Sir, I don’t have an answer for you, but again, I will

take it for the record, and we will respond.

Mr. MARCHANT. Thank you.

Mr. SHAYS. That makes me a little uncomfortable given that it

was something just very recently disclosed. It would have been

nice, frankly, if you had anticipated that question. And maybe we

should have let you know. I want to be clear, you do not have any

knowledge of this issue?

Mr. ASSAD. No, sir. The specifics of the investigation, I do not.

I don’t have any knowledge of it, but I will find out.

Mr. SHAYS. Is the investigation ongoing?

Mr. ASSAD. I don’t know the answer to that, sir. I don’t know

whether CENTCOM or the combatant commander did the investigation or whether it was done here in the States.

Mr. SHAYS. Thank you.

Mr. MARCHANT. Thank you, Mr. Chairman.

Mr. SHAYS. Thank you. I would like to—I first want to say, I am

one person on this committee who believes that our involvement in

Iraq is a noble effort, and every time I’ve been there, I have been

in awe of our troops. I’ve been in awe of the security people that

protect us and protect others. I’ve been in awe of the Iraqis. I have

met political figures there that know they are a target every moment of their day, and they go out of the green zone into the red

zone. I’ve met a man like Mr. Alalusi who went to Israel, and afterwards, the Iraqis punished him by kicking him out of the government and taking away his security guard, some in the former government—I don’t mean Saddam Hussein’s government. I mean in

this past government. He lost his two sons. They tried to protect

him and died in front of him. And when he met with me here, I

said, ‘‘You can’t go back.’’ And he looked at me in amazement and

he said, ‘‘I have to go back. My country needs me.’’ And to learn

that he has been elected to their general assembly, it is amazing

to me, considering that we disbanded their army, their police and

their border patrol, left them with no security, that we would hear

people say that we need to get out and get out right away and the

Iraqis had better get their act together.

These are folks that didn’t attack us; we attacked them. And in

my judgment, until they have the ability to protect themselves, we

had better be there. And I am in awe of free elections in just 11

months, absolutely in awe of that.

So, for me, I view that I am looking at a country that, not unlike

the United States years ago, got to have this opportunity for freedom and liberty. So I have no problem whatsoever with the fact

that we have security guards. That is not my issue. I want the

Army to be the tip of the spear, and I don’t want them to be cooks

when they don’t have to be. I don’t want them to have to be standing guard at the front of bases. I don’t want them to have to be

taking Members of Congress to this place or that place.

But the security people who do that and the contractors who do

that are risking their lives. And I think the gentlelady from Illinois

is right; when they risk their lives, they should be saluted and recognized. And when they lose their lives, we should take note of

that. And that is part of the cost of this war. But when I ask these

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folks about why they are there, they are there to be of service to

our country and the cause.

Where I take issue with is the fact that we don’t seem to be able

to have a handle on how many we have there. We don’t yet have

a sense of the coordination between—in terms of the private companies that then hire private security. They have a choice on

whether or not to register with the reconstruction center.

And so I am going to ask you, does it not make sense for the private security forces to coordinate with the Reconstruction Operations Center? Should that not be mandatory? And I would like to

ask each of you that question.

Mr. Solis.

Mr. SOLIS. In our report last year, we had considered making

that recommendation. We held off because, at the time, we reported that coordination appeared to be getting better, but as I

made note in our testimony, it appeared that the coordination had

not improved to the degree that we thought it should. And so we

believe it is worth considering making a requirement that companies that are U.S. security firms that are doing business in Iraq,

that they be required to work with Iraq or coordinate with Iraq.

Mr. SHAYS. And let me just set the stage here. Those that work

directly for State, Defense, AID, they do have to register, and they

do have to coordinate. Correct?

Mr. SOLIS. They have to—it is not—it is completely voluntary. It

is not a requirement. Unless it is potentially in the contract, that’s

voluntary.

Mr. SHAYS. Well, let me put it differently. In most of the contracts, when it is directly connected to DOD and State, is it not

mandatory, Mr. Starr?

Mr. STARR. Sir, per our contracts, we do not coordinate directly

with Iraq. Our contracts coordinate directly with the TOC, the

Technical Operations Center, which is our operations center which

coordinates directly with the military. All of our moves are fully coordinated.

Mr. SHAYS. So they would be coordinated with the national reconstruction center?

Mr. STARR. Yes.

Mr. ASSAD. Yes, sir. Our contractors, direct contractors we have,

they do coordinate with Iraq.

Mr. SHAYS. So we are going to call them direct and indirect contractors, OK. Mr. Kunder, correct? The same policy, as Mr. Starr

is obviously under State?

Mr. KUNDER. I’m sorry, sir?

Mr. SHAYS. The same policy that AID has——

Mr. KUNDER. We follow the same. We have the same contractor

at this point. Yes, sir.

Mr. SHAYS. AID doesn’t like to think of themselves as being

under State, so I try to be respectful here.

Mr. KUNDER. We take full policy guidance from the Secretary of

State, sir.

Mr. SHAYS. Well said. Well said. OK. The question then is,

should the indirect contractors have to follow those same rules?

And Mr. Solis said they didn’t make that recommendation, but it

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seems that it is logical given what has happened. That is what I

am hearing you say.

Mr. Assad.

Mr. ASSAD. Sir, personally, my personal response is, yes, I believe that they should be required. And I will take it back to the

Department in terms of the operational commanders and give them

my personal opinion. I do believe that should happen.

Mr. SHAYS. Mr. Starr.

Mr. STARR. Sir, I would qualify it by saying that I think certain

operations over a certain size should have to be required to do that.

But I think the size and scope of the contracts that are out there,

many of these may be very tiny; many of them may be very remote

and may not have the capability to do that. So I think there is a

bit of balancing on some of these indirect contractors.

Mr. SHAYS. OK. Mr. Kunder.

Mr. KUNDER. Sir, I’ve had the honor to testify before the Congress many times. I know better than to make administration policy while sitting here. As an individual, it makes sense for me to

get better coordination. The issue I would raise, sir, is that, given

the fact that in most of these post-conflict situations—I was reading, in preparation for the hearing, the European Community Humanitarian Office Security Guidance—you have U.N. agencies involved. You have the international NGO’s involved. You’ve got the

international community, the Red Cross. The question would be

whether you want national law or some sort of international treaty

or guidance like that. And one of their quick answers, sir—I

worked in Somalia. We had a major problem. When you create

some sort of humanitarian operations center, then you get an awful

lot of people walking around with guns in there, and you wonder

who some of the organizations are. So I just think it is an area in

which we need to move very thoughtfully.

Mr. SHAYS. I hear what you are saying, and I appreciate your

thoughtful response. I would just say it strikes me, though, that if

we think it’s logical for the people we directly hire, it is probably

even more logical for the people that are indirectly hired, especially

given that now 42 percent of the Iraqi populous is under now,

thank God, the control of the Iraqi government and its own security forces.

Let me ask, is there anything that you would like to put on the

record that we haven’t put on the record? Anything that you stayed

up last night thinking about and prepared to answer and thought

you might be eloquent enough to impress us that we didn’t give you

that opportunity? I am being a little facetious, but let me say,

sometimes the best point of the whole hearing is the point that we

didn’t make that you need to put on the record. So let me just say,

you don’t have to be eloquent. Is there anything that we need to

put on the record that is not on the record? We will start with you,

Mr. Kunder.

Mr. KUNDER. Sir, the point I was making with Ms. Schakowsky,

just that there is a balance between the indisputable notion of

guidelines on how to coordinate with an ROC, for example, on the

one hand, and these contractual relationships under the Federal

Acquisition Regulations. There is a tradeoff there in terms of making law for subcontractors of government primary contractors. It is

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just something that I would respectfully request that we look at

closely.

Mr. SHAYS. I hear you. I am going to respectfully say that the

bottom line is, though, I think we have gotten ourselves in pretty

much a feeling of suspicion and so on, because we don’t have

enough information. And Ms. Schakowsky is right that we need

more information, and that all of us, and you in particular, would

have more credibility.

Mr. Starr.

Mr. STARR. Simply, sir, that contract security, which is essentially what this is, is subject to the same vagaries of every kind of

contract. If it is a well written contract, a well managed contract,

a competitively bid contract managed on the ground effectively

with effective oversight, I think you get the services that you want.

And I think that is a critical point of what we have to say when

we are looking at private security providers overseas. We have to

be very specific and very careful.

Mr. SHAYS. Thank you.

Mr. Assad.

Mr. ASSAD. Mr. Chairman, I would like to say that we recognize

within the Department of Defense that we need improvement with

regard to many of the things that we have talked about today. But

we are focused on this, and I personally am focused on ensuring

that we take the actions to get the coordination that is necessary,

get the insight that is necessary and be able to be more responsive

to you and your staff.

Mr. SHAYS. I am just going to say, whether you end up with a

Republican Congress or a Democratic Congress next year, we are

going to have this same kind of oversight. And so it would be wonderful to be able to have you come in and say, you know, this is

what I have done since I took office in April, and we can all pat

you on the back. So that is kind of what we would like to do.

Mr. Solis.

Mr. SOLIS. The only thing I would offer, we still made several

recommendations which are still in various phases of implementation or are still open with some of the agencies. And we believe

they still have merit and are worth considering as they go along

in developing policy.

Mr. SHAYS. I would request that you continue to engage all the

Departments in these recommendations and give us a sense of

whether you are getting pushback or whether you are getting a

sense that there is buy-in. That would be helpful. We would like

to empower you to do that, or encourage you to do that.

Gentlemen, this has been a very interesting hearing. We appreciate you coming here today, we appreciate your patience with our

votes. And we do believe that you all recognize that you are doing

important work and want to do it well, and we thank you for that

very much. Thank you.

We are going to enjoy inviting our next panel up. Our panel comprises five individuals: Mr. Chris Taylor, VP for Strategic Initiatives, Blackwater, USA; Major General Robert Rosenkranz, U.S.

Army, retired, president, International Technical Service, DynCorp

International; and my colleague to my left says I should say Mr.

Iggy Balderas, but it is Ignacio, I think, former CEO and current

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member of the board of directors, Triple Canopy; Mr. Doug Brooks,

president, International Peace Operations Association; and, Mr.

Alan Chvotkin, senior vice president and Counsel, Professional

Services Council, and also, I believe, a constituent of Mr. Van

Hollen. So you will probably get the best introduction you have

ever gotten.

We swear our witnesses in. This is an investigative hearing. Obviously, we would expect you to tell the truth no matter what, but

this makes it a little more official.

[Witnesses sworn.]

Mr. SHAYS. Note for the record, all of our witnesses have responded in the affirmative. They are all sworn in. And I am going

to welcome you here, and Mr. Van Hollen will welcome all of you

but one in particular.

Mr. VAN HOLLEN. Thank you, Mr. Chairman. I would just like

to introduce as well again a constituent of mine, Alan Chvotkin,

who is the senior vice president and counsel of Professional Services Council and has worked on the issues that we have been discussing for many, many years. He has a long history with respect

to private contracting as well as the government. He worked back

in the 1980’s for the U.S. Senate as a staff member. We will forgive

you on the House side for that.

But I want to welcome you here, welcome everybody, but it is

great to have you here. And thank you for your advice and input

to members of this committee on these issues over many years.

Mr. SHAYS. I thank the gentleman.

The bottom line is we are grateful you are here. We all know

that you bring tremendous credibility and knowledge to this issue.

And if the questions seem somewhat aggressive, it is only that we

want to know what the heck is going on. But I think we all admire

what you folks do.

So we will start with you, Mr. Taylor. With five of you, we would

prefer that you be closer to 5 minutes than longer. And we will

make sure that everything you need is on the record. I will stay

as long as we have to make sure that is true. So don’t feel that you

have to get everything in your opening statement. Your opening

statement will be there for the record. So I am going to not hold

you to 5 minutes but encourage you to be as close to that as possible.

Mr. Taylor.

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STATEMENTS OF CHRIS TAYLOR, VICE PRESIDENT,

BLACKWATER USA; MAJOR GENERAL ROBERT

ROSENKRANZ, U.S. ARMY, RETIRED, PRESIDENT, INTERNATIONAL TECHNICAL SERVICE, DYNCORP INTERNATIONAL; IGNACIO BALDERAS, FORMER CEO AND CURRENT BOARD OF DIRECTORS MEMBER, TRIPLE CANOPY;

DOUG BROOKS, PRESIDENT INTERNATIONAL PEACE OPERATIONS ASSOCIATION; AND ALAN CHVOTKIN, SENIOR VICE

PRESIDENT AND COUNSEL, PROFESSIONAL SERVICES

COUNCIL

STATEMENT OF CHRIS TAYLOR

Mr. TAYLOR. Thank you, Chairman Shays, Congressman

Kucinich, and other committee members, for this opportunity to

discuss private security firms, our role and how we perform our duties each day.

Since the American Revolution, private security firms have

played an integral role in the successful development and defense

of our Nation. The role of the private security firm has not changed

that much over time. Providing specialized capabilities and search

capacity to the U.S. Government in flexible, cost-effective packages

and building capacity for friendly foreign governments continue to

be core competencies of our industry.

National and global security challenges demand innovative and

flexible solutions to be successful in the global war on terror. As

stated in the 2006 Quadrennial Defense Review, private security

firms are members of the total force. Contractors benefit the government by augmenting existing capabilities, improving response

times, and freeing scarce military logistical resources.

Blackwater is fortunate to have many who have already spent a

career in public service, some in the military, some in law enforcement, and some in other government service, but all of whom are

committed to the same objectives that guided them during their

public service. Many of these professionals in previous careers

earned Bronze Stars, Silver Stars, Purple Hearts and even a Navy

Cross. These honorable men and women, though no longer serving

in an Active Duty uniform, are as dedicated and committed to the

mission today as when they served on Active Duty. In fact, they reaffirm their commitment to the oath they took to support and defend the Constitution of the United States. These same professionals now daily put themselves in harm’s way in support of U.S.

and coalition missions and fully support national security and U.S.

foreign policy.

Today private security firms perform a number of roles from executive protection and static security to training partner nations to

providing both ground and aviation logistics support, all in dangerous environments. In the future, private security firms will likely be called upon to support stability operations and peacekeeping

efforts.

The majority of international legal controls are embodied in the

Hague and Geneva Conventions, the applicable additional protocols

and the Universal Declaration of Human Rights. This also includes

SOFAs, Status of Forces Agreements, that may be in place.

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Blackwater has consulted human rights groups to assist in program development for human rights training and policy development. Each Blackwater professional receives blocks of instruction

in leadership, ethics and international humanitarian law.

Because of the Federal nature of the battlefield, our services support primarily Federal entities. Private security firms, therefore,

are accountable to many domestic Federal statutes, regulations and

common law, which include the Military Extraterritorial Jurisdiction Act, the War Crimes Act of 1996, the Victims of Trafficking

and Violence Protection Act of 2000, the Anti-Torture Statute, the

Defense Trade Controls Act, the Gun Control Act, Arms Export

Control Act, Export Administration Regulations, International

Traffic and Arms Regulations, the Defense Base Act, Federal Aviation Regulations, the Defense Federal Acquisition Regulations, the

Foreign Corrupt Practices Act, and the general orders of Central

Command, the Multi-National Corps of Iraqi forces, and the Combined Joint Task Force 76.

We seek to exceed the expectations of our clients. I am pleased

that Doug Brooks and the IPOA are here today. Blackwater is a

member of the International Peace Operations Association, and I

currently serve as its chairman. The IPOA standards committee is

working diligently to develop industry standards. We are committed to defining the standards by which our independent contractors

are credentialed as qualified to work in the industry, improving the

Federal contracting and oversight process, providing increased

transparency in business operations, and encouraging discussion of

our industry so that it can become more fully integrated into the

process of finding solutions to difficult challenges.

At Blackwater, recruiting and vetting begins with the self-selection application process and a thorough criminal background and

credit check. For those with private government service, discharge

and release documents are reviewed and verified. When a contract

requires private security professionals to have a security clearance,

the government then conducts an even more thorough background

check. Third country nationals and host nationals also have background checks performed.

Blackwater USA provides both contractually mandated and additional training to all of our security professionals. Again, the additional training includes leadership, core values, ethics and human

rights courses. In any case, we ensure that each of our professionals conducts and passes all required training commensurate

with the environment in which they will be working.

Private security firms provide efficient, flexible and innovative

solutions to complex challenges and can positively effect a strategic

balance in favor of peace and security and freedom and democracy

everywhere. We should look together for ways to leverage the experience and commitment of these professional men and women toward that end.

I hope my brief comments have helped to provide the committee

some increased understanding of private security firms, and I look

forward to answering any questions that you may have. Thank you.

[The prepared statement of Mr. Taylor follows:]

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Mr. SHAYS. Thank you very much, Mr. Taylor.

General Rosenkranz, thank you, sir.

STATEMENT OF MAJOR GENERAL ROBERT ROSENKRANZ

General ROSENKRANZ. Mr. Chairman, distinguished members of

the committee, my name is Bob Rosenkranz.

I am a vice president of DynCorp International, and the president of DynCorp International’s Technical Services Division. In

that capacity, I am responsible for managing the company’s law enforcement services, counternarcotics support, contingency and logistics support, facility operations, infrastructure development, and

security services, including related DynCorp International operations in Iraq and Afghanistan. In addition to my experience with

the private sector, I served with the U.S. Army for 34 years, and

I retired at the rank of major general.

DynCorp International is pleased to provide this committee with

respect to standards—cooperation and coordination of information

with respect to standards, cooperation and coordination of contractors working with the U.S. Government in battlefield environments.

Before I respond to the specific issues that the committee addressed, permit me to clarify the role DynCorp International plays

in Iraq and Afghanistan, because I think it is important to this discussion.

Providing security services is one of our areas of expertise. Indeed, we have extensive international security experience. We believe we are among the best of the companies who provide such

services anywhere in the world. However, DynCorp International

while providing comprehensive security services in battlefield environments is also involved in many other government services. In

Iraq and Afghanistan, we serve as peacekeepers and provide advisers. We train and deploy civilian police forces after the cessation

of conflict. We secure State Department personnel and assets. We

provide logistics and give industry support, and we assist in recovery and rebuilding efforts. In Afghanistan, we provide services to

eradicate illicit narcotic crops; we are engaged in the removal and

destruction of land mines and like weapons.

We have a long history of supporting the U.S. Government in

battlefield environments. We supported every major U.S. military

campaign since Korea. We support State Department initiatives,

produce stabilization and the rule of law in post-conflict societies.

Ensuring basic security in society is the fundamental element in

establishing an environment where conflict is minimized and trust

and confidence are restored. Providing security in high-threat environments is a critically important activity in support of the successful completion of the missions of the State Department, Defense

Department and U.S. Government. And with that understanding,

I will briefly address the issues raised in the letter of invitation.

Roles and responsibilities of DynCorp International and security

work are largely mandated by specific contract requirements. Generally, those responsibilities are dictated by the individual customer with whom we are doing business. In all cases, the security

we provide is fundamentally protective or defensive in nature.

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The international legal controls that govern private security services are varied and fact-dependent. DynCorp International engages

its corporate legal resources and human resource managers to

clearly identify applicable regulations and maintains compliance

with these requirements throughout the life of the contract. U.S.

regulations and statutes are generally included as contract clause

requirements but may also be promulgated by U.S. military commanders and the designated chief of mission in the area of operations. Due to the nature of the security business, these are generally related to the use of force and standards of conduct.

In addition to U.S. and international regulations and statutes,

DynCorp International adheres to strict performance standards

and imposes established professional standards of conduct which

govern employees in all assignments.

As a result of DynCorp International’s and other security related

services since 1994, we have a mature vetting procedure for evaluating and selecting candidates for the provision of these security

services. Our process includes extensive investigations, medical

screening, psychological assessments and a variety of other

screenings described in detail in our formal submission. As with

our vetting procedures, we have the benefit of 12 years of active

experience developing and refining our training procedures for security assignments. Programs of instruction and course curricula

are designed and developed to apply to the specific field assignment, taking into consideration the prevailing security environment.

Our experience with the U.S. military, the Department of State

and USAID organizations has been very productive. Almost without exception, coordination with these agencies has been very productive.

Despite the struggles we all face with respect to startup activities, we have developed effective working relationships with government counterparts that produce favorable results and a truly

collaborative work environment.

In conclusion, providing security services in any environment

presents a degree of risk to the individual employee and his employer. These risks increase dramatically in battlefield areas like

Iraq and Afghanistan. As indicated in our submission, DynCorp

International has lost over two dozen employees to hostile activity

in the fight for freedom in Iraq and Afghanistan. Each death on the

battlefield represents a loss to family, friends and society.

Private contractors provide the Federal Government and other

agencies and organizations a critically important service that may

otherwise not be available in support of reconstruction, stability

and the establishment of the rule of law. We are confident that

continued partnership between the U.S. Government and private

companies will further refine the expertise and infrastructure that

permit us to effectively operate as a team in this environment. As

these relationships evolve and mature, greater success and enhanced capacity to respond to critical requirements on current and

future battlefields will be the result.

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Thank you, Mr. Chairman. I appreciate each member of the committee for providing us the opportunity to share our experiences

and to participate in this important process.

[The prepared statement of General Rosenkranz follows:]

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Mr. SHAYS. Let me ask you very quickly, General. Were your

folks the individuals that were killed in Gaza in that bomb incident

a few years ago?

General ROSENKRANZ. In where, sir?

Mr. SHAYS. In Gaza.

General ROSENKRANZ. I don’t know. I just joined the company.

Mr. SHAYS. Well, they were protecting me. Those were the same

folks that just previously when I went into Gaza protected me, and

they were just top notch. And it just is instructive to me and others. You were part of that?

Mr. BALDERAS. We took over the contract from DynCorp. It was

actually Triple Canopy people, Mr. Shays.

Mr. SHAYS. OK. Thank you. You are on. How did you get the

name Iggy?

Mr. BALDERAS. That goes way back when I first joined the unit

over 18 years ago, that they have a tradition of giving you a call

sign and that was the one that was given to me. I think it was a

little easier for them to say my name that way.

Mr. SHAYS. Well, you are well known in the industry. And welcome to this committee. And I think we are probably screwing you

up a bit, because I think you are not making the plane you hoped

you would make.

STATEMENT OF IGNACIO BALDERAS

Mr. BALDERAS. Well, thank you anyway, Mr. Chairman and

members, for the opportunity to testify before the subcommittee. I

was Triple Canopy’s CEO until December 2005 and now serve on

the company’s board of directors.

Before joining Triple Canopy, I was a command major of the U.S.

Army First Operational Detachment Delta.

I will tell you a little bit about Triple Canopy, our culture and

our experience in providing protective services in Iraq. Finally I

will share my perspective on government regulation of private security contractors who serve on the battlefield.

Triple Canopy, was founded in 2003 by U.S. Army Special Forces

veterans to provide integrated security solutions to the U.S. Government and private corporations. Our services include personal security details, fixed site security, threat assessments and

counterterrorism training. We provide protective services in extremely hostile environments throughout Iraq. We also provide security services worldwide and have employees in Africa, Asia, the

Middle East and the United States.

Triple Canopy has the ‘‘Do the Right Thing’’ culture. We are

dedicated to legal, moral and ethical behavior and business practices. We firmly believe that honesty and integrity in all we do

serves our clients, employees and society. We are committed to setting the standard for ethical conduct within the industry and strive

to be a good neighbor to the United States and abroad.

In all of our contracts, Triple Canopy works hard to provide the

best possible service at a fair and reasonable price. While placing

emphasis on the quality of service, we still continually strive for

cost reductions that can be passed on to our customer as the form

of a lower price.

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It is important to note that all of Triple Canopy’s U.S. Government contracts are and all have been firm fixed price agreements

that were all competitively awarded. Under firm fixed price contracts, Triple Canopy assumes all risk for unforecasted increases

and company costs and wartime losses.

Triple Canopy’s record of success stems from our commitment to

safety, recruiting, training and retention. Since the commencement

of our operations, Triple Canopy has achieved the fewest reported

incidents, injuries and casualties of any security company that provides protective services on a comparable scale in Iraq. We firmly

believe that hiring only highly experienced and professional personnel, providing them with thorough and relevant training prior to

deployment, and holding them accountable to high standards once

deployed is critical not only to operational success but also to employee satisfaction and retention.

Triple Canopy’s recruiting and screening standards are among

the industry’s most stringent and are explained in detail in my

written testimony. Our training produces highly capable operators

who are prepared to perform demanding tasks in challenging highrisk environments. We fully realize the grave responsibility incurred when filling protective details and will not compromise the

safety of our clients by fielding anything but the most qualified

personnel. Maintaining rigorous hiring and training standards is

the only way to reduce performance problems in the field.

Triple Canopy strongly endorses the establishment of U.S. regulations, setting standards for the hiring and training of protective

security specialists who support critical government missions on

the battlefield. We are all for establishing standards and holding

people to them. Substandard recruitment and training creates an

environment of poor quality security and potentially increases the

threat level on the battlefield. Regulations need to be strong

enough to readily identify substandard performers.

And, finally, private contractors should never provide offensive

combat operations. Triple Canopy supports the FAR regulations

which prohibit the government from contracting with organizations

that offer quasi-military armed forces for hire.

Thank you for your time and the opportunity to testify this afternoon. I look forward to answering your questions.

[The prepared statement of Mr. Balderas follows:]

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Mr. SHAYS. Thank you for your time.

Mr. Brooks.

STATEMENT OF DOUG BROOKS

Mr. BROOKS. Thank you very much. Mr. Chairman, members of

the subcommittee, I would like to thank you for inviting IPOA’s

testimony. It is an honor to appear before you today.

As president of the International Peace Operations Association

[IPOA], I represent firms from all over the world that provide essential services, including logistics, training and security in support

of international peace and stability operations in conflict and postconflict regions. IPOA predates September 11th, and our focus has

always been to ensure that the private sectors’ enormous capabilities are utilized to support peace operations with professionalism

and high ethical standards. IPOA member companies are operating

in every peace and stability operation in the world, including Afghanistan, the Democratic Republic of Congo, Haiti, Iraq and

Sudan.

Indeed, international peace operations simply would not happen

without the critical services of the private sector which brings enormous efficiencies, capabilities and cost savings. Ultimately, the

more effective our support of international peace and stability operations, the more lives that will be saved in the long run.

Our IPOA code of conduct was originally written by human

rights lawyers and nongovernmental organizations, and has subsequently been embraced by all IPOA member companies. IPOA and

its members work continuously to improve upon the code and to enhance IPOA’s enforcement mechanisms.

Coincidentally, at the same time as this hearing, or actually previously when the hearing first started, our standards committee

was meeting at George Mason University working with humanitarian experts and academics to test our accountability mechanisms related to our code of conduct.

We believe that the IPOA code of conduct is a valuable tool for

ensuring ethical behavior. Clients, be they states, NGO’s or international organizations, would be well advised to include adherence

to the standards set by the IPOA code in their request for proposals.

I also want to recognize two partner industry organizations that

have been instrumental in advancing industry standards, codes

and accountability: The British Association of Private Security

Companies in the United Kingdom, and especially the Private Security Company Association of Iraq that works closely with Iraqi

authorities to ensure proper laws, regulations and accountability.

I should note that IPOA represents a broader industry, not just

private security companies. The vast majority of private sector employees providing valuable services in complex contingency operations are actually involved in logistics, support and training operations. Some 90 percent of the personnel and contract value is actually in logistics and support and training.

In general, companies in complex contingency operations can be

divided into three general categories: Logistics and support companies, the private security companies and the sector company reform

companies.

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The first category, the logistic and support companies, that is 90

percent of the industry in value, personnel and everything. That is

where the big money is.

The second category, the professional security companies, are the

ones that protect nouns, as we say, people, places or things, during

a complex contingency operation. They defend things, either armed

or unarmed, but they provide the security for them.

And the third category of the security sector reform companies

are the ones that create a more stable environment in the long run

so that you can end the peace or stability operation in the long run.

Outsourcing services to the private sector has been hugely successful in terms of efficiencies, quality, speed and results. It is safe

to say that the U.S. military in Iraq is the best supported, best

supplied military force in history. However, it also makes sense to

ensure that the government oversight capabilities are available and

capable of ensuring the best results. This can be accomplished

through an expansion of contract officer numbers and resources.

From a contractor perspective, we strongly support professional

and effective oversight that is also standardized between government departments, which has been a problem in the past. Effective

oversight simplifies our jobs enormously and allows better competition, reduction in cost and improvements in quality.

Another concern that the industry has faced has been the blue

on white issue, the so-called friendly fire incidents where PSCs are

accidentally fired upon by military units. This has been brought up

in previous reports. The nature of complex contingency operations

means that mistaken identity will always be a hazard, but there

are ways to minimize a problem. This can be done through awareness training in the military, standardized recognition signals and

better coordination of civilian and military movements in the field,

all of which are being done to much greater extent since 2003. At

IPOA, we worked with our partners to develop wallet cards that

can be distributed to deploying GIs that will give them an idea of

what PSCs are doing and what they look like in the field. A draft

version of those cards is available here today on the table.

One recurring issue that we face is licensing. Member services,

training operations and equipment exports require licenses from

the Department of Defense and the Department of State, which is

entirely appropriate. However, despite special efforts, the scale of

operations in Afghanistan and Iraq have made this requirement a

real bottleneck. We believe these offices could be better resourced

and the process safely streamlined without compromising appropriate controls over exports of services and equipment.

One of the more critical issues that we face or the complex issues

in Iraq is regarding the access badges that contractors use. Contractors require these badges to be able to fulfill their contracts.

International personnel used to be able to obtain the badges in 2

to 3 days; now the process can take 10 to 90 days. This dangerous

and frustrating bureaucratic bottleneck has been enormously

wasteful in time and resources, and is having a seriously adverse

impact on the larger mission. This is a problem that could be largely solved by allowing electronic applications or giving international

sites outside of Iraq necessary authority.

Mr. SHAYS. Let me ask you, how much longer do you have?

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General ROSENKRANZ. One short paragraph.

This industry is highly responsive. My own field research in Iraq

and elsewhere has amply revealed that companies in this highly

competitive market are eager to ensure that their clients are satisfied with the quality of work. IPOA includes the most professional

forward-thinking and ethical companies in the industry, and our

members are all publicly committed to our code of conduct. While

operations and chaotic conflict in post-conflict regions necessarily

require a high degree of flexibility, we should not resign ourselves

to compromise on quality. Thanks very much. I look forward to the

questions.

[The prepared statement of Mr. Brooks follows:]

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Mr. SHAYS. Now, I have to get advice from a Croatian.

It’s Chvotkin?

Mr. CHVOTKIN. Yes, sir.

Mr. SHAYS. OK.

STATEMENT OF ALAN CHVOTKIN

Mr. CHVOTKIN. Mr. Chairman, Congressman Van Hollen, members of the subcommittee, thank you for the invitation to testify

today.

Professional Services Council is the leading trade association representing hundreds of companies. Several of our member companies provide security services, including two who are on the panel

today. Some also have contracts directly with the U.S. Government,

and as such, we know their concerns as service providers and have

been working with them on a myriad of issues. In addition, many

of our member companies are operating in Iraq pursuant to contracts awarded by the U.S. Government. These terms are consumers of these security services. We have worked with them to highlight and address their concerns as well.

Over the past several years, the Professional Services Council

has had extensive interactions with the Department of Defense. In

2004, we conducted an extensive lessons learned project with the

Army Materiel Command. We’ve worked closely with the Department of State, USAID and other agencies on their Iraq initiatives

and their policies and practices affecting our member companies.

Finally, we have partnered with the Special Inspector General

for Iraq Reconstruction on his comprehensive activities including

his three-part lessons learned project. In Iraq, there were three

types of operations taking place concurrently, often in the same geographic space: The military action, the reconstruction activities

across the 10 critical sectors, and developmental assistance.

Hiring private security support is common for many of our member companies who are routinely engaged in reconstruction and developmental assistance overseas. So Iraq is not new in that regard.

However, it is obvious that Iraq has been and continues to be a

very dangerous place to live and work, particularly for those individuals and organizations in any way associated with the U.S. Government. Thus, work in Iraq continues to present special challenges and issues. Because of the number of projects the U.S. Government has contracted for and that are underway simultaneously,

the number of contractors, contractor employees and facilities that

simultaneously require private security support and the evolving

and often deteriorating security situation where the work is to be

performed, private contractors are playing a critical role in each of

these concurrent operations. In fact, it would be impossible for the

U.S. Government to execute the number and scope of projects without the contractor support, and as such, private security firms are

an essential adjunct to the U.S. companies executing contracts.

The private security firms provide personal security firm employees, housing locations and work sites. They coordinate and provide

security for the transportation of key company personnel and resources and coordinate with government officials when their clients

require interaction for official government business. To the extent

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nate with the U.S. military in Iraq on the overall security threat

environment.

Only recently has the U.S. Government established the reconstruction operation centers in various regions in Iraq to provide a

formal channel for such coordination, even on a voluntary basis. In

fact, one of the key lessons learned from our Army Materiel Command effort was the fact that contractor force protection requirements were not integrated into the military planning process. We

found too many examples where even the planning required by the

Defense Department for contractors accompanying the force were

not followed and that the rules, numbers and life support needs of

those contractors were not fully addressed.

In light of these experiences, the Professional Services Council

worked with members of the House Armed Services Committee last

year on what became known as the Contractors on the Battlefield

Regulatory Act, Title XVI of the House passed fiscal year 2006 National Defense Authorization bill. While that title did not become

law, the conference report accompanying the law directs the Defense Department to review all policies and guidance and instructions to address security issues raised by both contractors accompanying the force, those directly supporting the military, and those

contractors not accompanying the force, and specifically addressed

five enumerated issues in that report. I mention those in my statement, my lengthy statement.

And today, we are not aware of any formal steps the Defense Department has taken to address those matters. The number, scope

of the projects in Iraq, the need to retract, retain and employ personnel who are essentially on their own for force protection and the

highly variable security environment force contractors to put a premium on hiring skilled, trained and well-managed security services. Thus, almost from the outset of the Iraq conflict, PSC has

strongly recommended that the U.S. Government generally and

particularly the Defense Department adopt a nontraditional role

with respect to private security firms.

As Mr. Waxman noted in his opening questions in March 2003,

the Professional Services Council recommended to DOD that it consider taking at least one of three initiatives: first, set standards for

private security firms; or better yet, establish a qualified list of

firms from which the private sector could contract directly for security services that were needed; or even better still, that DOD directly contract for and supervise those firms that the contracting

firms would reimburse. The essence of these requirements was included in the GAO report from July 2005. In fact, the most vocal

supporters for these standards are the industry leaders themselves,

as you have heard at this table this afternoon. The U.S. Government has valid reasons why they did not concur. I think there was

a missed opportunity for the government to address what we feared

would become a significant growing challenge.

Our lessons-learned efforts with both the Army Materiel Command and the Special Inspector General for Iraq Reconstruction

highlighted the lack of advanced planning for the security needs of

those government organizations. The most significant portion of the

State Department’s December 2004 revision to their acquisition

regulations proposed new coverage requiring State Department

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contracting officers to address the administrative logistics and security support for contractors performing overseas in high-risk activities. The rule was explicit that, unless stated otherwise, the

contractor’s responsible for all of their support.

In-country coordination and communications is essential. It must

be a two-way effort, and there’s every reason for the government

to take advantage of the information that the companies have

about the security situation in various parts of the country. Over

time, despite the lack of formal methodology or doctrine, many

firms have nonetheless created those informal mechanisms.

Mr. SHAYS. Would you give me a sense of how much longer you

have?

Mr. CHVOTKIN. Thirty seconds. In conclusion, hiring private security is common in overseas operations. Iraq is not new in that regard. However, the magnitude and the work and the concurrent operations taking place in the almost unprecedented security environment create unique challenges, but solutions must be approached

carefully and with full consultation to address real issues without

creating new problems. We would love for the opportunity to work

with the subcommittee and others on these important policy matters. Thank you for the opportunity to appear.

[The prepared statement of Mr. Chvotkin follows:]

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Mr. SHAYS. Thank you.

I think what we’ll do is do 5-minute rounds the first time so we

can get through and come back for a second round.

Mr. Marchant.

Mr. MARCHANT. Thank you, Mr. Chairman.

As we heard in the first panel’s testimony, coordination with reconstruction operation centers is voluntary. I would like to know

each of your opinions as to whether that ought to be mandatory or

if you think it ought to be voluntary, and I’d like to know whether

your company is coordinating with the regional operation centers.

Mr. SHAYS. Excuse me. We’re going to do 10-minute rounds if

this is the Members we have. So you have 10 minutes.

Mr. TAYLOR. Blackwater does indeed participate in the regional

operation centers. We do coordinate through them.

Mr. MARCHANT. Do you think it ought to be mandatory?

Mr. TAYLOR. I think that to the extent that it can be—that it affects area commanders, visibility of the battle space, absolutely.

Mr. MARCHANT. Thank you.

Mr. ROSENKRANZ. Mr. Congressman, we are participants in the

ROC. The type of work we do with the State Department already

has the operation centers, so for us it’s sort of a redundancy. I

think it’s useful, and it’s certainly very important for those who do

not have direct contracts with the government.

Mr. MARCHANT. Thank you.

Mr. BALDERAS. Yes, we do. Triple Canopy does. I think we were

talking a little earlier about when Aegis, which runs that contract,

came in, came and helped us set it up, they asked us to help them

set it up, the issue of everyone reporting; it’s just commonsense.

You have to do that in order to get support from the military. If

you have an accident or incident on the road, they’re the ones they

call, and ROC is the one that coordinates that. So definitely, in my

opinion, everyone needs to do that. It should be mandatory.

Mr. MARCHANT. Thank you.

Mr. Brooks.

Mr. BROOKS. Well, of course, we’re a trade association, but I

think, during my visit in December, January, I was quite impressed with the system. I think it’s quite useful. Both for the contractors and for the military. So I would say it would probably be

a good idea to put it in contracts if it’s a requirement.

Mr. CHVOTKIN. I would generally agree. I would just echo Mr.

Kunder’s earlier comments. Many of the companies are providing

support to the U.S. Government agencies well outside of those

areas, and so the nature of the coordination is such that they may

not need as much. So there has to be some tempering, but by and

large, I agree that coordination at least from the contractor end not

to be mandatory. We’ve suggested that two-way communication because the military knows a lot that could help in the planning on

our side, and there are some concerns about how much information

can actually be shared out, but by and large, I think that communication is an important one.

Mr. MARCHANT. Is the risk of a clash with the military decreased

the more coordination you have with the regional operation centers? And do you know of any instances where specifically there

was no coordination and it resulted in a very tragic consequence?

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Mr. TAYLOR. Mr. Marchant, I can’t offhand recall a specific incident, but obviously, more coordination should result in decreased

incidence.

Mr. MARCHANT. Each of you, would you mind saying—General

Rosenkranz stated how many casualties, deaths you’ve experienced

in your operations in Iraq.

Mr. TAYLOR. Blackwater has experienced—we have had 22

deaths in Iraq.

Mr. MARCHANT. And this is mostly stateside civilians?

Mr. TAYLOR. In that 22, I believe 4 were third-country nationals.

Mr. MARCHANT. Thank you.

Thank you.

Mr. ROSENKRANZ. As I mentioned, we had 26 killed in Iraq.

There were a few TCNs in that number. I didn’t bring with me the

exact number of wounded, but it’s a fairly large number.

Mr. SHAYS. Would the gentleman just yield a second?

Mr. MARCHANT. Yes.

Mr. SHAYS. When they’re wounded, do they go right to the military complex or do they go through the private sector?

Mr. ROSENKRANZ. They’re given the same kind of medical support as the soldiers are.

Mr. SHAYS. Good.

Mr. ROSENKRANZ. They get very good support. Even on the KIA,

the evacuation procedures, it’s really quite good.

Mr. SHAYS. Thank the gentleman for yielding.

Mr. MARCHANT. Mr. Balderas.

Mr. BALDERAS. Yes. Triple Canopy suffered four casualties since

September 2005, and the military does a great job in assisting private contractors. What the military does, they move them to

Ramstein, Germany, where if they’re wounded, then the private

company picks up and moves them to wherever they need to in the

United States, so all four of Triple Canopy’s personnel were expats.

Mr. MARCHANT. Thank you.

Mr. Brooks, I know your chair association.

Mr. CHVOTKIN. I don’t have anything from the association, but I

would call your attention to a report that the Defense Department

submitted to the Congress last year in response to Section 1206 of

the National Defense Authorization Act, and in that, for the period

May 2001 through October 28, 2004—I’m sorry—May 2003 through

October 28, 2004: Total casualties, 1,171; total fatalities, 166; of

which, 175 casualties were United States, and 64 fatalities were

United States. That’s a period May 2003 through October 2004.

Have not looked at the Defense Base Act or Department of Labor

report for any more current information.

Mr. MARCHANT. I can say as a Congressman that went to Iraq

and Afghanistan in the same trip, I was very thankful for the

Blackwater people that were there with me. I was not as aware of

the danger, I don’t think, as they were, and on the trip, I was, it

was—the security was so integrated with the military that it was

very difficult for a civilian to know in whose hands you were at any

given time. And to me, that seems to be the best possible situation.

I just have a couple of more questions. What would you say the

biggest threat today to your forces that are there, your security

forces that are there? Is it the new IEDs? Is it ambushes? Is it peoVerDate 11-MAY-2000 12:19 Mar 30, 2007 Jkt 000000 PO 00000 Frm 00171 Fmt 6633 Sfmt 6633 C:\DOCS\33252.TXT HGOVREF1 PsN: HGOVREF1
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ple that are communicating to the insurgent forces? What would

you identify as the biggest threat?

Mr. ROSENKRANZ. I don’t think there’s any doubt that the IED

and DBIEDs are lethal, and they’re getting better, and they’re

more prevalent, particularly in Afghanistan. We’ve noticed an uptick, considerable uptick in the last few months. I would say IEDs

and variations on IEDs.

Mr. TAYLOR. I would agree. IEDs, DBIEDs are the most dangerous threat we face right now.

Mr. MARCHANT. Have you experienced that in other places in the

world if you have personnel? Or is it just, just Iraq and Afghanistan that——

Mr. TAYLOR. I can’t say that it’s just Iraq, but it’s certainly most

intense in Iraq.

Mr. MARCHANT. Mr. Balderas.

Mr. BALDERAS. Yes. I agree with Chris on that. Afghanistan, Iraq

and to some extent also Israel, because it seems that area there

has a preponderance for the items that were mentioned, IEDs and

the DBIEDs.

Mr. MARCHANT. OK.

Mr. Chairman, thank you for allowing my questions.

Mr. SHAYS. Thank the gentleman.

Mr. Kucinich.

Mr. KUCINICH. To Mr. Taylor from Blackwater, what’s the approximate annual gross revenue from your company’s security work

in Iraq?

Mr. TAYLOR. I don’t have that figure with me, Mr. Kucinich. I

just don’t from—I don’t have it.

Mr. KUCINICH. Would you make it available to the committee?

Mr. TAYLOR. I can certainly—yes, I will go back with that request to make it available.

Mr. KUCINICH. Do you know what the trend in your revenue is

over the past 3 years?

Mr. TAYLOR. In revenue, with regard to—are we talking about

Federal contracts?

Mr. KUCINICH. In your revenue generally.

Mr. TAYLOR. Well, clearly, there’s been growth in our industry,

and we have experienced growth in the industry.

Mr. KUCINICH. What about Iraq?

Mr. TAYLOR. We have experienced growth in Iraq as well. The

demand for our services has been—is much—is greater.

Mr. KUCINICH. And could I ask, Mr. Chairman, if the chair would

request—if the committee would request the approximate annual

gross revenue from all the companies represented here today?

Mr. SHAYS. I would be happy to request their gross revenues,

yes.

Mr. KUCINICH. I’d like to ask the gentleman from Blackwater

some questions about contracting. Has Blackwater participated in

contracts with Regency Hotel and Hospital Company at all?

Mr. TAYLOR. We were contract—as your exhibit—or I’m sorry,

Mr. Waxman’s exhibit denotes, we did participate in that contract.

Mr. KUCINICH. And Environmental Support Services [ESS]——

Mr. TAYLOR. That’s correct.

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Mr. KUCINICH. And in those contracts, is it true that you were

paying your men $600 a day but billing Regency $815 a day?

Mr. TAYLOR. Per the presentation, Mr. Kucinich, $815 a day is

the right figure, but it’s a fully burdened figure. That includes travel, training, gear, housing, food, the works. That is a fully burdened

number. So $815 is the correct number, but it includes everything.

Mr. KUCINICH. Were you involved personally in any of those discussions at all between Blackwater and Regency?

Mr. TAYLOR. I was not.

Mr. KUCINICH. Are you familiar with a person who works for

Blackwater by the name of John Potter?

Mr. TAYLOR. I know who John Potter is.

Mr. KUCINICH. OK. John Potter is currently in your employ. Is

that correct?

Mr. TAYLOR. I don’t believe John Potter is in our employ right

now, Mr. Kucinich. But I will have to go back and check, but I

don’t believe he is right now.

Mr. KUCINICH. Would you be willing to provide for this committee correspondence or internal memoranda relative to the hiring,

departure and rehiring of Mr. Potter by Blackwater in connection

with his work under this contract with the government?

Mr. TAYLOR. Mr. Kucinich, I can certainly take that request back

to legal counsel for Blackwater.

Mr. KUCINICH. Mr. Taylor, is it your understanding that

Blackwater cannot be sued for workers’ debts or injuries and that

all liability lies with the government?

Mr. TAYLOR. Mr. Kucinich, I am not an attorney. I’m certainly

not an expert at all in that area. However, again, I could certainly

take that question back to our legal counsel.

Mr. KUCINICH. And does Blackwater urge the families who have

lost loved ones who have been in your employ to apply for benefits

under the Defense Base Act?

Mr. TAYLOR. Under numerous—under different contracts, the Defense Base Act benefits are provided. They are actually mandated

by the programs—the program insurance for contracting entities.

So that is at the family’s—we don’t urge anybody, but the benefit

is made available to our independent contractors.

Mr. KUCINICH. Do you advertise the Defense Base Act as a way

for Blackwater to service the war, to avoid being sued?

Mr. TAYLOR. Again, Mr. Kucinich, it is a—the Defense Base Act

insurance is provided as a passthrough cost to the government and

is generally mandated to us.

Mr. KUCINICH. Does Blackwater currently provide security for

Ambassador Khalilzad in Baghdad?

Mr. TAYLOR. Yes, we do.

Mr. KUCINICH. How much does the government pay Blackwater

for these services?

Mr. TAYLOR. Mr. Kucinich, I don’t have those numbers in front

of me.

Mr. KUCINICH. Could you provide that information?

Mr. TAYLOR. Mr. Starr mentioned in the earlier panel that was

an open and competitively bid contract, and I’m sure that it can be

made available to the committee.

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Mr. KUCINICH. Can you provide the information to the committee?

Mr. TAYLOR. If I cannot, sir, I’m sure the Department of State

can.

Mr. KUCINICH. What other government contracts does

Blackwater have in Iraq? How many contracts do you have in Iraq?

Mr. TAYLOR. Government contracts?

Mr. KUCINICH. Right.

Mr. TAYLOR. The majority of our work is with the Department

of State. We have other contracts in Iraq that are not—that don’t

fall under USG.

Mr. KUCINICH. Can you provide this committee with information

about how much the government pays Blackwater for their services?

Mr. TAYLOR. Again, our contracts are open and competitively bid.

And one—I’m sure that they can be made available to the committee. They are public knowledge.

Mr. KUCINICH. Can you provide us with that information?

Mr. TAYLOR. I would have to go back and talk to legal counsel

about our specifically providing it, Mr. Kucinich, but I’m sure that

the committee can get the information.

Mr. KUCINICH. In Iraq, what is Blackwater’s policy for the type

of armor vehicle, weapons and personnel required for security escort missions?

Mr. TAYLOR. That is actually mandated to us by our—by our client, the Department of State.

Mr. KUCINICH. And does the Department of State set the terms

of your contracts?

Mr. TAYLOR. Yes, they do.

Mr. KUCINICH. And does the Department of State in some cases

require that you provide armor?

Mr. TAYLOR. We have actually a contract through the Department of State for armored vehicles that is mandated by the Department of State to us.

Mr. KUCINICH. Have you ever had an instance where you were

required by the Department of State to provide armor and you did

not?

Mr. TAYLOR. I cannot—I don’t believe so. I don’t believe so.

Mr. KUCINICH. Does the Department of State require you to have

a certain number of personnel on carriers?

Mr. TAYLOR. The Department of State has very strict procedures

for—for movements, personal security detail movements, and we

follow those to the T.

Mr. KUCINICH. And has there ever been a time where you didn’t

follow these requirements of the Department of State and in order

to save money?

Mr. TAYLOR. Again, Mr. Kucinich, these are mandated movements and processes by the Department of State.

Mr. KUCINICH. I know they’re mandated. I’m asking you if you

can recall a time.

Mr. TAYLOR. I cannot, sir.

Mr. KUCINICH. You have no knowledge of any time——

Mr. TAYLOR. I have no knowledge of any time that we did not

fulfill our Department of State mandate.

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Mr. KUCINICH. All right. Could you talk about Blackwater’s expansion into the Philippines?

Mr. TAYLOR. It is a proposed—we have great demand for our

training services, and one of the places that we have been looking

into, into offering those training services was in the Philippines.

Mr. KUCINICH. And are you building a training center in the

Philippines?

Mr. TAYLOR. We are in negotiations, in exploration in trying to

find out if that’s possible.

Mr. KUCINICH. And who are you negotiating with, the State Department or the Philippine Government?

Mr. TAYLOR. This would be the—this would be Metropolitan Authority, who I believe has control over—control over that, but I

would have to go back and check particularly because I am not

working that particular project, Mr. Kucinich.

Mr. KUCINICH. Are you planning to go into Darfur for work?

Mr. TAYLOR. We’re not planning—of course, we have had discussions on how the resources that Blackwater has could be useful in

situations such as the Darfur genocide.

Mr. KUCINICH. And have you hired Chilean troops that have

been trained under Mr. Pinochet? Is that true?

Mr. TAYLOR. I don’t know. We have indeed used Chilean thirdcountry nationals before. I have no knowledge of whether or not

they served under Pinochet or not.

Mr. KUCINICH. Are you putting together new training facilities in

California?

Mr. TAYLOR. Again, we’re exploring opportunities to expand our

training operations in many places.

Mr. KUCINICH. Does Blackwater engage in offensive operations?

Mr. TAYLOR. Absolutely not, Mr. Kucinich.

Mr. KUCINICH. On behalf of the U.S. Government?

Mr. TAYLOR. Absolutely not.

Mr. KUCINICH. On behalf of foreign governments?

Mr. TAYLOR. Absolutely not.

Mr. KUCINICH. Or private entities in Iraq?

Mr. TAYLOR. Absolutely not.

Mr. KUCINICH. In Afghanistan, anywhere in the world?

Mr. TAYLOR. We do not engage in offensive operations, Mr.

Kucinich.

Mr. SHAYS. I just want to say that you answered quickly. I just

want to make sure you were comfortable with all those answers because he hadn’t even finished his questions. I’m not trying to

change the answer. I just want to make sure that you’ve thought

about his questions because you are under oath, and I just want

to make sure.

Mr. TAYLOR. Chairman Shays, it is a common question for the industry, and we do not execute offensive operations.

Mr. SHAYS. OK. Thank you.

Mr. KUCINICH. I thank the Chair.

Mr. SHAYS. I thank the gentleman.

We’ll go to my colleague from Maryland. He has the floor.

Mr. VAN HOLLEN. Well, thank you. Thank you, Mr. Chairman,

and thank all of you gentlemen for your testimony as well.

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As I said in my opening statement, I think clearly there’s an appropriate role for private security contractors in places like Iraq

and elsewhere. The issue is exactly what functions and roles are

being played and what kind of oversight there is. And it’s my view

that the U.S. Government, the Federal Government has a responsibility in making sure that the taxpayer is getting a fair treatment. It is the responsibility of the contractor to make sure you

provide the quality services under the contract, that you don’t

gouge the taxpayer. But the oversight from the Federal Government is important, and the Federal Government, seems to me,

should have a system set up to assure that the taxpayer gets the

best deal. And in that context, I would like to ask you, Mr. Taylor,

just a couple of questions because I think the chart we’ve got here

today actually illustrates some of the problems with the overall

system, from my perspective in the cost-plus with a percentage at

the top.

Let me ask you first, are you familiar with the article that appeared in the News Observer several years ago that talked about

the pricing structure for your company, for Blackwater U.S.A.? It

was a couple years ago. It was after the four individuals who were

members of your company had been killed in Fallujah, and the

newspaper wrote a story about that. They also obtained information about the payments you received from those four individuals.

Are you familiar with that?

Mr. TAYLOR. I am not, actually. If there was an article—understand, I read many things that are printed about our industry.

Mr. VAN HOLLEN. I understand. That’s the basis for a number of

the charts—the numbers on the charts Mr. Waxman presented. My

understanding is a number of the family members of the people

who got killed were upset about the fact that despite the amount

of money being charged to the Federal Government and the taxpayers for these services, not enough was provided for security, and

that’s the basis of the information.

So the information drawn on these charts is based on documents

that were obtained by this newspaper about those particular individuals. I just want to make sure I understood your response to a

question by Mr. Kucinich regarding the $815 a day charge. As I understand, you said that was fully loaded; is that correct?

Mr. TAYLOR. That’s correct, sir.

Mr. VAN HOLLEN. Because that article—and this is an opportunity to correct the article if you want—it said that the

Blackwater charges to Regency for Zovko’s work, he was one of the

individual contractors involved in that terrible incident, were $815

a day. A mark-up of $215 then goes on to—say, in addition,

Blackwater billed Regency separately for all its overhead and costs

in Iraq insurance, room and board, travel, weapons, ammunition,

vehicles, office space. In other words, they say that you billed separately for that overhead, and you’re saying—I just want to make

it clear, you are saying that overhead was part of the $815 a day

charge.

Mr. TAYLOR. I am told that the $815 was a fully burdened

charge, sir.

Mr. VAN HOLLEN. OK. If you could—I don’t know if you have documents, just because the article was based on documents that were

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obtained through some people who worked for Blackwater, and

they reached a different conclusion. If you could provide the committee with those documents, it would be helpful.

Mr. TAYLOR. Again, I can certainly take that request back to

legal counsel.

Mr. SHAYS. Let me just tell you this part though, because you are

on record, and I feel like I’m a friendly participant in this dialog.

You are on record as saying that basically constitutes the full force.

So you do need to document that. This $800 is the full cost of all

the things that involve the training, the housing and so on. It’s

not—and so we just want documentation that shows that to be correct.

Mr. TAYLOR. Again, Congressman Shays, I will certainly go back

to legal counsel.

Mr. SHAYS. I’m trying to say it differently. I know you are going

to go back. I need to make sure that you provide us that information. Now, whether it’s you that provides it or someone else, I just

want to say this, it is not an issue of, you know, you have the option to not provide that information. Please tell your superiors that

you have testified—and I believe you, so you don’t have a problem

with me—that you testified that this constitutes the full cost. If it,

in fact, doesn’t, you need to set the record straight that it doesn’t

with documentation, and if it does, you need to just provide us the

documentation that shows it’s true. It’s a common request, and one

to which I know you would—you can’t commit what your company

does, I understand it. You’re not the man in charge, but you’re

close to it. So that’s all.

Mr. TAYLOR. I understand the request. Yes, sir.

Mr. SHAYS. OK, good. And we understand what you’re saying to

us. Just as long as that gets conveyed to them.

Mr. TAYLOR. Absolutely.

Mr. VAN HOLLEN. Thank you, Mr. Chairman.

Now, under the contract structure you had, as I understand, if

you could look at that chart, Halliburton had the umbrella contract; is that correct?

Mr. TAYLOR. I am not personally aware of that, sir.

Mr. VAN HOLLEN. OK. You did not know that at the top of the

subcontracting pyramid was Halliburton?

Mr. TAYLOR. I’m not personally aware of that, sir.

Mr. VAN HOLLEN. OK. Let me just ask you and maybe some of

the others just a general question. There’s a quote from a fellow

by the name of Henry Bunting. He is a former Halliburton purchasing officer, and he said a common refrain in 2003 in Kuwait

for managers of KBR—that’s Kellogg Brown & Root, a division of

Halliburton—was, don’t worry about price. It’s a cost-plus. And he

goes on to say, there’s no question the taxpayers are getting

screwed. This is a fellow who was an Army staff sergeant in Vietnam. There’s no incentive for KBR or their subs to try to reduce

costs; no matter what it costs, KBR gets 100 percent back plus

overhead plus profit. That is right. Right? In other words, that is

the structure. It’s a cost-plus structure, and assuming you have a

number of subs, from Halliburton’s perspective or whoever’s at the

top of the pyramid, the more subs and the more costs, the better

off in terms of the return for the person at the top. Is that right?

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Mr. TAYLOR. Mr. Van Hollen, for Blackwater, we only engage in

firm fixed-price contracts. We don’t have cost-plus contracts. We

don’t propose cost-plus contracts. We have only firm fixed-price.

Mr. VAN HOLLEN. OK. But at least in this particular instance,

you’re at the—you know, near the bottom. The individual employee

who is your employee is the only other person you are paying out.

So now my question to you—and this is maybe a general question.

If we could keep our answers as short as possible because we have

limited time. But under this design, the design for a cost-plus contract, is it not true that there’s no incentive for the person at the

top of the pyramid if they’re getting cost plus a percentage fee to

keep their costs at a minimum? Is there any incentive? Can you

tell me how—if there’s any incentive there for the person at the top

of the pyramid to keep their overall costs low?

Mr. CHVOTKIN. The incentive is in the award fee because the—

in your hypothetical, and I don’t know enough about the specific

contract, but in the hypothetical, if the award fee is tied to cost,

then the lower the cost, the higher the award fee. And so there is

an incentive through the award fee. And that’s what the 2 percent

was explained earlier with respect to—if I understand this portion

of the contract, how it would apply.

Mr. VAN HOLLEN. My understanding is this was a cost-plus. I

don’t know if there was any award fee for coming under cost. I

mean, if anyone knows about this, I’m talking about this

particular——

Mr. BROOKS. I’m going to stick my neck out a little bit. KBR is

not a member company. When there is a task that has been given

to KBR or another company on a cost-plus basis, the company sits

down with the contract officers or with the procurement people,

and they decide on how much the maximum cost will be, and then

the company has to go and stay under that cost. So there is a process that comes up with a cap of how much it’s going to cost, say

$10 million for a base in the desert or something like that. So

that’s where you get the controls.

Now, the value of the cost-plus is that it gives you the flexibility

you need in a complex contingency operation where you don’t know

what the final cost will be, and you can come up with a—some sort

of accurate estimate.

Mr. VAN HOLLEN. My understanding is, in the LOGCAP contracts, that did not happen, what you were just talking about. We

can go back and take a look at that. But let me ask you, because

we talk about the fact that private contracting for security services

can provide a return to the taxpayer. Now, I think under certain

circumstances, that’s true. I just want to pursue this idea a little

bit with respect to Iraq because in the particular case that we’re

talking about here with respect to the $600 a day for the security

officer which comes out to, as I understand it, it’s approximately

$180,000 a year; if you were to take somebody of Mr. Zovko’s experience and rank—he’d been a sergeant—and you took that sergeant

in the active duty military, the equivalent in terms of the salary

would be about $38,000 a year. So my question to you is, this, I

mean, isn’t it the case that the administration is essentially relying

on private contractors in many cases not to provide cost savings

but because to add 48,000 additional troops—and 48,000, according

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to the GAO report, is the number of private security people in Iraq

right now—would not be politically palatable because at least in

this case, maybe, Mr. Taylor, you can correct the figures if I’m

wrong, $180,000 a year for the employee you are paying versus

$38,000 a year plus maybe health benefits and others for a sergeant in the regular Army, that does not seem to be a benefit to

the taxpayer. If you could explain.

Mr. SHAYS. And I’m going to just say that the gentleman’s time

has concluded, but this is—this is a very important question that

I’d like all of you to answer. And this is, frankly, an opportunity.

Make your case. Why you guys instead of the military? And I’ll be

happy to let the gentleman followup.

Mr. VAN HOLLEN. Thank you, Mr. Chairman.

Mr. SHAYS. So just make your case.

Why don’t you start? We’ve had Mr. Taylor ask and answer a lot

of questions. Let’s give him a rest.

Mr. ROSENKRANZ. First of all, we have to compete for the contracts. Even the ones——

Mr. SHAYS. Can you make sure your mic is on?

Mr. ROSENKRANZ. Perhaps I’m not close enough. You have to

compete for your contracts. They’re not indefinite. And so if you’re

not competitive, if you don’t deliver the value, then you won’t return, and certainly all of us have had that experience.

Mr. SHAYS. Let me just interrupt by saying, you’ve lost contracts;

someone else got the contract instead of you?

Mr. ROSENKRANZ. Absolutely, yes. And you lose because of a variety of reasons. It’s up to the customer, but certainly one of the facets of that is the cost you have to the customer. I think that we

tried to bring people into Iraq at the most competitive price that

we can get to, and as it gets—and certain conditions in Iraq, depending on the scarcity of the population, of, say, police, to recruit

police, that changes the amount of money you have to pay to get

them to go.

But the number that you end up with does not necessarily reflect

what you normally would call salary because of the uplifts, because

of the tax break and other factors that are entered into that total

number. And that’s why people choose to go there, but they go

there for 1 year, and they make enough money, and they go back

to wherever they came from, and they go back to $40,000 a year.

I think we’re competitive; our company is competitive. I think you

won’t find a large variation on what we have to pay to get certain

skills and particularly if it’s a management skill.

But the number that you’re using there I think is a little bit deceptive in the fact of what that actual salary is, and that’s not including the other pieces that get added to it.

Mr. SHAYS. Let’s keep going.

Mr. BALDERAS. Yes, one of the things on the—that was already

talked about is salary, is that we don’t set the salary rates. The

contracting office does. It’s market rates. We propose labor rates,

and whether the bid is successful or not is dependent on the contracting officer and the entire proposal, and they usually go with

the lowest cost. So that’s how you lose a competitive bid. So, again,

we don’t set the rates. We just suggest what they could be and

what labor we could get.

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Now, as far as the total costs, again, you have to look at the total

picture, what it buys, what the individual contractor has to do.

There is no retirement plan for him. He has to get his own health

insurance. His family, where an individual has always been mentioned, a military person already has that. We’re not talking longterm costs either. Looking at the military, it is that an individual

has a retirement plan, you know. I encourage people that—in the

military, to stay there at least 20 years so you get the retirement

benefit, you get healthcare. One of the issues under the TRICARE

is that it’s a great program, but only if you complete your 20 years.

So I advise guys to stay there and get that, because out on the civilian market, health costs are climbing twice, twice, almost double

every year. It’s gone from 8 to 10 to 16 to 20 percent. So corporations have to deal with that as well for employees. An individual

working contracts, spending the short time over there, trying to get

a high paycheck, has to support his family off of that, as I said,

before healthcare; there is no long-term plan for a guy doing this

type of work. It’s high risk, and it’s an individual choice to go over

there.

Anyway, in my opinion, it is cost effective because of the fact of

long-term care. If you look at the military, you can see the military

is not married. They have personnel that are married. When I

came in the Army over 25 years ago, most of the military personnel

in the service were not married. Now we have schools. We have additional building construction for housing units on posts. We have

healthcare issues for the family their entire career service members’ time, and after, when he retires, that support’s still there for

that service member. So that’s a long-term care plan that military

and DOD has to deal with where a contractor, DOD contractor, or

any contracting officer can end that contract tomorrow, and that

person’s out of work.

Mr. BROOKS. I think this is a really great question and really

gets to the heart of the whole issue of using contractors for services

in a lot of areas of conflict. It really comes down to a case of capability versus cost effectiveness. When you have a soldier, a second

lieutenant in Iraq, theoretically at least, they can call in a B–52

strike. They can call in tanks. They have all this sort of enormous

capability behind them to do this sort of thing. You don’t necessarily need that capability to guard a fence, you know, or to

guard the gate. Maybe you need somebody with a different kind of

capability or less capability. The way the military—I’ve talked to

people at the Pentagon about this, the way they calculated. It’s

costing them $15,000 per soldier per month in Iraq, which is pretty

expensive. Now, obviously, that’s not salary. That’s all sorts of

other things that have been mentioned already. That’s just for the

guys in Iraq. And of course, the other issue you have to remember

is that the military rotates these people out. So you have a two or

three to one ratio of people outside Iraq that are leaving Iraq, that

are getting ready to come back to Iraq, that are training or whatever else. So there’s all this other money that’s sort of going on behind the scenes that’s involved in keeping the military there.

You need the military there. It has its own reasons for being

there, its own capabilities. What our companies do is support that

military option. I also want to point out that when they kick

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around these numbers of contractors in Iraq, we need to be clear

whether we’re talking about security contractors or nonsecurity

contractors and whether they’re Iraqi or not. Many of our member

companies have ratios or have percentages of Iraqi employees of

upwards of 70 or 80 percent. And this is normal. Most companies

when they work in areas in Balkans or in Sierra Leone or in Liberia, they hire as many locals as they can, which is a good thing for

the economy. It’s a good thing from an ethical perspective. It’s a

good thing from a legal perspective. So when you get your open

number of 48,000, you’re probably talking an awful lot of Iraqis, 50,

60 percent at least, probably higher.

I think the other thing I wanted to point out, even in the United

States, we have three times as many private security as we do police. So it’s not unusual that Iraq would have a large number of

private security people.

Mr. CHVOTKIN. I would just add to that, first of all, is the size

of the available work force to meet the number of projects that are

underway. Simply insufficient military. Even if all of the military,

even if number of available was not the issue or the policy was not

the issue, I don’t think there’s enough to provide the force protection that’s necessary.

Mr. Van Hollen, I think you are familiar with many of the developmental assistance programs around the globe and in some cases,

even in Iraq and Afghanistan, where the companies prefer to have

distance between themselves and the U.S. military in order to

carry out their work, and so in many cases, there’s a preference

both on the government side as well as on the company’s side to

avoid that force protection.

Finally, benefit, this is a sheddable work force. If the project

ends, the work force goes away and not so on the military. You’ve

got to task them. You’ve got to continue to train them. And so another benefit to having the—using contractors, the other panelists

have said there’s a cost effectiveness; there’s a resource capability.

There’s a resource availability. All have to come into play.

Mr. VAN HOLLEN. If I could just very quickly——

Mr. SHAYS. Sure. Sure. Just respond.

Mr. VAN HOLLEN. Thank you, Mr. Chairman.

Mr. SHAYS. Just remember that the last gentleman who spoke

was the individual that you introduced. He’s first among equals in

this group. You had to have been persuaded by his comments.

Mr. VAN HOLLEN. I understand.

Mr. SHAYS. It’s the quid pro quo.

Mr. VAN HOLLEN. He did a very good job. But let me just ask

a couple questions here because, again, as I said in my opening

statement, and again——

Mr. SHAYS. Don’t get carried away. Your time ended a long time

ago. You want to make a comment; I want some time.

Mr. VAN HOLLEN. Let me make two comments, a couple comments. First of all, Mr. Taylor, just for the record, the contract with

Regency and Blackwater specifically makes it clear that Regency is

a subcontractor of Kellogg, Brown & Root. So it’s in the contract

that your company signed with Regency, at the top of the pyramid

was KBR, and so just to—which is consistent with this chart that

we’re showing.

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Second, again, the question is not whether there are certain circumstances under which it’s good to have private security contractors. I just want to go back to the cost because, you know, what

was the figure you gave, Mr. Brooks, for the military?

Mr. BROOKS. $15,000 per month, and that’s an average.

Mr. VAN HOLLEN. That includes the whole overhead.

Mr. BROOKS. Oh, absolutely.

Mr. VAN HOLLEN. OK. But we’re talking in this case an individual employee with the rank of and the experience of a sergeant,

$600 a day, which does calculate out to $180,000 a year, and—well,

anyway, I’m just quoting from the Regency. They did the math.

The newspaper did the math. And so the question is, what is the—

is the taxpayer getting the best for the tax dollar that we’re paying? I must say that we’ve been trying to get to the bottom of a

lot of these questions. The subcommittee—and I will end with this,

Mr. Chairman.

Mr. Waxman long ago wrote to Brigadier General Jerome Johnson with the Army Field Support Command asking for questions,

any Defense Department reports comparing the costs of paying contractors to provide security services or logistical support under the

LOGCAP contract with the cost to the Army of providing the services or support itself. That’s the question that we’ve been asking

here.

We’ve received no response back to this letter. It’s dated November 30, 2004.

Thank you, Mr. Chairman.

Mr. SHAYS. Thank the gentleman.

I want to thank all of you for being here. I think that the men

and women who serve with you are true heroes, and they are risking their lives every day. Bottom line.

I do want to clarify, because I may not have been as clear as I

want, and I want to be clear about this, when my staff director and

I went to the West Bank for a week, DynCorp was protecting us

because that was 2003. We were there during the Easter recess,

and when we went into Gaza City for the day, we went with three

cars plus an additional car behind us, and that additional car, we

didn’t know who was in it. It was all black. They went in. They

never got out of that car, but when we got out of the gate, they

walked out. And they were covered from head to toe with everything you could imagine. And I said, what would happen if your

services were required? And they explained, you wouldn’t want to

be anywhere around us. Now, those individuals, two of those individuals I think died a week—about a month later because they

were blown up by an IED on the way in or out of Gaza City, and

I’m forgetting which. And I just want to say, having looked in their

eyes, knowing that they were there to protect us and to know they

lost their lives, this is not child’s play. I’m not suggesting anyone

is suggesting that, but I want to put it on the record. They are

doing extraordinarily dangerous work.

And I do think the question that was asked about cost and benefit, I do buy in totally, completely, to the fact that the military has

three shifts, and you have one—one training, you have one kind of

in the back, and you have one in the action. And in this case, you

are totally right. We only pay for when they’re there. And when we

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want to dump them, we can just get rid of them. There is a cost

effective aspect to this. And if there were earlier contracts that did

cost-plus, even then the government has to be looking at this and

saying, you know, we don’t like your cost-plus. We’re going to look

at someone else to come in. But a cost-plus is not, in my judgment,

the way we would want to design contracts as a general rule.

I want to ask you all, and I’m going to say to you, Mr. Balderas,

I notice that the colonel on my staff seemed to be more impressed

with you as the Delta Force, and I said, what the heck’s going on

here? And he said, you know, he used to fly you guys into Laos and

some other places when he was in Vietnam, manning the helicopter. And I said, so you mean they’re as good as the SEALs? An

he said, no, better. Now, that was his perspective. So as the top enlistee in the Delta Force, you just kind of won him over. So he

made me very impressed with what you do, and I appreciate your

expertise and your service to our country.

But there is this definite conflict and bias that my staff director

has.

I’d like to ask all three companies. Do you all share the same

armor, the same vehicles, the same IED jammers? Give me a sense,

do you sometimes compare notes? I mean, you’re competitors, but

I would like to think you all want the best, and if you got the best,

you’re not just going to keep it to yourselves, and you all have

training. Tell me where you interface and where you don’t, and if

you don’t interface, tell me that, too.

Mr. Taylor, have you had a rest from answering questions? Are

you ready to go again?

Mr. TAYLOR. I’m fine, Mr. Chairman.

Mr. SHAYS. OK. At the operator level, at the level who are actually doing the heavy lifting, there is absolutely work between and

among—even though we’re competitors—among the companies. Because necessarily during our operations, we overlap, we could overlap, and in that case, we understand the value, particularly as

former enlisted guys, of very direct communication to ensure that

we’re not getting in each other’s way, that we’re not getting in anybody else’s way, and that we’re able to fulfill whatever mission it

is that we have. With regard to gear and everything else that is

generally contractually mandated and is provided for in an RFP or

request for proposal, that is identified in that request for proposal.

Mr. SHAYS. Thank you.

I’d like to just go down the line.

Mr. ROSENKRANZ. Well, we certainly are close to each other. We

share a camp in Baghdad. And sometimes you can be too close, I

guess, but I think there’s a lot of interaction among the companies.

Government disperses us in different parts of the countries where

we serve, but I think, not only do we interact, but we rate each other’s populations, you know, for new hires, and so I think there’s a

lot of interaction among the companies.

As far as equipment, in the State Department contract for the

WPPS, there’s a great commonality on the civilian police side.

When we submit a proposal, we can suggest the type of equipment

that we think’s appropriate, and then the INL folks in the State

Department decide, you know, whether they can afford it. That includes airplanes. That includes the types of vehicles and other

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types of equipment. And I was asked by counsel at one point, you

know, what we knew about this core equipment for detecting IEDs

or rather for preventing the detonation of IEDs, we did do some experimental work with that, at least we supported the experiment

in Iraq. I don’t know what the outcome was on that. They just gave

us some copies. This is the type of jammer that—it will stop both

the transmitted—transmitted signal and jam it or it will do something to the signal that’s already preset with the other kind of explosive device. So we get involved in that tangentially, really, but

as far as equipment on the one program, I think it’s a pretty common type of equipment on the police side. There’s no experimentation. And we have changed over the last 2 years as to what kind

of vehicles we use, what kind of equipment we use.

Mr. SHAYS. Thank you.

Mr. Balderas.

Mr. BALDERAS. Yes, it depends on the contract, Congressman.

For example, all three companies here are on the worldwide contract for the Department of State, and most of that equipment is

GFE, government furnished equipment. So there is a commonality

because sometimes we do interchange. So all that is the same.

As far as working together, it is absolutely true. The guys on the

ground do work together, and it’s force common sense to do so. In

fact, when we had our incident in September of last year, it was

DynCorp Security that stopped and made it for our guys on the

ground. So yes, the guys on the ground do work together and share

and pass info. In fact, some of the guys actually have probably

worked for all three companies at one time or another. So they all

stay on the ground and stay in contact.

Mr. SHAYS. Thank you. Let me ask the three of you, and I’m not

trying to be cute here, but when you are competing, you’re competing based on service and cost. Is there the possibility that the low

bidder uses inferior protective gear?

Mr. BALDERAS. Again, depending on the contract, some contracts,

you are asked to provide your own, but for most of the DOD and

DOS contracts, they’re strictly requirements on the contract, what

you have to meet the requirement. So again, the——

Mr. SHAYS. Let me ask you a question that had been answered

before I asked it. The bottom line is, most of the equipment is provided.

Mr. ROSENKRANZ. Government furnished or in the contract,

requires——

Mr. SHAYS. Let me ask you, you each have your own training

procedures. Which one of you is responsible for training Iraqi police

in Jordan?

Mr. ROSENKRANZ. That would be DynCorp.

Mr. SHAYS. DynCorp, right. So you are basically training the police, at least those police that are trained in the Jordan

training——

Mr. ROSENKRANZ. We support the Jordan Training Center or we

provide the logistic or we did up until——

Mr. SHAYS. You are not doing the teaching. You are just trying

to do the protective—I mean, are you training these police officers?

Mr. ROSENKRANZ. Logistics on the school in Jordan or we did. We

do our mentoring and advising onsite in the regions of the two

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countries. We have 1,000 police advisors in the two countries who

conduct the training. For instance, in Afghanistan, there are regional training centers. We conduct the training there, CTC in Afghanistan. We do the training, and in Iraq, we do training for the

police—with the police. It’s a direct training with the Iraqis and Afghans.

Mr. SHAYS. Before I ask you if there’s anything anyone wants to

put on the record, I would invite Mr. Kucinich to followup on a

question with our colleague or vice chairman or——

Mr. KUCINICH. Just a couple questions.

Mr. SHAYS. Yes, just a couple, and let’s do it.

Mr. KUCINICH. Mr. Chairman, I’m concerned about the suffering

caused by war-induced psychological injury for the individual and

for his immediate family, society, working for the private security

companies here. As you no doubt know, the gold standard study on

this question was mandated by Congress a decade ago or actually

a decade after the end of the Vietnam War. It was called the National Vietnam Veterans Readjustment Study, and one of the important findings of the study was the likelihood of violent criminal

behavior by veterans with Post-Traumatic Stress Disorder. The

study investigators surveyed veterans for the number of violent

acts they had committed in the last year. Nearly one-fifth of individuals in the study with PTSD self-reported committing 13 or

more violent acts in that year. Violence on such a scale implies

sometimes criminal activity, such as armed robbery, gang activity

and assault, not confined to domestic violence, but the study also

found a very high incidence of criminal behavior among veterans

whose war experience was high stress, 14.4 percent. The implication of that is that the diagnosis of PTSD does not capture all the

psychological injuries that can result in the commission of violent

acts because we all know that the stress of theater, of war can

cause psychological injuries, and we care deeply about the health

of the employees and private military contractors, about the people

of Iraq they work with and about the American society they return

to.

I just want to ask a couple questions about the measures that

the owners and management of private military contractors are

taking in this area. First I’d like to know——

Mr. SHAYS. For the gentleman, I told Mr. Balderas he couldn’t

take an earlier flight so please make sure he’s asked a question so

I don’t feel guilty.

Mr. KUCINICH. Well, Mr. Balderas, I would like to know—thank

you, Mr. Chairman—about the environment in which your employees work. Which percentage your employees in Iraq do you believe

are in danger from roadside bombs kidnapping or ambush?

Mr. BALDERAS. As far as all the employees who work in Iraq, unfortunately, they’re all under that same risk.

Mr. KUCINICH. What happens to, attempts to monitor your employees in Iraq before, during and after their return, for key signs

of psychological injury, such as alcohol abuse, drug abuse, anxiety

disorders, PTSD, violent acts? You know, do you have any monitoring at all?

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Mr. BALDERAS. Yes, we do. We do a psychological profile as part

of our assessment in recruiting and hiring practice. One of the

things I did——

Mr. KUCINICH. Exit interviews?

Mr. BALDERAS. Yes, and one of the things we actually did when

we got heavily involved in 2004 was, I went ahead and started a

program that was based on a casualty assistance program in the

military, and we went in and contracted with a doctor that also

works for Fort Bragg and as part of the mental health program,

and he is on call. He served us well when we had our incident with

the four personnel we lost. He was able to call mental health specialists in each of those areas, counsel the family, and he personally met the plane at Dover. And he recently just came back from

Iraq to go over and talk to people that are over there right now just

to give them a sense. Because one of the things I learned in the

military that’s true now, that an individual that is under a lot of

stress sometimes doesn’t want to let you know because it carries

a stigmatism, and they are in fear of their jobs. So we have a program where they can call him, and we wanted to make sure they

knew that they could call them offline.

Mr. KUCINICH. So you do have provisions or your employees in

Iraq get treatment for any psychological injuries?

Mr. BALDERAS. Yes, and that is also one of the programs of the

companies. So it is—has some type of shielding for the employee.

Mr. KUCINICH. And is that true of Blackwater, Mr. Taylor?

Mr. TAYLOR. Yes, Mr. Kucinich.

Mr. KUCINICH. That’s true of DynCorp?

Mr. ROSENKRANZ. Yes, it is. We take psychologists over there.

Mr. KUCINICH. And can you tell me, do you also pride yourself

in situations where your employees file Workers Comp claims

against the company because they feel that they were injured on

the job and therefore deserve some kind of compensation?

Mr. Balderas.

Mr. BALDERAS. No. We have never had—part of the issue under

the Defense Base Act, if someone is injured, they are covered under

Workers Comp, but not as far as they not being dealt with fairly.

The company does try to go above and beyond to treat everyone the

same.

Mr. KUCINICH. So you don’t have any Workers Comp issues; is

that what you are saying?

Mr. BALDERAS. No.

Mr. KUCINICH. Major General.

Mr. ROSENKRANZ. No.

Mr. KUCINICH. Mr. Taylor, do you have any type of Workers

Comp issues?

Mr. TAYLOR. I don’t know of any.

Mr. KUCINICH. You don’t know of any?

Mr. TAYLOR. I don’t know of any.

Mr. KUCINICH. Will you check with your legal advisors and let

them know?

Mr. TAYLOR. Of course I will. Mr. Kucinich, if I could point out,

one of the things we also do is we have a full-time chaplain who

is a full-time chaplain of the Marine Corps in our employment at

Blackwater.

183

Mr. KUCINICH. Is he a trained psychologist?

Mr. TAYLOR. He has a career’s worth of dealing with people who

have served in combat and have come back.

Mr. KUCINICH. Clinical background?

Mr. TAYLOR. I would be glad to forward to you Father Pittarelli’s

background.

Mr. KUCINICH. Just one last question to Mr. Balderas, how many

of your employees in Iraq, who have returned from Iraq, are dealing with alcohol abuse? Do you have any idea of quantifying it?

Mr. BALDERAS. No. I don’t have that information. I know of no

issues.

Mr. KUCINICH. Anxiety disorders?

Mr. BALDERAS. I could check with Dr. Martin and find out in

that manner, but——

Mr. KUCINICH. PTSD? I mean, do you——

Mr. BALDERAS. As far as psychological issues, I’d have to talk to

him offline.

Mr. KUCINICH. I thank you.

Mr. Chairman, I mean, obviously, this is something that is important as a health issue for the employees of private contractors

as well as for the American society when people come back, to

make sure that if you’re doing—if you’re identifying people who

have difficulties, you’re providing them with assistance and treatment, you do have followup. Each of you said that. That’s important for this committee to hear that. Thank you.

I thank you, Mr. Chairman.

Mr. SHAYS. Thank the gentleman.

Chris, do you have a question that you want to——

Mr. VAN HOLLEN. Just one. Thank you, Mr. Chairman.

I just have a question based on your testimony, Mr. Chvotkin,

where you stated in the written testimony——

Mr. SHAYS. Is this a coincidence you are finally going to your

constituent?

Mr. VAN HOLLEN. No.

Mr. CHVOTKIN. He’s trying to protect me from rush hour over on

270.

Mr. VAN HOLLEN. Another 20 minutes, it will loosen up a little

bit. He got it right.

Way back in March 2003, at the very outset of hostilities in Iraq,

your organization, PSC, Professional Services Council, recommended to senior acquisition leadership of the Department of

Defense that DOD consider taking, as you say, one of three initiatives: One, setting standards for private security firms who wanted

to operate in Iraq; or, two, better yet, establish a qualified list of

firms from which the private sector would contract directly for

services; or, even better still, that DOD directly contract for and supervise these private security firms and the contracting firms that

they would reimburse.

Those recommendations were picked up, Mr. Chairman, as you

may recall, in a 2005 GAO report. My understanding is that, however, as of today, they have not been adopted by the Defense Department. And my question to you is why do you think these recommendations are important? And why have they not been adoptVerDate 11-MAY-2000 12:19 Mar 30, 2007 Jkt 000000 PO 00000 Frm 00187 Fmt 6633 Sfmt 6633 C:\DOCS\33252.TXT HGOVREF1 PsN: HGOVREF1
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ed, to the best of your knowledge, by the Defense Department or

other contracting agencies?

Mr. SHAYS. And I would like to add, if the gentleman would

allow me, I would like the others of you to say whether you think

that these recommendations were important.

Mr. CHVOTKIN. Mr. Van Hollen, we saw the situation in Iraq as

it was just emerging. We had a concern of a long-term set of issues

for the use of contractors accompanying the force as well as the reconstruction and USAID activities which were just beginning.

Many of our companies, while they are familiar with buying security services, we saw the fear the magnitude would be such that

knowledge would far outstrip both capability as well as availability.

And that is why we went down the suggestion that the government

at large and the Defense Department, which was in charge of the

security operations in all of Iraq at the time, take those steps to

facilitate those coordination and communications among the companies, the security forces, and to assist those companies that had

to provide security on their own to find the most capable, most

qualified, the most effective kind of security support.

I think those recommendations remain valid. I have read

through some of the commentary and the GAO report as to why

the agencies didn’t believe that they were appropriate. Some of

them are fair, legal interpretations of the government’s role and

still remain valid today. I still hope that, as a result of this hearing, the Defense Department or the U.S. Government would adopt

those recommendations.

Mr. VAN HOLLEN. So your view is those recommendations should

still be adopted?

Mr. CHVOTKIN. My recommendation is those recommendations

are still valid today.

Mr. SHAYS. I would like you to just quickly respond to whether

you think these recommendations make sense.

Mr. BROOKS. I think largely they are OK. I think we have to remember we need to keep the flexibility in any sort of conflict,

postconflict environment; you need to have some flexibility that allows you to adapt to the situation. As we say, you don’t need James

Bond to guard a gate, you need somebody who is capable and professional. So the standards have to be very carefully set so that it

allows scaling depending on the level of threat and the need.

Mr. BALDERAS. Yes, I support those recommendations.

Mr. ROSENKRANZ. I think Department of State has set a good

standard. In the two programs that we’re a major player in, they

set high standards, and they get good results. And it’s sort of ironic. I mean, a lot of what our companies are doing as a result of the

fact that Defense cannot do it, they are overcommitted, or they are

underresourced. I think everyone agrees to that. So it is somewhat

ironic that they are not engaged, because the buck stops over there,

and they could take the lead from State on how to do it and should

do it.

Mr. TAYLOR. Yes, we would generally support those recommendations.

Mr. SHAYS. Mr. Kucinich just has one.

Mr. KUCINICH. I thank the Chair for his indulgence.

185

I have heard that one general or it may have been Mr. Brooks

said that 60 percent of the people in Iraq who are employed by private security are Iraqis. Did you say that?

Mr. BROOKS. Roughly.

Mr. KUCINICH. Roughly. The costs that are on this sheet of $600 a day, that is not what

the employees get, is it? It’s just what you charge for the employees, for individual employees?

Mr. BROOKS. Is that this chart?

Mr. KUCINICH. That’s this chart.

Mr. BROOKS. That would be, though, dependent on the quality of

employee that you hire.

Mr. KUCINICH. That’s with all the costs that are involved.

Mr. BROOKS. You would have to ask these guys what they

charge.

Mr. KUCINICH. Here’s my question. For people who are doing

similar work, do you pay Iraqis the same that you pay non-Iraqis?

Does the industry? Do Iraqis get the same pay for the same work?

Mr. TAYLOR. They don’t do the same work, Mr. Kucinich.

Mr. KUCINICH. In no case?

Mr. TAYLOR. From Blackwater’s perspective, they are not doing

high-threat protection.

Mr. KUCINICH. So Iraqis are the lowest-paid then?

Mr. TAYLOR. I have no idea, Mr. Kucinich.

Mr. KUCINICH. Could you get the information from your legal

counsel and provide it to us?

Mr. TAYLOR. Absolutely.

Mr. SHAYS. Just be clear about your testimony here. You are basically saying they are not doing that kind of work. You are not

asking them to do that kind of work; therefore, they are not going

to get paid those kind of dollars.

Mr. KUCINICH. But for similar work.

Mr. TAYLOR. We would have to define similar. High-threat protection of a U.S. Ambassador is not performed by local Iraqis. That

requires a different skill set.

Mr. BROOKS. If I could weigh in on that. I think what you are

getting to is, yes, an American who goes to work in Iraq, whether

driving a truck or mechanic, can expert to earn, say, double what

they would in the United States. If they are from Nepal or if they

are from the Philippines or something, then even driving a truck

or something, it is 10 times what their salary would have been

back at home. Is it as much as an American? Probably not. But it

is still a lot more than they would get at home. So the employees

of third country nationals and the Iraqis that I talk to when I was

in Iraq were quite happy with their salaries.

Mr. KUCINICH. Mr. Chairman, I think it would be interesting for

this committee to have the gentlemen who are here and the industry provide us with a chart which shows how much an American

there gets paid, how much a Nepalese gets paid, how much an

Iraqi gets paid for similar work. I mean, I think it would be very

interesting for us to have that information.

Mr. SHAYS. Let me just say, if the gentleman would like it, I

would be happy to request it. From my own perspective, I would

be outraged if someone who left their own country at a certain salVerDate 11-MAY-2000 12:19 Mar 30, 2007 Jkt 000000 PO 00000 Frm 00189 Fmt 6633 Sfmt 6633 C:\DOCS\33252.TXT HGOVREF1 PsN: HGOVREF1
186

ary structure was ultimately getting what someone would get who

came from a country where their reimbursement would have been

much higher. So I am not on the same wavelength, but I would be

happy if that could be provided to the committee what the different

pay scale. I will just ask the two folks that do the association work

to provide that for us. Just give us a sense of what folks would get.

I mean, Mr. Brooks, it is your response really, but I think what you

are saying is that in some cases they might get 10 times more than

they would get in their own country. And then you could take that

information and conclude with it as you like.

Mr. KUCINICH. I appreciate the gentleman’s indulgence to let me

ask that question, and I think that no matter what country we are

in, there is always questions of equity that need to be looked at.

Mr. ROSENKRANZ. But usually you hire the men required to do

the job, and if it is the type of job where you can hire somebody

and get them at a lower salary, that’s the type of person——

Mr. KUCINICH. I understand. I am looking at this chart, just before we started this hearing. If the government is being charged

$600 a day for an employee, and that employee happens to be

Iraqi, he’s getting, say, $10 a day, we’d be interested.

Mr. ROSENKRANZ. It doesn’t work that way. I mean, if you have

a person who has to do a sharp-team or do a PSD that requires

a clearance, you have no choice on who you are going to hire. And

if it is somebody that is going to provide local security, and it can

be an Iraqi, then you hire an Iraqi. You would never bring somebody over.

Mr. BROOKS. If I could back that up. I think one of the really interesting things for me, when you look at this industry, it is truly

a global industry. And companies that work in the Balkans that

are now working in Iraq have actually brought some of their employees who have been working their way up the corporate ladder

to work in Iraq. And in Darfur you have companies that worked

in Sierra Leone that have brought Sierra Leone and are now part

of management structure. That is quite normal. And for the companies who are competitive, it’s cheaper to use a Sierra Leonean and

give them a very good wage by Sierra Leonean standards than it

is to hire an American to do the same thing. So it is a global industry, and they try to be as cost-effective as possible.

Mr. SHAYS. Let me say, I have found—this is your life’s work

right now, so for you this is old hat stuff. But for me, this was a

very informative hearing. You have been an excellent panel. Mr.

Balderas, if you had left to take your plane, it wouldn’t have been

as good a panel.

Mr. BALDERAS. Thank you, Mr. Chairman.

Mr. SHAYS. So if your wife wanted to leave earlier, I thank her

for understanding that you were a valued part of this. All of you

were.

This was a very interesting hearing, both panels, and I thank

you very much. Is there any closing comments that you would like

to make that won’t get Mr. Kucinich or Mr. Van Hollen to ask a

followup question?

Mr. TAYLOR. No, thank you, Mr. Chairman.

Mr. SHAYS. But anything we need to put on the record?

187

Mr. ROSENKRANZ. These folks, these women and men—and, by

the way, we have a number of women in our police program. They

are doing a magnificent job. Everything who gets protected by

them, the people who watch our police program in action are so impressed. These are just marvelous people.

Mr. SHAYS. Thank you.

Mr. Balderas.

Mr. BALDERAS. Mr. Chairman, just Triple Canopy would just like

to thank you for having the opportunity to talk here today. And

also, on behalf of all the veterans there at Triple Canopy, we would

just like the opportunity to continue to serve our country. Thank

you very much.

Mr. SHAYS. Thank you very much.

Mr. Brooks.

Mr. BROOKS. Very quick. We do have public companies, I just

want to say, right off the bat that are publicly known. So their incomes and their contracts are quite open. Armor Group, MPRI are

two member companies that are public companies. Good oversight

makes for good companies, and if you look in our presentation, we

are happy for good oversight. We look to support oversight from the

government side.

A code of conduct is useful for making good companies. I mean,

we have a code of conduct. I think all companies should. I think

they all have similar codes of conduct, but it is useful to have that

public so everybody knows what the rule is.

And finally, I would just like to say it has been an honor to be

on the panel with these folks here. I mean, they are amazing.

Mr. SHAYS. And, constituent of Mr. Van Hollen, would you like

to get the last word?

Mr. CHVOTKIN. These are complicated issues, Mr. Chairman.

They require good thought. I appreciate the attention that the subcommittee has paid, and would look forward to a continued dialog

with you on it.

Mr. SHAYS. Well, again, a very interesting hearing. Thank you so

much for your cooperation. Any question that you said you would

followup on, it is important that there be that followup and communicate with our committee. And if there’s not the ability to get

exactly what we wanted, we will need just a reason why, and we

will walk through it.

But thank you, gentlemen, for your service to our country. We

appreciate it a lot. With that, this hearing is adjourned.

[Whereupon, at 7:23 p.m., the subcommittee was adjourned.]

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