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DEFENSE DEPARTMENT CONTRACTING IN

AFGHANISTAN: ARE WE DOING ENOUGH TO

COMBAT CORRUPTION?

HEARING

BEFORE THE

SUBCOMMITTEE ON NATIONAL SECURITY,

HOMELAND DEFENSE AND FOREIGN OPERATIONS

OF THE

COMMITTEE ON OVERSIGHT

AND GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

FIRST SESSION

SEPTEMBER 15, 2011

Serial No. 112–80

Printed for the use of the Committee on Oversight and Government Reform

(

Available via the World Wide Web: http://www.fdsys.gov

http://www.house.gov/reform

(II)

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

DARRELL E. ISSA, California, Chairman

DAN BURTON, Indiana

JOHN L. MICA, Florida

TODD RUSSELL PLATTS, Pennsylvania

MICHAEL R. TURNER, Ohio

PATRICK T. MCHENRY, North Carolina

JIM JORDAN, Ohio

JASON CHAFFETZ, Utah

CONNIE MACK, Florida

TIM WALBERG, Michigan

JAMES LANKFORD, Oklahoma

JUSTIN AMASH, Michigan

ANN MARIE BUERKLE, New York

PAUL A. GOSAR, Arizona

RAU ́ L R. LABRADOR, Idaho

PATRICK MEEHAN, Pennsylvania

SCOTT DESJARLAIS, Tennessee

JOE WALSH, Illinois

TREY GOWDY, South Carolina

DENNIS A. ROSS, Florida

FRANK C. GUINTA, New Hampshire

BLAKE FARENTHOLD, Texas

MIKE KELLY, Pennsylvania

ELIJAH E. CUMMINGS, Maryland, Ranking

Minority Member

EDOLPHUS TOWNS, New York

CAROLYN B. MALONEY, New York

ELEANOR HOLMES NORTON, District of

Columbia

DENNIS J. KUCINICH, Ohio

JOHN F. TIERNEY, Massachusetts

WM. LACY CLAY, Missouri

STEPHEN F. LYNCH, Massachusetts

JIM COOPER, Tennessee

GERALD E. CONNOLLY, Virginia

MIKE QUIGLEY, Illinois

DANNY K. DAVIS, Illinois

BRUCE L. BRALEY, Iowa

PETER WELCH, Vermont

JOHN A. YARMUTH, Kentucky

CHRISTOPHER S. MURPHY, Connecticut

JACKIE SPEIER, California

LAWRENCE J. BRADY, Staff Director

JOHN D. CUADERES, Deputy Staff Director

ROBERT BORDEN, General Counsel

LINDA A. GOOD, Chief Clerk

DAVID RAPALLO, Minority Staff Director

SUBCOMMITTEE ON NATIONAL SECURITY, HOMELAND DEFENSE AND FOREIGN

OPERATIONS

JASON CHAFFETZ, Utah, Chairman

RAU ́ L R. LABRADOR, Idaho, Vice Chairman

DAN BURTON, Indiana

JOHN L. MICA, Florida

TODD RUSSELL PLATTS, Pennsylvania

MICHAEL R. TURNER, Ohio

PAUL A. GOSAR, Arizona

BLAKE FARENTHOLD, Texas

JOHN F. TIERNEY, Massachusetts, Ranking

Minority Member

BRUCE L. BRALEY, Iowa

PETER WELCH, Vermont

JOHN A. YARMUTH, Kentucky

STEPHEN F. LYNCH, Massachusetts

MIKE QUIGLEY, Illinois

(III)

C O N T E N T S

Page

Hearing held on September 15, 2011 ..................................................................... 1

Statement of:

Motsek, Gary, Deputy Assistant Secretary of Defense (Program Support),

Office of the Under Secretary of Defense (Acquisition, Technology &

Logistics); Kim D. Denver, Deputy Assistant Secretary of the Army

(Procurement), Office of the Assistant Secretary of the Army (Acquisition, Logistics and Technology); and Brigadier General Stephen J.

Townsend, Director, Pakistan-Afghanistan Coordination Cell, J–5, the

Joint Staff ...................................................................................................... 7

Denver, Kim D. .......................................................................................... 14

Motsek, Gary ............................................................................................. 7

Townsend, Brigadier General Stephen J. ................................................ 23

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

Chaffetz, Hon. Jason, a Representative in Congress from the State of

Utah, prepared statement of ........................................................................ 3

Denver, Kim D., Deputy Assistant Secretary of the Army (Procurement),

Office of the Assistant Secretary of the Army (Acquisition, Logistics

and Technology), prepared statement of ..................................................... 16

Motsek, Gary, Deputy Assistant Secretary of Defense (Program Support),

Office of the Under Secretary of Defense (Acquisition, Technology &

Logistics), prepared statement of ................................................................ 9

Townsend, Brigadier General Stephen J., Director, Pakistan-Afghanistan

Coordination Cell, J–5, the Joint Staff, prepared statement of ................ 25

Yarmuth, Hon. John A., a Representative in Congress from the State

of Kentucky, letter dated September 15, 2011 ........................................... 40

(1)

DEFENSE DEPARTMENT CONTRACTING IN AFGHANISTAN: ARE WE DOING ENOUGH TO

COMBAT CORRUPTION?

THURSDAY, SEPTEMBER 15, 2011

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON NATIONAL SECURITY, HOMELAND

DEFENSE AND FOREIGN OPERATIONS,

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM,

Washington, DC.

The subcommittee met, pursuant to notice, at 11:19 a.m. in room

2157, Rayburn House Office Building, Hon. Jason Chaffetz (chairman of the subcommittee) presiding.

Present: Representatives Chaffetz, Tierney, Labrador, Welch,

Yarmuth, Lynch, Quigley.

Staff present: Thomas A. Alexander, senior counsel; Robert Borden, general counsel; Molly Boyl, parliamentarian; Mark D. Marin,

director of oversight; Rafael Maryahin, counsel; Sang H. Yi, professional staff member; Nadia A. Zahran, staff assistant; Kevin

Corbin, minority deputy clerk; and Scott Lindsay, Carlos Uriarte,

and Ellen Zeng, minority counsels.

Mr. CHAFFETZ. The subcommittee will come to order.

Good morning, and welcome to today’s hearing, Defense Department Contracting in Afghanistan: Are We Doing Enough to Combat

Corruption?

Thank you all for being here. Our apologize on delays. You are

all very busy with very important responsibilities, and I appreciate

your patience as we had votes on the floor earlier.

I would like to welcome Ranking Member Tierney, members of

the subcommittee, and members of the audience for being here. Today’s proceedings continue this subcommittee’s efforts to oversee

the billions spent in support of military and civilian operations in

Afghanistan. Last year, this subcommittee conducted an investigation of the Defense Department’s Host Nation Trucking Contract.

The purpose of this contract was to supply our military through the

use of private contractors. The idea was to remove this burden

from our armed forces while at the same time promoting the local

Afghan economy.

Almost since its inception in 2009, allegations surfaced that warlords, power brokers and the Taliban would seek ‘‘protection payments’’ for safe passage through tribal areas. According to those familiar with the contract, the result was a potential windfall for our

enemy. In short, the American taxpayer had allegedly funded the

same enemy our soldiers fought on the battlefield.

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While the investigation did not yield smoking gun evidence that

this had occurred, the anecdotal evidence was substantial. At the

same time the investigation revealed that the Defense Department’s contract oversight was woefully inadequate. Despite whether the allegations could be substantiated, the oversight structure

did not allow for swift and thorough review. These findings were

released at a hearing last June at which the Pentagon leaders testified.

As a result of that hearing, and the subcommittee’s investigative

report, the Defense Department established three task forces to examine these particular issues as well as corruption in general.

Today we will hear from the Defense Department about its findings

and its progress since last year’s hearing. With the Commission on

Wartime Contracting’s recent revelation that anywhere between

$30 billion and $60 billion dollars has been misappropriated in Iraq

and Afghanistan since 2001, it is certainly critically important that

the Pentagon get this right. I hope it has made significant progress

in this regard.

I also want to commend my colleague, Mr. Tierney, for his great

and tireless work here. He has done some good research in diving

deep into this, and I am glad that we can continue on with the

work that he initiated.

I would now like to recognize the distinguished ranking member,

the gentleman from Massachusetts, Mr. Tierney, for his opening

statement.

[The prepared statement of Hon. Jason Chaffetz follows:]

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Mr. TIERNEY. Thank you, Mr. Chairman.

We have just marked the 10th anniversary of September 11th.

It is soon going to be a decade since our forces crossed the border

into Afghanistan. We entered that conflict for a cause and our

brave men and women in uniform have largely accomplished the

mission of ridding Afghanistan of al Qaeda and the international

terrorists that were threatening the United States.

I wanted to begin today by honoring and stating once again how

proud I am of all those people that have given service to this country and I also want to thank all of you for your service to the country and to our soldiers, sailors, airmen and Marines whom you

have supported.

I asked Chairman Chaffetz to call this hearing to examine the

problem of contracting corruption in Afghanistan. I thank him for

doing so and for working with us on this issue.

Last year, I led a 6-month subcommittee investigation of the

major Department of Defense logistics trucking contract in Afghanistan. Our investigation found that the trucking contract had

spawned a vast protection racket in which warlords, criminals and

insurgents extorted contractors for protection payments to obtain

safe passage. Our investigation further showed that senior officials

within the U.S. military contracting chain of command had been

aware of the problem but had done little to address it.

In plain English, the investigation found that the Department of

Defense’s supply chain in Afghanistan relied on paying the enemy

and fueling corruption in order to maintain our substantial military footprint.

Following the subcommittee’s investigation, General Petraeus established three task forces designed to address the problem of contract corruption and he issued new contracting guidelines to break

down the silos between contracting and operations. These were important first steps.

Since then, the Department has provided multiple briefings to

the subcommittee staff, demonstrating substantial progress in identifying where the U.S. taxpayer dollars are going. I commend the

Department for that ongoing effort.

Unfortunately, the picture presented is not pretty. Recent news

reports stated that the Task Force 2010 had specifically identified

and traced over $360 million in contracting dollars in Afghanistan

that had been diverted to warlords, power brokers, insurgents and

criminal patronage networks. The task force also confirmed the results of the subcommittee’s investigation, finding that many of the

trucking contractors were in fact making illicit payments that

ended up in the hands of the enemy.

The Commission on Wartime Contracting looked at contingency

contracting in both Iraq and Afghanistan, and estimated that upwards of $60 billion in U.S. contracting dollars had been lost to

waste, fraud and abuse. I fear that these reports are only the tip

of the iceberg. Much of the Afghan economy now centers around

the United States and international military presence and logistics

contracts, but a significant portion of those funds seem to end up

supporting the Dubai real estate market rather than jobs in Afghanistan.

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At the top of the hierarchy, there are weekly reports about politicians, or brothers and cousins of politicians who have obtained

multi-million dollar contracts with the U.S. Government. At the

bottom of the hierarchy, the extortion of international contractors

is a booming industry.

Today, the business of Afghanistan is war. How can we ever hope

to extricate ourselves from the war when so many Afghans benefit

from the insecurity that is used to justify our continued presence?

To my mind, we have crossed the tipping point at which the size

of our military footprint inadvertently fosters further instability.

Every additional soldier and every additional supply convoy that

we send to Afghanistan further fuels the cycle of dependence, corruption and endless war.

With that said, I want to focus today on the hearing on three

basic questions. One, what is the scope of contracting corruption in

Afghanistan; two, what is being done to address it; and three, how

can we dramatically reduce it?

Although I am skeptical about the design of the current U.S. endeavor there, today’s hearing we will focus on practical solutions

that hopefully can be implemented right away.

Congress has also had an important role to play. This spring, I

worked with the Armed Services Committee to include an amendment in the National Defense Authorization Act that would give

commanders in the field more authority to immediately stop contracting with companies that undermine the efforts of our troops on

the ground. I recently introduced a bill to establish a permanent

inspector general for overseas contingency operations, one of the

key recommendations of the Commission on Wartime Contracting.

I encourage my colleagues here today to join me in that legislation.

I am also working to draft comprehensive contingency contracting reform legislation to fundamentally change the way we do

business in war zones.

I want to close by reading from General Petraeus’ counter-insurgency contracting guidance, released in September 2010. He wrote,

‘‘If we spend large quantities of international contracting funds

quickly and with insufficient oversight, it is likely that some of

those funds will unintentionally fuel corruption, finance insurgent

organizations, strengthen criminal patronage networks and undermine our efforts in Afghanistan.’’ Simply stated, we can’t afford to

fail at getting a handle on contracting corruption in Afghanistan.

It is utterly unacceptable for any taxpayer dollars to ever make

their way into the hands of those who would use them as a means

to harm our brave men and women in uniform.

So I appreciate your testimony here today, gentlemen. I look forward to our discussion and again, thank you, Mr. Chairman.

Mr. CHAFFETZ. Thank you. Does any other Member have an

opening statement?

Mr. Lynch is recognized for 5 minutes.

Mr. LYNCH. Thank you, Mr. Chairman. I appreciate your holding

this hearing.

I want to associate myself with the remarks of our ranking member, Mr. Tierney, who has done yeoman’s work, along with the

chairman, on this issue, and his staff. I have had the benefit of

traveling many times to Afghanistan, several times in the company

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of Mr. Tierney’s staff on this issue. I just want to emphasize, or

amplify some of what Mr. Tierney has said here. We have a lawless

environment in Afghanistan.

And while I understand the mission there and I understand the

President’s approach, there is still, I think, a wide distance between where we should be in terms of watching our money and resources in that country and where it is today. I honestly believe,

having maybe eight or nine trips over to Afghanistan, and many

times on this issue and on corruption in general, along with Kabul

Bank, which is a whole other issue, I honestly believe at this point

that corruption, corruption is a greater enemy and a greater threat

to Afghanistan stability than the Taliban.

I think the Taliban can be beaten, or co-opted. I think corruption

in that culture, in that country, is a much tougher road.

I applaud Mr. Tierney on his great work, and Mr. Chaffetz has

been over there a number of times himself, they have done great

work. And I see that DOD has made some changes in their contracting protocols, and that is good. But I don’t think it is enough.

I don’t think it is enough. We have to get a better handle on this,

and I think it needs to be a tighter rein and a greater concern for

the theft, the theft of billions of dollars of American taxpayer

money.

The American people are doing a good thing. They are trying

their best to help a country gain stability. But our kindness and

our generosity is being abused in this case. And it needs to stop.

It needs to stop, and we need to put systems in place that will prevent that abuse from continuing. We are partners in this. We are

partners in this, the Congress and DOD. We have to make sure

that we tighten up this system and address some of the concerns

that Mr. Tierney has uncovered.

Thank you. I yield back.

Mr. CHAFFETZ. Thank you.

Members will have 7 days to submit opening statements for the

record.

We will now recognize our panel. Mr. Gary Motsek is the Deputy

Assistant Secretary of Defense for Acquisition, Technology and Logistics. Mr. Kim Denver is the Deputy Assistant Secretary of the

Army for Procurement. And Brigadier General Steve Townsend is

the Director of the Joint Staff Pakistan-Afghanistan Coordination

Cell.

Pursuant to committee rules, all witnesses will be sworn in before they testify. Please rise and raise your right hands.

[Witnesses sworn.]

Mr. CHAFFETZ. Let the record reflect that the witnesses answered

in the affirmative. Thank you.

In order to allow time for discussion, if you would please limit

your verbal testimony to 5 minutes, and whatever materials and

statement that you have for the record will be submitted in its entirety.

So we will start with Mr. Motsek. You are now recognized for 5

minutes.

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STATEMENTS OF GARY MOTSEK, DEPUTY ASSISTANT SECRETARY OF DEFENSE (PROGRAM SUPPORT), OFFICE OF THE

UNDER SECRETARY OF DEFENSE (ACQUISITION, TECHNOLOGY & LOGISTICS); KIM D. DENVER, DEPUTY ASSISTANT

SECRETARY OF THE ARMY (PROCUREMENT), OFFICE OF

THE ASSISTANT SECRETARY OF THE ARMY (ACQUISITION,

LOGISTICS AND TECHNOLOGY); AND BRIGADIER GENERAL

STEPHEN J. TOWNSEND, DIRECTOR, PAKISTAN-AFGHANISTAN COORDINATION CELL, J–5, THE JOINT STAFF

STATEMENT OF GARY MOTSEK

Mr. MOTSEK. Good morning, Chairman Chaffetz, Ranking Member Tierney, members of the subcommittee. Congressman Lynch, I

wish I had written what you just wrote. I rarely would ever say,

I would like to align myself with your remarks as well.

Thank you for this opportunity to appear before you today and

discuss the efforts of the Defense Department to reduce and control

contracting corruption in Afghanistan. This is an update to our testimony that we gave last June. And I hope we can in fact demonstrate that we have made some progress.

Contractors continue to provide critical support to operations in

Afghanistan. The use of local national contractors in particular is

a key to the counter-insurgency [COIN] strategy, of our commanding general. They currently make up 47 percent of the DOD

contractor work force in Afghanistan.

There is no doubt that the strategy that promotes Afghan first

carries risk. However, it is clear that the COIN strategy is essential to developing a stable Afghanistan.

Recognizing the essential role of contractors since September

2010 has been noted previously. The commander of ISAF published

counterinsurgency contracting guidance. This guidance stressed

that everyone must understand the role of contracting

counterinsurgency and how it could not only benefit but undermine

our efforts in Afghanistan.

Due in no small part to the concerns of this committee, Task

Force 2010 was established by that same commander to address

contracting corruption and its negative impact to that COIN strategy. The task force consists of individuals from uniformed services

and includes civilian representative from a variety of contracting,

auditing and criminal investigating agencies. The team most importantly includes contract forensic accountants who assist the task

force in tracing money through the Afghan domestic and international financial networks. I need not remind the committee that

is probably the toughest part of this job, as we all recognize.

One of the key efforts Task Force 2010 undertook was the assessment of the Host Nation Trucking contract. We are thankful for

this committee’s June 2010 report which served as an important

resource. The Host Nation Trucking Assessment looked at eight

prime companies that supported the contract to evaluate the extent, if any, that the power brokers, criminal elements and insurgents have had on the execution of those services. I know that one

of the specific concerns of this committee was our use of a particular private security contractor. During last year’s testimony, I

committed to ensuring action would be taken. Immediately upon

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departure from this committee, we suspended operations with that

contractor.

On August 4, 2011, the Army entered into an administrative

agreement with that private security contractor that stipulates he

will not provide convoy security for a period of 3 years. In accordance with this administrative agreement, we have ceased to use

this security contractor for convoy security.

There were a number of direct actions taken as a result of the

2010 Host Nation Trucking assessment. The most significant action

was the contracting command’s decision to execute a new contract

vehicle to address the challenges we had with the previous contract. Specifically, the new contract vehicle expands the potential

number of prime contractors, establishes new standards of conduct

and a variety of ways of applying security.

Due to the complexity of this new contract and to meet operational requirements, we continued to use Host Nation Trucking

vehicle with additional controls until the performance could be

started under the new contract which is tomorrow, and to address

the concerns that you expressed with the Host Nation Trucking.

We have put together a comprehensive strategy that should drive

business away from the bad actors, enable smaller companies to

prosper and to meet the vast arrays of our complex needs. With a potential of nearly $1 billion we must execute this program with care and vigilance. This is one of several actions taken

by the Task Force 2010. Other additional examples include the debarment of 78 individuals or companies, the suspension and pending debarment of an additional 42, and the referral to the appropriate debarment official of an additional 111 persons or companies. We continue to pursue a wide range of corrective actions.

However, we can’t do this alone. As you are aware, Task Force

2010 is but a part of a larger organization that is operating that.

Of course, challenges remain and our concerted effort to control

corruption in contracting must persist. With the commander’s commitment, which we now have without any doubt, and the participation of the international community, we will continue to make

progress.

I thank you and look forward to your questions.

[The prepared statement of Mr. Mostek follows:]

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Mr. CHAFFETZ. Thank you.

Mr. Denver, you are recognized for 5 minutes.

STATEMENT OF KIM D. DENVER

Mr. DENVER. Chairman Chaffetz, Ranking Member Tierney and

distinguished members of the Subcommittee on National Security,

Homeland Defense and Foreign Operations, thank you for the invitation to appear today to discuss Army efforts to reduce contracting

corruption in Afghanistan.

I am pleased to represent Army leadership, members of the

Army Acquisition and Contracting Workforce and our soldiers, who

rely on us for timely and efficient materiel, supplies and services

in support of expeditionary operations. When our Army deploys, it

depends on civilian support from contractors.

As you are aware, the past decade has brought unprecedented

challenges to contingency contracting. We have operated in theaters where the culture includes corrupt business practices. In spite

of this environment, Army personnel supporting CENTCOM strive

to uphold the integrity of the procurement process and our fiduciary responsibility to the American public.

We appreciate congressional attention to contingency contracting

by several amendments in the current version of the fiscal year

2012 National Defense Authorization Act, as well as the investigative reports last year on Host Nation Trucking and private security

contractors.

Oversight of subcontractors has been a significant concern of the

contracting community, the audit agencies and Congress. In response, we have trained over 9,600 contracting officer representatives, CORs, instituted vetting procedures and increased transparency by mandating government approval of all subcontractors.

CORs are on the front line of our contracting oversight as responsible stewards of American taxpayer dollars. In December

2009, the Army rejuvenated our COR management and training by

mandating that deploying brigades have as many as 80 soldiers

trained as CORs.

The vetting of Host Nation contractors is a key element in fighting corruption and ensuring security for U.S. warfighters, civilians

and contractors, as well as the security of the reconstruction effort

in Afghanistan.

It has been a struggle to create a vetting process for a country

that lacks universal identification criteria. Biometric identification,

although time-consuming and still relatively new, provides the

most reliable means to ensure security. The continued use of contractor vetting and biometric information reduces the risk to contracting with bad actors and creates a more secure environment.

Let me take a moment to provide an update on how we have refined and improved our systems and precesses in respect to transportation contracts. Chairman Chaffetz, Ranking Member Tierney,

we paid serious attention to the findings and recommendations

from this committee’s Warlord, Inc. Report. The National Afghan

Trucking contract, NAT, addresses these concerns. This new transportation contract was awarded by the CENTCOM Joint Theater

Support Contracting Command last month and includes stricter

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oversight and performance controls than the previous Host Nation

Trucking contract, HNT.

NAT ensures greater transparency into subcontracts, includes a

code of ethics, significantly expands the number of prime contractors, ensures prior vetting and establishes a tiered rate structure

based on security requirements and separates contracts into suites

to encourage smaller and local companies to participate. The HNT

contract ends today. Execution of the NAT contract begins tomorrow.

The increase in the number of available contractors from 8 to 20

on the NAT enables greater competition, leading to more work for

companies that perform responsibly. It also provides the flexibility

to suspend problem contractors as well as to facilitate the development of the trucking industry in Afghanistan.

NAT incorporates congressional recommendations on the role of

Afghan national security forces in highway security. NAT inventories actual trucking assets available to DOD on a daily basis, and

it ensures transparency, vetting, past performance information of

all contractors and subcontractors. As a result, NAT will reduce

costs, pay only for services performed and incentivize timely delivery, resulting in improved oversight and performance.

Army contracting continues to identify more effective ways to ensure that we get the most value for our contracting dollars and the

most effective support for our warfighters. I cannot stress enough

the complexity of managing countless requirements, overseeing

tens of thousands of contractors and awarding billions of dollars in

procurement in an environment that is already hostile on many

levels.

The endemic corruption in Afghanistan remains a challenge to

our contracting personnel. It will take time to change this environment. The U.S. Army remains committed to the protection of the

interests of the United States, our warfighters and our taxpayers

through excellence in all contracting activities.

Thank you for your continued support. I look forward to your

questions.

[The prepared statement of Mr. Denver follows:]

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Mr. CHAFFETZ. Thank you, Mr. Denver.

We will now recognize Brigadier General Townsend for 5 minutes.

STATEMENT OF BRIGADIER GENERAL STEPHEN J. TOWNSEND

General TOWNSEND. Chairman Chaffetz and Ranking Member

Tierney and members of the subcommittee, thanks for this opportunity to appear before you today to discuss our efforts to link contracting and the flow of U.S. contracting dollars to our

counterinsurgency strategy in Afghanistan.

The bottom line up front is we recognize we must see and address the challenges we face with corruption and popular perceptions in Afghanistan. Even as our supplies are flown to our

warfighters, they arrive with good reliability, surprisingly little disruption and pilferage, and with low investment or loss in U.S. lives

and battlefield resources.

The focal point for our COIN strategy in Afghanistan is to deny

terrorists safe haven and secure the Afghan people. Our effective

management of our government’s contracting dollars is essential to

the success of this strategy.

As you all know, after 30 years of war and social devolution, corruption is a tremendous challenge in Afghanistan. Congressman

Lynch, you so eloquently said that corruption is a greater threat

to the stability of Afghanistan than the Taliban. I would agree, and

so would many of the other soldiers, sailors, airmen and marines

that I was privileged to serve with in regional command just recently.

Deterring this corruption involves an integrated effort at all levels, so we can see where our money is going to gain an awareness

and a level of control over the unintended consequences of our

spending. We have and will continue to take appropriate steps to

reduce the effects of corruption and be good stewards of the American taxpayers’ dollar.

The U.S. military has greatly increased our understanding of the

corruption problem and the unintended consequences of contracting

dollars can have on our COIN effort in theater. This committee’s

Warlord, Inc. report was very helpful to that increased awareness

and understanding.

Since last year, you have heard here, we have taken a number

of steps to combat corruption. We have established Combined Joint

Interagency Task Force Shafafiyat, that is a Dari word meaning

transparency. That has helped to map out the criminal patronage

networks that exist in Afghanistan and to address corruption as a

strategic problem.

Task Force Spotlight has aided in tracking and enforcing procedures regarding private security companies and Task Force 2010

has given us a better understanding of with whom we are doing

business and providing commanders and contracting activities with

the information they need to take informed action.

I visited with Task Force 2010 just 3 days ago to see how they

are doing. Under Army Brigadier General Ross Ridge, Task Force

2010’s accomplishments include a detailed study of the Host Nation

Trucking contract, which has led to identification of key changes

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they have been making to contracting practices. These have now

been integrated into the new National Afghan Trucking Contract.

This new contract will provide a better understanding of transportation service costs and significantly increase the number of

prime contractors, which you have already heard. They have also

identified individuals and companies for referral for debarment for

not performing responsibly. Perhaps even more important than

these actions they have taken in mitigation are the preventive actions that they have taken. Task Force 2010 has implemented including working closely with CENTCOM’s contracting command

and to share information across the theater to include US Embassy

Kabul, USAID, NATO and other partners. This vetting process

helps identify high-risk contractors before agreements are entered.

I have highlighted just a few of these efforts that DOD is making

to counter the effects of corruption on our COIN operations in Afghanistan. These initiatives underscore our focus to overcome the

significant challenges we face in Afghanistan and will help us improve how we are performing now and in the future.

Thanks for your continuing support of our men and women in

uniform and for this opportunity to appear before you today. I look

forward to answering your questions.

[The prepared statement of General Townsend follows:]

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Mr. CHAFFETZ. Thank you, gentlemen.

I will now recognize the ranking member, as has been said before, who has really done some very important work on this subject. I will now recognize Mr. Tierney for 5 minutes.

Mr. TIERNEY. Thank you, Mr. Chairman.

Thank you for your testimony, gentlemen. I want to start by saying, look, your testimony highlighted the creation of Task Force

2010 and Task Force Shafafiyat. It is a major signal, you say, for

showing how serious you are about attempting to understand all of

the problems with corruption that are going on in contracting in

Afghanistan. I think those are good efforts, I praised them in my

opening remarks. But I do have a significant problem seeing any

tangible evidence of them really being put into serious action at

this point in time.

Mr. Motsek, last year when you were in front of the committee,

you did, as you said in your testimony here today, assure us that

our concerns about Commander Rohullah and Watan Risk Management would be taken seriously and you start action. I understand

that you did start action on debarment for those two individuals on

that. In fact, the Army announced its suspension and debarment

and made a big deal out of that fact, and I think it rightfully was.

Task Force 2010 found that significant sums of money from that

company had gone to insurgents while Commander Rohullah

served as the principal security provider.

Now, the findings of the committee, you understand first of all

that our committee investigation was a committee investigation. It

doesn’t substitute for a Department of Defense investigation, or

DOJ, is that right?

Mr. MOTSEK. Sir, that is a source document. That is correct.

Mr. TIERNEY. So I was a little disappointed when I learned that

without further investigation, this went to a hearing and then the

Army basically cut a deal with both Rohullah and the trucking

company, the Watan trucking company. Mr. Rohullah claimed that

he hadn’t understood what was going on in the investigation, which

I would propose is nonsense. But at any rate, I was disappointed

that the Army hadn’t done its own investigation and nailed down

those facts in a way that wouldn’t allow for that kind of a determination.

Second, they let Watan off the hook by basically saying, well, you

can’t do any more with Host Nation Trucking contracting for 3

years. The company was already out of that business. So that

wasn’t much of a punishment on that basis. So you have, according

to Task Force 2010, a warlord, a bad actor, maligned actor,

Rohullah, now free to contract with the United States. And you

have Watan free to contract with everything but an enterprise that

they already decided to get out.

I am not sure you could feel comfortable thinking that you fulfilled your promise to this committee. How do you feel about it?

Mr. MOTSEK. Sir, when we came together, we said we would take

under advisement, and I believe I used the term in your investigation. Anything that was in there that was actionable, we would

deal with it immediately.

And so the short-term solutions, as you recall, we had some

issues with arming, which was the primary reason that we were

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able to suspend Watan Group at the initial outset. And we continue

to march forward.

Task Force 2010 did in fact do additional work with regard to

both cases that you talked to. What is important in my mind to remember is that debarment by the Code of Federal Regulation, and

your own excellent Congressional Research Service, shows this over

and over again, should not be interpreted as punishment.

Debarments are there to protect the interests of the United States.

Mr. TIERNEY. Well, I will grant you that point. So how is the

2010’s findings where the $1.7 million were made in payments by

Rohullah, who received them and passed them on to maligned actors, they found in fact that he was not such an upstanding character himself. He was working in concert with Watan contracting

company.

So let’s assume that what you say is true, you don’t want to punish them. Let’s protect ourselves from having contracts with them,

and wouldn’t that require debarment as a basis for protecting us

to have to deal with these maligned characters again?

Mr. MOTSEK. Again, the process, as you well know, you have an

independent senior suspension debarment official that makes the

judgment based on facts that are presented to him. Without reading too much into his decision, he believes, and he is the deciding

official, that the interests of the government were in fact protected

because you cannot go into, it is agreed that you will not go into

additional contracts with them for a period of 3 years. If they try

to go around the corner——

Mr. TIERNEY. But he debarred them from doing business they

had already given up, and there are a host of others. Watan Management Co. is basically the Popal brothers, right? Cousins to

President Karzai? So let’s just get it out on the table here, basically, they got themselves a deal by appealing this and they got

Rohullah, basically a warlord of maligned character, off the hook

as well.

I don’t find that satisfactory, I am sorry. I just don’t find it satisfactory.

And General Townsend, I appreciate your testimony but when I

saw on page 2 that you said in some cases the Afghan populace

perceives that our money is not positively benefiting Afghan people

and instead is supporting power brokers and maligned actors, it is

not a perception, is it? It is fact. Task Force 2010 found in fact that

money was going to maligned actors.

General TOWNSEND. That is fair. It is a fact that it is also a perception amongst the people.

Mr. TIERNEY. Okay. So we will both get it down on that. But it

is a problem that we have here, and it has to be stopped.

The other part of this thing is that we have a serious issue on

that. What are we going to do about it? We have the Task Force

finding that basically tells us that we have choices. We have use

of United States or ISAF forces to protect the convoys, but we really want to use them in other ways and don’t have enough of them

to put them in protection. Is that fair to say? Part of the theory

on this?

General TOWNSEND. Yes, sir.

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Mr. TIERNEY. Two, you use the Afghan national security forces,

except they are not ready and they are not able to at this point in

time. Is that a fair statement?

General TOWNSEND. That is fair for now. We are working on

that.

Mr. TIERNEY. You are working on it, but it is a ways from happening. So what does that leave you with to protect the convoys

and to get this done?

General TOWNSEND. For now, private security companies as we

build the Afghan public protection force.

Mr. TIERNEY. So we are right back to the same people that were

involved in the problem that instigated the investigation. One of

the things we found in the investigation was that there was little

going on to actually oversee and manage these contracts. I know

that some of your regulations have addressed that. But tell me a

little bit about whether this is happening on the street. Are people

going outside the gate and observing those convoys? Are they

riding along on those convoys? Are they auditing and taking investigations and inspections to make sure that things on those trucks

are getting from one point to another? Is there physically people

out there doing it? Or are they just relying on reports and somebody’s word that these things have been done?

General TOWNSEND. I wouldn’t say that every convoy is observed

or escorted. But I think significantly more of them now are than

were a year ago.

Mr. TIERNEY. Mr. Motsek.

Mr. MOTSEK. Sir, if you recall, last time I was here, our biggest

deficiency with regard to the PSCs were we were failing to follow

our own procedures which required the dual licensing process as

we recall, that if you are going to use a PSC it must be dually licensed in the country. And we had an arming and vetting procedure that we were supposed to follow. In this particular time, with

regard to Watan as the subcontractor, we had failed to do that.

Task Force Spotlight, under General Bohrer, one of her primary

functions was to get her hands around that licensing and vetting

process, which we should have done before.

The other piece that has occurred since we discussed the last

time is, if you recall, we had temporary rules in the Code of Federal Regulation regarding the use of private security contractors

overseas. And they not only apply to us, but they apply to our sister agencies.

Since we have met, we have been able to finally push through

the final rules, which are a substantial improvement over the originals. So they were published about 6 or 8 weeks ago. That was not

an easy process, to get them through the CFR, and that is my

fault. But they are out there.

So that process and those procedures are in place. The visibility,

because of President Karzai’s Decree 62 and the efforts to come up

with the other option is driving this entire institution inside Afghanistan to a different standard right now. As you know, we are

not going to be giving up PSCs as a nation overall. The diplomatic

side of the house will continue to use them.

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So in retrospect, yes, in the short term, we will use them. But

our intention is to have the options to use the other two alternatives.

Mr. TIERNEY. Thank you.

Mr. CHAFFETZ. The gentleman’s time is expired. I now recognize

myself for 5 minutes.

Can we get a grip here on the dollars and I want to understand

also what is being transported. Because my understanding is there

is a difference as to what the actual physical materials that are

being transferred. Do we have a sense percentage-wise, dollar-wise

of what we think we have lost, what has been pilfered through this

trucking process?

Mr. DENVER. If I could take that question, sir.

Mr. CHAFFETZ. Yes.

Mr. DENVER. As it relates to the HNT contract, I would have to

take the question for the record in terms of giving you the specific

items. But we understand that about $700 million has actually

been paid out.

Mr. CHAFFETZ. When you say paid out?

Mr. DENVER. Paid to the contractors for their services for the

transportation they provided. But we have about $145 million in

penalties and withholds that relate to lost equipment, pilferage.

Mr. CHAFFETZ. Do we have a total value of what had been

shipped and what had been lost, pilfered or simply didn’t make it

to its destination?

Mr. DENVER. I could take that for the record and get it to you,

sir.

Mr. CHAFFETZ. My understanding is, though, with the Task

Force 2010 being stood up, that a number of items have been recovered. Do you know the value of what has been recovered?

General TOWNSEND. About $172 million in recovered losses.

Mr. CHAFFETZ. And what would be included in the list of $172

million that was recovered?

General TOWNSEND. I think probably just about anything we

transport, a piece of just about anything we transport on the roads,

from unit equipment to general purpose supplies. To kind of get at

your question of a second ago, we transport roughly 1.5 million gallons of fuel per day in Afghanistan, and roughly half of our cargo

is moving on the ground.

Mr. CHAFFETZ. But there is certain cargo that is not transported

via this.

General TOWNSEND. That is right. Some of the recent press accounts have talked about ammunition being transported in these

convoys. And that is not the practice in Afghanistan. Ammunition

is typically transported only in a U.S. military-escorted convoy and

not in convoys that are secured by private security companies or

moving unsecured.

Mr. CHAFFETZ. So with these private security companies providing the transportation and security, do we do sensitive electronics in those shipments, thumb drives and those types of things?

Mr. DENVER. I think we do have some electronics that track what

the electronics do. We have in-transit vehicle transponders.

Mr. CHAFFETZ. I am talking about the content of what is actually

behind those.

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Mr. MOTSEK. Sir, the standard is no Class 5, no ammunition.

And what we have is a class of supply that is called sensitive

items. The simplest answer I would give you, things such as night

vision goggles would not be permitted to be transported by them.

Loaded computers would not be allowed to be transported by them.

We could take it for the record to give you a larger list.

Mr. CHAFFETZ. Would weapons be on that list?

Mr. MOTSEK. No, they are sensitive items, they would not be

transported by them.

Mr. CHAFFETZ. Uniforms?

General TOWNSEND. Uniforms were transported in these types of

convoys earlier in the effort. We have made large efforts to reduce

that now because of problems.

Mr. CHAFFETZ. Reduce that or eliminate it?

General TOWNSEND. I think probably the goal is to eliminate it,

but I wouldn’t say that we have eliminated that completely.

Mr. CHAFFETZ. That is not too reassuring. I appreciate the candor, though. Medical equipment? There is a Wall Street Journal report that I would appreciate your familiarizing yourself with, it

came out just in the last couple of weeks, talking about some of the

horrendous and horrific situations that are happening in Afghanistan. The article is entitled ‘‘Afghan Military Hospital, Graft and

Deadly Neglect.’’ There are oversight issues there, but specifically

I know we are talking about the transportation issues. I would appreciate it if you would look at this article dated September 3rd of

this year as well.

One of the other deep concerns here is that these, that we are

not doing our job on the ground. And I recognize in the theater of

war and all that is happening, there is an added degree of pressure

that I am sure only those in theater can appreciate. But one of

these reports said that often the containers were never counted or

reopened once they got to their destination.

What assurance can you give to this committee that you are actually solving that problem? Because it is pretty easy to tell, you

should be able to tell what left and what arrived. And yet the reports we are getting are saying that that checkpoint at the end just

doesn’t happen when our men and women receive these materials.

General TOWNSEND. The ground truth out there is that the vast

majority of everything that shows up at a base gets opened and

checked, it gets received, it gets looked at. Is there a percentage of

stuff that is moving on these lines of communication that doesn’t

get received or inspected? Yes, I would say there probably is. And

I would just give you a simple vignette to describe this, one from

my own experience.

We found in a yard, we did a transition with the unit before us,

we started inventorying everything on our base and we found this

series of containers there locked up. So what are these containers?

The last unit didn’t take them with them. Well, we started opening

them up and discovering parts that had been ordered over time,

supplies that had been ordered over a period of time. So the unit

ahead of us maybe hadn’t even ordered it.

So these things arrive and you do your best to account for your

equipment, and now you start accounting for someone else’s equipVerDate 17-JUN-2003 13:40 Jan 24, 2012 Jkt 000000 PO 00000 Frm 00037 Fmt 6633 Sfmt 6633 C:\KATIES\DOCS\71986.TXT KATIE PsN: KATIE
34

ment that may be on your base. So that is kind of how it transpires.

But yes, there is a tremendous effort for units to account for

their stuff.

Mr. CHAFFETZ. Well, and not just their stuff, but checking the

manifest as to what was shipped and did it actually arrive.

General TOWNSEND. Yes, of course.

Mr. CHAFFETZ. Mr. Denver, and then I will yield back.

Mr. DENVER. If I may, Chairman, let me talk a little bit about

the process, what is happening and what we are doing in the contract to get our hands around the pilferage and addressing this

issue. First, there is an understanding that a transportation mission request is sent to these contractors. Within that transportation

mission request, it identifies exactly what is to be transported and

trucks that we would need to transport further.

Within the convoys, if there is sensitive equipment or equipment

that can be pilfered, we actually seal these trucks so that if they

are unsealed, we are aware of it when they get to destination. If

we find a situation where that has occurred, if there is pilfering or

if the seal has been broken, that results in a failed mission. With

that particular failed mission, what happens is the contractor does

not receive payment for that mission.

The other thing that happens is they also, within the contract we

have built a deduct that relates to their total mission throughout

each month. And if there are instances of pilferage, we have percentage deducts that take off a deduction on their invoices for that

monthly shipment. That would be withheld from their invoices.

So we are taking a number of steps to identify that. The other

thing we are doing I would say is with DCMA, the intent on the

previous contract, we did not have a random inspection method. In

the future, on the NAT contract, we will have DCMA at the gate,

both origin and destination. But it will be random, so that we can

conduct spot checks. Those spot checks would be based on what

was shipped, the condition of the trucks. It would also involve security personnel being checked, that they are appropriate and they

are badged and licensed.

But the real answer here is, are we putting in the oversight. The

oversight takes more than just contracting, it takes the Defense

Contract Management Agency, it takes the contracting officer, it

takes the requirement site.

Mr. CHAFFETZ. And do we have a log of what is missing and the

value of it?

Mr. DENVER. I would have to take that for the record and get

that back to you, sir.

Mr. CHAFFETZ. Thank you.

Mr. TIERNEY. Would the chairman yield for a second?

Mr. CHAFFETZ. Yes.

Mr. TIERNEY. It is an appropriate time, I think, to make note of

one thing here. I would like to have unanimous consent to put this

on the record, if I could. This is a sheet the Department made

available to us with respect to oil deliveries. It is a multi-page

item. In the red, you see the amount or percentage of shortage on

delivery. Basically it will tell you there is mostly zeroes. Zero delivVerDate 17-JUN-2003 13:40 Jan 24, 2012 Jkt 000000 PO 00000 Frm 00038 Fmt 6633 Sfmt 6633 C:\KATIES\DOCS\71986.TXT KATIE PsN: KATIE
35

ered out of what should have been 100 percent, most zeroes on

that, to significant occasions.

Now, we are also told that $25,000 is the penalty they pay for

not delivering a full load. Yet the value of this is over $40,000 on

the street. So I am not sure we have our penalties aligned with the

price on that. There are 1,100 trucks delivering oil that were pilfered, 5.4 million gallons of fuel gone, no explanation on that. So

I hope that we are addressing that. I would just ask the chairman

if we could put that on the record.

Mr. CHAFFETZ. Without objection, we will enter it into the record.

[NOTE.—The information in the report was not able to be reproduced legibly. The report can be found in the official record of the

hearing.]

Mr. CHAFFETZ. I will yield back and—yes, General.

General TOWNSEND. I would just like to put that into a little bit

of context. You are right, fuel pilferage rates are higher than we

want them to be. Overall, pilferage rates on the ground locks in Afghanistan is about 1 percent plus or minus. So that is overall context of what we are talking about here.

Still, the level of our endeavor in Afghanistan, that is still a lot

of stuff, 1 percent even. With fuel, it is as high as 15 percent. And

part of that is, Congressman, what you just pointed out there about

penalty may not be offsetting the actual street value of this commodity. And this is a discussion I had with General Ridge just

about 3 days ago. He recognizes this and is working on adjusting

that penalty.

Mr. CHAFFETZ. Thank you.

We will now recognize the gentleman from Massachusetts, Mr.

Lynch, for 5 minutes. Or maybe a little more.

Mr. LYNCH. Thank you, Mr. Chairman. I appreciate that.

I want to thank you for coming before the committee and helping

us, like I said before, this is one team, one fight we are all trying

to do the right thing here. We had an opportunity, myself, I believe

the chairman and several of our staffers here, Mr. Alexander was

there, Mr. Lindsay was there, I think Mr. Fernandez from my office was there. We went into Kandahar, and we went down that

Route 4 that leads from Karachi, goes up through Quetta and then

goes into Afghanistan. The major seaport there is Karachi in Pakistan and then these trucks leave. And the Pakistani trucking outfits take over at a place called Spin Boldak that we went into. That

is controlled by a fellow by the name of, he is now General Razik.

Now, they had threatened, if we went in there, to do oversight

on the trucking operation, that they would shut the border down.

There are thousands of trucks going through there in the course of

a day.

So when we on behalf of Mr. Tierney at the time, he was the

chairman, went down there and inspected, they shut it down, just

as they had threatened. So first of all, we couldn’t refuse to go

down there and do our jobs doing oversight. But he followed

through on his threat and he shut the trucking center there, the

border crossing, down until we left. We did as much oversight and

inspection as we could, and then when we left, the oversight committee left, then he opened up the border again.

36

And myself, we had a Stryker brigade with us, we didn’t go down

there by ourselves, God bless them. That is pretty tight control,

when you can shut off the oversight of the U.S. Congress and DOD

and the military did what they could to get us in there to do the

oversight.

But that vignette is one that troubles me greatly, that here we

are, spending billions of dollars in taxpayer money, we go down

there, we are elected by the folks that are actually paying the

freight here, we go down to inspect what is going on there. And you

have this, he is a general now, he was a colonel back then, he is

a warlord, is what he is, Razik. And this is all sort of Taliban-controlled territory that we drove through from Kandahar down to

Spin Boldak.

I just have to tell you, it is a whole lawless area. If the guy can

shut off Congress from conducting reasonable oversight, then what

chance do we have of implementing a system where we actually

perform due diligence on protecting the taxpayers’ money? I just

have great misgivings about this. Look, we have some leverage

here, they need our help. We need to use that leverage to make

sure that they operate by our standards. We shouldn’t be operating

under the wild west standards that they operate under. And that

is sort of what is going on here.

I have to say, I think it goes right from the top, from Karzai on

down. It is just rotten from top to bottom over there. The goodness

and the generosity of the American people is being abused. Here

they are, trying to do the right thing, I know the President has a

withdrawal plan there. But in the meantime, he is trying to do the

right thing. The average Afghan over there is in a desperate strait,

and we are trying to do the right thing from a humanitarian standpoint, we are trying to stand up that country so they can take care

of themselves.

But in the meanwhile, we are getting fleeced by the very people

we are trying to help, or a certain portion of it. I don’t think the

average Afghan is really as malicious as these folks. But it is a

game. It is a game. And now, in the economy that we have right

now, we could never afford this, ever. But especially now it is just

heartbreaking to see the resources of the American people abused

and stolen in this fashion. And to have some two-bit warlord down

there blocking off the U.S. Congress from doing its constitutional

duty to make sure that the appropriated moneys here by the American people are getting to the source that they are targeted to, and

spent in a way that is consistent with our mission, this just can’t

go on.

And I appreciate what you are trying to do. I appreciate your

tweaking the contract, going from 8 to 20. That is helpful, get a little competition. Next time I go down to Spin Boldak, am I going

to face the same situation, where they are blocking the oversight

committee from going in down there?

Mr. MOTSEK. Sir, very possibly. You hit the nail, in my mind, in

your opening comments, on the head. What we are doing in the

core of this hearing has to do with a couple of contracts. But you

hit the larger issue, and Congressman Tierney has raised it, as has

the chairman, that this is a society that is based on 3,000 plus

years of doing things this way, and 30 long years of war. And we

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are not going to change it overnight. That is the frustration we

have.

So the metrics of the number of convictions I have are interesting, and they are important. But the real issue is, the efforts,

quite frankly, that the larger task force is doing to try and engage

to change the tone, so that you have a judicial system that you can

trust, you have a police system that you can trust, you have a leadership system that you can trust. And it goes back to Congressman

Tierney’s comment about who is related to whom and what is going

on.

That is not going to happen overnight. I think we all recognize

that.

Mr. LYNCH. I don’t think it is going to happen in a thousand

years.

Mr. MOTSEK. And it may not. But the fact that, and in no small

part again, because of this committee, we are not taking the narrow view. The narrow view would have been Task Force 2010 and

Spotlight. But to have the overarching view, which pulls in our

other partners, our international partners, it pulls in the ISAF side

of the house. So we have to look at it directly.

We get the right words, make no mistake. We get the right words

from the senior leadership about the importance of corruption and

controlling corruption. And years ago, we didn’t even get the right

words. My frustration, and I am sure everyone’s frustration is the

same as yours, is what is tolerable. My personal opinion is we are

not going to eliminate corruption, we are not, in our lifetime. Our

efforts right now should be centered on primarily controlling the

corruption that we can control so that our interests in our dollars

and our values and our resources are protected, as are our allies’

resources.

But I share, what happens to you is, you go in, and as soon as

you leave, unless we have a presence there 24 hours a day, 7 days

a week, we take risks that that will transition back to exactly as

you said. We all share your frustration. But I would say that the

fact that we are looking broadly, and that is going to be very tough

to measure. And as you know, I can’t give you metrics that say that

the executive branch of Afghanistan is now good because of these

four metrics. The proof will be if we can reduce the numbers. The

only number we will be able to show you is a reduction in the number, the dollar value of corruption. That will be the bottom line

when we come before you again.

Mr. CHAFFETZ. The gentleman’s time is expired.

I want to make sure that we have time for Mr. Yarmuth of Kentucky here. So we will now recognize you for 5 minutes.

Mr. YARMUTH. Thank you, Mr. Chairman.

I am going to use part of my time to make a unanimous consent

request to insert a document into the record. Last month, Ranking

Member Cummings sent a letter to Chairman Issa requesting authorization for me to join a congressional delegation to Afghanistan, led by Senator Wyden. The purpose of the delegation was to

investigate allegations of contracting fraud and corruption.

As today’s hearing demonstrates, this subcommittee has done

great work on this issue. And given recent media reports, and the

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testimony we are hearing today, it is clear we must continue this

oversight of this very important issue.

As a member of the subcommittee, I wanted to join Senator Wyden’s delegation to press U.S. officials for answers to exactly the

kinds of questions we are examining today. That is why I was extremely disappointed that Chairman Issa rejected my request. His

rationale was that Democrats from our committee should not be allowed to join bipartisan delegations unless a Republican from our

committee also joins.

This is a misguided policy that has no basis in House rules or

policies. The policy established by Speaker Pelosi and continued by

Speaker Boehner is that every foreign delegation must be bipartisan, and that it include a Republican and Democrat from each

committee, I am sorry, not that it include a Republican and a Democrat from each committee. Senator Wyden’s delegation meets this

standard because it has another Republican House Member, Representative David Schweikert.

Both the committee on House Administration and the Office of

Interparliamentary Affairs have confirmed that this misguided policy is not the Speaker’s but Chairman Issa’s alone. So I am asking

unanimous consent to include a letter Ranking Member Cummings

sent to Chairman Issa this morning, requesting him to immediately

reverse this policy. Thank you.

Mr. CHAFFETZ. I am going to hold off on ruling on that. Would

you mind if I had a chance to look at the letter, please?

Mr. YARMUTH. Certainly.

Mr. CHAFFETZ. You may continue.

Mr. YARMUTH. Thank you, Mr. Chairman.

This conversation that Mr. Lynch has talked about, the mis-use

of taxpayer dollars and the waste of taxpayer dollars, American

taxpaying dollars, that sometimes go to our people we are trying

to help, and in fact, according to Task Force 2010, reports of Task

Force 2010, it indicated that they have identified $360 million that

has been diverted to insurgents and power brokers and warlords

and so forth. Some of that money, presumably, funding the very insurgency that our counterinsurgency is designed to combat.

So, General, as you talked about the counterinsurgency strategy,

I would like to ask you, to what extent do you think these diverted

funds are undermining the counterinsurgency strategy? And to

what extent they are being used to attack our own troops, and do

you think we are doing enough to make sure that we are not funding attacks on our men and women?

General TOWNSEND. Thanks for the question, Congressman.

I had this conversation with General Ridge a couple of days ago.

That $360 million that they have identified, that you cited there,

is from a look at $31 billion of contracts. So that is a little bit of

context there, $31 billion into $360 million. That is still a tremendous amount of money, if it is correct, it is really bad.

So I don’t know how you can quantify how much of that money

has actually, I think that money, part of it is probably going to just

simple crime that would exist in any society. Some of that money

for sure is going to, I think, the insurgency. And then how much,

I can’t quantify how much of that money is going to attacks against

us versus some other insurgent purpose. It is clear to us some of

39

that money is going into the insurgency and we have to do whatever we can to stop that. I don’t think you can completely stop it,

but we have to do whatever we can to minimize it.

There is nobody in uniform over there who likes to hear that,

first of all, everybody in uniform over there is a taxpayer, too. And

they don’t like to hear that our tax dollars are going into funding

the guys that we are trying to fight. So I think that what I can

say is that we have the processes in place, partially due to the efforts of this committee, we have the processes in place now to address it. But it would be hard to quantify, I think, how much of

that money is actually going to the insurgency. Clearly, some is too

much.

Mr. YARMUTH. But you do have a strategy, or are working to develop a strategy for trying to determine where, how it is getting to

the insurgents and stopping that?

General TOWNSEND. Absolutely. You have a couple organizations,

Task Force Shafafiyat, that is their job, is to do the overall strategic anti-corruption effort. And they integrate the efforts of some

of these other organizations like 2010, they also integrate our efforts across not just the U.S. Government, the Afghan government

and also our NATO and other partners there.

So there are other organizations over there, the Afghan Threat

Finance Cell, I attended a briefing with Chairman Mullen just

about a week ago by the Afghan Threat Finance Cell. They are an

intelligence organization, interagency organization. And their job is

to delve into this and point folks out.

I can tell you that they are certainly taking action there.

Mr. YARMUTH. I would hope that to the extent that you can, you

can report to the subcommittee as to progress you have made and

of any discoveries you have made about how this process may be

going on, and whether you have had any success in stopping it.

Thank you, Mr. Chairman.

Mr. CHAFFETZ. The gentleman yields back. Thank you.

The gentleman had previously requested unanimous consent to

insert into the record a letter dated September 15, 2011. Without

objection, so ordered.

[The information referred to follows:]

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Mr. CHAFFETZ. Now I recognize the gentleman from Massachusetts, Mr. Tierney, for 5 minutes.

Mr. TIERNEY. Thank you.

I want to stay on this topic a little bit here. Part of it is the

money, nobody wants to lose the money, the taxpayers are like

that. The larger part of it is, what is it doing to our operation in

Afghanistan in terms of this counterinsurgency angle that we have

taken over there. And one aspect of that, as I understand it from

General Petraeus’ own writings, is that corruption and feeding into

corruption is not going to be helpful. It is one of the main things

that has to not happen in order for the counterinsurgency to be effective.

So the publicly available legal documents that were filed by

Watan in the case they had said this: Watan argued that the alleged bribes were not bribes, per se, but rather facilitation payments. They argued that Watan had no choice but to pay Afghan

government officials and other armed groups for police protection

while Watan transported cargo for the U.S. military through Afghanistan’s volatile war zone.

General Townsend, do you agree that the security operators, the

contractors, had no choice but to make those payments?

General TOWNSEND. I do agree that in many cases they don’t

have a choice, or they perceive that they don’t have a choice. They

perceive that they will be attacked if they don’t make some of these

payments.

Mr. TIERNEY. And Mr. Motsek, do you agree with Watan’s analysis that these so-called facilitation payments or bribes, as some of

us might say, large sums of cash provided to provincial Governors,

the local police or warlords, in order to ensure that trucks aren’t

bothered, do you think that is legal under U.S. law?

Mr. MOTSEK. Clearly, it is not. It is clearly, and it is counterproductive to what we are trying to do. And again, it is part of the

larger systemic problem that we have.

Mr. TIERNEY. So here is what Watan’s court filing goes on to

state: ‘‘The Army allowed and encouraged HNT contractors to do

and pay whatever was necessary to assure convoy security and prevent loss of life. The Army engaged in the affirmative misconduct

by encouraging private contractors to undertake activities that the

Army only disavowed once they were exposed to the public.’’

Mr. Denver, was the Army aware of the apparently common

practice of facilitation payments? And does it encourage people like

Watan to make them?

Mr. DENVER. I am not familiar with whether the Army had that

information. I would tell you this, in conversations when I had a

meeting with the suspension and debarment official, I think he indicated the same that you have heard today, that the facilitation

payments were necessary. So in that context, I would say when

Watan came to the table and identified what they paid, in that context I would say that is when it became, we were aware. But I am

not familiar with it as to whether we were aware prior to, sir.

Mr. TIERNEY. In another court filing, Watan stated that the

Army apparently made a policy determination that having its contractors pay for safe passage in money is cheaper than paying for

that same passage in guns, bullets and bodies. The court filing goes

43

on to call extortion payments the realities of Afghan society and

the realities of this war. Do you agree, General Townsend, that it

is simply the cost of fighting war in Afghanistan?

General TOWNSEND. I am not sure I would agree that it is the

cost of fighting war in Afghanistan. It is certainly part of the landscape in Afghanistan. And we took extraordinary efforts, down

even at the very low tactical level, every day, to try to root out,

when we would hear a report that a checkpoint was charging passage fee, a toll, we would go investigate that and go to great

lengths to try to find out if they were charging a toll and ways we

could mitigate that.

One example is we actually posted billboards beside some of

these checkpoints that said there is no toll required to pass this

checkpoint. Then you would have to deal with the Afghan literacy

rate below 30 percent.

Mr. TIERNEY. And the fact that somebody with a gun is standing

there asking for a toll.

General TOWNSEND. Some guy with a gun is standing there.

There is no argument from us that corruption is probably, the biggest victims I think are the Afghan people, even more so than the

American taxpayer.

Mr. TIERNEY. So the International Crisis Group wrote, I think

saliently, there is a nexus between criminal enterprises, insurgent

networks and corrupt political practices in Afghanistan. We know

that there are a pile of relatives of people in high political offices

that are involved in these contracts, that are subcontractors and

making these payments or whatever. So my question is, in order

to break that nexus, what prosecutions have happened? How many

people have been prosecuted? How high up the chain? The Afghan

people, do they see an example of some of these well-connected people actually being brought to the rule of law, or are they going to

continue to be an impediment to our insurgency, counterinsurgency

because they think the whole game is rigged and the government

is as bad as the Taliban?

General TOWNSEND. I can answer that question, not in the context of what we are talking about here, trucking, corruption,

but——

Mr. TIERNEY. This is indicative. All that is just indicative of a

much larger picture.

General TOWNSEND. Yes. Kabul Bank, for example. There are a

number of officials that are under investigation with respect to the

Kabul Bank situation, corruption practice there, incident there. I

think we are hopeful that the Afghan government will prosecute

some of those parties but it has yet to happen. But there are a

number of investigations, over 20 investigations in work with

Kabul Bank. And we are waiting to see what they do.

And we are, right now, the U.S. Government is conditioning

some of our support to see the outcome of Kabul Bank.

Mr. TIERNEY. Well, I would hope so. You just drive from the airport, where you land your plane, down to the capital and look up,

and you can see houses up there that are well-heeled people living

in that, and the regular Afghan people just really suffering and

having a hard time making it. And they get it, too. I don’t know

how you ever get the confidence of them to support having this

44

country come around and move in the right direction without doing

more in that regard.

So I think you have your work cut out for you. I think we ought

to take a real hard look at our mission over there, and the prospects for accomplishing well-intended goals on those things without

really addressing that issue the way it ought to be. I know it is political, I know there are people like the intercession, I understand,

there are people into the Watan case and the Rohullah case or the

Popal brothers or whatever, that is a good example of why people

would be disgusted when somebody should have been debarred and

should have been out there that all of a sudden they get a slap on

the wrist and they are off and running. This is not good. Not good.

And I think we have to be cautious of that.

I yield back. Thank you, Mr. Chairman.

Mr. CHAFFETZ. The gentleman yields back. I would now recognize

myself for 5 minutes.

Under the Host Nation Trucking, we had eight prime contractors. Six of those eight were found to have committed some sort of

fraudulent behavior, be it fraudulent paperwork, reverse money

laundering, excessive profiteering, aiding and abetting, unjust enrichment. So now the plan is, oh, instead of having just 8 prime

contractors, now we are going to go to 20 prime contractors. One

of the criticisms of the Host Nation Trucking process was we had

too many subcontractors, we couldn’t keep track of them. And that

sometimes people were paying themselves, only to pay themselves

again and again and again.

So how, what are you doing to alleviate this problem? Because

you are expanding the number of contractors. And at the same

time, what are you doing to make sure that those nefarious characters are not indeed just getting in line, but somewhere else under

a different name?

Mr. DENVER. Sir, if I could take that question. I think as I indicated earlier, the real approach is ensuring that we have the right

oversight. It is true that the number of prime contractors has expanded. In the new contract, it is 20 contractors. And many of

those prime contractors came from the previous contract.

I can tell you that——

Mr. CHAFFETZ. How many?

Mr. DENVER. I believe it is 11. Eleven total, play either in a

prime or subcontractor capacity, sir.

Mr. CHAFFETZ. And how many of those were previously found to

have been involved in——

Mr. DENVER. None of those were found to have been involved in

this. They are just 11 contractors that we know, they were subcontractors before that we know that they were, they conducted

performance under the contract previously. But none of them——

Mr. CHAFFETZ. My understanding is, in order to be considered as

a prime contractor, you have to have access to 600 trucks, is that

right? I believe it is 600 trucks.

Mr. DENVER. It may be across the suite. I would have to take

that for the record.

Mr. CHAFFETZ. In Afghanistan, I have to believe that the universe of potential vendors here, or potential contractors, is fairly

small.

45

Mr. DENVER. I have some information on the contracts. I would

tell you that it is a growing industry. But when we went out with

the contract——

Mr. CHAFFETZ. Yes, we are pouring $2 billion in there. Of course.

What percentage of the GDP, it is a growing industry all right. It

is probably the most enriched industry there is, next to the poppies. But go ahead.

Mr. DENVER. Basically when we went out with the contract, we

asked contractors to come in, the prime contractors and subcontractors to come in and identify what their capacity was in the contract. And I would tell you that there was sufficient trucking assets

to be provided within Afghanistan from the Afghan firms. So it is

a developing industry. I would actually consider it a positive, that

we were able to grow the industry under the new contract and

show some success. These new companies, or these companies now

participating under the new contract have been vetted.

Mr. CHAFFETZ. Are you here to assure us that nobody who has

been found to be fraudulent in the past is involved in this new contract?

Mr. DENVER. No, sir. No, sir, I am not here to say that. I am here

to say that——

Mr. CHAFFETZ. Well, how do we get the assurance that that is

the case?

Mr. DENVER. Well, I would tell you that there are risks associated with this. And the assurance that you have is that we are putting the oversight——

Mr. CHAFFETZ. Are they or are they not allowed to participate in

this new contract, if they are under suspension or have been found

to be fraudulent in the previous contract?

Mr. DENVER. If they are under suspension, they are prohibited

from receiving a contract award, that is correct. But if there are ongoing investigations, you have to let the due process run. Right

now, I am not here to tell you that something couldn’t happen in

the future. But those companies that we made awards to were not

excluded and were not suspended, sir.

Mr. CHAFFETZ. I would like to continue to dive further into that.

Let me real quickly, time is short, we are going to have to come

up for votes here again. There are two programs, the Afghan First

and the Direct Assist, something that the State Department is very

adamant about pursuing. With those two programs, is there an

overlap of contrast here that we think will become increasingly—

we are asking for more oversight, we are asking for more accountability. And yet at the same time we have the State Department

saying, you have to speed up the payments, you have to make

these payment direct. You have to make sure that, and I see a conflict between those objectives under Afghan First and Direct Assist

as opposed to what we are trying to do in making sure that the

$2 billion plus is accountable.

Yes, Mr. Motsek.

Mr. MOTSEK. Sir, that segues into something I should have

talked about earlier, and that is, the two pending pieces in the

NDAA legislation are somewhat key to address your concerns. The

fact that, I can’t remember whether it is the House or Senate

version, hopefully both pieces pass in committee, you will presumVerDate 17-JUN-2003 13:40 Jan 24, 2012 Jkt 000000 PO 00000 Frm 00049 Fmt 6633 Sfmt 6633 C:\KATIES\DOCS\71986.TXT KATIE PsN: KATIE
46

ably give us the authority to delve deeper into those secondary,

those tertiary contractors that we have never had before. Heretofore, as you know, we only had a legal relationship with the

prime. If the law changes as in in the NDAA, we will be able to

go deeper. That is number one.

Number two, you are going to grant, if the law passes, the commander on the ground greater authority to take people off the table

with frankly less legal proof that they are undeserving to continue

or to operate with us, that we can actually use in our judgment

process intel and a variety of other methods to make that assessment. Both of those pieces we talked about at the early testimony.

We promised that we would bring you proposed legislation. And as

always, it gets a little morphed as it gets on the Hill.

But fundamentally, those two pieces are in the NDAA. They are

somewhat key to Mr. Denver to be able to dig further into those

secondary and tertiary contracts.

The reality is, the trucking industry is a decentralized process.

And the bulk of your truckers are owner operators, just like they

are in the United States. And that is not going to fundamentally

change. So these guys that get these contracts are able to pull together 600 or 450 subs, and they own 150. That is how they pull

together the resources to make this happen. That is the reality of

the business. It is the same way in the United States.

The key is, as Mr. Denver has said, we are trying to vett that

guy before he ever gets a chance to come to the table and not after

the fact. Your legislation gives us greater ability to do that.

Mr. TIERNEY. Will the gentleman yield for a second?

Mr. CHAFFETZ. Yes.

Mr. TIERNEY. Just on that point, I am looking at the Federal report, as early as the summer of 2009, there were frequent reports

of subcontractors and middlemen who were paying contract money

to warlords and the Taliban to guarantee safe passage for the convoys. The U.S. Army investigators prepared a briefing for senior

commanders that bore the blunt title, Host Nation Trucking Payments to Insurgents. The investigators estimated that the going

rate for protection was $1,500 top $2,500 per truck, paid by contractors and their subs to private Afghan security companies allied

with warlords or insurgents or in some cases directly to militias or

Taliban commanders. That is a military report.

The military maintained that the Federal contracting rules did

not require, and by some interpretations prohibited a close look

below the level of prime contractors. That is a disgrace, that somebody in the Department of Defense would let out a contract that

didn’t let people go deeper into what was behind those contracts or

the subcontract level. But the better quote was from somebody in

the military who said, ‘‘These people should be fired and sent

home.’’ The senior Defense official said of the military overseers,

that attitude is crazy, what are they saying, it is okay to pay the

enemy because they have better snacks, that the convoys travel

unimpeded?

I think everybody gets that now, I hope everybody gets that now.

That kind of contracting is before first level law school.

Mr. CHAFFETZ. We are now going to recognize the gentleman

from Massachusetts, Mr. Lynch.

47

Mr. LYNCH. Thank you, Mr. Chairman. I appreciate that.

Gentlemen, the Commission on Wartime Contracting, which is

an independent bipartisan commission, recently published a report

summarizing their work in Afghanistan and Iraq since 2008. And

based on their estimates, in the last decade, the United States has

spent more than $192 billion on contingency contracts and grants. Of this amount, as much as $60 billion has been lost to contract

waste and fraud. Mr. Motsek, do you think that is a reasonable estimate?

Mr. MOTSEK. Sir, I think I hold the record for testifying in front

of the commission. The answer is, based on the way we are discussing fraud, the answer is no.

Mr. LYNCH. What do you think is a better number?

Mr. MOTSEK. I can’t give you an exact number.

Mr. LYNCH. Okay, I don’t want you to——

Mr. MOTSEK. What I would have to——

Mr. LYNCH. No, I just had one question and you answered it. So

that is good, we need to move on. We are short on time, I am sorry.

I don’t mean to be disrespectful, you have been very helpful as a

witness.

Here is my issue. Right now, the President has a couple of plans,

one in Iraq, one in Afghanistan, where we are going to reduce our

profile for the military and we are going to actually use more and

more contractors. And so we have this problem. We have, at times

we have had more folks under contract than we have had in the

military. So as this trend continues, they have estimated that we

are already over-reliant on contractors in Iraq and Afghanistan.

And it is going to get more so as we draw our troops down.

So they put it this way. The United States will lose much of our

mission-essential organic capability. And also, it will create an Afghanistan rife with inflation and distorted economic activities. You

have some bad incentives in there.

How do we facilitate this transition with greater use of contractors? Eighty percent of these contractors are non-U.S. citizens. So

we have very little control over that accountability, I guess is what

I am looking for. And with 80 percent of those who are under contract non-U.S. citizens, I am very concerned about this corruption,

undermining the remaining effort that we are making in Iraq and

in Afghanistan to stabilize both those countries.

Where does that leave us? Where does that leave us if we are

transitioning to a contractor-based, or contractor-centric operation?

Mr. MOTSEK. Sir, we don’t have the capabilities in the organic

force today in many of the areas that we are discussing. You would

have to grow the Department of Defense to make that happen. So

that is the reality. So you are absolutely correct.

The fact, we have already talked about the broad issues and

what needs to be done. A microcosm, in my mind, to eliminate and

to give competence to the local national is two-fold. Number one,

with regard to Host Nation Trucking as an example, we are not

going to pay in dollars any more. We are not going to pay in dollars. That is a blinding flash of the obvious. We pay in Afghanis.

So now it is not question of dollars leaving the country, which

has been a problem to begin with. The second piece, and I don’t

know how to resolve this in the short term and long term, but until

48

you can have assured payment to the individual without payoffs on

the way down, we have this problem with the police, we have it endemic in the government. Until you can pay the person directly

their money, there is no confidence in the system.

We have gone, through the international community, we are paying some of the police, we are paying them on their cell phone because it goes directly to the policeman and it doesn’t filter down

and lose those dollars along the way.

So there are practical steps you have to take. But you are absolutely correct, it will be a contractor-centric institution. Iraq obviously, after December 31st, as things stand, absolutely.

Mr. LYNCH. Okay. Mr. Chairman, my time is just about expired.

I do want to say one thing, though. Having spent enough time over

there in Afghanistan, as bad as this situation is, it would be worse

if we had U.S. personnel, military personnel providing security on

these convoys. The body count would be totally unacceptable. So I

appreciate the effort that you have made to straighten this mess

out. Thank you. I yield back.

Mr. CHAFFETZ. I am going to recognize Ranking Member Tierney

for just a moment here, as we conclude. We have votes coming up

on the floor.

Mr. TIERNEY. Thanks, Mr. Chairman.

Rohullah continues to be providing security on the road in Afghanistan to this day. Anybody look at the intelligence reports in

our intelligence community about the background of this individual? No? All right.

General TOWNSEND. Sir, I would like to say this about Rohullah.

Can’t go into it a whole lot, but Rohullah is not off our scope.

Mr. TIERNEY. I would like for you gentlemen to provide for us at

some point in time in written form subsequent to this hearing the

amount of prosecutions that are ongoing right now for this type of

corruption and graft, as well as the amounts of money that have

been recovered to date.

Last, I just want to get an idea of who is responsible, so that

when we look at this and try to evaluate later on, we can know

who to call for witnesses and who to talk to. As I understand it,

the trucking contracts now for oversight, it is the 419th Mount

Control Battalion that are in charge of managing the contract, is

that correct? Nobody here knows. All right. That is one problem.

They report to the 143rd Expeditionary Sustainment Brigade,

does that sound reasonable?

Mr. MOTSEK. Sir, today, but they will transition, perhaps even

before you have your next hearing.

Mr. TIERNEY. That is going to change again?

Mr. MOTSEK. It will change as units rotate. I would caution

about using, we will find organizations for you and give you the hierarchy, I think that is what you are looking for.

Mr. TIERNEY. Well, it is because what I have from the investigations that we did was that the contract signing is the immediate

responsibility of the Baghran contracting center, regional contracting center, who reports to the principal assistant responsible

for contracting in Iraq and Afghanistan, who gets authority from

the Army acquisition executive or the Secretary of the Army. But

a practical matter, from CENTCOM.

49

So where do you gentlemen fit in in that chain?

Mr. MOTSEK. The commander of JSCC——

Mr. TIERNEY. Rather than using acronyms, can you——

Mr. MOTSEK. The commander of Joint Support Contracting Command is Admiral Kalathas, he is my deputy and he is detailed

there for a year to operate that.

Mr. TIERNEY. So is he doing the regional contracting center in

Baghran?

Mr. MOTSEK. He owns that. He owns that.

Mr. TIERNEY. And you work for him?

Mr. MOTSEK. No, he works for me.

Mr. TIERNEY. He works for you?

Mr. MOTSEK. Normally, he has been detailed forward. If I could

very quickly explain it. The Army is the executive agent for contracting in the conflict. We had to give the executive agency to

someone, and it could have been a service, it could have been agency. The Army is the executive agent. They have tried many years

to get away from that. They are going to stay the executive agent.

And because of that, the Army acquisition executive, who is Mr.

Denver’s boss, is the ultimate responsible agent from the contracting standpoint. So the authority and the warrants for the people to operate under the Joint Contracting Command come via the

Army to spend money. And so appeals and oversight, direct oversight of contractors, with very few exceptions within Afghanistan,

are the Army’s responsibility. I will give you the warrant diagram,

sir.

Mr. DENVER. Sir, if I may take a moment to add to that. That

is true, the OSD appointed the Army as the executive agent. The

executive agency went to my boss. I am actually, detail those authorities for executive agency. And I have an organization that provides broad oversight, when you get into theater, Admiral Kalathas

is the head of contracting activity in theater.

Then he has two senior contracting officials that work for him,

one for senior contracting official in Afghanistan, one for senior

contracting official in Iraq. The senior contracting official Afghanistan oversees those regional contracting offices, the ones that you

referred to. But that is the contracting chain of command for local

authority, sir.

Mr. TIERNEY. Well, then I suspect we will be seeing you gentlemen back here again, since you have responsibility.

I want to thank the chairman again for working with us on this.

I appreciate his hard work and leadership on this matter. Thank

you all for testifying.

Mr. CHAFFETZ. I want to thank you gentlemen for your commitment to our country, for your service. We do thank you.

The Pentagon, the Department of Defense, has to get this right.

The State Department has to get this right. We are talking about

billions upon billions upon billions of dollars that unfortunately we

know is going to fuel some of the very people that we are trying

to suppress. That is totally unacceptable. The waste, fraud and

abuse that is happening in the theater of war is unacceptably high.

And we see that in report after report.

I understand the difficulties, and I am trying to appreciate all

the nuances in the difficulty of war. And there will be some small

50

degree that happens in that theater. But when we hear about tens

of billions of dollars in waste, fraud and abuse, it is unacceptable.

One of the next hearings that we will have in this subcommittee

will deal with what is happening in Iraq. Because we have to get

the contracting part of the equation right. As the transition is

made from the Department of Defense to the State Department,

the State Department is looking to bring up something like 17,000

contractors. So the news clips may be that we are drawing down

in Iraq, but the reality is, we are hiring up in Iraq to the tune of

17,000 contractors in an unbelievable amount of money. We have

to get this equation right.

I thank you all for being here. I appreciate the great work from

Mr. Tierney and his staff, in a very collaborative effort. You are

going to find Republicans and Democrats very united, working together on this. So at this time, this committee will stand adjourned.

[Whereupon, at 12:45 p.m., the subcommittee was adjourned.]

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