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THE COSTS OF MILITARY OPERATIONS AND

RECONSTRUCTION IN IRAQ AND AFGHANISTAN

HEARING

BEFORE THE

COMMITTEE ON THE BUDGET 

HOUSE OF REPRESENTATIVES

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

HEARING HELD IN WASHINGTON, DC, JULY 31, 2007

Serial No. 110–17

Printed for the use of the Committee on the Budget

(

Available on the Internet: 

http://www.gpoaccess.gov/congress/house/budget/index.html 

(II)

COMMITTEE ON THE BUDGET 

JOHN M. SPRATT, JR., South Carolina, Chairman 

ROSA L. DELAURO, Connecticut, 

CHET EDWARDS, Texas 

JIM COOPER, Tennessee 

THOMAS H. ALLEN, Maine 

ALLYSON Y. SCHWARTZ, Pennsylvania 

MARCY KAPTUR, Ohio 

XAVIER BECERRA, California 

LLOYD DOGGETT, Texas 

EARL BLUMENAUER, Oregon 

MARION BERRY, Arkansas 

ALLEN BOYD, Florida 

JAMES P. MCGOVERN, Massachusetts 

ROBERT E. ANDREWS, New Jersey 

ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia 

BOB ETHERIDGE, North Carolina 

DARLENE HOOLEY, Oregon 

BRIAN BAIRD, Washington 

DENNIS MOORE, Kansas 

TIMOTHY H. BISHOP, New York 

GWEN MOORE, Wisconsin 

[Vacancy] 

PAUL RYAN, Wisconsin, 

Ranking Minority Member 

J. GRESHAM BARRETT, South Carolina 

JO BONNER, Alabama 

SCOTT GARRETT, New Jersey 

MARIO DIAZ–BALART, Florida 

JEB HENSARLING, Texas 

DANIEL E. LUNGREN, California 

MICHAEL K. SIMPSON, Idaho 

PATRICK T. MCHENRY, North Carolina 

CONNIE MACK, Florida 

K. MICHAEL CONAWAY, Texas 

JOHN CAMPBELL, California 

PATRICK J. TIBERI, Ohio 

JON C. PORTER, Nevada 

RODNEY ALEXANDER, Louisiana 

ADRIAN SMITH, Nebraska 

[Vacancy] 

PROFESSIONAL STAFF

THOMAS S. KAHN, Staff Director and Chief Counsel 

JAMES T. BATES, Minority Chief of Staff 

(III)

C O N T E N T S

Page 

Hearing held in Washington, DC, July 31, 2007 .................................................. 1

Statement of: 

Hon. John M. Spratt, Jr., Chairman, House Committee on the Budget ..... 1

Hon. Paul Ryan, ranking minority member, House Committee on the 

Budget ............................................................................................................ 8

Hon. Gordon England, Deputy Secretary of Defense .................................... 10

Prepared statement of ............................................................................... 13

Robert Sunshine, Assistant Director for Budget Analysis, Congressional 

Budget Office ................................................................................................. 46

Prepared statement of ............................................................................... 48

Stuart W. Bowen, Jr., Special Inspector General for Iraq Reconstruction .. 63

Prepared statement of ............................................................................... 66

Hon. Joseph Saloom, Ambassador of the United States and Senior Transition Advisor, U.S. Department of State ...................................................... 69

Prepared statement of ............................................................................... 71

Hon. John A. Gastright, Jr., Deputy Assistant Secretary of State for 

South and Central Asian Affairs, U.S. Department of State .................... 75

Prepared statement of ............................................................................... 76

Hon. James P. McGovern, a Representative in Congress from the State 

of Massachusetts, Congressional Progressive Caucus Issue Report No. 

1, ‘‘Iraq War Cost Tradeoffs’’ ........................................................................ 93

Hon. Robert C. ‘‘Bobby’’ Scott, a Representative in Congress from the 

State of Virginia, Oct. 9, 2002, letter entered into the Congressional 

Record ............................................................................................................ 96

Hon. Earl Blumenauer, a Representative in Congress from the State 

of Oregon, and Congressman McGovern, questions for the record and 

responses ....................................................................................................... 97

(1)

THE COSTS OF MILITARY OPERATIONS AND

RECONSTRUCTION IN IRAQ AND AFGHANISTAN 

TUESDAY, JULY 31, 2007

HOUSE OF REPRESENTATIVES, COMMITTEE ON THE BUDGET, Washington, DC. 

The committee met, pursuant to call, at 10:00 a.m., in room 210, 

Cannon House Office Building, Hon. John M. Spratt, Jr. (Chairman 

of the committee) presiding. 

Present: Representatives Spratt, Edwards, Allen, Schwartz, 

Beceerra, Doggett, Blumenauer, Boyd, McGovern, Scott, Etheridge, 

Hooley, Baird, and Smith. 

Chairman SPRATT. I would like to welcome our first panel Deputy Secretary of Defense, Gordon England; the Under Secretary of 

Defense, Tina Jonas; General Sattler the J-5, all to discuss the cost 

of our operations in Iraq and Afghanistan. 

This is the third time that Secretary England and Under Secretary Jonas have agreed to testify before the Budget Committee. 

You have accepted all of our invitations and frankly we very much 

appreciate your willingness to field our questions so that we can 

get a better grasp, a better idea of the cost of our operations in Iraq 

and Afghanistan. 

We also have a second panel of excellent witnesses; Robert Sunshine of the Congressional Budget Office; Stuart Bowen who is the 

Special IG for Iraq reconstruction; Ambassador Joseph Saloom; and 

Deputy Assistant Secretary John Gastright from the State Department. 

The purpose of this hearing as I said is to get a better handle, 

a better grasp, a better idea of the cost of military operations and 

reconstruction in Iraq and Afghanistan to date. And as equally important if not more important how much in future cost we are facing. In particular we would like a better understanding of how the 

requirements or assumptions that underlie the President’s budget 

may have changed over the last several months and how these 

changes may affect the cost of operations next year and beyond. 

Much has happened since the submission of the President’s budget. The surge has been implemented, the 2007 War Supplemental 

has passed, the President’s bench mark report has been submitted, 

the Walter Reed Commission, amongst other things, has been just 

released and this is to name only a few. 

Since February the monthly burn-rate has already increased 

from $10 billion to $12 billion. We are here not just to count beans. 

We are here to ask some fundamental questions because what we 

are dealing with in our estimation of the cost are constructs that 

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are given to us by GAO, CBO, OMB—well not OMB because that 

is one of the things we are going to question for today. But we have 

several different constructs of cost which tend to converge on each 

other, but we would like to know are these approximations correct. 

And secondly, we would like to know does the Department of Defense keep some similar sort of financial constructs of the cost of 

operations both historic and future. Do you have any way of projecting or do you project in your assemblage of the, FYDP, the future years defense plan, what likely costs are going to be for our 

deployment in Iraq and Afghanistan? 

CBO has an estimate that model which has been upgraded, I will 

be using their old numbers. CBO said when we asked them, ‘‘What 

is the cost of staying there into the future?’’ CBO said, ‘‘If you draw 

down your forces in the theater, and that is Afghanistan and Iraq, 

to about 75,000 additional troops a remaining force of 75,000 

troops, by the year 2013. And if you maintain that steady level of 

troops through 2017 the ten year cost is $845 billion.’’

Now add that to the cost we have already incurred, it is $1.1 to 

$1.2 trillion. That is a substantial sum of money and lots of trade 

offs and much needed things involved in appropriating that level 

of funding. And we would like to know if you could regard that as 

a reasonable approximation of what the future costs are likely to 

be. 

We understand that about $44.5 billion has been spent or at 

least appropriated and remains to be obligated for reconstruction 

in Iraq. We would like to know if that number is correct and if we 

have the facilities to show for that sort of substantial outlay, $44.5 

billion. In addition, we understand that the Iraqis have allocated 

$37 billion for reconstruction of their country, but they have yet to 

spend substantial sums of this money including $10 billion put 

aside in a fund, it was one of the bench mark objectives in determining whether or not the government was getting underway with 

projects it needs to do. 

These are the sort of questions we would like to ask you today, 

we would like to explore with you today. We will receive testimony 

after your testimony about a number of projects there that have 

not been completed and yet the contractors have essentially spent 

100 percent of the funds allocated to those projects. We would like 

to find out, number one, if these allegations are true. And, number 

two, if there are any consequences for the contractors who have 

spent fully the amount allocated but have not completed the facility. That includes seven or 12 health clinics, eight of 20 hospitals, 

a number of public facilities that have not been completed despite 

the fact that the budgeted amounts of money have been spent. 

Let me just quickly take a minute to show you the numbers that 

we are talking about so that we are singing to some extent off the 

same sheet of music, or you at least know what we are talking 

about. Jose could you start with the series of charts. We will just 

run through these quickly.

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That is our estimation of difference in defense cost since the 

Bush Administration took office. The ten year budget at that time 

by CBO’s forecast was $3.6 trillion, today it is $5.7 trillion. That 

is a substantial sum of money. We understand there are reasons 

for it, but it is a substantial sum to accommodate in any budget 

if you are trying to bring it to balance. 

Next chart.


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Here is our layer cake showing the different components of the 

increase in the Defense budget since the year 2000. And you can 

see that the war supplementals constitute a substantial part of 

that particular budget and whether or not they have to continue 

indefinitely into the future clearly has an impact on our Defense 

Program. 

Next chart.

To date by our estimation with CBO’s help and GAO’s help and 

CRS’s help Operation Iraqi Freedom has cost $450 billion, Operation Enduring Freedom Afghanistan, $127 billion, Operation 

Noble Eagle $28 billion. War funding provided to date is over $600 

billion by the calculation of those who have like CBO and CRS. 

Next chart.


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Even though the war has gone on for in its fifth year now, it 

steadily increases. Instead of moving towards a conclusion where 

we spend less as we achieve our objectives, we are actually spending more and more each year. Now these numbers then the year 

2009 fall off completely because there is no place over after that 

for national defense, but as you can see there is an ominous indication that the cost is continuing to increase, it has increased steadily 

for each of the last five years. 

Next chart.


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This is just a way of figuring out the cost of keeping one troop 

and an expeditionary force in a theater like Iraq or Afghanistan. 

It is very, very substantial, $390,000 per troop. By a simple back 

of the envelope calculation, dividing the number of troops into the 

amount spent within that theater. 

Next chart.


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And this is another calculation of the cost of Iraqi Freedom, 

which is $450 billion total cost of U.S. budget to date per the numbers provided as by CBO and CRS. 

Next Chart.

Total cost $135 billion 2007. Cost per month comes out to be 

$11.3 billion. The cost per day $370 million. A substantial sum of 

money any way you cut it. 

Next chart.


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And this is CBO’s chart which is out of date because we have 

just gotten a new estimation but I referred to it in my opening 

statement earlier. CBO says, ‘‘If you began drawing down your 

forces such by the year 2007—you would have by the year 2013, 

you would have about 75,000 troops in theater. The cost and if you 

then extended that force level of 75,000 troops in theater out over 

the next five years, the cost over ten years will be $840 billion.’’ 

Now that is a consequential number. It has real trade offs and that 

is why we are here today. 

We will refer to these charts again in the course of our hearing 

today, but I simply want to put them on the wall to let you know 

what we are working against. If you disagree that is part of the 

purpose of this hearing is to understand where you disagree and 

to improve our understanding, our grasp per the cost of the war. 

Before proceeding with your statements, let me turn to Mr. Ryan 

our Ranking Member for his opening statement. Mr. Ryan. 

Mr. RYAN. Thank you, Chairman. Deputy Secretary England it 

is nice to have you back with us again. I think this is your third 

time here this year. I also wanted to say to Inspector General 

Bowen and my friend Joe Saloom, the last time I saw you two gentleman was in Baghdad a few months ago. And it is nice to have 

you here and I look forward to your progress reports as well. 

Of the many pressing issues this Congress faces, none seems 

more urgent than our operations in Iraq and Afghanistan as the 

Chairman just mentioned. And it is obvious from the many debates 

we have had this year here, there are a series of members in both 

sides of the aisle and on different sides of the issues who recognize 

that whatever we do over the next several months will have a profound and lasting implication. 


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So it is important for all of us to measure our steps carefully to 

avoid over simplifications, to get away from the bumper sticker 

phrases and accusations and to keep in earnest debate about the 

real stakes involved in our decisions that we are going to make. 

And I know that is the intention of Chairman Spratt and all of our 

members here today. 

It is also obvious that when we discuss the cost of these operations we mean a great deal more than what can be measured in 

dollars. Nevertheless it is fitting to the Budget Committee should 

examine this part of this subject. The most tangible actions in this 

matter that Congress has taken, and will take again, involve budget related matters. Specifically providing funds for these operations 

for the troops themselves, for their equipment, supplies, support, 

and so on. So the Budget Committee should evaluate what we have 

spent so far, how we have spent it, and what lessons can be 

learned from our choices. 

Early on in these operations the spending bills were truly supplemental, they were added on top of the President’s budget. At the 

urging of this Committee, the President began including the estimated supplemental amounts in his annual appropriation submissions and we are very pleased to see the DOD and OMB moving 

in this direction. This year, the President’s 2008 supplemental request is again included in the budget proposed in February. Unfortunately, the supplemental is not being considered as part of the 

DOD appropriations bill on the floor this week which will make it 

very difficult for the troops to receive their funding at the start of 

the fiscal year, a concern that we should serious consider at this 

hearing. 

In addition, as a measure of credibility, Congress and the Administration should continue to include future war cost in the regular 

budget process. In estimating what those costs will be it is up to 

DOD to provide accurate and timely reporting of the monthly costs 

associated with the war and I hope that that will be the case. 

If it is as the Chairman’s charts suggest, then we should know 

it and we should budget for it. Administration has presumably 

learned from both successes and mistakes this period including its 

reconciliation in reconstruction efforts. We should insist that today’s witnesses explain what they have learned and what they 

have done to ensure that any mistakes of the past will not be repeated. We are not going to answer every question about Iraq at 

this one hearing today, but we are not going to resolve all the 

many issues, but we should be looking into the budget ramifications and that is what we are going to be taking the course today. 

But certainly we can make this hearing a useful contribution to 

the debate that is going on in Congress. I hope that is the case will 

all the members here today. And Deputy Secretary England, I 

think you know the general take of the interest we have here in 

the Committee, and I look forward to your testimony. I also look 

forward to hearing what mistakes that have been made have been 

corrected and how we are going to prevent those mistakes from 

being from happening again. And we also want to know how we are 

going in the next 12 months. Where things are going from a funding perspective, and how reliable the funding streams you may or 

10

may not have as we consider the supplemental and the appropriations bill. 

And with that, Mr. Chairman, I thank you for your indulgence. 

Chairman SPRATT. Thank you, Mr. Ryan. Secretary England, the 

floor is yours, but before you take it let me say that we can take 

your prepared statement and make it part of the record so that you 

can summarize it. Thank you, sir. 

STATEMENT OF THE HONORABLE GORDON ENGLAND, DEPUTY SECRETARY OF DEFENSE; ACCOMPANIED BY: TINA 

JONAS, UNDER SECRETARY OF DEFENSE (COMPTROLLER); 

LIEUTENANT GENERAL JOHN F. SATTLER, DIRECTOR FOR 

STRATEGIC PLANS AND POLICY, THE JOINT STAFF 

STATEMENT OF GORDON ENGLAND 

Mr. ENGLAND. Good. Mr. Chairman, thank you and Representative Ryan thank you. Members of the House Budget Committee, it 

is a pleasure to be back again. Some of those questions rather 

daunting questions I am not sure we can answer all those, but perhaps we can provide some clarity, or at least our thinking on some 

of those subjects. So we will do the best we can, Mr. Chairman. 

First if all, I am very pleased to have back with me Tina Jonas 

who is our Comptroller. Also this time to have Lieutenant General 

John Sattler. He is the Director of Strategic Plans and Policy. And 

I believe he can be helpful in some of these discussions also today. 

I do want to say I am very pleased to see you have the second—

the second panel here today. I think that will be very helpful. And 

Stu Bowen who is a Special IG for Iraq deals with me directly and 

he has done a very excellent job. And as you mentioned, Joe 

Saloom, also John Gastright. So people who work with the Department pleased that they are here also for their panel, War Cost. 

We do have a commitment. You know the Secretary is fully committed to a fully open and transparent dialogue with the Congress. 

We do provide the Congress our monthly cost of war reports. The 

last one we provided, this month in July, and it covered all the expenses from September 11, 2001 through May 2007. 

Mr. Chair, we can discuss the dollars. Once in a while they get 

a little confusing, because I believe you deal with the entire federal 

government, we deal with only the DOD aspect. That said, our latest report through May, Congress had appropriated $549 billion for 

GWOT, of which we had obligated $438 billion as of May. So, 

again, the reports we turn in monthly and I think they are clear 

and hopefully they are clear and if not we will certainly clarify 

them for this Committee. 

Our request this year is $141.7 billion. And as we commented, 

that is for the GWOT. As we commented in our last two hearings, 

that is literally extrapolating the current war costs for 2007 into 

2008 because by the time we put the budget together, and frankly 

still at this time, that request will evolve and we will get additional 

insight when the President’s September report on the Iraqi benchmarks comes forward. Also there is various assessments underway 

that all come about that time. So there are adjustments to fiscal 

year 2008. We can talk some of that today, but frankly it is going 

to be based on insights, the situation on the ground, the President’s 

11

decisions, time lines, etcetera. I mean basically we respond to the 

President’s direction in this regard. 

Now the last time I met there were questions about contracts 

and I think a number of members had questions about contracting 

in Iraq. And as of April 2007 if I can just give you the latest numbers. At that time there were 129,000 contractor personnel in Iraq. 

Twenty-one thousand were U.S. citizens. So about 16 percent are 

U.S. citizens. Forty- three thousand or 33 percent were third country nationals. And sixty-five thousand, which is what you like to 

see keeping the local Iraqis employed, 65,000 or 51 percent were 

the local Iraqi nationals. 

You mentioned the and representative Ryan specifically in terms 

of oversight and accountability, we do have an number of processes 

in place. First of all, the DCAA, the Defense Contract Audit Agency 

they did over 35,000 reviews in fiscal year 2006. Reviewed about 

$345 billion in contracts and that effort saved about $2.3 billion. 

There is also the DOD IG they had a 34 GWOT related projects 

worth about $91 billion. And then you will here from Stu Bowen 

the Special IG Inspector for Iraq reconstruction and I will let him 

cover his, but he also has extensive coverage of contracts. 

Regarding abuse, I mean we do everything we can, obviously, to 

prevent abuse but like every other part of society you can’t prevent 

all of it, but you can uncover it and you can punish people who do 

not play by the law. And that is a deterrent when we find people 

who are doing things wrong, we do what everybody else does. We 

prosecute them. The DOD IG investigations have led to 17 convictions. The Special IG for Iraq reconstruction they have over 65 ongoing investigations and their efforts have led to five convictions. 

And I view that as good news because when people do bad things 

we want to catch them and we want to convict them as a deterrent 

to other people to live by the rules. 

A few initiatives, IEDs. We have talked about this in the past. 

Improvised explosive devices, that is the reason most of our people 

are killed and injured. We spend about $4.4 billion and that is our 

recommendation as I believe for fiscal year 2008. In the past we 

have included MRAP vehicles, the new vehicles for specific kinds 

of threats in Iraq. We will be asking for additional funds that Congress just reprogrammed $1.2 billion and I thank the Congress for 

that. 

We now have that $1.2 plus $4.4 for MRAPs, different than the 

IED but happens to be the same number, $4.4. So that $5.6 billion 

is being used to order 6,400 of these vehicles and we will be requesting another $5.8 so there will be an additional request that 

we know of today of—pardon me $5.3 because there is already $440 

billion in the budget. So there will be $5.8 billion additional for 

MRAPs in the fiscal year 2008 and that is to buy additional vehicles and also all the support to go with those vehicles. 

A comment. We do have a task force for business and stability 

operations in Iraq. As you probably know 40 percent of the Iraq 

population is under the age of 15, so jobs are very, very important 

and very important that we have economic development in Iraq. 

We have assessed 64 factories, commerce, DAID, agriculture, Iraqi 

ministries, DOD, also some other countries supporting us. And so 

there is a significant effort underway in terms of job creation. 

12

CERP fund very important, Commanders Emergency Response 

Program. General Sattler can talk more about that, but again it is 

a way to employ Iraqis and show direct benefits. 

Training and equipping, obviously important. Iraqi forces we are 

prepared to discuss that also with you in terms of the status and 

that is very important. Obviously, they need to come up to being 

able to take over the job so that we can, frankly, leave at some 

point. It is important that we have them up to speed and that is 

a major effort of the Department. 

Lastly, I returned just a week or so, two weeks ago from both 

Iraq and Afghanistan. And I will tell you I was struck by the significant progress since my last visit. Yesterday I was also struck 

by an article in the New York Times by Michael O’Hanlon and Ken 

Pollack. And they were, ‘‘surprised’’ by the gain they saw. I mean 

they had a very positive article yesterday. They said our troops the 

moral is high. I can tell you that is the case, both Iraq and Afghanistan. And for the Iraqi security forces, their quote, ‘‘things look 

much better than before.’’ That was also my observation. Things 

were obvious on a very positive slope in Iraq and also Afghanistan. 

I did meet with many of the men and women who serve our military, who protect and defend this great nation every day and on 

behalf of them I do thank you and I thank the Congress for the 

support you provide us that we can therefore provide them. 

So with that, Mr. Chairman, we would be pleased to take your 

questions and we will try to provide as much clarity as we can, but 

I will tell you the future is still quite hazy out there in terms of 

the total direction and, therefore, it is going to very hard to be definitive with you today, but to the extent we can be helpful, we certainly will be. 

[The prepared statement of Gordon England follows:]

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Chairman SPRATT. Thank you very much, Mr. Secretary. I believe you have to leave at twelve o’clock? 

Mr. ENGLAND. Yes, I do, sir. 

Chairman SPRATT. And I think we have votes just before then, 

so that converges our program our agenda converges with yours. 

That means I will sort of ride the gavel pretty closely up here to 

see that everyone gets their fair chance but that several then we 

also move along. 

I failed to ask unanimous consent that all members be allowed 

to submit an opening statement. At this point in the record, if they 

care to do so, without objection, is so ordered. 


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Mr. Secretary, the numbers we show they are $610 billion for 

Iraq and Afghanistan and enhance North American security. Fourfifty of that going to Iraq and $127 billion of that going to Afghanistan. Do these comport with your own constructions of what the 

cost has been? 

Mr. ENGLAND. Let me to turn it over to my Comptroller. I think 

she has, you know, the specific numbers. So, Tina, if you can address the specifics. 

Ms. JONAS. Thank you. Mr. Chairman, I believe the numbers that you are using the $610 or what CBO is recording. That includes State Department figures, I believe, and other government 

numbers. We would, as the Secretary said in his opening statement, our cost of war reports again this is for the Department of 

Defense only, we record $438 billion—point four billion dollars as 

having been spent; $332.6 on Iraq, $78.1 on Afghanistan and another $27.7 for Operation Nobel Eagle which of course is our Homeland Defense. 

Chairman SPRATT. And that is the Department of Defense. 

Ms. JONAS. That is the Department of Defense. 

Chairman SPRATT. The Pentagon itself. If you add in the State 

Department, I believe they may be including Veterans’ Administration expenses, incremental expenses as well. 

Ms. JONAS. Yes, sir. 

Chairman SPRATT. All inclusive it is a bigger number. Do you have any notion of whether or not the $610, the $450, and the $127 

are rough approximations of all inclusive cost? 

Ms. JONAS. Again I would defer to you on that and I have not 

looked at the State figures myself. I would say that within the 

amounts that CRS has noted there is some disagreement on their 

figures including the fact that they have included $2 billion of base 

housing allowance housing money in that estimate. 

So we have some minor disagreements, but I would say it is a 

rough order. 

Chairman SPRATT. What about the surge itself, which involves 

the introduction of about 10,000 additional troops that have been 

over then. What is your estimation of the annual cost, the one year 

cost of the surge? 

Mr. ENGLAND. We in the budget we had as I recall $6.5 billion 

that was the cost of the surge and that was until October 1. So we 

funded the surge until October 1 of this year, so that is six and a 

half billion dollars. We have no funding past October 1 for the 

surge. And we have no funding in the GWOT fiscal year 2008 cost 

of war. 

Chairman SPRATT. Now I wanted to ask that question. Let me 

just stop you and not to interrupt you, but to get this point clear, 

because this emerged from our last hearing as well, I believe. 

We have no money in the supplemental or the Department of Defense Appropriations bill for the surge beyond September 30? 

Mr. ENGLAND. That is correct. That is correct. The decision was 

made to fund it through September 30. We did not include any cost 

in the fiscal year 2008 GWOT pending progress on the ground, because we did not know, one, how long the surge would last. It is 

a surge, remember this now goes back some period of time, Mr. 

Chairman, these costs were first put together. And so we did not 

22

know what the level of activity would be past October 1, so we have 

nothing in the budget. 

And at this point, frankly, we will delay providing a budget 

amendment, frankly, as long as we can until we get more clarity 

in terms of exactly what the commitment will be in Iraq in terms 

of those added cost. 

Chairman SPRATT. Well if the decision is to extend the surge for 

additional months, will there have to be a supplemental request on 

top of the supplemental still pending and the Defense Appropriations bill? Will there have to be an additional supplement request 

to pay for it? 

Mr. ENGLAND. I would expect there would be an amendment of 

some sort to the current GWOT supplemental. So that GWOT supplemental, $141.7, I don’t know what the mechanism will be, but 

yes there will be a delta cost. And I and in fact there definitely will 

be a delta cost, because quite obviously at this point, I mean, all 

those troops will not be out on October 1. I mean it would be physically impossible to do that. So we know there will be some increased costs. I don’t know what the mechanism will be to handle 

that, Mr. Chairman. I don’t know if that is an amendment. I will 

let people more familiar with that decide. 

Chairman SPRATT. Let me turn to contractor experiences in that 

theater in Iraq in particular. There have been all kinds of reports 

of projects started, budgets fully spent, projects partially completed 

and the contractors seem to have been exonerated. Seem to have 

walked away with impunity. Is that the case? 

We don’t hear the consequences of these contractor overruns. 

These contractor apparent violations, breaches of contract. Are 

there any consequences for these contractors who don’t complete 

jobs within the budgeted cost of which they have contracted? 

Mr. ENGLAND. I would say contracts with DOD we definitely 

track the contractors and if people don’t perform, if nothing else 

has an effect on their next contract. So past performance is certainly a criteria in awarding contracts in the future. I think each 

one of those you would have to look at individually. And of course 

again I think the Special IG can comment better than I can. 

I mean a lot of these contracts are under extraordinary difficult 

situations and terms and conditions change I expect in a lot of 

cases just because the conditions on the ground. But Mr. Chairman, I think it would be better, frankly, to discuss that with the 

Special IG, because every one of those circumstances is a different 

situation. 

Chairman SPRATT. One last question to you and or to Secretary 

Jonas. We just received this morning a calculation by CBO using 

their model for projecting future cost of our engagement in Iraq 

and Afghanistan. And the projection they gave us shows that military operations between 2008, 2017 ten year period of time, meaning incremental outlay of probably $845 to $931 billion. With an indigenous security forces, they have, this is not the right chart. I 

don’t think you have this yet because I think we got it this morning. You do? Okay. 

Chart number 18.

23

Military operations at $845 to $931 billion, indigenous security 

forces, $50 billion, foreign aid and diplomacy, $16 billion, veterans 

services, $13 billion. Obviously, there is some clear estimates there 

that are not firm numbers, but nevertheless they come up from an 

approximation of the ten year cost of remaining—of maintaining a 

presence of 75,000 troops, building down to that over five years. 

And then for five years maintaining that level between $924 billion 

and $1 trillion dollars. 

Do you do any sort of forecast yourself as you look at the course 

that we are likely to take? Does the Pentagon turn to your shop, 

Secretary Jonas or turn to you Mr. Secretary and say, ‘‘Give us 

your best take, your best estimate of what staying here one year, 

five years, and ten years is likely to be so we can factor it into our 

decision making.’’

Mr. ENGLAND. I would say, Mr. Chairman, we don’t because that 

bottom line up there is an assumption. I mean it depends on what 

your assumptions are. That is a long way in the future to have 

those assumptions and then to predict cost. So——

Chairman SPRATT. It is an extrapolation from existing cost and 

we have got five years of experience so they are extrapolating from 

that, not just pulling an assumption out of the air. They are extrapolating from known cost to what future costs are likely to be 

at certain force levels. 

Mr. ENGLAND. Yes, sir. I mean that is the assumption is those 

force levels and of course that is the driver in the assumptions. So 

when you are talking 2008 to 2017, I mean the assumption is there 

is 75,000 troops I guess on the—and on this assumption for that 

entire period of time. I mean we don’t have that sort of assumption. 

I don’t know if that is valid or not. Obviously, you make an assumption whatever those costs are, but I can’t tell you if that is a 


sprc-9.eps
24

valid assumption. I don’t think anybody can, Mr. Chairman. I 

mean that is a long time in the future to be assuming a troop level 

and I am not sure we know what that troop level will be in a year, 

frankly, much less all the way out to 2017. 

So the final numbers, obviously, a function of what that assumption is, but I would think lots of people would have a different assumption in terms of those troop levels. So I don’t know how we 

can help you with that, Mr. Chairman. 

And we don’t have that sort of an assumption going out to that 

period of time. I mean we look through a FYDP, so we are only 

looking at a five year period, and that is for our base budget where 

we actually know and predict the size of our force. I mean we know 

by law the size of our force. We know what are normal deployments are. We know what our equipment and maintenance, we 

know what is being procured. So we estimate that over a five year 

period. We do it with a reasonable degree of certainty but we don’t 

do that with war cost, because we don’t have that degree of certainty, certainly. 

Chairman SPRATT. Thank you, sir. Mr. Ryan. 

Mr. RYAN. Secretary, I wanted to ask you about just the way we 

do the supplementals here. We have, you know, and from this Committee’s perspective we have long been saying give us the 

supplementals early so we can plan for the full fiscal year ahead 

and you did that. And that was helpful. You submitted the fiscal 

year 2007 and fiscal year 2008 supplemental back in February with 

the budget itself. It took us until about June to get the fiscal year 

2007 supplemental done. 

The DOD approps bill is on the floor this week. It had been our 

hope that the fiscal year 2008 supplemental would be on the floor 

this week with the DOD approps bill, but that doesn’t seem to be 

the case. Can you, you just mentioned in your answer to the Chairman that you do not have funding for fiscal year 2008 beginning 

October 1 for Iraq funding. Is that correct? 

Mr. ENGLAND. That is correct. 

Mr. RYAN. So we have this——

Mr. ENGLAND. We do not—pardon me. We have fiscal year 

2008——

Mr. RYAN. Surge, yeah. 

Mr. ENGLAND [continuing]. Funding but not for the surge. 

Mr. RYAN. That is what I mean. 

Mr. ENGLAND. Yes. Right. 

Mr. RYAN. And so we know that we are still going to have these 

troops here. We know that on October 1 this is going to occur. The 

question I want to get at is, what reprogramming authority do you 

have if you don’t get the funding in time? How much latitude do 

you have, number one. Number two, what efficiencies are lost, 

what are the cost associated with doing this piecemeal, incrementally? 

I believe that, you know, we are losing a lot of efficiencies by 

doing this on a drib and drab standpoint and just doing this like 

we have done before in a month at a time or something like that. 

Can you go to the cost that are involved with having to reprogram these funds away from other priorities into pressing priorities 

25

and not having that sort of predictability that getting a full years 

worth of appropriations give you. 

Mr. ENGLAND. So it is very, very disruptive and Congressman 

Ryan you are right, in the fiscal year 2007 which came very late 

there was a lot of debate about the 2007. Everybody said, ‘‘Well you 

can last until such and such a time.’’ The fact of the matter is we 

move a lot of money around in the Department. It is also extraordinary disruptive for our men and women who serve, because we 

literally take money out of their accounts and various accounts to 

pay for ongoing operations, things that we need to fund. 

We also have commitments. So for example, the vehicles I talked 

about. When we buy those vehicles, I mean that is a large cash 

flow and our manufacturers buy materials and goods to go into a 

long production chain. Now if we only fund them incrementally, 

they can only buy very small lots, no one ever ramps up production, so frankly, we can’t make our production rates. So we do need 

funding, reliable, predictable funding over a period of time so we 

can make commitments for everything that we buy, for everything 

that we spend in both support of our normal operations and of 

course for our war operations. 

So when the funding is late, we then have to reallocate funds for 

some period of time, which is very disruptive. And if they come incrementally then we cannot make the kind of commitments we 

need to make on a long term basis. So it is costly, but it is also 

that we can’t do the mission of the Department of Defense. So first 

you can’t do the mission, and secondly it is costly, and third it is 

very disruptive for our men and women in uniform. 

Mr. RYAN. What program—if this stalemates through September, 

your fiscal year 2008 supplemental, what programming authority 

do you have and how long can you play that game until you literally run out of funds? 

Mr. ENGLAND. So, Tina, can you talk——

Ms. JONAS. Yes. Mr. Ryan, we have approximately, I believe it is about $3 billion roughly, $3 billion in reprogramming authority, 

but as the Deputy said, that tends to hurt our other programs. I 

mean for example one important program to readiness are the 

depot maintenance accounts. And so we tend to take money from 

areas like that. Last year we had to borrow some money, I believe, 

from the accounts which pay our troops. So it does tend to get difficult. It certainly provides an element of uncertainty that is not 

helpful as we try to move forward. 

Mr. ENGLAND. Also——

Mr. RYAN. Go ahead. 

Mr. ENGLAND. Mr. Ryan, if I can comment. I believe the reprogramming authority level is set by the Congress, is that not 

right? 

Mr. RYAN. Right. 

Ms. JONAS. That is right, sir. 

Mr. RYAN. Yeah. 

Mr. ENGLAND. So typically we ask for say $5 billion in re- programming or $8 billion so that we have some flexibility, but normally that is limited, because obviously the Congress has line item 

authority and they tend to want to limit that, and that is understood. But a higher reprogramming, obviously, eases things for us, 

26

but it does not solve the problem and we still have the same fundamental problem, but to the extent we can have a higher reprogramming authority that would also be helpful. 

Mr. RYAN. Your fiscal year 2008 supp request is $141 and your 

reprogramming authority is three right now——

Ms. JONAS. I believe it is about three. 

Mr. RYAN [continuing]. As it stands? Okay. Let me ask you one 

question on the MRAP. How many MRAP vehicles are in production now? 

Mr. ENGLAND. I believe we have on order over 3,000 vehicles actually definitize orders. We have we will have a total, I believe, of 

over 6,000 as we definitize current contracts. So I believe right now 

we will have as we definitize contracts, 6,400 vehicles. 

Mr. RYAN. That is the $4.4 billion that has already been obligated? 

Mr. ENGLAND. That is the $4.4 plus the $1.2 of reprogramming 

dollars that was just reprogrammed by the Congress through the 

last couple weeks ago. So that is the $5.6 and that is for those vehicles, but what we 

did, Mr. Ryan, because we wanted the vehicles as quickly and as 

many as we could and as quickly as we could, so we increased the 

production ramp to the maximum production ramp. We deferred a 

number of the support dollars and the spares and all that to maintain the vehicles so we moved that into the fiscal year 2008. So 

that will be part of the $5.3 billion that we will come back to the 

Congress in fiscal year 2008 and that will buy us another tranche 

of vehicles plus the year’s worth actual two years, I think, of support cost and spares and all those things we have to buy to support 

the vehicles. 

Mr. RYAN. How many are deployed in the field? Any? 

Mr. ENGLAND. Yes. We have—I will have to get you a specific 

number. Do you know, John? 

General SATTLER. I do not have that number, Mr. Secretary. 

Mr. ENGLAND. Okay. 

Mr. RYAN. The reason I ask the question is——

Mr. ENGLAND. But hundreds. 

Mr. RYAN [continuing]. I mean the enemy has the EFPs which 

are so much more deadly IEDs. The question I want to get to is, 

have the MRAPs proven to be more effective, measurably and demonstrably more effective in protecting our soldiers against EFP 

IEDs than their predecessor Humvees, Unarmored Humvees? 

Mr. ENGLAND. Mr. Ryan, if you don’t mind, I don’t want to get 

into classified because I don’t want to pass information on to our 

advisories. So I would rather defer that. I will tell you that the 

MRAP is designed for a very specific kind of under body——

Mr. RYAN. I understand. 

Mr. ENGLAND [continuing]. Type of attack. And beyond that, I 

would like to go to a classified discussion with you or any members 

who may be interested. 

Mr. RYAN. I would like to follow up with you on that. 

Mr. ENGLAND. I would be happy to do so. I will make an appointment, sir. 

Mr. RYAN. One final. The DOD approps bill as I mentioned is on 

the floor right now. I think it is $3.4 billion under the AdministraVerDate 0ct 09 2002 12:44 Dec 16, 2007 Jkt 000000 PO 00000 Frm 00030 Fmt 6633 Sfmt 6633 J:\DOCS\HEARINGS\110TH\110-17\38255.TXT HBUD1 PsN: DICK
27

tion’s request. Have you analyzed this bill? It seems like a pretty, 

other than the $3.4 under the 302B it seems like a pretty vanilla 

straight forward approps bill. Have you put a SAP out on this bill 

in favor or against it? 

Mr. ENGLAND. I do not believe we have, but I believe the real difference is about $1.7 billion, Tina, because of accounting type differences? 

Ms. JONAS. This Committee would appreciate, there is a disagreement at this moment——

Mr. RYAN. Yeah. OMB CBO differences? 

Ms. JONAS. Yes. 

Mr. RYAN. Yeah. 

Ms. JONAS. There are. And so we are trying to assess what the 

exact reduction to our budget would be. 

Mr. RYAN. No SAP has been released? 

Ms. JONAS. To my knowledge, it has not yet been. But I would 

say that one area, and we are very appreciative to the support of 

the Congress. One area that we are a bit concerned about in this 

bill is the reductions to our operations and maintenance accounts 

in the order of $6 billion, and of course that does impact our readiness. 

Mr. RYAN. Thank you, Chairman. 

Chairman SPRATT. Mr. Edwards. 

Mr. EDWARDS. Secretary England, Secretary Jonas, John Sattler, 

thank you all for you distinguished service to our country. 

Secretary England, you commented, I believe in your opening remarks that based on your trip to Iraq and Afghanistan recently, 

you saw ‘‘significant progress in Iraq and Afghanistan.’’ I hope you 

are right, I fear you are wrong. And I would like I want to give 

you time to perhaps explain what you meant by ‘‘significant 

progress in Iraq and Afghanistan.’’

And I have great respect for you because I have known you for 

20 years, but my concern about the word we have been getting out 

of this Administration for the last five years has been each year 

has been significant progress being made, but the facts on the 

ground don’t seem to bear that out. 

For example, in terms of significant progress in today’s Washington Post, Mr. Chairman I would like to read into the record. A 

consortium of humanitarian groups led by a British group concluded that 28 percent of children are malnourished in Iraq compared to 19 percent before the 2003 invasion. That nearly a third 

of the population needs emergency aid. Ninety-two percent of Iraqi 

children have learning problems, mostly due to the climate of fear. 

Fifteen percent or four million Iraqis regularly cannot buy enough 

food. Seventy percent are without adequate water supplies compared with half of the population prior to 2003. More than two million Iraqis, mostly women and children, have been displaced inside 

Iraq, another two million have left the country and about 40 percent of Iraq’s professional class has left since 2003. That would be 

devastating had that occurred in the United States population. 

I guess in addition to that I would say that, you know, after five 

years training Iraqi army is incapable of defending its nation and 

providing security for its families; virtually no political reconciliVerDate 0ct 09 2002 12:44 Dec 16, 2007 Jkt 000000 PO 00000 Frm 00031 Fmt 6633 Sfmt 6633 J:\DOCS\HEARINGS\110TH\110-17\38255.TXT HBUD1 PsN: DICK
28

ation. The majority of the parliament said they would like to see 

U.S. troops leave Iraq. 

I guess my question would be in order to make significant military progress in Iraq, don’t we in this kind of insurgents, don’t we 

have to win the hearts and minds of the Iraqi people and the typical family there? And is there significant progress from their perspective, how their daily life is ongoing? 

The Washington Post article would suggest otherwise. Perhaps 

your comments were more narrowly focused on certain military aspects. And let me stop at that point to allow you in fairness and 

out of my great respect for you personally to further explain what 

you meant by their significant progress in Iraq and Afghanistan. 

Mr. ENGLAND. So Mr. Edwards, first of all, I was in downtown 

Baghdad. Yes, had SAPI plates and a helmet because you know 

you are in downtown Baghdad, but I was also in downtown Baghdad with people walking the streets and going into stores. And the 

shopping centers are being expanded, so the outdoor shopping centers. They are protected because, obviously, one person with a vehicle borne IED can cause great havoc so just like any other place 

in the world one person can do great havoc so there are protectors 

so that people can’t bring vehicles into those areas anymore. 

Markets are expanding, people are shopping and lives are starting to return to normal in those areas where our troops, along with 

the Iraqis. By the way, I was in one of the security stations with 

Iraqi police and with the Iraqi military and they are there with our 

men and women on the front, and in fact leading in many of those 

areas. 

I was also out in Al Ambar Province. Al Ambar Province is as 

big as the State of North Carolina. The day before I was there, 

there were four incidents in the entire Al Ambar Province. Business is coming to life. And by the way, the Sheiks and people are 

coming back into the area. There is another interesting report in 

the paper today about how, you know, that area is now starting to 

expand to other areas in Iraq. So I think as you look at the country 

and you look at different sectors of the country, large sectors of the 

country are returning to normal because people are now wanting 

to live normal lives. 

Jobs are very important. I had mentioned the jobs. I mean this 

is counter insurgency type operation so you did need to win the 

hearts and minds, but this is about jobs and we are working that 

part of it program also. Like I think what is very important is to 

factually look at the progress being made every day. I mean I know 

people like to go back to the past and quote all the facts, but I my 

view is you have to deal with the facts on the ground today and 

what will continue to evolve as the surge progresses. 

So when you talk to the commanders and the people there, I 

think they feel like great progress is being made. My view was 

compared to prior trips it was great progress and also by the way 

again I point to the O’Hanan article yesterday, another view. I 

think there is more and more people now starting to make a more 

detailed assessment and the trend line in my judgement is now 

positive. Doesn’t mean there aren’t problems. It is still a war, but 

progress in a war. 

Mr. EDWARDS. Thank you. 

29

Chairman SPRATT. Mr. Lungren. 

Mr. ENGLAND. Thank you. 

Chairman SPRATT. You are first according to my list. Mr. Tiberi. 

Mr. Tiberi. 

Mr. TIBERI. Thank you, Mr. Chairman. I thank you for having 

this hearing today. I have some questions, but I want to first start 

off with a statement that Ms. Jonas made at the end of Mr. Ryan’s 

testimony regarding funding and how it impacts operations and—

the operations and maintenance account and how that would impact readiness. Can you further comment on that? 

Ms. JONAS. Actually, I might also ask General Sattler to talk 

about the impacts to the force. But one of the areas that we have 

ran into issues last year was making sure that our depot maintenance capability was there. And we do put those funds in the operations accounts. And we want to make sure that our depos are operating capacity to repair equipment and so that became a difficulty last year. 

Mr. ENGLAND. But also Mr. Tiberi, I mean the current bill I understand that is to being marked up now, appropriations bill is 

short six and a half billion dollars I believe in O and M, is that 

right, Tina? 

Ms. JONAS. It is five point seven billion. 

Mr. ENGLAND. Okay. Five point seven billion. So, obviously, that 

is five point seven billion. Now that is not the war budget, that is 

our base operating support budget. So O and M is just that, it is 

all of our operation and maintenance for the ongoing activities of 

the Department of Defense. And so that is a problem, I mean, if 

we are down almost six billion dollars, we will have to deal with 

that some way. But that it is a lot of money for our basic force that 

we use to literally steam our ships and maintain our equipment 

and you know all the things are in that account. So six billion dollars, obviously, is a very large deficit for us. Now the bill is not 

complete, but I think that was part of the discussion earlier about 

the ‘‘six billion dollars.’’

And, General, do you have a word or so? 

General SATTLER. I would just pile on that, obviously the depo 

is as the gear comes back from inside theater or the stuff that is 

cycled back and replaced that it needs to go through the depos to 

be upgraded and maintained to be put back into the forces, the active, the guard, and the reserve that are back here that are training and preparing to do other missions or to go back to Iraq or Afghanistan, sir. 

Mr. TIBERI. Thank you. Mr. England, you mentioned earlier that 

the article was in the paper yesterday in the New York Times. 

Within that article it talks about the observation of local leaders 

working with our marines and army units in establishing and providing basic services of electricity, fuel, clean water, and sanitation 

to the people and being done pretty well. 

Initially that was being done mostly with U.S. dollars, I believe. 

Can you comment on that and how that is working today? The reconstruction dollars. 

Mr. ENGLAND. As I recall, and perhaps somebody here can correct me. As I recall the Iraqis are now spending more than we are 

in terms of those activities. So we are spending, I believe, about 

30

five and a half billion dollars and they are spending about seven 

and a half billion dollars in terms of their own infrastructure. 

[The information follows:]

The information for the record correct data is: For 2007, Iraq has a capital budget 

for reconstruction of about $10.1 billion; while U.S. appropriated funds in 2007 

amount to about $3.6 billion for reconstruction activities. This does not include the 

U.S. funds appropriated for Iraq security forces.

Mr. TIBERI. How does that relate to what is happening in——

Mr. ENGLAND. Pardon me. Is that right? Do I have that right? 

Ms. JONAS. I believe that is right, sir. I think it is——

Mr. ENGLAND. Okay. 

Ms. JONAS [continuing]. About seven point three. 

Mr. ENGLAND. Okay. But it is pretty close. I mean they are now 

spending more than we are. So, yes, the answer is they are now 

spending more for their infrastructure. 

Mr. TIBERI. How about in Afghanistan? What is the break down? 

Mr. ENGLAND. I don’t have that, sir. 

Mr. TIBERI. Is that something you can get to me? 

Mr. ENGLAND. Yes, sir. 

Mr. TIBERI. Or to the Committee? 

Mr. ENGLAND. Yes, sir. 

Mr. TIBERI. What the U.S. spends, percentage of dollars on reconstruction versus everyone else. 

Mr. ENGLAND. And specifically compared to the Iraqi—I mean 

compared to the Afghan government, that ratio? 

Mr. TIBERI. And everybody else. 

Mr. ENGLAND. Okay.

[The information follows:]

As of May 2007, the U.S. pledges for this fiscal year were about $10.1 billion of 

a total $12.1 billion pledged by 29 countries and organizations (chart submitted), 

that has been reported. 

Presently, Afghanistan relies on international assistance for its reconstruction 

costs.

Donor $M Pledges—FY 1386 (2007–2008) 

ADB ....................................................................................................................................... $205.00

Australia ............................................................................................................................... 18.00

Belgium ................................................................................................................................ 9.88

Canada ................................................................................................................................. 127.91

Denmark ............................................................................................................................... 29.00

EC ......................................................................................................................................... 195.00

ECHO ..................................................................................................................................... 12.00

Finland .................................................................................................................................. 12.00

Germany ................................................................................................................................ 131.00

Greece ................................................................................................................................... 2.00

India ..................................................................................................................................... 50.00

Iran ....................................................................................................................................... 50.00

Islamic Dev Bank ................................................................................................................. 30.00

Japan .................................................................................................................................... 150.00

Korea (Rep of) ...................................................................................................................... 7.00

Luxembourg .......................................................................................................................... 2.44

Netherlands .......................................................................................................................... 40.00

New Zealand ......................................................................................................................... 4.00

Norway .................................................................................................................................. 73.00

Pakistan ................................................................................................................................ 40.00

Saudi Arabia ......................................................................................................................... 51.00

Spain .................................................................................................................................... 36.33

Sweden ................................................................................................................................. 40.00

Switzerland ........................................................................................................................... 18.00

Turkey ................................................................................................................................... 18.00

31

Donor $M Pledges—FY 1386 (2007–2008) 

UK ......................................................................................................................................... 300.90

UN Agencies ......................................................................................................................... 26.55

USA ....................................................................................................................................... 10,117.00

WB ........................................................................................................................................ 265.00

Total ........................................................................................................................ 12,061.01

Mr. TIBERI. With respect to Afghanistan and with respect to Iraq, is there anybody else spending money on reconstruction other than the U.S. and the Iraqis? Any 

other nations? 

Mr. ENGLAND. I can’t answer the question. I will have to get back with you, Congressman. 

[The information follows:]

Iraq has benefited from international donations beyond those provided by the 

United States Government. The Special Inspector General has identified about 

$18.2 billion in international reconstruction donations. 

The United States Government contributions to Afghanistan are among fortythree donors (countries and other organizations) identified as supporting Afghanistan reconstruction since 2002.

Mr. TIBERI. You can give me both the Iraq number and the Afghan number in terms of what we spend versus what their governments are spending as well as what other nations may be spending. 

Mr. ENGLAND. We will get back with you on that. And I if I could 

go back to the——

Mr. TIBERI. Yes. 

Mr. ENGLAND [continuing]. First discussion because I think again 

you will hear some of this from Stu Bowen later. It is important, 

obviously, to have a secure environment for economic development. 

I mean my view of this is security is one side of the coin, economic 

development is the other side of the coin and they go hand in hand. 

You have to have security for economic development and you have 

to economic development for security. So we have been providing 

this security envelope to get economic development. 

Now, until you have security that is a mixed measure of the economic development, but as time goes on and again what you see 

in Al Ambar specifically as you get a more secure environment you 

see more economic development and then you will see the people 

taking more responsibility for their own infrastructure that they 

rely on. 

So I mean these go together and I think you have to look at them 

that way. 

Chairman SPRATT. Mr. Allen of Maine. 

Mr. ALLEN. Thank you, Mr. Chairman and thank you all for 

being here. Secretary England, welcome back. I think I will start 

with you. 

The first question I have, the Special Inspector General for Iraq 

last year in July issued a report. And in that report ‘‘lessons 

learned, lessons in contracting and procurement,’’ he had this to 

say on the use of sole source or no-bid contracts. ‘‘Generally avoid 

using sole source and limited competition contracting actions. 

These exceptional contracting actions should be used as necessary 

but the emphasis must always be on full transparency in contracting and procurement. While use of sole source and limited 

32

competition contracting in Iraq should have virtually ceased after 

hostilities ended.’’ And I think they mean we got to Baghdad. ‘‘And 

previously sole source limited competition contracts should have 

been promptly rebid.’’

Is what is the policy today of the Department of Defense in terms 

of sole source contracts in Iraq? Have you gotten away from that 

practice or are you still doing it? 

Mr. ENGLAND. Well most of those contracts, I don’t believe are 

with the Department of Defense. Most I believe are with State and 

I guess Stu Bowen can help me with that. Most of the reconstruction are not actually DOD contracts. 

I can tell you this, though, for DOD and the Special IG is absolutely right, but it applies everywhere. That is whenever we can we 

have competitive sourcing rather than sole source. I mean sole 

source is by exception to our policy. So we do have our contracting 

obligation is to have a competitive environment. 

Now that said, many times we have a competitive environment, 

people are in place or manufacturing and there is a follow on and 

so you don’t have another competition for a follow on contract. I 

mean, you know, in the extreme case once you let—once you have 

a competition, you let the competition or an F-35 Fighter follow on 

orders we don’t compete, obviously, so that looks like sole source. 

Mr. ALLEN. But in Iraq, when Iraq began you were doing you 

were relying heavily on Halliburton and Bechtel and others. I 

mean those were sole source contracts, right? No bid contracts? 

Mr. ENGLAND. I actually I don’t—I just can’t really comment, Mr. 

Allen——

Mr. ALLEN. Okay. 

Mr. ENGLAND [continuing]. As authoritatively on that. 

Mr. ALLEN. Let me do something else. Let me turn to another 

slightly different topic. I understand there is no one federal agency 

that has a sole mission to audit, investigate, or oversee DOD appropriated funds for troops support services under LCAP, the logistics 

civil augmentation program. I gather that is the Halliburton KBR 

contract. 

And there are—I understand there are many agencies who share 

the mission, including the Defense Contract Audit Agency, the Defense Contract Management Agency, the Army Audit Agency, and 

the DOD Inspector General. It has been proposed that the Special 

Inspector General for Iraq be given expanded authority to also investigate DOD logistics contracts in Iraq. 

Do you agree with that proposal that Mr. Bowen should have expanded area to oversee these contracts? 

Mr. ENGLAND. I guess I am not—look, we already have extensive 

oversight. Like you said, you mentioned four agencies, so I mean 

the DCA in itself did 35,000 reviews last year, so there is extensive 

reviews by all these agencies. All of them have their piece that they 

look at with their expert looking at it. So having another group 

look at these at this area, I don’t know would be helpful or not. 

On the other hand it gives another set of eyes on the ground. 

And I think Stu Bowen and his people have done a good job, but 

we do have extensive reviews and oversight and analysis of all of 

those, Mr. Allen. 

33

Mr. ALLEN. I understand. One more question. One of the recommendations that Mr. Bowen made last year was, ‘‘To designate 

a single unified contracting entity to coordinate all contracting in 

theater.’’ Does that solve the problem? Would you agree with that 

recommendation? 

Mr. ENGLAND. Again, Mr. Allen, I don’t—I am not sure I agree 

or I mean somebody will have to be closer to the specifics. Here is 

an—here is sort of the problem I have with all of this. Centralizing 

a vast organization is not always the best solution, I have found, 

my own experiences. Extraordinarily large organizations, large expenditures, you actually want to decentralize so that you can get, 

you know, views of different discrete parts of this, because this is 

not a homogeneous operation. These are vastly different in terms 

of contracts, kinds of contracts, jobs being accomplished. 

So to look at this as one homogeneous contract, I mean my view 

is that is not always the best the most effective and the most efficient. So I would tend to say as a general, you are better decentralizing than you are having one organization trying to do this 

broad scope of activity. 

Mr. ALLEN. Do you think the oversight of the Halliburton contract has been effective and efficient? 

Mr. ENGLAND. I don’t know, Mr. Allen. I just can’t comment. I 

haven’t been involved and I just don’t know. 

Mr. ALLEN. Thank you. 

Chairman SPRATT. Mr. Lungren. 

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

Mr. Secretary, again, thank you for being here as was stated before. I think it is your third appearance before us and we appreciate your testimony. 

Earlier in response to a couple of questions with respect to contracts not being performed and so forth. You indicated some concern and said that if they are not performed if they come up again 

that goes against them. I just want to make sure that that is not 

all your saying. That if there are instances of fraud and abuse you 

would expect those to be prosecuted and fully support that, correct? 

Mr. ENGLAND. Yes. But as I said in my opening statement there 

has been a number of those cases, unfortunately there are people 

who break the law——

Mr. LUNGREN. Right. 

Mr. ENGLAND [continuing]. And then those people get punished. 

And, yes, there has been convictions and convictions based on various groups that were mentioned by Mr. Allen. They all have been 

working. There has been convictions, there is others underway. 

Fortunately, that is a very small percent. I—well under one percent——

Mr. LUNGREN. I agree with that. 

Mr. ENGLAND [continuing]. Of both people and dollars. 

Mr. LUNGREN. But we have a very small number of members of 

Congress who have been found to be guilty of crimes and yet when 

somebody like Duke Cunningham does it, in my judgement, he is 

taking money that ought to go to diverting it in a certain way, that 

basically diminishes the protection of our men and women in uniform. And I look at I it——

Mr. ENGLAND. Absolutely. 

34

Mr. LUNGREN [continuing]. And I look at it the same way with 

anybody who is under a contract for reconstruction or anything 

else, they ought to be—they ought to get the full weight of the law. 

And I just wanted to make sure that you fully supportive of that. 

Mr. ENGLAND. We violently agree, Mr. Lungren. 

Mr. LUNGREN. Very good. I appreciate that. General, you talked 

equipment coming back and so forth. One of the complaints I have 

received from national guard back in California is that when they 

go to the theater of combat they leave their equipment there and 

they are behind, they are in a hole right now with respect to equipment to allow them to maintain their capability either to respond 

to incidences at home in their normal course of activity if we had 

a natural disaster or for particularized training to allow them to 

be in good shape when they show up in a theater of conflict. 

What do you say about that? What concerns do you have about 

that? And what are we doing to address that? 

Mr. ENGLAND. Okay. I will let you. Go, no go ahead, General, and 

then I will comment. 

General SATTLER. Sir, I obviously the same we have the same 

challenges in the active force and in the reserve as well as the 

guard. And when we went forward and we left our sensitive equipment there to efficiently rotate forces in, they fell in on equipment 

that was left in a theater. And forces that went back home had 

training sets back at their home base. 

Now that is a lot easier when you have large units, some marine 

units or army units active, where a unit comes in, leaves it gear 

behind, falls in on a gear of a unit coming home. In the case of the 

guard because they come from a geographic location if they leave 

their gear behind and another guard unit comes in, then we have 

a mismatch when the unit comes home. 

So I understand the challenge and the problem. We have been 

working it as we procure additional equipment and we send equipment back to through the depots that Secretary Jonas talked 

about, when that is reworked it is sent out to where it is needed 

not necessarily to where it came back from. 

Mr. LUNGREN. Okay. My concern is that national guard units 

having a capability to respond to natural disasters or other kinds—

we have had examples of civil unrest in this country. We have had 

them in my State and the national guard is called out. I would 

hope that we would not have a situation where because we are 

doing what we need to do and I support what we are doing in Iraq 

and Afghanistan. I am a very strong supporter of that, but I don’t 

want to see us with our units at home incapability of doing the 

other part of their job, which is just as important as what is happening in Iraq and Afghanistan to respond to either domestic civil 

unrest or which we have on a regular basis, natural disasters. 

And I am concerned about that. 

Mr. ENGLAND. If I can address it, because we have this discussion with General Blum who is head of the National Guard Bureau. There are at agreements between all the States in terms of 

national guard so that they actually, you know, share equipment 

when they need to. 

The last time I sat down with General Blum, specifically, and 

there was a White House review, for example, for the hurricane 

35

season. If you look at all the equipment that is available, I mean 

there is more than adequate equipment available within each region of the country to deal with natural disasters. I mean we still 

have vast quantities of equipment mainly what we have left in theaters is unique combat equipment and not equipment that you 

would use for natural disasters in the United States. 

That said, we are also refurbishing and we have put, I believe, $30 billion in the budget, Tina? 

Ms. JONAS. That is right. 

Mr. ENGLAND. For national guard type equipment to, you know, 

reset and reconstitute the national guard. So that is an area focus, 

but in the meantime I can assure you that the nation is well being 

well served by the national guard. And my judgement is between 

the guards, particularly in regions, well prepared to do what is necessary in terms of natural disasters. 

Mr. LUNGREN. If I just might be indulged a second. I appreciate 

that and I hope you are and I hope that we can continue to look 

at that. And we have reference to the hurricane season, that is sort 

of a cyclical thing. We have something in California called earth 

quakes which are non- cyclical and I am not sure you can plan in 

the same way for them. Thank you very much. 

Chairman SPRATT. Mr. Doggett. 

Mr. DOGGETT. Thank you and thank you for your testimony. My 

understanding of what you have said is that we have pending here 

in Congress to fund the war in Iraq and in Afghanistan $145 billion request. And you can’t tell us today precisely what the appropriate level should be, but you know it is more than $145 billion? 

Mr. ENGLAND. We took last January we projected, because request of the Congress. 

Mr. DOGGETT. Of course. 

Mr. ENGLAND. And right to——

Mr. DOGGETT. And you now realize that you need over five billion 

dollars more for the mine resistant equipment. That would be on 

top of the $145 billion? 

Mr. ENGLAND. That is correct. 

Mr. DOGGETT. And you will need the money for the surge which 

was not budgeted past the end of this fiscal year. So it wouldn’t 

certainly wouldn’t be unreasonable as we do our planning to estimate that we are up approaching $170 billion when you include 

that, $165, something in that range? 

Mr. ENGLAND. I don’t know if that is the number, sir. But you 

are right, there is the surge past October 1. There is also the 

MRAP vehicles. And I believe the appropriators have actually 

moved some other money into GWOT that was in the base bill, so 

that will be accounted for. So——

Mr. DOGGETT. And you wouldn’t be surprised to have some other 

adjustments as well as you see the experience and the reports in 

September? 

Mr. ENGLAND. That is correct. 

Mr. DOGGETT. Now it is my understanding that while it certainly 

does require additional work in the accounting department that if 

that money is not—well, first of all I guess, that money will not be 

requested probably until the end of the fiscal year, the precise 

amount? Certainly not until after the September 15 report? 

36

Mr. ENGLAND. I believe the $5.3 will be requested before that because we have that, we understand precisely what that is so since 

we know the number. Where we do not yet know what the cost will 

be, we will defer that as long as we can but hopefully still be able 

to, you know, have that responded to by the Congress by October 

the 1. 

Mr. DOGGETT. All right. So you would hope by October 1, you 

would have this estimate to us of what the cost for those wars 

would be in the next fiscal year? 

Mr. ENGLAND. That is correct. 

Mr. DOGGETT. And you have capability if we can’t act, of course, 

until you submit the request, but if the action is not immediate you 

have capability to continue the war surely into at least the beginning of next calendar year, don’t you? 

Mr. ENGLAND. We have, and I guess I will have to have my 

Comptroller here talk about what expenditures, you know, what 

has been expended or will be by that time. So certainly all, for example, the personnel dollars are paid by that point. I mean that 

will be expended. So various categories will be expended. 

Tina, can you elaborate, please? 

Ms. JONAS. Sir, it depends on, obviously, where we are on October 1. If the Congress has acted, obviously, we will be in good 

shape——

Mr. DOGGETT. If we have approved the bill that is up this week. 

Ms. JONAS. That is right. And then we would have to just adjust 

either the supplemental——

Mr. DOGGETT. You would make adjustments and carry it into 

next year——

Ms. JONAS. That is right, sir. 

Mr. DOGGETT [continuing]. Without the supplemental, right? 

Ms. JONAS. That is right. 

Mr. DOGGETT. Okay. 

Ms. JONAS. The additional we were just talking about. 

Mr. DOGGETT. And we you testified when you were before the 

Committee before, Ms. Jonas, that the burn-rate in Iraq had gotten 

up approaching $10 billion. If the request for next year is in the 

$165, $168—70 billion dollar range, then the burn-rate in Iraq has 

really risen to approaching $12 billion a month, isn’t it? 

Ms. JONAS. That would be about right. And——

Mr. DOGGETT. Okay. And as far as the long term cost in the 

chart that the Chairman mentioned earlier, General Petraeus told 

Fox News back in June that this not a challenge that can be resolved in a year or even two years. That the typical insurgency 

takes nine to ten years. Ambassador Crocker said in July that we 

are just getting into the first reel of five reels in Iraq, contrary to 

what many people say. If you assume, if you take not just any assumption, but General Petraeus’ assumption of a nine to ten year 

commitment then the projection that we have of a trillion dollar 

war here is certainly not unreasonable, is it? 

Mr. ENGLAND. Again, Congressman, it depends on what the assumption is in terms of a level——

Mr. DOGGETT. Right. 

Mr. ENGLAND [continuing]. Of that effort. 

Mr. DOGGETT. Of course. 

37

Mr. ENGLAND. And I don’t know what the level of that effort 

would be. So whatever that assumption is, the dollars will follow 

the assumption. In this case the assumption is 75,000 troops, but 

I don’t know if that is valid or not. It certainly an assumption. 

Mr. DOGGETT. The last time I asked you questions on March the 

6, you told me that there was no effort underway at the Pentagon 

to plan for any cost of withdraw or draw-down. 

Last week, as you know, Secretary Gates in a letter to Senator 

Clinton said that it was not only appropriate but essential to have 

such a plan. When did things change on that issue at the Pentagon? Between March 6 in your testimony and his letter of July 

25. 

Mr. ENGLAND. I think the—I think what the Secretary was saying at that time is there are various questions that you would ask 

regarding the war going forward. And so he has framed some of 

those questions, but what we will do, frankly, is we will cost whatever the President’s decision is come September. I mean that will 

be the baseline as we go forward, Congressman. So whatever that 

decision by the President is, that will be the basis of our funding 

going forward. 

Mr. DOGGETT. One last question. There has been comment with 

regard to the sources of foreign fighters and suicide bombers in 

Iraq, that a majority of the suicide bombers and the largest percentage of the foreign fighters in Iraq are Saudi nationals. Is that 

accurate? 

General SATTLER. Well there certainly are some Saudi nationals 

that fit into the foreign fighter, the suicide bomber both vest and 

vehicle borne, Congressman. But I would rather take that for the 

record rather than—because there are a couple countries that 

dominate the foreign fighter network. So I would like to take that 

for the record so I don’t put out erroneous information, sir. 

Mr. DOGGETT. You want to submit something as a follow up, is 

that what you are saying? 

General SATTLER. Yes, sir. I mean I will—I am sorry. 

Mr. DOGGETT. The Saudi’s are certainly—Saudi nationals are 

certainly one of the dominant countries in providing foreign nationals who are suicide fighters and others that are out killing Americans, right? 

General SATTLER. A number of the foreign fighters do in fact 

originate from Saudi Arabia, yes, sir. 

[The information follows:]

[DELETED]

Mr. DOGGETT. If you can respond in writing, promptly to the 

Committee to verify the press accounts that a majority of the foreign fighters in Iraq are Saudi nationals, a majority—suicide bombers, excuse me, are Saudi nationals and that about 40 percent of 

all foreign fighters coming into Iraq are Saudi nationals. 

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

Chairman SPRATT. Mr. Conaway. 

Mr. CONAWAY. Thank you, Mr. Chairman. Appreciate that. 

Thanks for being here. Those of us who support what we are doing 

still need to know how much it costs. I mean it is, you know, it is 

good practice to don’t, you know, start a building a home until you 

know what it costs. And so questions that we have relative to the 

38

costs, I hope we are not necessarily interpreted as being negative 

to what we are trying to do, but we need to know what it is that 

we are trying to accomplish. 

Last week in the Armed Services Committee we passed out on 

a almost party line basis H.R. 3159 which is which would codify 

DODs intent and all of our intent to create dwell time for our men 

and women in service who have gone into harms way, they come 

home, we want them here for an extended period of time to recoup 

and get ready to do something again on behalf of our country. 

But at the hearing, nobody on staff had a clue what that cost 

would be. And you could approach the analysis one of two ways. 

One, either increase the in-strength of the force, which I think is 

the right answer. Or you can dramatically draw-down the people 

who are in harms way, ignoring of course the situation on the 

ground, the circumstances in the fight to accomplish what we are 

going to require DOD to do. Like an unfunded mandate if this 

thing actually became law. 

Have you at this stage and it may be way too early, Ms. Jonas 

or Secretary, have you all looked at how you would comply with 

that 3159 requirement? In other words, how many more troops 

would you need and what would that be cost be on a every year 

basis if we are able to increase the in-strength of our, particularly 

the marine corp and the army to accomplish a goal that all of us 

what to have accomplished. 

Mr. ENGLAND. So Mr. Conaway, we do have a policy and we are 

growing both the marine corp and the army consistent with that 

policy in terms of increase in the dwell time. While that is a policy, 

I would also say, I think the Department and the nation needs to 

do what needs to be done in time of war, because there is an uncertainty in the nation, so I mean I hope this is not some law about 

dwell time. 

I mean, obviously, the men and women who serve want to serve 

at the time of greatest threat to America. So while that is a policy 

and it is a policy that we, frankly, promulgate ourselves, right? We 

came out with the policy for both the guard and the reserve and 

the active force and we are growing the force to be able to sustain 

what we believe is the right size force in the field on a long term 

basis with the appropriate dwell times. 

Nonetheless, I mean I would pretty violently say you don’t want 

to put that in law, because you do have to have flexibility both 

within the DOD and with the force to respond to whatever happens 

in America. I mean, you know, at the right time you and I will both 

be serving if we need to, obviously. 

So while that is a policy and we are gearing up for that, there 

is a cost, obviously, associated with it that is part of growing the 

force. I mean we are growing the army and the marine corp to be 

able to meet that long term commitment. 

Mr. CONAWAY. Well, I guess, if you would get some folks to just 

take a look at that policy that came out of Committee, which focused on Iraq and dwell times and other—so it may be more of a 

political statement that it is a true effort to protect our troops and 

to make sure that we have got the right level of forces in place. I 

hope it is the latter not the former, but nevertheless it may just 

be political. 

39

Could you look at that and give us some sort of an estimate of 

saying, ‘‘All right. We are going to keep the fight going the way we 

are. In order to maintain or accomplish the dwell time goals and 

policies that you have got in place, how many more people would 

we need?’’

In other words, one of the things that Petraeus told us when he 

was here in May is that no one liked the extension of 15 months, 

additional three months to—but they all understood why it had to 

happen and the professionalism they are going to get it done. But 

to accomplish that goal, I think, we need to know what that cost 

is as a part of it. 

Mr. ENGLAND. Mr. Conaway, when the Secretary came out with 

that policy, along with that policy we actually put forth also the 

growth of the military consistent with the policy. 

Mr. CONAWAY. Right. So you are saying you have got that answer 

somewhere and you will get it back to us? 

Mr. ENGLAND. Yeah. I mean my view is today when we project 

our long term needs for the nation in terms of how many troops 

deployed for what reasons in different parts of the world. When you 

look at that commitment, growing the force allows us to meet that 

commitment and the dwell time policies articulated by the Secretary of Defense. 

So I believe we know today what that mix of growth, dwell times, 

and cost is. 

Mr. CONAWAY. Okay. Understand, Mr. Secretary, that we are 

those statements are being made after a number of years of civilian 

leadership at the Pentagon saying, ‘‘We don’t need any more 

forces.’’ And so I want to make sure that all of those, you know, 

statements are made and I know you made in good faith, but I just 

want to make sure those of us on the other side look at four or five 

years of saying, ‘‘No, we don’t need any more people,’’ we want to 

make sure that if you need more people to accomplish that, then 

let us know. 

Mr. ENGLAND. And that cost for the growth is in the budget. 

Mr. CONAWAY. Right. Right. 

Mr. ENGLAND. So and it is in the out year budget. So the growth 

and some of it was in 2007. So the cost of both the army and the 

marine corp to the new authorized level is in the base budget Department of Defense across the——

Mr. CONAWAY. We just want to make sure that new authorized 

in-strength is the right number. And if it needs to be bigger we 

need to know that going in. Thank you, Mr. Chairman. I yield 

back. 

Chairman SPRATT. Mr. McGovern. 

Mr. MCGOVERN. I thank you and thank you Mr. Secretary for 

being here. You have stated that future cost of the war in Iraq will 

be situation dependent. And I think everybody agrees with that. 

And I want to get back to something that Mr. Doggett raised. If 

the situation were the redeployment of all U.S. troops and contractors not needed for the protection of the U.S. Embassy our diplomatic personnel and for limited operations targeting foreign 

jihadists, I mean is it—I mean you must have cost estimates for 

the redeployment, you know, of all other U.S. troops from Iraq over 

a period of time. Do you have cost estimates for the redeployment 

40

over six months or nine months or 12 months? Is that something 

that——

Mr. ENGLAND. No, sir, I don’t. 

Mr. MCGOVERN. Well, you know, what is a little bit disturbing 

is the fact that Congress, the House of Representatives have on 

record as voting for a time line. The Senate, if they ever get allowed to vote, would probably the majority would probably vote for 

the same thing. 

I guess what I would like to ask, and I am not sure the proper 

way to request this, is that if you could give this Committee the 

estimates of the cost of the redeployment of U.S. forces over a period of six, nine, and 12 months. Is that something that you could 

provide the Committee? 

Mr. ENGLAND. I would say, Mr. McGovern, you can only provide 

it if you understand all the guidelines that go into that. So there 

is a whole lot of considerations in terms of equipment. I mean so 

you could construct such a scenario. 

Mr. MCGOVERN. I think that would be helpful to us given the 

fact that a majority of the House of Representatives is on record 

asking for a time line. And I am not sure what the situation is 

going to be in September, but it is conceivable that a majority in 

this House will vote again for a time line. And it is conceivable that 

the United States Senate will. And that, you know, a bill will be 

moved to President. 

And I guess I would like to, you know, ask the Chairman or 

whatever the proper way to do this is, is if you could provide this 

Committee within the next 30 days so when we come back in September that we have some basic outlines of what in fact, you know, 

the cost of redeployment would be. I mean Senators Warner and 

Lugar, also two republicans have set out a set of guidelines that 

cost—that call for a date certain. 

But I think it is important for us to know what we are talking 

about in terms of cost. Just as you, you know, kind of guestimate 

what in fact it might be to stay for a month or two months or three 

months or four months or a year. I think we would like to know 

what it would cost actually, you know, to bring our troops home 

with a caveat that obviously we would want to protect our the people at our Embassy and have a force there to respond to al-Qaida 

or any other threats. 

And so if we could make that formal request here, and if you 

could get us something in the next 30 days that would be very 

much appreciated. 

Mr. ENGLAND. So, Mr. McGovern, so let me just say, I do understand the request. And so I understand your request and I—and 

so I accept the request. 

[The information follows:]

I provided the response to this Insert for the record directly to Representative 

McGovern’s office, dated September 5, 2007.

Mr. MCGOVERN. All right. Thank you. One other issue here, and 

that is you know according to the October 2006 report of the Special Inspector General for Iraq reconstruction, only about 10,000 of 

the 370,000 smaller arms delivered through U.S. assistance had 

their serial numbers recorded. And I think there is slide on the bottom on the bottom of page five that deals with this. 

41

Some of these arms and equipment have been discovered in the 

possession of sectarian militias, others have turned up on the black 

market. There have also been several recent articles as well as testimony before Congress that raise concerns about the reliability 

and loyalty of Iraq security forces. One article in the New York 

Times described how uniformed security forces equipped with U.S. 

arms have even attacked and ambushed U.S. military forces. 

Now I read that U.S. military commanders are now pushing the 

strategy to create local militia groups to provide security who 

might or might not be hired at a later point by the Iraqi government. And these forces would be paid with, ‘‘U.S. emergency funds, 

reward payments, and other monies,’’ according to a July 28 Washington Post article. 

I guess my question is what emergency or other funds are being 

used to pay for these forces? Is this coming out of the Commanders 

Emergency Response Program monies? 

General SATTLER. The movement that they are talking about, sir, 

is mainly out in Al Ambar Province where the Sheiks——

Mr. MCGOVERN. Right. 

General SATTLER [continuing]. Have come forward and due to the 

brutality and intimidation of the al-Qaida they have basically worn 

our their welcome. So that the Sheiks have come forward, 

partnered with the commanders on the ground to go ahead and 

build local—to go ahead and take local security forces or under the 

tribal command and partner with. I am not I cannot—I do not 

know for a fact where the funds whether it is CERP funds or what 

type funds are being used initially to go ahead and pay those 

forces, but——

[The information follows:]

[DELETED]

Mr. MCGOVERN. If you could provide us that information as well, 

because CERP funds as I—is supposed to respond to ‘‘urgent humanitarian reconstruction needs.’’ And I am I guess there is some 

concern about having those funds be, you know, directed to supporting militias. 

And just this is the final thing, is how can we be assured that 

the funds, equipment, and arms that we are providing the Iraqi 

military police and security forces are not being used against U.S. 

troops in the field or in sectarian attacks against various Iraqi 

groups and communities as, you know, we have seen a number of 

reports that have appeared in the press about that. And I guess, 

you know, how do we ensure that, that is not the case in the future? 

General SATTLER. Well, obviously, the commanders on the 

ground do the best they can do go ahead and vet those who would 

come forward to part of these security elements just like we do 

when we recruit them to send them to formal military training or 

to police academy, sir. So and they are in the process now of they 

are taking the fingerprints and they are putting them in that system so that we have a record of those individuals who step forward 

to become part of these security forces. 

Mr. MCGOVERN. But clearly there is—there seems to be a problem when we have Iraqi—U.S. trained Iraqi security forces in some 

42

cases attacking U.S. military and in some cases, in many cases, attacking Iraqi civilians. 

So, obviously, something is not working the way we want it to. 

And I guess, and I know I am running out of time, but maybe you 

could provide us some sort of a statement as to, in fact, what is 

going on to try to deal with this situation more effectively. 

Mr. ENGLAND. Mr. McGovern, we will try to actually categorize 

this in terms of scope and size. Obviously, Iraq, I mean there is a 

lot of security forces, a lot of capability. And so I don’t know if this 

is just aberrant small group or how big this problem is. So we will 

try to characterize for you and also answer your questions. 

Mr. MCGOVERN. Appreciate it. Thank you very much. 

Chairman SPRATT. We have three votes coming up; a 15- minute 

vote followed by two 5-minute votes. I will ride the clock down to 

about three minutes, have 13 minutes left for the vote. We will go 

to Mr. Diaz-Balart and then we will come back to Mr. Scott and 

we will do the best we can. But Mr. Secretary England has to leave 

by 12 o’clock so there is no way we can make it back to see him. 

I am sorry for the members who will miss it. 

For those who did not get to ask questions, we will put you in 

the front of the line for the next panel. 

Mr. ENGLAND. Is there a next time, Mr. Chairman? 

[Laughter.] 

Chairman SPRATT. Mr. Diaz-Balart. 

Mr. DIAZ-BALART. Thank you, Mr. Chairman. Gentleman, there 

is let me ask, is there any doubt that al-Qaida now is in Iraq? Or 

we are fighting al-Qaida in Iraq? 

Mr. ENGLAND. There is no question there is al-Qaida in Iraq. 

Mr. DIAZ-BALART. And again there is no question? 

Mr. ENGLAND. There is no question. We know al-Qaida is in Iraq. 

I mean al-Qaida is firmly implanted in Iraq. 

Mr. DIAZ-BALART. And—because I keep hearing and reading 

about the civil war, but the so called civil war, but if al-Qaida is 

in Iraq, again I am not the smartest guy in the world, so I am 

going to have to ask you again. We are sure that al-Qaida is in 

Iraq. We are fighting al-Qaida in Iraq and we are now—and the 

Iraqis are also now helping us fight al-Qaida in Iraq? 

Mr. ENGLAND. They certainly are, at least in a lot of those provinces and a lot of those areas. And, General, I will let you speak, 

you are closer to military. But I mean every time just the last time 

I was there I mean that was that was the discussion about alQaida elements and everything you read, I mean every report, 

every Intel report, newspapers, everything is al-Qaida in Iraq. 

Mr. DIAZ-BALART. This would be the same al-Qaida that when 

there was a vacuum in Afghanistan attack the United States. My 

question is then, if we don’t fight al-Qaida there, is there any indication that they will just put down their arms and become farmers? 

Mr. ENGLAND. I thought the last commander in Iraq said it well, 

and that is, if we withdraw from Iraq they will follow us back to 

the United States. 

I mean look this is the fundamental question facing America. 

And that fundamental question is, how do you better protect and 

defend America? There are those of us who believe you want to be 

on the offense and you don’t want them to be on the offense. You 

43

always want al-Qaida on the defense. And, frankly, so far it seems 

to work for America. We have avoided an attack. 

I think a large part of that is we have managed to keep al-Qaida 

on the defensive while we have been on the offense. I frankly believe it is not possible to protect and defend America inside America. I mean you do have to be on the offense otherwise we can obviously suffer our own chaos in this country. 

Mr. DIAZ-BALART. Mr. Secretary, and if we were prematurely 

leave Iraq, in your opinion or is there any indication that al-Qaida 

would not, for example, then move to Afghanistan and try to fight 

the coalition forces there? Or would Afghanistan be perfectly safe 

regardless of us leaving al-Qaida alone in Iraq? 

Mr. ENGLAND. I think the whole concern in the Middle East and 

of course the Secretary is in the Middle East this week with the—

with Ambassador Rice to discuss the broad issues in Middle East, 

because our presence in the Middle East is obviously very important for stability and security there and that of course that translates to lots of other places in the world including the United 

States of America. 

Mr. SCOTT. Thank you. Mr. Secretary, it is good to see you today 

and just to follow up, the just question you got, has our presence 

in Iraq increased or decreased the presence of al-Qaida in Iraq? 

Mr. ENGLAND. In judgement, al-Qaida is al-Qaida. I mean they 

have a world wide ambition. 

Mr. SCOTT. Has our presence—has our presence in Iraq increased 

or decreased the al-Qaida’s presence in Iraq? You said al-Qaida is 

in Iraq. 

Mr. ENGLAND. Yes. 

Mr. SCOTT. Has our presence in Iraq increased or decreased alQaida’s presence in Iraq? 

Mr. ENGLAND. I hope we have drawn more al-Qaida in Iraq so 

frankly we can fight them and dispose of them. 

Mr. SCOTT. The more al-Qaida in Iraq after we got there? 

Mr. ENGLAND. I don’t know. My comment was I hope, sir, that 

more of them are there rather than here so we can fight them. 

Mr. SCOTT. We were told by the CIA that Iraq posed no terrorist 

threat to the United States and was not expected to pose a terrorist 

threat unless we attack them. 

Mr. ENGLAND. Pardon me? Repeat your statement. 

Mr. SCOTT. The CIA wrote a letter to the Senate Intelligence 

Committee indicating that in their opinion, it is in the Congressional Record, that Iraq posed no terrorist threat in their opinion 

to the United States before we attacked. And that an attack would 

increase the terrorist threat. 

Let me ask you another question. You are familiar with the articles written over the weekend from the Washington Post and New 

York Times talking about wastes in the contracts. The headlines——

Mr. ENGLAND. I mean I have seen various articles. 

Mr. SCOTT. Okay. Could you provide us for the record your response to those articles? 

Mr. ENGLAND. Response to the articles? 

Mr. SCOTT. Right. 

44

Mr. ENGLAND. I normally don’t respond to articles in the Washington Post, but I mean I don’t know what you mean. 

Mr. SCOTT. Are the articles true? 

Mr. ENGLAND. We will provide you if you would like the actions 

taken, you know, to prevent waste, fraud and abuse and to convict 

people who do, you know, who break the law in that arena. 

So I have commented in that regard that we do have lots of processes in place and we will be happy to provide that to you. And also 

the record of people that have been convicted to date uncovered by 

our processes that we utilize every day. 

Mr. SCOTT. Okay. Are you satisfied with the budget for mental 

health services for our troops and veterans? 

Mr. ENGLAND. There was an addition of $900 million which has 

being used now for both mental health and for TBI. And there is 

a group under way under the Chairmanship of myself and Gordon 

Mansfield who is the Deputy of Veterans’ Affairs. So there is a 

group looking at this and we will be making recommendations in 

this area before the end of the year. 

Mr. SCOTT. Thank you. In response to the question from the 

Ranking Member, you didn’t answer because of security concerns 

about the vehicles and whether or not they are have certain capabilities. Has Congress provided enough funding to make sure that 

these vehicles are in fact the state of the art? There are a lot of 

published reports that suggest that if we had had better equipment 

early on that some of the troops might not have died. 

Have we—has Congress provided enough money to get the state 

of the art vehicles? 

Mr. ENGLAND. I would say that Congress has been very responsive to our request, Mr. Scott. And again more broadly I would 

rather talk to you off line in terms of what those capabilities are. 

But I can say this: the Congress has been very responsive to our 

request for special vehicles for our troops in Iraq and Afghanistan. 

Mr. SCOTT. Okay. And I guess finally I wanted to question on the 

surge. We are seeing charts that plot out what it would cost if the 

surge last 24 months, or if lasts four months. What was the estimate when we started the surge of how long the surge would last? 

Mr. ENGLAND. Again, we cost it. I am not sure we knew how long 

it would last, but we cost it until the end of this fiscal year. So at 

the beginning of the surge we costed the surge until the end of this 

fiscal year. And I don’t recall there was a discussion of how long 

it would last. I just know there was a discussion of how much we 

would fund. 

Mr. SCOTT. Is it unrealistic to think that we could in the foreseeable future, that is within ten years, get under 75,000 troops? 

Mr. ENGLAND. Mr. Scott, again I don’t know. It depends on what 

everybody’s assumptions are. So if that is again, I think we need 

to wait until, you know, an assessment is made in terms of going 

forward in Iraq. 

Mr. SCOTT. If we surge as far as 24—keep the surge numbers the 

deployment numbers up to where they are for 24 months, Senator 

Webb has a bill to limit the troop deployment to a reasonable 

length and frequency. What would a 24 month surge do in terms 

of troop deployment to an individual troop in terms of length of deployment and frequency of deployment? 

45

Mr. ENGLAND. General, do you know? 

[The information follows:]

The Secretary of Defense’s current policy is that active Army forces will deploy 

according to a 15:12 deployment-to-dwell ratio. That is, active Army forces will deploy to USCENTCOM for no longer than 15 months and will spend no less than 

12 months at home before deploying again. As such, our current deployment and 

rotational plans for active Army forces deployed to USCENTCOM are at or below 

a 1:1 deployment-to-dwell ratio. If the current USCENTCOM surge was to last for 

a total of 24 months, and assuming there are no other changes in global requirements, the deployment-to-dwell ratio for forces deployed to USCENTCOM will continue to decrease. Our forces will deploy for longer and/or deploy more frequently 

(thereby reducing dwell). It is difficult to provide the exact ratios without an indepth study of different options to satisfy a particular scenario. As always, the intent would be to balance readiness and the increased stress on the force, to ensure 

our forces always remain ready and capable of fighting, and winning our Nation’s 

wars.

General SATTLER. Sir, we will have to take that also to question 

and respond to you. To take a look at what continuing surge for 

24 months would mean as far as dwell time, deployed time for the 

forces. We will have to take that on, sir. 

Mr. ENGLAND. Yes, we will. We will respond to the record, sir. 

Chairman SPRATT. We will have to call that a morning. Thank 

you very much for your forthright testimony. We appreciate you 

coming here once again and your cooperation with us. 

The questions for the record that were asked. To Mr. Etheridge, 

you had one question you want to ask? 

Mr. ETHERIDGE. Just permission, Mr. Chairman. 

Chairman SPRATT. Go ahead. One more. 

Mr. ETHERIDGE. For those of us who didn’t get to ask question 

to send written request to the Secretary for him to respond? 

Mr. ENGLAND. Absolutely. Yes, sir. If you will send them, we will 

try to promptly respond. 

Mr. ETHERIDGE. Thank you, Mr. Chairman. 

Chairman SPRATT. Thank you very much. And we very much appreciate it. And to our second panel, we have got one vote followed 

by two votes and we will be back as quickly as we possibly can. 

We very much appreciate you forbearance. 

Mr. ENGLAND. Mr. Chairman, thank you very much. 

Chairman SPRATT. The Committee stands in recess until pending 

the three votes that are now occurring on the House floor. 

[Recess.] 

Chairman SPRATT. We come now to our second panel which consists of Dr. Robert Sunshine, who is the Assistant Director for 

Budget and Analysis at CBO; Stuart Bowen who is the Special Inspector General and Senior Transition Advisor, State Department; 

the Honorable Joseph Saloom who is the Ambassador of the United 

States and also his is the Senior Transition Advisor, U.S. Department of State. Of course Stuart Bowen is the IG at the Pentagon 

or State? Which? Both? Okay. And the Honorable John A. 

Gastright, Jr., who is the Deputy Assistant Secretary for South and 

Central Asian Affairs in the Department of State. 

Please bear with me with this cold. Yesterday I couldn’t hear. 

Today I can’t talk. I am—we are delighted to have all of you and 

we look forward to your testimony. And as with all witnesses we 

will make yours part of the record, your testimony, your written 

testimony so that you can summarize it as you see fit. 

46

And we will start with Dr. Sunshine. 

STATEMENTS OF ROBERT SUNSHINE, ASSISTANT DIRECTOR 

FOR BUDGET ANALYSIS, CONGRESSIONAL BUDGET OFFICE; 

STUART BOWEN, JR., SPECIAL INSPECTOR FOR IRAQ RECONSTRUCTION; HONORABLE JOSEPH SALOOM, AMBASSADOR OF THE UNITED STATES AND SENIOR TRANSITION 

ADVISOR, U.S. DEPARTMENT OF STATE; HONORABLE JOHN 

A. GASTRIGHT, JR., DEPUTY ASSISTANT SECRETARY FOR 

SOUTH AND CENTRAL ASIA AFFAIRS, U.S. DEPARTMENT OF 

STATE 

STATEMENT OF ROBERT SUNSHINE 

Mr. SUNSHINE. Thank you, Mr. Chairman. Mr. Chairman and 

Congressman Ryan, I appreciate the opportunity to appear before 

you today to discuss the cost of the U.S. operations in Iraq and Afghanistan and the war on terrorism. My testimony will address 

three questions. First, how mush is the U.S. spending on these operations and activities 

Mr. RYAN. Can you pull the mic closer? 

Mr. SUNSHINE. It is on? Yeah. Okay. First, how much is the U.S. 

spending on these operations and activities related to them. Second, what might be the cost of the recent increase in the number 

of troops deployed to the Iraq theater. And third, looking out over 

the next ten years, what might be the budgetary impact of U.S. operations in the war on terrorism under several different assumptions. 

First, the big picture. CBO estimates that since September 2001 the Congress has appropriated $602 billion for military operations 

and other activities related to the war on terrorism. In addition, we 

estimate that the Department of Veterans’ Affairs has spent another two billion for war- related care and benefits, bringing total 

funding to date to about $604 billion. That figure differs only 

slightly from a CRS figure of $610 billion. There are a number of 

judgements that both agencies have to make in doing this calculation and we differ only a little in how we make those judgements. 

Specific appropriations which average $93 billion a year from 

2003 to 2005 have now risen to $120 billion in 2006 and $170 billion in 2007. Most of the appropriations about $563 billion have 

been allocated for military operations and other defense related activities including funding for Afghan and Iraqi security forces. The 

Defense Department’s 2007 appropriation for these purposes, $165 

billion accounts for more than a quarter of its budget for the year. 

The Department has reported obligations for fiscal year 2007 that 

average almost $11 billion a month for expenses related to its operations in Iraq and Afghanistan and for other activities related to 

the war on terrorism. 

Most of that sum, more than $9 billion a month is related to operations in Iraq. We estimate that in fiscal year 2007 the U.S. will 

spend about $120 billion for its operations in Iraq and elsewhere 

in the war on terrorism. These figures include cost for the State 

Department and intelligence agencies. That means that we are now 

spending on these activities more than ten percent of all the government’s annually appropriated funds. 

47

As for the recent increase in force levels, last year the Defense 

Department announced plans to deploy 15 army brigades and marine regiments in the Iraq theater. Comparing current force levels 

to what we thought we would have anticipated under those plans, 

CBO estimates that an additional 30 to 40,000 personnel from the 

four military services have been deployed on the ground in the Iraq 

theater. If that increase is sustained for four months, we estimate 

that added costs will come to about ten billion dollars. If it remains 

in place for a year, those additional costs will reach $22 billion. 

Looking farther out, CBO has projected costs through 2017 for all 

activities associated with operations in Iraq, Afghanistan, and the 

war on terrorism on the basis of two long term scenarios requested 

by the Chairman. 

One assumes that the number of deployed troops declines to 

30,000 by 2010 and remains at that level for several years. That 

scenario produces out year costs of about $30 billion a year. The 

other assumes a higher long term commitment of 75,000 troops. 

That scenario results in out year costs of around $65 billion to $70 

billion a year. Those costs are shown in tables five, six, and seven 

in my prepared statement 

Because detailed operational statistics are not available, and because the nature of wartime operations is difficult to predict in any 

event, these estimates are rough approximations based on current 

funding and force levels. Costs in the next few years would be higher, how much higher would depend on the duration of the recent 

increase in force levels and the rapidity with which troops are 

withdrawn. Under the scenarios we assessed funding required for 

fiscal year 2008 might be in the range of $140 billion to $170 billion dollars. For 2009 the range is much bigger, from about $90 billion to $170 billion. 

Than concludes my statement, Mr. Chairman. And I would be 

happy to answer any questions. 

[The prepared statement of Robert Sunshine follows:]

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Chairman SPRATT. Thank you very much, Mr. Sunshine. Now 

Ambassador Bowen. 

STATEMENT OF STUART W. BOWEN 

Mr. BOWEN. Thank you, Chairman Spratt, Ranking Member 

Ryan, members of the Committee on the Budget. Thank you for inviting me today to address you. Well I am very appreciative of that 


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and because I had the opportunity always to work closely with Ambassadors in Iraq so. Thank you. 

That is right. I report to Secretary Rice and Secretary Gates. 

Chairman SPRATT. Thank you very much and you may proceed 

with your statement. 

Mr. BOWEN. Thank you very much. Thank you for asking me to 

address the Committee on the cost of military operations and reconstruction in Iraq and Afghanistan. The Office of the Special Inspector General for Iraq Reconstruction was created in January of 

2004 initially as the coalition provisional authority Inspector General. In October of that year the Congress created SIGIR. We have 

oversight now of about $32 billion in reconstruction funds. Thirtytwo of the 44 that have been appropriated to date by Congress. 

Yesterday we released our 14 quarterly report and this report 

contains detailed reviews of eight new audits, five new on the 

ground inspections, updates on our many investigations and a sector by sector review of how taxpayer money has been allocated and 

spent for Iraq reconstruction to the four major funds that Congress 

created. I leave this week for my 17 trip to Iraq to oversee the continuing work of the 30 auditors, inspectors, and investigators that 

are carrying our mission today in Baghdad. 

The title of this hearing asks what the cost of Iraq reconstruction 

have been. SIGIRs newest quarterly report helps answer that question. The United States Congress has appropriated approximately 

$44 and a half billion for the relief and reconstruction of Iraq, including around $21 billion through the Iraq Relief and Reconstruction Fund; $14 billion through Iraq Security Forces Fund; $3.1 billion through the Economic Support Fund; and two and a half billion through the Commanders Emergency Response Program. 

About 90 percent of the IRRF is spent. Sixty-one percent of the 

ISSF is spent and half of the CERP and the ESF that has been appropriated to date has been spent. 

My office has oversight of about 70 percent of these funds. Our 

audits and inspections and investigations have numerous 

incidences of waste and some egregious examples of fraud as evidenced just last week three new arrests were made in a case that 

SIGIR is a joint task force participant on. And we continue to move 

forward on 57 fraud cases. But waste is really the challenging issue 

in Iraq reconstruction. It is no surprise that our audits have uncovered incidences of waste, that is my job. 

Part of our mission is to root out waste and abuse and we do that 

through real time auditing. And what that means is working with 

management to inform them about what we find in the course of 

our audits so that the corrections are made along the way. And 

Ambassador Saloom worked extraordinarily well with my office in 

the year that he was director of the Iraq Reconstruction Management Office in responding and making meaningful, positive 

changes in the mission. And so I commend him to the Committee 

for his excellent coordination on this effort. 

The task order 130 audit that we just released, Ambassador 

Saloom worked closely with us on and it looked at how KBR supported the mission through food, fuel and shelter. And along the 

way a number of significant deficiencies were found, almost all of 

them were fixed before the audit was released three weeks ago. 

65

Along with our real time auditing, we are also engaged in an ambitious focused forensic audit endeavor and that is looking at the 

largest contracts for Iraq reconstruction pursuant to the Congress’ 

mandate to SIGIR and the Iraq Reconstruction Accountability Act 

of 2006 to carry out forensic auditing. The first one is our in this 

quarterly report. It is of Bechtel and it has some interesting and 

revealing statistics about how that contract was carried out. We 

are also next up dealing with Parson’s, Blackwater, KBR are all 

underway and announced. 

Asset transfer another important audit this quarter highlights 

the fact that the asset transfer process that had been worked out 

with the Iraqi government has been off the rails for about a year 

and other means have had to be used to transfer projects such as 

local transfer or unilateral transfer. That raises grave questions 

about the sustainability of what the U.S. has constructed in Iraq. 

The Provincial Reconstruction Team Program audit in this quarterly is a piece of good news. Real progress has been made since 

our report of last October on security, resources, and staffing front. 

And the 15 new PRTs are being staffed and a number of the embedded PRTs are operational and we will have a report out in September on the ethicacy of that endeavor. 

As I said, sustainment, that is ensuring that what the United 

States has provided Iraq continues to be operated and maintained 

is a continuing issue for our office and we carry out inspections 

looking at projects that have been handed over to the Iraqis at 

least a year and in this latest report the Al Doura power generation plant, the most important power plant for Baghdad is not 

working as revealed by our visit in June. Indeed it hasn’t worked 

for most of this year. Ninety million dollars invested to get two 

units going, only one was ever started and that was in April of 

2004. It was turned over the Iraqis and they it burned out the unit. 

And the Corps of Engineers has taken it over and we will have 

both restarted next week. In fact, one just started up the last couple of days and about 30 megs are flowing into the city. When both 

are up it will add seven and a half percent to the grid in power 

generated. 

You also asked for improvements that SIGIR has helped effect in 

the course of our oversight, and much has been done as I pointed 

out by in the responsiveness of management to help apply many 

of our findings. For example, the definitization problem that we uncovered over a year ago and that is getting control over cost and 

cost plus contracts and it was virtually ignored. It had been virtually ignored. As a result of the audit the control over cost within 

those contract is beginning to be managed better. Certainly better 

than before. 

Two years ago during my trip to—one of my trips to Baghdad, 

I discovered the award fee process for cost plus contracts of, you 

know, a very significant financial issue because there is a guarantee three percent plus of another possibility of 12 percent in each 

of these cost plus contracts. There were no criteria for those award 

fees. And as soon as we kicked off our audit, criteria were developed, files were developed, and that process was finally managed 

appropriately saving millions in taxpayer dollars. 

66

Our audits of the construction—reconstruction database prompted coordination and develop of a meaningful database that kept 

track of reconstruction projects. Something that wasn’t the case 

when our audit began. And our three lessons learned reports to 

date have effectuated real change. One on human capital management promoted the civilian reserve corp concept which is taking 

hold and I think an important structural reform necessary to for 

future contingency operations. 

The contracting lessons learned report has produced some pending legislation from Senator Collins called the Accountability in 

Government Contracting, that is going to address this cost plus 

contract problem that we have continually focused on. And our 

most recent lessons learned report on program and project management emphasis the need for real reform of post conflict contingency 

relief and reconstruction operations. That is structural reform that 

I believe the Congress should provide for the agencies. 

Our investigations continue. We coordinate well on a number of 

task forces with other IG’s and the FBI. And I have six investigators on the ground today and 14 working here in D.C. and I expect 

in the course of the year we are going to make some real progress 

and have some more news to report to you in due course. 

So with that I appreciate your time and look forward to answering your questions. 

[The prepared statement of Stuart W. Bowen follows:]

PREPARED STATEMENT OF STUART W. BOWEN, JR., SPECIAL INSPECTOR GENERAL FOR

IRAQ RECONSTRUCTION

Chairman Spratt, Ranking Member Ryan, and members of the Committee on the 

Budget, thank you for inviting me to appear before you today to address ‘‘The Costs 

of Military Operations and Reconstruction in Iraq and Afghanistan.’’

The Office of the Special Inspector General for Iraq Reconstruction was created 

in January 2004, and is responsible for conducting the independent and objective 

oversight of more than $31.8 billion in funds appropriated under the Iraq Relief and 

Reconstruction Fund and certain other appropriations. 

Yesterday we released our 14th Quarterly Report to the Congress. This Report 

contains detailed reviews of SIGIR’s eight new audits, five new on-the-ground inspections, updates on SIGIR’s investigative work (which includes two recent 

sentencings and three recent arrests for fraud), and a sector by sector recounting 

of how taxpayer money has been allocated and spent for Iraq’s reconstruction 

through four major funds created by the Congress. 

Over the past three years, SIGIR has produced 94 audits, nearly 100 on-theground inspections, opened over 300 investigations, released 3 ‘‘lessons learned’’ reports, and obtained savings, recoveries and restitution orders from audits and investigations amounting to over $70 million. I am proud of the achievements of SIGIR’s 

auditors, inspectors, and investigators: 30 of them are working today in Iraq to 

carry out the oversight mission assigned by the Congress. I must note that their 

work has become more challenging over the past three months as attacks upon the 

Green Zone have markedly increased. Later this week, I will leave on my 17th trip 

to Iraq to support my team’s efforts in Baghdad and across Iraq. 

The title of this hearing asks what the costs of Iraq’s reconstruction have been. 

That is a question that can be answered on several levels. SIGIR’s newest quarterly 

report helps provide those answers on a financial level. 

The United States Congress has appropriated approximately $44.5 billion for the 

relief and reconstruction of Iraq. That includes: around $21 billion appropriated in 

2003 to the Iraq Relief and Reconstruction Fund (IIRF); around $14 billion appropriated to the Iraq Security Forces Fund (ISSF) since mid-2005; $3.1 billion appropriated to the Economic Support Fund (ESF) since early 2006; $2.5 billion appropriated to the Commander’s Emergency Response Program (CERP) over the past 

three years; and approximately $4 billion appropriated to 26 smaller accounts. Approximately 90 percent of the IRRF is spent, around 61 percent of the ISSF is spent, 

67

and around half of CERP and half of ESF appropriated to date has been spent. 

SIGIR has oversight of around 70 percent of these appropriations. Pledges of international support amount to approximately $18 billion in loans, grants and debt reductions, but, to date, just under $4 billion of this amount has 

been used in Iraq. Our new quarterly report also notes that around $36 billion in 

Iraqi funds have been used for relief and reconstruction purposes since 2003. In 

total, almost $100 billion has been allocated for Iraq’s recovery from varying 

sources. SIGIR’s audits and inspections have uncovered numerous instances of waste and 

inefficiency in the program; but we also have inspected many projects that have met 

contract expectations. 

The reasons for the shortfalls we have found vary greatly. This quarter’s reporting 

uncovered problems in sustainment at the Al Doura power plant south of Baghdad. 

The benefit of the $90 million dollar investment in this project, which is so critical 

to providing power to Baghdad, has not been realized because of weak operations 

and maintenance practices by the Iraqis after the project was turned over in April 

2006. Specifically, only one of the Al Doura units was brought on line, and it failed 

in late 2006 because of deleterious operational practices. The US Army Corps of Engineers is now repairing both units and expects to have them back on-line in August. Once up and fully running, Al Doura will provide 320 megawatts to the electric grid, adding 7.5 % to the current generated nationwide output and increasing 

greatly the hours of power available per day to Baghdad. 

As happened at Al Doura, waste can occur because of poor operations and maintenance, whether in planning or execution. Waste also can occur due to weak oversight (see SIGIR’s audit of the Primary Health Clinics program) or poor quality control (see SIGIR’s inspection of the Baghdad Police College) or both (see this quarter’s 

audit of KBR’s support to the Embassy). ‘‘Waste’’ can also arise due to delays created by security problems. In any event, waste increases the cost of investment to 

help rebuild Iraq. 

Part of SIGIR’s mission is to root out waste, and we have accomplished that in 

a number of instances through our ‘‘real time’’ auditing approach. Real time auditing means keeping management informed during audits so that changes can be 

made to correct accountability and control weaknesses before the audit is released. 

The Task Order 130 audit this quarter is a perfect example of how this approach 

is applied. SIGIR auditors found a number of problems in KBR’s management of the 

provision of food, fuel, and shelter to the Embassy in the Green Zone. As the problems, were uncovered, management and KBR corrected them such that, by the time 

the audit was published on June 22, almost of the problems were remediated. 

SIGIR’s real time auditing is complemented by larger-scale contract audits that 

look to answer the question ‘‘where did the money go and what did we get for it.’’ 

SIGIR will accomplish this mission by carrying out a series of focused financial audits of the largest contracts in Iraq reconstruction This audit program will meet the 

forensic audit requirement of the Iraq Accountability Act of 2006. 

FOCUSED FORENSIC AUDITS

SIGIR completed this quarter the first in its planned series of focused financial 

reviews of large contractors funded by the Iraq Relief and Reconstruction Fund 

(IRRF). SIGIR reviewed the spending of Bechtel National Inc. under its Phase II 

IRRF contract. Bechtel was the largest IRRF contractor. 

The audit, which reviewed Bechtel’s work under a $1.33 billion contract with 

USAID, is emblematic of the challenges faced in Iraq reconstruction. Bechtel succeeded in meeting original contract scope requirements in about half of the contract’s 24 task orders. 

Among the findings, SIGIR found: 

• The shortage of government contracting staff resulted in a lax oversight in the 

validation of performance. 

• Approximately half of the job orders did not meet their original stated objectives. 

SIGIR’s audit illustrated both the successes of some task order projects and how 

some projects were descoped, cancelled, ran over their budgets, or were severely delayed. Among the items of concern uncovered by the audit was a government decision to pay Bechtel invoices within 10 days of receipt, with just two staff members 

assigned to the review process. 

ASSET TRANSFER

SIGIR has closely followed the asset transfer process in Iraq—that is, how U.S. 

agencies are turning over completed projects to Iraqi officials, both at the national 

68

and on the local levels. SIGIR has conducted four audits on various aspects of this 

important process. 

This latest audit discovered that the Government of Iraq (GOI) has not formally 

accepted a single project since July 2006. Local Iraqi officials are accepting projects, 

but the national government has not. Completed projects that are not transferred 

also represent potential ongoing sustainment expenses for the U.S. 

Typically, asset transfer between nations is managed under bilateral agreements. 

Thus, SIGIR recommended that the U.S. Ambassador to Iraq provide senior-level 

support to finalize a bilateral agreement between the United States and Iraq on 

asset transfer to the GOI. SIGIR believes that asset transfer to the GOI is best accomplished through a single U.S. government process, rather than by each implementing agency independently negotiating its own agreement. 

PROVINCIAL RECONSTRUCTION TEAMS

The United States is placing additional emphasis on the use of Provincial Reconstruction Teams (PRTs), which are civil-military teams designed to build capacity 

in local governance across Iraq through direct assistance to and training of provincial government personnel. As of June 2007, the United States has provided $1.934 

billion to support the Iraq PRT Program, and DoD has requested $937 million in 

additional funding for FY 2008. 

This quarter, SIGIR issued the second of three audits on the PRTs, which showed 

that the PRT program has made great strides overcoming problems with civil-military integration, operational support issues, and resource and staffing shortfalls. 

However, SIGIR continues to recommend that planners further define the objectives 

and develop a monitoring system to measure the performance of the PRT program, 

including clearly defined objectives and performance measures and milestones. 

SUSTAINMENT

For over 18 months, SIGIR has been raising concerns about the process for sustaining U.S.-funded infrastructure and systems after they have been turned over to 

the GOI. Last year, SIGIR instituted a regime of inspections to review sustainment 

of projects already turned over to Iraq. In the last two Quarterly Reports, SIGIR 

observed only limited progress in this regard. The Al Doura report issued this quarter was the most serious sustainment shortfall uncovered to date. 

SIGIR’s assessments this quarter suggest that some improvement has been made, 

but we note that efforts need to be more effective: • In 3 of the 4 sustainment assessments SIGIR inspectors made this quarter, 

sustainment problems were identified, posing threats to the condition and durability 

of the facilities, and the health and safety of those who worked and lived in the facilities. • In one other sustainment review, SIGIR found that sustainment was being 

properly addressed and the project should continue to remain functional. 

A larger challenge to sustainment practices is likely to occur when the bulk of 

U.S.-funded projects are transferred to the GOI. The program and fiscal planning 

required by the GOI to successfully meet this sustainment challenge reminds us of 

the importance of a well-defined asset transfer process. 

IMPROVEMENTS

The Committee has asked about improvements that agencies are making with respect to their Iraq reconstruction practices. Of note, agency management has been 

receptive to virtually all of SIGIR’s recommendations, whether from our audits and 

inspections or our lessons learned reports. My co-panelist today, Ambassador Joe 

Saloom, was very responsive to SIGIR’s recommendations during his recently completed year in Iraq as the Director of the Iraq Reconstruction Management Office. 

Much has been done, for example, to repair the contract ‘‘definitization’’ process, 

through which cost-plus contract task orders are defined into a more fixed price 

state. SIGIR audited this definitiatzation requirement in 2006 and found that it was 

not being applied. The agencies agreed with our concerns and our recommendation; 

thus, corrective measures have improved definitization practices in Iraq. 

Two years ago, I learned, during one of my trips to Baghdad, that the award fee 

process for cost plus contracts was not being properly managed. I immediately ordered an audit of the process, and SIGIR’s auditors found no adequate criteria in 

place for the award of very large award fees. The managing agency quickly reformed 

the process so that only performance exceeding expectations is rewarded. This was 

a good example of SIGIR’s real time auditing. 

SIGIR’s multiple audits of the reconstruction database management systems 

eventually prompted the creation of a single project database, based on SIGIR’s recVerDate 0ct 09 2002 12:44 Dec 16, 2007 Jkt 000000 PO 00000 Frm 00072 Fmt 6633 Sfmt 6621 J:\DOCS\HEARINGS\110TH\110-17\38255.TXT HBUD1 PsN: DICK
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ommendations. Our lessons learned report on contracting recommends that this improvement be made part of the permanent planning structure. 

SIGIR’s lessons learned reports have effected a number of improvements. The contracting report helped evolve salutary change within the Joint Contracting Command/Iraq-Afghanistan. Senator Collins (R-ME) has introduced the ‘‘Accountability 

in Government Contracting Act,’’ which would implement needed reform into the 

area of cost-plus contracting practices consistent with recommendations in the contracting lessons learned report. SIGIR’s contracting report also prompted OMB’s Office of Federal Procurement to adopt SIGIR’s contingency contracting recommendations in its recently published contracting guidance. 

Personnel practices in Iraq also changed after SIGIR’s lessons learned report on 

human capital management. Changes included improved management of tour 

lengths and personnel transition. The need for developing a ‘‘civilian reserve corps’’ 

recommended in that report is receiving support in the agencies and from the Congress. Finally, SIGIR’s most recent lessons learned report on program and project 

management contained what I believe is SIGIR’s most important recommendation: 

Congress should reform post-conflict contingency relief and reconstruction planning 

and structure. 

INVESTIGATIONS

SIGIR aggressively pursues all credible allegations it receives of criminal misconduct on the part of government officials or contractors, and we work with other 

investigative agencies and with career prosecutors at the Justice Department to develop and prosecute our cases. SIGIR’s investigative work has resulted in 13 arrests, 

5 convictions, 5 imprisonments, and the recovery or restitution of over $15 million. 

In the past ten days, SIGIR participated in arrests in a significant new bribery case, 

which arose form the work of one of the joint task forces of which SIGIR is a part. 

Corruption within the Iraqi government is a serious problem that we refer to it 

as ‘‘the second insurgency.’’ SIGIR’s review of anticorruption support to Iraq found 

areas still in need of improvement. A recent reorganization of United States efforts 

followed SIGIR’s recommendations and will help make progress in this important 

area. 

SIGIR PLANNING

During the next reporting quarters, SIGIR will, among many other things, continue its focused financial reviews of large contractors, report on the results of the 

Provincial Reconstruction Team Program, assess and inspect Commanders’ Emergency Response Program projects, and open up audits on large Iraq Security Force 

Fund contracts. In addition, we will continue to work aggressively on our many investigations of alleged criminality in the reconstruction program. In pursuing each 

of these missions, SIGIR continues to rely on and appreciate the support we receive 

from the Congress and the Departments of State and Defense. 

Mr. Chairman, members of the Committee, thank you for your time and attention 

to these important matters, and I look forward to answering your questions.

Chairman SPRATT. Ambassador Saloom. 

STATEMENT OF JOSEPH SALOOM 

Mr. SALOOM. Thank you very much, Mr. Chairman. It is a pleasure for me to testify before you, Congressman Ryan, and other 

members of the Committee, ladies and gentleman. 

I just got back—I got back from Iraq about two and a half 

months ago where I spent a year as head of the Iraq Reconstruction Management Office. So this is a topic that is near and dear 

to me. Okay. 

So this is a topic of course that is very near and dear to me. I 

did have the chance to discuss this with Congressman Ryan when 

he was in Baghdad and actually we had quite a large number of 

Congressional visitors that we had the chance to discuss this program with. 

Mr. Chairman, your letter inviting me here noted the Committee’s interest in past and projected costs of reconstruction and what 

the departments were doing to identify and curb wasteful spending. 

70

The answer to your first question is that our emphasis has 

moved for building things to building the capacity of the Iraqis to 

channel their own considerable resources to meeting the needs of 

the Iraqi people. If there was one theme that I had in my year 

there that was in every talk it was we are building capacity, not 

things. 

Our efforts with the ministries in Baghdad are complemented by 

giving the provincial reconstruction teams that Mr. Bowen mentioned both the mission and the tools to spur the Iraqis at the provincial level and at the local level to use their resources to make 

visible improvements in the daily lives of Iraqis. What you are, I 

think, most interested in the budget impact of all of this change is 

that our requests for fiscal years 2006, 2007, and 2008 are each in 

order of magnitude smaller than the IRRF, the original IRRF 2003, 

2004 IRRF funds which were $20.9 billion. So the numbers were 

$1.7 billion for 2006; $2.2 billion in 2007 and our request for 2008 

is $1.4 billion. 

I am especially delighted to see Special Inspector General for 

Iraq Stuart Bowen on this panel. I would simply echo what he 

mentioned—our record of working with SIGIR is overwhelmingly 

one of acceptance and implementation of the SIGIR recommendations to improve the management of resources that are entrusted 

to us by you, by Congress. 

The most pressing fiscal challenge preventing Iraq from being 

self reliant in economic affairs is the failure of the Iraqis to execute 

their capital budget. They do very well at spending current doing 

current expenditures, wages, pensions that sort of thing. But it’s 

mobilizing funds for projects that are particularly difficult. The 

bright side of this is that Iraqis have of all political persuasions 

from all regions of the country and at all levels recognize this problem and are moving to address it. 

While our focus is on the way forward, we are also determined 

to manage effectively the remaining funds for Iraq reconstruction. 

As I mentioned, we received $20.9 billion in IRRF I and II. We 

have obligated 98 percent of IRRF II and as of July 17 we have 

disbursed 86 percent. The 90 percent number Stuart used was 

probably IRRF I and II together. 

We expect to complete most ongoing IRRF II projects during the 

course of 2007. But we know that not every project has progressed 

as we would have wished. Some projects have deservedly attracted 

attention, including from Congress and from SIGIR. In such cases 

we have taken action to get them moving in the right direction and 

have moved to put in place management oversight structures to 

help ensure that similar problems do not reoccur. 

We have learned lessons from our experience that have reshaped 

the program to more effectively meet its intended goals. In the 

early stages IRRF managers relied heavily on cost plus design 

build contracts with large U.S. and international firms. Experience 

has taught us as the situation evolved that it is often much more 

economical to move to firm fix priced contracts with other Iraqi 

companies or companies from the region and we have moved to do 

that. 

71

To conclude, Iraq has a significant capital budget that it must 

mobilize to spend on needed facilities. We have designed our assistance to foster that mobilization but not to substitute for it. 

Thank you very much. I look forward to your questions and to 

your ideas. 

[The prepared statement of Joseph Saloom follows:]

PREPARED STATEMENT OF HON. JOSEPH SALOOM, AMBASSADOR OF THE UNITED

STATES AND SENIOR TRANSITION ADVISOR, U.S. DEPARTMENT OF STATE

Mr. Chairman, Mr. Ryan, members of the Committee, ladies and gentlemen: It 

is a pleasure for me to appear before you today to discuss reconstruction in Iraq. 

I returned two and a half months ago from a year as Director of the Iraq Reconstruction Management Office where I worked on these issues on a daily basis and 

had the chance to brief some of you on these issues during your trips to Baghdad. 

The Chairman’s letter inviting me noted the Committee’s interest in past and projected costs of reconstruction and what Departments were doing to identify and curb 

wasteful spending. The answer to the first question is that our emphasis has moved 

from building things to building the capacity of the Iraqi government to channel its 

considerable resources to meet the urgent needs of the Iraqi people in a transparent 

and accountable manner. We expect the Iraqis, not the U.S. taxpayer to pay for fixing the Iraqi economy, building on generous U.S. reconstruction assistance which we 

provided during the reconstruction phase of our assistance program to Iraq under 

the IRRF. As this phase winds down, we are focusing on building Iraqi capacity 

though the investment of a much smaller amount of U.S. funds to help Iraqi authorities to mobilize and channel their own resources to meet the needs of the Iraqi 

people. 

The budget impact of this shift in focus is that our requests for FYs 2006, 2007 

and 2008 each are an order of magnitude smaller than the IRRF funding. The Congress made available $1.7 billion in FY 2006, $2.2 billion in FY 2007 and our request for FY 2008 is $1.4 billion. 

On the question of wasteful spending, I am delighted to see Special Inspector 

General Stuart Bowen on this panel. The Department of State works closely with 

SIGIR and is constantly exploring ways to improve monitoring of projects to minimize waste. The record of our working with SIGIR is overwhelmingly one of acceptance and implementation of SIGIR recommendations to improve management of the 

resources entrusted to us by Congress. 

CHANGING FOCUS

As part of the President’s New Way Forward announced in January, the focus of 

our assistance effort in Iraq is changing. As Iraqis increasingly take the lead we 

have shifted our focus from large infrastructure projects to capacity development 

and technical assistance programs that will increase the ability of the Iraqis to better plan and execute their capital budget, increase production of essential services 

in vital areas such as electricity and water, and improve governance at the national 

and provincial levels. 

To meet these objectives, we continue to boost our capacity building effort with 

the central government in Baghdad and are extending and expanding our reach beyond the Green Zone to help local communities and leaders transition to self-sufficiency. At the center of this latter effort is the expansion of the Provincial Reconstruction Teams (PRTs). 

CURBING WASTE

One of the issues I had to grapple with in deciding whether or not to take on the 

challenge of the IRMO position were the questions that have been raised regarding 

allegations of waste and abuse of Iraq Relief and Reconstruction Fund (IRRF) monies appropriated by Congress. Secretary Rice has emphasized in testimony her complete commitment to transparency and accountability. She meets regularly with the 

Special Inspector General for Iraq Reconstruction (SIGIR) Stuart Bowen. The State 

Department and our implementing agency partners also work closely with SIGIR to 

support the latter’s program review of our assistance. I met frequently with Mr. 

Bowen during his trips to Baghdad. When he found deficiencies, my goal was to 

have his reports read ‘‘SIGIR found this problem and it either has been or is in the 

process of being fixed.’’

72

CIVIL MILITARY COMMON EFFORT

The President has reinforced our own troop levels in the Baghdad area and in 

Anbar Province. Also, these troops are doing things differently. The mission of this 

enhanced force is to augment the efforts of Iraqi troops and commanders to lead in 

the clearing and security of neighborhoods, protect the local population, provide essential services, and create conditions necessary to spur political reconciliation and 

economic development. The State Department is contributing robustly to this effort 

by expanding our presence—including by embedding our staff with military units—

and closely coordinating with our military counterparts in and outside of Baghdad, 

as well as with the Iraqi government. Congress has provided additional budgetary 

resources for assistance programs designed to capitalize on security improvements 

by creating jobs and promoting economic revitalization. There must be the fullest 

possible civilian-military unity of effort if we are to be successful. In this vein I 

would like to underscore that hardly a day went by during my time in Baghdad 

when I did not hear or use the expression ‘‘One Team, One Mission’’ to describe the 

partnership between military and civilian elements. This ethos is also strong between Divisions and Brigade Combat Teams on the military side and the PRTs. I 

visited all ten of the PRTs that existed throughout Iraq at the time that I was there 

and found remarkable civil/military unity of purpose and team spirit. The fact that 

DOD has requested additional PRTs is the best indicator of the value our military 

colleagues place in this partnership. 

To further reinforce this civil/military effort, we are deploying greater resources 

alongside our military in Baghdad, Anbar Province and North Babil. The centerpiece of this effort is the expansion of our Provincial Reconstruction Teams. We have 

doubled the number of PRTs from 10 to 20 and are adding anther four in the coming months. We are adding more than 300 new personnel to the existing personnel 

already on the ground. The first phase of PRT expansion is complete, as the ten new 

interagency PRT core teams (40 personnel in total) arrived in Iraq in March. The 

new PRTs—six in Baghdad, three in Anbar and one in north Babil—are embedded 

in Brigade Combat Teams engaged in security operations. To demonstrate our unity 

of effort, on February 22 the State Department and the Defense Department signed 

a Memorandum of Agreement to codify this joint civilian-military effort. 

The State Department has assigned ten senior-level Team Leaders for these new 

PRTs. Each Team Leader is joined by a senior USAID development advisor, as well 

as a civil affairs officer and bilingual, bicultural advisor from the Department of Defense, to form core teams. These core teams completed the first specialized interagency PRT training course at the Foreign Service Institute, designed to prepare 

them for their new mission. PRT leaders worked jointly with Brigade Commanders 

to develop plans for the ‘‘build’’ phase of clear, secure, and build. 

PRTs target both civilian and military resources, including foreign assistance and 

the Commanders’ Emergency Response Program, against a common strategic plan 

to sustain stability, promote economic growth, advance our counter-insurgency efforts and foster Iraqi self-sufficiency where we have made security gains. In the 

next phases of our PRT expansion, we will augment the ten new PRTs and our existing PRTs with specialized technical personnel and add four more PRTs. Based 

upon ground-up evaluations, we are recruiting (among others) city planners, rule of 

law experts, and agribusiness development experts to meet provincial and local 

needs. 

PRTs use targeted assistance designed to develop provincial capacity to govern in 

an effective and sustainable way. PRTs will continue to play a leading role in coordinating U.S. programs funded by the Congress, including Iraqi Provincial Reconstruction Development Councils (PRDC) and USAID‘s local governance, community 

stabilization, and community action programs. 

IRAQI EFFORTS

Iraqis understand that they are in the lead and the Iraqi government is dedicated 

to doing its part to invest in its own economic development. The Government of Iraq 

is committed to spending $10 billion for capital projects. At a conference co-hosted 

by U.N. Secretary General Ban Ki-Moon, on May 3, Iraq committed to implement 

the comprehensive economic reform programs laid out in the International Compact 

with Iraq. On July 20 at the U.N. in New York, Iraq reported that it is making tangible progress toward meeting more than two-thirds of its International Compact 

goals and benchmarks. 

The most pressing fiscal challenge preventing Iraq from being self-reliant in economic affairs is the failure of Iraqis to execute their capital budget. The Government 

of Iraq has available financial resources from oil revenues. They do not, however, 

uniformly have the capacity to execute this funding—especially when money must 

73

move rapidly, as is the case with post-military-action stabilization in Baghdad and 

Anbar Province. Iraq must develop the means to put its money to use, both for 

short-term ‘‘build’’ efforts and longer-term capital investment. 

The Iraqis have responded by designating budget execution as a high priority in 

2007, and, to this end, the GOI has formed a budget execution taskforce led by Deputy Prime Minister Barham Salih, Finance Minister Bayan Jabr and Planning Minister Ali Baban. In coordination first with Ambassador Carney and now with Ambassador Ries, the joint taskforce held a conference for spending ministries and 

provinces to introduce new budget regulations and to dispel concerns about corruption allegations that stymied Iraqi spending in 2006. The Iraqi Ministry of Finance 

also has released 25 percent of the 2007 capital budget to ministries and16 percent 

to provinces and created incentives for ministries to execute their capital budgets 

or risk losing the funds. Ministries have committed nearly 25 percent of their funds 

to contracts, and provinces have committed 42 percent. Several ministries have 

demonstrated sufficient progress in allocating and spending their 2007 budget that 

the Ministry of Finance has released the second tranche of their budget funds, including the Ministries of Municipalities, Public Works and Electricity. 

The PRTs are working closely with their provincial governments both to boost the 

capacity of provincial and local officials to execute their budgets but also to enhance 

communication and cooperation between provincial and central government entities. 

One of the most successful initiatives between the PRTs in the northern part of the 

country and Multinational Division North is a program that brings delegations of 

provincial officials to Baghdad to meet regularly with key central government officials whose cooperation is needed to move projects forward. Deputy Prime Minister 

Barham Salih plays a pivotal role in arranging the appropriate appointments for 

these provincial officials and this combined effort has removed many of the roadblocks to provincial spending. We remain cautiously optimistic that their resolve 

combined with our support will result in better budget execution in 2007. 

SUPPORTING PHYSICAL INFRASTRUCTURE AND DEMOCRACY WITH THE IRAQ RELIEF AND

RECONSTRUCTION FUND (IRRF)

While our focus is on the way forward, we are also determined to manage effectively the remaining funds for Iraq reconstruction. In Fiscal years 2003-4, we received $20.9 billion in the Iraq Relief and Reconstruction Fund (IRRF). This funding 

was intended to kick start the Iraqi economy and focused primarily on helping to 

re-establish the Iraqi security forces and police; restore essential services like water, 

electricity and oil; and improve health and education. Despite challenges, including 

insurgent attacks, IRRF projects have made significant improvements in Iraq. We 

have added capacity to provide clean water for up to 5.9 million Iraqis and capacity 

to provide sewerage for 5.2 million; added or rehabilitated more than 2,500 MW of 

generating capacity and helped to keep an additional 2,200 MW operating through 

preventive maintenance; and helped Iraq maintain oil production at relatively 

steady levels despite deteriorating security conditions. Democracy programs also 

helped Iraq hold three elections and provided advisers to support the drafting of the 

constitution. 

IRRF was never designed to completely rebuild Iraq’s degraded infrastructure. 

The 2003 UN/World Bank estimate of medium term reconstruction needs amounted 

to $56 billion based on certain assumptions about the security situation: an estimate 

today would certainly be higher. 

We have obligated 98 percent of IRRF II, and, as of July 17, have disbursed 86%. 

The remaining 2% of IRRF funds ‘‘expired’’ on October 1, 2006 and will be used to 

cover technical adjustments to existing obligations as required under law. We expect 

to complete most ongoing IRRF II projects during the course of 2007. 

But we know that not every project has progressed as we would have wished. 

Some projects have deservedly attracted attention, including from the Congress and 

from SIGIR, with whom we work very closely. In such cases, we have taken action 

to get them moving back in the right direction and have moved to put in place management oversight structures to help ensure that similar problems do not reoccur. 

I want to emphasize the State Department’s strong commitment to oversight of 

the funds Congress has appropriated to us for our efforts in Iraq. We have supported 14 audits by the Government Accountability Office, more than 80 audits and 

reports issued by the SIGIR as well as audits done by the Inspectors General of the 

various implementing agencies. We will continue to work closely with SIGIR, GAO, 

and the Inspectors General to maintain the highest standards of oversight and accountability for all of our operations in Iraq. 

There are numerous studies and reports on the evolution of the IRRF program, 

the various times that it was adjusted and refocused, and why certain approaches 

74

worked better than others. We have learned lessons from our experience and have 

reshaped the program to more effectively meet its intended goals. In early stages, 

IRRF managers relied heavily on ‘‘cost plus design build’’ contracts with large U.S. 

and international firms. The idea was that this was the only way to attract bidders 

capable of mobilizing quickly in the uncertain atmosphere of the early days of Operation Iraqi Freedom. Experience has taught us as the situation evolved that it was 

often more economical to move to firm fixed price contracts with Iraqi and regional 

firms for many projects, especially those that do not require specialized technical expertise. 

ECONOMIC SUPPORT FUNDS: FY 2006 AND 2007

While IRRF was designed to start recovery of Iraq’s severely degraded infrastructure, the focus of subsequent assistance efforts moved progressively away from construction of facilities and more to building capable and transparent Iraqi government structures at the central and provincial levels. Main spending categories for 

FY 2006 and FY 2007 were funds for use by the PRTs and USAID Local Governance 

Project (LGP) to train local and provincial leaders to take on the responsibility of 

governing in a decentralized system rather than taking orders from a central authority in Baghdad. In addition, Congress provided significant funds for the Community Stabilization Program (CSP) and the Community Action Program (CAP). The 

PRDC funds provided the new democratically elected provincial authorities with 

their first funds to program and allocate, teaching them how to use open and transparent procedures and to balance the needs of competing constituent interests. 

These PRDC, LGP, CSP funds all provide funds for near-term, high impact improvements in the lives of citizens after security operations created conditions for such 

projects to succeed. 

Other major spending categories included operations and maintenance for U.S.-

built projects, capacity building at plant level for operations and maintenance as 

well as longer term public administration training, democracy promotion, and support for rule of law, civil society, rural development and economic reform activities. 

The common theme is that we are spending our money to help the Iraqis develop 

the capability to govern themselves in an efficient, transparent and democratic manner, and that we are not rebuilding major facilities for Iraq. The programs that actually involve construction are small, short term, high impact projects that are designed either as a capacity building tool for provincial governments or as civilian 

support to ongoing security operations by demonstrating that cooperating in combating insurgents and militias can bring a better life to citizens. 

LOOKING FORWARD

Iraq has a significant capital budget that it must mobilize to spend on needed facilities. We have designed our assistance to foster that mobilization, not to substitute for it. 

LESSONS LEARNED

Mr. Chairman, your letter noted the Committee’s interest in what the departments are doing to identify and reduce wasteful spending. Beyond my testimony 

above, I would like to pass on some personal views of ‘‘lessons learned’’ for the future post-conflict operations based on my on my time working on reconstruction 

throughout Iraq for the past year. Some of you, including Ranking Member Ryan, 

have heard some of this before from me in Baghdad. Not surprisingly, many of these 

are similar to some of Special Inspector Bowen’s recommendations in his ‘‘lessons 

learned’’ series. 

I would like to stress the importance of ‘‘listening to the client’’ in order to have 

projects meet the priorities of the intended recipients: the key to local buy-in and 

local ‘‘ownership’’ of projects. This can be done relatively quickly for a small, high 

impact project but takes more time and consultation with a broader range of stakeholders for larger infrastructure projects. Special Inspector Bowen has noted the difficulties in the Asset Recognition and Transfer process. There are hosts of complicating factors involved with this process, including frequent changes in Ministers, 

but fundamentally, this process would have been easier if, from the start, the Iraqis 

had had a greater sense that these were projects that they had selected to meet 

their most important needs. 

Use the local firms and workers as much as you can. This builds the local business community, the domestic economy and local employment and is likely to provide best value for money to the taxpayer. It forges a spirit of partnership with the 

local community. This requires a rapid survey of the capability of local firms because there will always be specialized requirements for which the local skill base 

75

is inadequate. I concur with Special Inspector Bowen’s suggestion to pre-compete 

and pre-qualify the specialized contractors that you will need for things local firms 

cannot do so that we can move quickly on items beyond the capacity of local firms. 

Much like in medicine, there is a ‘‘golden hour’’ in post-conflict reconstruction, 

when small, high impact projects can demonstrate in the early stages of an operation our good intentions and show rapid benefits to the population of cooperation 

with us. Authority and funding to furnish a small generator to power local essential 

service providers or other similar items should be part of the toolkit that we should 

be able to deploy quickly in such situations. Every military commander that I 

worked with in Iraq stressed the importance of having a civilian capacity to do this 

as a complement and enhancement to CERP. Preplanned rapid procurement, contracting and grant-making mechanisms are especially important. 

Special Inspector Bowen and I have often discussed the importance of quality assurance and my people in Baghdad were sick of me using the cliche that ‘‘you don’t 

get what you expect, you get what you inspect.’’ My chief of operations in IRMO, 

MG Steve Abt, visited projects at every opportunity and earned a Silver Star for 

taking fire so often when he was out looking at ongoing reconstruction efforts. I and 

my other IRMO colleagues also spent significant time in the ‘‘Red Zone’’ monitoring 

project progress as did colleagues at the Gulf Regional Division of the Corps of Engineers. Special Inspector Bowen and his people added to this effort by having ‘‘eyes 

on’’ projects. This monitoring and oversight will always be more complicated and 

costly if the environment is non-permissive and we need to recognize and plan for 

security issues as a cost of doing business and as a constraint on optimal monitoring. 

In post-conflict operations, there will always be complementary programs done by 

different agencies under different authorities and drawing on different sources of 

funds but there needs to be a preplanned mechanism to deconflict and coordinate 

efforts and share best practices from the unit level to the national level. This mechanism needs to be something that civilians and military have trained together to 

implement as part of civil/military contingency post-conflict exercises. There are useful lessons to be learned from the experience of IRMO, CETI, and the PRTs as we 

design the way forward. 

It is also a cliche that no battle plan survives the first contact with the enemy 

but I believe that if we do the things above, more of the plan will survive. 

Thank you very much. I look forward to your questions and ideas.

Chairman SPRATT. Thank you, Ambassador. And now my constituent and as fellow South Carolinian, Secretary John Gastright. 

STATEMENT OF JOHN A. GASTRIGHT, JR. 

Mr. GASTRIGHT. Thank you, Mr. Chairman. It is a pleasure to be 

here today before yourself and Mr. Ryan and other members Committee. 

Afghanistan obviously remains at the forefront of efforts to combat global terrorism. And I am pleased to say that we are winning, 

but this effort in Afghanistan is going to require many years of intense U.S. engagement and it is going to require continued support 

from the United States Congress. 

I have this story I tell, I say in 1979 Afghanistan was one of the 

poorest countries in the world and then they went through 25 years 

of invasions and civil war. So they went backwards. We have a 

term that we use, in fact for this hearing, reconstruction. And that 

term doesn’t accurately apply to the case of Afghanistan. 

In Afghanistan we are starting from scratch. We are starting at 

less than zero. And so our approach these years has been focused 

on constructing a state. We started by building the institutions of 

that state. We started with a constitution. We worked on developing the Office of the Presidency, the Parliament. We started 

working on building an Afghan national army. They have never 

had an Afghan national army before. They defeated the soviets 

with the Mujadhideen and they had run the British our hundreds 

of years earlier with the same process. They have never had a naVerDate 0ct 09 2002 12:44 Dec 16, 2007 Jkt 000000 PO 00000 Frm 00079 Fmt 6633 Sfmt 6602 J:\DOCS\HEARINGS\110TH\110-17\38255.TXT HBUD1 PsN: DICK
76

tional institution like that. We are working on building the Afghan 

police as well. 

And we started moving on building the economic infrastructure 

on which you can build a sustainable economy. An economy that 

needs to provide economic opportunity for over 20 million Afghans 

over 60 percent of those under the age of 25. 

And finally, today we are thinking forward about what we are 

going to do and it is about building capacity of that government to 

reach out and provide the services required to govern the Afghan 

people. At not only the government level at the central level, but 

at the sub-national level. And so far to date through fiscal year 

2007 that has cost the American people about $22.7 billion. 

It is going to require us to stay the course for many years, because we are talking about building the Afghan state so that it can 

never again be a haven for international terrorism. Again, I believe 

we are on the right track. Afghanistan is making great progress 

and I look forward to answering your questions. Thank you, sir. 

[The prepared statement of John A. Gastright, Jr., follows:]

PREPARED STATEMENT OF HON. JOHN A. GASTRIGHT, JR., DEPUTY ASSISTANT SECRETARY OF STATE FOR SOUTH AND CENTRAL ASIAN AFFAIRS, U.S. DEPARTMENT OF

STATE

INTRODUCTION

Mr. Chairman, Members of the Committee, almost six years after September 11, 

2001, Afghanistan remains at the forefront of efforts to combat global terrorism. 

Make no mistake: we are winning, but this effort is going to require many years 

of intense U.S. engagement. And with the continued strong support of the United 

States Congress our strategic goal of a democratic Afghanistan that is never again 

a haven for international terrorism will be achieved. 

The integrated strategy we are pursuing melds together security, governance, and 

reconstruction. Each line of effort reinforces the other. The focus of our security efforts is training the Afghan military and police forces and we are making real 

progress. To complement these efforts, we are strengthening Afghan national institutions and improving Afghan governance throughout the country. We continue to 

make excellent progress on road construction, which improves Afghan economic viability, and also intend to extend the availability of electricity. We are re-building 

the rural infrastructure, enabling agricultural production to take place in vast areas 

of the country until recently out of bounds because of lack of irrigation or the presence of land mines. 

Since 2001, with this Committee’s support, the United States has invested more 

than $22.7 billion into rebuilding Afghanistan, and we have made great progress on 

many fronts. The Congress has appropriated $10.1 billion for assistance in Fiscal 

Year 2007 alone, which includes over $2 billion of foreign operations assistance for 

reconstruction. Economic growth remains high, and major reconstruction milestones 

in health, education, and infrastructure development have been reached. 

Despite these successes, renewed attacks, particularly in the south, by the 

Taliban and other groups opposed to the legitimate Government of Afghanistan, as 

well as the continued menace of narcotics production remind us that our efforts are 

far from complete and that our commitment needs to be strong and steady. 

RECONSTRUCTION

Our military efforts are helping to create a secure environment, while our reconstruction activities are laying the foundation for a functioning Afghan economy by 

constructing roads, building power generation capacity, expanding rural development opportunities, and working with the Afghan Government to extend good governance to the Afghan people. 

In 2001, after the fall of the Taliban, there were only 50 kilometers of paved roads 

in the entire country. Construction is complete on over 5,825 kilometers of highways 

and provincial roads. The Ring Road is fully subscribed; routes to neighboring countries are under construction; and provincial and district roads are knitting together 

the country, particularly in the south. Not only are these roads transforming the 

77

rural landscape of Afghanistan and providing the foundation for a sustainable economy, they are also providing construction jobs and help to extend the writ of the 

central government. The Pyanj River Bridge, constructed by the U.S. Army Corps 

of Engineers, will link Afghanistan and Tajikistan. Once it is dedicated in August, 

it will draw Central and South Asia closer together by permitting the flow of goods 

and travelers that will help to re-establish Afghanistan as the transportation focal 

point for the region. We have also recently completed crossing facilities on the 

Turkmen border at Imamnazar. Allied to such physical infrastructure upgrades, the 

United States supports mentoring of customs and border police units in order to improve Afghanistan’s ability to sustain itself. 

Access to reliable, affordable power is also critical to the stabilization and development of Afghanistan. Today, roughly ten percent of Afghans have access to electricity. We are working with the Afghan Government and other donors to build a 

power generation network that can serve as an engine of development. The goal of 

the Afghan government is to provide power to 40 percent of its population by 2011. 

In recent months, success in security operations in the Sangin District of Helmand 

Province has permitted the resumption of construction on the Kajaki Dam project, 

which will provide electricity for Helmand and Kandahar Provinces to close to two 

million Afghans. In the north, with our international partners, we are assisting Afghanistan in its efforts to secure power purchase agreements with neighboring countries and to build transmission lines to Kabul. 

In addition, we are working to harness the power of markets. To ensure that people have opportunities for employment and a chance to develop sustained alternative livelihoods, President Bush announced his support for the establishment of 

Reconstruction Opportunity Zones (ROZs) in Afghanistan and the border regions of 

Pakistan. By allowing certain goods manufactured in ROZs to enter the United 

States duty free as part of a comprehensive strategy of support for the Afghan private sector, this initiative can serve as a catalyst for increased trade and economic 

stability. The Administration is working with Congress, American industry, and the 

Afghan government to implement this initiative and to give these people, who need 

jobs and hope for the future, an opportunity to join the world economy and build 

sustainable livelihoods. 

GOVERNANCE

Improved governance is essential to laying the foundations of a stable society. 

Widespread incapacity and corruption together with traditional patronage networks 

impede efforts to deliver government services. Afghans deplore the continued presence of corrupt officials at all levels. Regrettably, the central government has been 

slow to remove even those involved in some of the most egregious cases. However, 

the attorney general has launched efforts to hold corrupt officials accountable, and 

we are beginning to see progress on this front. Good governance is key to maintaining and reinforcing long-term stability, preventing the return of the Taliban and 

winning in Afghanistan. 

At the July 2007 Rome Conference on Rule of Law in Afghanistan, the inter- national community pledged approximately $98 million in new contributions to support justice sector reform efforts in Afghanistan, and they developed a plan to coordinate justice assistance programs in the provinces. 

Where governmental authority is weak and provincial governors uncommitted, 

poppy cultivation has grown. Farmers must have alternative livelihoods; security 

forces (army and police) must enforce the law; and government officials need to provide the necessary leadership. Preliminary poppy cultivation figures this year show 

a distinct north-south split. In the North, where our five-pillar strategy (alternative 

development, eradication, interdiction, judicial reform, and public information) is 

working in synergy, poppy cultivation is down. In the South where our five pillars 

have a more difficult environment, poppy cultivation will likely be up significantly. 

Mr. Chairman, we have made much progress in Afghanistan, yet the international 

community must persist in supporting the Afghan people until they are able to 

stand on their own two feet. We must ensure that Afghanistan never again becomes 

a safe-haven for those who wish us harm 

Thank you Mr. Chairman, I look forward to responding to your questions.

Chairman SPRATT. Thank you very much indeed. Mr. Ryan I will 

turn first to you. 

Mr. RYAN. Dr. Sunshine, what was the—I think you had this in 

your testimony, but what is the total money that has been spent 

on reconstruction in Iraq to date? Is that the $44 billion figure I 

heard? What is that number? 

78

Mr. SUNSHINE. Yes. I think that is- let me check that for you. 

Well we have diplomatic operations and foreign aid we have about 

$39 billion. There is another five billion that was originally appropriated to the State Department that was for indigenous security 

forces. We put that in a separate pot so we are using $39 billion 

for diplomatic operations and foreign aid. 

Now that is just not—that is not just reconstruction. 

Mr. RYAN. Yeah. So——

Mr. SUNSHINE. That is the operation of the Embassy and all the 

other things that are going on. 

Mr. RYAN. And the SIGIR has the number as well. Is that the 

44? I think you used the $44 billion number, Stuart. 

Mr. BOWEN. That is right. That is not the amount spent, that is 

the amount appropriated. 

Mr. RYAN. To date? 

Mr. BOWEN. Yes. To date, yeah. And it is combining the amount 

from the Iraq Relief Reconstruction Fund, the Iraq Security Forces 

Fund, the Commanders Emergency Response Program, and the 

Economic Support Fund as well as 26 sub- accounts. 

Mr. RYAN. Let me ask both Joe and Stuart if I could, when a lot 

of the criticisms that we have seen on these trips to Iraq are on 

the Iraqi side of the budget. And the Iraqis’ ability to, number one, 

execute their own budget, I can’t recall the number but it was billions last year they literally couldn’t execute. And then on the revenue side, the oil. And I can’t recall the name of the refinery, General Odierno walked us through you know the ‘‘black market’’ problem with the refinery. The sabotage problem. I think he detached 

a unit from 82 airborne to protect it. 

Can you give us a sense on where we are now with respect to 

helping the Iraqis execute their own budget and with the extent of 

the Iraqis protecting their own revenue base and preventing sabotage and the black market from eroding their own revenue base. 

Who ever feels, you know, so motivated to answer. 

Mr. SALOOM. Actually I have been working on this for much of 

the past year. Indeed, the capital budget this year is $10 billion. 

Execution last year was in the low 20 percent range. It is an absolutely pivotal thing but the Iraqis themselves recognize this problem and it is actually one thing on which all Iraqis agree. I mean 

all regions of the country, all political parties, all levels of government. 

The Deputy Prime Minister, Dr. Barham Salih, has put together 

a task force to work on budget execution. They had a conference 

in March that explained to the new budget expedited procedures. 

We are working with them, Major General Darryl Scott who is 

head of the Joint Contracting Command for Iraq and Afghanistan, 

has been instrumental in helping set up procurement assistance 

centers in conjunction with the Ministry of Planning where one of 

the big problems has been ministries would get money, but they 

couldn’t actually contract it out. Okay? They just didn’t have the 

expertise or the experience. And this group is set up so that if a 

ministry or a province has a problem. 

Now the first one of these is actually up and running, but they 

plan on having these in every province. In addition, we have set 

79

up in Deputy Prime Minister Barham Salih’s office a budget execution monitoring office. Well we have helped them to set it up. 

Mr. RYAN. It is a total cash economy, correct? 

Mr. SALOOM. Cash. 

Mr. RYAN. So all cash? 

Mr. SALOOM. Cash. 

Mr. RYAN. Everything cash. Every project that is let, cash? 

Mr. SALOOM. Cash. 

Mr. RYAN. And 20 percent of the ten billion capital budget last 

year——

Mr. SALOOM. No. Twenty percent of last year’s budget was spent. 

Last year’s budget was capital budget was so much smaller. 

Mr. RYAN. Okay. So this year it is ten billion? 

Mr. SALOOM. This year is ten billion. But also USAID is working 

with six of the key ministries to put in project management units. 

So we are—we have made budget execution helping them on budget execution absolutely job one. 

When the Iraqis themselves had their budget management conference in March we had a conference for all of our PRT leaders 

the following week and gave them binders this thick, sort of saying, 

here is how you help your provincial government to actually spend 

its money. And in addition there has been great cooperation with 

multi-national division north where they are bringing members of 

the local governments, they have got five or six governments in 

MND North. 

They will bring the governors down to Baghdad and Dr. Barham 

Salih and his office will help coordinate meetings with all of the 

ministers for them so that they can advance projects that have to 

be approved at central level with the ministries that the governors 

can sit with the ministers and advance those projects. 

So it is——

Mr. RYAN. Well I got to think it is——

Mr. SALOOM [continuing]. That is considerable effort. 

Mr. RYAN. I got to think it is pretty tough for them to establish 

an audit trail on these cash transactions. Has the SIGIR looked at 

this on behalf of——

Mr. BOWEN. We have. 

Mr. RYAN [continuing]. Of and——

Mr. BOWEN. We have. We have good reporting on and our latest 

quarterly about eight to ten billion was left unspent in the Treasury last year that should of been spent on capital projects, most notably administrative oil, $3.5 billion they spent $90 million. Less 

than two percent. 

This year already, according to the Iraqis’ own reporting, we know how reliable it is, $538 million has been spent or 23 percent 

of the ministry of oils budget. This is the result of a coordinated 

effort between the Embassy and the Iraqis. The Embassy has coordinator for economic transition who now has complete authority 

over economic issues with respect to Iraq, including the budget execution initiative. 

The Iraqis have also created a budget execution monitoring unit. 

And so those are important steps which is why the bench mark on 

this three weeks ago was rated conditional satisfactory. The actual 

explanation under the bench mark show that the Iraqis have a apVerDate 0ct 09 2002 12:44 Dec 16, 2007 Jkt 000000 PO 00000 Frm 00083 Fmt 6633 Sfmt 6602 J:\DOCS\HEARINGS\110TH\110-17\38255.TXT HBUD1 PsN: DICK
80

propriated money for budget execution. The data on actual execution is still a question mark, but it points out that if they continue 

on current levels they might reach about 50 percent. It is not a linear process. But if they reach 50 percent that is significantly better 

than last year. 

Mr. RYAN. In the revenue base, the black market on the oil coming out of the refineraries which is protects their own revenue. 

What progress has been established on that? 

Mr. BOWEN. That is a huge issue. Ninety-four percent of the 

budget is derived from the sale of oil and gas reserve. Seventy-four 

percent of the GDP and Bhagee is the power plant you were talking about. And I think one of the best things that General Petraeus 

did when he came in was send a battalion up surround it and stop 

the black marketing that is going on, but it still an issue and that 

is why frankly the turkey pipeline gets taken out a lot. It is down 

almost all the time and because when that pipeline is down it 

means oil has to be exported by truck, which means it is susceptible to smuggling and indeed there is a significant black market 

for refined fuels, a lot, most of it coming out of Bhagee in Iraq. 

And for and this is the core of the corruption problem. 

Mr. RYAN. But no more smuggling out of the refinery itself? 

Mr. BOWEN. Well I am going back to Iraq to find out what the 

current status is. I mean whether that battalion is still up there 

and what the issues are, because the Commissioner on Public Integrity reports to us it continues to be a problem. 

Mr. RYAN. Joe, you spent a year doing reconstruction. What kind 

of projects are the way to go in the future versus what we did in 

the past? It seems like we had a lot of white elephant projects that 

really didn’t advance the cause. And you mentioned, I think in your 

testimony, expanding the Iraqis’ capacity. What lessons have we 

learned now after a few years of IRRF on what not to do and what 

to do? And I think anybody else who cares to comment on that, I 

would appreciate your answer on that. 

Mr. SALOOM. I put some of those in my written testimony. I 

would say first and foremost is ask the client. I realize that in 2003 

when we went in there wasn’t an Iraqi government with which to 

coordinate these things. But looking forward in other places and 

under other circumstances, getting the taking the time to know 

what all of the stakeholders want, what as this goes to the issue 

that Stuart and I talk about all the time with sustainability. If 

there is buy-in at the beginning, the chances of you getting sustainability are going to be significantly higher. 

So the first thing is consult with those people who will be affected by the project as the very first important step. Another one 

I mentioned briefly and it is a lesson learned that we actually have 

applied in Iraq is going to from fixed price contracts with local contractors. I asked GRD for the Gulf Regional Division of Corps of 

Engineers for some data on this and they sent me something back 

that from 2005 to 2007 the percentage of contracts going to Iraqis 

went from the low 40s to the 70s in terms of percent. 

Mr. RYAN. When you switched to fixed price contracts? 

Mr. SALOOM. And the switch to fixed price contract went from 

virtually 100 percent cost plus in 2003 to 95 percent from—this is 

GRD only. 

81

Mr. RYAN. Yeah. 

Mr. SALOOM. There are other contracting mechanisms and it is 

construction only. But virtually a complete turn around from of the 

GRD construction contracts from cost plus to firm fixed price. 

So it is a lesson learned that we have both we have learned and 

applied. 

Mr. RYAN. One last question. I think this is probably for the 

SIGIR. The cost plus contracts, this is a concern. Could you give 

us more of your take on how money has been wasted in these cost 

plus contracts and how a real audit trail hadn’t been established 

until you started looking into this. 

Mr. BOWEN. The Bechtel audit is a good example. Bechtel had 

166 subcontractors, 60 percent of those usually subs to those subs 

many of them were Iraqi subcontractors. So in the evolution that 

Joe was talking about was simply removing the design build component out of the picture which also removed the dilution of the 

taxpayer’s investment in Iraq. That is an expensive couple of steps 

down when you finally get health care facility or a refurbished 

power plant at the end, which done by regional or Iraqi firm. The 

lesson learned is exactly the one Joe pointed to and JCCI, the Joint 

Contract Command Iraq, moved agility there when we started to 

raise the issue and that is contract directly with fixed prices then 

you know what you are paying and you know what you are going 

to get and you have some accountability. 

The cost plus system depends upon a definitization. As I said 

during my statement, it was observed in the breach in the course 

of the Iraq reconstruction system. Senator Collin’s bill I also mentioned addresses the cost plus contracting matter and I think it 

provides reform that is very necessary. This $18.4 billion in IRRF II was contracted out, the construction 

part, through 12 $500 million cost plus contracts. In other words, 

totally dependent, $6 billion dependent upon definitization that 

didn’t happen overseen by six other contractors. So the oversight 

was outsourced as well. That is spelled out in our contracting lessons learned and our program management lessons learned report. 

And I think the recommendations from both help provide some 

guidance for reform. 

Chairman SPRATT. Mr. Allen. 

Mr. ALLEN. Thank you, Mr. Chairman. And thank you all for 

being here. I think I would like to stay on this topic for a moment. 

Mr. Bowen when Secretary England was here, I sort of read this 

part of your July report. And I am going to read it again just to 

get bring us back there. The recommendation you had was, ‘‘Generally avoid using sole source and limited competition contracting 

actions. These exceptional contracting actions should be used as 

necessary, but the emphasis must always be in full transparency 

in contracting and procurement. The use of sole source and limited 

competition contracting in Iraq should have virtually ceased after 

hostilities ended.’’ You mean 2003? 

Mr. BOWEN. Well I understand your point. Yeah. 

Mr. ALLEN. Yeah. And previously sole source limited competition 

contracts should of been promptly rebid. You know this is in—this 

is a lessons learned that you wrote——

Mr. BOWEN. Yes. 

82

Mr. ALLEN [continuing]. In July of 2006. 

Mr BOWEN. That is right. 

Mr. ALLEN. My question is, didn’t you personally come to this 

conclusion much earlier than that in 2004 and 2005? You didn’t 

really need a study to come to this conclusion did you? 

Mr. BOWEN. Well it was—well you are right. When we started 

doing our audits of contracting and among our first set of audits 

we looked at the CPA contracting process and found many weaknesses. For instance, unlocatable contracts, no system, no portable 

database. Another recommendation is develop a contracting method 

that is used in theater. We found five different methods that were 

being used and that led simply to inconsistent audit trails that we 

have talked about today. 

There was no way to find out how many contracts had been let 

because there was no single system developed. There were some 

missing contracts that we asked for and they said well they were 

on a thumb drive and someone had left the country. 

Mr. ALLEN. If I can just interrupt you. 

Mr. BOWEN. Yes. 

Mr. ALLEN. You start—you took this position in January of 2004. 

Mr. BOWEN. That is right. 

Mr. ALLEN. So you are talking now about 2004 or? 

Mr. BOWEN. 2004 and 2005. 

Mr. ALLEN. 2004 and 2005. 

Mr. BOWEN. It took a while to get the organization stood up and 

get auditors deployed to Iraq. So our first this first contracting 

audit began in April of 2004 and was published in July of 2004. 

Mr. ALLEN. And how many different reports have you made since 

you personally became the inspector general for——

Mr. BOWEN. Ninety-four audits and 96 inspections. 

Mr. ALLEN. Okay. And quarterly reports? 

Mr. BOWEN. Fourteen. 

Mr. ALLEN. Fourteen. 

Mr. BOWEN. Three lessons learned reports. 

Mr. ALLEN. And in the last three years, how many times have 

you testified before a House or a Senate Committee? 

Mr. BOWEN. This is my twenty-first time. 

Mr. ALLEN. But, let me break up, 2004, 2005, 2006, how many 

during that period? 

Mr. BOWEN. I think none in 2004. And so all 11 this year, and 

ten last year. Or 12 this year and nine last year. 

Mr. ALLEN. Okay. And none in 2005? 

Mr. BOWEN. I don’t know. I would have to go back and look. I 

think a couple, yeah. 

Mr. ALLEN. Order of magnitude. Let me come back to another 

question here. The in the lessons learned that I referred to earlier, 

July 2006, you advocated for establishing a single set of simple contracting regulations and procedures that provide uniform direction 

to all contracting personnel in contingency environments. And I 

gather that is because so many agencies oversee, among other 

things, so many agencies oversee LCAP the——

Mr. BOWEN. Yes. 

Mr. ALLEN [continuing]. The Halliburton KBR contract. 

Mr. BOWEN. The——

83

Mr. ALLEN. Can you expand on that? 

Mr. BOWEN. Yes. And interestingly, those recommendations 

about contingency contracting were adopted a week before last by 

the Office of Federal Procurement Policy as contingency guidelines. 

So it is an example, I think where SIGIR lessons learned have 

helped promote reform and helped develop a better approach to 

contracting. 

Mr. ALLEN. Yeah. I don’t question that, I just wish some of this 

had happened earlier. 

We have spent, I am told, about $19 billion on training and arming Iraqi security forces. Is that about right as far as you know? 

Mr. BOWEN. Eighteen billion. That is right. 

Mr. ALLEN. Okay. And the your report says that actual present 

for duty—the actual present for duty number of Iraqi army personnel continues to be lower than reported. DOD states that only 

65 percent of authorized personnel are active on duty in fielded 

units at any time. 

Mr. BOWEN. That is right. 

Mr. ALLEN. And that police trained by soldiers receive less emphasis on rule of law, human rights, and treatment of suspects and 

prisoners and policing in a democracy. Is that right? 

Mr. BOWEN. That is right. 

Mr. ALLEN. And that——

Mr. BOWEN. And it is changing though as the rule of law initiative develops. 

Mr. ALLEN. Okay. Okay. What if anything—I am concerned that 

we are training Iraqi personnel who may well wind up using their 

training and using the arms that are provided to them either to kill 

each other or to attack U.S. military personnel. Have you looked 

at that issue and what have you found so far? 

Mr. BOWEN. We do not look at that issue. We are—some reporting on that, that we get from DOD and there are concerns about 

the national police and if it’s facility protection service. Those both 

have needed and have received reform because of sectarian issues 

that you elude to. 

Mr. ALLEN. Okay. And I guess the last question I would have is 

that it has been suggested that you should have expanded authority to investigate DOD logistics contracts in Iraq, and I am thinking the Halliburton contract, which I understand is about half of 

what we have spent in terms of reconstruction. Is that number 

right? 

Mr. BOWEN. On the DOD side I don’t know what the logistic 

spending number is. 

Mr. ALLEN. Well there is——

Mr. BOWEN. But LCAP if you are talking about LCAP it is $16 

billion contract in Iraq. 

Mr. ALLEN. Right. Okay. So that is—and Halliburton overall, 

KBR I should say——

Mr. BOWEN. That is right. 

Mr. ALLEN [continuing]. Has received, I understand, about $20 

billion, which is about half of the $44 you——

Mr. BOWEN. Well, again, we are mixing numbers here. That is 

all military DOD money that is not within our jurisdiction and that 

84

is why the proposal, I think you are referring to in Senator Webb’s 

bill is to provide us jurisdiction to look at that money. 

Mr. ALLEN. What is your position on that proposal? 

Mr. BOWEN. We will respond if assigned the task. 

Mr. ALLEN. What is the—well the last thing I will say, what do 

you think is the extent, given current law of your responsibility if 

any, for overseeing Halliburton and KBR’s contracts? 

Mr. BOWEN. Well the Task Order 130 audit is a KBR audit. And 

it looked at real shortfalls on the part of KBR in managing fuel 

supply to the mission and providing food and managing the building program. But we only look at it to the extent that it involves 

Iraq relief and reconstruction fund money, which is a tiny fraction 

of the overall investment. 

Mr. ALLEN. Okay. Well, thank you very much. 

Mr. BOWEN. Thank you. 

Chairman SPRATT. Mr. Conaway. 

Mr. CONAWAY. Thank you, Mr. Chairman. The quarterly report 

you talk about convictions and results of some of the audits in the 

legal system. Can you did these convictions result in jail time? 

Mr. BOWEN. They did. 

Mr. CONAWAY. Can you give us a little how that——

Mr. BOWEN. Sure. We have a chart in Section one of this report, 

the first time we have included a detailed chart that lays out who 

the wrongdoer was, what where they were from, what their crime 

was, and all five of the——

Mr. CONAWAY. Okay. 

Mr. BOWEN [continuing]. Persons from SIGIR are in prison now 

as a result of our investigation. 

Mr. CONAWAY. Can you help me understand, those five convictions and the 13 arrests, eight pending trials. 

Mr. BOWEN. Right. 

Mr. CONAWAY. What is the scope of the overall transactions that 

you glean that from so is there any way extrapolate that to the 

broader issue? 

Mr. BOWEN. Yes. The biggest crime that we uncovered was a result of an audit down in Hilla of a series of contracts. Really the 

CPA’s management of $120 million. We found through that audit 

that $90 million had poor back-up paperwork. Then we drilled 

down further and we found $8 million was just missing. So I sent 

my investigators down there to look at it and they indeed found a 

number of significant problems. We began a year long investigation 

in this and have caught about eight people in this net and four of 

these five are from that scheme and they have gone to prison. It 

involved about $10 million in kick backs and bribes. 

Mr. CONAWAY. Okay. Did we recover any of that money? 

Mr. BOWEN. We have. We have recovered or have gotten restitution orders to date of $16 million total from our investigations. 

Mr. CONAWAY. And then the 57 ongoing investigations, those are 

criminal——

Mr. BOWEN. Yes, they are. 

Mr. CONAWAY. Could result in criminal as well? 

Mr. BOWEN. There is some civil in there and but 90 percent are 

criminal. 

85

Mr. CONAWAY. Criminal. Okay. You are talking and all I have 

got is this, right? 

Mr. BOWEN. Yes. 

Mr. CONAWAY. At this moment? The sustainment reviews? 

Mr. BOWEN. Yes. 

Mr. CONAWAY. And you also talk about of the four transfers only 

you are saying three of the four transfers cannot be sustained? 

Mr. BOWEN. We are talking about our sustainment inspections 

and it was a regime we started last quarter to look at projects that 

had been handed over for over a year. Al Doura is the biggest one. 

Mr. CONAWAY. Okay. Of the—give me a sense of what the scope 

of a project is. Is this is a tiny little $10 million deal or a billion 

dollars? 

Mr. BOWEN. No. But we look at it across the board, but——

Mr. CONAWAY. Of the four that you have got. 

Mr. BOWEN. Of the four. And the Al Doura one was—yeah. Al 

Doura was $90 million. That was one that fell short. It is a $90 

million—$93 million rehabilitation of the most important electric 

plant providing power Baghdad. 

Mr. CONAWAY. Right. 

Mr. BOWEN. And so we went down there in June to see what the 

status was and that is as I mentioned in my testimony the it was 

not operating, neither unit. It could provide 320 megawatts to the 

grid, which would be seven and a 2half percent of the total power 

right now generated. And it would provide Baghdad with much 

more than the eight hours it is currently receiving. 

Mr. CONAWAY. Okay. And the other two projects? 

Mr. BOWEN. The there was——

Mr. CONAWAY. That is 90——

Mr. BOWEN. Yeah. 

Mr. CONAWAY [continuing]. You said $90 million or $90 billion? 

Mr. BOWEN. Ninety million. 

Mr. CONAWAY. Million. Okay. 

Mr. BOWEN. Ninety million. The there was the Al Rashid refurbishment which was a several million dollar project. It was a base 

in the Baghdad vicinity and the C-130 based also a refurbishment 

of barracks and providing generators. 

Mr. CONAWAY. And——

Mr. BOWEN. Several million dollars much smaller than Al Doura. 

Mr. CONAWAY. All right. And of those three, you talk about the 

are not being sustained properly? 

Mr. BOWEN. Yes. There were problems with sustainment and——

Mr. CONAWAY. Was that ongoing? 

Mr. BOWEN. Well the—we raised the problems and the expectation is that the Iraqis will address and repair the are the concerns 

we have. The generators are broken at the were broken at the Al 

Rashid base. 

Mr. CONAWAY. Okay. And on the power plants you are—you said 

it is going to be online in August of 2007? Is that——

Mr. BOWEN. That is right. In that case the Corps of Engineers 

took over and one is started up a couple days ago. One of the units 

has started and it is producing 30 megawatts right now. 

Mr. CONAWAY. When did the Corps take over? 

86

Mr. BOWEN. They have—earlier this year. The beginning of this 

year. 

Mr. CONAWAY. Okay. And you think they will have everything 

up, the other one going in August? 

Mr. BOWEN. Yes. I met with the Commander of the Corps yesterday and he told me they will be up in August. 

Mr. CONAWAY. Okay. On the asset transfers, on the first place, 

you are talking about asset transfers that the central government 

has not accepted any of those transfers. What does that mean to 

us? 

Mr. BOWEN. That is right. This is our fourth audit on this issue. 

Very important. Tied to the sustainment issue, because it is about 

whether there is a plan for our projects to go within the jurisdiction—to be transferred within the jurisdiction of the Iraqis and 

then manage and operate and maintain properly. 

A good process which worked out as the audit points out. And it 

from April to June of last year hundreds and hundreds of projects 

transferred with tens of millions of dollars. Then in July the ministry of finance abandoned the program. And there was no coordinated transfer program thereafter to replace it. And as a result 

local transfer had to occur and then eventually the Corps just developed a unilateral transfer process, certainly not what anybody 

wants with respect to these projects. 

There is a pending remedy. A new bilateral agreement to re-energize, re-institute the transfer program that fell off the tracks a 

year ago. 

Mr. CONAWAY. Okay. And you will review that for us next quarter or I mean that will be——

Mr. BOWEN. Yes, sir. 

Mr. CONAWAY [continuing]. A subject you are continuing——

Mr. BOWEN. Yes. 

Mr. CONAWAY [continuing]. Oversight? 

Mr. BOWEN. Our recommendation to the Ambassador was to is 

to ensure that he and his counterpart execute that and they have 

accepted the recommendation. 

Mr. CONAWAY. Okay. Good. Thank you, Mr. Chairman. I yield 

back. Thank you for your—and I apologize for interrupting you but 

we only get five minutes. 

Mr. BOWEN. Sure. I understand. 

Mr. CONAWAY. Unless I keep asking one last question. 

Mr. BOWEN. Sorry for going on so long. 

Mr. CONAWAY. Yeah. No, no, no. So, pardon my abruptness with 

you. I was trying to get some answers. Thank you, sir. I yield back. 

Mr. BOWEN. Thank you. Thanks. 

Chairman SPRATT. The number we have is $44.5 billion appropriated thus far for reconstruction work. We also are informed that 

Iraq has amassed about $37 billion for the same purpose. And that 

firms other assistance has been pledged, but yet to be delivered of 

about four billion out of an amount of $18 billion pledged, much of 

which I think was in loans as opposed to grants. 

Mr. BOWEN. That is right. 

Chairman SPRATT. Those numbers are roughly correct? 

Mr. BOWEN. The Iraqi money is the amount that has already 

been spent. It is not it doesn’t address the amount of money that 

87

they currently are putting forward. That is the development fund 

for Iraq money, the development fund sub-accounts and the 

amount that was transferred to the Iraqis during the CPA and 

thereafter for their national budgets. That is where that number is 

derived from. 

Chairman SPRATT. Well I take it that you included capital budgeting as one of the bench marks? 

Mr. BOWEN. Yes. That is exactly right. 

Chairman SPRATT. Because you—do you believe that is a sign of 

a functional government? 

Mr. BOWEN. Exactly. And we have a separate section just addressing that issue. Yes, sir. 

Chairman SPRATT. Sorry, I didn’t understand you. 

Mr. BOWEN. Yes. The capital—moving forward the expending the 

capital budget is essential to recovery of the economy. 

Chairman SPRATT. Is the—here the numbers we were talking 

about 44.5, 36.9, and 18.2 of which four billion is in disbursed——

Mr. BOWEN. Yes. That is right. 

Chairman SPRATT [continuing]. $14 billion remains in pledge. 

What is the hold up? Is it due partly to the fact that the technocrats who ran the government, the Baathists, are no longer in 

power and those who are in power don’t have that confidence or capability? 

Mr. BOWEN. I think that is part of it. The fact is that over the 

last four years, four governments have ruled Iraq. The CPA, ambassador—excuse me—Prime Minister Alawhi, Prime Minister 

Jaffri, and now Prime Minister Maliki’s government. 

And with each one of those turn overs there was frequently turn 

over among the ministry heads which led to turn over within the 

ministries themselves. Continuity of management in most ministries is relatively weak and I think so capacity is the issue you 

are pointing to is continuing to be a problem. And it is a place 

where economic support funds are being spent. 

Chairman SPRATT. One of the reasons we are pursuing this is we 

had Mr. Wolfowitz here in March of 2003, March the 27th. And we 

asked him about reconstruction, normalization, putting Iraq back 

together again. And he said, ‘‘We are dealing with a country that 

can really finance its own reconstruction and relatively soon.’’ Why 

did we make that assumption and why did it not work out? 

Mr. BOWEN. The assumption was based on the fact that Iraq has 

the third largest oil and gas reserves in the world and an enormous 

potential for economic benefits to the citizens of Iraq. Only nine 

percent of the Iraq relief and reconstruction fund, however, was 

spent on the oil and gas sector. It was behind security, of course, 

behind electricity, behind water, behind economic development. The 

assumption was that it would begin to regenerate on its own. That 

assumption has proved false. 

Chairman SPRATT. The goal set early after the war for reconstruction was, I believe, around two point five to three million barrels per day. Preferably the upper end of that. 

Mr. BOWEN. The three. Yes. 

Chairman SPRATT. The two point——

Mr. BOWEN. Yes, sir. 

88

Chairman SPRATT [continuing]. Eight to three million is compared to about two and a half million barrels a day before the war. 

Mr. BOWEN. That is right. 

Chairman SPRATT. What happened? Is this due to sabotage, pilferage, corruption, over estimation, lack of competence, all of the 

above? 

Mr. BOWEN. All of the above plus a debilitating infrastructure. 

The primary problems have been security. As I mentioned earlier 

that the pipelines get hit regularly. Then corruption right behind 

it as I mentioned the smuggling issue deprives the Iraqis of the 

benefits of a significant portion of their economy, because it is off 

budget. It doesn’t benefit the country. And third, that there is a refinery system is debilitated, is deteriorated and needs capital investment now. As a result of that debilitated system, Iraqis import 

refined fuels. They cannot refine enough for their own needs. 

And finally, related to the reconstruction enterprise, a number of 

the electrical generators that we have installed are running on the 

wrong fuel because the system is so inadequate that the natural 

gas necessary to run those generators is not laid and provided for 

the power plants. 

Chairman SPRATT. In March the head of the Army Corps of Engineers of the Gulf Regional Division estimated that $100 billion 

more would be needed for reconstruction. This is in addition to the 

$100 billion provided to date from the U.S., Iraq and other sources. 

Do you know the derivation of that number and if so where is this 

$100 billion to be obtained? 

Mr. BOWEN. I don’t know the derivation, but I have heard numbers like that from World Bank or IMF estimates. As we have said 

in our last two quarterly reports and repeat again in this one, the 

burden of financing the recovery of Iraq is a burden squarely on 

the shoulders of the government of Iraq. And they have tremendous resources that are untapped in the oil and gas reserves. And 

if that sector can be brought online and operating optimally then 

there is a great potential for progress. 

Chairman SPRATT. Let us just take the $10 billion that was earmarked, designated for as one of the bench marks for distribution 

to get the economy going again, tend to some essentially capital 

needs. The ten billion dollars subject to the bench mark apparently 

there is a memo, some sort of MOU for the allocation of this, but 

the allocation has never occurred. What is the problem? 

Mr. BOWEN. Well, I think that the allocations have occurred, the 

execution is the open question. The bench mark report that came 

out three weeks ago gave the conditional satisfactory to the 

progress on the budget execution initiative. The coordinator for economic transition and the budget execution monitoring unit on the 

Iraqi side have pushed out funds to the provinces, $5.8 billion in 

capital funds, and the oil sector, the public works, ministry of education for example are spending their capital budgets. But getting 

good data from the ministry of finance about that execution is continues to be a challenge and is the mission of the coordinator for 

economic transition. So I can’t give you a sense of whether it really 

is satisfactory at this point. There is a conditional satisfactory 

based on allocations to date. 

89

Chairman SPRATT. There is a story in the New York Times this 

past weekend and I put this question to all of you. It said that even 

as we complete these projects the Iraqis are reluctant to take responsibility for them. Only one in seven apparently which has completed is actually been taken over. One out of every seven projects 

out of a couple thousand projects? 

Mr. BOWEN. Right. That is from our asset transfer audit. 

Chairman SPRATT. Yeah. Is that an accurate account? 

Mr. BOWEN. Yes, sir. The asset transfer process needs to be reformed and re-energized with the new agreement. 

Chairman SPRATT. One would think that they would want to get 

their hands on the equipment then, you know, exercise some dominion and control and——

Mr. BOWEN. Yes, sir. 

Chairman SPRATT [continuing]. Be in charge. But apparently not. 

Is their a lack of get up and go? A lack of entrepreneurial spirit? 

Fear that they will fail and suffer the consequences? 

Mr. BOWEN. I think a lot of the problem may be centered upon 

the current minister of finance as pointed out in our audit. 

Chairman SPRATT. There obviously has been a lot of poor contracting work. Granted a lot of the contractors didn’t estimate the 

security situation adequately and probably didn’t appreciate the 

conditions. One thing for clarification I would like to have straightened out. You say cost plus and cost plus by itself is illegal, but 

there is cost plus fixed fee and cost plus incentive fee. Were most 

of these contracts fixed fee contracts? 

Mr. BOWEN. They were a mixture of cost plus fixed and incentive. 

There was a three percent fixed fee and then the opportunity to 

earn 12 percent in incentive award fee. So a total amount of 15 

percent award fee on the design build contracts, which is why I 

was so concerned when I found out there were no criteria for the 

management of the award fee process. 

Chairman SPRATT. If you take all of these capital amounts that have been provided, the $44 billion or $37 billion and the $4 billion 

out of the 18 provided by other sources adds up to $80 odd billion 

dollars. What would you estimate is the value of the assets that 

corresponds with these investments today? 

Mr. BOWEN. On the ground in Iraq? 

Chairman SPRATT. Yeah. 

Mr. BOWEN. I will—that is a tough question that we don’t have 

enough data to answer yet. That is what I am trying to accomplish 

through these focused financial reviews is find out where the 

money went and what we got for it. And the Bechtel audit is the 

beginning of that. It lays out in that contract, you know for example, you know the Basrah Children’s Hospital, the original budget 

was $37 million the final budget was $26 million but there were—

had been other cost related to the delays. What the value of what 

ultimately is completed is something we are going to have to address over the course of these many focused financial reviews that 

SIGIR is now carrying out. 

Chairman SPRATT. One final question then I will turn it over to 

Mr. Scott. With respect to those contracts that weren’t completed 

where the contractors had substantial overruns and didn’t stay to 

complete the job. Did you allow them or did the government allow 

90

them, did we allow them some exoneration, some release from the 

contract so that they could walk away from the job without consequences or——

Mr. BOWEN. Yes. The fact is, is that the only way to recover for 

a poor performance under a cost plus fixed award fee contract is 

terminating for default. In most cases, however, in Iraq terminations have been for convenience. 

Chairman SPRATT. Of the government. 

Mr. BOWEN. And when there is termination for convenience there 

is no then cause of action that the government retains for going 

against the contractor for poor performance. 

Chairman SPRATT. But down the road there are no penalties, 

no——

Mr. BOWEN. Well we are pursuing——

Chairman SPRATT [continuing]. Damages, debarment, anything 

like that? 

Mr. BOWEN. We actually are pushing hard on the debarment suspension front in my office. And we are working with the Department of Army and we have made some progress there and we will 

continue to push it because that is an important mechanism too for 

accountability. 

We also are going to do an audit of the terminations issue you 

just raised, because I have been looking at this as well for a while 

and we want to know what contracts were terminated, why they 

were terminated, and what the issues were connected to them. 

So we will have a report by the end of the year to you on that. 

Chairman SPRATT. Thank you very much. Mr. Scott. 

Mr. SCOTT. Thank you, Mr. Chairman. I wanted to follow that 

up. In what you will have at the end of the year, will that give us 

an idea of what these services should reasonably have cost? 

Mr. BOWEN. Those were our focused financial reviews and with 

that and the Bechtel is the first. Parson’s is next. We are doing 

Black Water and Floor and Research Triangle Institute. The big 

contracts in Iraq and out of that the purpose is to say what was 

contracted for, what was actually achieved, what was it originally 

suppose to cost, and what did it cost. And then explain the delta. 

Mr. SCOTT. Well and what should it have reasonably cost, because there are a handful some of these are sole source and just 

because you contracted for it doesn’t mean that is a reasonable 

cost. Can you get a kind of idea of what it should of cost? 

Mr. BOWEN. That is beyond our capacity. What we can do is look 

at the contracts and find out. But let me just make a point on sole 

source. Sole source and limited competition, which was more common, occurred primarily in 2003. Since then it has been a very infrequent mechanism. 

Mr. SCOTT. Well there—I would image that there are limited 

number of firms actually bidding so the real—you don’t have this 

kind of competition you would have on a domestic contract. Is that 

right? 

Mr. BOWEN. That is a fair point. Yes, sir. 

Mr. SCOTT. And so if they I know in Virginia they would we had 

a when I was in the State House we had a scandal because people 

would have kind of cooperative bids. 

Mr. BOWEN. Uh huh. 

91

Mr. SCOTT. You bid high on this one so that my high bid will actually——

Mr. BOWEN. Bid rigging that is called. 

Mr. SCOTT. Well courtesy bidding. 

[Laughter.] 

Mr. SCOTT. Without if everybody is just kind of bidding high generally, not rigging, just an understanding you can if everybody is 

bidding high then everybody is going to get a nice price. Now are 

you looking at what these value of the contract should be? 

Mr. BOWEN. That is a job for the Defense Contract Audit Agency. 

Their mission is exactly that. They serve the contracting officers in 

reviewing bids and assessing whether they are financially appropriate. 

Mr. SCOTT. Okay. Now when I was in the National Guard when 

you talked about privatizing you what we kind of thought of was 

privatizing KP. Everything else you would expect military personnel to actually do. Now we are using a lot of contractors to do 

what are essentially military functions. 

Mr. BOWEN. That is right. 

Mr. SCOTT. Is that an efficient way of getting things done? 

Mr. BOWEN. That is a broad policy question. The LCAP——

Mr. SCOTT. But part of it is the numbers we see later on show 

that about 70,000 troops are going to cost—75,000 troops will cost 

$70 billion. That is about a million dollars a troop in round numbers. I imagine that part of that is because for every troop you got 

you got a bunch of contractors around. So it is not a really apples 

to apples comparison. 

Does the use of contractors is that financially appropriate and 

does it affect your ability to get the job done when you are dealing 

with contractors that you can’t—that aren’t as responsive necessarily as the person in the chain of command. 

Mr. BOWEN. Well this is an issue that is outside the jurisdiction 

of my office. It is within the jurisdiction of the Department of Defense IG because it has to do with DOD funding. I focus on reconstruction funding which is inner agency appropriations. We do look 

at a small portion of KBR’s spending as it affects the reconstruction program. We will be auditing their oil contract. We had an 

audit out this quarter on their LCAP task order that supported the 

embassy and found a number of concerns there that were fixed. 

Mr. SCOTT. Does your office have anything to do with mental 

health funding? 

Mr. BOWEN. No, we don’t. 

Mr. SCOTT. Replacement of vehicles? 

Mr. BOWEN. No, sir. 

Mr. SCOTT. And things like that? 

Mr. BOWEN. It is all Department of Defense. 

Mr. SCOTT. Have you read the articles that were written over the 

weekend talking about things that have been wasted? New York 

Times and Washington Post? 

Mr. BOWEN. Can you refer to me specifically which ones? 

Mr. SCOTT. The headlines or report says, ‘‘Iraq Lags in Rebuilding.’’ ‘‘U.S. Rebuilds Iraq Won’t Act on Finished Work.’’ ‘‘Bechtel’s 

Projects Lacking in Iraq.’’

Mr. BOWEN. Yes. Those are articles reporting on our audits. 

92

Mr. SCOTT. Okay. Are these reasonably accurate to the best of 

your knowledge? 

Mr. BOWEN. Yes, they are. 

Mr. SCOTT. Okay. Thank you, Mr. Chairman. 

Chairman SPRATT. Thank you, Mr. Scott. To our panel, I would 

like to thank you very much for your excellent presentation, for 

your forthright responses. We really do appreciate you coming in, 

not least for your forbearance in waiting while we had to finish our 

votes on the floor. Thank you very much, indeed. 

Mr. BOWEN. Thank you, Mr. Chairman. 

Chairman SPRATT. A couple of housekeeping details before we finally recess. I would like to ask unanimous consent that my opening statement be made part of the record. In addition, Mr. McGovern has a study done by the Progressive Caucus which he would 

like to have inserted in the record as well, if there is no objection. 

Mr. SCOTT. Mr. Chairman——

Chairman SPRATT. Hearing none, so ordered. 

[The information follows:]

93

THE PROGRESSIVE CAUCUS: COST OF THE IRAQ WAR/OCCUPATION BY CONGRESSIONAL DISTRICT AND WHAT ELSE THAT $ COULD HAVE FINANCED 

[ISSUE REPORT #1: JULY, 2007] 

CPC Member Total $ on Iraq War (million) People with Health Care Elementary School Teachers Head Start Places for Children Children w/ Health Care Affordable Housing Units New Elementary Schools Scholarships for University Students Music & Art Teachers Public Safety Officers Homes with Renewable Energy Port Container Inspectors 

Abercrombie ........ $883.00 296,947 16,965 117,958 297,861 2,764 67 238,917 16,965 21,657 1,470,114 12,786Baldwin ............... $1,125.70 674,804 19,998 168,136 805,479 9,391 134 179,244 19,123 26416 1,372,905 17,896Becerra ............... $687.10 282,193 10,366 81,542 256,291 2,057 52 105,515 10,246 12,783 1,224,272 9,184Bordallo .............. Not found in 

NPP Database 

Robert Brady ....... $736.40 171,120 12,179 104,456 217,473 7,483 51 63,984 12,574 16,981 885,548 11,322Corrine Brown ..... $899.90 289,060 16,643 121,839 452,793 6,636 141 290,864 15,559 21,420 632,904 11,100Capuano ............. $1,170.00 340,649 17,334 139,090 426,199 4,064 88 126,107 20,165 23,553 1,824,237 17,584Carson ................ $785.00 244,560 14,134 116,429 390,961 8,219 70 110,370 13,210 20,107 746,058 11,248Christensen ......... Not found in 

NPP Database 

Clarke ................. $1,281 225,561 14,927 141,094 427,416 7,053 87 204,485 17,339 24,638 2,323,074 18,649Clay ..................... $844 314,085 18,017 124,087 301,778 8,473 100 121,243 16,735 21,215 736,708 13,432Cleaver ................ $890.30 331,357 19007 130,911 318,373 8,939 104 127,910 17,655 22,382 777,220 14,170Cohen .................. $837.70 138,958 16,578 115,735 232,690 8,711 92 158,343 16,273 23,300 620,197 11,779Conyers ............... $753.10 258,837 10,504 112,906 514,761 6,071 68 81,747 10,401 16,284 1,058,482 11,394Cummings .......... $941.90 171,769 15,232 125,234 337,003 5,052 83 120,440 16,078 20,296 874,483 17,807Davis (IL.) ........... $1,288 468,502 20,967 188,357 772,918 9,303 152 148,616 22,616 26,014 1,706,375 19,825DeFauzio ............. $746.50 160,824 13,064 110,650 223,075 4,621 78 132,985 13,731 15,912 701,662 12,488DeLauro ............... 2,346 804,569 33,822 325,826 934,954 11,334 177 299,122 33,008 47,322 2,922,032 30,178Ellison ................. $1,402.10 393,858 24,271 198,871 454,051 8,827 164 160,314 22,019 31,812 1,586,596 16,477Farr ..................... $1,289.40 531,854 19,537 153,684 483,035 3,877 98 198,867 19,311 24,093 2,307,404 17,310Fattah ................. $800.90 186,115 13,246 113,610 236,530 8,139 56 69,591 13,676 18,469 963,150 12,314Filner ................... $1,033.00 424,237 15,584 122,587 385,297 3,092 78 158,628 15,403 19,218 1,840,519 13,808Frank ................... $1,631 460,510 23,433 188,030 576,163 5,494 118 170,480 27,259 31,841 2,466,115 23,772Grijalva ............... $696.30 153,305 16,138 89,145 300,591 5,301 53 154,809 15,113 16,515 596,557 8,329Gutierrez ............. $1,142.70 417,211 18,671 167,736 688,299 8,284 136 132,346 20,140 23,167 1,519,562 17,655Hall (N.Y.) ........... $2,342 425,316 28,147 266,045 805,930 13,300 163 385,576 32,694 46,456 4,380,352 35,163Hare .................... $1,114.80 407,045 18,216 163,649 671,528 8,083 132 129,121 19,649 22,602 1,482,536 17,224Hinchey ............... $1,406 255,521 16,910 159,834 484,187 7,990 98 231,646 19,642 27,910 2,631,631 21,125Hirono ................. $844.00 283,811 16,215 112,740 284,686 2,642 64 228,349 16,215 20,699 1,405,082 12,221Honda ................. $1,989 810,344 29,766 234,156 735,963 5,907 150 302,998 29,422 36,709 3,515,613 26,375Jackson ............... $1,292 480,158 21,488 193,043 792,149 9,535 156 152,313 23,178 26,662 1,748,831 20,318

94

THE PROGRESSIVE CAUCUS: COST OF THE IRAQ WAR/OCCUPATION BY CONGRESSIONAL DISTRICT AND WHAT ELSE THAT $ COULD HAVE FINANCED—Continued

[ISSUE REPORT #1: JULY, 2007] 

CPC Member Total $ on Iraq War (million) People with Health Care Elementary School Teachers Head Start Places for Children Children w/ Health Care Affordable Housing Units New Elementary Schools Scholarships for University Students Music & Art Teachers Public Safety Officers Homes with Renewable Energy Port Container Inspectors 

Jackson-Lee ........ $1,057.80 230,237 19,996 149,167 433,033 12,611 107 151,718 18,830 25,344 805,546 17,913Johnson (GA.) ...... $1,294 286,166 23,324 185,962 636,578 11,001 208 287,259 23,283 35,357 1,037,064 19,243Tubbs-Jones ........ $808.30 270,917 13,734 124,799 459,647 73,649 73 100,004 12,372 19,388 905,181 16,673Kaptur ................. $1,017.10 340,935 17,283 157,052 578,440 9,486 91 125,851 15,570 24,399 1,139,122 20,982Kilapatrick .......... $650.50 223,586 9,074 97,529 444,656 5,244 59 70,614 8,984 14,066 914,328 9,842Kucinich .............. $1,057.40 354,443 17,968 163,275 601,359 9,862 95 130,837 16,187 25,365 1,184,255 21,814Lantos ................. $1,871 759,591 27,902 219,490 689,869 5,537 141 284,021 27,579 34,410 3,295,420 24,722Lee ...................... $1,167.30 479,385 17,609 138,523 435,383 3,494 89 179,248 17,405 21,717 2,079,774 15,603Lewis (GA.) ......... $1,071.00 230,534 18,789 149,809 512,824 8,862 168 231,414 18,757 28,484 835,452 15,502Loebsack ............. $823.40 259,765 19,032 123,881 369,806 10,245 97 146,720 18,241 20,400 926,476 13,795Maloney ............... $2,104 378,262 25,032 236,611 716,767 11,829 145 342,918 29,077 41,317 3,895,739 31,273Markey ................ $1,644 485,744 24,717 198,334 607,733 5,795 125 179,822 28,752 33,586 2,601,247 25,075McDermott .......... $1,295 200,573 23,089 147,862 509,939 7,365 141 237,631 23,160 25,599 1,187,569 18,095McGovern ............ $1,518 434,836 22,126 177,547 544,039 5,188 112 160,976 25,740 30,066 2,328,624 22,446Miller (CA.) ......... $1,403 571,274 20,984 165,074 518,837 4,164 105 213,606 20,742 25,879 2,478,425 18,593Moore (WISC.) ..... $793.30 475,538 14,093 118,487 567,625 6,618 94 126,315 13,477 18,615 967,493 12,611Nadler ................. $1,751 311,600 20,621 194,913 590,450 9,744 119 282,485 23,953 34,036 3,209,185 25,762Holmes-Norton .... $2,335 590,376 39,034 311,645 727,150 7,965 204 1,107,837 39,034 39,598 4,057,835 34,465Olver ................... $1,285 368,586 18,756 150,497 461,152 4,397 95 136,450 21,818 25,486 1,973,844 19,026Pastor ................. $692.20 152,394 16,042 88,615 298,803 5,270 53 153,889 15,023 16,418 593,010 8,280Payne .................. $1,286 141,943 18,656 145,369 506,426 5,052 89 137,832 15,788 23,326 1,779,046 17,977Rangel ................ $1,017.40 184,936 12,239 115,682 350,434 5,783 70 167,656 14,216 20,200 1,904,660 15,290Rush ................... $1,173 432,516 19,356 173,889 713,549 8,589 141 137,201 20,878 24,016 1,575,307 18,302Linda Sanchez .... $1,175 490,207 18,007 141,649 445,211 3,572 90 183,295 17,799 22,206 1,818,982 324,606Sanders ............... $776.60 281,075 13,791 90,102 226,608 5,696 59 72,255 14,395 17,868 1,161,348 12,222Schakowsky ......... $1,516 539,788 24,156 217,017 890,523 10,719 176 171,229 26,057 29,973 1,966,013 22,841Serrano ............... $703.30 127,856 8,461 79,977 242,274 3,999 49 115,909 9,828 13,965 1,316,798 10,571Slaughter ............ $1,156.50 210,241 13,913 131,510 398,385 6,574 81 190,596 16,161 22,964 2,165,281 17,382Solis .................... $1,088.90 447,203 16,427 129,223 406,155 3,260 82 167,215 16,237 20,258 1,940,157 14,555Stark ................... $1,640 674,442 24,774 194,886 612,535 4,916 124 252,182 24,488 30,553 2,926,012 21,951Thompson (Miss.) $449.30 97,385 9,914 74,279 255,206 6,617 70 104,014 9,430 14,583 332,634 7,309Tierney ................ $1,752 502,312 25,560 205,098 628,461 5,992 129 185,955 29,734 34,732 2,689,966 25,930Udall ................... $554.60 163,424 11,847 79,228 217,054 5,658 68 141,560 11,351 14,726 867,530 26,824

95

Velzquez .............. $1,061.60 192,986 12,772 120,717 365,689 6,034 74 174,954 14,835 21,079 1,987,572 15,955Waters ................. $846.20 347,548 12,767 100,427 315,647 2,533 64 129,953 12,619 15,744 1,507,809 11,312Watson ................ $832.80 342,028 12,563 98,832 310,634 2,493 63 127,889 12,419 15,494 1,483,861 11,132Watt .................... $1,002.20 207,021 21,329 135,168 461,002 9,485 110 217,256 19,361 26,365 795,084 14,607Waxman .............. $1,634 657,070 24,136 189,866 596,757 4789 122 245,686 23,857 29,766 2,850,643 21,385Welch .................. Same as 

Sanders 

Woolsey ............... $1,528 639,045 23,474 184,658 580,388 4,658 118 238,947 23,203 28,949 2,772,445 20,799

96

Chairman SPRATT. Mr. Scott? 

Mr. SCOTT. Ask unanimous consent that Congressional record S10154, October 9, 2002 be entered into the record. It is the copy 

of the letter that the CIA wrote to Senator Graham about the presence of al-Qaida and the threat that was present in Iraq and the 

fact that it would be worse if we attacked. 

Chairman SPRATT. How about letting us have a copy of that then 

for record. 

Mr. SCOTT. Thank you. 

[The information follows:] 

[From the Congressional Record, October 9, 2002, page S10154:]

CENTRAL INTELLIGENCE AGENCY, 

Washington, DC, October 7, 2002. 

Hon. Bob Graham, Chairman, 

Select Committee on Intelligence, U.S. Senate, Washington, DC. 

DEAR MR. CHAIRMAN: In response to your letter of 4 October 2002, we have made 

unclassified material available to further the Senate’s forthcoming open debate on 

a Joint Resolution concerning Iraq. 

As always, our declassification efforts seek a balance between your need for unfettered debate and our need to protect sources and methods. We have also been mindful of a shared interest in not providing to Saddam a blueprint of our intelligence 

capabilities and shortcoming, or with insight into our expectation of how he will and 

will not act. The salience of such concerns is only heightened by the possibility for 

hostilities between the U.S. and Iraq. 

These are some of the reasons why we did not include our classified judgments 

on Saddam’s decisionmaking regarding the use of weapons of mass destruction 

(WMD) in our recent unclassified paper on Iraq’s Weapons of Mass Destruction. 

Viewing your request with those concerns in mind, however, we can declassify the 

following from the paragraphs you requested. 

Baghdad for now appears to be drawing a line short of conducting terrorist attacks with conventional or CBW against the United States. 

Should Saddam conclude that a US-led attack could no longer be deterred, he 

probably would become much less constrained in adopting terrorist actions. Such 

terrorism might involve conventional means, as with Iraq’s unsuccessful attempt at 

a terrorist offensive in 1991, or CBW. 

Saddam might decide that the extreme step of assisting Islamist terrorists in conducting a WMD attack against the United States would be his last chance to exact 

vengeance by taking a large number of victims with him. 

Regarding the 2 October closed hearing, we can declassify the following dialogue. 

Senator Levin: * * * If (Saddam) didn’t feel threatened, did not feel threatened, is 

it likely that he would initiate an attack using a weapon of mass destruction? 

Senior Intelligence Witness: * * * My judgment would be that the probability of 

him initiating an attack—let me put a time frame on it—in the foreseeable future, 

given the conditions we understand now, the likelihood I think would be low. 

Senator LEVIN: Now if he did initiate an attack you’ve * * * indicated he would 

probably attempt clandestine attacks against us * * * But what about his use of 

weapons of mass destruction? If we initiate an attack and he thought he was in 

extremis or otherwise, what’s the likelihood in response to our attack that he would 

use chemical or biological weapons? 

Senior Intelligence Witness: Pretty high, in my view. 

In the above dialogue, the witness’s qualifications—‘‘in the foreseeable future, 

given the conditions we understand now’’—were intended to underscore that the 

likelihood of Saddam using WMD for blackmail, deterrence, or otherwise grows as 

his arsenal builds. Moreover, if Saddam used WMD, it would disprove his repeated 

denials that he has such weapons. 

Regarding Senator Bayh’s question of Iraqi links to al-Qa’ida, Senators could draw 

from the following points for unclassified discussions: Our understanding of the relationship between Iraq and al-Qa’ida is evolving and is based on sources of varying 

reliability. Some of the information we have received comes from detainees, including some of high rank. We have solid reporting of senior level contacts between Iraq 

and al-Qa’ida going back a decade. 

Credible information indicates that Iraq and al-Qa’ida have discussed safe haven 

and reciprocal non-aggression. 

97

Since Operation Enduring Freedom, we have solid evidence of the presence in 

Iraq of al-Qa’ida members, including some that have been in Baghdad. 

We have credible reporting that al-Qa’ida leaders sought contacts in Iraq who 

could help them acquire WMD capabilities. The reporting also stated that Iraq has 

provided training to al-Qa’ida members in the areas of poisons and gases and making conventional bombs. 

Iraq’s increasing support to extremist Palestinians, coupled with growing indications of a relationship with al-Qa’ida, suggest that Baghdad’s links to terrorists will 

increase, even absent US military action. 

Sincerely, 

JOHN MCLAUGHLIN, 

(For George J. Tenet, Director).

STATEMENT BY DCI GEORGE TENET, 

October 8, 2002. 

There is no inconsistency between our view of Saddam’s growing threat and the 

view as expressed by the President in his speech. Although we think the chances 

of Saddam initiating a WMD attack at this moment are low—in part because it 

would constitute an admission that he possesses WMD—there is no question that 

the likelihood of Saddam using WMD against the United States or our allies in the 

region for blackmail, deterrence, or otherwise grows as his arsenal continues to 

build. His past use of WMD against civilian and military targets shows that he produces those weapons to use not just to deter.

Chairman SPRATT. Likewise I ask for unanimous consent that 

members who didn’t have an opportunity to ask questions of the 

witnesses be given seven days to submit questions for the record. 

Without objection, so ordered.

[Questions submitted for the record and the witnesses’ responses 

follow:]

Congressman: Congressman BLUMENAUER

Witness: Mr. BOWEN

QUESTION NO. 1: WATER QUALITY AND SANITATION ISSUES

Question: Special Inspector General Bowen: SIGIR’s audits indicate limited 

progress in nearly every aspect of reconstruction. Please inform me as to steps 

planned to improve water quality and water sanitation infrastructure in Iraq. Are 

these planned actions sufficient to restore access to fresh water and functioning 

water sanitation to the Iraqi population?

Answer: The World Bank estimates that the Iraq water sector needs $14.4 billion 

to rebuild Iraq’s public works and water system. According to information program 

managers have submitted to SIGIR, but which we have not independently verified, 

the U.S. has contributed approximately $2.38 billion in reconstruction funds to the 

water sector, the preponderance of which came from the Iraq Relief and Reconstruction Fund (IRRF). Of the total U.S. allocation for the water, $2.2 billion has been 

obligated and $1.72 billion expended. 

The IRRF was used to fund approximately 1,100 water projects, including potable 

water, sewerage, water conservation, wastewater treatment, and pumping stations 

across Iraq, according to program managers; we are told that only about 100 

projects remain ongoing. As only these few projects remain to be completed, it is 

unlikely that direct U.S. efforts in this sector will result in a significant further improvement in access to fresh water and functioning water sanitation to the Iraqi 

population. 

The goal of the U.S. effort is to provide potable water capacity for 8.38 million 

people and sewerage service for 5.2 million people. As of July 31, 2007, U.S. projects 

have provided the capacity to serve 5.86 million people with potable water and 5.1 

million people with sewerage service, according to figures provided to SIGIR by the 

program managers. It is important to note that the U.S. is not able to measure with 

accuracy how much water actually reaches Iraqis. The outcome metrics recorded by 

the Iraq Transition Assistance Office track ‘‘potential’’ impacts of U.S reconstruction 

efforts in the water sector. 

Commanders’ Emergency Response Program funds are starting to play a larger 

role in the water sector since IRRF funds are mostly expended. 

Iraq’s water treatment and sewerage facilities are operating at considerably less 

than normal capacity. The inability of Iraq’s water ministries to sustain projects 

continues to limit progress in the sector. The security situation is the number one 

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challenge faced by ministries today in executing their work. According to an official 

of the Department of State’s Near Eastern Affairs Bureau, ‘‘deteriorating [security] 

conditions are increasingly affecting the ability of both the Ministry of Water Resources and the Ministry of Municipalities and Public Works to operate and has 

reached a crisis stage.’’

SIGIR noted in its latest quarterly report that ‘‘employees [of the water ministries] have vacated Baghdad buildings in dangerous locations’’ and that Iraqi Ministry of Municipalities and Public Works officials said that ‘‘less than half of the remaining staff are showing up for work every day.’’

Congressman: Congressman BLUMENAUER

Witness: Mr. ENGLAND

QUESTION NO. 2: ENERGY EFFICIENCY IN DOD OPERATIONS

Question: Deputy Secretary of Defense England: In the 6 years since the publication of the Defense Science Board report, please fully discuss whether the Department of Defense has implemented any of its recommendations.

Answer: The 2001 Defense Science Board (DSB) recommendations have sparked 

an increased emphasis in DoD’s approach to energy and energy security. This DoD 

emphasis is highlighted in my August 9, 2007 memorandum listing ‘‘energy initiatives’’ as a DoD top 25 transformation priority. 

Core to Departmental efforts is an initiative to accurately value the fully burdened cost of fuel (FBCF) and integration of FBCF considerations into DoD acquisition processes. Integrating the FBCF, which studies have shown to be as high as 

$42 per gallon, will facilitate the use of energy efficient technologies in weapons systems development by revealing the true cost of energy across the life cycle of a 

weapons system. Formal process change to introduce FBCF considerations into acquisition programs began April 10, 2007 with an Under Secretary of Defense, Acquisition, Technology and Logistics (USD (AT&L)) memorandum. This memo identified 

three (3) pilot programs which are being used to develop the specific guidance and 

detailed procedures to apply the fully burdened cost fuel to acquisition processes. 

Overarching guidance mandating use of FBCF considerations is currently being integrated into DoD Instruction 5000.2, ‘‘Operation of the Defense Acquisition System’’. 

In addition, last year the Department formed an Energy Security Task Force to 

explore energy efficient technologies applicable to the DoD. The Energy Security 

Task Force has the responsibility for technologies relative to DoD platforms, systems and installations and looks at both conventional and alternative energy 

sources and demand-reduction strategies. 

The Department fully recognizes energy as a dominant factor in the 21st century 

battle space. While traditional Departmental approaches to energy have focused on 

supply-side efficiencies, the DSB and other studies have emphasized that energy 

must be addressed in a broader context. Accordingly, the Department is moving to 

incorporate energy considerations (cost and technologies) into key corporate processes on the demand-side to develop a more mobile and agile force.

Congressman: Congressman BLUMENAUER

Witness: Mr. ENGLAND

QUESTION NO. 3: ENERGY EFFICIENCY IN DOD OPERATIONS

Question: Deputy Secretary of Defense England: What is the status of your efforts 

to implement the performance parameter noted in ADM Giambastiani’s 2006 memorandum? Also, is the ‘‘fully burdened cost of fuel’’ metric identified in Mr. Krieg’s 

2007 memorandum now being used in all acquisition trade studies?

Answer: Chairman of the Joint Chiefs of Staff (CJCS) incorporated the requirement for an energy efficiency key performance parameter (KPP) in the recent update to CJCS Instruction 3170.01F and CJCS Manual 3170.01C. These documents 

formally lay the foundation for the selective application of an energy efficiency KPP 

to DoD systems and potential capabilities. Currently, efforts are under way to develop the detailed criteria to determine how and when to apply an energy efficiency 

KPP to a program. The energy efficiency KPP must be measurable and serving to 

reduce both battle space supply-side challenges and life-cycle costs. 

Complementing the energy efficiency KPP initiative, the USD (AT&L) April 10, 

2007 Fully Burdened Cost of Fuel (FBCF) memo identified three (3) pilot programs 

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which are being used to develop the specific guidance and detailed procedures to 

apply the fully burdened cost fuel in acquisition processes. The Institute for Defense 

Analysis is on contract to assist in guidance and procedure development. Formal 

program performance based on fully burdened cost of fuel considerations should 

begin late 2008.

Congressman: Congressman BLUMENAUER

Witness: Mr. ENGLAND

QUESTION NO. 4: ENERGY EFFICIENCY IN DOD OPERATIONS

Question: Deputy Secretary of Defense England: I understand the Army has established a Rapid Equipping Force (REF) to respond to urgent operational needs in 

Iraq and Afghanistan. Please describe the status of this effort. Has the REF identified any conditions in Iraq contributing to the high fuel demand there? If so, what 

steps is the Department of Defense taking to relieve that situation?

Answer: The REF has been fully operational since October 3, 2005, and to date 

has developed over 257 types of technology and has shipped over 59,800 pieces of 

equipment to theater. The REF ‘‘leans forward’’ to provide advanced technology to 

meet operational commanders’ immediate warfighting needs. The REF’s cuttingedge solutions increase Soldiers’ lethality and enhance their survivability. 

Pursuant to a Joint Urgent Operational Need Statement from Commander, NMDW, the REF chartered a Power Surety Task Force to assess energy requirements 

in support of contingency operations. The primary intent was to reduce the number 

of Soldiers and trucks exposed to enemy activity while moving bulk fuel. Surveys, 

beginning in November 2006, in Djibouti, Kuwait, Iraq and Afghanistan determined 

that the majority of fuel for Forward Operating Base (FOB) power generation is consumed powering HVAC for temporary work and living spaces (mainly tents). The 

REF quickly developed a technique, called Project Eskimo, which insulates temporary structures by applying sprayable foam to the exterior surfaces, controlling 

temperature, cutting dust infiltration, and reducing noise transmission. This solution was approved by Army Test and Evaluation Command (ATEC) and the Center 

for Health Promotion and Preventive Medicine in January 2007, with first deployment to theater in May 2007. To date, the REF has sprayed approximately 120,000 

square feet in Iraq, 56,200 square feet in Djibouti, and 25,700 square feet in Kuwait; spraying in Afghanistan is scheduled for September 2007. Initial reports indicate that Project Eskimo is reducing HVAC power use by 45% to 80%. 

The Army submitted a Joint Concept Technology Demonstration to the Department of Defense to continue the development of technologies and techniques such 

as Eskimo, which are focused on achieving energy independence at our Forward Operating Bases and Installations. The strategic importance of energy independence is 

now supported by the tactical relevance of reducing the number of trucks on the 

road. Reducing the burden cost of fuel in dollars is important; reducing the burden 

cost in blood is paramount.

Congressman: Congressman BLUMENAUER

Witness: Mr. ENGLAND

QUESTION NO. 5: RECRUITING STANDARDS IN LIGHT OF THE DEMANDS OF THE WAR

Question: Deputy Secretary of Defense England: What are the long-term costs imposed on the Army as a result of the relaxation of these standards? Are there any 

efforts to quantify the added costs of adding recruits who, in previous years, would 

have been rejected? Are there any limitations imposed on Army readiness as a result of these added costs?

Answer: Army recruiting standards are measured by a Soldier’s mental category 

(MENTCAT) and whether or not the Soldier accessed with some type of waiver 

(medical, drug, moral, etc.). The Army does track loss rates by MENTCAT and by 

waiver, and the data clearly indicates that there is no significant long term cost of 

accessing Cat IV Soldiers or Soldiers who require a waiver. 

All recruits access into the Army through a MOS specific Initial Entry Training 

(IET) pipeline. MENTCATs are an indicator of the trainability of the recruit and 

as such they are used solely to determine what MOS the Soldier is qualified for 

based upon his/her degree of technical capacity. There is no additional training for 

Cat IV Soldiers within a given IET pipeline. Therefore, the Army does not incur an 

extra training cost for accessing a Cat IV Soldier, nor does it degrade Army readiVerDate 0ct 09 2002 12:44 Dec 16, 2007 Jkt 000000 PO 00000 Frm 00103 Fmt 6633 Sfmt 6621 J:\DOCS\HEARINGS\110TH\110-17\38255.TXT HBUD1 PsN: DICK
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ness. The Army does track loss rates by MENTCAT, and the data shows that the 

loss rate of Cat IV Soldiers is only slightly more than that of the average of all Soldiers (and actually slightly better then Cat IIIA and IIIB soldiers). Since the Cat 

IV soldiers retain at about the average rate of all Soldiers, the Army does not expect 

a higher loss rate (and thus an increase to the accession mission) should the Army 

decide to access more Cat IV Soldiers. 

Waivers are given to Soldiers who the Army otherwise deems fit to serve. There 

is no extra training necessary for Soldiers with a waiver, and as a whole, they have 

a loss rate almost exactly equal to those Soldiers without a waiver. Like Cat IV Soldiers, there appears to be no long term cost or decrease in readiness due to accessing a Soldier with a waiver under current policy. 

Currently, the Army considers all recruits fully capable of serving in their designated MOS. If this policy changes in the future, and the Army is forced to allow 

Cat IV soldiers to serve in a MOS above their current technical capacity, then there 

is a foreseeable training cost to the Army.

Congressman: Congressman MCGOVERN

Witness: Mr. BOWEN

QUESTION NO. 6

Question: I asked Deputy Secretary England how we can be sure that funds, 

equipment and arms we are providing to Iraqi military, police and security forces 

are not being used against U.S. troops in the field or in sectarian attacks against 

various Iraqi groups and communities? I pose that same question to you, Mr. 

Bowen: In your investigations, can you reassure this Committee that this is not the 

case?

Answer: I can give no such assurances, in part because our jurisdiction is limited 

to a small portion of the programs related to the issues raised in the question. We 

did complete a report on weapons for Iraq security forces funded by the Iraq Relief 

and Reconstruction Fund (SIGIR 06-003), which disclosed problems with accountability for those weapons and which demonstrates that agency management did not 

use procedures intended to prevent those weapons from being misused.

Congressman: Congressman MCGOVERN

Witness: Mr. BOWEN

QUESTION NO. 7

Question: How well, in your opinion, are we tracking and monitoring the Iraqi 

military and security forces that we train, and the equipment and arms we provide 

them?

Answer: We have not directly examined the adequacy or effectiveness of efforts 

to track and monitor Iraqi military and security forces we have trained or the equipment and arms we have provided to them. SIGIR provides, in its Quarterly Report, 

information derived from a variety of sources which may help Members of Congress 

address this question, but we have not assessed the accuracy of that information. 

We did note, in the report cited above (SIGIR-06-003), serious problems with tracking arms provided to Iraqi security agencies. We anticipate undertaking other work 

in this area.

Once again, thank you very much indeed. 

[Whereupon, at 1:30 p.m., the Committee was adjourned.]

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