S. HRG. 114–630 

OVERSIGHT OF TASK FORCE FOR BUSINESS 

AND STABILITY OPERATIONS PROJECTS IN 

AFGHANISTAN 

HEARING 

BEFORE THE

SUBCOMMITTEE ON READINESS AND 

MANAGEMENT SUPPORT 

OF THE

COMMITTEE ON ARMED SERVICES 

UNITED STATES SENATE 

ONE HUNDRED FOURTEENTH CONGRESS 

SECOND SESSION 

JANUARY 20, 2016 

( 

Printed for the use of the Committee on Armed Services 

OVERSIGHT OF TASK FORCE FOR BUSINESS AND STABILITY OPERATIONS PROJECTS IN AFGHANISTAN 

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25–364 PDF 2017

S. HRG. 114–630 

OVERSIGHT OF TASK FORCE FOR BUSINESS 

AND STABILITY OPERATIONS PROJECTS IN 

AFGHANISTAN 

HEARING 

BEFORE THE

SUBCOMMITTEE ON READINESS AND 

MANAGEMENT SUPPORT 

OF THE

COMMITTEE ON ARMED SERVICES 

UNITED STATES SENATE 

ONE HUNDRED FOURTEENTH CONGRESS 

SECOND SESSION 

JANUARY 20, 2016 

Printed for the use of the Committee on Armed Services 

( 

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

COMMITTEE ON ARMED SERVICES 

JOHN MCCAIN, Arizona, Chairman 

JAMES M. INHOFE, Oklahoma 

JEFF SESSIONS, Alabama 

ROGER F. WICKER, Mississippi 

KELLY AYOTTE, New Hampshire 

DEB FISCHER, Nebraska 

TOM COTTON, Arkansas 

MIKE ROUNDS, South Dakota 

JONI ERNST, Iowa 

THOM TILLIS, North Carolina 

DAN SULLIVAN, Alaska 

MIKE LEE, Utah 

LINDSEY GRAHAM, South Carolina 

TED CRUZ, Texas 

JACK REED, Rhode Island 

BILL NELSON, Florida 

CLAIRE MCCASKILL, Missouri 

JOE MANCHIN III, West Virginia 

JEANNE SHAHEEN, New Hampshire 

KIRSTEN E. GILLIBRAND, New York 

RICHARD BLUMENTHAL, Connecticut 

JOE DONNELLY, Indiana 

MAZIE K. HIRONO, Hawaii 

TIM KAINE, Virginia 

ANGUS S. KING, JR., Maine 

MARTIN HEINRICH, New Mexico 

CHRISTIAN D. BROSE, Staff Director 

ELIZABETH L. KING, Minority Staff Director 

SUBCOMMITTEE ON READINESS AND MANAGEMENT SUPPORT

KELLY AYOTTE, New Hampshire, Chairman 

JAMES M. INHOFE, Oklahoma 

DEB FISCHER, Nebraska 

MIKE ROUNDS, South Dakota 

JONI ERNST, Iowa 

MIKE LEE, Utah 

TIM KAINE, Virginia 

CLAIRE MCCASKILL, Missouri 

JEANNE SHAHEEN, New Hampshire 

MAZIE K. HIRONO, Hawaii 

MARTIN HEINRICH, New Mexico 

(II)

C O N T E N T S 

JANUARY 20, 2016 

Page 

OVERSIGHT OF TASK FORCE FOR BUSINESS AND STABILITY OPERATIONS

PROJECTS IN AFGHANISTAN .................................................................................. 1 

McKeon, Honorable Brian P., Principal Deputy Under Secretary of Defense 

for Policy ............................................................................................................... 98 

Sopko, John F., Special Inspector General for Afghanistan Reconstruction ...... 107 

Questions for the Record ......................................................................................... 180 

APPENDIX A ........................................................................................................... 187 

APPENDIX B ........................................................................................................... 219 

APPENDIX C ........................................................................................................... 220 

APPENDIX D ........................................................................................................... 234 

APPENDIX E ........................................................................................................... 434 

APPENDIX F ........................................................................................................... 439 

APPENDIX G ........................................................................................................... 448 

(III)

(1) 

OVERSIGHT OF TASK FORCE FOR BUSINESS 

AND STABILITY OPERATIONS PROJECTS IN 

AFGHANISTAN 

WEDNESDAY, JANUARY 20, 2016 

U.S. SENATE,

SUBCOMMITTEE ON READINESS

AND MANAGEMENT SUPPORT, 

COMMITTEE ON ARMED SERVICES, 

Washington, DC. 

The subcommittee met, pursuant to notice, at 3:03 p.m. in Room 

SR–232A, Russell Senate Office Building, Senator Kelly Ayotte 

(chairwoman of the subcommittee) presiding. 

Committee members present: Senators Ayotte, Rounds, Ernst, 

Kaine, McCaskill, Shaheen, and Heinrich. 

OPENING STATEMENT OF SENATOR KELLY AYOTTE, 

CHAIRWOMAN 

Senator AYOTTE. Welcome, everyone. I appreciate both of our witnesses being here today for this important hearing to receive testimony on the oversight of the Task Force for Business and Stability 

Operations in Afghanistan [TFBSO]. This is a hearing of the Subcommittee on Readiness and Management Support. 

I want to thank, first of all, my ranking member, Senator Kaine, 

for joining me in leading this subcommittee and for his hard work 

every day on behalf of our servicemembers and their families. I 

look forward to the work we will do together this year. 

We begin this subcommittee’s first hearing of the year to receive 

testimony on the Task Force for Business and Stability Operations, 

TFBSO, projects in Afghanistan. We are joined this afternoon by 

Secretary Brian McKeon, the Principal Deputy Under Secretary of 

Defense for Policy, as well as Mr. John F. Sopko, the Special Inspector General for Afghanistan Reconstruction [SIGAR]. 

I want to thank each of you for your willingness to testify today 

and for your dedicated service to our country. 

TFBSO was a Department of Defense [DOD] task force created 

to address economic revitalization efforts in Iraq. Then in early 

2010, TFBSO began operations in Afghanistan. 

The goals of TFBSO in Afghanistan were to reduce violence, enhance stability, and support economic normalcy for Afghanistan. 

The task force sought to, one, restore productive economic capacity; 

two, stimulate economic growth; and three, serve as a catalyst for 

international investment in Afghanistan. 

2 

In order to support these goals, according to SIGAR, more than 

$820 million was appropriated since fiscal year 2009 for TFBSO 

programs and operations in Afghanistan. Of that $820 million, 

about $759 million was obligated, and $638 million was disbursed 

for the task force’s operations and activities in Afghanistan. 

The real purpose of today’s hearing is to determine, foremost, 

whether these resources were spent wisely and properly, and 

whether measurable results were achieved from the hundreds of 

millions of dollars that were spent on task force TFBSO. 

SIGAR has published a number of reports and inquiries on this 

task force. I am going to briefly touch on them. 

First, in July 2014, SIGAR released an inspection report about 

a cold and dry storage facility, which cost TFBSO nearly $3 million 

for this facility to store local produce, provide a location for sorting 

and packaging produce, and serve as a transit point for trucks. According to SIGAR’s report in July 2014, it has never been used and 

is not being maintained. 

In April 2015, SIGAR released the first report about TFBSO and 

U.S. Agency for International Development [USAID] extractive 

projects. This report identified a lack of a clear and cohesive development strategy by TFBSO and that TFBSO had not improved 

interagency coordination, subsequent to issues that were identified 

by the Government Accountability Office [GAO] as a weakness in 

2011, when it evaluated this issue. 

In October 2015, SIGAR released a special projects report about 

TFBSO’s compressed natural gas filling station project, which 

TFBSO paid $43 million in direct and overhead costs to construct, 

according to a number originally provided by the DOD to the 

SIGAR and was not subsequently disputed until we received Mr. 

McKeon’s testimony recently. 

A somewhat similar facility in Pakistan, according to SIGAR, 

would cost only between $200,000 and $500,000 to build. 

In November 2015, SIGAR sent an inquiry to DOD questioning 

the expenditure of $150 million, nearly 20 percent of its total budget, for villas and associated armed security. SIGAR found that 

TFBSO could have saved tens of millions of taxpayer dollars, if 

TFBSO members had lived at existing DOD facilities, bases existing in Afghanistan. 

Then most recently in January 2016, SIGAR released an audit 

report on TFBSO’s and USAID’s efforts to assist Afghanistan’s oil, 

gas, and mineral industries. The report found eight of the 11 

TFBSO extractive projects, worth $175 million of the total $215 

million disbursed, either had little to no or partial project achievement. Further, not a single project was transitioned to the Department of State [State] or USAID when the TFBSO task force ceased 

operations in Afghanistan. 

The totality of these reports, and some of the conclusions reached 

in a RAND report that was actually commissioned by TFBSO itself, 

raise very serious questions about how the money that was appropriated by Congress for TFBSO and its work in Afghanistan was 

spent, and whether this money was wasted. 

SIGAR concluded that TFBSO generally has not delivered on its 

stated goals. According to SIGAR, they have received more comVerDate Nov 24 2008 11:25 May 31, 2017 Jkt 000000 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 C:\USERS\WR47328\DESKTOP\25364.TXT WILDA
3 

plaints of waste, fraud, and abuse relating to TFBSO activities 

than for any other organization operating in Afghanistan. 

These questions have been exacerbated by the failure of the Department of Defense to respond to SIGAR’s legitimate questions. 

TFBSO ended its programs in Afghanistan in December 2014, 

and the task force ceased operations in March 2015. 

One of the most troubling aspects of this task force and DOD’s 

oversight is that, on multiple occasions, SIGAR asked DOD to answer questions about this task force, including about the compressed natural gas station as early as May 2015, at that point, 

two months after the task force ceased. Yet, DOD repeatedly failed 

to provide documents, claiming the department no longer processed 

the personnel expertise to address these questions. 

These assertions were made repeatedly despite the fact that 

members of TFBSO were still working for DOD, and the former 

acting director of TFBSO worked in the Office of Secretary of Defense [OSD] beginning in June. In fact, a hard drive of over 100 

GB of documents was just recently made available to SIGAR only 

last week. 

In Secretary McKeon’s testimony today, DOD disputes SIGAR’s 

numbers on what the compressed natural gas [CNG] station cost. 

According to SIGAR, DOD actually gave this number to a company 

called Vestige, the $43 million figure, that was contracted by DOD, 

which in turn provided this information to SIGAR. 

It is notable that when the draft report was issued by SIGAR on 

the compressed natural gas station in September, DOD did not dispute the $43 million figure then, and did not dispute it at the time 

the final report was issued in October. We have only recently received the dispute of what the number is. 

But most importantly to this, putting aside the dispute on how 

much the compressed natural gas station actually cost, there are 

many other important questions that need to be addressed today. 

First of all, what happened to the money, all of it? Second, regardless of cost for this compressed natural gas station, was there ever 

even a feasibility study conducted before money was invested on 

this project and other projects in Afghanistan? 

There are other troubling issues raised. Why did we spend $150 

million on villas and security for no more than five to ten TFBSO 

staff a majority of the time when they could have stayed on base? 

Why did we spend $55 million to facilitate an oil lender process 

that resulted in a Chinese company winning a contract that some 

have said—and, in fact, this Congress has even noted—could be 

used to exploit an estimated $1 trillion worth of Afghanistan mineral resources? What did DOD spend and should DOD have spent 

money to develop carpet, jewelry, and ice cream businesses in Afghanistan? Why is it that after operating for years and spending 

millions of dollars that most of TFBSO’s extractive projects failed 

to fully meet project objectives? Finally, why were any of TFBSO’s 

projects not transferred to State or USAID, so that we have continuity after having spent hundreds of millions of taxpayer dollars? 

Every dollar the Pentagon wastes is a dollar that we do not have 

to restore military readiness and provide our troops with what they 

need to protect themselves and our country. At a time of growing 

threats and constrained defense budgets, when we have issues like 

4 

this raised and where we have serious questions about how taxpayer dollars have been spent, this is a very important inquiry for 

this committee and for the Senate because of our shared concern 

that we use every dollar to support our men and women in uniform 

in what they need to do to defend this station. 

So today, I will be asking these questions and many more. I look 

forward to this hearing, and I thank both of you for being here. 

With that, I would now like to call on the ranking member, Senator Kaine, for his opening remarks. 

STATEMENT OF SENATOR TIM KAINE 

Senator KAINE. I want to thank you, Madam Chair, and my colleagues, the witnesses, and all who are here. 

This was a hearing that got its momentum following the release 

of a SIGAR Office of Special Projects report that was issued in October. The report had an attention-grabbing title, ‘‘DOD’s Compressed Natural Gas Filling Station in Afghanistan: An Ill-Conceived $43 Million Project.’’ I read and reviewed the report, and 

there are a number of issues that are raised by the report. 

TFBSO ceased existing at the end of 2014, so it is no longer a 

project in its own way, but there are a number of lessons here that 

we need to dig into do make sure: A) that we understand the situation; and B) if there were mistakes, we need to correct them going 

forward, issues that interest me. 

First, in doing economic development or reconstruction work, is 

the DOD the best agency to do it, or should we rely upon agencies 

of the United States Government that do it as their normal, everyday work, like USAID, for example. I think that is a very important question for Congress. 

Second, to the extent that DOD does work on economic reconstruction or other projects, has money been wasted? Can it be used 

better? That is a traditional oversight role that this subcommittee 

and the larger committee needs to take very seriously. 

Third, what is the relationship between the Department of Defense and the Inspector General’s [IG] office? Is it a cooperative 

one? Does the DOD provide the information that it is supposed to? 

We are all human beings. We can understand there might be some 

natural tension in the relationship of an agency to an IG, but the 

public looks at us as all part of the same family, and we are all 

supposed to be working together. 

The role of the IG is a critical one. Congress would not pass statutes empowering IGs if we did not think they were important. And 

one of the issues raised by this report is whether the DOD has 

been cooperative with the IG or not. That is a very important question. 

There are also some questions about the IG. The report with the 

attention-grabbing headline about the ill-conceived $43 million expenditure was issued by one division of SIGAR, the Office of Special Projects. But there have been other reports issued earlier in 

April and subsequently in December from the SIGAR’s Audit Division suggesting that the cost of this filling station was not $43 million but $5 million. 

So if the SIGAR that is charged with providing the facts that we 

need to exercise oversight is producing different answers depending 

5 

upon which division of SIGAR is speaking, that is a question as 

well. What is the reason for that? Is there communication between 

the different divisions of SIGAR? Do the different divisions of 

SIGAR, Special Projects and Audit Division, use different accounting standards? 

I think when the $43 million report came out, a lot of us were 

outraged. Many took to the floor, put out information about this as 

a classic example of government waste. But it was generally not 

put out at the same time that SIGAR had previously and subsequently reached a different calculation about the cost of this gas 

station. 

Now, I am not in the business. I do not know whether $5 million 

is an effective figure and $43 million is not. But the fact that the 

IG is putting out material with two different numbers is something 

that I definitely want to dig into today and understand. 

If there is a need for us to clarify that the government accounting standards should be used uniformly regardless of which division is looking at a problem, I hope that is something that we will 

explore as well. 

So this is a big hearing because it is about what is the right role 

for DOD in reconstruction. Has DOD wasted money in this now 

defunct project? And should there be lessons learned going forward 

for other projects? Does the DOD fairly cooperate and communicate 

with the IG, which we expect them to do as Members of the Senate. 

And why would the IG be producing reports with different numbers 

about this? 

Those are the questions that I am interested in exploring today 

and in the future. 

Madam Chair, I would like to just ask for a few items to be put 

into the record, with consent, first the TFBSO activities reports to 

Congress beginning in 2011 through 2014; second, a letter to 

Chairman McCain and Ranking Member Reed from the former 

Minister of Mines and Petroleum of Afghanistan; third, a letter to 

SASC from Jim Bullion, who is a former director of the TFBSO; 

fourth, a letter to the Readiness Subcommittee from Paul Brinkley, 

a former Deputy Under Secretary of Defense and director of the 

TFBSO; and finally, a letter to SIGAR from Paul Brinkley’s counsel. I would just like to make those part of the record, without objection. 

Senator AYOTTE. Without objection. 

[The information referred to follows:] 

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Senator KAINE. Thank you, Madam Chair. 

Senator AYOTTE. Thank you. 

First, we are going to receive testimony from the Principal Deputy Under Secretary for Defense Policy, Secretary Brian McKeon. 

STATEMENT OF HONORABLE BRIAN P. McKEON, PRINCIPAL 

DEPUTY UNDER SECRETARY OF DEFENSE FOR POLICY 

Mr. MCKEON. Thank you very much, Senator Ayotte, Senator 

Kaine, members of the committee. You have my longer statement 

for the record. Let me focus on a few key elements, including the 

genesis and purpose of the Task Force for Business and Stability 

Operations, and the oversight of the task force. 

Ultimately, time will tell whether the task force succeeded in its 

objectives. Independent assessments tell us that it had mixed results with some successes and some failures. 

The origins of the task force are rooted in the chaos of Iraq before President George Bush ordered the military surge early in 

2007. It was created in June 2006 by then-Deputy Secretary Gordon England. He charged the task force with transforming military 

contracting in Iraq so that the task force could generate stability 

through economic development and job creation. 

In March 2010, Secretary Bob Gates directed the task force to expand its efforts to support Operation Enduring Freedom. In my 

statement for the record, I provide a detailed timeline of the task 

force’s authority to operate in Afghanistan, including planning to 

transition the task force’s projects to other government agencies 

and the Government of Afghanistan. 

Consistent with the direction from Congress and the Secretary of 

Defense and plans to draw down U.S. force levels in Afghanistan, 

the task force ceased its operations at the end of 2014. I requested 

authority for an additional three-month administrative sunset period, during which a small number of the task force employees engaged in closeout activities, as well as responded to SIGAR’s request for information. 

I was not serving in the Department for most of the period during which the task force operated, but I have spoken to many 

former senior U.S. officials involved in Afghanistan policy, including Generals Stanley McChrystal, David Petraeus, and John Allen, 

and Ambassadors Karl Eikenberry and Ryan Crocker, to understand the history and rationale for the task force. These conversations make clear there was a strong demand signal from the field, 

strong support in the Pentagon, and strong support in the Government of Afghanistan for the work of the task force, the objective 

of which was to assist that government to generate economic activity in support of the military campaign plan. 

You asked me to address DOD’s oversight of TFBSO activities. 

Let me make two broad points. There are a lot more in my statement for the record. 

First, the task force did not have independent contracting or procurement authority. All task force contracting and disbursement of 

funds and other support functions were handled either by U.S. 

Army Central in Kuwait, by DOD headquarters elements, or by 

other U.S. Government entities. 

99 

Second, the reporting chain of the task force to the Under Secretary for Policy only commenced in August 2011. Prior to that 

time, the task force reported directly either to the Secretary or the 

Deputy Secretary. I have spoken to all of my predecessors in OSD 

Policy, who have reported they had regular meetings with task 

force leadership. 

In April 2014, as the task force was winding down, Michael 

Lumpkin, then performing the duties of the Under Secretary for 

Policy, asked the Department Inspector General to perform an 

overarching audit of the task force’s operations, financial actions, 

and contracts. The IG declined to do so due to limited resources 

and the need to focus its efforts on ‘‘projects with the greatest potential return on investment.’’ 

After my arrival in DOD of August 2014 until the final administrative closeout in March of 2015, I met every few weeks with the 

acting director. My primary focus was on ensuring the orderly 

shutdown of the task force and responsible preservation of the 

records. In the fall of 2014, I requested a financial audit of the task 

force, which was completed last April. 

My written statement examines in some detail OSD’s policy engagement with SIGAR over the last two years. Let me comment on 

the issue of SIGAR’s access to the task force records. 

First, at all times, SIGAR had unfettered access to TFBSO 

records, consistent with the Inspector General Act of 1978. 

Second, SIGAR now possesses a hard drive containing the unclassified records of the task force. The provision of the hard drive 

followed a meeting that I initiated with SIGAR, and followed an exchange of letters between myself and Mr. Sopko setting forth the 

conditions of our doing so. 

With regard to the CNG station project that has been mentioned, 

I would offer two observations and point you to my statement for 

the record for more detail. 

First, SIGAR has issued two reports conducted by its Office of 

Audits on U.S. Government support for the extractives industry in 

Afghanistan, one issued last April and one issued last week, both 

of which review the CNG project in some detail. Notably, in the 

most recent report, one of the projects that SIGAR concluded had 

generally met project objectives is the CNG station project. 

Second, in preparing this report on the CNG station project, 

SIGAR relied on information provided by an economic impact assessment [EIA] prepared by a consulting firm that was hired by 

TFBSO. That assessment stated that the task force spent $43 million to fund the station, of which $12.3 million were direct costs 

and $30 million were overhead costs. We believe the methodology 

used by the EIA is flawed, and that the project costs are far lower. 

The consulting firm that conducted the assessment has also reviewed its work, and we have seen a copy of their memo to the 

committee staff indicating that total costs of the station are likely 

well under $10 million. 

With that, let me break down the costs of the station, as we understand them. 

First, the cost for the entire station project was $5.1 million. Of 

this amount, the gas station itself cost $2.9 million. This is conVerDate Nov 24 2008 11:25 May 31, 2017 Jkt 000000 PO 00000 Frm 00105 Fmt 6633 Sfmt 6602 C:\USERS\WR47328\DESKTOP\25364.TXT WILDA
100 

sistent with the amount reported by SIGAR in its April 2015 audit 

report. 

Second, the data that the EIA team reviewed suggests that approximately $7.3 million was spent on subject matter experts, or 

SMEs. These experts were also involved in a broader effort to advise the Afghan Government to develop a natural gas industry. The 

figure of $7.3 million appears to be an average of all labor costs 

across the energy sector work by the task force divided by the number of projects. We believe the assumption that the labor costs were 

equal across all projects is likely flawed. 

Third, we cannot validate the figure of $30 million in overhead 

costs as being directly attributable to the CNG station. As with the 

labor costs, this appears to encompass the entire amount spent to 

support all natural gas or energy projects, which is a flawed method of accounting. 

I would note that in the most recent SIGAR audit on the extractives industry, when analyzing the costs of projects, it also appears 

to apply similar methodology to the one I just described. 

Reports that we commissioned to assess the task force work as 

well as SIGAR’s work tell us that the task force had a mixed record 

of success. As was highlighted by both Senator Ayotte and Senator 

Kaine, the most recent audit on the extractives industry portrayed 

a mixed record of the various projects in the energy sector by the 

task force, some meeting their objectives, some not, some partially 

meeting their objectives. 

The overarching question of how we promote economic development during a contingency operation, the point which Senator 

Kaine emphasized, remains a challenge for all of us in the U.S. 

Government. I personally am skeptical that the Department of Defense is a natural home for that mission. As a government, we need 

to consider and develop a functioning mechanism so that we are 

prepared for future contingencies, and I commend the committee 

for engaging in that discussion. 

Thank you for listening. 

[The prepared statement of Mr. McKeon follows:] 

PREPARED STATEMENT BY BRIAN MCKEON

Chairwoman Ayotte, Ranking Member Kaine, and Members of the Subcommittee, 

thank you for convening this hearing, which gives us a chance to review two important national security challenges that have confronted our government in the last 

decade: how to use non-military tools in concert with a military campaign, and how 

to strengthen our financial management and accountability in conflict zones. 

My testimony will address several subjects – the history of the Task Force for 

Business and Stability Operations, including the decision to close it down, OSD Policy’s engagements with the Special Inspector General for Afghanistan Reconstruction regarding the work of the Task Force, the specifics of the Compressed Natural 

Gas Station project, and finally, lessons learned. 

I was not serving in the Department of Defense for most of the period of the operation of the Task Force. To prepare for this hearing, I have reviewed many reports, 

including reports by SIGAR, some of the records of the Task Force, and spoken to 

many former senior U.S. officials, civilian and military, involved in Afghanistan policy during the operation of the Task Force in Afghanistan, including Generals 

McChrystal, Petreaus, and Allen, and Ambassadors Eikenberry and Crocker. 

These conversations make clear that there was a strong demand signal from the 

field, strong support in the Pentagon, and strong support in the government of Afghanistan, for the work of the Task Force, the objective of which was to assist the 

government of Afghanistan to generate economic activity in support of the military 

101 

campaign plan. Many of the commanding generals in Afghanistan had seen the 

work of the Task Force in Iraq, and welcomed its contributions in Afghanistan. 

The Task Force was, in a sense, expeditionary, operating not under Chief of Mission authority but under authority of the military commander. This unique status 

gave them a certain freedom to move around the country and engage more directly 

with Afghans than employees of the U.S. Embassy. 

During the course of its operation in Afghanistan, the Task Force obligated close 

to $800 million and disbursed over $600 million, which was roughly evenly divided 

between projects and support costs. These support costs are undoubtedly higher in 

Afghanistan due to the security requirements of operating in a war zone. The Task 

Force’s work in Afghanistan was focused on a few major lines of effort, particularly 

efforts to assist Afghanistan benefit from its mineral resources and fossil fuels. 

Time will tell whether the Task Force succeeded in its objectives. Independent assessments tell us that it had mixed results, with some successes and some failures. 

We welcome continued oversight of the Task Force to help us understand lessons 

that can be applied to any future contingency operation. 

I. HISTORY OF THE TASK FORCE FOR BUSINESS AND STABILITY OPERATIONS

The origins of the Task Force for Business and Stability Operations (TFBSO) are 

rooted in the chaos of Iraq in 2006, before President Bush ordered the military 

surge early in 2007. 

On June 22, 2006, Deputy Secretary of Defense Gordon England issued a memo 

entitled ‘‘Accelerating Reconstruction and Stability Operations in Iraq.’’ The memo 

stated that the formation of a government in Iraq had created a ‘‘short window to 

accelerate stabilization and reconstruction operations.’’ Toward that end, Deputy 

Secretary England appointed Paul Brinkley, then Deputy Under Secretary of Defense for Business Transformation, to head a Task Force to Support Improved DOD 

Contracting and Stability Operations in Iraq. As the name implied, it was charged 

with adapting and unifying military contracting in Iraq such that the Task Force 

could become an engine for stability through economic development and job creation. 

The mandate of the Task Force was also to look forward to examine possible 

changes to acquisition law and practice to address future contingency operations, as 

well as to accelerate the definition of contingency operations doctrine in the business 

mission area. In short, the Task Force was born from the concept that economic development and job creation were necessary conditions for building a stable and secure Iraq. 

On March 11, 2009, Secretary Gates issued a memo indicating that he had asked 

Mr. Brinkley to continue the Task Force’s economic revitalization efforts in Iraq for 

‘‘an appropriate transitional period into the new Presidential Administration’’ and 

shifted the chain of command to have Mr. Brinkley report directly to him. 

A year later, on March 25, 2010, Secretary Gates issued a new memorandum, directing that Mr. Brinkley extend the efforts of the Task Force to support Operation 

ENDURING FREEDOM, and directing that it focus on ‘‘development of economic 

opportunities including private investment, industrial development, banking and financial system development, agricultural diversification and revitalization, and energy development.’’ 

Later that same year, some uncertainty about the status of the Task Force arose 

when the Office of General Counsel cast doubt on the legal authority of the Department of Defense to conduct economic development activities in a foreign country, as 

they appeared to be inconsistent with the Department’s authorities. Many activities 

of the Task Force were suspended. 

Congress clarified the situation in the FY 2011 National Defense Authorization 

Act, providing statutory authority for activities of the Task Force in Afghanistan. 

The NDAA provided, however, that this authority would expire on September 30, 

2011, and directed a plan to transition the activities of the Task Force to the Department of State and the Agency for International Development. 

The sunset provision caused an impression within the Department that the Task 

Force would continue only through Fiscal 2011, and contributed to a decision by Mr. 

Brinkley and other senior staff at the Task Force to depart in the summer of 2011. 

Consequently, Senators Levin and McCain, then the Chairman and Ranking Member of this Committee, wrote to Secretary Gates on April 19, 2011, stating that the 

NDAA provision should not be read as requiring the shutdown of the Task Force. 

Citing congressional testimony in support for the Task Force by then-Chairman of 

the Joint Chiefs Michael Mullen and by General David Petraeus, the two senators 

urged the Department to keep the Task Force in operation so that it could ‘‘continue 

to serve as an important strategic tool for General Petraeus’ counterinsurgency campaign in Afghanistan.’’ 

102 

On August 10, 2011, Secretary Panetta issued a new memo, underscoring that the 

activities of the Task Force remained ‘‘critical to the current mission in Afghanistan.’’ The memo altered the reporting chain, and required the Director of TFBSO 

to report directly to the Under Secretary of Defense for Policy. The Task Force was 

further directed to emphasize areas of indigenous industries, mineral development, 

and energy development. 

Consistent with the transition recommendation provided to Congress on May 1, 

2012, indicating the agreement of the State Department, USAID, and DOD that 

Task Force operations should continue through 2014, Secretary Panetta issued a 

memorandum on October 18, 2012, reiterating TFBSO’s mission and the expectation 

that it would continue through 2014, stating that, ‘‘TFBSO will focus on developing 

economic opportunities, including mining sector development, private sector investment, and industrial development.’’ 

In the FY 2014 NDAA, Congress made a parallel amendment to law, authorizing 

the Task Force through calendar 2014. The Senate report on the legislation said 

that the TFBSO ‘‘has contributed to the stability of Afghanistan’s economy, particularly the development of its mining sector.’’ 

Consistent with this statutory provision, policy guidance, and plans to drawdown 

U.S. force levels in Afghanistan, the Task Force ceased operations in Afghanistan 

in December 2014. The Task Force requested authority for an additional threemonth administrative sunset period, during which a small number of Task Force 

employees engaged in close-out activities, as well as responded to information requests by SIGAR. 

II. SHUTTING DOWN THE TASK FORCE—RECORDS MANAGEMENT, AUDITS, AND LESSONS

LEARNED

You asked me to address DOD’s oversight of TFBSO activities. Let me start by 

making two broad points before I detail specific oversight that occurred. 

First, I wish to emphasize that TFBSO did not have independent contracting authority. All Task Force contracting and disbursement of funds and other support 

functions were handled by U.S. Army Central (ARCENT), by a DOD headquarters 

element, or by other U.S. government contracting offices. 

Second, I can only speak to the period of oversight by the Office of the Under Secretary for Policy, which commenced in August 2011. I have spoken to all of my predecessors, all of whom reported that they had regular meetings with Task Force leadership and that the Deputy Assistant Secretary of Defense for Afghanistan and 

Pakistan also engaged closely on all activities. This level of oversight and engagement is similar to that is provided by OSD Policy to the two defense agencies and 

one field activity that report to the Under Secretary. I have no insight into the oversight during the period that the Task Force reported directly to the Secretary or 

Deputy Secretary. 

In 2014, the Task Force focused its efforts on bringing projects to completion or 

getting them to a point where the Afghan government or another U.S. entity might 

be able to continue the Task Force’s work. From the Office of the Under Secretary 

of Defense for Policy’s perspective, the emphasis during that period was on ensuring 

an orderly and responsible shutdown, including an effort to gather lessons learned. 

In February 2014, with the departure of the Task Force Director, the Deputy Director was appointed Acting Director. He commissioned two studies: the RAND Corporation was hired to conduct a study of lessons learned, while Vestige Consulting, 

LLC was hired to conduct an Economic Impact Assessment of Task Force work. This 

latter project was completed December 29, 2014. The RAND study was completed 

last fall and published last week, January 12, 2016. We have provided both of these 

studies to the Committee. 

On April 7, 2014, Assistant Secretary of Defense (Special Operations & Low Intensity Conflict) Michael Lumpkin, then Performing the Duties of the Under Secretary of Defense for Policy, asked the DOD Inspector General (IG) to perform an 

overarching audit of the Task Force’s operations, financial actions, and contracts to 

‘‘help to ensure DOD captures lessons learned and closes the TFBSO books efficiently.’’ On August 26, 2014, the DOD IG replied that it could not undertake the 

requested audit based on limited resources and the need to focus its efforts ‘‘on 

projects with the greatest potential return on investment.’’ 

Under Secretary Wormuth and I assumed our current positions in OSD Policy in 

the summer of 2014. Ms. Wormuth began her service as Under Secretary in late 

June, and I assumed the role of her Principal Deputy in mid-August. I oversaw the 

closure of the Task Force. 

After my arrival in August, until the final administrative closeout in March 2015, 

I met every few weeks with the Acting Director of the Task Force. My primary focus 

103 

in these meetings was on ensuring the orderly shutdown of the Task Force and the 

responsible preservation of the records. In the fall of 2014, I requested that the 

Washington Headquarters Services (WHS), which provided administrative and financial support services for the Task Force, undertake a financial audit of the Task 

Force. WHS engaged the firm of Williams Adley for this purpose. It began work in 

early January 2015, and provided a final report on April 30, 2015. 

III. OSD POLICY ENGAGEMENT WITH SIGAR IN 2014 AND 2015 REGARDING TFBSO

In 2014, the Task Force provided SIGAR with several tranches of documents and 

content, in response to specific queries, on the Task Force’s extractives industry programs. 

In late November 2014, a media account in a defense trade publication reported 

that Mr. Sopko intended to conduct an in-depth review of the TFBSO, which he asserted had been an ‘‘abysmal failure’’ and that, as far as he could determine, had 

‘‘accomplished nothing.’’ On December 9, 2014, I phoned Mr. Sopko, and explained 

that following the administrative sunset period, the Department would not be in a 

position to retain TFBSO personnel for the purpose of responding to SIGAR requests. 

The SIGAR sent a letter to me the following day, requesting the preservation of 

Task Force records to enable ongoing SIGAR work. As noted, records preservation 

was already a focus of shutdown efforts. 

On January 15, 2015, the TFBSO staff provided information requested by SIGAR 

the previous December regarding travel and spending by Task Force employees and 

contractors, information on the program working with indigenous jewelry makers, 

the Economic Impact Assessment contract and draft deliverable, and copies of other 

consulting contracts. On January 29, 2015, SIGAR requested significant additional 

information on all Task Force work, including a list of all Task Force employees and 

their titles from 2010 to the present. All of the requested information was provided 

on March 3, 2015. During this period, SIGAR staff continued to interview a number 

of TFBSO staff, including the Acting Director. 

On March 30, 2015, I sent a letter to SIGAR with information regarding TFBSO 

records preservation, the location of the records, and points of contact following the 

March 31, 2015, closedown. On March 31, 2015, the sunset period was concluded 

and all records had been provided to WHS Executive Archives. At that point, the 

Task Force ceased to exist. 

SIGAR’s release of CERP data 

On May 18, 2015, we discovered that a media organization had published nearly 

18,000 records on projects DOD implemented in Afghanistan under the Commander’s Emergency Response Program (CERP) on its website. The data, which the 

media organization received pursuant to a Freedom of Information Request (FOIA) 

submitted to SIGAR, included names and, in some cases, contact information for 

U.S. military personnel and civilians and Afghan civilians who received CERP funding. 

OSD expressed concern to SIGAR about the release of this information, and the 

security implications for our personnel and our Afghan partners. SIGAR’s Chief of 

Staff conceded by email that the release was a breach of policy saying, ‘‘The SIGAR 

FOIA clerk who handled this request did not follow SIGAR’s procedures for processing FOIA requests. She is no longer with the agency. I am consulting with 

SIGAR’s Office of General Counsel about this issue, but any future FOIA requests 

for data will be held until we can resolve how to handle the data.’’ SIGAR requested 

DOD assistance to review the data, as SIGAR contended that it was too big a 

project for them to handle in way that fully addressed DOD concerns. The Department also asked the media organization to remove the data from its website. 

Engagement regarding the compressed natural gas station 

Also on May 18, 2015, DOD received a letter from SIGAR requesting additional 

information on the compressed natural gas (CNG) station project that is the subject 

of this hearing. The Task Force had already provided extensive information about 

the CNG station in response to a SIGAR audit that commenced in the summer of 

2014 that examined all U. S. Government efforts, including the Task Force’s, in the 

extractives sector. That audit report, released in April 2015, explains the purpose 

of the CNG station, and notes that $5.1 million was expended on the construction 

and tender of the station, conversion of four existing Ministry of Interior diesel generators, and provision of and training for the installation and maintenance of CNG 

engine conversion kits. 

On June 17, 2015, DOD’s reply indicated that with the closure of TFBSO, OSD 

no longer possessed the personnel expertise to address the questions about the gas 

104 

project or to assess properly the information in the Executive Archive. DOD also indicated it was fully prepared to arrange for access to TFBSO information, and suggested that our staffs meet to work out the modalities of SIGAR’s access to the information requested. 

On June 30, 2015, our staffs met. DOD made clear that SIGAR would have unrestricted access to the TFBSO records in a reading room managed by WHS. If SIGAR 

wanted to obtain copies of any documents, the documents would first need to be reviewed by DOD attorneys to protect information that may be withheld from release 

under FOIA. DOD believed this step was necessary following the unwarranted release of the CERP data, which I outlined above. No limitation was placed SIGAR’s 

access to unredacted documents. SIGAR never responded to this offer. 

On September 24, 2015, SIGAR sent us the draft version of its report on the CNG 

filling station. DOD was troubled by SIGAR’s apparent decision not to undertake 

due diligence in reviewing the records, so our October 9, 2015, reply indicated both 

our continued willingness to provide access to the documents and to any DOD personnel that SIGAR wished to interview. 

On October 22, 2015, SIGAR’s report on the CNG station was published. 

Access to TFBSO records 

I wish to underscore that at no time has SIGAR been denied access to any available records of TFBSO. 

The Department believes that providing SIGAR unfettered access to review 

unredacted TFBSO archived materials via a reading room, as outlined previously, 

satisfies the objective of providing access while mitigating the risk of inappropriate 

release of FOIA-exempt information. Such an arrangement is fully consistent with 

the statutory requirement for Inspector General ‘‘access’’ under the Inspector General Act (5 USC App. § 6). Further, this approach has been used with other SIGAR 

staff as part of a separate SIGAR Afghan war lessons learned project, without any 

objections from SIGAR. 

On December 15, 2015, pursuant to my suggestion, Mr. Sopko and I met in his 

offices in Crystal City to discuss SIGAR’s access to TFBSO records. Following an 

exchange of letters, and receipt of certain assurances from SIGAR, DOD agreed to 

provide a copy of the hard drive of TFBSO’s unclassified records. That hard drive 

and a list of TFBSO personnel that we have determined still work within DOD was 

delivered to SIGAR last week. 

IV. THE COMPRESSED NATURAL GAS (CNG) FILLING STATION

SIGAR’s report on the Compressed Natural Gas filling station asserts that the 

project cost the United States Government $43 million, and was ill-conceived. 

A report to Congress on FY2011 Task Force activities (transmitted on December 

16, 2011) explained the purpose of the project: ‘‘As a pilot project, the TFBSO funded the construction of a CNG complex in Sheberghan City, including the compression station, pipeline extension from the current gas grid, desulphurization and dehydration systems, engine conversion kits, and installation and maintenance training for station operators. The TFBSO is also coordinating with the taxi association 

in Sheberghan for the first opportunity to convert their fleet of cars to dual-use 

(CNG/gasoline) engines.’’ That report indicated that construction of the station and 

its associated refining and conversion facilities cost $2.9 million. 

A SIGAR report on extractive industries in Afghanistan, issued in April 2015, described the project in a similar fashion: 

Because Afghanistan’s electric power plants and transport fleet rely on expensive diesel imports, TFBSO leadership decided that taking steps to develop a domestic fuel market would be critical to Afghanistan’s economy 

and energy security. As a proof of concept to demonstrate that Afghanistan’s automotive fleet could transition from a reliance on foreign diesel and 

instead use cheaper, locally-produced natural gas, TFBSO funded the construction of a compressed natural gas complex in Sheberghan City, including a compression station, pipeline extension from the current natural gas 

grid, desulphurization and dehydration systems, engine conversion kits, 

and installation and maintenance training for station operators. Additionally, TFBSO coordinated with the taxi association in Sheberghan to convert 

its fleet of approximately 150 cars to dual-use-compressed natural gas/petroleum-engines. TFBSO also converted two diesel generators operated by 

105 

1SIGAR Audit Report 15–55, ‘‘Afghanistan’s Mineral, Oil, and Gas Industries: Unless U.S. 

Agencies Act Soon to Sustain Investments Made, $488 Million in Funding is at Risk,’’ April 

2015, page 27. 2SIGAR quarterly report to Congress, July 30, 2012, page 123. 

the Afghan Ministries of Interior and Defense to run on compressed natural 

gas. 1

The CNG station was part of a larger effort to create a viable energy market within Afghanistan. The SIGAR Extractives report notes that TFBSO was working with 

the Afghan authorities to refurbish an existing pipeline running between natural 

gas fields in Sheberghan and a power plant near Mazar-e-Sharif. TFBSO also 

planned to build an entirely new pipeline alongside this older pipeline. In parallel, 

USAID was investing funds to rehabilitate and develop natural gas wells in 

Sheberghan, and construction of a nearby natural gas processing plant. The Task 

Force’s focus on the natural gas sector was consistent with guidance from the Secretary of Defense, and with the overall effort to assist in the development of Afghanistan’s natural resources. 

The CNG project was detailed in the annual TFBSO activities reports to Congress 

and referenced in several quarterly SIGAR reports. In its July 30, 2012, quarterly 

report to Congress, SIGAR noted as follows: 

This quarter, the compressed natural gas station (CNG) in Sheberghan was 

handed over to the Ministry of Mines. It began commercial operation in 

May. Construction of the station had been funded by [TFBSO]. Because 

CNG is 50% cheaper than gasoline, as well as cleaner, the TFBSO said the 

CNG station should reduce fuel imports and provide greater security. 2

In preparing its report on the CNG station project issued last October, SIGAR relied on information provided by the Economic Impact Assessment (EIA) prepared by 

a consulting firm engaged by TFBSO. That EIA report stated that the Task Force 

spent $43 million to fund the CNG station, of which there were $12.3 million in direct costs and $30 million in overhead costs. 

We believe the methodology used by EIA, and relied on by SIGAR, is flawed, and 

that the costs of the station are far lower. I believe the consulting firm has also reviewed its work and engaged the Committee staff, and we have received a copy of 

their memo to one of your staff that indicates that the total costs of the station are 

likely ‘‘well under $10 million.’’ 

CNG Station Cost Breakdown 

In preparation for this hearing, DOD has examined records to ascertain the costs 

of the CNG station. 

Let me breakdown the costs of the CNG station as we understand them today. 

First, the costs for the entire station project were $5.1 million. As noted previously, the costs for the station portion of the project were $2.9 million. The $5.1 

million covered the costs of the fueling station, two dispensers, one CNG trailer filling point, a car conversion center, an administrative office building, gas compression 

and processing equipment, and the conversion of two generators to power Ministry 

of Interior bases. This is consistent with the amount reported by SIGAR in its April 

2015 audit report. 

Second, the data provided to the EIA team suggests that approximately $7.3 million was spent on subject matter experts (SMEs) working to support the technical, 

legal, financial, policy and governance requirements for a natural gas consuming industry. The SME work supported the gas station project as well as a broader effort 

to help the Afghan government develop a natural gas industry. The SMEs supported 

the Afghan government as they went through the process of setting a price for natural gas, creating a framework for licensing a station, creating safety standards, 

and creating a legal framework for distributing natural gas to individual consumers 

for the first time. The figure of $7.3 million is based on an average of all labor costs 

by the SMEs across the entire energy sector, divided by the number of projects. The 

assumption that the labor costs were equal across all projects is likely flawed. The 

consulting firm estimates that the more accurate allocation of the SME costs to the 

CNG station project is two to four percent of the total labor costs of $36.4 million. 

DOD cannot validate the figure of $30 million in overhead costs set forth in the 

SIGAR report as directly attributable to the CNG station project. This appears to 

represent an effort to capture the amount shared across all natural gas or energy 

projects. This is a flawed method to determine overhead costs for a given project. 

The preferred method is to use actual cost data attributed to the specific project, 

because each project has unique support requirements. The support costs data availVerDate Nov 24 2008 11:25 May 31, 2017 Jkt 000000 PO 00000 Frm 00111 Fmt 6633 Sfmt 6621 C:\USERS\WR47328\DESKTOP\25364.TXT WILDA
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3Data from the International Association for Natural Gas Vehicles. 

4 As SIGAR notes in the April 2015 extractive industries audit, ‘‘Sour gas is natural gas that 

contains measurable amounts of hydrogen sulfide. It is colorless, flammable, poisonous to humans and animals, and, unlike sweet natural gas, it is extremely corrosive and requires refining 

before use’’, page 27. 5 CSIS, ‘‘Final Report on Lessons Learned: Department of Defense Task Force for Business 

and Stability Operations,’’ June 2010, page 5. 

able to us do not provide the necessary fidelity to determine overhead costs in support of the CNG project. 

The SIGAR report also compares the cost of this station to a comparable station 

in neighboring Pakistan. We believe that there are several reasons this station was 

more expensive than a station in Pakistan. 

First, this station was the prototype for all of Afghanistan. In 2012, Pakistan had 

one of the most established and largest CNG distribution networks, with 2.9 million 

CNG vehicles and 3,330 refueling stations. 3 With a large and established market, 

along with the ability to source locally or import construction materials by sea and 

rail, building new CNG stations is substantially less expensive in Pakistan. 

Second, this station had several additional components not included in a basic filling station. It had the ability to fill trailers for use by future stations, to convert 

cars, and to refine the sour gas coming into the station. 4 The ability to fill trailers 

was critical to the business model being established as it eliminated the need for 

direct pipeline access. DOD understands that the Afghan government continues to 

plan for a future station in Mazar-e-Sharif, and that these trailers will assist in that 

effort. 

Third, the costs of construction in Afghanistan are much higher than in neighboring countries due to the lack of existing production and manufacturing capacity 

related to construction in general and for extractive industries specifically, the landlocked nature of the country, and the costs of security in a war zone. 

SIGAR noted that that the cost of converting cars would be prohibitive to the average Afghan. To be sure, the average Afghan does not own a vehicle. As the Fiscal 

Year 2011 report to Congress highlighted, a primary focus of this project was those 

who do own vehicles, primarily taxi drivers. In addition, it was expected that the 

government would seek to convert its vehicle fleets. For taxi drivers, conversion 

would reduce monthly fuel consumption costs by 50 percent. DOD understands that, 

in many neighboring nations, conversion costs are paid upfront by station owners, 

who then charge vehicle owners more for gas until the conversion cost is paid for, 

generally within a year, due to the price differential. In this case, the Task Force 

committed to paying for conversion of 120 vehicles to ensure the targeted community of vehicle owners would be able to demonstrate the value of conversion. 

Last, SIGAR’s report questioned whether the station is still operating. My staff 

contacted the operator of the CNG station by email on November 15, 2015. The operator indicated that the station was working normally, that 230 cars had been converted, and that every day approximately 160 cars obtain fuel from the station. 

V. LESSONS LEARNED

You asked me to address the lessons learned and how these lessons will inform 

DOD activities going forward. 

At the Task Force’s request, Vestige Consulting, LLC provided an Economic Impact Assessment (EIA) for TFBSO work done in Afghanistan. DOD also commissioned reports by CSIS in 2010 and RAND in 2015. In addition, GAO, the Special 

Inspector General for Iraq Reconstruction (SIGIR), and SIGAR have all conducted 

reviews of TFBSO activity. The two reports from SIGIR (2008 and 2009) highlighted 

the difficult environment in which the Task Force was operating, suggested some 

process improvements, and clarified the resources and activities of Task Force work 

in Iraq. I commend all of these reports to the Committee. 

The CSIS lessons learned report endorsed the value of the Task Force and its approach in Iraq, stating that, ‘‘The Task Force needs to retain its essential attributes 

of entrepreneurial leadership, a broad mandate that enables flexibility in approach 

and operations, and responsiveness to military commanders in theater . . . .The Task 

Force has demonstrated value to DOD field commanders and to Iraqis. It serves a 

useful and key role as part of economic operations in conflict zones, and it helps 

fill the gap between initial stabilization and longer-term economic development.’’ 5

One important point made by CSIS was that it was difficult to measure the real 

value and merit of specific Task Force projects, saying, ‘‘CSIS concludes that many 

of the activities the Task Force pursued were worthwhile, with the caveat that for 

a specific activity, it is difficult to ascertain whether the value the Task Force generated or received – economic or otherwise – exceeded the money spent. Some reVerDate Nov 24 2008 11:25 May 31, 2017 Jkt 000000 PO 00000 Frm 00112 Fmt 6633 Sfmt 6621 C:\USERS\WR47328\DESKTOP\25364.TXT WILDA
107 

6 Ibid, page 29. 

7 Ibid, page 5. 

8 Ibid, page 51. 

9 RAND, ‘‘Task Force for Business and Stability Operations: Lessons from Afghanistan,’’ January 12, 2016, page 82. 10 Ibid, pages xviii-xix. 11SIGAR 16–11 Audit Report, ‘‘Afghanistan’s Oil, Gas, and Minerals Industries: $488 Million 

in U.S. Efforts Show Limited Progress Overall, and Challenges Prevent Further Investment and 

Growth,’’ January 2016, page i. 

sults achieved by the Task Force can be reasonably quantified, though calculation 

of a return on investment or similar metric is often not possible and perhaps not 

meaningful.’’ 6

The report also recommends developing a more sustainable approach to economic 

operations in combat zones, ‘‘There is a substantial gap in U.S. government capability with regard to economic operations. That gap in capability is caused in part 

by resource shortfalls but also by significant and unresolved policy differences . . . 

Further action to address these challenges is needed . . . ’’ 7 The report then provides 

more detailed findings, including recommending ‘‘an effort to analyze and develop 

longer-term options for organization both for DOD civilian support for expeditionary 

operations and for DOD economic operations in conflict environments.’’ 8

The RAND lessons learned report’s review of TFBSO project implementation concludes ‘‘TFBSO’s record is very mixed overall. Stakeholders who discussed these 

projects and other sources pointed to numerous instances of both success and failure. Respondents who discussed the business accelerator, the carpet program, 

Ariana Airlines, and, to some extent, the Amu Darya tender often commented that 

the programs were helpful. In several of these cases, project successes grew out of 

early failures, but it was possible to see learning and improvement. Respondents 

saw other projects, such as the Sheberghan Gas Pipeline and the Khas Kunar chromite crusher, as more problematic. In general, TFBSO had problems implementing 

large, complicated infrastructure investments. In the cases in which TFBSO interventions were more in the vein of advising, matchmaking, and closing small gaps 

in value chains, the implementation seems to have been smoother.’’ 9

RAND offered the overarching recommendation that, ‘‘Economic development is 

likely to remain a key component of U.S. contingency operations. And regardless of 

today’s perceived effectiveness of the Task Force in Afghanistan, or Iraq, it is likely 

that these future economic development efforts will contain private sector-focused 

elements akin to those employed by TFBSO. The U.S. policy community should plan 

for future organizational solutions to these same challenges.’’ 10

The just released second SIGAR Audit on extractives also highlighted TFBSO’s 

mixed record, saying, ‘‘TFBSO’s 11 projects achieved mixed results, with 3 of those 

projects showing little to no achievement of their project objectives, 5 partially met 

project objectives, and the final 3 generally met project objectives.’’ 11

In closing, the overarching question of how we promote economic development 

during a contingency operation remains a challenge for all of us in the U.S. government, both in the legislative and executive branches. I am skeptical that the Department of Defense is the natural home for that mission. We have struggled with this 

challenge over the last decade or more, and as a government we need to develop 

a functioning mechanism so that we are prepared for future contingencies. I commend the Committee for engaging in this discussion. 

Senator AYOTTE. Thank you. I would now like to call on Mr. 

Sopko. Mr. Sopko is the Special Inspector General for Afghanistan 

Reconstruction. 

STATEMENT OF JOHN F. SOPKO, SPECIAL INSPECTOR 

GENERAL FOR AFGHANISTAN RECONSTRUCTION 

Mr. SOPKO. Thank you very much, Chair Ayotte, Ranking Member Kaine, and other members of the subcommittee. Thank you for 

inviting me to testify today about our ongoing work related to the 

Task Force for Business and Stability Operations, or TFBSO. TFBSO, as has been stated, was an $800 million experiment in 

which DOD attempted to attract private sector investment to Afghanistan to stimulate the economy and create jobs. Unfortunately, 

108 

what might have seemed like a good idea on paper seems to have 

turned out rather differently in reality. 

SIGAR’s review of the construction of the compressed natural gas 

filling station in Sheberghan, Afghanistan, highlights many of the 

problems we have found in other TFBSO programs dealing with 

planning, management, coordination, and oversight. 

I would like to address two issues right now in my oral statement. My written statement covers a lot more issues. 

The first issue is this question about the cost of the CNG station. 

It is important to note that the $43 million number is not a SIGAR 

number. That number came from the Department of Defense. Although Mr. McKeon’s testimony glosses over this and makes it 

sound like the number came from their consultant Vestige or 

SIGAR, the truth is that number came from the Department of Defense. 

SIGAR had an obligation to report that number when we found 

it. It was the best evidence we had at the time. It would have been 

irresponsible for SIGAR not to report it. 

In addition, yesterday, the Department of Defense made available to us for the first time the DOD Comptroller who reviewed 

that $43 million number for Under Secretary McKeon. That comptroller told our staff that he confirmed, first of all, the $12 million 

of direct costs, but he also said that while his ‘‘gut feeling’’ was that 

the overhead charge was wrong and was probably less than $30 

million, due to the poor records maintained by TFBSO, the $43 million number with the $30 million overhead was the best number 

available. 

I would remind all of the members, our requirement is to report 

the best number available. We do not make numbers up. We do not 

call people in Afghanistan to get their opinion or send an email to 

someone in Afghanistan to get their opinion on what the number 

is. We tend to rely on the Department of Defense when we ask for 

records about DOD expenditures. 

Remember, we asked the Department of Defense to comment on 

that number and explain that number as far back as May 18, 2015. 

Again, along with the rest of our draft report that we sent to Under 

Secretary McKeon on September 24, we again repeated our request 

to please explain that number, explain that overhead, because we 

ourselves realized it was a very extraordinarily high number. 

We never got an answer. You never got an answer. The American taxpayer never got an answer, until last night when apparently DOD discovered that the number was in error. 

Now, if DOD now repudiates that number and says it was actually $10 million or $7 million or $5 million or some other number, 

we are glad they finally decided to look at their own records and 

take a second look. But I have to say, Senators, I wish they had 

done so earlier, but I guess it is better late than never. 

In the end, whether it is $43 million or $20 million or $10 million, it is still a lot more than should have been spent in Afghanistan, and DOD to date still has no real explanation for the expenditure and what benefit the U.S. taxpayer got from that expenditure. 

It is very clear at this point that DOD never did a cost-benefit 

analysis before they spent whatever the amount is in Afghanistan. 

109 

Right now, essentially, this is a giveaway that apparently benefits 150 taxi drivers in Sheberghan. That is all the U.S. taxpayer 

got out of it. 

The second issue I want to address—and, Senator Kaine, I am 

glad you raised it—is the mistaken notion that special reports 

issued by SIGAR for some reason do not follow professional standards. That is simply incorrect. 

All SIGAR reports are fact-based. All SIGAR reports note the 

sources. And all SIGAR reports comply with relevant, professional 

standards, including CIGIE, which is the Council of Inspectors 

General on Integrity and Efficiency Silver Book standards. 

Senator Kaine, you pointed out that we have used different numbers in different reports. I am certain your staff has read the reports and has told you that the reports where we use the $5 million 

number was because we were comparing TFBSO programs and 

AID programs, and we did not have overhead numbers for those reports. So in fairness to TFBSO, in fairness to AID, we did not want 

to compare apples and oranges. So we used just direct costs to 

make the comparison. 

With the special projects report, which was a discrete report that 

was based upon work that our auditors and investigators uncovered, we had seen this tremendously high expenditure of overhead, 

we had the overhead cost numbers. We had them from the DOD 

contractor. I must say, it is surprising now that it turns out DOD 

spent $2 million for that contract report and apparently DOD is 

now saying that they wasted the $2 million because they did not 

know how to figure overhead costs. 

Now only late last Thursday, my office received from DOD a 

hard drive containing what DOD claims to be all of TFBSO’s unclassified records. My staff has spent the weekend doing a preliminary review. What does that review show us? It again corroborates 

the $43 million number. 

The records show that TFBSO managers, including senior managers of TFBSO, reviewed the draft economic impact statement numerous times, even corrected numbers, because the initial draft 

was $50 million. They backed out $10 million that had been erroneously put in, and TFBSO accepted the overhead charges. 

But now, mysteriously last night, the numbers are wrong. 

In addition, we have not been able to find in our preliminary review any cost-benefit analyses done by TFBSO. 

However, I will say this and caution you, the data provided is 

substantially inadequate. There is obviously a lot of data missing 

in this hard drive that we got, so much so that we have forensic 

accountants now reviewing it to determine if the data has been manipulated. We are also concerned that we are missing emails, major 

email files. 

We are also concerned that this is supposed to be all of the 

records of TFBSO and it only amounts to 100 GB of data. That 

seems extraordinary for an organization that lasted for 5 years and 

employed up to 80 people. As one younger staffer in my office has 

said, 100 gigabytes of data is what I have on my iPhone. We are 

surprised by the assurances from DOD that these are all the 

records of TFBSO. 

110 

Finally, I want to raise one last issue, which is again a larger 

issue beyond how much money a gas station costs in Afghanistan. 

That is the issue that, since December 2014, the Department of Defense has been telling us, because of legislation Congress passed, 

they have no authority, no money, and no bodies to explain this important program to an Inspector General who is required by statute 

to investigate allegations of fraud, waste, and abuse. 

Now I worked for Sam Nunn for approximately 15 years, worked 

for John Dingell for other years. In my 20-some years working in 

Congress, I have never heard of that excuse. My deputy worked for 

38 years for GAO. He has looked at many closed programs. He has 

never heard that excuse. 

As a matter of fact, USAID and State Department and other elements of DOD have been reporting to us on a regular basis on 

closed programs. Only TFBSO has this institutional amnesia. 

I close by saying if that institutional amnesia continues, it will 

be bad for oversight, bad for criminal investigations that we are 

conducting, and bad for the U.S. taxpayer. 

Thank you very much, Senators. 

[The prepared statement of Mr. Sopko follows:] 

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Senator AYOTTE. Thank you, Mr. Sopko. 

I want to start with a basic question, Secretary McKeon. That is, 

there was roughly $638 million disbursed over the life of the 

TFBSO task force. Can the DOD account for how each of those dollars was spent? As I look at the big picture here, and a lot of the 

questions that have been raised on recordkeeping, can you fully account to the taxpayers as to how each of those $638 million was 

spent? 

Mr. MCKEON. Senator Ayotte, we can give you a list of the contracts, and I believe we can tell you how all the money was disbursed broadly by sector. In answering the question about the CNG 

station, it points to an inadequacy in the way they kept the books 

in the task force in terms of allocating the support costs to specific 

projects. They did not do it on a project-by-project basis, which 

gives us the challenge of coming up with the right number for the 

CNG station. 

But it is my understanding, based on what I have been told and 

what I have seen in reviewing some of the records, that we know 

where all the money went. The money was contracted or disbursed 

through other parts of the Department, either U.S. Army Central 

in Kuwait or other DOD entities, such as the Washington Headquarters Services, or contracts that went through the Department 

of the Interior, for example. So I think we have all the paper that 

shows—— 

Senator AYOTTE. Let me just ask you a basic question, then. If 

we can account for each of these dollars—but I have serious questions given even this dispute listening to this that we can—was it 

worth it? What did we get for the taxpayers? That is the fundamental question. What can we say in terms of deliverables for the 

mission that is anything sustainable that we get to accomplish the 

purpose of economic development in Afghanistan? 

Mr. MCKEON. That is the big question, Senator, and it is the 

right one. As I said in my statement, I think it is a mixed record. 

I also think it is a little early to say. 

So, for example, some of the work the task force did and USAID 

has done in advising the Ministry of Mines and Petroleum on governance, competitive tenders, administration of the ministry, that 

kind of thing, the jury is still out on that. There are number of 

tenders that I am told are still in a decision making process within 

the government. The Ghani government is looking closely at and 

reviewing a number of decisions by the Karzai government. 

As I think even the task force’s most recent audit on the extractives industry says, it is ultimately up to the Government of Afghanistan to carry the ball forward. 

Senator AYOTTE. Right. So did we keep metrics or anything like 

that for this task force? 

Mr. MCKEON. I have not seen, in all the materials I have reviewed, specific metrics. 

Senator AYOTTE. Is Mr. Sopko right when he said, using the gas 

station as an example, that there was no feasibility study? 

Mr. MCKEON. I cannot dispute that, Senator. We have not found 

in our search of the records what we would understand to be a feasibility study. 

153 

Senator AYOTTE. So there are a number of other issues, one that 

I wanted to ask about as well, and I am going to give Mr. Sopko 

an opportunity to comment on the questions that I have raised, but 

there was a letter that was written about $150 million that was 

spent on villas and security for TFBSO staff. That is 20 percent, 

roughly, of the money appropriated by Congress. 

Why could they have not stayed on base? And why was that decision made? And why is it justifiable for 20 percent of the money 

allocated for economic development for that purpose? 

Mr. MCKEON. Senator, we owe SIGAR an answer to that letter. 

We are still digging into the questions that he asked about the 

housing in Kabul and Herat and a couple other places. 

What I understand was the reason for this was, first, the task 

force was unique insofar it was not under the Chief of Mission authority. They were somewhat entrepreneurial and took a little risk. 

I think part of the reason for the housing was housing for staff 

coming from Washington in and out. I do not think a lot of people 

lived there permanently. They were also used as offices, and they 

were used to show international businesses and executives that 

they could come to Afghanistan to do business. 

Senator AYOTTE. So did we get any deliverable contracts of inter- national businesses there because we spent $150 million on villas 

versus having them stay on base? 

Mr. MCKEON. Senator, I cannot tie a specific visit of an executive 

in one of these houses to a later investment. I would not make that 

claim. 

The other thing I would say is the task force had their own private security to help them with security movements. They were not 

relying on the United States military for movements within the 

country, by and large. There is a document that we have seen in 

the records that—— 

Senator AYOTTE. Could they not have? I mean, they were a DOD 

task force. Could they not have asked the DOD and allocated some 

of the cost to support that? 

Mr. MCKEON. I have not asked that question of Central Command [CENTCOM], whether that would have been feasible at the 

time. I have seen one document where they signed an Memorandum of Understanding [MOU] between U.S. Forces Afghanistan 

[USFOR–A] and the task force as a contingency, essentially, for the 

task force to go on base or to be supported by the military. It was 

signed by a one or two star general who wrote a note to the commander and said he had a little misgivings about this because he 

was not sure if they were going to be able to support it completely. 

Senator AYOTTE. Well, it just seems to me as a DOD task force, 

$150 million, this is very important question. And obviously, I 

think we as a committee would like to know why those decisions 

were made and what were the justifications, and what return on 

investments we think we got from taking 20 percent of the appropriations to do that. I also wanted to follow up on the issue of the $55 million that 

was spent to facilitate an oil lender process that resulted, essentially, in the Chinese company winning a contract for extractives 

in Afghanistan. Do you think that was a wise use of taxpayer dollars? 

154 

Mr. MCKEON. Senator, what I know about that is the task force 

assisted the Afghan Ministry of Mines to offer a tender in accordance with general international principles, and the Chinese company competed and won. I cannot tell you whether it was completely transparent and followed all the rules that we would expect 

in such a tender. 

Senator AYOTTE. But stepping back for a second, my time is expiring and I know a number of others have questions, and I am, 

certainly, going to want another round of questions, but I am just 

trying to think how I tell the people of New Hampshire that we 

spent $55 million to facilitate an oil tender process so that we could 

pave the way for the Chinese to get a contract in Afghanistan, 

where apparently what is at issue is their ability to exploit an estimated $1 trillion worth of Afghanistan mineral resources. 

I am laying it out there. Just in your opinion, do you think that 

was a wise use of our resources? 

Mr. MCKEON. Senator, it is my opinion, the foundational work, 

as I said, of advising the Ministry of Mines may pay off in the future. There are a lot of ifs. It will require some significant advances 

in security, significant advances in the rule of law, and significant 

embedding, essentially, of a culture of openness and transparency 

in business practices. 

So I am not going to tell you that we are happy about the Chinese Government winning that tender. I do not think we tried to 

skew the results toward a non-Chinese firm. I do not know great 

detail about who else bid on the contract. We will go back and try 

to look at that. 

But, as I understood it, the task force was going in to try to advise them about how to do an international tender the way that 

international businessmen would expect. That was the objective. 

Senator AYOTTE. Mr. Sopko, did you want to add on that? 

Mr. SOPKO. Yes, Madam Chairman. If I could just add one thing 

about the Ministry of Mines—and I think, Senator Kaine, this is 

also important to you, because I know you got a letter from a 

former minister. There has been a lot of analysis of that one tender, but there has been even more analysis done by Afghans themselves that during the time that tender was done—remember, this 

is the Karzai regime—the Ministry of Mines was the most corrupt 

ministry in a very corrupt government. It was so corrupt that 

USAID pulled back any direct assistance because they did a study 

on that, and it is a public study provided to all government agencies about how corrupt and incompetent that ministry was under 

the leadership of Minister Wahidullah Shahrani. 

Now what is important about this, and some of you know I am 

a former prosecutor, but I also was an attorney and partner for 

Akin Gump, representing a lot of Fortune 100 firms. One thing you 

know when you deal with corporate America, American businesses 

know their customers, they know where they are going to be selling 

the products, and they know what the bottom line is. If you look 

at TFBSO and apply just reason and common sense, what we are 

talking about is here the Department of Defense still does not 

know who their clients were and what the bottom-line cost was for 

all of this. 

155 

So I would caution, before we have this pie in the sky that this 

is all going to come to fruition, we understand what we are dealing 

with. I think that is the big picture question about TFBSO. They 

did not know where they were working. 

Senator AYOTTE. Thank you. 

Senator Kaine? 

Senator KAINE. Thank you, Madam Chair. 

I, basically, have three lines of questioning, but the testimony 

has knocked off the first one. I wanted to ask DOD about the efficacy of DOD doing these kinds of reconstruction projects. 

Secretary McKeon, I gather from your testimony that, in analyzing this, you think they should be placed somewhere other than 

DOD. I strongly believe that. I am a member of the Senate Foreign 

Relations Committee. I am ranking on the committee that oversees 

USAID. Whether it is USAID or another agency that does economic 

development as their daily work—we would not ask USAID to do 

military operations, for sure. I appreciate your concession that activities of this kind are probably best done somewhere else in government. So I am not going to beat that one. I think we have established that. 

I have then one line of questioning for SIGAR, and one other one 

for DOD. 

So on SIGAR, just looking at the record, I have the April 2015 

audit report, Audit Report 1555. There is a discussion on page six 

of the compressed natural gas station. There is a listing of its cost, 

distributed funds, $5.051 million. 

By my read of this, I see no caveat that does not include overhead or this is an incomplete number. Maybe that is somewhere 

else in the report, but I do not see a caveat or qualification with 

respect to that. 

I will get to my question in a second, and I would love to hear 

if there is a caveat there. 

I see, after that, an April 2015 report saying the cost is $5.051 

million, and the October 2015 special projects report with the title, 

‘‘DOD’s Compressed Natural Gas Filling Station in Afghanistan: 

An Ill-Conceived $43 Million Project.’’ 

Then I am looking at the January Audit Report 1611, basically 

saying TFBSO spent at least $39.4 million, $5.1 million toward a 

compressed natural gas infrastructure development, and $33.8 million for other activities. I do not see a caveat on that $5.1 million 

number, that it does not include overhead costs, although in the 

next paragraph, there is a reference to the special projects report 

and the $42.7 million number. 

So the questions that I have are basically these, and you testified 

to this, and I want to make sure I understand this. Does SIGAR’s 

special projects unit use the government accounting standards? 

You mentioned the standards that are unique to IGs. But are these 

done according to Generally Accepted Government Auditing Standards [GAGAS], the special project department’s work? 

Mr. SOPKO. By definition, GAGAS, which is the Generally Accepted Government Auditing Standards, only apply to audits. This 

is not an audit. SIGAR, like 11 other inspectors general, have other 

reports than audits. They use different terms. 

Senator KAINE. Okay, this is very helpful. 

156 

Mr. SOPKO. Of those 11 other IGs—and actually, the GAO issues 

reports that are not GAGAS. Now we follow the general overarching policies of GAGAS in all of our reports, and that is that 

you have to be factual, you have to be independent, you have to be 

free of any conflicts of interest, and you have to support all the 

statements you make. 

In some areas, and it is very interesting, even in GAGAS for audits, you are not required to do indexing and referencing, but we 

do indexing and referencing for even our special project reports. 

Senator KAINE. Do you believe the audit reports of April and 

January from your agency were performed in accordance with 

GAGAS? 

Mr. SOPKO. Yes. 

Senator KAINE. Because they are audits? 

Mr. SOPKO. Yes, they are audits. By definition, they have to. 

They take longer because of—— 

Senator KAINE. They take longer. Are they more elaborate? 

Mr. SOPKO. Well, yes, the whole audit process, and that is one 

of the reasons why we created special projects and why other IGs 

have created it. For an audit, usually, and the way we work, we 

get together with the GAO, State, AID, the Department of Defense 

IGs, and do an audit plan based upon what the big issues are out 

there. 

When we do an audit, there is a set policy of sitting down, having an entrance conference, and do planning. Audits usually take 

up to a year to get out. 

When I took this job four years ago, I met with the staff of this 

committee and the staff of many other committees, including the 

Foreign Relations Committee—— 

Senator KAINE. Just really quickly, because I am going to be out 

of time. I just want to put on the record that there is a little bit 

of a challenge for those of us who are exercising an oversight function if the auditing division of SIGAR issues reports that are consistent with GAGAS standards with one number and they are consistent, and the special projects division uses a different set of 

standards—I am not saying they are inappropriate; I gather that 

they are the standards that are used by IGs—that come up with 

a different number. That kind of leaves us in a jump ball as to 

which we believe and how we harmonize those. 

Some I am just going to put on the record that that may be a 

point for some additional conversation, because I, certainly, find it 

confusing to see that $5 million number in two audits, and the $43 

million number on the headline of the report. So that is something 

that we want to dig into. 

I want to come back to DOD with a minute and 20 seconds. 

Mr. Sopko’s testimony was not too complimentary about this ‘‘we 

will turn over the records at the 11th hour.’’ I mean, I find that 

pretty disappointing, because while I certainly get the natural 

human tension between an agency and Inspector General—I have 

been in this business for a while—we are all on the same team. 

This is all of our taxpayer dollars. We have to be accountable for 

them. 

So, Secretary McKeon, you spoke first, then you heard his testimony. How do you respond to the notion that it was only when we 

157 

had this hearing and it was going to happen finally that DOD said, 

okay, here are all the records that you ought to take a look at? 

Mr. MCKEON. Sure. Senator, I would point you to my written 

statement for more detail on this, but let me try to talk through 

the story as quickly as I can. 

Last year around this time from January to March, the task 

force responded to voluminous requests for information from 

SIGAR and turned over about five discs of CD–ROMs of material, 

including a list of the former staff of the task force for the last several years. 

When we got the request for information in the spring, we made 

available to SIGAR the task force records that were set aside in a 

reading room at the Washington Headquarters Services. They had 

full access to those records, which is what the IG Act requires, 

which is access to records. What we said to them is that if you 

want to copy any of these documents and take them back to your 

office, we need to review them for Freedom of Information Act 

[FOIA] releasability. 

The reason we did that, sir, is, in a prior case, working closely 

with SIGAR, our Afghanistan and Pakistan Office had given over 

18,000 records from the Commander’s Emergency Response Program [CERP]. Those records were then released to media organizations subject to a FOIA request submitted to SIGAR. There were 

names of soldiers and Afghan partners in that dataset that was put 

on the Internet. It is still on the Internet. We have asked this 

media organization to take it down because of our security concerns 

for our soldiers and their Afghan partners. They have refused to 

do so. So that is why we did not simply hand over the records. 

Secondly, we did not have task force employees. In the normal 

case, our Office of Afghanistan and Pakistan works very closely 

with SIGAR. They come in and say, ‘‘We want to examine this program. Can you give us your records on these issues?’’ We never 

hand over full hard drives and computer drives in the way that we 

have here. It is a dialogue. ‘‘Tell us what you need and we will provide it to you.’’ 

So there were two reasons that we set aside this reading room 

for SIGAR to access. But there were no restrictions on what they 

could read, absolutely none. They could read the full records 

unredacted. 

The question was, could they come back, take those records back 

to their office. After I met with Mr. Sopko in December, and we exchanged letters expressing our concern about the issue of the release of the information, and we came to a meeting of the minds 

on that, we agreed to turn over the hard drive, which SIGAR now 

has. 

Senator KAINE. Thank you, Madam Chair. 

Thank you to the witnesses. 

Senator AYOTTE. Senator Rounds? 

Senator ROUNDS. Thank you, Madam Chair. 

Mr. Sopko, I am just curious, maybe just in terms of the top lines 

that we have been looking at, a lot of discussion has been occurring 

based upon the CNG station. It would appear that this is just part 

of the overall number of projects. You did a pretty good job of layVerDate Nov 24 2008 11:25 May 31, 2017 Jkt 000000 PO 00000 Frm 00163 Fmt 6633 Sfmt 6602 C:\USERS\WR47328\DESKTOP\25364.TXT WILDA
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ing out a series of projects down the line that this particular operation was responsible for. But we started out by saying that there was about $822 million that was appropriated, and we have approximately $638 million 

that was disbursed. The delta between the two, was it simply a 

matter that the other money was not released? Where is that, the 

delta between the $822 million that was appropriated and the $638 

million that was actually spent, or that we can find disbursements 

for? 

Mr. SOPKO. Senator, I do not have a good answer on that. I will 

ask one of my auditors, who probably knows. 

What he is saying is that the numbers could have been obligated, 

but not yet disbursed. And that is delta we are talking about. 

Mr. MCKEON. Senator, my understanding is this is not atypical 

for assistance programs, that an amount is allocated and put on 

the contract, but then over the course of the contract, they decide 

they do not need to spend as much of it. So the actual disbursements are lower. I do not know whether the ratio here is typical 

in an aid setting, but having that kind of delta is not atypical. 

Senator ROUNDS. The reason why I ask is I just want make sure 

we had an understanding of where we are beginning from, in terms 

of what the TFBSO was actually responsible for disbursing. That 

appears to be $638 million. A fair statement? The big picture, that 

is what we are talking about? 

Mr. MCKEON. I think we have a slightly different number, but 

we are in the ballpark, yes, sir. 

Senator ROUNDS. Okay. Of the $638 million, there seems to be 

a question of how we would appropriate or at least allocate the resources for overhead, travel, and so forth, and whether it was appropriately laid out project-by-project. 

I will direct this to Mr. McKeon. Is there a broad understanding 

between both you and Mr. Sopko’s office that there is an understandable appropriation or at least allocation among the different 

projects for overhead? 

Mr. MCKEON. Senator, I do not know that we have had that discussion. 

Senator ROUNDS. You have not quite gotten to that point? 

Mr. MCKEON. I am happy the engage in—— 

Mr. SOPKO. I think that probably both of our staffs feel that it 

is very difficult to find out how they did allocate. 

Mr. MCKEON. Senator Rounds, I think we can say that the 

spending was roughly evenly divided between project spending and 

overhead and security. Security costs are quite high because it is 

in a warzone. I talked about this at length with General Petraeus, 

and he sort of walked me through why it was so expensive. 

Mr. SOPKO. Senator, if I can just add, the comptroller who helped 

Mr. McKeon take a look at it actually contacted one of our staff 

and gave some data. In that data, it looks like the overhead costs 

actually exceeded the amount of the actual programs. But I cannot 

confirm that yet. That was just something he shared with our staff 

recently. 

Senator ROUNDS. Mr. McKeon, did TFBSO personnel actually attend a designer and tradeshow event in Europe in support of the 

TFBSO’s Afghanistan carpet initiative? 

159 

Mr. MCKEON. I do not know the precise answer to your question 

about the show, Senator. I know it is listed in our activities reports, the task force activities reports to Congress. There was support for the indigenous carpeting industry in Afghanistan. They 

thought it was one of the high-end industries that could be advanced through regional and international markets. 

Senator ROUNDS. Could you then perhaps, just for the record, 

provide a summary of where the TFBSO personnel traveled in Europe in support of the carpet initiative, how long they stayed, and 

the total costs of those trips? 

Mr. McKeon, I just want to add, is it true that the TFBSO actually imported a large number of Italian goats via air shipment from 

Italy to Afghanistan? 

Mr. MCKEON. I have not heard that, Senator. We will have to 

check. 

Senator ROUNDS. Okay, will you provide that for the record for 

us as well, please? 

Mr. MCKEON. Yes. 

Senator ROUNDS. Thank you. 

I was going to ask whether or not the goat initiative was a success or failure, but apparently you are not in a position to find that 

out. 

Mr. MCKEON. I am pretty sure if it happened, it happened before 

my time. 

Senator ROUNDS. My time has expired. Just looking at this 

project, I have one question for Mr. Sopko. That is, if you are not 

already looking at the entire $638 million in disbursements, do you 

have the capability to look through and to gain access to lay out 

where these disbursements were at? And do you have the capabilities to find the individuals who were working for us who are within 

the Armed Forces or contractors responsible to the Armed Forces? 

Do you have the legal capabilities right now to follow this through 

with your existing powers, sir? 

Mr. SOPKO. In part. We can only find all of that and answer 

those questions if we have the total, full cooperation of the Department of Defense, because we need to find these individuals, and we 

need access to all the records. That is the only way we can do it. 

Now, we lack subpoena authority to get testimonial subpoena. I 

think there was legislation pending, but that would be very helpful. 

I am probably not allowed to pontificate on pending legislation, but 

I think you can see right now, if we had had subpoena authority 

to actually bring some of these people in, we may have gotten to 

the bottom of this a lot earlier than now. 

Right now, we have to basically beg people to talk to us who are 

nongovernment employees. We were trying to get Mr. Brinkley. He 

is an excellent witness, but we kept contacting him, and he kept 

blowing us off. It was not until we put his name in the report explaining why we were quoting his book but not him that all of a 

sudden he contacted us. Then, I must say, he submitted to an 

interview, which was very helpful. 

But if I had subpoena authority, like most prosecutors do, I could 

have dropped paper on him and gotten him in here for an interview, so that would have been helpful. 

160 

Senator ROUNDS. Mr. McKeon, I just want to give you an opportunity to respond. Based upon the discussion that we have had 

here today, it would seem as though you are in a position to where 

we are going to be looking back at you for additional answers in 

the future. Can you make a commitment to this committee to provide as much information as possible or that you have available to 

you, and that that information would also be made available to Mr. 

Sopko on a timely basis? 

Mr. MCKEON. Yes, Senator. To the extent we can help find additional records, if Mr. Sopko thinks there are shortcomings, we will 

do that. I believe the records that we turned over are the unclassified records. There may be other records elsewhere in the Department not owned by the task force relative to this work. 

Senator ROUNDS. By that, would you be suggesting that in a classified setting, you would have it additional information that you 

would share with this committee? 

Mr. MCKEON. No. I do not have additional information. For example, as I said, the contracting was done by other elements, not 

by the task force. There may be records in those components that 

are not on the hard drive that we gave Mr. Sopko. 

Senator ROUNDS. Meaning the Department of the Interior? 

Mr. MCKEON. Department of the Interior or U.S. Army Central 

or Washington Headquarters Services. 

Senator ROUNDS. One last question. Do you have the ability to 

follow through with the Department of the Interior, Mr. Sopko? 

Mr. SOPKO. Yes, sir. We will pursue wherever we can, where the 

records are. I think we are probably going to do either a complete 

financial audit—we have been asked by some Senators to do that— 

or we will do an entire programmatic audit of TFBSO. 

Senator ROUNDS. Thank you, sir. 

My time is expired. Thank you, Madam Chair. 

Senator AYOTTE. Thank you. I would just say that we would appreciate that audit. I think it would be very important for us to 

have a financial audit, so that we can ensure that each of the dollars that were disbursed, how they were spent, we can account to 

taxpayers for that. 

I would like to call on Senator Shaheen. 

Senator SHAHEEN. Thank you, Madam Chair. 

And thank you both for being here. 

I found the history of the task force very instructive, Secretary 

McKeon, because one of the things that you point out is, in March 

2009, Secretary Gates issued a memo indicating he had asked Mr. 

Brinkley to continue the task force efforts. Then there was a new 

memorandum in 2010 directing Mr. Brinkley to continue the efforts. I think it was in 2009 that the chain of command was shifted 

so that he reported directly to Secretary Gates. 

But what I particularly found instructive was looking at the role 

that this committee played, which I confess I did not remember 

with respect to continuing the organization in the 2011 National 

Defense Authorization Act, where we initially said that the authority should expire in September 2011 and because of concerns by 

General Petraeus and the Chairman of the Joint Chiefs, Mike 

Mullen, they came back and asked Chairman Carl Levin and SenVerDate Nov 24 2008 11:25 May 31, 2017 Jkt 000000 PO 00000 Frm 00166 Fmt 6633 Sfmt 6602 C:\USERS\WR47328\DESKTOP\25364.TXT WILDA
161 

ator John McCain to change the provision and not require the 

shutdown of the task force. 

So clearly, there were a lot of hands in why we got to the place 

that we got on the TFBSO. 

I wonder if, Mr. Sopko, you can suggest the kinds of questions 

that this committee should have asked or what kind of information 

we should have been looking for, as this issue of whether we should 

continue what they were doing came up before this committee. 

Mr. SOPKO. I would be happy to provide that to you. I think right 

now I will go back to the point I made to Senator Kaine based upon 

my experience dealing with companies, corporations. Corporate 

America understands whom they are selling to. They understand 

their market. 

Again, this may have been the problem. We are asking the Department of Defense to start thinking like corporate America. I represented clients who knew how many pickles were being used on 

any particular day in a city, when I worked for Akin Gump. DOD 

does not think in those terms. 

I remember having a nice conversation with a three star general 

who said, ‘‘Look, we are good at blowing things up. We are not really good at building things.’’ Now, they will do it, and they may do 

it, if the State Department and AID are not there and are not sitting at the table. Like on many of these provincial reconstruction 

teams, we knew there were seats for State and AID, and we actually reported on it, but State and AID for financial reasons, they 

did not have the bodies, they are not there. So DOD is then forced 

to take up the slack. 

I think, Senator, it is great that you are sitting on both committees because you realize—and you, too, I am sorry, Senator Shaheen—it is going to be a whole-of-government approach the next 

time we do this. And if we just plus-up DOD and do not plus-up 

State and AID, then who is going to be left doing this kind of work? 

I agree with Secretary McKeon, but I cannot speak from a 

GAGAS point of view or audit point of view. We have not done the 

report yet. That is a serious question that needs to be asked: Is this 

the proper role for DOD? 

Senator SHAHEEN. Well, I would, certainly, agree with Secretary 

McKeon and with Senator Kaine. I think that this is not the proper 

role for DOD. I appreciate the challenges that we were facing in 

Afghanistan, but it seems to me that one of the things that we do 

need to look at is what the role for DOD is, and what the role for 

the Department of State is, and how diplomacy figures in to what 

we are doing as we are facing conflicts in places like Afghanistan. 

We had a hearing before the Armed Services Committee today 

where we heard comments from the people who were speaking 

about the need for military action sometimes to get to diplomacy, 

but they were not making the connection that we needed to do economic development through DOD in order to get diplomacy. 

So I do think it raises serious questions. 

And I guess I would ask you, Mr. Sopko, are there other 

takeaways from your analysis of the TFBSO that you would urge 

us as a committee to look at? 

Mr. SOPKO. Senator, I think it is important to look at lessons 

learned. Now, the TFBSO hired CSIS, the Center for Strategic and 

162 

International Studies, to do lessons learned on Iraq. What we 

found out is that issued a pretty good report, but it does not seem 

like anybody ever read it and followed up on it. 

The RAND Corporation has been hired, and I give credit to 

TFBSO, and I think maybe Under Secretary McKeon was involved 

with that. RAND is a reputable organization. They came in and developed some lessons learned. 

The problem with the RAND report is they even admit in the beginning they did not consider the cost-benefit analysis, so they are 

leaving that to us to do. 

So I think lessons learned is so important. You may want to require every agency that participated that is under your jurisdiction 

in Afghanistan, ask them if they are doing real lessons learned. 

Now, we are trying to do that, because we are required to do it. 

Actually, General Allen said we are the only agency in the government that has this broad ability, because we are not housed in any 

government agency. We can do an across-the-board, whole-of-government approach. So we are doing that. But each particular agency can also help. 

Clearly, not only lessons observed, but you have to apply them. 

I do not think this was done in this case at all. 

Senator SHAHEEN. Just a final comment because you raised the 

question of being able to subpoena people to come before SIGAR. 

I would point out that, as you said, I was one of the people who 

introduced that legislation in August 2012 that would have allowed 

subpoena power for SIGAR. I think it is something that we actually 

ought to consider again. I do not know if either of you would like 

to comment on whether that is helpful. 

Secretary McKeon, I think we have already heard Mr. Sopko’s 

view of that. Do you have thoughts about whether that is legislation that should be in existence that might help deal with some of 

these questions before we get to this point? 

Mr. MCKEON. Senator Shaheen, the power of the IGs is a little 

bit outside my lane in OSD policy. What I have said and committed 

to is any former task force employees who work in the department, 

we will obviously make them available, and any former employees 

that we can help try to find, we will do that. Whether he needs 

subpoena power or the IGs need subpoena power, that is not really 

for me to say. 

If I could comment on your other statement about lessons 

learned, first, quickly, I suspect the Army Corps of Engineers 

would take exception to the unnamed general that said the Army 

does not know how to build things. 

But I think one thing to think about, as you think about this 

issue, is the task force was a startup, and they brought in a lot of 

business folks from outside the Department and were outside of 

Chief of Mission authority. There is a law in the Foreign Service 

Act of 1980 that says everybody is under the Chief of Mission except Voice of America correspondents and people under combatant 

commander authority. 

It is unusual for civilians, unless they work directly for the combatant command [COCOM], to be under COCOM authority and not 

Chief of Mission. So you already had this very unusual animal of 

the task force being under COCOM authority. The other parts of 

163 

the Department and other agencies—and now I am just speaking 

impressionistically—some of the antibodies in government and 

human nature come out. They look at who are these people, and 

why are they in our swim lanes? I think it is quite clear that there 

were challenges in cooperation across interagency at least in the 

beginning, and then it was mandated that the State Department 

concur on projects, and I think it got a little bit better. 

But there is an opportunity cost any time you stand something 

up and you bring in people from outside the department who are 

not really of the department. 

Now Mr. Brinkley would say that is what made us different. We 

were entrepreneurial. We did not follow the normal government 

rules. We were able to do things quickly. Those are some of the 

comments I heard from General Petraeus and General Allen. 

So it is a trade-off. If you want to do it that way, you are breaking a little china in the normal governmental systems, and the 

other side of the ledger is institutionalizing them in normal government entities. 

So I do not have a clear answer for you. Obviously, I have a bias 

that this is not a DOD function, but that is something you need 

to think about. 

Senator SHAHEEN. Well, my time is up, but I would just say I 

think we would all be okay with breaking a little china if they were 

efficient and effective in doing it. The challenge here is that there 

are real questions about how effective and efficient they were. 

Thank you, Madam Chair. 

Senator AYOTTE. Senator McCaskill? 

Senator MCCASKILL. This is like de ́ja ́ vu all over again, over and 

over and over and over again. 

We had an ugly morphing of CERP to this task force to the Afghanistan Infrastructure Fund [AIF], no proof that the metrics 

worked on any of it in terms of fighting counterinsurgency. There 

has never been any data presented that the walking-around money 

in CERP helped. There has never been any data presented that the 

ridiculous fuel station in Afghanistan helped anything. It was dual 

fuel and totally impractical and not sustainable. There has never 

been any data that the highway that we had to spend more on security to build than actually it cost to build it did any good. 

So the idea that we are worried about Yellow Book standards 

today, give me a break. We have almost $1 billion—no metrics, no 

cost-benefit analysis, no sustainability analysis, a program that is 

dumb on its face. 

The average person in Afghanistan, their annual income is $690. 

It costs $800 to convert a car to natural gas. Did anybody in the 

room sit there and say, is there anybody in Afghanistan that can 

afford this? The 120 cars we did, we paid for. 

Now what I want to know, Secretary McKeon, is who made this 

decision? Was it Brinkley? Was it Petraeus? Who decided it was a 

brilliant idea when the people of a country makes $690 a year that 

we are going to spend—I do not care if it was $2.9 million or $200 

million. Who made the brilliant decision that this was a good idea 

to put a natural gas station in Afghanistan? 

Mr. MCKEON. Senator McCaskill, the project started in 2011. Mr. 

Brinkley left in June 2011. I am not sure if it was in the first half 

164 

or second half that this decision was made to start it. I think it was 

under Mr. Brinkley, but I will have to get that—— 

Senator MCCASKILL. I want to know, because I want to talk to 

that person and find out what they were on that day, because that 

is bizarre. 

Do you not agree that sounds improbable on its face that we are 

going to get a good result out of that? 

Mr. MCKEON. Senator, there is a long excerpt that I would point 

you to in the SIGAR report about what the theory of the case was 

and how this was a proof of concept. It is in the SIGAR audit report of April 2015. That is what we have is evidence of what the 

plan and what the thinking was behind it. 

Senator MCCASKILL. Okay. 

When SIGAR asked questions about this, you said in a letter 

that DOD lacked personnel expertise to address the questions. I am 

quoting from your letter. 

Is it true that Dr. Joseph Catalino, a former acting director of 

TFBSO, was actually working in your office at the time? 

Mr. MCKEON. He was not working in my office at the time. He 

was employed after that letter was written. 

Senator MCCASKILL. Okay. But when he was, did you offer him 

up, since now you had personnel that obviously knew an awful lot 

about it because he was the director of the program? 

Mr. MCKEON. Senator, he started as the director in 2014. He was 

interviewed at length by SIGAR before the task force shut down. 

He was interviewed again earlier this month. So he has been available to the task force. 

Senator MCCASKILL. You know, the point I am trying to make, 

Secretary, is the program has been shut down for five months and 

all of a sudden nobody is home, nobody knows nothing. We have 

nobody here to help you. We have no personnel to help you, because nobody is here. And it has been shut down for five months. 

Do you think you would be frustrated if you were trying to get 

to the bottom of what occurred and why the money was spent and 

how it was spent? 

Mr. MCKEON. Senator, it was a unique task force, as we discussed. It is far from the core competency of the Department of Defense. We do not have investment bankers and energy sector advisers working in OSD Policy or even in Acquisition, Technology, and 

Logistics [AT&L]. 

So what we thought and understood was SIGAR was set up for 

success. We provided a lot of information in the first quarter of 

2015. We made the records available. They had a list of all the 

former employees. We let the task force people go, and we brought 

back Mr. Catalino to perform a different function. He has been advising me and helping me respond to these queries that the committee has given us, and the SIGAR questions. But this expertise 

does not normally reside in OSD Policy, ma’am. 

Senator MCCASKILL. Well, there is a lot of expertise that normally does not reside in the Department of Defense. It does not 

mean that they did not start building highways and they did not 

start building a lot of other things in both Iraq and Afghanistan 

that never were good investments of taxpayer money because of 

sustainability and security issues. 

165 

So let us talk about security. If you are spending close to $800 

million and 20 percent of the money has to be spent on security in 

order to convince businesses to come do business in Afghanistan, 

once again, common sense, do you see a problem with that scenario? And you do not want them to be military because you do not 

maybe want the businesses to know that they are going to have to 

spend multiples of millions just to be secure in this country, if they 

want to come in and do business? Do you see the fallacy in the 

logic there that you have one company making $50 million. You 

have 24/7—I mean, I wish our embassies had the security these villas had. 

We have a whistleblower who says they sat empty except for the 

security personnel most of the time. I mean, it was amazing the security they had in place, besides the queen-size bed, flat-screen TVs 

in each room 27 inches or larger, a DVD player in each room, a 

mini refrigerator in each room, and an investor villa that had even 

upgraded furnishings. But we are talking about $51 million for secured accommodations 

24 hours a day, 7 days a week by armed guards and a closed-circuit 

television [CCTV] monitoring system where you can view the entire 

perimeter and surrounding area. They paid another person $40 

million to provide transportation and personal protection from terrorists or criminal attacks. 

I mean, look at the money we are spending supposedly keeping 

the people safe that we are trying to get there to come open businesses. 

This is not exactly a traditional Chamber of Commerce move. If 

you have to spend that much money on security, do you think most 

businesses are going to go, ‘‘We cannot afford to open a business 

here, especially if the average Afghan makes $690 a year?’’ 

Mr. MCKEON. Senator McCaskill, I am not a businessman. You 

make a lot of valid points. Investing in a warzone and conducting 

activities is dangerous and high cost. What I said at the outset is 

I think there was an understandable imperative and desire on the 

part of the commanding generals to get something going, recognizing that it was high cost. 

Whether it has succeeded, the jury is out, but it is a pretty mixed 

picture. I agree with a lot of what you have said. The costs sound 

quite exorbitant. We are digging into this villas question. 

Senator MCCASKILL. I apologize for being so short but you have 

no idea how many hearings like this I have sat in and gone 

through project after project not well thought out. These all began 

before we passed the contracting bill where you have to show sustainability, and you have to show some other measures. 

But I will tell you that not cooperating and pulling the Band-Aid 

off as quickly as possible just makes it worse. The argument that 

has been put forth in the press that somehow the figures in this 

are not correct, I mean, frankly, all you did was fan the flames that 

somehow it was not $43 million when you cannot even say where 

the $30 million went. 

This is a terrible waste of taxpayer money when we have so 

many other uses for it. 

Mr. Sopko, I wish we could get you testimonial subpoena power. 

A bunch of us are trying for both you and the IGs. We are running 

166 

into roadblocks, but we are going to keep trying, and thank you for 

your work. 

Senator AYOTTE. Thank you, Senator McCaskill. 

I fully support what Senator McCaskill and Senator Shaheen 

have said, that our IGs deserve subpoena authority and full access 

to records, which they are not getting right now. And important 

legislation is being blocked by the Department of Justice, of all people. 

But anyway, I would like to call on Senator Heinrich. 

Senator HEINRICH. Thank you, Madam Chair. 

I want to get back to this issue of core competency. At this point, 

it seems very clear to all of us that this was not a natural place 

or function for DOD. I want to pick at a little bit why this occurred 

in the first place. I am trying to remember back. 

What years, for starters, Secretary, did this task force exist? 

From what fiscal years? 

Mr. MCKEON. It was created in June 2006 by Deputy Secretary 

England to operate initially in Iraq. Then Secretary Gates in 2010 

directed them to operate in support of Operation Enduring Freedom, which technically would have put them in places other than 

Afghanistan. Mr. Brinkley’s book details exploratory efforts in 

Pakistan. 

Senator HEINRICH. That is consistent with my memory. In 2009, 

I was a new Member of Congress in the House and trying to understand why we would fund some of these things through DOD as opposed to through USAID and other State and other more appropriate places. 

If my memory serves me right, there was, to some degree, an attitude that things that could get appropriated through DOD would 

never ever get appropriated if they were sought through USAID or 

State. Do you have an opinion as to whether or not some of these 

things landed in DOD’s lap because it seemed at the time easier 

to put them in the budget there and actually get appropriations, 

as opposed to where the core competencies would have existed to 

execute more appropriately? 

Mr. MCKEON. Senator Heinrich, at the time, I was working at 

the Senate Foreign Relations Committee for then-Senator Biden. 

So that was the conventional wisdom, that the Department of Defense could more easily get the funds from Congress, and there was 

some skepticism about State and AID’s ability to operate, particularly in a warzone. There was even a case in the second term of 

President Bush where there was a lot of criticism of the police and 

security forces training program in Iraq, and I cannot remember 

exactly how it got done, but essentially Secretary of State 

Condoleezza Rice pushed over a lot of the authority for that kind 

of training to the Department of Defense. So that was what was 

sort of in the atmosphere at the time. 

Senator HEINRICH. That is actually quite helpful. I am in no way 

justifying the sort of lack of analysis or execution that may have 

gone into this CNG project or any other projects. But I do think 

we need to learn some lessons in terms of when you sort of play 

those games, what the potential ramifications are, because, obviously, this simply has not worked. 

167 

Mr. Sopko, do you have any opinion on that matter whatsoever? 

Or is that outside the scope of what you look at, at SIGAR? 

Mr. SOPKO. As to how this came about, in our analysis we basically identify, and I think we reported in some of our audits, similar to what the Under Secretary said. There was a view that State 

or AID could not move fast enough and was not quite attuned to 

it. 

Now, again, State and AID, and particularly AID, they have implementing partners who have the same flexibility in movement 

that TFBSO did. We were a bit surprised when we interviewed Mr. 

Brinkley that Mr. Brinkley had never known that. He had never 

talked to an implementing partner. 

So there seemed to have been a parallel track, and they were not 

well coordinated. 

Senator HEINRICH. Clearly. 

Mr. SOPKO. One of our audits said that. They did not coordinate 

very well. 

It did cause a lot of resentment. When we say we heard so many 

complaints, many of the complaints came from people inside our 

own Embassy about how this program was being run. 

So there were warning bells about this program from the beginning. 

Senator HEINRICH. Would you ever think it would be appropriate 

to have an agency or task force that could pay contractors who do 

not keep project-by-project financial numbers? 

Mr. SOPKO. I would never do that, particularly in Afghanistan. 

You are just basically asking to lose all your money. 

That is the big problem now. We do not really know how much 

money of this was stolen. I mean, I can understand why the Minister of Mines loved this program and sent that letter. I saw a copy 

of it. Of course he did. I mean, his predecessor disappeared to Germany with $35 million in cash, as reported in the press. 

Senator HEINRICH. As a standard matter, should access to those 

kinds of records be contractually obligated for any contract? 

Mr. SOPKO. Absolutely. And the interesting thing is, USAID did 

an analysis of the ministry it is dealing with and withheld money 

because they did not trust it. TFBSO, no problem, let us just give 

them the money. 

I think that is a good analysis of how USAID is used to this. 

They deal with this all the time. They work in some very difficult 

places. And they understand the terrain and who they are dealing 

with. 

The TFBSO team was just short of a scattershot approach. I 

know one of the members started talking about the things with the 

goats and everything else. It sounded like they just got together 

and said, ‘‘Hey, this sounds like a great idea and we have an unlimited budget, let us just do it and see if it works.’’ 

That is why no one can really say with any credibility that the 

programs were effective. 

Senator HEINRICH. Thank you, Madam Chair. 

Senator AYOTTE. Thank you. 

I am actually going to call on the ranking member, Senator 

Kaine, first, and then I am going to go to my questions. 

Senator KAINE. Thank you, Madam Chair. 

168 

She knows I just have one question while she has multiple. 

My question, actually, Mr. Sopko, I want to give you a chance to 

respond to some of what Secretary McKeon said in response to one 

of my questions. Your testimony had a litany of kind of instances 

where it was difficult for SIGAR to get the records that you needed 

to basically offer the oversight that you want to. I find that troubling. I think it is not a capital offense, but at least it is a cardinal 

offense to not cooperate with an IG that Congress has put in place 

to give us information that we need to exercise oversight. 

Since you testified after he testified, I asked him to respond, and 

he kind of went through a response. One of the elements of his response was the concern that kind of came up in this relationship 

over material that had been delivered from the DOD to SIGAR that 

was, I guess, mistakenly released via a FOIA that led to the identities of U.S. personnel and some contractors being disclosed in ways 

that could jeopardize them. 

He said that, and I did not give you a chance to respond, so I 

wanted to just see if you had any response. 

Mr. SOPKO. Yes, I do. I mean, I think the claim that DOD has 

made that the individual names were covered under the Privacy 

Act is in error. The names that were in that CERP data—remember, we did not put it up on the Web. Somebody filed a FOIA, and 

we responded to the FOIA. Our staff normally as just a courtesy 

will take names out, if we are asked. But we did release some 

names. 

The point is that names of soldiers, names of civilian employees, 

are not covered or barred from being released. We have actual 

DOD regs that talk about the Department of Defense privacy program dated 2007, which says civilian records can be revealed that 

include the names, titles, et cetera. I can give you a copy of that. 

So they are not covered. 

The other thing is the Privacy Act does not really protect names. 

It protects records about the names. The name itself you can reveal. I am happy to put into the record, if you want to, dozens of 

press releases from the Office of Secretary of Defense where they 

not only name the soldiers serving in Iraq, they name their wives, 

they name their kids, and they give their addresses. 

So we find this as a red herring. It is not Privacy Act material. 

Now what I also find is a red herring is this access was restricted 

only for TFBSO. No other element of the Department of Defense 

restricted our access to records, and we deal with classified information all the time. Nobody had this concern. Only for TFBSO was 

there some concern, and they put in these restrictions that basically violate the IG Act. 

Remember, I am supposed to be independent. I cannot let the 

Department apply FOIA exemptions to my request for documents, 

and that is what Mr. McKeon was suggesting. ‘‘All’’ means all 

under the IG Act. 

Senator KAINE. Let me just follow up. You indicated that it is 

your normal practice, and I think you used the word courtesy, 

when releasing information pursuant to FOIA of this kind, to take 

the names out, but in this case that did not happen. 

169 

Mr. SOPKO. There was a mistake because it was a multiple filing 

and you had to dig down. We accepted that the person did not understand. We do that just as a courtesy, if we are asked to do it. 

Senator KAINE. Is that a courtesy that you do because you are 

aware that there could be security sensitivities to names? 

Mr. SOPKO. If there is specific security sensitivity, we will definitely do that. We do not release—we follow that. 

But this was a case where you had a name of so-and-so was a 

CERP official or did something three or four or five years ago at 

some Provinual Reconstruction Team [PRT]. I doubt there was any 

security implication from that. 

Senator KAINE. There is a statement in Secretary McKeon’s written testimony, not in his verbal testimony, I went back and 

checked, that as result of the release of these names via the FOIA, 

somebody at SIGAR was removed from a position for doing that. 

Is that accurate or not? 

Mr. SOPKO. She was not removed. She left. She got a job somewhere else. We are a temporary agency. A lot of our people move 

on. No, nobody was fired or anything. 

Mr. MCKEON. I did not mean to imply that she was fired. I do 

not know. 

May I respond, briefly, Senator? 

Senator KAINE. Yes, please. 

Mr. MCKEON. So my colleague from the Office of General Counsel has handed me a statute—which I will read to you, and which 

I assume came from this committee—title 10 U.S. Code section 

130b, which gives the Secretary the authority notwithstanding the 

Freedom of Information Act to withhold from disclosure to the public personally identifying information regarding any member of the 

Armed Forces assigned to an overseas unit or routinely deployable 

unit. 

But putting aside the legal debate about this provision or what 

Mr. Sopko just said about the Privacy Act, as a generic matter, we 

do not like to release names of personnel who are downrange our 

Afghan partners who are getting money from us on CERP. Mr. 

Sopko is no doubt right that we have press releases that praise soldiers in this place or that, but that is our decision. That is the Department’s decision. It is not SIGAR’s decision to release those 

names. 

That is what animated our concern. You can go on the Web site 

of this media organization today—I did it last weekend—and still 

find these names of Afghan partners and soldiers. The information 

is still there. 

Senator KAINE. But what about Mr. Sopko’s position that the restricted nature of their access to these documents is highly unusual 

within the IG’s interaction with DOD departments? 

Mr. MCKEON. I am happy to address that, sir. 

Section 6 of the Inspector General Act of 1978, which is one of 

the authorities that SIGAR has, says that the Department shall 

provide access to records. Those are the words of the statute. We 

provided full access to the records in this reading room. We never 

said you cannot go see this record or that record. He had full access 

to the records. 

170 

The issue, as I highlighted, was whether he could take the full 

records and whether we would review them for releasability under 

FOIA. 

This is now water under the bridge, in a sense, because we have 

now come to a meeting of the minds on this issue. And he has the 

hard drive. It is in his control. He has agreed that it is not the policy of SIGAR to release names. 

So with that assurance and some other conditions that are set 

forth in the letters, he has these materials. 

Senator KAINE. Thank you. I do not have any other questions. 

Senator AYOTTE. Thank you, Senator Kaine. 

I wanted to ask, as I looked at sort of the course of information 

here, one of the things that troubled me was that SIGAR either 

provided draft reports to DOD for comment or requested TFBSO 

information in March 2015, May 2015, June 2015, October 2015, 

and, of course, this month again. And in each instance, the OSD 

or you, Secretary McKeon, responded by saying that the task force 

was shut down and that you could not answer questions about 

TFBSO because the task force was shut down. 

Now this task force shut down in March 2015. You yourself are 

who this task force reported to nine months prior to its shutting 

down. And as I understand it, as soon as June 2015, Dr. Catalino, 

who had a significant role in the task force, was actually working 

at DOD, I think in OSD itself. Yet the repeated answer to SIGAR’s 

question was, ‘‘Listen, we cannot answer your questions, because 

the task force is shut down.’’ 

So to follow up on what Senator McCaskill asked, I mean, if that 

is the case, how are we ever going to have oversight on any task 

force? Can you explain to me why that was the answer each time? 

The other issue is that, as I understand it, there were also military personnel who had assisted in the task force and had roles in 

the task force that were still serving that could have been made 

available as well. And yet, the answer was the same each time. 

Why would we answer in such a way, instead of just trying to get 

to the bottom of answering their questions? 

Mr. MCKEON. Senator, if I could go back to about a year ago this 

time during the administrative shut down period from January to 

March, this task force and Mr. Catalino responded to fairly voluminous information requests from SIGAR, and I know Mr. Catalino 

was interviewed. 

So after the task force staff dispersed and were gone from the 

roles of the Department, we thought we had set up SIGAR for a 

way to successfully do its review. We provided access to the record. 

We already provided this information on several discs. And we provided a list of the former employees of the task force from 2010 to 

2014. 

Senator AYOTTE. Can I ask you a question? When you provide a 

list of the employees on the task force, did you include in that list 

current members who were serving in the military? 

Mr. MCKEON. Ma’am, I have not seen the list. I looked at the letter that was written from Mr. Catalino to SIGAR, setting forth 

what it was we provided. I have not seen the list of personnel, so 

I cannot tell you what level of detail about their assignments are. 

171 

Senator AYOTTE. I will, certainly, want to come back to that. But 

I think, Mr. Sopko, you had a comment on this issue? I mean, obviously, with your history and experience in doing these types of investigations, this struck you as unusual, as I understand it? 

Mr. SOPKO. Extremely unusual. As I said, my deputy was in 

GAO for nearly 40 years, and I did this for almost 20 years on the 

Hill, and I never heard of an organization—it would be like Harry 

Truman in 1945 saying, ‘‘I cannot answer any questions about 

dropping the bomb. The war is over. We have shut down.’’ This organization was not a dining facility [DFAC] out in Omaha. This 

was an organization that reported to the Secretary of Defense. It 

was the premier organization on developing the economy in Afghanistan by the Department of Defense. It was an organization 

that reported to my good colleague here for seven months. And 

then all of a sudden, it is like, poof, amnesia. 

It is not just access to individuals. They have a responsibility to 

answer some of the questions. It is not our responsibility to track 

down—and again, I have no subpoena authority. Once they retire 

or once they leave the military—like Mr. Catalino. We interviewed 

him when he was working for TFBSO. He then left. Ironically, he 

was recruited in May and June by Mr. McKeon’s Deputy Chief Operating Officer [COO], who in that June 30 meeting where his Deputy COO had just hired back Mr. Catalino, he makes a statement 

in front of everybody, including multiple staff members, that I 

know of no one in the Department who can answer any of your 

questions. 

Senator AYOTTE. So you were told no one in the Department, in 

this meeting, can answer your questions, yet at the time, they recruited or already hired—— 

Mr. SOPKO. They had already hired. We interviewed Mr. 

Catalino, and he told us he had been hired ten days before that 

meeting by the Deputy Chief Operating Officer, Mr. Steve Schleien. 

Now I have no idea. Maybe Mr. Catalino is mistaken. It is very 

easy to pull out his hiring documents. We know he knows Mr. 

Schleien. I do not know why Mr. Schleien then makes a pronouncement to us at this June 30 meeting, after he hires back Catalino, 

that I do not know anybody in the department who can answer 

your questions. 

Now that is what I am saying is an enigma. I have never faced 

this before in my dealings with the Department of Defense, both 

as a congressional staffer as well as a private attorney. I have 

never heard of this before. 

Senator AYOTTE. The reason I wanted to ask whether when you 

provided a list of employees, whether you provided the names also 

of currently serving members of our military is because we have 

someone in the audience that I want to thank who is here, who has 

given me, I think, permission to recognize him, and that is Colonel 

John C. Hope, who is here with his wife. 

Colonel Hope actually was assigned to the TFBSO task force and 

served as Director of Operations of TFBSO from August 2014 until 

March 2015. 

Mr. Sopko, I want to ask you, is this someone who you spoke to 

in this investigation? 

172 

Mr. SOPKO. We normally do not say whom we have spoken to, 

but in this case, since I believe Colonel Hope has already mentioned that he has given his permission, yes, he has been very 

helpful to us and we are dealing with him and have followed up 

on some of his allegations. 

Mr. MCKEON. Senator, can I respond briefly to what Mr. Sopko 

just said about the June 30 meeting? 

Senator AYOTTE. Yes. 

Mr. MCKEON. I do not know what was said. I was not at the 

meeting. We are not trying to hide Mr. Catalino. We have made 

him available and will make him available again. If Mr. Schleien 

made a mistake about the fact that Mr. Catalino had already started, that is on us. We are accountable for that. 

But the irony is that if he was not in the Department, as Mr. 

Sopko has said, he would be free to decline to talk to SIGAR, because of the lack of subpoena power for testimonial purposes. 

So he is available to SIGAR, as are other former employees who 

are in the department. 

Senator AYOTTE. So I want to raise the issue of Colonel Hope’s 

service, which we are grateful for, because I think it is very important, as I look at the role that he played on this task force. When 

he was assigned to this task force, he started to raise issues immediately of deep concern. There is a long list of things he raised, 

about the lack of operation and financial oversight, about the lack 

of metrics or analysis to measure success, that essentially the oversight was lacking, no accounting of cost expenditures or money 

transfers, and serious questions about excessive travel, both from 

security and financial standpoints. I mean, this is a laundry list, 

that TFBSO had no property book or no property book officer over 

the lifetime of its existence. 

He claims, and I have to say I am very troubled as I see this 

whole course of record, that not only him but the entire Afghanistan military team was subjected to and continues to be subjected 

to retribution and retaliation after their return from the task force 

and after he, in particular, raised issues about this task force. 

As I understand it, when the list of employees was given to 

SIGAR, people like Colonel Hope were not listed on that list, and 

they obviously would have knowledge as current serving members 

of our military that were involved in important roles in this task 

force. That raised a flag for him that caused him to not only bring 

information to the attention of SIGAR but also, as result of him 

raising this, he had to file a retribution complaint with the Inspector General’s Office of the department. 

And he was given a review that was different than four other reviews he had received from very, very respected and senior members of our military. Really from you, Secretary McKeon, is one 

that any member of our military would view as a career-ender. 

As result, not only was this review one where it should have 

been issued in March and then was not issued until December, in 

violation of existing DOD policy, but essentially he raised all these 

issues about TFBSO and now, again, as someone who I would describe as doing the right thing as a whistleblower and who has 

really nothing to gain, and at this point, obviously, I am concerned 

173 

about being the subject of retribution, is now in a position where 

this has been harmful to his military career. 

So I guess my question to you, Secretary McKeon, is, as Colonel 

Hope’s senior rater, what was it in his role, why was his evaluation 

so late, why were his concerns not taken seriously? As I understand it, he sent to you an after-action report by email in 2015. In 

fact, he told me that he sent it actually in I believe March 2015, 

and he never received a response from you by email. 

So I guess what worries me is I hear this course of conduct 

where SIGAR asks a series of questions and they are told, well, the 

task force ended and no one can answer your questions right now. 

We had questions as a committee. I pushed to have this hearing. 

And we did not get the new numbers on the gas station even 

though you had the draft report in September, and you had the 

final report in October, you had a follow-up written letter in December on this issue, we did not get the numbers until the night 

before. 

I have to ask, what is going on here? This worries me. Can you 

address Colonel Hope? Can you address that we should not be concerned that somehow this is being covered up, because all this 

course of conduct raises this flag that very much concerns me as 

to why this is not being played out in a way that we would normally see this type of investigation, the questions being answered 

and answered not without having to call a hearing on it but immediately? 

Mr. MCKEON. Senator Ayotte, let me first address the issue of 

Colonel Hope. He was the Director of Operations in the Kabul office starting I believe in September 2014 until the end of the task 

force operation. He asked me probably about a year ago at this 

time to be a senior rater because I was the next person above Mr. 

Catalino. He emailed me and asked me to do that and asked to 

come see me so I could put a face with the name, and I did meet 

with him last January. 

His Officer Evaluation Report [OER] did not come to me until 

September. I cannot account for the delay. 

Senator AYOTTE. What does OER stand for? 

Mr. MCKEON. I am sorry, ma’am. Officer evaluation report. 

His OER came to me in September, and I filled it out. Let me 

look at the dates that I have here. It was signed by Mr. Catalino 

on the 2nd of September. I signed it on the 11th of September. 

At that time, I am a little embarrassed to say this, when I filled 

out the form, in filling out one part of the form, I did not completely fill it out. But the computer program that the Army has for 

its personnel allowed me to hit the signature box even though I 

had not completed the form. You know, with a lot of merchants or 

government Web sites, if you go through and you do not fill out the 

key one, it will not let you sign it and hit submit. But this one did. 

That is on me. It is my fault. I am not blaming the Army system. 

But that is what happened. 

When it was called to our attention that it had not been completed, it was completed in mid-November, on November 19 by Mr. 

Catalino, and I signed it also the same day. Then the system 

pushed it to Colonel Hope. 

174 

That is my understanding of how it works, based on an Army 

colonel who works in our front office. 

Our records show that Colonel Hope signed it on 15 December. 

I read the after-action report only in the last month or so. If 

Colonel Hope emailed it to me last March—I will go back and look 

at my records—I do not remember seeing it at that time or reading 

it at that time. 

As to what the report says, it says some of the things you said 

about the lack of a property book and property accountability, and 

Colonel Hope recites how he and his colleagues sought to remedy 

that. I do not recall that the report says some of the other things 

you said about travel abuse. 

But I would unequivocally deny that the rating he received had 

anything to do with that report. As to the rating received, I do not 

feel it is my place to discuss that in this open hearing. 

As to the other issue raised, Senator, about trying to answer 

SIGAR’s questions, I think I tried to answer it earlier, but I will 

do it again, which is, I know it may sound odd that we did not have 

the expertise to dig through these records and understand them, 

but other than Mr. Catalino, we really had no one who had familiarity with these records. He was not steeped in the energy project. 

It was started before his time as deputy director. I talked to him 

about it, about his knowledge about it. It was not deep. 

We have spent a lot of time in the last couple months by grabbing staff from other projects to try to help sort through these 

records. The comptroller that Mr. Sopko referred to earlier is not 

in Mr. McCord’s part of the organization. He is the comptroller for 

the Defense Security Cooperation Agency who reports to the Under 

Secretary for Policy. 

I asked him to take a few days to sift through these records and 

see if he could make sense of the CNG project as somebody who 

understands DOD financial practices. The statements I make in my 

written testimony are derived directly from what he told me. 

So we have conveyed that, and we made him available to SIGAR 

to do explain his analysis. 

So what I am trying to say, ma’am, is, as I said before, because 

of the unique nature of this task force and because we shut it down 

and chose not to keep legacy employees around, it has been a challenge for us to go back and try to reconstruct these records. But 

we are doing that now in response to your requests and response 

to SIGAR’s requests. I am trying to see if we can find a former employee of the task force to come work on a temporary basis to assist 

us. 

So we will work in good faith to try to respond to these requests, 

but they had 150, 200 employees, a lot from the business sector. 

They are all gone. To try to recreate what happened five and six 

years ago is going to be a very hard challenge for us. 

We welcome the audit that you and other Senators have asked 

for. As I said, Mr. Lumpkin, when he was performing the duties 

of the Under Secretary in April 2014, asked the DOD IG to perform 

a full audit. I requested a financial audit at the end of 2014, which 

Washington Headquarters Services paid for. I think we have provided that to you, but if we have not, we will. 

175 

So we are an open book on these records. SIGAR has them. If 

there are other records that he thinks that are out there that we 

have not provided, we will look. We are not trying to hide anything. 

I think it is very useful to find out what happened, but it is going 

to be hard for us to recreate some of this history with all the task 

force employees gone except for a handful of people who might still 

be in the Department. 

Senator AYOTTE. Just so I can finish up this circle on Colonel 

Hope, because I am very appreciative of his service, I want to ask, 

Mr. Sopko, do you know generally when Colonel Hope started 

speaking at least to SIGAR about his concerns about TFBSO? 

Mr. SOPKO. Offhand, I do not. I would have to check with the 

staff. 

Senator AYOTTE. Can you get that for me, for the record? 

Mr. SOPKO. Absolutely. 

Senator AYOTTE. I would appreciate it. 

Secretary MCKEON. Senator, if I can say one more thing about 

Colonel Hope. I did not witness his work firsthand. I read his report. It is my understanding he did perform a critical function in 

Kabul. When I saw him here today before you arrived, I apologized 

to him for the delay in the OER. So I do apologize publicly for the 

delay. I deny and believe to my core there was no retaliation. 

Senator AYOTTE. Well, I think the concern is also when Colonel 

John C. Hope was rated by General Odierno, who many of us know 

has a distinguished record of service, he called him a top 1 percent 

officer and one of the top 20 of the 100 colonels he had served with 

in his 40-plus years in the Army. So I just want to make sure that 

that is in the record, because having certainly had the opportunity 

to know General Odierno, we know he is one of the finest generals 

to serve our Nation. 

So this issue does raise a flag for me, and I want to make sure 

that every member of our military or our civilian workforce understands that they can fully come forward with any issue that they 

have or concern about not only how taxpayer dollars are spent but 

also how the business of the government is conducted in a way that 

they know that they will not face any potential for retribution. 

I want to follow up on a couple specific issues to make sure that 

this committee, as we get information about the activities of 

TFBSO, in follow-up not only to Senator Rounds’ questions, in addition to the goats and the carpet, I would like to make sure that 

we get travel records of where people traveled for the carpet industry, the purchase and shipment of the goats. But also I would like 

to have the same type of information about the jewelry manufacturing initiative. We have been given information that TFBSO 

traveled to India and other locations as part of that. I do not know 

if you have information on that today. 

But I would like to understand that on the jewelry initiative, and 

also the ice cream initiative. 

Apparently, TFBSO had a Herat ice cream project run out of the 

villa in Herat, Afghanistan. And a former TFBSO employee says 

this initiative was one of the primary reasons that they had a villa 

or safe house established in Herat. So I would like to understand, 

as we get the answer on the villa issue, the information about the 

176 

ice cream initiative, the jewelry initiative, the goat initiative, and 

the carpeting initiative. 

And one of the issues that, as I heard you talking, Secretary 

McKeon, about the challenges of not having the employees, when 

we had the wind-down of the task force, did it not occur to anyone 

at that point that the Congress would want to have a full accounting of how the taxpayer dollars were spent, and whether we actually got any return on the investment? 

Secretary MCKEON. It did, Senator. That is why Mr. Lumpkin 

asked for the Inspector General to conduct an audit. That is why 

I asked for the financial audit. That is why we contracted the 

RAND Corporation to help us with the lessons learned examination. 

Senator AYOTTE. But that RAND report by its own admission is 

not an audit and does not fully account for how dollars were spent 

and also a cost-benefit analysis of those dollars. 

Secretary MCKEON. That is correct. It is a general, impressionistic review based on interviews of whether projects were meritorious and succeeded. We do not have an audit ability in OSD Policy. We asked the IG to do it. He declined based on resources and 

wanting to work on current projects rather than backward-looking. 

I only know that from his letter. This is the former IG, Mr. Jon 

Rymer. He has now left the Department. I spoke to him briefly. 

That is why I asked for the financial audit, which WHS contracted for, which I believe you have. 

We support if SIGAR wants to undertake a full audit at your request or the committee’s request. We have no objection to that. 

Senator AYOTTE. I would like to request that audit. I think the 

members of the committee would like to see that. And obviously, 

we would hope that you would fully cooperate in getting whatever 

information is needed so that the SIGAR could conduct a full audit, 

so that we could account for not only the initiatives that we talked 

about today but we are able to account for each of the dollars that 

were expended and how they were expended in this task force. 

I do have to ask though on the gas station issue, why it took so 

long for DOD—I mean, when there was draft report in September, 

when there was the final report in October, where there were 

issues raised even in December in a follow-up letter about the villas that again reiterated the $43 million number for the gas station, in each of those instances, DOD did not challenge the number. 

I am just curious why it took basically the night before this hearing, or day before this hearing, for that to come forward and for 

you to then challenge the number. 

I am not disputing whether the number is right or wrong in that. 

I am just trying to understand what took so long. 

Secretary MCKEON. As I said, Senator, we have been borrowing 

staff from other functions to try to answer the inquiries over the 

last few months on this issue and trying to drill down on the data 

and the records. I cannot remember when the comptroller from the 

Defense Security Cooperation Agency came up with his analysis. 

We knew you were planning this hearing, so I think it was before 

yesterday. We, certainly, had some of this information and were 

preparing to provide it to the committee. 

177 

Senator AYOTTE. Do you agree it would have at least been helpful to say to SIGAR we think there is a huge problem with this 

number and we are going to have a financial analysis done on it? 

Mr. SOPKO. Senator, if I can interject to maybe help Mr. McKeon, 

we spoke to that comptroller. As I told you, we just got his name. 

We have been asking Mr. McKeon for his name and contact information since December. He actually told us that he started his review on November 17 and finished it on November 20. Like yourself, he finished it on November 20, it would have been useful if 

we had gotten a copy of it before last night. We still do not have 

a copy of his final report. We have just interviewed him. 

Senator AYOTTE. Again, as I understand your testimony, Mr. 

Sopko, even that individual cannot fully answer the question about 

the number because of the lack of recordkeeping. 

Mr. SOPKO. You are absolutely correct, Senator. He basically said 

that the analysis underlying the overhead number is probably incorrect, but due to poor recordkeeping, there is no way to get a better number. Again, I reiterate that under GAGAS, under CIGIE 

standards, we are required to get the best number. So, therefore, 

he basically makes our case that the number we gave—which came 

from DOD, again—it was the best number. 

His gut feeling, he indicated, it is probably less, but he stated 

that there is no fidelity in the overhead numbers. It would be impossible to arrive at a more accurate estimate of the total overhead 

costs for CNG. 

I think this is critical not because of the number. The gas station 

number is really not that important. This goes back to the underlying problems that I think the Senators have pointed out, and that 

there is poor planning, poor management, and poor coordination at 

TFBSO. They cannot even get their overhead numbers right. No 

wonder we do not know how much money was spent on goats or 

if the goats were even eaten or not. We do not know. This is so 

poorly managed. 

That is a problem that was identified by the General Accounting 

Office years ago when they first did their first audit. We have been 

identifying that since then. 

Senator AYOTTE. That brings me to my final question, which is, 

there was the 2011 GAO report based on what happened with 

TFBSO in Iraq before the decision was made to transition to Afghanistan. And it strikes me that as you look at what is in the 

GAO recommendations, the lessons learned from Iraq, none were 

taken into account as this transitioned to Afghanistan. In fact, I do 

not think that Mr. Brinkley could account for costs or feasibility. 

And, in fact, projects seem to have been approved without knowing 

what they would cost. 

As you look at the GAO report, about how you should establish 

project criteria, metrics, monitoring, these were all lessons taken 

from Iraq and also from the CSIS report, similar lessons, all that 

information, it does not appear to me, Secretary McKeon, that any 

of that was considered or addressed based on the lessons we 

learned in Iraq as this task force undertook its activities in Afghanistan. 

Would you disagree with me on that? 

178 

Secretary MCKEON. I was not there at the time, Senator. Based 

on the record I have seen, I am not sure I can disagree. 

What I would say is that Mr. Brinkley left in the summer of 

2011 and a lot of senior people left with him. There was a gap before there was a new director hired. In 2012, there was an acting 

director. I think they probably had to reinvent the wheel a little 

bit. 

When they first went into Afghanistan, it is my understanding 

they asked McKinsey & Company to do an analysis of what sectors 

might be productive in terms of economic generation. They focused 

on a few set issues, including particularly the extractives industries, minerals and fossil fuels. 

We have not found this review or study. In my experience with 

McKinsey, it is a ten-page slide deck, so I am not sure it is going 

to answer many questions anyway. But I am told that the 

McKinsey work helped to direct and guide the focus of the task 

force. 

I think in terms of mineral resources that Afghanistan has, as 

I said earlier, there are a lot of ifs here, if you had security, if you 

had strong companies, if you had an open and noncorrupt government, there is a lot of potential there for Afghanistan to benefit 

from its natural resources. There are a lot of countries in the world 

who have as many natural resources as Afghanistan, and they 

have not managed them well, corrupt governments have not shared 

prosperity with all. So it is a pretty big challenge even in the absence of a war. 

So whatever useful work was done by the task force and USAID 

to lay the foundation for the Government of Afghanistan, I am not 

sure we are going to see a payoff anytime soon from that, if, indeed, there ever is a payoff. 

Senator AYOTTE. Yes, I think that is one of the problems when 

we look at $800 million of taxpayer dollars, and we cannot show 

any metrics or deliverables. I think that is where my constituents, 

certainly, become upset about how we are spending their dollars. 

I would just end with how can we make sure that this does not 

happen again? I think we heard today that DOD is not the best 

place for this type of work. But unfortunately, as we look at what 

we do going forward, how do we make sure that this does not happen again? 

And how do we make sure that you have what you need, Mr. 

Sopko, to properly conduct oversight and to make sure that the Inspector General’s Office has the teeth that it needs to get us information that we need to ensure that we are doing our job on oversight for the taxpayers of this country? 

Mr. SOPKO. Senator, I think you can make certain this does not 

happen again by having hearings like this. Oversight is important. 

Congressional oversight, and I am a little biased, having spent 25 

years doing it for Sam Nunn, Carl Levin, and John Dingell, among 

others, and Warren Rudman from your State. You need oversight. 

Senator AYOTTE. You have worked for really good people. 

Mr. SOPKO. I learned from the best. It is important. It has to be 

done. I can tell you, I am usually not shy in expressing my concerns about issues. 

179 

One of the reasons why I am not shy is I realize, and I learned 

from those Senators, that you sometimes have to publicize an event 

to reach over the heads of the people who are trying to protect 

their bosses from hearing bad news. 

I say, Senators, you have already done quite a bit. By announcing this hearing, for the first time, we have access to records. We 

have a list of names. We have, for the first time in years, Mr. 

McKeon’s shop actually looking at some of those numbers. I think 

you have a success already. 

Now there are many more miles to go on this, but that is the importance of congressional oversight. Your hearing itself has started 

the ball rolling in the right direction. And I think with Secretary 

McKeon and myself working together on this, we can help give you 

more answers to these questions. 

Secretary MCKEON. Senator, may I respond? I think I said it a 

few times, but I have to rebut what Mr. Sopko just said. He had 

access to records and he had the names of employees all of last 

year. 

The point I would make in response to your question is that we 

welcome oversight from the IG or from SIGAR. It is unfortunate 

that some of this oversight of the task force work did not come earlier so we could have had course corrections. We are now doing retrospective history, which is still useful in its own right, but it is 

going to be a challenge, I wish to underscore, for us, without the 

people who were there, to recreate what happened, but we will do 

our best to respond. 

Senator AYOTTE. I appreciate that. 

I want to thank both of you for testifying today. I would just say 

that we had the lessons learned from the CSIS report and the GAO 

report from 2011. We just have to stop repeating these lessons over 

and over again. 

It is my hope, and I think the point that Senator McCaskill made 

today, that this is not the first instance where we have seen big 

issues with how taxpayer dollars have been spent and wasted. So 

we need to take the work that has been done, take it to heart, and 

actually apply the lessons from it, and I hope that we will. 

But this committee still does expect to be able to account to the 

people of this country for how this money was spent, so I hope that 

every effort will be made to do that. I would like to insert a letter 

and its attachments from Mr. Sopko for the record. 

See APPENDIX A. 

Thank you. 

[Whereupon, at 5:12 p.m., the hearing was adjourned.] 

[Questions for the record with answers supplied follow:] 

180 

QUESTIONS SUBMITTED BY SENATOR KELLY AYOTTE

DEPARTMENT OF INSPECTOR GENERAL

1. Senator AYOTTE. Secretary McKeon: During the hearing you stated that in, 

‘‘April of 2014, as the Task Force was winding down, Michael Lumpkin, then performing the duties of the Under Secretary for Policy asked the department Inspector 

General to perform an overarching audit of the Task Force’s operations, financial 

actions and contracts. The IG declined to do so, due to limited resources and the 

need to focus its efforts on quote ‘projects with the greatest potential return on investment.’ ’’ 

Please provide a copy of the DOD Inspector General’s response, declining to conduct this audit. 

Secretary MCKEON. Please find enclosed the request by Assistant Secretary of Defense (Special Operations & Low Intensity Conflict) Michael Lumpkin, then Performing the Duties of the Under Secretary of Defense for Policy, as well as the DOD 

Inspector General’s response. 

See APPENDIX B. 

FINANCIAL AUDIT

2. Senator AYOTTE. Secretary McKeon: You stated that, ‘‘In the fall of 2014 I requested a financial audit of the Task Force, which was completed last April.’’ 

Are you referring to the April 30, 2015, report by Williams Adley entitled, 

‘‘Agreed-Upon Procedures Report for the Task Force for Business and Stability Operations in Afghanistan?’’ 

Secretary MCKEON. Yes. In the fall of 2014, I requested that the Washington 

Headquarters Services (WHS), which provided administrative and financial support 

services for the Task Force, undertake a closeout audit of the Task Force. WHS developed a statement of work, solicited contract support, and awarded a contract 

(GS–23F–8184H) to conduct an independent audit of the TFBSO operations. The 

audit focus was to validate and fully support forensic documentation of TFBSO’s operation from inception to closure. WHS awarded this contract to the firm of Williams Adley, a small business, for this purpose of determining if the TFBSO office 

complied with applicable National Defense Authorization Acts and DOD fiscal 

guidelines. It began work in early January 2015, and provided a final report on 

April 30, 2015. The final report was entitled ‘‘Agreed-Upon Procedures Report for 

the Task Force for Business and Stability Operations in Afghanistan.’’ The agreedupon procedures were developed to support WHS’s management objective of determining whether TFBSO transactions were in compliance with Authorization Acts 

and fiscal guidance. These procedures where arranged, and agreed to, between Williams Adley (the contractor) and WHS (the client) The audit results concluded that 

while there were transactional discrepancies there were no identifiable material 

weaknesses, deficiencies, or reportable conditions of the procedures and/or practices 

that guided TFBSO’s financial operations. 

See APPENDIX C for the report. 

3. Senator AYOTTE. That report says the following: ‘‘Because the procedures did 

not constitute an audit conducted in accordance with generally accepted auditing 

standards, we do not express an opinion on the TFBSO’s financial information, nor 

do we express any form of assurance on (1) the TFBSO’s or WHS’s overall compliance with laws, federal regulations or DOD policies and procedures, or (2) the overall effectiveness with which the TFBSO carried out its mission. Had we performed 

additional procedures or conducted an audit in accordance with generally accepted 

auditing standards, other matters might have come to our attention that would have 

been reported to you.’’ 

If this is what you were referring to, in light of the statement above which is contained in the report, why do you consider this an audit? Why did DOD’s Washington 

Headquarters Services (WHS) not have the contractor perform a financial audit as 

you stated in your testimony? 

Secretary MCKEON. As stated previously, Mr. Lumpkin had requested that the 

Department’s Inspector General (DOD IG) conduct an overarching audit of TFBSO 

operations, financial actions, and contracts in order to help to ensure DOD captured 

lessons learned and closed the TFBSO books efficiently. As a result of DOD IG denial to conduct such a review, I asked WHS leadership to fulfil the intent of this 

request by contracting for an independent audit of TFBSO operations. The statement of work which guided the audit was focused on verifying the compliance of the 

TFBSO activities (to include financial transaction) with established authorities. As 

TFBSO was one of the organizational elements within the overall WHS financial 

181 

statement, they did not have a separate financial statement. A full financial audit 

can only be completed on the total WHS financial statement. WHS has recently 

completed an independent financial examination on the Schedule of Budgetary Activities. This examination resulted in corrective action plans that will improve control activities and supporting documentation for all organizational entities within 

the WHS financial statement. 

DOD SUITABILITY

4. Senator AYOTTE. Secretary McKeon: In your oral testimony, you said, ‘‘I am 

personally skeptical of the Department of Defense as a natural home for [economic 

development during a contingency operation]. As a government, we need to consider, 

and figure, and develop a functioning mechanism so that we’re prepared for future 

contingencies.’’ 

How have your observations of TFBSO made you skeptical that DOD should be 

involved in these kinds of economic development activities during a contingency? 

Secretary MCKEON. When the Task Force was created in 2006, it was charged 

with transforming military contracting in Iraq so that the Task Force could generate 

stability through economic development and job creation. TFBSO was specifically 

designed to be expeditionary, operating not under Chief of Mission authority but 

under authority of the military commander. This status gave it certain freedom to 

move around the country and engage more directly with Afghans than employees 

of the U.S. Embassy. Although there was a rationale for how the Task Force was 

structured and operated, the Task Force was ultimately a multi-year experiment in 

how to generate economic growth in Iraq and later in Afghanistan. Economic development overseas is not a core DOD competency, and as such, it does not appear that 

the Department of Defense was the natural home for the Task Force’s mission. For 

this reason, the Department is not contemplating assuming this mission again and 

we are instead focused on capturing lessons learned. 

RESPONSE TO SIGAR

5. Senator AYOTTE. Secretary McKeon: You testified that, ‘‘There may be other 

records elsewhere in the department not owned by the task force relative to this 

work.’’ You also said that TFBSO ‘‘contracting was done by other elements, not by 

the task force. There may be records in those components that are not in the hard 

drive that we gave Mr. Sopko.’’ 

Has the DOD provided SIGAR all of the TFBSO-related documents and hard 

drives, both unclassified and classified, that DOD has in its possession? 

Secretary MCKEON. On January 14, 2016, OSD Policy provided to SIGAR a copy 

of the unclassified records that SIGAR requested. These records have been archived 

at the Washington Headquarters Services Executive Archives. On March 8, 2016, 

SIGAR requested any classified information on TFBSO that was retained by the Executive Archives. On March 14, 2016, OSD Policy delivered to SIGAR the TFBSO 

records from DOD’s Secret Internet Protocol Router Network that are stored at the 

Executive Archives. 

6. Senator AYOTTE. Which TFBSO-related questions posed to DOD by SIGAR has 

DOD not yet answered? 

Secretary MCKEON. On February 19, 2016, the Department of Defense received 

a notification that SIGAR is initiating a comprehensive performance audit of 

TFBSO’s programs and activities in Afghanistan. The notification requested that the 

Department notify the appropriate officials of this work, which we did. On March 

17, 2016, SIGAR conducted the entrance conference with OSD Policy. The Department will work with SIGAR as SIGAR notifies us of subsequent steps. To our 

knowledge, as of March 29, the Department of Defense had answered all other 

TFBSO-related questions and inquiries that we received from SIGAR. 

TFBSO CONTRACTS

7. Senator AYOTTE. Secretary McKeon: In your oral testimony, you said that DOD 

‘‘can give you a list of the [TFBSO] contracts. And I believe we can tell you how 

all the money was disbursed broadly by sector.’’ 

Please provide a list of all TFBSO contracts and all available details on how all 

$638 million was disbursed. For all contracts, please provide the purpose of the contract, who received the contract, how much was disbursed for the contract, and 

whether DOD has evidence that a feasibility study was conducted. Please include 

the total costs of the ‘‘gem program,’’ ‘‘carpet program,’’ and ‘‘cashmere goat program.’’ 

182 

Secretary MCKEON. I am enclosing the spreadsheet with the list of contracts that 

I referenced during the January 20, 2016, hearing. The spreadsheet provides a detailed account of all contract obligations. The project names are listed, but not the 

purpose of each contract. The enclosed Economic Impact Assessment provides more 

detailed information on each project. 

See APPENDIX D for the report. 

ACCOUNTING FOR COSTS

8. Senator AYOTTE. Secretary McKeon: In your oral testimony you testified that 

TFBSO did not account for costs ‘‘on a project-by-project basis.’’ 

How is it acceptable or possible that DOD cannot provide cost information on a 

‘‘project-by-project basis’’ for TFBSO projects? If you can’t provide this information, 

how can TFBSO or DOD assess the performance of a project or ensure the money 

was not stolen? Has this problem been fixed for all present DOD task forces? If not, 

what steps are you taking to rectify this unacceptable situation? When do you expect this shortcoming to be remedied? 

Secretary MCKEON. As was common practice, TFBSO did not directly attribute 

overhead costs to individual programs or projects. As such, we are unable to list all 

TFBSO projects in which the overhead costs exceeded the direct costs of the program. The preferred method is to use actual cost data attributed to the specific 

project, because each project has unique support requirements. In the case of the 

CNG project, the support costs data available to us do not provide the necessary 

fidelity to determine overhead costs in support of the CNG project itself. 

In fiscal year (FY) 2015, each of the Military Departments began an audit of its 

FY 2015 General Fund Schedule of Budgetary Activity in December of 2014. These 

initial audits are already proving invaluable by testing our systems, process controls, and our audit infrastructures while also highlighting key dependencies between organizations that could represent financial reporting weaknesses. Over the 

next two years, we will continue to expand the scope of audits until full audit readiness is achieved. 

Senior leadership remains fully engaged and is taking a risk-based approach to 

achieving audit readiness and proceeding into full financial statement audits in FY 

2018, as required by the NDAA for FY 2010 and subsequent years. To accelerate 

progress in the high-risk areas, the Office of the Under Secretary of Defense (Comptroller) developed critical path milestones along with target dates for completion. 

Progress in these areas is being carefully tracked and monitored by both the Under 

Secretary of Defense (Comptroller)/Chief Financial Officer and the Deputy Chief 

Management Officer. 

9. Senator AYOTTE. For each TFBSO project, provide the written performance 

metrics that were established for that project and whether each of those performance metrics were met. For which TFBSO projects is there no evidence that there 

were written performance metrics? 

Secretary MCKEON. TFBSO maintained metrics for all projects across each focus 

areas (Energy, Minerals, Indigenous, and Investment). Each metric report per focus 

area was updated at least monthly. Enclosed are the final close-out metric reports 

for each sector. 

Documents retained in Committee files. 

CNG FILLING STATION

10. Senator AYOTTE. Secretary McKeon: In your oral testimony, you said that you 

could not dispute that there was not a feasibility study conducted for the CNG filling station project. 

Please confirm whether TFBSO conducted a feasibility study for the CNG filling 

station project. If one was performed, please provide a copy of the feasibility study. 

Who made the decision to proceed with the CNG filling station project? 

Secretary MCKEON. Although the Economic Impact Assessment (EIA) cited in 

SIGAR’s report on the CNG filling station references a cost-benefit analysis (CBA) 

of the CNG station covering the years 2011 to 2018, we were unable to find such 

a CBA in the TFBSO archive. A CBA is a feasibility study that is typically performed prior to project initiation to determine if the project has a positive return 

on investment. According to the EIA, the total discounted value of benefits for this 

project were estimated to be $1.2 million while the total discounted value of costs 

was estimated to be $32.5 million between 2011 and 2018. If this recitation of the 

data is correct, it suggests that the costs exceeded the benefits of pursuing the CNG 

station. 

183 

A technical feasibility study that focused on the type of gas (e.g., CNG, diesel) and 

whether the Afghanistan’s existing wells and infrastructure were sufficient to provide natural gas to the CNG station was produced. I have enclosed this technical 

feasibility study. The project began in fiscal year 2011, but I have no further insights into who made the decision to proceed with the CNG station project. 

See APPENDIX E. 

11. Senator AYOTTE. Secretary McKeon: In your testimony, you mentioned that 

you asked the Defense Security Cooperation Agency comptroller to review records 

related to the cost of the CNG filling station. 

Please provide the comptroller’s cost analysis of the CNG filling station, including 

all related work papers and records used to produce the cost analysis. 

Secretary MCKEON. I have enclosed the two slides that the Defense Security Cooperation Agency (DSCA) comptroller compiled after reviewing the records for the 

CNG filling station. I am also enclosing the records that were sent to the DSCA 

comptroller. 

Documents retained in Committee files. 

ACCOMMODATIONS ‘‘VILLAS’’ 

12. Senator AYOTTE. When do you expect DOD to provide SIGAR a response to 

its November 25, 2015, letter related to the TFBSO ‘villas’? 

Secretary MCKEON. The Department of Defense provided an interim replied to 

SIGAR’s November 25, 2015, letter on December 4, 2015. On February 5, 2016, the 

Department provided a final response to the November 25 letter with a commitment 

to continue looking into a couple matters related to TFBSO’s private security and 

housing expenditures. 

13. Senator AYOTTE. Secretary McKeon: In response to my questions about 

TFBSO living in ‘villas’, as well as their private security, you cited a memorandum 

of understanding (MOU) between USFOR–A and TFBSO which apparently discussed the possibility of TFBSO living on base or being supported by the military. 

Please provide a copy of that MOU. 

Secretary MCKEON. I have enclosed a copy of the memorandum of understanding 

(MOU) between USFOR–A and TFBSO. 

See APPENDIX F. 

14. Senator AYOTTE. Provide any documentation related to the ‘villas’ and the decision to use them instead of staying on base, including any cost-benefit analysis 

used as a basis for this decision. 

Secretary MCKEON. I have enclosed the documentation on private housing and security expenditures that was provided to SIGAR in conjunction with our reply dated 

February 5, 2016. 

Documents retained in Committee files. 

CHINA NATIONAL PETROLEUM CORPORATION

15. Senator AYOTTE. Secretary McKeon: During the hearing, I raised the issue of 

the Chinese National Petroleum Corporation—International (CNPC–I) winning the 

oil tender process that TFBSO spent $55 million to facilitate. 

Please provide details regarding this TFBSO project. Was a feasibility study conducted? Did that study anticipate a country like China winning the contract? Did 

TFBSO, DOD, or the U.S. government make any effort to encourage Afghanistan 

to award the contract to a company from the U.S. or other member of ISAF? 

Secretary MCKEON. TFBSO engaged many U.S.-based mining companies regarding Afghanistan opportunities. The majority of large U.S. mining companies were 

not interested in exploration projects in Afghanistan. One exception was Chevron, 

which engaged in discussion on the Turkmenistan, Afghanistan, Pakistan, India 

(TAPI) pipeline. TFBSO’s interest in Afghanistan’s mining industry was to Train, 

Advise, and Assist the Afghan ministry to develop the capability to let mineral contracts. TFBSO facilitated the processes used by the Afghans in this industry. The 

Afghans received bids from various companies, many state-owned, such as CNPC– 

I. Given that China has significant economic and political interests in the region, 

it was not surprising there would be bidders from China and other countries. As 

TFBSO was in an advise and assist role, the task force was not in a position to ask 

the Afghan ministry to reject the CNPC–I bid. 

184 

TFBSO PROGRAM COSTS

16. Senator AYOTTE. Please provide a list of all TFBSO projects in which the overhead costs exceeded the direct costs of the program. 

Secretary MCKEON. As was common practice, TFBSO did not directly attribute 

overhead costs to individual programs or projects. As such, we are unable to list 

retroactively all TFBSO projects in which the overhead costs exceeded the direct 

costs of the program. 

17. Senator AYOTTE. Please provide a list of all foreign travel of TFBSO personnel 

outside Afghanistan or the United States. Include the date of the trip, the number 

of individuals who traveled, where they went, the purpose of the trip, and the total 

cost of the trip. Please include suspected trips to Europe for the carpet project and 

India for the jewelry project. 

Secretary MCKEON. I understand that SIGAR was examining allegations of travel 

fraud, waste, and abuse of 15 TFBSO employees. Enclosed are the records provided 

to SIGAR in January 2015 from its data call. 

We have been unable to find a list of all the foreign travel of TFBSO personnel 

outside Afghanistan or the United States. TFBSO’s mission to facilitate investment 

in Afghanistan required personnel to travel to investor conferences, trade shows, or 

other events attended by potential investors. These meetings occurred in various locations with specific focus areas (e.g., gemstones, carpets, investment). 

Documents retained in Committee files. 

18. Senator AYOTTE. Did TFBSO import goats from Italy to Afghanistan? Please 

provide details, including activities and costs. Was a feasibility study conducted for 

this project? Who approved this project? How were they transported to Afghanistan? 

How much was spent to bring the goats to Afghanistan? What were the results of 

bringing the goats to Afghanistan? 

Secretary MCKEON. Afghanistan is the third largest producer of cashmere in the 

world and there are varying degrees of cashmere quality. A large percentage of Afghan-produced raw cashmere is illegally sold to China where it may or not be treated before it is harvested for clothing manufacturing and sold around the world. 

TFBSO engaged goat farmers and developed an Afghan cashmere coop. The intent 

was to improve the quality of Afghan cashmere as well as the value chain of the 

commodity in the market. TFBSO partnered with Colorado State University 

through a $2.3 million grant to develop a cashmere certification lab and goat farm. 

The grant funded testing equipment and the purchase and shipment of nine bucks 

from Italy to breed with the Afghan goats at the farm. The certification farm ensured international standards were met related to cashmere production and distribution. TFBSO also helped Afghanistan pass a law banning the export of raw 

cashmere. The cashmere lab and goat farm was tendered off to an Afghan cashmere 

producer and continues to operate today. The cashmere lab and farm preliminary 

financials are enclosed. 

See APPENDIX G. 

19. Senator AYOTTE. Does DOD have classified information related to TFBSO? If 

so, why hasn’t that information been provided to SIGAR? 

Secretary MCKEON. On January 14, 2016, OSD Policy provided to SIGAR a copy 

of the unclassified records that SIGAR requested. These records had been archived 

at the Washington Headquarters Services Executive Archives. On March 8, 2016, 

SIGAR requested any classified information on TFBSO that was retained by the Executive Archives. On March 14, 2016, OSD Policy delivered to SIGAR the TFBSO 

records from DOD’s Secret Internet Protocol Router Network that are stored at the 

Executive Archives. 

LESSONS LEARNED

20. Senator AYOTTE. I appreciate that TFBSO sponsored a RAND study of the 

task force. However, the fact that many concerns from the 2010 CSIS report and 

the 2011 GAO report were not addressed increases my concern that DOD will likely 

make the same mistakes again if a concerted effort is not made to garner and codify 

lessons learned. 

What are DOD’s specific lessons learned from TFBSO and how are those lessons 

being codified within DOD, in coordination with other relevant agencies, to avoid 

similar mistakes in the future? What office or agency is responsible for maintaining 

those lessons learned for future application? Please provide a detailed answer. If 

DOD expects other agencies to take certain steps, please detail what DOD has done 

185 

to request certain actions from other agencies and how those agencies have responded. 

Secretary MCKEON. The Department sent to Congress transition reports for fiscal 

years 2012, 2013, and 2014, as well as a final closeout plan in May 2015. Prior to 

its disestablishment, TFBSO worked with interagency partners and the Government 

of Afghanistan to determine, where possible, an appropriate entity to assume responsibilities for TFBSO programs. No U.S. government agencies were in a position 

to assume responsibility for legacy TFBSO programs. 

As I expressed during the January 20 hearing, I am personally skeptical that the 

Department of Defense is the natural home for the Task Force’s mission of generating economic development overseas because it does not appear to be a core DOD 

competency. The Department is not currently planning for another undertaking of 

this nature. Instead, the Department will focus on its responsibility to be prepared 

to conduct stability operations activities through all phases of conflict and across a 

range of military operations, including in combat and non-combat environments, 

pursuant to DOD Directive 3000.05. 

TFBSO PERSONNEL

21. Senator AYOTTE. When DOD provided the list of TFBSO employees to SIGAR, 

did that list include military servicemembers assigned to the task force? If not, why 

not? Do DOD cost estimates of TFBSO include the costs associated with military 

servicemembers assigned to TFBSO? How many military servicemembers worked 

for TFBSO during its tenure in Afghanistan? 

Secretary MCKEON. The list of former TFBSO employees that the Department 

provided to SIGAR on January 14, 2016, did include some military servicemembers 

who were previously assigned to the task force. There may be other former employees who are still currently employed by the Department of Defense and we are not 

aware of their employment status. The Department does not maintain records regarding the current employment of former TFBSO employees, but OSD Policy has 

created our own list based on our own due diligence. 

22. Senator AYOTTE. What was the specific date when former TFBSO Director Joseph Catalino was hired by the Department of Defense to work in the Office of the 

Undersecretary of Defense for Policy after he departed TFBSO? 

Secretary MCKEON. Mr. Joseph Catalino resumed employment with the Department of Defense on June 29, 2015. 

SUPPORT FOR WARFIGHTERS

23. Senator AYOTTE. Some have suggested that one of the justifications for a DOD 

task force like TFBSO is that it filled a niche supporting military commanders that 

the State Department and USAID did not. Yet, the January RAND report, sponsored by TFBSO, concluded that, ‘‘ . . . integrating TFBSO operations into tactical 

and strategic military operations remained a challenge through the organization’s 

life in Afghanistan.’’ The report found that, ‘‘there was a significant gap with the 

U.S. military on types of activities that TFBSO should be engaged in . . . ’’ The 

RAND report also concluded that, ‘‘A prevailing view among the military respondents was that TFBSO was a tool that should have benefited the military effort, but 

that it ‘stayed out on an island’ rather than becoming a team player.’’ 

What is your assessment of those RAND findings in a report sponsored by 

TFBSO? 

Secretary MCKEON. The findings of the RAND report are similar to questions and 

concerns I expressed during the January 20 hearing. New organizations often have 

difficulty integrating into established agencies or operations, and RAND’s findings 

suggest that TFBSO, despite being a DOD entity, may have experienced problems 

integrating into military operations and considerations. 

24. Senator AYOTTE. Were any TFBSO projects in Afghanistan transitioned to 

USAID or any other U.S. government entity? If not, why not? Is there any evidence 

that TFBSO made an effort to transition their projects to other agencies? 

Secretary MCKEON. USAID did not assume any former TFBSO projects. TFBSO 

worked to transition projects to USAID, the Afghan government, or other entities. 

Each project was tracked through a formal metric process, including a transition 

plan. As early as January 2012, TFBSO participated in an interagency steering 

committee, and continued to engage the Department of State and USAID through 

the end of 2014. Ultimately, the Department of State and USAID declined to assume any TFBSO projects. 

186 

1SIGAR Audit 13–8, Taxes: Afghan Government Has Levied Nearly a Billion Dollars in Business Taxes on Contractors Supporting U.S. Government Efforts in Afghanistan, 5/14/2016. 

25. Senator AYOTTE. In 2013 the Special Inspector General for Afghanistan Reconstruction (SIGAR) issued a report saying the Afghanistan Government has levied 

nearly a billion dollars in business taxes on contractors supporting U.S. efforts in 

Afghanistan despite agreements exempting them from such. 

Have you followed up on the Inspector General’s initial report as requested? 

Mr. SOPKO. SIGAR contacted the Department of Defense, Department of State, 

and the U.S. Agency for International Development 60 days after issuing its May 

2013 business taxes audit report, 1 and regularly thereafter, to determine the implementation status of its recommendations. In August 2014, SIGAR closed all remaining report recommendations as implemented. 

26. Senator AYOTTE. Can you report back on the current situation regarding business taxes on contractors supporting U.S. efforts in Afghanistan? 

Mr. SOPKO. The United States and the Afghan government signed the Bilateral 

Security Agreement (BSA) on September 30, 2014. The BSA defines requirements 

for U.S. defense contractors for taxation, registration, and entry and exit. The U.S. 

military also operates an International Agreements Branch to help ensure that U.S. 

defense contractors comply with Afghan government law and regulations. Since 

SIGAR issued its audit report in May 2013, private sector companies supporting 

U.S. government efforts in Afghanistan have reported to SIGAR that the Afghan 

government continues to levy taxes and associated penalties from which they should 

be exempt. SIGAR has on-going criminal investigative work in this area. 

27. Senator AYOTTE. What is DOD doing to address the issues raised in the 2013 

SIGAR report (SIGAR audit 13–8)? 

Secretary MCKEON. Of the $921 million in tax assessments that SIGAR asserts 

were improperly levied against US contractors, $93 million was identified by SIGAR 

as levied on DOD contractors. By comparison, in a January 2015 report to Congress, 

DOD noted that following an extensive data call by the Office of the Undersecretary 

of Defense for Acquisition, Logistics and Technology, DOD contractors reported 

being levied $83 million in taxes in 2013, of which they paid $7 million in taxes 

to the Afghan government. Almost all of the remaining $921 million in reportedly 

illegitimate assessments that SIGAR identified was, according to SIGAR, levied 

against State Department contractors, but State strongly questioned the basis for 

SIGAR’s claim. 

In the 2013 audit, SIGAR made three recommendations for DOD, all of which 

were implemented in 2013: 

• Develop procedures to help contractors obtain appropriate documentation of tax 

exempt status with the Afghan Government; 

• Issue guidance and training to contracting officer on how to properly identify 

taxes in contracts and invoices; and 

• Ensure through guidance and training that contractors are reimbursed only for 

eligible tax payments. 

DOD is preparing a required report for Congress describing efforts to address taxation of DOD contractors by the Afghan government that will be submitted upon 

completion of intra-Department coordination. 

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APPENDIX A 


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APPENDIX B 


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APPENDIX E 


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APPENDIX F 


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APPENDIX G 


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Æ 


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