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41–448 PDF 2008

S. Hrg. 110–437 

MANAGEMENT AND OVERSIGHT OF CONTINGENCY 

CONTRACTING IN HOSTILE ZONES 

JOINT HEARING 

BEFORE THE

FEDERAL FINANCIAL MANAGEMENT, GOVERNMENT 

INFORMATION, FEDERAL SERVICES, AND 

INTERNATIONAL SECURITY SUBCOMMITTEE 

AND THE

OVERSIGHT OF GOVERNMENT MANAGEMENT, 

THE FEDERAL WORKFORCE, AND THE 

DISTRICT OF COLUMBIA SUBCOMMITTEE 

OF THE

COMMITTEE ON HOMELAND SECURITY 

AND GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

JANUARY 24, 2008 

Available via http://www.gpoaccess.gov/congress/index.html 

Printed for the use of the Committee on Homeland Security 

and Governmental Affairs 

( 

(II) 

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

JOSEPH I. LIEBERMAN, Connecticut, Chairman 

CARL LEVIN, Michigan 

DANIEL K. AKAKA, Hawaii 

THOMAS R. CARPER, Delaware 

MARK L. PRYOR, Arkansas 

MARY L. LANDRIEU, Louisiana 

BARACK OBAMA, Illinois 

CLAIRE McCASKILL, Missouri 

JON TESTER, Montana 

SUSAN M. COLLINS, Maine 

TED STEVENS, Alaska 

GEORGE V. VOINOVICH, Ohio 

NORM COLEMAN, Minnesota 

TOM COBURN, Oklahoma 

PETE V. DOMENICI, New Mexico 

JOHN WARNER, Virginia 

JOHN E. SUNUNU, New Hampshire 

MICHAEL L. ALEXANDER, Staff Director 

BRANDON L. MILHORN, Minority Staff Director and Chief Counsel 

TRINA DRIESSNACK TYRER, Chief Clerk 

FEDERAL FINANCIAL MANAGEMENT, GOVERNMENT INFORMATION, 

FEDERAL SERVICES, AND INTERNATIONAL SECURITY SUBCOMMITTEE 

THOMAS R. CARPER, Delaware, Chairman 

CARL LEVIN, Michigan 

DANIEL K. AKAKA, Hawaii 

BARACK OBAMA, Illinois 

CLAIRE McCASKILL, Missouri 

JON TESTER, Montana 

TOM COBURN, Oklahoma 

TED STEVENS, Alaska 

GEORGE V. VOINOVICH, Ohio 

PETE V. DOMENICI, New Mexico 

JOHN E. SUNUNU, New Hampshire 

JOHN KILVINGTON, Staff Director 

KATY FRENCH, Minority Staff Director 

MONISHA SMITH, Chief Clerk 

OVERSIGHT OF GOVERNMENT MANAGEMENT, THE FEDERAL 

WORKFORCE, AND THE DISTRICT OF COLUMBIA SUBCOMMITTEE 

DANIEL K. AKAKA, Hawaii, Chairman 

CARL LEVIN, Michigan 

THOMAS R. CARPER, Delaware 

MARK L. PRYOR, Arkansas 

MARY L. LANDRIEU, Louisiana 

GEORGE V. VOINOVICH, Ohio 

TED STEVENS, Alaska 

TOM COBURN, Oklahoma 

JOHN WARNER, Virginia 

RICHARD J. KESSLER, Staff Director 

JENNIFER A. HEMINGWAY, Minority Staff Director 

JESSICA NAGASAKO, Chief Clerk 

(III) 

C O N T E N T S 

Opening statements: Page 

Senator Carper ................................................................................................. 1 

Senator Akaka .................................................................................................. 3 

Senator Collins ................................................................................................. 5 

Senator McCaskill ............................................................................................ 8 

Senator Levin .................................................................................................... 48 

WITNESSES 

THURSDAY, JANUARY 24, 2008 

Stuart W. Bowen, Jr., Special Inspector General for Iraq Reconstruction ......... 9 

William M. Solis, Director, Defense Capabilities and Management, U.S. Government Accountability Office, accompanied by Carole F. Coffey, Assistant 

Director, Defense Capabilities and Management Team, U.S. Government 

Accountability Office ............................................................................................ 11 

Dina L. Rasor, Director, Follow the Money Project and co-author of ‘‘Betraying Our Troops: The Destructive Results of Privatizing War’’ ......................... 13 

Robert H. Bauman, Investigator, Follow the Money Project and co-author 

of ‘‘Betraying Our Troops: The Destructive Results of Privatizing War’’ ........ 15 

Perry Jefferies, First Sergeant, U.S. Army (Ret.), Iraq and Afghanistan Veterans of America .................................................................................................. 17 

Hon. P. Jackson Bell, Deputy Under Secretary of Defense for Logistics and 

Materiel Readiness, U.S. Department of Defense ............................................. 35 

General David M. Maddox, U.S. Army (Ret.), Former Commander in Chief, 

U.S. Army Europe, Member of the Gansler Commission ................................. 36 

Hon. John Herbst, Ambassador of Ukraine (2003–2006) and Uzbekistan 

(2000–2006), Coordinator for Reconstruction and Stabilization, U.S. Department of State ........................................................................................................ 40 

William H. Moser, Deputy Assistant Secretary for Logistics Management, 

U.S. Department of State .................................................................................... 42 

James R. Kunder, Acting Deputy Assistant Administrator, U.S. Agency for 

International Development ................................................................................. 44 

ALPHABETICAL LIST OF WITNESSES

Bauman, Robert H.: 

Testimony .......................................................................................................... 15 

Prepared statement with Dina Rasor ............................................................. 101 

Bell, Hon. P. Jackson: 

Testimony .......................................................................................................... 35 

Prepared statement .......................................................................................... 123 

Bowen, Stuart W., Jr.: 

Testimony .......................................................................................................... 90 

Prepared statement .......................................................................................... 57 

Herbst, Hon. John: 

Testimony .......................................................................................................... 40 

Prepared statement .......................................................................................... 155 

Jefferies, Perry: 

Testimony .......................................................................................................... 17 

Prepared statement .......................................................................................... 114 

Kunder, James R.: 

Testimony .......................................................................................................... 44 

Prepared statement .......................................................................................... 166 

Maddox, General David M.: 

Testimony .......................................................................................................... 36 

Page

IV 

Maddox, General David M.—Continued 

Prepared statement .......................................................................................... 131 

Moser, William H.: 

Testimony .......................................................................................................... 42 

Prepared statement .......................................................................................... 162 

Rasor, Dina L.: 

Testimony .......................................................................................................... 13 

Prepared statement with Robert Bauman ..................................................... 101 

Solis, William M.: 

Testimony .......................................................................................................... 11 

Prepared statement .......................................................................................... 73 

APPENDIX 

‘‘Urgent Reform Required: Army Expeditionary Contracting,’’ Report of the 

‘‘Commission on Army Acquisition and Program Management in Expeditionary Operations,’’ submitted by General Maddox ......................................... 142 

Chart entitled ‘‘Diminished Foreign Service Cadre Erodes Technical Leadership, Oversight, Policy Impact on Foreign Nations, and Innovation,’’ submitted for the Record by Mr. Kunder ................................................................. 175 

Report entitled ‘‘Logistics Civil Augmentation Program (LOGCAP) LOGCAP 

Support Unit (LSU) Det. Y8—Iraq, After Action Report & Lessons Learned, 

Operation Iraqi Freedom,’’ submitted by Mr. Bauman ..................................... 176 

Charts submitted for the Record by Senator Carper ............................................ 210 

Questions and responses for the Record from: 

Mr. Bauman and Ms. Rasor ............................................................................ 217 

Mr. Jefferies ...................................................................................................... 222 

Mr. Bell ............................................................................................................. 226 

Mr. Kunder ....................................................................................................... 239 

(1) 

MANAGEMENT AND OVERSIGHT OF CONTINGENCY CONTRACTING IN HOSTILE ZONES 

THURSDAY, JANUARY 24, 2008 

U.S. SENATE,

SUBCOMMITTEE ON FEDERAL FINANCIAL

MANAGEMENT, GOVERNMENT INFORMATION,

FEDERAL SERVICE,AND INTERNATIONAL SECURITY,

AND THE SUBCOMMITTEE ON OVERSIGHT OF

GOVERNMENT MANAGEMENT, THE FEDERAL WORKFORCE,

AND THE DISTRICT OF COLUMBIA, 

OF THE COMMITTEE ON HOMELAND SECURITY

AND GOVERNMENTAL AFFAIRS, 

Washington, DC. 

The Subcommittees met, pursuant to notice, at 2:30 p.m., in 

Room SD–342, Dirksen Senate Office Building, Hon. Thomas R. 

Carper, Chairman of the Subcommittee, presiding. 

Present: Senators Carper, Akaka, Levin, McCaskill, and Collins. 

OPENING STATEMENT OF SENATOR CARPER 

Chairman CARPER. The Subcommittee will come to order. I want 

to thank my colleague, my dear friend, Senator Akaka, for cohosting and co-chairing this hearing with me today. 

We will be joined shortly by others of our colleagues. The Senate 

is working today on FISA legislation dealing with the surveillance 

court that was established, thirty-some years ago, I believe. 

And we are going to be voting on and off during the afternoon 

on amendments to that bill. We just finished the first, and I am 

sure more will follow. Hopefully, they will not be too disruptive. 

But I would like to say when I am Majority Leader, we won’t 

have these votes interrupting my Subcommittee hearings, so that 

will probably be a while. 

Well, we are glad you are all here and we will be welcoming Senator Coburn shortly; Senator Collins, who is the Ranking Member 

of the full Committee; and others as they come and go in the afternoon. 

Nearly 5 years after going into Iraq, we still do not know how 

many contractors are there. We have estimates, but they differ. 

Last summer, the U.S. Central Command told us that there were 

about 130,000. Then later, they updated that number to approximately 180,000 contractors. The Gansler Commission Report, 

which came out in October, estimated that there may be 160,000 

contractors in Iraq. 

2 

The Government Accountability Office (GAO) bases its cost estimate on what the Department of Defense said last year, which was 

that there are over 120,000 contractors in Iraq. 

But whatever estimate we ultimately accept, one thing seems for 

sure: We now have maybe as many, maybe even more, contractors 

in Iraq as we have U.S. troops. 

There is an old saying that you cannot manage what you cannot 

measure. And we in Congress are in a position to try to oversee 

contracting in Iraq among other places—without our government 

agencies knowing how many contractors there actually are in theater. 

Certainly, the continuing lack of management attention and 

proper oversight over the contractors in a war zone has resulted in 

runaway costs. Unfortunately, waste, fraud, and abuse are all too 

common in Iraq. Out of $57 billion worth of contracts for services and for reconstruction work in Iraq, the Defense Contract Audit Agency has reported that more than $10 billion, or roughly one-sixth of the total 

spent on contracts, is either questionable or cannot be supported 

because of lack of contractor information needed to assess costs. 

To date, there are more than 80 separate criminal investigations into contracts totaling more, I believe, than $5 billion. And despite 

the dedicated, talented, and hard working contracting professionals 

we have, contract abuse appears to have become endemic. 

Late last year, we learned that the U.S. military paid a Florida company nearly $32 million to build barracks and offices for Iraqi 

army units, even though nothing was ever built. 

Earlier last year, the Special Inspector General of Iraq—he is 

with us today—told us that Parsons Global, Inc., was charged with 

building 140 primary health care centers throughout Iraq, but only 

completed six after 2 years and $.5 billion dollars had been spent. Parsons was also paid $62 million to build the Iraqi Police College, but the barracks failed to include proper plumbing, causing 

sewage to leak through the floors. The building, my staff has 

learned, has not yet been repaired. Construction of the $600 million 

U.S. Embassy in Baghdad continues to be plagued with safety and 

construction problems, and a contractor, First Kuwaiti, has been 

accused of labor abuses and human trafficking. And the list goes 

on. 

But let me be quick to add, though, that the story is not all 

gloom and doom. There are strides being made on all fronts, and 

they are worthy of recognition. 

In response to the 2007 Department of Defense Authorization 

Bill, the DOD has established a comprehensive policy and program 

framework for managing contractors and contractor personnel deployed with our forces on contingency operations. 

The Army, under the leadership of our former colleague, Secretary Pete Geren, commissioned the Gansler Report, and, with the 

blessing of Defense Secretary Gates, has begun implementing some 

of its recommendations. 

A Memorandum of Agreement has been recently reached between the Department of Defense and the Department of State defining the authorities and the responsibilities of private sector contractors in Iraq. 

3 

1The charts referred to by Senator Carper appears in the Appendix on page 210. 

With the leadership of Senators Lieberman and Collins, we were 

able to get more accountability in contracting. And, with the leadership of the freshman senators, we were able to pass into law the 

Wartime Contracting Commission. I, along with, I think, most of 

my colleagues here and on our full Committee were co-sponsors of 

both pieces of legislation. 

I called for this hearing for two reasons: First, how to figure out 

how to improve contracting practices in Iraq and Afghanistan; and 

second, how to prevent these contracting problems from happening 

again. 

As elected Members of Congress, we have an obligation to safeguard American taxpayer dollars, wherever they are being spent. 

The point of this hearing is to move forward and plan better for 

future contingencies, which the United States is certain to face. 

Today, I want to try to ensure the following—and we have a couple of charts set up here with the goals of today’s hearing.1

Goal one is that the workforce problems caused by inadequate 

staffing on the contracting and contract management sides are 

being addressed and solved; second is that the lack of training for 

military personnel and civilians on the battlefield is remedied before the next contingency operation. And third is that we capture 

the lessons learned and inculcate them into military leadership 

schools and civilian training for contracting officers. 

And if you will just look to the other side of the room, number 

four and five—number four that we are planning U.S. governmentwide how to deal with reconstruction and stabilization crises in 

conflict and post-conflict areas, and who should be charged to implement those interagency activities; and finally that Congress 

plays an effective and active role in the path forward. 

To date, the United States has appropriated nearly $630 billion 

for Iraq and Afghanistan, and has spent nearly $470 billion in Iraq 

alone. 

A large part of that money is going to contractors, contractors involved in providing services to our troops and in reconstruction 

projects. Since 2003, we have passed nine supplemental bills for 

Iraq and Afghanistan. We will be asked to vote on another one 

later this year. 

At home, we are addressing huge, growing fiscal imbalances due 

to our aging population, skyrocketing healthcare costs, and a sharp 

decline in the housing sector. And now, we are facing a recession. 

We need to do everything we can to make sure the American taxpayer is getting what he or she paid for, and that is what we intend to do. Senator Akaka. 

OPENING STATEMENT OF SENATOR AKAKA 

Senator AKAKA. Thank you very much, Senator Carper. It is 

great to be with you and to work with you. 

I want to thank you personally for organizing this important 

hearing and for jointly conducting it with the Oversight of Government Management Subcommittee. 

4 

I recently held a hearing in my capacity as Chairman of the 

Armed Services Readiness Subcommittee, which examined deeply 

rooted problems in Army contracting. 

At that hearing, we took testimony from Dr. Gansler, who spearheaded a very revealing and thorough report, which we will hear 

about from our second panel today. 

Contracting specialists are being asked to oversee an increasingly large number of contracts, as was mentioned by the Chairman. Since 1999, the number of contracting specialists has been 

frozen at about 30,000 at the Department of Defense, even as the 

number of contracts has ballooned. 

We have seen less oversight and less accountability at the Department of Defense and government-wide as well. It seems not a 

week goes by where I do not see yet another news story about 

waste, fraud, abuse, and even violence carried out by contractors 

in theater. 

Last year, the Armed Services Committee heard about appalling 

contractor waste and abuse committed by Halliburton under the 

LOGCAP contract. The Special Inspector General’s reports likewise 

have painted a troubling picture of contracting failures in Iraq. 

It also came to light recently that contract security officers in 

Iraq working for the Department of State used unjustified lethal 

force against Iraqi civilians. Shockingly, it seems that these contractors are immune from prosecution under either Iraqi or U.S. 

law. 

Most recently, we learned of contractors in Iraq committing 

crimes against their fellow employees, including rape, with virtually no response from this Administration. 

Contracting can be a valuable tool to supplement government 

services and fulfill our responsibilities to our troops and to the 

American people. But at times, it seems that this Administration 

is turning contracts into corporate giveaways. 

We must restore accountability, without question. Congress, the 

military, and the State Department must redouble their efforts to 

reduce the financial costs to American taxpayers, as well as tragic 

human costs that can result from failures of a contractor oversight 

and accountability. 

These failures are the result of a crisis on multiple levels. First, 

there is a workforce crisis. As I noted a moment ago, the number 

of acquisition specialists has remained stagnant while contracting 

has expanded dramatically. 

The shortage of acquisition workers will continue to get worse if 

we do not address it. According to the Federal Acquisition Institute 

in their Fiscal Year 2006 annual report on the Federal acquisition 

workforce, over half of the Federal Government’s acquisition workforce will be eligible to retire in the next 10 years. Many of these 

will be at the Department of Defense. 

Second, there is a management crisis. We simply do not have 

enough individuals to conduct adequate contract planning, execution, and oversight. 

Unfortunately, planning and oversight often go by the wayside so 

that contracting specialists can meet deadlines and get deliverables. This, again, is not acceptable. 

5 

The acquisition workforce needs enough competent managers to 

oversee the billions of dollars of taxpayers’ money spent on contracts. 

Finally, the most troubling: There is a crisis of accountability. 

Committees from both the House and the Senate have held countless hearings on contracting problems in Iraq and Afghanistan for 

the past 4 years. We created a Special Inspector General for Iraq. 

Still, no one in this Administration has been able and been held 

accountable for these failures. Problems are consistently overlooked 

or ignored. 

We need to shift course in the management of contracting. While 

it is imperative to look at the past to find what has gone wrong, 

it is more important to look to what can be done better. 

I fully support many of the recommendations made by the 

Gansler Commission and by the Government Accountability Office. 

I am committed to working with my colleagues to continue oversight in this critical area, and I am equally committed to taking 

any necessary steps to fix these problems. 

Agencies must invest more in recruiting top-quality contracting 

specialists to provide for oversight. Such an investment would be 

far less costly than paying for more flawed, wasteful, multi-million 

dollar contracts. 

I plan to work especially vigorously on the workforce aspect of 

this issue in my capacity as Chairman of both the Oversight of the 

Government Management Subcommittee and the Armed Services 

Readiness Subcommittee. 

I would like to invite my colleagues here to join me at a hearing 

on my OGM Subcommittee which we will hold soon on governmentwide acquisition workforce challenges. 

This is a serious problem throughout the government and it 

needs our urgent attention. 

Again, thank you, Senator Carper, for agreeing to hold this joint 

hearing, and I thank our witnesses for coming here to provide their 

valuable insight. I hope our hearing today will lead to some real 

progress. Thank you very much. 

Senator CARPER. You bet, Mr. Chairman. Thank you, and it is 

just an honor to sit here next to you and I think this makes a lot 

of sense for us to do this together. Senator Collins, welcome. 

OPENING STATEMENT OF SENATOR COLLINS 

Senator COLLINS. Thank you, Mr. Chairman. Mr. Chairmen, I 

guess I need to say today. 

I want to commend you both for holding this joint hearing, and 

for your diligent focus on a very serious problem, and that is ensuring that taxpayers’ dollars are wisely spent no matter the circumstances. 

Our Committee, both at the full Committee level and at the Subcommittee level, has held countless hearings looking at contracting, 

highlighting examples of wasteful spending, even examples of outright fraud. 

We have found that natural disasters and military deployments 

since the year 2000 have helped to double the dollar volume of Federal contracting, which now exceeds an astonishing $400 billion a 

year. A vast amount of that contracting has gone to the Iraq reconVerDate Aug 31 2005 09:53 Aug 05, 2008 Jkt 041448 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 P:\DOCS\41448.TXT SAFFAIRS PsN: PAT
6 

struction effort, but there were also billions of dollars that have 

been spent in reconstruction efforts for the Gulf Coast in the wake 

of Hurricane Katrina. 

But whether you are looking at the Iraqi reconstruction effort or 

the reconstruction of the Gulf Coast, unfortunately, you see common problems. 

You see an insufficient Federal workforce to oversee and write 

the requirements for those contracts. You see a lack of training. 

You see a lack of a contingency contracting corps that could be assembled to respond to a natural disaster. And not coincidentally, 

you see an over-reliance on non-competitive, no-bid contracts, 

which do not ensure that the taxpayer is getting the best value and 

the highest quality goods. 

Meanwhile, and not coincidentally, the GAO, the Special Inspector General for Iraq Reconstruction, and agency inspectors general 

have identified waste, fraud and abuse, and fiscal mismanagement 

exceeding billions of dollars. 

These problems demand action. They waste taxpayers’ dollars 

and impede the achievement of program objectives. Contracting 

problems in war zones carry additional risks of frustrating the military missions, jeopardizing relations with friendly governments, 

and diluting the effectiveness of America’s financial commitments 

to promoting security, stability, and respect for human rights. 

Last fall’s report by former Under Secretary of Defense Dr. 

Gansler paralleled what this Committee has found in its investigations, and, again, it is the same litany of problems—an over-reliance on no-bid contracts, a vastly expanded workload, insufficient 

staffing, insufficient training, and deficient oversight. 

I believe the Senate took an important step toward contracting 

reform with its unanimous passage of S. 680, the Contracting and 

Accountability Act, which both Chairmen have co-sponsored. 

It is a bipartisan bill, and it would make a big difference. It not 

only addresses the over-reliance on sole source, no-bid contracts, 

but it really focuses on the acquisition workforce. 

That is far less glamorous, but arguably it is even more important than the new restrictions that we have imposed or will impose 

on no-bid contracts. 

The legislation would also establish a contingency contracting 

corps, to ensure that trained and experienced contracting officers 

can deploy to combat zones or to areas struck by natural disaster. 

The House has also passed a contracting reform bill, and I hope 

that this will be one of the accomplishments that we can get done 

this year. 

Again, I want to commend both Chairmen for their interest and 

commitment to this issue, and I am very pleased to join them this 

afternoon. Thank you. 

Senator CARPER. Thank you very much, Senator Collins, and we 

are pleased to join you in support of that legislation. 

Senator COLLINS. Thank you. 

Senator CARPER. Thank you for your leadership. 

I am going to go ahead and introduce our witnesses at this time, 

and we will start with Stuart Bowen. It is always a pleasure to 

have you with us, the Special Inspector General for Iraq ReconVerDate Aug 31 2005 09:53 Aug 05, 2008 Jkt 041448 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 P:\DOCS\41448.TXT SAFFAIRS PsN: PAT
7 

struction, who I have learned just yesterday was married not long 

ago at Rehoboth Beach, Delaware. 

Mr. BOWEN. That’s right. 

Senator CARPER. That’s got to be the start to a good wedding, a 

good marriage. 

Mr. BOWEN. Thank you. 

Senator CARPER. Four years into his job, he’s been to Iraq 18 

times. I think Senator Biden may have the high number here in 

the Senate. He has, I think, been eight or nine times, so you have 

doubled our list. 

When you go, how long do you stay? 

Mr. BOWEN. Two to 3 weeks. 

Senator CARPER. OK. 

Mr. BOWEN. In the summer, sometimes 4 to 5 weeks. 

Senator CARPER. OK. I think I would shorten those summer visits, if I were you. It is pretty hot over there in the summer. 

Well, 4 years into his job, Mr. Bowen has been to Iraq, as I said, 

for 18 times, more than twice the number of, as far as I know, any 

of us in the Senate. 

He has been a vocal advocate of ensuring fiscal stewardship over 

the $44 billion in U.S. appropriated reconstruction funds. Thank 

you, sir. 

Mr. BOWEN. Thank you. 

Senator CARPER. Thanks for joining us. Our next witness, Bill 

Solis, is Director of the Defense Capabilities and Management 

Team in the U.S. Government Accountability Office. 

His portfolio of work covers issues such as contractors on the battlefield, supply chain management, force protection for ground 

forces, and equipment reset. He is joined today by his colleague 

from GAO, Carol Coffey, and the two of you look a whole lot like 

the folks from the GAO who briefed Senator McCaskill and myself 

and our staffs before we went to Iraq back in June. So, it is good 

to see you both. Thank you for your help then and thank you for 

your help today; and frankly, your help in preparing for this hearing. 

Dina Rasor is a partner in the Bauman and Rasor Group. Currently, she serves as Director of the Follow the Money Project, 

which is dedicated to making sure U.S. soldiers have the equipment they need in Iraq and Afghanistan by following the money allocated for the war effort. 

She previously served the Project on Military Procurement for 10 

years, which exposed event scandals in the 1980’s, including over 

pricing and fraud in procurement systems, such as the infamous 

$7,600 coffee brewers—I remember those—and the $670 armrest in 

the C–5 cargo plane, which we have stationed at Dover Air Force 

Base. And did you ever work on P–3s, anything on the P–3 aircraft, 

the Navy P–3 aircraft? 

Ms. RASOR. A little bit. 

Senator CARPER. OK. Fair enough. 

Ms. RASOR. I’ve worked a lot on airlift, though. 

Senator CARPER. OK. As I recall, the coffee brewer was one that 

would make coffee at sea level. It would make coffee at 50,000 feet. 

It would make coffee a thousand feet below the water. 

8 

Ms. RASOR. Well, the specs were just that it would still make coffee after an impact of 40 G’s, which no C–5 would survive, but you 

would still have coffee. 

Senator CARPER. Yes. I always wondered how good was that coffee. That is a lot of money for a cup of coffee. 

Ms. RASOR. Soldiers—troops told me not so good. 

Senator CARPER. All right. Thank you, Ms. Rasor. 

Robert Bauman is an investigator with the Follow the Money 

Project and a partner in Bauman and Rasor Group. He has 24 

years of experience as a DOD Criminal Investigator, investigating 

many large defense contractors. 

He and Dina Rasor have recently co-authored a book entitled 

‘‘Betraying Our Troops: The Destructive Results of Privatizing the 

War.’’ Was that published last year? 

Ms. RASOR. Yes. 

Senator CARPER. Good. And finally, I really want to extend a 

warm welcome to Perry Jefferies, First Sergeant, U.S. Army, Retired. We were talking earlier, and he tells me he had served 25 

years. Is that correct? 

Mr. JEFFERIES. Between the Texas National Guard and the U.S. 

Army, yes, sir. 

Senator CARPER. All right. Well, thank you so much for a quarter 

of a century of service to our Nation. 

As a First Sergeant with the Army’s Fourth Infantry Division in 

Iraq, Mr. Jefferies earned the Bronze Star. And while in the Army, 

he served in Korea and Germany in infantry, armor, and cavalry 

units, and as an instructor at the Armor School at Fort Knox. Upon 

retirement, he was awarded the Legion of Merit. 

He is a founding member of Iraq and Afghanistan Veterans of 

America, and again, our country owes you a huge debt of gratitude. 

Thank you for your service. 

Before I turn it over to Mr. Bowen to offer his statement, I am 

going to ask our witnesses to try to stick to around 5 minutes. If 

you go a little bit over that, it is not the end of the world, but I 

try to ask you to adhere to that. 

We have been joined by Senator McCaskill, and I was just mentioning before we went on our CODEL to Iraq and Kuwait and 

other places how Mr. Solis and Ms. Coffey were good enough to 

brief us and our staff. They denied it. But we know it was them. 

Senator McCaskill, would you like to make any statement at all 

before we turn it over to our witnesses? 

OPENING STATEMENT OF SENATOR McCASKILL 

Senator MCCASKILL. Well, there are a number of people that are 

testifying today that have been of great assistance to me since I 

have arrived in Washington. This is, in a weird way, the stuff that 

I find most exciting. I know that is hard for people to understand 

that I think contracting and following the money is very important. 

And I am glad we are having this hearing, Mr. Chairman. 

I learned a lot when I was in Kuwait and Iraq looking at contracting issues, and most of it was not good. Most of it would make 

most Americans sick to their stomach. 

We clearly were not prepared for contracting in the way that we 

engaged in contracting in this conflict. We were not prepared by 

9 

1The prepared statement of Mr. Bowen appears in the Appendix on page 57. 

being trained. We were not prepared by process. We were not prepared by oversight. And we certainly were not prepared for accountability. 

And I think it is very important that we focus on one important 

fact. Things don’t change unless there are consequences. If people 

are not fired or demoted or if there is not a failure to promote in 

the military because of massive failure of appropriate oversight and 

management, things will not change. 

One of the most disheartening things I heard when I was in Kuwait and Iraq was the admission by many people I talked to that 

the exact same mistakes had been made in Bosnia. 

And guess what they did after Bosnia? They did a lessons 

learned. And guess what happened to the lessons learned? Nobody 

read it before Iraq. And so, the same mistakes were repeated 

again. 

And there is no way we can look the American people in the eye 

and say that we are not going to let this happen again unless there 

are consequences when people fail to look out for the taxpayers’ 

money in a way that is responsible. 

So this hearing is important, but I do think that the Contracting 

Commission, which I am very excited about that will be a bipartisan effort beginning next year, if we do not look at their recommendations in the coming years, and make sure that this is not 

just about talk, and these hearings are very important and I know 

how many of them we have had. There have been, by my count, 

I think 300 different reports written about contracting problems. 

And there have been, by my count, tens upon thousands. I think 

we have figured out now, there are around 30,000 auditors in the 

Department of Defense alone. 

Now, this does not make America feel good about where we are. 

So, I am glad we are having this hearing. And I do not want to 

be the gloom and doom person here, but I will tell you I do not 

think all the hearings in the world are going to make a difference 

until somebody starts losing their job. Somebody loses a star. 

Someone fails to get a star. Someone at the Department of Defense 

is fired because of how they have done their job when it comes to 

watching taxpayer money. Thank you, Mr. Chairman. 

Senator CARPER. Senator McCaskill, we thank you as well. Mr. 

Bowen, please proceed. 

STATEMENT OF STUART W. BOWEN, JR.,1 SPECIAL INSPECTOR 

GENERAL FOR IRAQ RECONSTRUCTION 

Mr. BOWEN. Thank you, Mr. Chairman, Ranking Member Collins, Senator McCaskill, and Members of the Committee. I am 

pleased to be here to address the topic of today’s hearing, Management and Oversight of Contingency Contracting in Hostile Zones, 

one of which I travel regularly. 

I am here to tell you that there are two fundamental aspects to 

analyzing this issue in my view: First, the oversight of the contracting processes in a contingency zone; and, second, oversight of 

contractors on the battlefield. 

10 

My office’s work has focused chiefly on the former issue, and my 

testimony today, which I will summarize briefly, analyzes that 

matter. 

SIGIR’s mandate gives us broad jurisdiction to look across agency lines in overseeing the use of about $45 billion in U.S. Government money appropriated for the relief and reconstruction of Iraq. 

We have issued more than 200 audits, opened more than 200 inspections, opened more than 300 investigations, and issued three 

lessons learned reports. My talk today will focus on our lessons 

learned report on contracting and procurement. 

Our next quarterly report will be delivered to the Congress in 5 

days, and, as you noted, I leave for my 19th trip to Iraq next 

month. 

In my remarks, there are three matters I would like to address 

briefly: One, our recommendations regarding contracting in Iraq reconstruction; two, what congressional actions have been taken and 

their efficacy, and three, the core challenge with analyzing and addressing the problems of contingency operations management. 

In 2006, we issued our second lessons learned report on contracting and procurement. The first lessons learned report was on 

human capital management, and the last one, presented to this 

Committee last spring, was on program management. 

At the hearing before the full Committee in August, we presented our findings and conclusions. We noted that our extensive 

review, which included interviewing all those in charge of contracting in Iraq and reviewing all the documents related to it that, 

indeed, found contracting procurement personnel were not adequately included in the planning for Iraq reconstruction. There was 

too broad a use of sole source contracts early on in the process and 

especially limited competition contracts; that there was no single 

set of contracting regulations at work in Iraq. There were a whole 

series of agency-driven versions of the Federal Acquisition Regulation. 

There was no deployable contracting system available at the time 

that the Iraq relief and reconstruction began. There was no single 

unified contracting entity to manage contracting in theater. There 

was a failure in Iraq to definitize contracts as one of our audits 

identified in detail, and there was an overuse of the expensive design-build, cost-based contracts, with limited, or not effective 

enough, invoice review. We continue to do our invoice review of 

those contracts, but different contracting mechanisms would have 

been better. 

Our recommendations promoted the creation of a contingency 

Federal Acquisition Regulation, institutionalization of programs 

like the Commanders’ Emergency Response Program, including 

contracting officials early on in contingency ops, and creating a contingency contracting corps, which S. 680 proposes to do, and which 

has passed the Senate. 

The Senate has acted through S. 680 in a very effective way to 

address some of our recommendations, including the contingency 

contracting corps issue; the need to address cost-plus contracts and 

get control and oversight on them; and to address the dramatic 

drop in the acquisition workforce over the last 15 years. 

11 

1The prepared statement of Mr. Solis appears in the Appendix on page 73. 

The OMB Office of Federal Procurement Policy has adopted 

SIGIR’s guidance for contingency contracts, and, so, that recommendation is having an effect within the Executive Branch as 

well, and additional evidence is the Gansler Report, a very effective 

review of the Department of the Army’s contracting challenges, 

echoing similar problems, ones that this Committee has uncovered 

in hearings and ones that we have identified in our reporting. 

The next phase of our lessons learned effort will be to look at 

contingency operation management writ large, which was the issue 

that Senator McCaskill was addressing. The contracting problems, 

the personnel problems, the program management problems are 

symptoms of a larger issue, and that is for the U.S. Government 

to address how it is structured to manage operations, relief and reconstruction operations, in a contingency environment. 

And with that, that concludes my brief statement. I look forward 

to your questions. Thank you, Mr. Chairman. 

Senator CARPER. Very fine. Thank you for that statement and for 

your work. Mr. Solis, you are recognized. 

Mr. SOLIS. Thank you. 

Senator CARPER. Why don’t you proceed? 

STATEMENT OF WILLIAM M. SOLIS,1 DIRECTOR, DEFENSE 

CAPABILITIES AND MANAGEMENT, ACCOMPANIED BY CAROLE F. COFFEY, ASSISTANT DIRECTOR, DEFENSE CAPABILITIES AND MANAGEMENT TEAM, U.S. GOVERNMENT ACCOUNTABILITY OFFICE 

Mr. SOLIS. Chairman Carper, Senator Collins, and Senator 

McCaskill, I am pleased to be here today to discuss a number of 

issues regarding the oversight and management of the contracting 

with the beginning of military operations in Iraq, the scope, size, 

and use of contractors has grown exponentially, making the management and oversight of them more complex. 

Your continuing oversight of this issue is paramount, not only to 

improving the management of contractors, but also helps ensure 

our military members receive high quality contract services in the 

most economical and efficient manner. 

My testimony will focus first on the problems that DOD has 

faced in managing and overseeing contractor support to deployed 

forces; and second, the future challenges that DOD will need to address to improve its oversight and management of contractors at 

deployed locations. 

In addition, as you requested, we have developed several actions 

the Congress may wish to consider requiring DOD to take on. 

Since 1997, we have reported on long-standing problems that 

have hindered DOD’s management and oversight of contractors at 

deployed locations. Examples of these problems include: The failure 

to follow planning guidance; an inadequate number of contract 

oversight and management personnel; the lack of visibility over 

contracts and the number of contractors; failure to systemically collect and distribute lessons learned; and a lack of comprehensive 

training for contractor oversight personnel and military commanders. 

12 

In addition, we have also reported on the lack of high level attention and leadership within DOD to deal with these problems. Not 

surprisingly and in some cases where there has been a lack of oversight and training with contractors, there have been both monetary 

and operational consequences. 

To its credit and in response to some of our recommendations, 

DOD has begun to address some of these long-standing issues by 

designating a focal point within the OSD to deal with contractor 

oversight issues, implementing a database to maintain accountability of contractor personnel in Iraq and Afghanistan, issuing in 

2005, a comprehensive guidance on contractor support to deployed 

forces, which is a noteworthy improvement. 

However, we found little evidence that DOD and its components 

were implementing the 2005 guidance or much of the other guidance addressing management and oversight of contractors supporting deployed forces. 

Therefore, we believe, the issue is now centered on DOD leadership ensuring that existing guidance is being implemented and 

complied with. 

Based on our past work, several additional challenges will need 

to be addressed by DOD to improve oversight and management of 

contractors supporting deployed forces in future operations. 

These challenges include a number of broader issues, such as incorporating contractors as part of the total force, determining the 

proper balance of military, civilians, and contractors in future contingencies and operations, clarifying how DOD will work with other 

government agencies in future contingencies and operations, and 

addressing the use and role of contractors in its plan to expand and 

transform the Army and Marine Corps. 

As requested, we have considered some specific legislative remedies for the challenges facing DOD. While we believe DOD bears 

the primary responsibility for taking actions to address these challenges, there are three actions that the Congress may wish to consider requiring DOD to take in order to improve oversight and 

management of contractors and ultimately to improve services provided to the war fighter. 

These include: Again, determining the appropriate balance of 

contractors and military personnel as it shapes its forces for the future, including the use and role of contractor support to deployed 

forces and force structure and readiness reporting; and ensuring 

that operation plans include specific information on the use and 

role of contractor support to deployed forces. 

In closing, I think it is important to recognize that we are dealing with a very complex and complicated issue. Today, there are as 

many contractors supporting military forces in Iraq as there are 

military forces themselves. 

These contractors provide a large range of services. Put simply: 

Contractors are an enormous and essential part of our way our 

military operates today, and DOD’s efforts to address long-standing 

challenges with its oversight and management of contractors at deployed locations touches fundamental aspects of how the military 

is organized, how resources and responsibilities are allocated, and 

how it prepares for and executes the missions in peace time and 

during combat. 

13 

1The prepared statement of Ms. Rasor and Mr. Bauman appears in the Appendix on page 

101. 

What is needed is an institutional change that accepts the reality 

of contractors as a vital part of the total force and fundamental 

change in how DOD thinks about, plans for, and executes its use 

of contractors to support deployed forces. 

As an officer told us in 2006, ‘‘contractors are not fire and forget.’’ 

This concludes my prepared remarks. I will be happy to answer 

any question that you may have. 

Senator CARPER. Mr. Solis, thank you very much for your testimony, to both of you for your help in past months and also in preparation for this hearing. 

Mr. SOLIS. Thank you. 

Senator CARPER. Ms. Rasor, you are recognized and please proceed. 

STATEMENT OF DINA L. RASOR,1 DIRECTOR, FOLLOW THE 

MONEY PROJECT; AND CO-AUTHOR OF ‘‘BETRAYING OUR 

TROOPS: THE DESTRUCTIVE RESULTS OF PRIVATIZING 

WAR’’ 

Ms. RASOR. OK. Thank you very much for having us today. I 

wanted to say—I guess we are kind of dating ourselves—but between the two of us we have 50 years of experience of looking at 

this, so it is very frustrating to see where we are today. 

We took time out of our normal work to write this book, because 

we heard so much from so many soldiers that troubled us. And 

when we were writing the book, we wanted to write it from the soldier and the contractor employee’s point of view. And we spent a 

lot of time talking to a lot of people. 

But one of the things that I learned the most about—in the 

course of writing this book—is how did this get started? How is it 

that we suddenly had this giant leap in the amount of contractors 

compared to the Gulf War and wars before this? 

And I am going to be discussing about contractors on the battlefield in hostile areas where they should be, where they should not 

be, and then I am going to defer to Robert Bauman with all his 

years of training in oversight, although we both talk about oversight. 

When we interviewed General Paul Kern, the head of the Army 

Materiel Command, for this book, he brought out something that 

I had not thought of, and it just did not dawn on me. He said, I 

was told to prepare for this war in a short—I am paraphrasing him 

here—amount of time for this war. And there was suddenly a troop 

cap put on us, and it was not just a troop cap on people who pulled 

the trigger. It was a troop cap on the people who did the logistics. 

And, of course, many of you may know that logistics is the weak 

sister in the sense of getting funding in the Army and the Department of Defense. It is not the glamour career. 

And so, he is looking around saying I do not have enough people. 

What am I going to do? 

Well, they pulled out the LOGCAP III contract that KBR had to 

service troops around the world—Bosnia and other places. And 

when they pulled it out, it was a $60 million a year contract. It has 

14 

now accrued, most estimates I have heard, $26 billion. That is contract growth. 

So what happened was suddenly because of this troop cap, because of this force, this contract was exploded in ways never 

thought of before, and I think of Iraq now as the land of unintended consequences. And one of the unintended consequences that 

I am very concerned about that is where the contractors are and 

how much do you rely on them and how do the troops rely on 

them? 

This situation was an anomaly. It does not have to be permanent. We do not have to have contractors in hostile zones at this 

level. I am not against contractors. I am not against the use of contractors. I am for using contractors where it makes sense, where 

it saves money, and when they have effective oversight. 

But there is an Achilles’ heel here. The Achilles’ heel is you cannot put people—contractors and contractor employees—in vital logistics areas in a hostile zone, where the soldiers have to rely on 

them getting through for their food, water supplies, ammunition, 

and everything else. 

And there is a reason for that. When you join the Armed Forces, 

you take an oath. You are under the Uniform Code of Military Justice. And we all know how patriotic our troops are. But the reason 

that we have the Uniform Code of Military Justice is you give up 

some of your constitutional rights, and one of them is you cannot 

just quit and go home. You stay. 

And you are expected to stay and fight. If you are an Army truck 

driver and you think that road is dangerous and you tell your sergeant you do not want to go there—you know in the back of your 

mind, your goal is—your choices are drive or be brought up on 

charges. 

And the reason is that war is chaos. War is dangerous, and you 

ask people in war to do things against their own self interest. And 

that is why we have a military. 

When you put a contractor truck driver in that situation—I am 

not talking about driving in a safe situation—I am talking about 

driving those long convoys, those thin lines of supply support from 

base to base in Kuwait—you have got two problems. One, are you 

asking the contractor to supply food and water to soldiers in outlying areas, which, by the way, the LOGCAP contract requires 

them to do, but they do not do it. 

When you do that, you have two problems. You have a contractor 

who has a statement of work who may decide I do not want to do 

some of this or all of it. I do not want to do some of it. Our book 

is full of that, of them halfway doing it. 

And the commander does not have the same kind of control of 

going up as he would someone under him, relieving him of command for not doing his job and putting in someone else. 

The commander has the job going back and forth with our peace 

time procurement rules; to run back, start a breach of contract proceedings in the United States. And the other part of that is contractor employees can quit at any time. That is their constitutional 

right, and they have. 

One of the examples is when you all remember when one of the 

first KBR truck convoys blew up and Tommy Hamil got kidnapped, 

15 

1The prepared statement of Ms. Rasor and Mr. Bauman appears in the Appendix on page 

101. 

and he was in a car with the insurgency, with a gun to his head. 

And that was flashed all over the news. Well, a whole lot of contracting truck drivers quit, and there were a thousand trucks 

stopped at the Turkish border, and the Army had to scramble to 

find somebody to drive them. 

Senator CARPER. Ms. Rasor, I could listen to you testify, frankly, 

for a whole lot longer, but finish your thought. And we will—— 

Ms. RASOR. Yes. OK. 

Senator CARPER [continuing]. Turn it over to Mr. Bauman. 

Ms. RASOR. All right. So, I wanted to put this into the mix, because this is something people do not think about. 

Now, what are we going to do if the Iraqi Parliament decides to 

pull the immunity for the contractors? How many more will go 

home and leave us in the lurch? I really would like you to listen 

to Perry Jefferies on this. 

So, I would like to say that my suggestion is you have to pull 

the contractors back to the safe fortified bases, to Kuwait, to the 

Green Zone, and figure out the line in the sand that you do not go 

across so that our soldiers are not stuck when the contractor fails 

to perform or the contractor employees quit. Their lives are at 

stake. And I am just appalled that this could happen to our troops. 

Now, I am going to turn it over to Mr. Bauman to talk more 

about the things that—— 

Senator CARPER. Mr. Bauman, you are welcome. Thank you. 

STATEMENT OF ROBERT H. BAUMAN,1 INVESTIGATOR, FOLLOW THE MONEY PROJECT; AND CO-AUTHOR OF ‘‘BETRAYING OUR TROOPS: THE DESTRUCTIVE RESULTS OF 

PRIVATIZING WAR’’ 

Mr. BAUMAN. Good afternoon, Mr. Chairman, and Members of 

the Subcommittees. 

I am here today with Ms. Rasor to speak about the problem with 

acquisition management and oversight for contingency contracts in 

Iraq. 

It has been well documented by government agencies that the 

Army’s management and oversight of its contingency contracts for 

services in Iraq and Afghanistan has been seriously deficient. Our 

book also discloses on-the-ground accounts of how poor acquisition 

management and oversight has affected our troops. 

Deficient acquisition management and oversight seriously erodes 

the government’s ability to maintain control and accountability of 

its contracts. 

Such deficiencies should not have been a surprise for the Army. 

As far back as 1994, the GAO and other agencies have disclosed 

these problems on the part of the Army on contingency contracts. 

Despite years of being aware of the problems, the Army has 

taken no substantive action to resolve their management and oversight problems. There is no telling how many billions of dollars 

have been wasted as a result. 

A startling example of just how dysfunctional and ineffective 

oversight has been on the ground in Iraq, especially for the 

16 

1The report entitled ‘‘Logistics Civil Augmentation Program (LOGCAP) LOGCAP Support 

Unit (LSU) Det. Y8—Iraq, After Action Report & Lessons Learned, Operation Iraqi Freedom,’’ 

submitted by Mr. Bauman appears in the Appendix on page 176. 

LOGCAP contract, was revealed in a 2005 LOGCAP Team Detachment after-action report we obtained from a source who was part 

of that team. 

LOGCAP support personnel, who are also called planners, were 

assigned to all the primary bases in Iraq between 2004 and 2005 

and were required to submit comments and issues regarding their 

tour of duty. 

These submissions were rolled up into the after action report 

submitted through the LOGCAP chain of command. I request this 

report be included for the record.1

Senator CARPER. Without objection. 

Mr. BAUMAN. These planners were there to monitor the contract 

and provide advice, assistance, and recommendations on LOGCAP 

issues to the Administrative Contracting Officer, the military, and 

KBR. Unfortunately, they did not have authority over the contractor or the ACO. 

The report disclosed a lack of support by their chain of command 

and being at the mercy of KBR for life support that was inadequate, untimely, and unresponsive. 

ACOs were not trained in LOGCAP and inexperienced in their 

roles. The LOGCAP program manager acted as a cheerleader for 

KBR and led the charge in supporting boondoggles for the contractor. 

Planners suggested possible conflicts of interest and unethical or 

criminal activities between DCMA, the LOGCAP program manager, other unnamed government agencies, and KBR in monitoring 

the contract, including possible collusion. 

Although the Gansler Commission Report was correct in recommending the need for more skilled acquisition and contract monitoring personnel, that alone does not address the root problems for 

defense contracting in general. 

Those root problems are the significant weakening of contract 

laws and regulations over the last 131⁄2 years, under the guise of 

acquisition reform, and the partnering process between DOD and 

contractors. 

The Federal Acquisition Streaming Act and the Federal Acquisition Reform Act, both enacted in the 1990’s, impacted Federal procurement laws and regulations by repealing or superseding various 

aspects of the statutory basis for government contracting such as 

weakening the use of the cost accounting standards, the backbone 

of controlling contractor costs. 

The partnering process in DOD contracting is a concept that has 

been a disaster for government agencies and the taxpayer. Based 

on a mutual commitment between government and industry to 

work cooperatively as a team, it accepts the concept of mutual common interests among the parties to further the interests of the contract. But it does not consider where those interests might be different, especially when it comes to pricing of contracts, technical 

issues, or differences in manpower, skill, and experience. 

17 

1The prepared statement of Mr. Jefferies appears in the Appendix on page 114. 

Large contractors in particular have far more acquisition resources, skill, and experience than DOD, and, therefore, dominate 

the acquisition process under this process. 

With partnering, a large contractor can insinuate itself into the 

acquisition process and dominate or influence acquisition management and oversight to its benefit. 

It seems the Army has decided the best way to remedy its deficiencies in acquisition management and oversight is to outsource 

these functions, such as what has been happening for the new 

LOGCAP IV contract. Contractors managing contractors compromises the government’s control of the process and creates a conflict of objectives between contractors in the DOD. 

It also questions the support contractor’s relationships and motive with the contractors it will oversee and evaluate. 

But who is going to watch the watchers? Certainly, not the 

Army. They do not have the resources to do that. Acquisition and 

oversight should be considered an inherently governmental function to maintain the government’s authority over contingency contracting and to have a contractor manage other contractors is tantamount to having a fox guarding the hen house. 

We recommend that the Congress incorporate remedies strongly 

recommended by GAO, SIGIR, and the Gansler Commission to 

grow the oversight acquisition personnel who have been trained 

and are skilled in this type of contracting. 

At the same time, FASA, FARA, and SARA laws should be repealed or modified, as they effect government contracting to include 

strengthening CAS to provide acquisition and oversight personnel 

with the tools to control costs. 

We also recommend eliminating the partnering process. There 

needs to be a clear acquisition authority over the contractor and 

over the process. 

Acquisition management and oversight should be an inherently 

government function. Therefore, Congress should enact a law restricting or eliminating the privatization of this process. 

I look forward to your questions. 

Senator CARPER. I am sure you will have some. Thank you so 

much, Mr. Bauman, for being here and for your help today. 

Mr. Jefferies, again, we are grateful for your service. We are 

grateful that you are here. And you are recognized for 5 minutes 

or so. Take a little more if you need it, but try to stick to that if 

you can. Thank you. 

STATEMENT OF PERRY JEFFERIES,1 FIRST SERGEANT, U.S. 

ARMY (RET.), IRAQ AND AFGHANISTAN VETERANS OF 

AMERICA 

Mr. JEFFERIES. Thank you, sir. Good afternoon, Chairman Carper, Ranking Member Collins, and Senator McCaskill. 

I am here to speak about the effects of contingency contracting 

on the battlefield as I encountered them in my role as a Calvary 

First Sergeant in Iraq. This is a short version of my full statement, 

and you have got the rest of it for the record. 

18 

Senator CARPER. Your full statement will be made a part of the 

record. 

Mr. JEFFERIES. I encountered these effects as the First Sergeant 

for Headquarters Troop, 1 Squadron, 10 U.S. Cavalry where I was 

assigned since June 2000 until I retired in 2004. 

I served in that role while I was in Iraq from April through October 2003. My troops’ role was to staff, supply, treat, arm, and support Force Package I, the lead element of the 4 Infantry Division 

during Operation Iraqi Freedom I. 

We were tasked organized with a field artillery battalion and elements of a support battalion, specifically the Forward Logistics Element that we called the FLE. 

Just to try to give you an idea of how big this element was, my 

troop or my squadron on its own normally had about 800 people. 

In Iraq, we moved with about 2,000 people, a fairly self-sufficient 

task force. 

I retired from the Army in 2004 and I am testifying today as a 

private citizen. 

But Chief of Staff General Peter Schoomaker wants retirees to 

wear this new Army Retired lapel pin and think while you are 

doing it: ‘‘I was a soldier, I am a soldier, and I always will be a 

soldier.’’ My director asked me what made me an expert to come 

here and testify today, and I told him because I lived it, and I am 

still a soldier. 

Soldiers are expected to maintain the Professional Army Ethic, 

and that means to speak out with the value of candor when it is 

needed. And I think there are some important issues, and I think 

that my soldiers were affected by the way these contracts worked 

while we were in Iraq and that needs to be said. 

I would like to point out that I work as a contractor at Fort 

Hood, and I understand that some services can be delivered by contractors in an efficient and responsible manner, and I try to do that 

every day. And that frees soldiers to train for war and to do those 

other important tasks instead of some of the miscellany that they 

might get caught up in otherwise. 

But what I refer here to are some large-scale support tasks doctrinally provided by combat support or combat service support 

units that were supposed to be provided to our unit in Iraq by civilian companies. 

While I was in Iraq, the task force that I was part of moved independently from our higher headquarters and support units. That 

made us rely on contractors in various locations to provide bulk 

supplies and services to us. When these contractors failed to provide or to deliver, their failure impacted my soldiers in a negative 

way. And I will discuss two issues now. There are others in my 

longer statement and some examples. To paraphrase one of my 

former commanders, whom I discussed my appearance with here 

today, he said we had just enough stuff to kick in the door, but we 

could not stay in the room for very long without help. And I think 

that should be changed. 

We were affected when water, food, and repair parts were not delivered to my unit in a timely manner. There were many weeks in 

Iraq when my entire unit survived on what we called two and 

19 

two’s—two bottles of water and two MREs, or packaged meals 

ready-to-eat a day. 

It is infuriating to know now that the water from our unit was 

sitting inside storage containers inside Iraq, but never moved forward. By Army supply doctrine, our higher headquarters was supposed to push these supplies to us—in other words, deliver what 

we needed. But, since the Army was relying on the LOGCAP contract to provide these supplies, other missions were assigned to our 

support, transportation, and logistics personnel that were supposed 

to get that done. So even though those supplies were paid for and 

designated for our use, they did not make that final mile, and they 

were never handed off to my unit or the element that supported 

them. 

When we departed from Kuwait to attack into Iraq, we carried 

with us all the food, water, and other supplies we could put our 

hands on. We literally covered our tracked vehicles with bottles of 

water and food. 

Thankfully, we were organized with the Forward Logistics Element from the 404th Forward Support Battalion, so we had a little 

bit of extra capability, and we were near to self-sufficient for a few 

days. But even with all those plans and all of our soldiers’ hard 

extra work to make them work, we felt our first supply shortages 

as soon as we crossed the gate into Iraq and saw Iraqi children 

standing by the side of the road. They held leaflets that the U.S. 

forces had dropped before them promising them food, water, and 

medicine. And they were literally begging for food and water, and 

we did not have any to give them. 

This system was troubled, too, by the absence of the normal supply runs. We were not able to evacuate our prisoners or broken 

equipment to rear areas as we had trained to do because since 

there were no trucks coming forward, there was no back haul capability to take it back. 

We moved through Iraq from Kuwait to Baghdad to Tikrit and 

then finally out to the eastern border, near Iran. As the main hostilities settled down so did we; first, in some positions in the desert 

that we called the dust bowl, and later we moved to the Kirkush 

Military Training Barracks—named Camp Caldwell after a young 

soldier who died there the first night we arrived. 

While we were at the dust bowl, water ran so short that even our 

scouts who stood on the checkpoints in the 120-degree sun were restricted to one or two one-liter bottles of water per day. 

When a laundry unit finally reported to us, I was forced to commandeer the water and use it to supply my soldiers. And then I 

put all their soldiers on guard duty. All this happened while supplies designated for my unit and supposedly delivered by KBR sat 

elsewhere in Iraq and went undelivered. 

Our soldiers had to add the mission of re-supply to their other 

activities just to ensure our survival. For example, the logistics officer from our Forward Support Element organized convoys to go to 

Baghdad and other places looking for supplies. In one case, they 

drove all the way back to Kuwait City to get hydraulic oil that we 

needed for our tanks. These were soldiers whose time was already 

accounted for since KBR was supposed to be providing these deliveries. 

20 

We felt other effects when contractors and subcontractors not 

only did not provide the required deliverables to the government, 

and my unit had to provide these or accomplish the task that these 

companies had been contracted to do. 

In late July, the trainers for the new Iraqi Army reported to our 

forward operating base at Camp Caldwell. Instead of relieving us 

from non-mission-essential tasks, they added to them. 

We had to provide food and water to the contractors. There was 

pressure on us to provide hot meals to these contractors even when 

we could not deliver them to all of our soldiers. 

Once again, we had to restrict the amounts of water provided to 

American soldiers to two bottles a day so that we could provide the 

new Iraqi Army trainees four bottles of water a day. We had to 

cover gaps in their contractor security and training. Meanwhile, 

our other military missions continued, and, in some cases, multiplied because of while we were out. 

One day at Camp Caldwell, I spent a day escorting a contract officer from General Sanchez’s office and several KBR contractors 

around while they discussed services they were supposed to provide 

to us. That was the first time I heard the words ‘‘statement of 

work.’’ 

While I was in Iraq, these people never followed through on work 

we discussed or other support that I only found out about once I 

had returned to the United States. 

Part of the problem with contingency contracts is that there is 

only a very remote connection between the people managing the 

contract and those receiving the service. Contract oversight personnels are assigned to the higher levels of leadership, not generally 

to the tactical levels supposed to receive these services. 

We were certainly not set up to monitor the terms and conditions 

of most contracts and receive services or had no idea of the scope 

of work, the conditions, or terms, we were responsible for, and we 

did not have a 1–800 contact number that we could call and find 

out about the contracting. 

I understand that the Army is creating a new type of contracting 

non-commissioned officer to help monitor contracts, but they are 

not deployed where the rubber meets the road, at least not yet. 

Worse, to me, it seems like a self-defeating proposition. If we 

have to add all these additional structures for oversight to the contracts in the front of the battlefield, then why don’t we just let 

those people execute the mission to start with? 

Just have them do the job the contractor is doing. The best way 

to prepare for tactical logistics, I feel, is to allow commanders to 

plan them and execute them with their own proper resources. 

There were a lot of other issues while I was in Iraq, but a lot 

of people worked very hard and eventually to good effect to correct 

a lot of the problems. But that in itself is a problem. 

During the invasion, during the crucial tactical phase, when 

units are contending for battle space and fighting for position, that 

is a bad time to be figuring it out. That needs to be done ahead 

of time, and then trained to as near perfection as possible, because 

plans will go wrong when they are executed. They are going to go 

wrong. That is the nature of war. But if you have a good plan at 

least you have got a good basis for change. 

21 

Hoping that your beans, bullets, and Band-Aids show up magically on time and in the right place, that is no kind of a plan. It 

is only a recipe for disaster. The best way to prepare for tactical 

logistics is to allow commanders to plan them. 

In my opinion, the Department of Defense should reduce its dependence on contractors and rebuild a self-sustaining logistics capability into its units. It should never again find itself in a position 

where it can only accomplish the mission with the permission of a 

civilian company unless the Administration is prepared to immediately nationalize these companies in time of war. 

And what I am talking about is delivery—trucks, security, the 

people to move supplies, all this must be under military control 

from the combatant commander on down at least until security is 

established and the kinetic part of the fight has ended. 

Thank you for the opportunity to appear before you, and I would 

be pleased to answer any questions you have. 

Senator CARPER. Mr. Jefferies, thank you very much for your excellent testimony. It went on little bit, but that was worth waiting 

for. 

The point that you make and your testimony, Mr. Jefferies is we 

sometimes focus understandably on the amount of money that is 

wasted, or the amount of money, tax dollars that are used ineffectively or inappropriately. 

We do not always focus on the consequences for the war fighter. 

Mr. JEFFERIES. Yes, sir. 

Senator CARPER. And what you have done is to just give us very 

graphically what the consequences are for the people that are out 

there fighting. Their lives are on the line, and trying to do their 

job, and how they need better support than in too many cases they 

have gotten in the last 4 years. 

Mr. JEFFERIES. Hooah. 

Senator CARPER. For those of you who do not know, that is an 

Army term, ‘‘hooah.’’ We do not have those in the Navy, but maybe 

we should. It is a good one. 

I sort of thought about this question as you all testified, I was 

born 2 years after World War II ended. I do not remember much 

about the Korean War except from my uncle, who has told me 

about it who served over there as a Marine. My dad, along with 

my uncle, served in World War II, so I know something of that. 

And I served in the Vietnam War myself, and was involved as 

the Governor and Commander-in-Chief of our National Guard in 

Delaware, and was in Congress during the Persian Gulf War, so I 

have some idea what was going on in those wars. 

I do not ever recall in the war that I served in or that my uncles 

and my father served in, where we had this kind of reliance on contractors. I just do not remember anything like this. I know we had 

some reliance in the Vietnam War, but nothing of this magnitude. 

How did this happen? My recollection is that our Secretary of Defense, Secretary Rumsfeld, wanted us to sort of redesign our defense and to have a smaller force, and I suppose a smaller uniformed force, and maybe the flip-side of that is by having a smaller 

uniformed force, we end up with a larger civilian force and private 

sector force that we use as contractors. 

22 

Now, maybe that is the genesis of this. But how did we go down 

this road in the first place? What started us down there? Anyone? 

Ms. RASOR. Well, I felt really compelled to tell Perry Jefferies’ 

story in my book, because, I, like I said it never dawned on me that 

troop cap meant logistics. And it also never dawned on me that 

they would actually believe that you could rely on contractors not 

to leave. 

And so, I think that is the start of it, but I think it was sort of 

the perfect storm. There was a lack of oversight already. There was 

already a problem. There was a rush to go to war. And this set up 

a situation where the troops and troop set all the way up—amazing, and one of our people we talk about in the book is now at West 

Point, and a brilliant captain. They just did not know what the logistics situation was because it got changed. It got changed while 

they were on the way to the war. And I think that people are kind 

of lost on that—because people say well, now contractors are there, 

and we rely on them, but we cannot change it. 

No, this was an unusual circumstance. And so, I am really hoping that the Army and the Congress look at this and say we do not 

have to do this again. 

Senator CARPER. All right. Mr. Solis and then Mr. Bowen? 

Mr. SOLIS. Yes, I was going to say part of it has to start with 

if you go back to the early 1990’s, when after the first Gulf War, 

we downsized the forces. 

I think also, which is maybe a beginning of a more recent phenomenon and General Casey even talked about it yesterday, is that 

one of the core missions that the Army is going to take on now is 

stability operations. And so, the missions are changing. And not 

only are we using more folks like in the logistics area, we have linguists in Iraq. We have interrogators that we are now using as contractors or intel analysts. So, we are expanding—— 

Senator CARPER. We even have sociologists and—— 

Mr. SOLIS. That’s right. 

Senator CARPER [continuing]. And anthropologists—— 

Mr. SOLIS. That’s correct. 

Senator CARPER [continuing]. Who, I am told, are doing pretty 

good work for you. 

Mr. SOLIS. Right. I mean, in addition, private security contractors. A number of different fields are being used. But I think part 

of the genesis is the downsizing of the force, the increase in different types of missions. 

So, I think there is—and part of that, also, I would mention that 

there is a requirement. There is a lot of requirements on the books 

for guidance in terms of preparing for the types of missions you are 

going to have into the future for the military, what are going to be 

your needs, not only for the military and civilians, but for contractors. 

And so, there is a lot on the books already. So, this necessarily 

should not be a surprise that we have these problems because 

there has been planning and there is planning guidance on the 

books already. 

Senator CARPER. All right. Mr. Bowen, please. 

Mr. BOWEN. A policy decision was made in the Department of 

Defense in 1991 to outsource primary logistical support for the 

23 

Army and for military members in contingency operations. That resulted in the issuance of the first LOGCAP contract. It was a 

multi-year contract. It went to Kellogg, Brown, and Root. They retained it; it was annually renewed until 1995 or 1996, when it was 

recompeted and awarded to DynCorp. 

DynCorp held that contract for five more years. It was recompeted again in 2000, and Kellogg, Brown, and Root earned that 

contract. And it was recompeted last year, and it was divided up 

for the first time among three different contractors—Fluor; Kellogg, 

Brown, and Root; and a third one. It has been challenged, so it is 

still—the issuance is still pending. 

The point being is the outsourcing of providing food, fuel, and 

billeting, or shelter, to troops in the field through contractors was 

made in the late 1980s, early 1990s—that was a policy decision. It 

resulted in the LOGCAP series of contracts, and it was a philosophical reflection, I think, of the trend towards outsourcing of 

many previously governmental functions within the U.S. Government as they evolved and also, perhaps, was part of the peace dividend process as well. 

Senator CARPER. All right. Thank you. 

Ms. COFFEY. Senator, if I may? 

Senator CARPER. Please. 

Ms. COFFEY. Some of these decisions are actually the result of 

unintended consequences. For example, when an acquisition person 

decides not to buy the technical data package for a weapons system, then they have to depend on contractors to support that weapons system because they do not own the technical data. 

Decisions that have been made to buy a limited number of aircraft or some kind of weapons system and then does not—is no 

longer economically feasible for the Department to train people to 

fix these weapon systems, then makes us rely on contractors. 

So, it is not—no one made a decision to bring 120,000 contractors 

into Iraq. Many, many people make a decision to bring one or two 

based on decisions that have been made maybe 20 or 25 years ago. 

Senator CARPER. All right. That was a helpful insight. Thank 

you. 

My time has expired. I am going to yield to our co-chair here, 

Senator Akaka, and, if you would, Mr. Chairman, I ask each of us 

to keep ourselves to about 7 minutes. And then we will have time 

for a second round, maybe a little shorter second round. Mr. Chairman, thanks very much again. 

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

Bowen, you recommend that any civilian agency contracting in a 

contingency environment should conduct Gansler-type studies of 

their contracting practices. 

Mr. BOWEN. That’s right. 

Senator AKAKA. This is a useful proposal, I feel. However, it 

seems that there are several cross-cutting issues affecting all agencies with contracts in Iraq that can be identified now. 

What are the most pressing contracting problems that you have 

identified that agencies should address in the short term? 

Mr. BOWEN. First, with respect to contingency operations, tracking the number of contracts and contracting actions going on in 

theater through a single database is essential. 

24 

Second, developing a single point, a one-stop shop, if you will, 

where theater contingency contracting is carried out would help 

achieve better insight and oversight to what contracting actions are 

going on. 

Third, ensuring that there is an effective continuity or process for 

continuity of contracting officers in theater. One thing that we have 

uncovered over and over again in Iraq is that a contract sometimes 

will not have a contracting officer on it, while the previous one has 

departed, and the next one is waiting to arrive. 

The Joint Contracting Command-Iraq, with respect to DOD contracts, has done a good job addressing that problem we identified 

early on, but it, nevertheless, continues to be an issue. 

And finally, we recommended in our contracting lessons learned, 

our first recommendation, was the development of a contingency 

Federal Acquisition Regulation—in other words, one set of regulations that all contractors will know are the rules of the game in 

contingency environments for contracting. That is not the case 

today. 

Senator CARPER. Chairman Akaka, can I interrupt for just a moment? We are in a situation where Senator McCaskill needs to go 

preside at four o’clock. And Senator Collins is required to be at another hearing of equal importance, and what I would like to do, if 

it is all right, is just maybe to yield to Senator McCaskill for, say, 

5 minutes, and then she could slip off to preside and then back to 

you. Is that all right? 

Senator MCCASKILL. I think that you should yield to Senator Collins for 5 minutes and then back to me, because then I would have 

time for 5 minutes to get there. 

Senator COLLINS. Thank you. 

Senator CARPER. All right. Fair enough. Senator Collins. 

Senator MCCASKILL. Because you were here before I was, and, 

besides that, you are more senior. See I am figuring it out. 

Senator COLLINS. You are a quick study. Thank you very much. 

Senator CARPER. Thanks for helping us work this out. 

Senator MCCASKILL. And thank you very much, Senator Akaka. 

Senator COLLINS. Yes, first, let me thank you both. I have a classified briefing from the Intelligence Officer that I am 15 minutes 

late for already, so I very much appreciate that. 

I wanted to follow up on the issue that Chairman Carper raised, 

because it really is a central issue, and that is when is it appropriate to use contractors and when is it not? 

And that is not an easy issue to resolve. I was struck, however, 

Mr. Solis, by your written statement, which pointed out that in 

Desert Storm, the Department of Defense used some 9,200 contract 

employees, but in the current war, the Department is now using 

129,000 contract employees. 

We have heard eloquent testimony from Sergeant Jefferies of an 

appalling situation in which rather than the contractor taking care 

of the soldiers, the soldiers were taking care of the contractors. 

We heard Mr. Bauman refer to contractors overseeing other contractors. That was a real problem with the Coast Guard Deepwater 

contract. 

So, I would ask you, Mr. Solis, when is it appropriate, what criteria would you suggest that the Pentagon should be using to deVerDate Aug 31 2005 09:53 Aug 05, 2008 Jkt 041448 PO 00000 Frm 00028 Fmt 6633 Sfmt 6633 P:\DOCS\41448.TXT SAFFAIRS PsN: PAT
25 

termine when a function should be contracted out and when it 

should not be. And specifically, in a war zone should logistics be 

contracted out? 

Mr. SOLIS. One of the things I am suggesting that the Department needs to go back and look at exactly what are going to be the 

requirements for operations into the future? What is the mix of 

people that they are going to need based on those requirements? 

What is the risk of having military—civilians and/or contractors do 

those particular functions? 

I will say that, notwithstanding all the problems that we have 

talked about with LOGCAP, in our conversations, too, with military members, when there has been proper oversight, proper planning, the contract has worked. 

So, I am not necessarily opposed to necessarily using contractors 

in a hostile zone. I think even if, if you recall recently, there were 

five contractors that were killed in the Green Zone. So, I do not 

know that there is any particular safe place. 

But again, I think the Department needs to go back, figure out 

what its core requirements are, then who’s going to fulfill those requirements? Who’s the best at doing it and what are the risks? And 

that is not going to be easy, but I think there needs to be some sort 

of, as we suggest, a QDR type review, a Goldwater-Nichols Review 

of exactly what are my requirements, who needs to do it, and how 

is it going to get done. 

Senator COLLINS. Mr. Inspector General, in order to have accountability, you have to have clear lines of responsibility. In order 

to do what Senator McCaskill correctly suggests should be done 

about holding individuals accountable, it has to be clear who is responsible. 

One of your major recommendations—or one of your major findings—has been that there is no single agency in charge of post-conflict situations. You have the Department of Defense prior to the 

war. You have the Department of Defense in the midst of the war. 

Right now, you have State, Justice, AID, Department of Defense, 

and you have done audits that show that they do not necessarily 

work well together. 

How important is it for us to tackle the issue of making sure that 

there is a single point of responsibility after the—in the post-conflict situation, though I would argue we are still in a conflict situation, too. 

Mr. BOWEN. I would say that you have identified the most important area for a forum in addressing the structural challenges of 

managing post-conflict contingency operations. 

In Iraq, as a practical matter, in fact, there have been three different agencies that have effectively been in charge of the relief 

and reconstruction process. Iraq Relief and Reconstruction Fund I 

was allocated primarily to the U.S. Agency for International Development because that was all that was deemed at the time necessary to invest in Iraq. 

That quickly changed in the course of 2003 when the Department of Defense effectively took over most of the contracting, the $13 billion of IRRF II. 

And then in 2004, the Department of State took over. So, simply, 

the experience of Iraq exposes, I think, the challenge of identifying 

26 

who’s in charge. And, thus, our lessons learned program, which will 

produce its next report later this year, focuses on exactly this issue 

and will make some recommendations to Congress for reform. 

Senator COLLINS. Thank you. And thank you, Mr. Chairman. 

And I thank my colleagues. 

Senator CARPER. You bet. Thank you so much for coming, and 

again thank you for your leadership on these issues. 

Senator McCaskill, thank you. 

Senator MCCASKILL. Thank you, and I really appreciate Senator 

Akaka giving me just a couple of minutes before I go preside. 

As you can imagine, this is really painful for me that I only have 

5 minutes, and I am like a kid in a candy store right now. I do 

not know where to start. 

Let me ask you this, Inspector General, are you aware of anyone 

who has been fired or demoted because of their failure to oversee 

a contract appropriately in Iraq? 

Mr. BOWEN. Off the top of my head, no. I would have to get to 

back to you with information. We may have that in our files, but 

I cannot name one now. 

Senator MCCASKILL. Can anyone on the panel name anyone who 

has been fired or demoted because of problems with the way they 

oversaw contracts in Iraq? 

Mr. JEFFERIES. Ma’am, I cannot name them, but they put a 

major from the Reserves from Texas in jail for it. They have had 

a couple go to jail. 

Senator MCCASKILL. And I am not talking about somebody who 

we caught stealing. 

Mr. JEFFERIES. Right. 

Senator MCCASKILL. We had active military, a number of active 

military, that have been caught stealing, and obviously this was 

mostly Army contracting oversight that failed. And we know that 

our weapons, frankly, probably have been used against us, because 

we failed to even do the basics of marking a weapon and 

inventorying a weapon when we brought it into the country of even 

keeping track of where the weapons were, and obviously we know. 

I have seen the myriad arrows and charts with all the problems in 

terms of fraud. 

I am talking about just not thinking it is important whether or 

not something cost a dollar or $10,000, the kind of failure to oversee. Anybody that anybody knows has ever been fired or demoted 

for that? 

Ms. RASOR. I have an example of an opposite situation. One of 

the main characters in our book, Major Rick Lambert, was a 

LOGCAP planner and then when he went to the LOGCAP contracting office, he said you have no idea what is going on in Iraq. 

This is ridiculous. The troops are not getting what they need. 

There is a lot of waste in time. And he was told by his senior— 

the senior authorities—I will not tell you because it is too identifying—but one of them said I want to get my next star. Keep your 

mouth shut. And Major Lambert has been retaliated against. 

So, unfortunately, he was very disillusioned because he thought, 

surely, if I go and tell the top-level people in this office—— 

Senator MCCASKILL. Something will happen. 

27 

Ms. RASOR [continuing]. Something will happen. So, we have not 

run into anyone. Quite frankly, I have to tell you, Senator, having 

done this for 25 years, I have rarely seen anyone fired in 25 years 

for doing a lot of this kind of stuff. 

Senator MCCASKILL. Let me ask you also, Inspector General, I 

was really concerned when I read the Center for Public Integrity’s 

recent report about the $20 billion in contracts that have gone to 

foreign companies that we do not know who they are; that it is impossible to determine who these companies are. They are just listed 

as foreign companies. 

Are you aware of unidentified foreign entities that are actually 

contractors in Iraq that we do not have the documentation or the 

available documentation as to who these companies actually are? 

Mr. BOWEN. Not within my jurisdiction. I have not uncovered 

that, but we will look into it. 

Senator MCCASKILL. Well, that is obviously a concern—— 

Mr. BOWEN. Yes. 

Senator MCCASKILL [continuing]. That we would have. In fact, 

their key finding from their analysis at the Center for Public Integrity is that the number one contractor from 2004 to 2006 is, in fact, 

unidentified foreign entities. They actually are at $20 billion, and 

KBR is at $16 billion. 

Mr. BOWEN. Are these DOD funds? 

Senator MCCASKILL. I am assuming they are DOD funds. Then 

on top of that, if you look at that, along with the foreign contractors that are identified, 45 percent of all the funds obligated in the 

top 100 contractors in Iraq from 2004 to 2006, in fact, are foreign 

companies. 

Mr. BOWEN. That is not true with respect to the Iraq Relief and 

Reconstruction Fund—— 

Senator MCCASKILL. Correct. 

Mr. BOWEN [continuing]. Or the Iraq Security Forces Fund. 

There has been over the last 2 years an Iraqi First Program that 

the embassy and the Joint Contracting Command in Iraq have 

pushed aggressively forward and, so, about 60 to 70 percent of the 

contracting actions done now are done with Iraqi firms. And that 

also applies to the Commanders’ Emergency Response Program. 

Senator MCCASKILL. And I think that is good. That is strategic. 

I am worried. I mean, some of the ones they identified a large contractor was Turkey and other countries, and I just—it goes back to 

the point that Ms. Rasor was making is if we are going to contract 

with foreign entities, they—if they are going to be in the hostile 

zone and they are going to be in a situation where they need to 

be focused on protecting the men and women who are there for us, 

even if they are getting less water than the Iraqi folks are getting, 

we need to make sure we know who they are, and we need to make 

sure we know what kind of oversight they have of the men and 

women that are working in the conflict, particularly in an area of 

the world where sometimes it is difficult to figure out who is on our 

side and who is not. 

I would love your follow up on that problem of foreign contractors 

and our ability to oversee them. 

Mr. BOWEN. We will get back to you on it. 

28 

Senator MCCASKILL. Hopefully, you guys will still be going when 

I finish presiding. If you are not, you know we will begin hopefully 

working with the contracting commission next year, and I look forward to seeing all of you there. Thank you. 

Mr. BOWEN. Thank you. 

Senator CARPER. Senator McCaskill, thank you. We will be here 

for a while, I assure you. Thank you for your good work on these 

fronts. Senator Akaka, thank you for your willingness to yield. We 

appreciate that very much. 

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

Mr. Solis, you testified about the extraordinary growth in contract employees serving the Armed Services, and stated that DOD 

does not have an adequate number of contract oversight and management personnel. 

In particular, your written testimony provides staggering statistics that Army contracting personnel experienced a 600 percent increase in their workload and are performing more complex tasks, 

while the Army, civilian, and military contracting workforce has remained stagnant or declined. 

What can be done in both the short term and long term to address this shortage of contracting personnel? Is DOD taking any 

positive steps in this regard? 

Mr. SOLIS. Well, I believe they are taking some steps for the 

short term. 

But nonetheless, again I keep jumping back to what is going to 

be needed for the future, and I think, as you think about growing 

the force, as you think about your requirements for the future, how 

many of those, for example, the 70,000 in terms of growing the 

Army and the Marine Corps I believe, how much of that is going 

to be devoted to this kind of activity in terms of contract oversight? 

I think there needs to be a look at those kinds of things before 

the Department moves along to make sure that if we are going to 

continue to contract at the level that we are at, that there is some 

insurance that there is adequate contractor oversight personnel to 

do the kinds of things that we are doing either like Iraq or for future stability operations. 

Senator AKAKA. Has the GAO looked at how many acquisition 

specialists the Federal Government has compared to their counterparts at the contracting firms, such as KBR? 

Mr. SOLIS. I do not think we have. I know we have reported on 

many problems with the acquisition workforce in general and some 

of the things that you alluded to—the number of people who are 

eligible to retire. But I do not know that we have looked specifically 

at that issue. 

Senator AKAKA. Mr. Bowen, your office’s October 2007 quarterly 

report states that, to date, your office’s cases have resulted in 13 

arrests and five convictions. 

Could you provide any update to those numbers and tell us how 

many cases your office has referred for prosecution and how you 

make that determination? 

Mr. BOWEN. Yes, sir. We have 52 open cases; 36 are at the Department of Justice for prosecutorial management and review; 14 

persons have been arrested; 14 indicted; 5 convicted; 5 in prisons; 

29 

and we’ve recovered over $17 million in forfeiture or simple direct 

recovery of stolen funds. 

The process for deciding how a case gets prosecuted is carried out 

through a joint effort between the Department of Justice attorneys 

and my investigators, as well as several task forces, of which 

SIGIR is a part. 

Senator AKAKA. Have these cases come about because of complaints or reports? 

Mr. BOWEN. Yes, they have. The largest case we have uncovered 

to date involved a corruption scheme in Hillah, South Central 

Baghdad, resulting in the imprisonment of four individuals. Five 

more are going to trial in March. 

That case arose from a whistleblower. And, of note, the National 

Defense Authorization Act strengthened protections for whistleblowers who report to SIGIR. 

Senator AKAKA. Yes. Thank you very much, Mr. Chairman. 

Senator CARPER. You bet. Thank you, my friend. 

GAO and SIGIR have made several suggestions for congressional 

action. If you can think out of all those suggestions that have been 

made, what are one or two of the most important actions that Congress should take to ensure that the problems experienced in Iraq 

are not experienced in the future? 

Mr. SOLIS. Again, I would come back. I think there needs to be 

some kind of Goldwater-Nichols, some sort of QDR Review, within 

DOD that need to be done. But I think the Congress needs to get 

a report back on where the Department stands in terms of that 

particular action. 

Until they decide what the core requirements for its future missions are and who is going to do that, I think that is the kind of 

thing that needs to be done and what is the role of the contractor 

not only for combat zones, but it can be a wide sweeping contractor 

look not only again for deployed locations, but also for maintenance 

and weapon systems and things of that nature. 

Senator CARPER. All right. Ms. Coffey. 

Ms. COFFEY. I would just add that I believe and GAO continues 

to believe that all of the recommendations that we have made in 

the past continue to be valid and should be implemented as soon 

as possible. 

Senator CARPER. Which one or two would you say are the most 

important? 

Ms. COFFEY. Well, in several reports, we have made recommendations that the Department establish teams of experts to 

go in and review the services of contracts like LOGCAP because 

the need for service and the appropriate level of service can 

change. So, periodically, experts should go in and determine whether the service is the right amount at the right time. 

We have found that when the government looks for savings, the 

government finds savings. And in several of our reports, we have 

noted that even small little changes can result in big savings. 

For example, the Marines, when they took over the activity in 

Djibouti, changed from commercial laundry detergent to laundry 

detergent that is available in the military supply system, and was 

able to save a considerable amount of money. 

30 

So those kind of little things can add up, and that kind of process 

should take place regularly. 

Senator CARPER. Good. Mr. Bauman. 

Mr. BAUMAN. One of the GAO recommendations I thought was 

very noteworthy going all the way back to about 1996 in the Balkans, but it certainly is appropriate today because it has not been 

acted on and that is determining level of service. When we deal 

with the labor issues, a lot of labor costs are going to be probably 

the overwhelming largest costs of the contract. 

Back in Bosnia, there was a real concern about the fact that the 

LOGCAP acquisition people did not have a handle at all on what 

the level of service should be, and relied on KBR—relied on their 

estimates and their level of service that they recommended. And 

they went with that without really determining on their own 

whether it was appropriate or not. 

And now, we see in Iraq that this issue has been raised time and 

time again, because we have received many reports about the fact 

that there are a lot of workers over there, especially on the bases, 

who only work a few hours a day, but charge 12 hours a day. And 

it goes on 7 days a week. 

We had on a radio show, a truck—former KBR truck driver that 

called in and said yes, he made an awful lot of money, $100,000 

or whatever it was. It was great money. All I had to do is to work 

3 hours. Then I just worked 3 days and sat around for 4 days, but 

still had to charge 12 hours a day, 7 days a week. And that would 

seem to be the routine. 

So, this is an issue that I think is very important for someone 

to pick up, whether it is—it could be DCAA. It could be the Army 

Audit Agency. It could be GAO. It could be anybody or even SIGIR, 

but it is an issue that I think cries out for a real hard look, because 

of the costs that are spiraling out of control. And I would put labor 

costs into that category. 

Senator CARPER. All right. Thank you. Ms. Rasor. 

Ms. RASOR. I have been looking at this in the last 25 years, and 

you certainly understand having to deal with this, it seems like 

every new weapon system is exponentially more expensive than the 

last until finally we only have one plane for all three services. 

This war is starting the same thing. The way you game a system 

on a cost-plus, cost-reimbursement contract is not the little margin 

of profit you are going to get calculated. You make sure, especially 

when there is no auditors, investigators around, you run up your 

charges—and labor charges are one of them. You run up your costs 

to the max as much as you can, as fast as you can. That increases 

your overhead rate. Then the next time, when you are ready for the 

next statement of work, that becomes the baseline. And that baseline and then you say OK, now, we are going to do this, and we 

are going to do a little more. And then you run that one up. And 

then that becomes the new baseline. And then you run that one up. 

And so, what happens is this new normal. This has happened 

now in Iraq, and now we have this incredibly unscrubbed, loaded, 

historical cost of what it costs to use contractors and fight a war 

using contractors in the battlefield or outside the battlefield. 

What I think needs to be done is all these contract costs need 

to be scrubbed back down to reality, and looked at and scrubbed— 

31 

labor costs, overhead costs, and everything else. That is how you 

game the system. You get well on the next contract. It is called 

contract nourishment. It is old as the hills. 

But in this situation, it is worse because there were very few 

governors on it. 

So, if we accept these historic costs as what it is going to cost 

to go to war, we will not be able to afford to go to war with contractors no matter how much money you pour in. 

Now, it took weapon systems many generations of weapon systems of fraud and fat to get to where we are now. This new industry, the war service industry, has already run their historic costs 

up to astronomical numbers, and that has to be scaled back. 

Senator CARPER. Thank you. Senator Akaka, any other questions 

of this panel? Please proceed. 

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

Mr. Solis, one issue that Ms. Rasor and Mr. Bauman have raised 

in their book is that the media, and, therefore the public, generally 

sees conditions at large bases in Iraq, where top military officials 

are often stationed. They went on to observe that at these bases 

contractors took very good care of our troops, while at more remote 

bases, soldiers had to use duct tape and take care of their boots in 

that way, and drink shower water because there was no clean 

drinking water available. 

So, based on your work in military operations in hostile zones, 

have you observed similar differences in conditions at large bases 

compared to remote bases? 

Mr. SOLIS. Yes. Let me go back to, I think, as I have testified 

before you, too, there have been longstanding problems with DOD’s 

and the Services’ supply chains. 

I would offer, though, that I think the further you go out to a 

forward operating base—not that they should not get a certain 

level of supply and service—the more difficult it does become in a 

hostile zone. But nonetheless, there have been problems with the 

distribution and management and movement of supplies within the 

theater. 

Ms. COFFEY. Well, and recently, we have been speaking to units 

who have recently returned from Iraq within 30 days of their return, and we have spoken to them about these kinds of situations. 

And I will say that generally at this point, military members we 

speak to are very happy and generally very appreciative of the 

services they have received, and they generally, or at this point in 

time, seem to be happy with what they are getting. 

Ms. RASOR. Can I make a point on this? These are the statements of work for KBR, of where they are supposed to deliver food, 

supplies, and water. Now, this is true this is earlier in the war and 

maybe it is better now, although I just heard a story today that 

shows the opposite. 

In the first statement of work, they were supposed to go 100 kilometers around main bases. Perry was within that 100 kilometers. 

It did not happen. And the second statement of work has to do with 

different supplies. KBR was supposed to go 250 to 400 kilometers 

among that bases. 

And I know that people come back and say well, it is getting better. It is getting better. We are 5 years into this war. And the fact 

32 

is that KBR refused when it got hostile to go out there, and do that 

perimeter run. 

And so, it was in their statement of work to do it, to get the 

water to Perry, get the food and water to him and others. But they 

just did not—would not do it. They would tell the commander and 

the LOGCAP planner we are not doing it. They even went so far 

and what we illustrate in our book at one point saying we are not 

going to have our guys come out of our trailers and feed the troops 

at this base because you have not paid the bills, which, by the way, 

was legal for them to do. 

The bottom line is that you—when these outlying areas, when it 

gets dicey and they do not go, the troops do not get the food. But 

it was in their statement of work that they were supposed to do 

this. And they just chose not to do it. 

Ms. COFFEY. Senator, if I could add one more thing? 

Senator AKAKA. Ms. Coffey. 

Ms. COFFEY. When we looked at the use—the activities in Bosnia, we found that the U.S. Army in Europe had developed very 

strict standards for what each base should have. And that was a 

lesson learned that was not necessarily taken forward to Iraq. And 

so, the size of the housing, the number of facilities, the size of the 

gym, that was all laid out, and that is what each base commander 

had to have depending on the personnel at his base. 

And so it made making these decisions much easier, and it also 

was an opportunity to sort of use those standards to limit contract 

growth, because these were the standards everyone had agreed to. 

This is an important lesson learned, as I say, that was not taken 

forward. 

Senator AKAKA. Ms. Rasor, you noted that the Military 

Extraterritorial Jurisdiction Act can be used to prosecute crimes 

committed by contractors. 

I have been distressed by media accounts that contract employees in Iraq may have committed serious offenses, including rape, 

without punishment. Do you know of any case of MEJA being used 

to prosecute any contract employee for wrongdoing committed in 

Iraq or Afghanistan? 

Ms. RASOR. Well, since I am not a legal expert on this, I would 

defer to Scott Horton, whom we spent a lot of time talking to, and 

he has been testifying in Congress. He is writing a book right now, 

on the law in Iraq. 

I do not know of any specific cases. I do know that we have 

talked an awful lot about KBR employees who came back. As an 

investigator, it is actually amazingly easy to find people who are 

former KBR employees because there are so many people who came 

back. 

And there was a fear of lack of—there was sort of a whole attitude, and not just KBR, with contractors, that you could pretty 

much get away with whatever you wanted out there; when they 

had the immunity thing, that set a mindset that the contractors 

were not under any umbrella. 

Now, we saw it very graphically with Blackwater, but I am sure 

there were lots and lots of other instances like that. But when I 

talked to Scott Horton about—for this hearing to write my testimony, he said to me you can use it for the most egregious type of 

33 

criminal stuff, and it will probably work. And he does not think 

that the UCMJ will work because a civilian has not given up their 

constitutional rights. But he said you cannot use it administratively. You cannot use it because a contractor says I quit and go 

home. You cannot use it because a contractor or employee, refuses 

to do a job. 

He said only for the most egregious crimes.—we do cover a lot 

of the security contractors in our book, too. And almost all of them 

told us that when they got there, they felt that they had no law 

over them. 

Senator AKAKA. Well, Mr. Chairman, my time has expired, and 

I will submit my questions. 

Senator CARPER. Fair enough. I have just one last question for 

this panel. And then we will excuse you, thank you, and bring forth 

our second panel. Then we will break for dinner—no, no. [Laughter.] 

This last question would be for Mr. Bowen, if you would, please. 

And I believe that you said to us that there ought to be what we 

call a one-stop shop for contractors in Iraq, and I guess in Afghanistan as well. 

And let me just ask whose responsibility do you think that ultimately should be? And what can my colleagues and I do to make 

sure that happens? 

Mr. BOWEN. I think developing such a resource would be part of 

the reform of contingency relief and reconstruction operations writ 

large, namely that once you identify an entity, be it new or an existing agency, that will be charged with managing contingency ops, 

then that entity will be in charge of developing human capital 

management policies, contracting policies, and program management policies that would be applicable to all the contracting in-theater. 

So, I think to take it piecemeal would be a challenge—and would 

perhaps Balkanize the solution to a Balkanized problem. 

I think that the larger and more ambitious reform would empower whomever is put in charge of contingency operations with 

the authority of effectively coordinating these important functions. 

Senator CARPER. Who should that entity be? 

Mr. BOWEN. Well, there are several ways that the Congress could 

choose to go. One would be a USTR-like entity, a new entity where 

a director of contingency operations reports to the President and 

has charge of managing the interagency issues and develops the civilian reserve corps, the contingency contracting corps—all of the 

elements that would go into deploying a ready team to carry out 

contingency operations. 

Alternatively, it would involve the Congress directing the various 

departments that play the largest role in contingency operations to 

work better together through more effective coordinated systems. 

Senator CARPER. All right. Well, all of you have been very generous with your time, and we are grateful to you for that. We are 

grateful to you for your testimony, your responses to our questions, 

and for your service to our country. 

Several of my colleagues were unable to join us who had to leave 

and will probably want to submit questions for the record, and I 

would just ask that you do your best to respond promptly to those. 

34 

But our thanks to each of you for joining us today, and you are 

excused at this time, and we will welcome our second panel to take 

your seats. Thank you so much. 

Mr. BOWEN. Thank you, Mr. Chairman. 

Senator CARPER. All right. I am going to ask all of our witnesses 

to try to keep your comments to 5 minutes. But we appreciate your 

patience. I will quickly introduce our witnesses on panel two. 

Jack Bell, Deputy Under Secretary of Defense for Logistics and 

Materiel Readiness. And prior to this appointment, Mr. Bell was 

the Deputy Under Secretary for the Army, and earlier as the First 

Chief of Staff of the State Department’s Afghanistan Reconstruction Group in Kabul. I understand you are a highly decorated officer, having served in the Marine Corps. Semper Fi. Thank you for 

your service, my friend. 

Next we have General David Maddox, U.S. Army, Retired. General Maddox is the former Commanding General, U.S. Army, Europe, and Seventh Army. He led the reduction of armed forces in 

Europe from 213,000 to 75,000 troops and restructured the force 

footprint and training of the U.S. Army forces in Europe. 

Our third witness is Ambassador John Herbst. He is the Coordinator for Reconstruction and Stabilization in the U.S. Department 

of State. Ambassador Herbst was the U.S. Ambassador to Ukraine 

and Uzbekistan. Are you currently the U.S. ambassador there? 

Mr. HERBST. No, I left there 18 months ago. 

Senator CARPER. All right. Thank you. He also served our embassies in Israel, Russia, and Saudi Arabia. 

Next, William Moser is Deputy Assistant Secretary for Logistics 

Management at the Department of State and one time a basketball 

referee in the State of Delaware. [Laughter.] 

No, there is another Bill Moser. 

Mr. MOSER. Even though I love basketball, I will not claim that. 

Senator CARPER. All right. Another Bill Moser. Mr. Moser, I understand, has served in the Foreign Service since 1984 across many 

disciplines, including financial management, political-military affairs, and energy affairs. We are glad you are here. 

And finally, James Kunder, Acting Deputy Administrator of the 

U.S. Agency for International Development is joining us today. 

Mr. Kunder has served with USAID in numerous leadership 

roles in Afghanistan as well as Asia and the Near East. Mr. 

Kunder was also an infantry platoon commander in the U.S. Marine Corps from 1970 to 1973. That is when I was on active duty, 

as well. Thank you for your service. We have got a couple of Marines here, and an Army fellow, we are delighted that you are all 

here. 

I am going to ask Mr. Bell, if you do not mind, just kicking it 

off, and we will again try to hold it to 5 minutes, and we will go 

through all of our witnesses and ask some questions. Thank you. 

35 

1The prepared statement of Mr. Bell appears in the Appendix on page 123. 

STATEMENT OF THE HON. P. JACKSON BELL,1 DEPUTY UNDER 

SECRETARY OF DEFENSE FOR LOGISTICS AND MATERIEL 

READINESS, U.S. DEPARTMENT OF DEFENSE 

Mr. BELL. Thank you, Chairman Carper, Chairman Akaka. 

Thanks for this opportunity first of all to discuss the Department 

of Defense’s initiatives to improve the management and oversight 

of contingency contracting. 

As has been discussed here today, contractors supporting our 

military forces, both at home and deployed, are performing critical 

support functions that are integral to the success of our military 

operations. They have become part of our total force that DOD 

must manage on an integrated basis with our military forces. 

At the end of Fiscal Year 2007, CENTCOM reported 196,000 contractor personnel working for DOD in Iraq and Afghanistan, and 

the 160,000 figure that is reported in the Gansler Report was the 

one up to date for Iraq. 

Faced with the unprecedented scale of deployed contractor operations I have just identified, the Department of Defense obviously 

has confronted major challenges associated with the visibility of 

contractors, their integration, their oversight, and the management 

of such a large contractor force working along side our deployed 

military personnel, a challenge that, frankly, DOD was not adequately prepared to address. 

At DOD, we have launched a series of major initiatives to 

strengthen the management and contractor personnel accompanying our forces. This does include the DOD follow up to the recommendations on the Gansler Report. 

However, a work still in progress, the Gansler Report follow up 

will not be covered in my testimony today, with the Army having 

the lead. 

In the limited time that I have available for oral testimony, I do 

want to identify three other major DOD initiatives that are discussed in more detail in my written testimony, and I would be 

happy to discuss those initiatives in more detail during the discussion period. 

In the first area, as mentioned earlier by Mr. Solis, my office has 

led a DOD effort since 2006 to establish a comprehensive framework for managing contractors deployed with our military forces. 

We provided a preliminary report to Congress last October identifying the major elements of this framework. We will be providing 

the final report to Congress in April. 

However, many of the elements of this framework are already 

being implemented in our current contracting management operations in Iraq and Afghanistan. 

The second major initiative was launched in September 2007, 

when Secretary Gates directed that an assessment be made of improvements needed in strengthening the management of contractor 

operations for DOD in Iraq. 

To this end, I led an OSD Team to Iraq, where we consulted with 

our military and civilian leaders and recommended five initiatives. 

These recommendations were endorsed by General Petraeus and 

were approved for implementation by Secretary Gates. 

36 

1The prepared statement of General Maddox appears in the Appendix on page 131. 

Implementation of these initiatives is already underway. Among 

them, two of note that have been discussed earlier in the hearing 

today, one of them was to strengthen further the authority of the 

Joint Contracting Command for Iraq and Afghanistan to give it 

overall authority to review and clear contracts and task orders 

being implemented in Iraq and Afghanistan. 

The JCCIA, as we call it, is adding up to 48 additional personnel 

in theater as we speak to provide this additional oversight. 

We also recommended the strengthening of the Defense Contract 

Management Agency, or DCMA’s, post-award contract administration and oversight for contracting in Iraq and Afghanistan. In response to that recommendation, DCMA has already deployed 100 

additional personnel to theater in December and is preparing to deploy up to an additional 150 DCMA personnel in March to the theater as needed. 

The third area I would like to highlight was identified earlier, 

which is the development of an MOA, which has been implemented 

by DOD and the State Department. Both DOD and the State Department recognize the need to improve the coordination of personnel security contractor operations in Iraq. 

We executed the MOA on December 5, 2007. It covers a broad 

range of management policies and procedures to achieve a more effective coordination of PSC operations in Iraq. Again, I will refer 

you to my written testimony for a listing of the key elements in 

this MOA. 

Many aspects of it have already been implemented, and others 

are in implementation. 

Taken together, these three initiatives substantially strengthen 

DOD’s capabilities and performance in managing our contractors 

and contractor personnel. 

And with that introduction as an index of my written testimony, 

I will be happy to answer your questions. Thank you again for the 

opportunity. 

Senator CARPER. Mr. Bell, thank you so much. General Maddox, 

welcome. 

STATEMENT OF GENERAL DAVID M. MADDOX,1 U.S. ARMY 

(RET.), FORMER COMMANDER IN CHIEF, U.S. ARMY EUROPE; 

AND MEMBER OF THE GANSLER COMMISSION 

General MADDOX. Senator Carper, Senator Akaka. I was a member of the Gansler Commission, and—— 

Senator CARPER. Roughly how many people served on the 

Gansler Commission? And for what period of time were you operating? 

General MADDOX. The Chairman, of course, was Jacques 

Gansler, who had been the Under Secretary of Defense for Acquisition Technology and Logistics from 1997 to 2001. We had five additional commissioners to cover a broad range of aspects. I was one 

of the five. I represented the Army’s operational community. The 

four others were Retired General Lee Solomon, who represented 

Army Acquisition; Retired Rear Admiral Dave Oliver, who provided 

alternative service perspective, but also the experience in Iraq 

37 

1The report entitled ‘‘Urgent Reform Required: Army Expeditionary Contracting’’ appears in 

the Appendix on page 142. 

when he served with the Coalition Provisional Authority; and Dave 

Barteau and George Singley, who are very senior experienced Department of Defense civilians. 

Senator CARPER. And who appointed you? Were you appointed by 

Secretary Geren? 

General MADDOX. We were appointed by Secretary Geren, and 

because of the criticality of the issue, when we were appointed, we 

were given 45 days to do our work. 

Senator CARPER. All right. Pretty quick turnaround. OK. Thanks 

very much. I am sorry for interrupting. 

General MADDOX. Our charter was forward looking. That is, we 

were tasked to ensure that institutionally the Army is best positioned for future operations, which we view will be expeditionary, 

joint, and most likely multi-agency. 

It is important to recognize that we did not address current 

fraud, equipment accountability, and private security contracts because there were actions going on in each of those three areas. 

In looking at our charter, in September and October, we conducted 122 interviews. We talked to people across the board in the 

United States and deployed. 

We did one thing, and that was when we looked at the word expeditionary in the dictionary, it relates to overseas. We broadened 

that definition to include CONUS for emergency conditions like 

Hurricane Katrina, because the responsiveness requirements are 

very similar. 

Despite the broad spectrum of our interviews—122 people in 

Iraq, in Afghanistan, in Kuwait, in the United States—we received 

almost universal agreement on what the issues are, what changes 

are required, and the absolute need for change. 

The Commission crafted a broad strategy for addressing the 

shortcomes, which we published as an independent report dated 

October 31, 2007, entitled ‘‘Urgent Reform Required: Army Expeditionary Contracting.’’1

I would request, Mr. Chairman, that the executive summary 

from that report be included in the record of today’s proceeding. 

Senator CARPER. Without objection. 

General MADDOX. One thing hit us very quickly and that was an 

understanding that the Army, and more broadly DOD, did not have 

a problem with a single organization or a group of individuals, but 

had, in fact, a very systemic problem. 

The operational Army is clearly expeditionary and it is on a war 

footing. Yet, it has not fully recognized the impact of the large 

number of contractors involved in expeditionary operations and 

their potential impact on mission success. 

In fact, with our number of 160,000, half of the total force are 

contractors. And that aspect on both sides needs to be understood. 

I, in fact, in looking at your goals, would suggest that the third 

goal, the one on who gets trained, is not limited to contracting personnel; that the role of the operational people, that is, the contract 

requirement is not done by a contracting officer. It is done by the 

customer, who is in the operational side. Source selection is not 

38 

done by the contracting officer. It is done by the operational side. 

And the majority of the people supervising what is going on are 

contracting officer representatives, which come from the operational force. 

Senator CARPER. Mr. Bell, did I see you nodding your head vigorously when General Maddox made that statement? 

Mr. BELL. Yes, sir. You did. 

Senator CARPER. All right. Thanks very much. Just want to get 

that head nod in for the record. [Laughter.] 

General MADDOX. But it is important because it is a cultural 

issue, and culture does not change quickly. But it is not just the 

contracting officers that need to be helped. It is the whole force 

that recognizes the role of the operational aspect of the force and 

the contracting part. 

Based on the problems we discovered and the valuable information that we learned, we developed recommendations that address 

the gravity of the situation and the urgent need for reform. 

In short, we identified four areas for our future success. One was 

contracting personnel—increase the stature, quantity, and career 

development of contracting personnel—military and civilian—especially for expeditionary operations. 

Second, organization and responsibility. Restructure the Army 

Contracting Organization and restore its overall responsibility to 

facilitate high quality contracting and contract management in 

both expeditionary and peace time operations. 

Third, training and tools. Provide training and tools for overall 

contracting activities in expeditionary operations. 

And fourth, legislative, regulatory, and policy. Obtain legislative, 

regulatory, and policy assistance to enable contracting effectiveness 

in expeditionary operations. 

Our report covers the details of the first three. So, today, I would 

like to focus on this fourth category and ask for congressional assistance with the legislative aspects of the Commission’s recommendations. 

First, we recommend that Congress authorize general officer billets for Army contracting and joint contracting. Specifically, this 

Commission recommends that five new Army general officers, as 

well as one senior executive service billet, be established and 

fenced for the Secretary to assign to meet this urgent need. 

We have identified a requirement for five general officers. 

The five additional joint officers be established and include a 

three-star for the expanded scope of the Defense Contract Management Agency, which we strongly recommend and would service 

backfill authorizations for joint positions. 

These military billets should not be created at the expense of existing civilian senior executive service contracting authorizations 

with the Army workforce. These need to be maintained. 

In the past decade and a half, we have witnessed the elimination 

of general officers in the contracting field. In 1990, there were five 

Army contracting general officers. Today, there are none. 

In joint commands, there were four contracting flag and general 

officer positions, and they have similarly disappeared. When the 

question was raised what general officer has been fired, there is 

none to fire. 

39 

Today, all that remains is one temporary position, the Joint Contracting Command Iraq-Afghanistan, which at the time of the report was being filled by an Air Force officer. 

The Commission believes that this backslide needs to be remedied, and we must get back at least to where we were in 1990. 

We need general officers to lead the Army transformation. We 

need some general officers so when you look in the career field, 

there might be a place that you would aspire to be. 

We need those general officers to be advocates to understand 

what is going on and provide the right leadership that is needed 

for this effort. 

Second, the Commission recommended an increase in Army contracting personnel authorizations by 1,983. That includes increasing Army military by 400; civilians by 1,000, as well as providing 

583 billets, military and civilian, for Army support to the Defense 

Contract Management Agency. 

In the DOD Authorization Act for Fiscal Year 1996, DOD was required to reduce the acquisition force by 25 percent by the year 

2000. They did it. 

But after September 11, 2001, we have had a seven-fold increase 

and greater complexity in the contracting environment, and yet, 

the workforce has not grown. 

On top of that, of those that remain, only 56 percent of the military officers and 53 percent of the civilians in the contracting career field are certified for their current positions. 

Senator CARPER. General Maddox, I am going to ask you to go 

ahead and try to wrap up. You are about 5 minutes over. 

General MADDOX. OK. 

Senator CARPER. It is very interesting testimony, but I just want 

to make sure everyone has a chance to testify. Thank you. 

General MADDOX. We need enough people to fill the billets that 

are in theater, and they are not being filled. 

With regard to DCMA, they are the contract management agency 

for Defense. They are not doing the job across the board, and they 

need the additional resources to do that. 

If DCMA does not do that, and that is where the 583 for the 

Army were identified, then the Services need to pick up that responsibility by service and be resourced accordingly. 

Third is the incentives for our civilian personnel. We order uniformed military people to go to war. We do not order civilians. They 

volunteer. And yet, the authorizations for our civilians who are 

doing the contracting do not compare with the force that they support nor the people that are being contracted. 

Specifically, they do not get a tax write-off for their pay while 

they are in country. While they are cared for if they are hurt there, 

they have no sustainment if they need long-term care. And if they 

have civilian life insurance with a war clause and are killed, they 

are not covered. 

Fourth, we believe that the Congress should enable flexibility of 

funding through a contingency operation transfer fund, without 

color of money and fiscal year. We picked up that recommendation 

from the Overseas Contingency Operation Transfer Fund, which 

was approved by Congress and is currently in existence for AID. 

But it needs to be created on a standby basis. 

40 

1The prepared statement of Mr. Herbst appears in the Appendix on page 155. 

Fifth, and lastly, we recommend standby legislation to waive 

small business and U.S. labor provisions, Buy America, Berry 

Amendments, especially medical and other such provisions to allow 

rapid local buying, if required, in expeditionary operations. In Iraq, 

Buy America has been waived, but it is currently tied to this operation. 

We have a lot of other recommendations that do not involve the 

Congress. They are in the report, and they are to be observed. 

Sometimes it takes a crisis to bring out major change. We have 

got the crisis. We have got the opportunity to fix this and not go 

through this problem again. We hope we can have congressional assistance, and I am ready for your questions later. 

Senator CARPER. You bet. I know you will have that assistance 

and thank you for your testimony today. Thank you for serving as 

a commissioner as well, and for your service to our country. 

Ambassador Herbst. 

STATEMENT OF THE HON. JOHN HERBST,1 AMBASSADOR OF 

UKRAINE (2003–2006) AND UZBEKISTAN (2000–2006), COORDINATOR FOR RECONSTRUCTION AND STABILIZATION, U.S. 

DEPARTMENT OF STATE 

Mr. HERBST. Mr. Chairman, thank you very much for the opportunity to testify today. 

I am going to be a little bit bolder than I had planned to be. The 

last two plus hours have explored in some depths the problems of 

running stabilization operations. 

I am here before you to say that we, my organization, the Coordinator for Reconstruction and Stabilization, has a well conceived answer to many of the problems that we have discussed and specifically to help you to achieve the goal you have at the top of that 

sheet over there—planning a U.S. Government-wide reconstruction 

and stabilization crisis in conflict and post-conflict areas, and 

knowing how to implement interagency precisely on that operation. 

My office was created to do two things. I work directly for the 

Secretary of State, and the Secretary of State was asked by the 

President to ensure that we could mobilize all resources of the civilian agency of the U.S. Government to deal with a stabilization crisis, and to coordinate what they do with the military; and to ensure 

that we have the civilians we need with the right skills, the right 

equipment, and the right training to deploy to crises in the golden 

hour, the first hours after we deal with that crisis. 

SCRS in the State Department—that is what my office is known 

as—has had real success, although not enough, in achieving those 

two objectives. Specifically, we have done the following to deal with 

the first of those challenges—to coordinate the U.S. Government. 

The Administration has agreed at senior levels to the creation of 

something called the Interagency Management System, which 

would be used in the next stabilization and reconstruction crisis. 

This interagency management system has the following elements. 

The first is the least interesting. It is something called the Country Reconstruction and Stabilization Group. It is an assistant secVerDate Aug 31 2005 09:53 Aug 05, 2008 Jkt 041448 PO 00000 Frm 00044 Fmt 6633 Sfmt 6633 P:\DOCS\41448.TXT SAFFAIRS PsN: PAT
41 

retary-level group, which involve every single agency which has 

some contribution to make to deal with the crisis. 

This group, the CRSG, would both define policy options for the 

leadership of our government, as well as oversee implementation. 

The CRSG would be assisted in this by a secretariat. The secretariat would be also interagency, run by my office. It would have 

the critical function of writing a plan of civilian operations that includes all the assets that every single civilian agency can bring to 

bear on this. 

Since the Department of Defense would be represented in this 

secretariat, it would link up at the highest level defense and civilian planning for a military operation. 

The third part of this interagency management system is called 

an integrated planning cell. If, in fact, there is a military operation 

alongside a civilian operation, this integration planning cell, which 

is interagency and led by SCRS, would deploy to the military headquarters which is conducting military operations. 

If it is an American-led operation, say, in Latin America, it 

means it would be deployed to SOUTHCOM. If it was an international operation led by the United Nations, we would deploy to 

U.N. headquarters. 

The purpose of this integration planning cell is to make sure that 

at the theater level, military and civilian plans are completely 

linked. 

The last part of this integration, the Interagency Management 

System (IMS), is called advance civilian teams. This is another 

word for PRTs. This would be an interagency group led in many 

cases by my office, but not exclusively. There might be cases where 

AID would be in charge of this interagency—this active advanced 

civilian team. They would deploy to the country in crisis. They 

would have all the civilians you need with the right skill sets to 

deal with civilian side of operations. If there is an American embassy there, they would be under the command of the Chief of Mission, the ambassador; if there is none, it would be the senior U.S. 

Government civilian presence in the country. 

This system, again, is now part of the Administration’s policy. It 

is there to be employed in the next stabilization crisis. That is our 

first task. 

The second task is making sure we have the civilians with the 

right skills needed to deploy to these places. We also have agreement in the Administration on creating three pools of civilians who 

would have all of the skills you need to deal with a stabilization 

crisis. 

The skills we are talking about are not those normally found in 

the State Department. We are talking about engineers of all kinds. 

We are talking about all the people involved in the rule of law— 

policemen, judges, corrections officials. We are talking about city 

planners. We are talking about health officials, public administrators, port officials, and so on. 

We will find people with the right skill sets, and we will create 

first, an active response corps. These will be people whose job it 

will be—civilians in the U.S. Government—to deploy to countries 

in crisis. These people will be in the State Department, in USAID, 

in Justice, in Treasury, in Commerce, etc. 

42 

1The prepared statement of Mr. Moser appears in the Appendix on page 162. 

They will be folks who will train substantially, including with the 

military, and within 48 hours of a decision to deploy, they will be 

on their way. They will be able to arrive, if circumstances require, 

with the 82 Airborne at the beginning of an operation. They could 

also go in lieu of the 82 Airborne. But they will be ready to deploy 

immediately. 

Backing them up will be something we call the Standby Response Corps. These are folks who will be sitting in the same civilian agencies as the Active Response Corps. They will have full-time 

day jobs. But they will be training several weeks a year for deployment in a crisis. 

We feel that these people will be—we should be able to deploy 

a minimum of 10 percent of them once we need them; a maximum 

of 25 percent. 

For every one Active Response Corps member, there will be eight 

Standby Response Corps members. So we have a large pool to draw 

from. That is the second part of the civilian response capability. 

The third is something called the Civilian Reserve Corps. 

Senator CARPER. Actually, I am going to ask you to go ahead and 

try to wrap it up, and I want to make sure we have time to hear 

from Mr. Moser and Mr. Kunder—— 

Mr. HERBST. OK. By my count—— 

Senator CARPER [continuing]. Before we start our votes. Thank 

you. 

Mr. HERBST. OK. The Civilian Reserve Corps is going to be like 

our military reserves, people in the private sector. They will have 

day jobs, but they will be training like our military reserves for 

several weeks a year. They will sign up for 4 years. They will be 

able to deploy for—they will have an obligation to deploy for 1 year 

in that 4-year period. 

If these things are funded, we have received appropriations for 

a 500-person Civilian Reserve Corps. We are waiting for authorizing legislation. S. 613 or H.R. 1084 could provide the authorization we need. If we had these various capabilities, we will have a 

command and control structure with the trained civilian talent we 

need to oversee any stabilization operation. 

Thank you. I think I was about 41⁄2 minutes. 

Senator CARPER. That was great. Thank you very much. Mr. 

Moser. 

STATEMENT OF WILLIAM H. MOSER,1 DEPUTY ASSISTANT SECRETARY FOR LOGISTICS MANAGEMENT, U.S. DEPARTMENT 

OF STATE 

Mr. MOSER. Chairman Carper, Chairman Akaka, thank you for 

the opportunity to appear here, and I would ask that my full written statement be a part of the record. 

Senator CARPER. Yes. In fact, your full written statement and the 

full statement of everyone else will be entered in the record. 

Mr. MOSER. Thank you very much. 

Senator CARPER. Please proceed. 

Mr. MOSER. And I will keep this as brief as possible. 

43 

The Department of State has extensive experience with contracting in crisis situations. Diplomatic activity is ever changing, 

and to meet the needs of our diplomatic activity and our country 

amid evolving world events, we have to do effective contracting. 

Contracts were needed to evacuate staff, protect property, and 

close missions in the 1990s in Pakistan, Somalia, Sudan, Liberia, 

and the country formerly known as Zaire. 

During the Bosnian War, we contracted for vehicles, equipment, 

and supplies for the Sanctions Assistance Mission, and as hostilities decreased in the Balkans, we provided contracting support 

for supplies, services, and equipment, to embassies in the region, 

and set up new embassies in Skopje, Sarajevo, Zagreb, and 

Ljubljana. 

One of my other duties besides contracting—the contracting activity is also the transportation activity, and I would like to note 

here that our contingency transportation contract successfully 

aided in the evacuation of 13,000 American citizens from Lebanon 

in 2006, and I think many would applaud the State Department for 

having—for mounting a very successful effort at that time, and 

contracting was there at the core of that activity. 

Just after the Al Qaeda bombings in Nairobi and Dar es Salaam, 

we further refined our strategy for dealing with contingency contracting support. Our Office of Acquisition Management partners 

with various State Department offices both at headquarters and 

around the world to determine the type of contracts that would 

best support their emergency requirements. And we have identified 

first responders in our contracting corps who will go with those 

program offices in crisis situations. 

That is not to say, though, that our experience in Iraq and Afghanistan has not shown us that there are areas where we need 

to improve our contingency capabilities. 

We have learned that we need more resources on site that we 

can improve planning, price analysis, contract formation, and oversight. And I think that all of these areas are things that have been 

highlighted in the discussion today. 

However the State Department’s resource limitations have prevented us from expanding the resources as rapidly as the growth 

in our contract requirements. 

Since 2001, the workload of the State Department’s Office of Acquisitions has grown dramatically, with no commensurate increase 

in staffing. The volume of transactions grew from $2 billion in 2001 

to $6.1 billion in 2007. And we kept approximately—we gained 

three full-time equivalent employees during this period. 

To rectify this situation and to gain the flexibility required in a 

rapidly-changing geopolitical environment, the Under Secretary for 

Management directed the transformation of the Office of Acquisition Management, our contracting activity, to a working capital 

funded organization. A 1 percent fee for service, based on the 

amount of contract award, will hopefully, with the approval of our 

appropriations and authorizing committees, cover the expenses of 

the acquisition activity. 

The working capital fund structure will permit the State Department to significantly increase the amount of cost and price analysis, legal review, and contract oversight performed. 

44 

1The prepared statement of Mr. Kunder appears in the Appendix on page 166. 

We want to ensure that our contracts meet the standard of integrity demanded by this committee, the rest of Congress, and the 

American people. 

The contracting operation needs to be more agile and responsive 

to all future contracting needs, including contingency contracting. 

We want to be able to rapidly increase the resources devoted to 

such contract action, whether the contract performance is in Iraq, 

Darfur, or Haiti. 

Successful contracting depends on close partnership with program offices. The Department’s Office of Acquisitions Management 

is working closely with Ambassador Herbst’s office, the Coordinator 

for Reconstruction and Stabilization, to improve contingency contracting. 

And I have also had the pleasure of working with Mr. Bell on 

our joint—on the MOU that John Negroponte, our Deputy Secretary, and Gordon England, the Deputy Secretary of Defense, 

signed in December 2007 to improve management and oversight of 

private security contractors in hostile zones. 

We look forward to the further cooperation with the Department 

of Defense and to provide the best contract support possible to our 

diplomatic and military forces around the globe. And we hope that 

we can, through these things that we are discussing today, offer solutions to the problems that you have so admirably highlighted. 

Thank you for your testimony—and I welcome your questions. 

Senator CARPER. You bet. Mr. Moser, thank you so much. Mr. 

Kunder, you are going to wrap it up for us. And then we will ask 

some questions and call it a day. 

STATEMENT OF JAMES R. KUNDER,1 ACTING DEPUTY ASSISTANT ADMINISTRATOR, U.S. AGENCY FOR INTERNATIONAL 

DEVELOPMENT 

Mr. KUNDER. Thank you, Chairman Akaka. You are very kind to 

hear out 11 witnesses on a long Thursday afternoon. I am number 

11. I realize that. 

We took seriously your request to look at lessons learned. And 

we have five bullet point lessons that we tried to distill from our 

experience that I would like to share with you. 

First, is to get the IG involved early and often. We decided early 

on in both Afghanistan and Iraq to seek concurrent audits from our 

Inspector General, and we invited them to join our team on the 

ground in both Kabul and Baghdad. That has paid dividends. We 

are also fans of Stuart Bowen, but we brought our own Inspector 

General on and I think that has helped to add a layer of accountability that was important to us. 

Second, we need to increase civilian military training, because 

the civilian military teams lash up during these kinds of contingency operations, and we have to bring the contracting culture and 

the broader culture together ahead of time. Sitting five rows behind 

me are two of our colleagues in town from Kabul, Jim Hope and 

Fareed Ahmed Payan. They are on their way to Fort Bragg, North 

Carolina—— 

45 

1The chart referred to appears in the Appendix on page 175. 

Senator CARPER. Would both of you just raise your hands? Thank 

you. Thanks for joining us. 

Mr. KUNDER. They are on their way to Fort Bragg for Joint Provincial Reconstruction Team training. We have been trying to do 

that kind of thing, but we need to invest more resources so that 

when we lash up out in the field, we are talking the same language 

and working with the same kind of contracting procedures. 

Third—and I have listened very intensely—I know there is a lot 

of interest in the Subcommittees, which we appreciate. 

I have listened intently to all the discussion about sole source 

contracting and full and open competition. And I would just appeal 

to the Subcommittees to think carefully about maintaining in the 

Federal Acquisition Regulations sufficient authority to handle the 

kind of flexibility, and the changing environment that we encounter 

in these kinds of contingency operations. Almost by definition, the 

circumstances on the ground are going to change very rapidly in 

Afghanistan and Iraq. 

I plead guilty. I have waived full and open competition requirements. And when I did that, I did it because I was saving—thought 

I was saving lives of U.S. troops by acting quickly to turn on a 

dime so that we could get roads built or schools built or health clinics built. And I am a strong believer in full and open competition, 

but we have got to preserve the authority we currently have under 

law to do less than full and open competition when it is essential 

to accomplish the mission in these complex and changing environments. 

The fourth point, the next to last point, I just want to add 

USAID’s endorsement for what Ambassador John Herbst said. A 

year and a half ago, or 2 years ago now, the U.S. Interagency, Department of Defense, the Joint Chiefs of Staff, USAID, the State 

Department got together at the NSC, and we thought we came up 

with the comprehensive fix for getting everybody on the same page 

in contingency operations, both in contracting, but beyond contracting. That was by creating the Coordinator for Reconstruction 

and Stabilization. And that is an important initiative which I hope 

in the category of Congress playing an effective role we would appeal that more resources be put behind that operation. 

And fifth, and finally, I provided for the Subcommittees this page 

of analysis on our staffing levels. We have reduced our oversight 

capability under both Republican and Democratic Administrations 

and Republican and Democratic Congresses. Over the last 25 years, 

we have reduced our USAID staffing overseas—our technical experts in engineering, health care, education—by 80 percent. 1

So now that we are grappling with these oversight and accountability issues, as General Maddox said, it comes back to having 

bodies on the ground who can go out and look at these projects. 

And we simply are running on fumes when it comes to accountability issues, and, again, that is something that we would like to 

talk to the Congress about. 

Thank you very much for the opportunity to testify. 

Senator CARPER. Thank you. Very nice to have you summarizing 

those recommendations. Thanks so much. 

46 

Let me start off with a question for Mr. Bell. And the Department’s October, I think it was 2007, Interim Report to Congress 

outlines a significant list of initiatives that the Department plans 

to take to help improve its oversight of contractors supporting deploying forces. 

Just explain for us, if you will, specifically how will you manage 

and oversee contractors during the next contingency operation? 

How will you sustain this effort during the transition to a new 

Administration? Again, how will you sustain this effort during the 

transition to a new Administration? 

I understand from my staff that your position is being downgraded from a level three to a level four? I do not know if that is 

correct or not. But what implications, if that is true, does this have 

for the important work that you and your office is directing? 

Mr. BELL. OK. Thank you. Let me address those questions. In 

the proposal we gave to Congress outlining the new framework for 

managing this, we have identified the requirement to empower a 

joint contracting command to be deployed into the AOR with the 

military forces. We have, in fact, done that in Iraq and Afghanistan. 

At the time we originally deployed them, we did not enable them 

to have the necessary authority we thought was necessary. 

We have since corrected that, and in the trip the Secretary sent 

us on in September, we went ahead and empowered the joint contracting command to have authority over all contracts to be implemented within Iraq and Afghanistan. 

So our intent in the future is to give that same sort of a joint 

contracting command authority to oversee all contracts that are 

going to be implemented in theater to ensure they have all of the 

necessary provisions regarding compliance with rules and laws to 

make sure that we standardize the approach to life support and essential services, and that will all be accomplished through a joint 

contracting command. 

To enable us to deploy that sort of a command, we are also creating a launch agency, which we have called different names, but 

essentially, it is a contract acquisition support office, and that organization has a standing joint contracting command ready to deploy. 

And each time it deploys one, if we deployed one, for example, to 

an operation in Africa or South America, it then creates another 

standing joint contracting command to be able to deploy to the next 

operation. 

That is the answer to your first question. 

The second question is how do we plan to sustain the effort we 

have underway for the Administration change? 

What we have done is we have embedded within DOD policies, 

instructions, directives, and regulations, the provisions about how 

this will function. The framework that you see there is actually 

pursuant to and will be documented in a DOD instruction called 

3020.41. It is also specifically responsive to legislation in Section 

854 of the 2007 NDAA, and so, for that reason, it is not subject to 

change with Administrations. 

Your third comment: In the 2007 NDAA, a provision was put in 

that when I leave my position here, the position is to be downgraded from a level three to a level four. 

47 

That was done I think in advance of the decision made for us— 

for my office to take on the total contracting oversight policy responsibility for the Department of Defense. 

My personal experience has been that it takes all of the standing 

and status of a level three, four-star equivalent officer, if you will, 

to have the access to get into theater and into the field that you 

need in order to provide this effective oversight. My personal recommendation is that is a decision that we would like to see Congress reverse. 

Senator CARPER. OK. Anybody on the panel want to comment in 

response to anything that Mr. Bell has said? 

I am going to yield to Senator Akaka. I want to make sure if the 

bell goes off for the next vote, that we both have a chance to ask 

questions. But, Mr. Chairman, feel free to engage right now if you 

want. 

Senator AKAKA. Thank you. Thank you, Mr. Chairman. 

Mr. Kunder, first, let me thank you for your testimony. I would 

like to note that your nomination to be Deputy Administrator of 

USAID has been pending for some time now, and I hope the Senate 

will be able to move it soon. 

You have an impressive resume. And I thank you for your willingness to continue serving our country. 

Presidential Directive 44 designated Ambassador Herbst’s office 

as Coordinator for Reconstruction and Stabilization in Iraq. 

The Directive explicitly spells out that the Secretary of State and 

Defense are to coordinate through this office. 

In addition, USAID already takes policy guidance from the Secretary of State. What extent have you worked directly with the Office of the Coordinator for Reconstruction and Stabilization? 

Mr. KUNDER. Sir, as I mentioned, we believe very strongly that 

the civilian side of the U.S. Government needs to be a better partner for the military side of the U.S. Government when it comes to 

contingency operations, and we believe strongly that the Coordinator for Reconstruction and Stabilization should be the overall coordinator of that function. 

We have detailed a number of staff from the U.S. Agency for 

International Development to Ambassador Herbst’s operation, and 

we are also beginning to organize our internal staffing so that we 

can be part of the team that he described. 

I am not here to lobby about dollars today, but the legislation 

that would provide the funding for Ambassador Herbst’s operation 

is also hung up. And so we have not yet been able fully to move 

forward. 

But at USAID, we strongly endorse the concept. We have been 

providing staff, and we stand ready once we stand up this interagency team to play our role in that operation. 

Senator AKAKA. Thank you. Ambassador Herbst, I would like to 

follow up with you on that same Presidential Directive which made 

your office the Coordinator for Reconstruction and Stabilization. 

According to your office’s Web site, you have a budget of about $20 million, 15 permanent staff, and a dozen interagency detailees. 

Is that about correct? 

Mr. HERBST. Our budget in Fiscal Year 2007 was a little bit over 

$7 million. And with that budget, we have a staff right now of apVerDate Aug 31 2005 09:53 Aug 05, 2008 Jkt 041448 PO 00000 Frm 00051 Fmt 6633 Sfmt 6633 P:\DOCS\41448.TXT SAFFAIRS PsN: PAT
48 

proximately 88, but only 24 of our staff are permanent FTE positions. We have detailees from other agencies. We have something 

called Y Tours, which are 1-year assignments that are given to us 

by the main complement at the State Department. And we also 

have some contractors. 

Senator AKAKA. The Department of Defense, on the other hand, 

gets billions of dollars of reconstruction funds for Iraq and has 

thousands more people tasked to reconstruction. 

Do you have any authority or influence over reconstruction contracts entered into at any of the various agencies discussed in the 

Directive? 

Mr. HERBST. Our office was created to make sure that we are 

prepared to deal with the stabilization crises that come up next. 

So we have played a very small, tiny role, in Iraq. We have 

played a somewhat larger, but still not large, role in Afghanistan. 

So we have not been involved in these sorts of issues that you 

have described in current operations. 

Senator AKAKA. All right. Thank you. Thank you, Mr. Chairman. 

Senator CARPER. You bet. We have been joined by the Chairman 

of the Armed Services Committee and the Chairman of the Investigations Subcommittee of the Homeland Security Government Affairs Committee, and it is just great to see you. We appreciate very 

much working with your staff in anticipation of this hearing, and 

you are welcome to speak, ask questions for as long as you wish. 

Thank you for coming. 

OPENING STATEMENT OF SENATOR LEVIN 

Senator LEVIN. Mr. Chairman, thank you very much for all the 

work you are doing on this, and our staffs have, indeed, cooperated. 

We thank you and Senator Akaka for delving into this issue the 

way you have. We have been into it, too, and it is going to take 

all the work of many committees and subcommittees, I think, to try 

to straighten this out. 

Section 1088 of the 2005 Defense Authorization Act extended 

criminal jurisdiction of the U.S. civilian courts to personnel whose 

employment relates to supporting the mission of the Department of 

Defense overseas regardless of whether those personnel are contracting with the Department of Defense or a civilian agency. 

Section 552 of the National Defense Authorization Act for Fiscal 

Year 2007 extended criminal jurisdiction of the military courts 

under the Uniform Code of Military Justice to persons serving with 

or accompanying an armed force in the field during a time of declared war or a contingency operation, such as our current operations in Iraq and Afghanistan. 

Now, despite the enactment of these provisions and the presence 

of those provisions on the books, we continue to hear questions 

raised about the jurisdiction of U.S. military and civilian courts 

over criminal misconduct by contractor employees on the battlefield 

in Iraq and Afghanistan. 

Do you believe that there is a gap in the jurisdiction over criminal misconduct by contractor employees in Iraq and Afghanistan or 

do you believe that all such conduct is subject to jurisdiction of either the military or the civilian courts? 

Mr. Bell, you want to start off? 

49 

Mr. BELL. Yes, sir. First of all, I would be the last one at the 

table to attempt to make a legal interpretation, but if you will 

grant me the liberty of a layman’s—— 

Senator LEVIN. Well, what is your understanding? Is there a 

gap? 

Mr. BELL. We believe there is a gap. And with regard to MEJA 

and the application of Section 1088 from 2005, the provision was 

I believe the term of art was supporting DOD regardless of whether they were contractors of DOD. I think there has been some question about whether contractors who were supporting the operations 

of the State Department in a country, for example, in Iraq, were 

supporting DOD or were supporting the diplomatic mission, and 

that has caused some questions about the applicability of MEJA to 

those forces that are not associated with the term supporting DOD. 

I think that has been the question. We have consulted with the 

State Department. Our general counsel’s offices have consulted 

with the State Department’s general counsel’s office. We believe 

that the provisions need to be clarified to ensure that gap, to the 

extent it represents a serious gap, is closed. 

Senator LEVIN. Does anyone else want to add anything to that? 

Mr. MOSER. Well, as the State Department official that has actually been most—closely involved in with this, Jack has essentially 

stated what the joint position that we have. And in the Memorandum of Understanding signed between Mr. Negroponte and Mr. 

England that is very much clear that we want to seek—that we are 

seeking a legislative remedy. 

Senator LEVIN. You support a legislative remedy? 

Mr. MOSER. Yes, we do. 

Senator LEVIN. I assume you do, Secretary Bell? 

Mr. BELL. We do, sir. 

Senator LEVIN. OK. Now, the Department of Defense has not yet 

issued a guidance implementing the expanded jurisdiction of the 

military courts under Section 552 of the National Defense Authorization Act. When are we going to get that guidance? 

Mr. BELL. Well, first of all, sir, we have issued a memorandum 

to the military forces indicating that the provisions of the UCMJ 

are in effect and, in fact, they are being followed in Iraq and Afghanistan today. The wording of the implementing guidance is in 

its final stages, and the Secretary has been consulting with the 

OGC. We expect him to issue that sometime in the very near term. 

Senator LEVIN. Does that mean within a month? 

Mr. BELL. Yes, sir. 

Senator LEVIN. Thank you. The Gansler Commission Report 

states that ‘‘the number and expertise of the military contracting 

professionals must be significantly increased.’’ To address the problems which have been experienced in theater, the Commission recommends that the Army hire 2,000 new contracting personnel. 

So, Secretary Bell, does the Department of Defense plan to implement that recommendation? 

Mr. BELL. Sir, as I have said at the beginning of my testimony, 

the provisions for my testimony here were not to include responses 

to the Gansler Report, for which the Army has the lead responsibility. That is being reviewed at this time, and they will have a response soon. 

50 

Senator LEVIN. I am wondering, Mr. Chairman, if we can then 

ask the Army, for the record, if they would answer that question. 

Senator CARPER. Yes, we can. 

Senator LEVIN. Thanks. Now, the Gansler Commission also says 

that the Army’s difficulty in adjusting to the singular problems of 

Kuwait, Iraq, and Afghanistan is, in large part, due to the fact 

there are no generals assigned to contracting responsibilities. 

The Commission recommends Congress authorize a core set of 10 

additional general officers for contracting positions. 

Is your answer to the intent of the Department on that point the 

same as before? 

Mr. BELL. It is, sir, although I would say in the work we have 

done on developing a strategic framework, we have identified the 

same problem, which is the need to create significant and meaningful career paths up through the general officer rank for contracting 

officers. 

Senator LEVIN. OK. Mr. Chairman, then, if we could—these Subcommittees could ask the Army the question. 

Senator CARPER. And we will. 

Senator LEVIN. Thank you. 

Section 862 of the National Defense Authorization Act for Fiscal 

Year 2008, which is going to be sent to the President for signature 

today, requires for the first time that private security contractors 

hired by the State Department and other Federal agencies to work 

in a war zone comply with directives and orders issued by our military commanders, as well as with DOD regulations. 

Mr. Bell, Mr. Herbst, Mr. Kunder, will this provision be promptly 

implemented? 

Mr. BELL. Let me take that answer. Sir, as I indicated earlier before you arrived here, we have already reached a Memorandum of 

Agreement with the State Department on implementing exactly 

those provisions in Iraq, and that has been implemented. We are 

now in process of working with the State Department, and USAID. 

Our intention is to fully implement those provisions. 

Senator LEVIN. Well, the agreement did not have this law in 

front of it, nor did it, as I remember, the language go as far as this 

law does? 

Mr. BELL. That’s correct. And we intend to. 

Senator LEVIN. It was a consultation or coordination rather than 

under the direction of; is that correct? 

Mr. BELL. We understand the implication of the difference. 

Senator LEVIN. OK. Then let me re-ask my question. 

Mr. BELL. Yes, sir. 

Senator LEVIN. Are you going to fully implement the new law? 

Mr. BELL. It is our intention to do so. 

Senator LEVIN. I will take that as a yes. 

What about State Department folks? Are you familiar with what 

we have done? 

Mr. MOSER. Yes, sir. We have had serious discussions, particularly with Mr. Bell and his group, and we have expected the enactment of the legislation. But I am really not—this is not something 

that I am really allowed to make a comment on. Thank you. 

Senator LEVIN. Not allowed to? 

51 

Mr. MOSER. Well, I am head of contracting. I cannot give you a 

policy position on a piece of—— 

Senator LEVIN. OK. 

Mr. MOSER [continuing]. Legislation that hasn’t been signed by 

the President. 

Senator LEVIN. All right. If it had been signed this morning, 

could you—— [Laughter.] 

So if it is reported to you it has now been signed, could you comment on it? 

Mr. MOSER. Well, something our intention is, it is just like the 

Federal Acquisition Regulations. If it is law, we are going to comply 

with it. 

Senator LEVIN. OK. There is a new commission on wartime contracting that has been adopted as part of the Defense Authorization Act, which we hope has been signed this afternoon or tomorrow. Will there be full cooperation with the operations of the new 

commission, Secretary Bell? 

Mr. BELL. Senator Levin, we actually welcome that opportunity. 

We think the focus that the Congress has provided with Section 

854 and with the follow-up legislation that Sections 861 and 862 

ares very helpful to this cause. We are very mindful of the urgency 

of improving and strengthening our contractor management, so we 

would welcome that. 

Senator LEVIN. OK. And, Mr. Herbst, Ambassador Herbst, and I 

think, Mr. Kunder, you would be the ones to answer that for the 

State Department and USAID? Are you familiar with what we did? 

And are you going to fully cooperate? 

Mr. HERBST. This is not my area of responsibility. Sorry, Senator. 

Senator LEVIN. Mr. Kunder? Either one. Mr. Moser? 

Mr. KUNDER. You pass the law, sir. We will obey the law. 

Senator LEVIN. Are you familiar with what is in it? 

Mr. KUNDER. We generally are familiar with the authorization, 

sir. 

Senator LEVIN. All right. 

Mr. MOSER. Yes, and I would say that is true for the State Department as well, Senator Levin. 

Senator LEVIN. OK. Secretary Bell, more than a year ago, senior 

Army officials told the Senate Armed Services Committee that the 

Army’s $20 billion LOGCAP contract, which until now has been 

performed by a single contractor, was going to be broken up into 

multiple contracts so that we would have competition for individual 

task orders awarded under the contract. 

Now, the Armed Services Committee feels so strongly that this 

is the right approach that in our 2008 authorization bill, soon to 

be an act, there is a strong new requirement to award contracts of 

this type to multiple companies. 

So far, the Army has been unable to live up to the commitment 

to split up the LOGCAP contract among multiple companies because the award of the new contracts was held up by a successful 

bid protest. 

Can you give us a idea as to how soon the Department will determine how to proceed in light of this successful bid protest? And 

52 

how soon we can expect to have new contracts in place so that we 

can have competition for those tasks orders? 

Mr. BELL. Sir, we certainly agree with the intent of the Congress 

on that. I would like to take that as a question for the record for 

the Army if we may. 

Senator LEVIN. All right. Will you give us a timetable on that? 

Mr. BELL. Yes, sir, we will. 

Senator LEVIN. Thank you. Mr. Chairman, I appreciate your 

courtesies as always. 

Senator CARPER. You bet. Thank you so much for coming here 

and for letting us work with you and vice versa. 

I have a series of three questions that I am going to ask both 

Mr. Bell and General Maddox to comment on. 

How does our military capture contracting lessons learned and 

incorporate them into operational planning? 

Mr. BELL. We have several mechanisms within DOD to do that. 

One is that JFCOM has an overall DOD responsibility to do lessons 

learned on all of our contingency operations. 

In addition to that, within the contracting framework that we 

have established and reported to Congress on, we have a specific 

module requirement to do lessons learned on contracting management and to input that both to our own operations as well as to 

the JFCOM overall operation. 

Senator CARPER. All right. General Maddox, would you like to 

add or take away? 

General MADDOX. We have got an organization that is charged 

with lessons learned. They are collecting them. We are not convinced that they get passed as well as they could. One of the suggestions that came out of our interacting within the Army during 

the Commission was in addition to the lessons learned to establish 

a blog on the Web, where contracting personnel can exchange their 

lessons back and forth with each other. 

Senator CARPER. All right. 

General MADDOX. And I think that is going to be implemented. 

Senator CARPER. OK. Thanks. 

The second question for both of you is how is feedback circulated 

back to each of the forces to ensure continued improvement? 

Mr. BELL. We think in terms of the continuity of military operations, which is the one of greatest concerns because of the rotation 

of troops, one of the things we have done is extended the overlap 

of command transitions. For example, we have just had a succession and change of command of the head of the Joint Contracting 

Command for Iraq and Afghanistan. And that overlap between the 

succeeding commanding officer and the outgoing commanding officer was spread out over a full 21⁄2-month period to ensure that we 

got continuity in that operation. 

In addition, the departing commander is going be available for 

ongoing consultations, both here in the States and back in Iraq. 

Senator CARPER. All right. General Maddox. 

General MADDOX. I do not think that is adequate. I think that 

is necessary. But it gets to the issue that this problem is not limited to the contracting people. And while we do overlaps from an 

operational point of view between units coming in and out of Iraq, 

53 

I am not convinced that we do enough in recognition of the relationship of their operation and contracting. 

One specific is contracting officer representatives. They are people who go and watch the execution of a contract. If it is the dining 

facility operation, it is somebody that operates with mess halls. If 

it is fuel resupply, it is somebody that has been in the fuel business. During our investigation, we found out that many of the contracting officer representatives did not know that they were going 

to have that function until they got in country. 

And then, in some cases—and I actually experienced this in my 

career, I became a contracting officer representative, and I did not 

know what the term meant. 

There is some education going on, but I think we need to make 

sure that while the operational units are switching that we do a 

better job of the new unit comes in, knows what the unit going had 

in responsibility for contracting officer representatives and other 

aspects of it, and that gets overlapped, too. 

Mr. BELL. If I could amplify on that, Senator Carper. 

Senator CARPER. Sure. Go ahead. 

Mr. BELL. We certainly agree within DOD and certainly within 

my organization working on the strategic framework that one of 

the great difficulties we have been confronted with is the significant downsizing of contracting personnel as well as contracting 

oversight personnel. 

It is clear that in order to do an effective job on the scale that 

we need to do it for a deployed operation, we are going to have to 

have a significantly larger force of qualified individuals so that 

they can do the job as well as have orderly transitions. 

Senator CARPER. My third and final question of each of you is 

should these lessons be considered and/or implemented in the development of curricula and be institutionalized in the Center for 

Army Lessons Learned? 

Mr. BELL. With regard to our efforts, one of the parts of the strategic framework that we are developing at this point in time is a 

training program not only for contracting and acquisition personnel, but for line commanders and NCOs who increasingly are 

dependent on contracting support in the field of operation. 

We have that program in place now at the Duke Defense Acquisition University. We are in the process of getting it in actually at 

the Service Academies as well as places like ICAF and NDU. 

Senator CARPER. General Maddox. 

General MADDOX. And I know in the Army that they are putting 

it into their own curriculum. There is an effort ongoing right now 

by the Chief in trying to do a better job of bringing his new two 

stars on board. And in the next month they have already put together a program to do that, and I know that the contracting part 

is an integral part of that. 

Senator CARPER. All right. Thank you. 

In closing, I am going to ask each of our witnesses—I am just 

going to start with you, Mr. Kunder, if I could—and if you just 

want to leave us with a closing thought as to something you think 

is just extremely important for us to keep in mind, for us to keep 

in mind as Members of the Senate relevant Subcommittees that we 

should particularly focus on and be mindful of. 

54 

Mr. KUNDER. Thank you, sir. I just wanted to emphasize the 

criticality of what General Maddox has been talking about—— 

Senator CARPER. OK. 

Mr. KUNDER [continuing]. That we need to pay attention to staffing both on the contract officers side, and then on the technical officers side. 

I will not take time to cite the numbers—grotesquely short on 

the contract officer side. We are relying on contractors at USAID 

not just for logistic support, but to do our core work of building 

schools, building hospitals, building roads. And so what we also 

need is engineers, education specialists, healthcare specialists out 

there looking at that. 

I just got a great note the other day from General John Allen, 

the Marine Commander in Anbar Province, citing the role of our 

men at the Provincial Reconstruction Teams. He called them heroes. The problem is there are only three heroes out there. 

So we have the staffing issues that General Maddox has emphasized both on the contract officers’ side and then on the technical 

officers side to go out and make sure that school is being built right 

or that road is being built right. 

I would emphasize that we have got to focus on these staffing 

issues that are so critical to the oversight that I know the Subcommittees cares about. Thank you, sir. 

Senator CARPER. All right. Thank you. Mr. Moser, any closing 

thoughts that you would like to emphasize? 

Mr. MOSER. Yes. Thank you very much, Senator Carper. 

I would like to emphasize as well what my colleague, Mr. 

Kunder, has emphasized is that if you look at our contracting operation, if you look at USAID’s contracting operation, we do not have 

the contracting personnel that we need to guarantee that the taxpayer dollar is being protected. 

We think that if we come up—we have a reasonable proposal on 

the table that we think could modify that. We are going to work 

with USAID to work through some of their problems, but we are 

very concerned about the integrity in the contracting process. We 

do not feel that we have had major scandals up to now, but we do 

not feel like that we can continue in the same situation. 

And then we also want to put in—make sure that we are ready 

to do the contracting support that we can take care of Ambassador 

Herbst and make sure that his operation in our next crisis gets off 

to the right start. 

Senator CARPER. All right. Thank you. 

Mr. Herbst, a closing thought? 

Mr. HERBST. We have created the means to deal effectively with 

the next stabilization crisis. There is an Administration position on 

this, supported across the interagency. We request the support of 

the Congress to both authorize and support it. Thank you. 

Senator CARPER. Thank you. 

Senator CARPER. General Maddox. 

General MADDOX. I think the majority of the recommendations 

that the Gansler Commission put together can be implemented 

within the DOD. 

Senator CARPER. But without the congressional involvement? 

55 

General MADDOX. The majority of them can be done within DOD. 

The critical piece is we are not going to solve this problem if we 

do not put leaders in place and enough people to get the job done. 

Senator CARPER. Leaders at what level? 

General MADDOX. I am talking about the five general officers for 

the Army. 

Senator CARPER. OK. 

General MADDOX. If we do not put them in place and increase 

the number of people that are charged to do this job, this problem 

is going to continue. 

Senator CARPER. Thank you, sir. 

Mr. Bell, the last word? 

Mr. BELL. Yes, sir. We believe at DOD that the execution of our 

national military strategy with the military forces that were authorized by Congress will continue to make us dependent on significant contractor support for our deployed forces. 

We recognize it is a complex challenge. We recognize now we 

must manage our contracting force as part of an integrated effort 

with our military forces. We believe that we are making significant 

strides forward, notwithstanding the problems that have been identified. We appreciate the congressional support. The provisions of 

Section 854 and 552 with regard to application of UCMJ are very 

important steps forward in helping us integrate our management 

of the total force, and so we look forward to being able to report 

to you the actual results and benefits of what we are doing. 

Senator CARPER. Thank you. 

Let me say in conclusion, I was first drawn to this issue as a 

former State Treasurer and one who was mindful of spending my 

State’s money judiciously and squeezing every dime as much as we 

could. And I feel like we had an obligation to the State’s taxpayers 

to do that. 

And I thought about the contracting work and some of the horror 

stories that we have all heard, but my first thought really focused 

on the waste of money, money that we do not have, money that we 

are borrowing around the world as it turns out, and the fraud and 

it just rubs me the wrong way, annoys the heck out of me. I know 

it does for other folks, too, that are trying to put food on the table, 

a roof over their heads, and send their kids to school and all. 

But sometimes we get lost in all this—when we let this kind of 

behavior occur and reoccur again and again, we undermine our 

troops, and we make their difficult tasks even more so. 

None of this is good. All of this is bad. And they deserve better. 

And frankly so do the people who pay my salary and the salary of 

all those who work around here. I am encouraged that over 4 years 

into this war, we are starting to figure this one out. It is a little 

bit like closing the barn door when the horses have escaped. But 

it is better than never closing it, and we have to make sure that 

we follow through on the good intentions that have been outlined. 

I know some good work has been done. But we want to make sure 

that we follow through and finish this job. 

And finally, when we do and we get it right this time, the key 

is when we find ourselves in another episode along these lines in 

the future, and we probably will, that we will not make the mistake that we did with respect to the Balkans where we kind of had 

56 

learned those lessons, wrote them down, and when this one rolled 

around in Iraq and Afghanistan we frankly have had to learn those 

lessons over again. It is tragic. It is not necessary. We have got to 

not let that happen again. 

That having been said, I thank you all for your testimony here 

today and for preparing for this and for helping us to focus on 

these issues. 

I think the questions that my colleagues have asked are important ones, and we want you to know as you leave here that we 

stand prepared to be supportive, to work with you, and to be supportive of getting us on the right track and making sure that we 

stay there. 

I hope to join my colleagues in pushing for the Gansler Commission recommendations, for their implementation, and as well as to 

ensure that we have the military and civilian workforce on hand, 

trained and prepared to do their jobs. And we are going to continue 

to look forward to you for some guidance in that regard. 

The hearing record is going to be open for 2 more weeks for the 

submission of some additional statements and questions. I would 

ask of each of you and our previous panel of witnesses for your cooperation in trying to get prompt responses to the questions that 

you might receive and that are going to be submitted for the 

record. 

With that having been said, again, our thanks to each of you, 

and this hearing is adjourned. Thanks so much. 

[Whereupon, at 5:35 p.m., the Subcommittee was adjourned.] 

(57) 

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