U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

74–755 PDF 2012

ARE CHANGES IN SECURITY POLICY JEOPARDIZING USAID RECONSTRUCTION PROJECTS AND 

PERSONNEL IN AFGHANISTAN? 

HEARING 

BEFORE THE

SUBCOMMITTEE ON NATIONAL SECURITY, 

HOMELAND DEFENSE AND FOREIGN OPERATIONS 

OF THE

COMMITTEE ON OVERSIGHT 

AND GOVERNMENT REFORM 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

MARCH 29, 2012 

Serial No. 112–149 

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

( 

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

http://www.house.gov/reform 

(II) 

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM 

DARRELL E. ISSA, California, Chairman 

DAN BURTON, Indiana 

JOHN L. MICA, Florida 

TODD RUSSELL PLATTS, Pennsylvania 

MICHAEL R. TURNER, Ohio 

PATRICK T. MCHENRY, North Carolina 

JIM JORDAN, Ohio 

JASON CHAFFETZ, Utah 

CONNIE MACK, Florida 

TIM WALBERG, Michigan 

JAMES LANKFORD, Oklahoma 

JUSTIN AMASH, Michigan 

ANN MARIE BUERKLE, New York 

PAUL A. GOSAR, Arizona 

RAU ́ L R. LABRADOR, Idaho 

PATRICK MEEHAN, Pennsylvania 

SCOTT DESJARLAIS, Tennessee 

JOE WALSH, Illinois 

TREY GOWDY, South Carolina 

DENNIS A. ROSS, Florida 

FRANK C. GUINTA, New Hampshire 

BLAKE FARENTHOLD, Texas 

MIKE KELLY, Pennsylvania 

ELIJAH E. CUMMINGS, Maryland, Ranking 

Minority Member 

EDOLPHUS TOWNS, New York 

CAROLYN B. MALONEY, New York 

ELEANOR HOLMES NORTON, District of 

Columbia 

DENNIS J. KUCINICH, Ohio 

JOHN F. TIERNEY, Massachusetts 

WM. LACY CLAY, Missouri 

STEPHEN F. LYNCH, Massachusetts 

JIM COOPER, Tennessee 

GERALD E. CONNOLLY, Virginia 

MIKE QUIGLEY, Illinois 

DANNY K. DAVIS, Illinois 

BRUCE L. BRALEY, Iowa 

PETER WELCH, Vermont 

JOHN A. YARMUTH, Kentucky 

CHRISTOPHER S. MURPHY, Connecticut 

JACKIE SPEIER, California 

LAWRENCE J. BRADY, Staff Director 

JOHN D. CUADERES, Deputy Staff Director 

ROBERT BORDEN, General Counsel 

LINDA A. GOOD, Chief Clerk 

DAVID RAPALLO, Minority Staff Director 

SUBCOMMITTEE ON NATIONAL SECURITY, HOMELAND DEFENSE AND FOREIGN

OPERATIONS

JASON CHAFFETZ, Utah, Chairman 

RAU ́ L R. LABRADOR, Idaho, Vice Chairman 

DAN BURTON, Indiana 

JOHN L. MICA, Florida 

TODD RUSSELL PLATTS, Pennsylvania 

MICHAEL R. TURNER, Ohio 

PAUL A. GOSAR, Arizona 

BLAKE FARENTHOLD, Texas 

JOHN F. TIERNEY, Massachusetts, Ranking 

Minority Member 

BRUCE L. BRALEY, Iowa 

PETER WELCH, Vermont 

JOHN A. YARMUTH, Kentucky 

STEPHEN F. LYNCH, Massachusetts 

MIKE QUIGLEY, Illinois 

(III) 

C O N T E N T S 

Page 

Hearing held on March 29, 2012 ............................................................................ 1 

WITNESSES 

Mr. Steven J. Trent, Acting Inspector General for Afghanistan Reconstruction 

Oral statement .................................................................................................. 5 

Written statement ............................................................................................ 7 

Mr. J. Alexander Thier, Assistant to the Administrator and Director of the 

Office of Afghanistan and Pakistan Affairs, U.S. Agency for International 

Development 

Oral statement .................................................................................................. 9 

Written statement ............................................................................................ 11 

APPENDIX 

Professional Services Council, Submitted Statements ......................................... 29 

The Honorable Jason Chaffetz, A Member of Congress from the State of 

Utah, opening statement ..................................................................................... 43 

Letter to The Honorable Jason Chaffetz from Steven J. Trent, Acting Special 

Inspector General for Afghanistan Reconstruction ........................................... 45 

Follow-up Questions for the record from Steven Trent, SIGAR, and J. Alexander Thier, USAID ............................................................................................. 46 

(1) 

ARE CHANGES IN SECURITY POLICY JEOPARDIZING USAID RECONSTRUCTION 

PROJECTS AND PERSONNEL IN AFGHANISTAN? 

Thursday, March 29, 2012, 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON NATIONAL SECURITY, HOMELAND

DEFENSE, AND FOREIGN OPERATIONS, 

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM, 

Washington, D.C. 

The subcommittee met, pursuant to call, at 9:35 a.m., in Room 

2154, Rayburn House Office Building, Hon. Jason Chaffetz [chairman of the subcommittee] presiding. 

Present: Representatives Chaffetz and Tierney. 

Staff Present: Ali Ahmad, Majority Deputy Press Secretary; 

Thomas A. Alexander, Majority Senior Counsel; Robert Borden, 

Majority General Counsel; Will L. Boyington, Majority Staff Assistant; Molly Boyl, Majority Parliamentarian; John Cuaderes, Majority Deputy Staff Director; Mitchell S. Kominsky, Majority Counsel; 

Justin LoFranco, Majority Press Assistant; Jaron Bourke, Minority 

Director of Administration; Devon Hill, Minority Staff Assistant; 

Peter Kenny, Minority Counsel; Rory Sheehan, Minority New 

Media Press Secretary; and Carlos Uriarte, Minority Counsel. 

Mr. CHAFFETZ. The Committee will come to order. 

I will state the Committee mission statement. 

We exist to secure two fundamental principles. First, Americans 

have a right to know that the money Washington takes from them 

is well spent and, second, Americans deserve an efficient, effective 

government that works for them. Our duty on the Oversight and 

Government Reform Committee is to protect these rights. Our solemn responsibility is to hold government accountable to taxpayers, 

because taxpayers have a right to know what they get from their 

government. We will work tirelessly in partnership with citizen 

watchdogs to deliver the facts to the American people and bring 

genuine reform to the Federal bureaucracy. 

This is the mission of the Oversight and Government Reform 

Committee 

I want to thank everybody for their participation in today’s hearing, which is entitled, ‘‘Are Changes in Security Policy Jeopardizing 

USAID Reconstruction Projects and Personnel in Afghanistan?’’ I 

would like to welcome Ranking Member Tierney and members of 

the Subcommittee and members of the audience that are here with 

us today. 

2 

National Security Subcommittee has a long history of overseeing 

U.S.-funded reconstruction efforts abroad. Last year alone, the Subcommittee held six hearings on Iraq, Afghanistan, and the billions 

spent on earthquake relief in Haiti. 

We have seen a common theme: the Federal Government appears 

to be incapable, at least thus far, of tracking its expenditures. Time 

and again it cannot readily provide data, simple data, such as the 

amount of money spent, the number of projects completed, the 

number of projects ongoing, and whether projects are on time, on 

budget, and whether they were actually completed. The simple request, for instance, know the location or see a photo is often met 

with bewilderment and inability to provide that information. 

The failure to track this data in real time demonstrates an extreme lack of oversight. It also tells this Congress that bureaucrats 

in Washington have little visibility or control over the billions of 

dollars spent overseas. I continue to work on a piece of legislation 

that will hopefully rectify this. Hopefully we can do that in a very 

bipartisan way. 

Oftentimes, the Inspectors General are the last bastion of accountability in the Executive Branch. Unfortunately, President 

Obama has failed to appoint replacements for the State Department, Defense Department, USAID, and SIGAR, the Special Inspector General for Afghan Reconstruction, which is, in essence, all 

the major players in Afghanistan. We don’t have even an appointment, let alone a Senate confirmation, for the major people that are 

responsible for the oversight within Afghanistan. 

In fact, the State Department has not had an IG since December 

2007. This is just inexcusable and I think a disservice to the American people, and it makes me wonder if this President, President 

Obama, simply doesn’t want somebody looking over his shoulder 

and want people in there on a full-time basis with the authority 

to get the job done. I think it is inexcusable to have so many vacancies at this point. 

In some cases there is significant disagreement between the 

agencies and the oversight community. We saw this recently with 

the Special Inspector General for Afghan Reconstruction and 

USAID. On March 9th, 2012, Mr. Steven Trent sent a management 

alert to Dr. Ken Yamashita regarding Afghan President Karzai’s 

Presidential Decree 62, PD 62, as it is called. PD 62 mandates that 

U.S. implementing partners cannot use private security companies 

after March 20th, 2012. Instead, the contractors and nongovernment organizations must contract with the recently formed Afghan 

Public Protection Force, or the APPF. So in addition to providing 

goods and services at no cost to the Afghan people, the American 

people must also pay President Karzai for security. 

Mr. Trent’s management alert outlined several core concerns: 

one, the transition to using the Afghan Public Protection Force may 

cause taxpayers an additional $55 million during the first year on 

13 different projects. Part of this is due to a staggering 20 percent 

profit margin demanded by President Karzai. Number two, the Afghan Public Protection Force may not be capable of providing adequate security for the implementing partners; and, third, approximately 1.34 billion U.S. dollars in taxpayer funded projects may be 

at risk of modification or perhaps even termination. 

3 

According to International Relief and Development, a nonprofit 

NGO, the transition to APPF may increase costs by approximately 

15 percent. This expense is then passed on to the American taxpayers. In response to SIGAR’s concern, Dr. Yamashita wrote the 

following on March 13th, 2012: ‘‘USAID acknowledges the issues 

identified in the observations, but rejects the SIGAR management 

letter in its entirety due to the inadequate comparisons, speculative 

assumptions, and inaccurate statements within the document.’’ 

USAID did not merely object to SIGAR’s findings, it rejected them 

in its entirety. 

We often see contrasts, we often see disagreements on particular 

points, but what strikes me about this particular one is just the 

total and complete dismissal of this report from top to bottom. 

Thus, we are holding this hearing. 

The purpose of today’s hearing is to reconcile these assessments. 

In doing so, we will take a broader look at whether this new security policy makes sense, whether it is in the best interest of the 

American taxpayer, and whether we can exceed under this rubric. 

The American people have little patience for government waste 

and lack of progress in Afghanistan. If, after 10 years, we are no 

closer to defining and achieving success, then Congress and the 

Obama Administration should reassess our future in Afghanistan. 

I hope that our discussion today will provide some clarity. I look 

forward to the hearing and the panel. I appreciate the two gentlemen who are joining us today and their commitment to our Country and our betterment, future. I really do appreciate their expertise and look forward to a good discussion. 

I would now like to recognize the Ranking Member, the gentleman from Massachusetts, a friend, Mr. Tierney, for his opening 

statement. 

Mr. TIERNEY. Thank you very much, Mr. Chairman. Thanks for 

having this hearing. 

Thanks to both of you gentlemen for coming here and testifying 

today. 

I can’t let go unanswered just the comment that the Chairman 

made with regard to not having appointments in various important 

positions. I agree that there are a number of important positions 

that need to be filled in this Country and that are not filled, but 

I do take note of the insistence in the Senate of having cloture 

votes on every single thing that comes down the line, and the 

amount of obstruction that has gone on with regard to the President’s attempts to appoint everything from the Consumer Protection Bureau to the FHFA director to judges to the National Labor 

Relations Board. 

When you have a minority party and minority leadership that 

says that their sole goal in life is to make sure that this sitting 

President doesn’t win a second term, I think that that is the indication of why things aren’t getting done in this Country in large 

scale, and particularly why we don’t have appointments in very important places and I would question whether or not that is the best 

thing for this Country. 

And I think if we want to start talking about working in a bipartisan way, that is a darn good place to start. Let’s fill these positions so that we can move forward and keep this Country safe and 

4 

keep our economy moving on that basis. So before we start loading 

up criticism at any one president on that basis, let’s get the congressional places functioning, and particularly the Senate, with regard to allowing people to be nominated and then have a debate 

and vote on that. 

This is important business that we are talking about here today. 

These are people that are working very hard to try and make the 

policy of the past government and the current government work in 

Afghanistan, and people are putting their lives at risk. We have to 

make sure that we are doing everything we can to keep them safe 

and that the security mechanisms that are put in place actually 

are effective. I have some serious questions about that and I have 

talked to Mr. Thier about it and would be happy to have the conversation with Mr. Trent about just how we are proceeding over 

there and whether or not it is the most efficient way, whether or 

not it is the safest way, and whether or not we are just throwing 

bad money after worst on that. 

I would just ask the Chairman, with unanimous consent, to enter 

my written remarks into the record, then we can proceed. I think 

it would be instructive to hear the witnesses and have an exchange 

of questions. 

Mr. CHAFFETZ. Without objection, so ordered. 

In the spirit of flushing this out, my criticism of the President 

thus far is that in most cases there hasn’t even been a nomination. 

So I agree the stagnation in the Senate is clearly a problem, and 

a bipartisan problem. I don’t know what that other body does, quite 

frankly, all day. They ought to give up the wheelchair races and 

the Wednesday night Bingo and actually do something. 

Mr. TIERNEY. If the Chairman would yield for a second. And, 

therefore, you see the President’s frustration. When he nominates 

people, they end up having to withdraw because they can’t get action. So if the Senate would show a little bit of an attempt here 

to work as a government should work, then I think the whole thing 

would move a little bit more smoothly. 

Mr. CHAFFETZ. And I would concur and work with you. My criticism of the President thus far is the lack of nominations, and we 

will continue to work on that, because I think ultimately our goal 

is the same and I think we are unified in that. We need people 

with authority, confirmed by the Senate, in these active positions. 

Nevertheless, maybe we will have another hearing about that. 

Let’s move forward, though. Members will have seven days to 

submit opening statements for the record. 

We would now like to recognize our panel. Mr. Steven Trent is 

the Acting Special Inspector General for Afghan Reconstruction 

and Mr. Alexander Thier is the Assistant to the Administrator for 

the Office of Afghan and Pakistan Affairs at the U.S. Agency for 

International Development. Both gentlemen have very distinguished careers and backgrounds, very well qualified for their positions. We appreciate their participation here today. 

Pursuant to Committee rules, all witnesses will be sworn in before they testify, so if the gentlemen would please rise and raise 

your right hands. 

5 

Do you solemnly swear or affirm that the testimony you are 

about to give will the truth, the whole truth, and nothing but the 

truth? 

[Witnesses respond in the affirmative.] 

Mr. CHAFFETZ. Thank you. Let the record reflect the witnesses 

answered in the affirmative. 

In order to allow time for discussion, we would like you to limit 

your testimony to five minutes. We will obviously submit your entire opening statement for the record. But at this time we will now 

recognize Mr. Trent for five minutes. 

STATEMENTS OF WITNESSES 

STATEMENT OF STEVEN J. TRENT 

Mr. TRENT. Mr. Chairman, Ranking Member Tierney, and members of the Committee, thank you for inviting me here today to discuss changes in Afghanistan’s private security contractor policies 

and their impact on USAID reconstruction projects and personnel 

in Afghanistan. 

President Karzai’s decision to dissolve private security contractors, or PSCs, and transfer the responsibility to an Afghan stateowned enterprise ultimately affects all U.S. international reconstruction programs. Under a two-year bridging strategy, the new 

Afghan Public Protection Force, known as the APPF, was to assume security responsibilities for all development projects and convoys by March 20th of this year, and for all military construction 

sites and bases a year from now. 

The transition most immediately affects AID, as the largest single funder for development projects in Afghanistan. SIGAR has 

conducted a number of PSC-related audits and is currently conducting an audit of the cost of PSCs used by AID’s implementing 

partners from 2009 through 2011. Earlier this month SIGAR alerted AID to issues we believed warranted immediate consideration in 

light of this transition to the APPF. 

Our primary concerns are over increased costs and the possible 

disruption or termination of reconstruction projects if the APPF 

cannot provide the necessary security. Security costs for reconstruction projects have steadily and significantly increased in recent 

years. Our ongoing audit work indicates that AID-implementing 

partners employing PSCs are currently spending an average of 14 

percent of the value of their contracts on security services. We 

noted one project whose security comprised 42 percent of the overall contract value. 

SIGAR’s analysis found the transition to the APPF may increase 

Afghan labor costs by as much as 25 to 46 percent and expat labor 

costs by as much as 200 percent. In January of this year, AID released an analysis of its implementing partners’ contingency plans 

for the transition. This analysis concluded that if the APPF cannot 

provide necessary security, at least 10 major AID funded projects, 

valued at nearly $900 million, would be at risk of termination. Another 19 projects, worth about $450 million, would need to be modified. 

Although AID disagreed with our alert letter, neither AID nor 

any of the U.S. Government agencies involved in Afghanistan’s reVerDate Aug 31 2005 11:54 Jun 29, 2012 Jkt 000000 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 C:\DOCS\74755.TXT APRIL
6 

construction systematically tracks security costs. No one knows 

how much the transition to the APPF is going to cost, but all agree 

it will cost more. How much more will ultimately depend on the 

APPF’s capacity to provide the full range of security services. The 

true increase in cost may not be known for a year or more as the 

fledgling APPF develops. 

I think it is important to realize that the current rush to establish contracts with the APPF is not the end game. At the moment, 

we have more questions than answers about how the APPF is actually going to operate. The bridging strategy called for developmental assessments of the APPF at the 6, 9, and 12 month marks. 

The six-month assessment, completed in September of 2011, found 

that the APPF was not ready to assume essential PSC responsibilities, such as training, equipping, and deploying guard forces to 

meet contract requirements. The December assessment at the 9 

month mark has not been finalized, and we are now at the 12 

month assessment point. 

SIGAR has suggested that AID determine if funding will be 

available to cover additional security costs for projects that will 

continue after the transition and assess the effect increased security costs will have on project implementation. SIGAR also suggested that AID address increased security costs before deciding to 

make a new award. In other words, AID should carefully and objectively consider whether the expected benefits of a reconstruction 

project outweigh the rising costs of security. 

Security is central to the reconstruction effort and SIGAR will 

continue to closely monitor transition to the APPF, assess transitional outcomes, and keep key policy and decision makers informed 

about the results of our work. 

Thank you, and I am happy to take any questions from the Committee. 

[Prepared statement of Mr. Trent follows:] 

7 


Insert offset folio 1 here 74755.001
8 


Insert offset folio 2 here 74755.002
9 

Mr. CHAFFETZ. Thank you. 

Mr. Thier? 

STATEMENT OF J. ALEXANDER THIER 

Mr. THIER. Thank you, Chairman Chaffetz and Ranking Member 

Tierney. Thanks for the opportunity to discuss the potential impacts of PD 62 upon the safety and security of our development 

programs and personnel in Afghanistan today. 

Over the past 19 years I have worked side-by-side with thousands of American, Afghan, and international public servants in 

Afghanistan, and these dedicated people risk their lives for the 

greater good, and their efforts have improved the lives of millions. 

The safety and security of both USAID staff and implementing 

personnel who work with USAID in Afghanistan are the highest 

priority of our agency and for me personally. Many people working 

with USAID in Afghanistan have sacrificed to support U.S. national security and to help to bring stability to the people of Afghanistan, and I have personally lost many friends. We must not 

forget that these gains come at a great cost. 

For this reason, since the passage of PD 62, the United States 

Government, and our agency in particular, has devoted significant 

energy to working with our partners on this transition required 

under Afghan law. 

USAID’s development assistance to Afghanistan continues to remain a critical component in supporting our core national security 

objectives and our efforts are a critical component of the whole of 

government’s civil military effort to advance these objectives. I also 

believe that our programs there are delivering meaningful results. 

It is really critical to keep in mind the situation that Afghanistan 

faced a decade ago. I first served in Afghanistan nearly four years 

during the civil war, when the country was literally dismantling 

every vestige of a functioning state that it had once had. 

But since 2002 we have supported Afghanistan’s impressive development progress in vital areas, despite operating under some of 

the world’s toughest conditions. This includes enormous progress in 

education, health care, and economic growth. 

Over the last 18 months, USAID has been adjusting our programming and our business model in Afghanistan to ensure that 

our portfolio reflects both the most effective and cost-effective priorities. 

Under PD 62, responsibility for security services in Afghanistan 

for civilian development programs and projects transferred to the 

APPF as of March 20th, 2012. 

USAID has made a concerted effort with its partners to reduce 

overall reliance on PSCs and the need for armed guards in the last 

18 months. Many, in fact most, of our partners do not use armed 

guards and have reduced their need for these services through community engagement and other tested approaches. As of March 1st, 

2012, only 32 of 91 USAID projects required protection by PSCs, 

and of the 59 remaining projects, which represent 75 percent of our 

funding, they do not require armed security and, therefore, will not 

utilize APPF for guards. 

USAID has worked intensively with those partners who do require APPF with the NATO training mission in Afghanistan to 

10 

manage this transaction without sacrificing security and to ensure 

that our critical efforts to stabilize Afghanistan continue. The transition model is a two-part process. First, partners contract with the 

APPF for services and their PSC guards convert to APPF guards; 

same guards, different uniforms. Second, the partner may choose 

to contract with a risk management company to provide security, 

advice, and consulting. 

In recent months, particularly after the September report that 

Mr. Trent has discussed, the APPF has significantly improved its 

capabilities and many of the necessary milestones for the APPF 

transition have been reached. Of the 32 USAID projects that have 

indicated that they will contract with the APPF, as of this week, 

23 have successfully contracted and the remaining 9 projects are at 

various levels of negotiation. The APPF is already operational in 

several key sites and interim licenses granted by the Ministry of 

Interior have provided additional time for remaining programs to 

find a solution to their security requirements. Enormous credit 

must be given to NATO team, who worked tirelessly with the Afghan government and USAID and our partners. 

In addition to addressing security concerns, USAID has also been 

carefully monitoring the costs associated with this transition. We 

have conducted an assessment of security costs for 15 of the 23 

projects that have converted from PSCs to APPF and RMC contracts. This initial assessment indicates that overall average costs 

based on a side-by-side comparison, including all costs associated 

with security for those projects, is 16 percent higher under the 

APPF and RMC model. As the process of transition to APPF proceeds, we will continue to monitor costs and seek opportunities to 

reduce overall expenses without sacrificing security. 

We are committed to a continued joint effort working closely with 

the NATO mission, Congress, the Afghan government, our Inspectors General, both internal and SIGAR, and international partners 

to sustain and improve on the development investments made during the past decade. 

Thanks for the opportunity to discuss this critical issue, and I 

look forward to your questions and advice. 

[Prepared statement of Mr. Thier follows:] 

11 


Insert offset folio 3 here 74755.003
12 


Insert offset folio 4 here 74755.004
13 


Insert offset folio 5 here 74755.005
14 


Insert offset folio 6 here 74755.006
15 

Mr. CHAFFETZ. Thank you both. I will now recognize myself for 

five minutes. 

I would ask unanimous consent to insert into the record a written statement from the Professional Services Council. They have 

350-plus members and I would like to insert that into the record. 

Without objection, so ordered. 

Mr. Thier, to simplify this, to read through this letter from 

USAID that came back from Mr. Yamashita, who is the Mission 

Director there for USAID, there isn’t going to be an increased safety concern, it is not going to cost more money, you are not going 

to have projects pulling out. Is that an oversimplification? That is 

in essence what they are saying, is pretty much don’t worry about 

it, nothing is going to change. 

Mr. THIER. Let me say that we are concerned, as we have been 

since day one and, in fact, before PD 62, about all of these issues 

because they are constantly evolving. What the mission response 

and my testimony represents is the best information that we have 

as of today, because it has been a very rapidly evolving situation. 

We were, indeed, six months ago very concerned about the potential that some of our important development programs may shut 

down as a result of this transition not succeeding. What we have 

seen, in fact, is that of the 32 projects that say that they require 

security, 23 of them have successfully contracted. 

Mr. CHAFFETZ. I understand that. The question is, is it going to 

cost more money? 

Mr. THIER. I think there are three issues. One is whether we are 

now concerned that projects are going to shut down on the immediate time frame, and my response to that is that our current indications as of today are that none of our projects are going to shut 

down. 

Mr. CHAFFETZ. Okay, so none are going to terminate. 

Mr. THIER. Right. 

Mr. CHAFFETZ. Nobody is going to leave. The risk that Mr. Trent 

shows up there, which you look at the worst case scenario, that is 

what they are supposed to do, is highlight the worst case scenario. 

So you are saying it is going to be zero and the Inspector is telling 

us that there could be up to $899 million worth of projects that are 

abandoned. 

Mr. THIER. I certainly can’t say that it is going to be zero. What 

I know is that of the projects that we were concerned about, none 

of them are now indicating a likelihood of shutting down in the 

near term. Now, I certainly can’t say that that won’t be the case 

in the future, but we—— 

Mr. CHAFFETZ. That is what Mr. Yamashita said. He said that 

none of them today are saying—said already been analyzing and 

preparing the transition for years and not one partner has stated 

that the organization would withdraw from Afghanistan because of 

the transition to the APPF. 

Mr. THIER. And that is exactly right. As of today, not a single 

one of our partners is planning to shut down—— 

Mr. CHAFFETZ. Safety is an obviously huge concern. Since 2003, 

USAID partners and personnel, there have been 1,000 people that 

have either been killed or injured; roughly just over a third of those 

people have been killed. One of the biggest concerns is safety. You 

16 

don’t see any disruption in the safety of what these people are 

doing? Because, as you rightly point out, these people are putting 

their lives on the line in the most difficult of circumstances. You 

don’t see any decrease in the safety of these people that are out 

there working for us? 

Mr. Thier Thus far we do not have indications. And this is obviously from our partners who are going through this process and 

making these contracts. We do not have any indication that there 

is any decrease or increase in security. And there are really two 

critical facts here: one, that our reliance on armed guards has dramatically decreased in the last 18 months, in part because we 

wanted to decrease our need or necessity for the APPF and PSCs 

for both cost reasons and security reasons leading up to this transition. 

Of those remaining who still feel the need for these services, they 

have gone forward. They are the ones who are responsible for the 

safety and security of their employees, and I talk to these people 

very day. They would not do this unless they were confident, as of 

today, that the safety and security of their employees was going to 

be okay under this model. 

Now, that may change, but at the moment they are all saying we 

are willing to make this transition because we feel comfortable 

with the way things have worked out. 

Mr. CHAFFETZ. And the cost? You don’t anticipate this is going 

to have an increase in cost? 

Mr. THIER. At the moment, we are trying to look at this very intensively, and we ordered this side-by-side comparison of 15 

projects, and what our implementing partners have said, based on 

their current contracts and their plans, that we see a 16 percent 

cost increase. 

Now, I can’t guarantee that some projects won’t be more; others 

won’t be less. We are also continuing to try to get some of our 

projects off of this entirely, which is, frankly, a much greater degree of cost savings than the incremental cost of the transition. But 

our analysis, which is looking at the actual contracts that have 

been signed and what our partners say they need today to secure 

their sites has a roughly 16 percent increase over 15 out of 23 contracts that have been signed. 

Mr. CHAFFETZ. This would be the 20 percent profit margin that 

the President is wanting to put in who knows what bank account? 

Mr. THIER. Well, it is split between several contracts. And whether the increase is coming from the risk management company side 

of the house or the APPF side of the house, I would have to let you 

know; I don’t have that breakdown. 

Mr. CHAFFETZ. Mr. Trent, I obviously want to give you time to 

respond to this, but I will come back to you. But in the essence of 

time, let me recognize the Ranking Member for five minutes. 

Mr. TIERNEY. Thank you. 

So this question is for both of you. Take it in whichever order 

you want. My understanding is for those remaining projects that 

require security, the deal is that now they are going to have APPF 

forces there, who I don’t know that we have a great deal of confidence in their abilities on that; there has always been trouble 

with the training of the security forces of Afghanistan. 

17 

So they are going to come in, and then for those that are still 

having trouble deciding how they are going to operate in this system, we are going to be able to have management risk companies, 

who are essentially going to be the same people that used to be 

contracting for the job to now layer on and oversee them. Then we 

are going to pay them on a cost-plus basis and add on the 20 percent profit. 

So if I work this calculation all the way out, is the ISAF forces, 

NATO and the United States and others, contribute money to Afghanistan, Afghanistan uses all of that money to try to build a security force, they then take the funded security force and assign it 

to these projects, which are paid for by the United States and other 

countries’ money for the development of that; charge them for the 

security by the people who are paid for by these people on a per 

person basis on cost-plus; and then manage them with people that 

used to be there without further management or whatever, one less 

layer, and pay for them and then add a 20 percent profit to it. Is 

that about right, Mr. Trent? 

Mr. TRENT. Congressman, we have paid a large amount of money 

through MLI to buy weapons and various equipment. Your characterization, I think, has certainly a consideration. I think that is 

not—I can’t say it is an unfair way to look at it. I would be interested in AID’s response to that. 

Mr. TIERNEY. So would I. 

Mr. Thier? 

Mr. THIER. Thank you. So let me just clarify one thing about I 

think the way this is functioning. The guards who were working for 

the private security contractors on March 19th changed their uniforms and go to work for the APPF. So this is not a—— 

Mr. TIERNEY. Without any further training. 

Mr. THIER.—not a separate guard force. And in most cases, I 

think in all cases thus far, the same guards who they were paying 

for for their private security contractors have now become APPF 

guards. So literally a change of uniform on that day. So the same 

people who they relied on and paid and trained to fulfill that role 

are the same people who are guarding them on March 21st, but 

wearing the APPF uniform. 

At the same time a number of private security contractors, and 

perhaps other companies, have signed up to become risk management consultants. 

Mr. TIERNEY. These are the same people that used to have what 

now are the APPF people when they had the old uniforms. These 

are the people that managed them—— 

Mr. THIER. Exactly. The old model was essentially some expatriate managers with Afghan guards, and that has now been split 

into two things: the Afghan guards now work for the APPF and the 

expatriates, if they are hired, work for these risk management companies, advising the firm on security. 

So what was previously one contract has now become two different contracts, one for the Afghan guards, one for the expatriate 

guards. And that is voluntary. The implementing partners don’t 

have to sign up with the APPF, but if they want those services 

they do. They don’t have to sign up with the risk management company, but if they want those services they do. 

18 

So that is the basic model of how this is meant to function. 

It is true that the international community has supported the 

standing up of a guard force to make this transition. It is our goal 

with the APPF, as with many of the other Afghan entities, to wean 

them off of—— 

Mr. TIERNEY. Let me just focus us back. So, so far we have taken 

one entity for security, made it into two. It is already funded by 

the United States and others on that basis. So you have just now 

broken it into two and you are now paying them on a cost per person basis; you break it down for the gun, for the uniform, whatever 

expenses are there, right? 

Mr. THIER. I would have to look at the contract to see how it is 

actually worded in terms of the costs, so I am sorry I don’t have 

that level of specificity. 

Mr. TIERNEY. But there is going to be a 20 percent profit margin 

allowed on those contracts, right? 

Mr. THIER. My understanding of the 20 percent is that it is not 

a profit in the—this is a state-owned enterprise. It is not a profit 

in the sense that this is something that is going to be used as profit 

to be distributed to individuals. 

Mr. TIERNEY. You say that. Given the history of corruption and 

ineptitude in this country, you think that adding additional layers 

and opportunities and another 20 percent is not an opportunity for 

further graft and corruption and driving a wedge between people 

in that country and their government? 

Mr. THIER. What is critical in this regard is that this entity, like 

all of the other Afghan entities that we are supporting, needs to 

have very rigorous accounting and oversight mechanisms to ensure 

that that doesn’t happen. 

Mr. TIERNEY. Which brings me to the next problem. You fairly 

well admit that you don’t have great vision into any of these contracts, particularly when it comes to security. Is that going to 

change? Are you telling us that now you are going to start looking 

at these security contracts and tracking the money? 

Mr. THIER. Our people review every contract. I am just saying 

that I specifically don’t know the mechanism that you are asking 

about, about whether it is costed out by the individual or in a different way. But certainly our contracting officers are required to review these contracts and have approved every single one. 

Mr. TIERNEY. I want to come back and revisit this, but I know 

my time is up. 

Mr. CHAFFETZ. Well, I just want to follow up on that line of questioning here. It is my understanding that USAID issued a blanket 

waiver for sole source subcontracts between U.S. companies and 

the APPF. How does that further your ability to look into the 

money that is going out? 

I would also say that SIGAR has issued a table here. I don’t 

know if you had a chance to look at Table 1, which basically outlines things, for instance, such as martyr contribution, pension payments. They even have a line item of profit, 20 percent of above 

total. So if you could look at that, that is on page 4 of what they 

issued to you. 

Where do you take exception with what they put out there? 

Mr. THIER. Maybe somebody can hand me the—— 

19 

Mr. CHAFFETZ. I will give you a moment to highlight that. 

Let me allow Mr. Trent to explain this Table 1, because if you 

are summarily dismissing the report in its entirety, they are pretty 

detailed and specific about food stipend and training and martyr 

contribution, hazard pay, to be determined by the customer, what 

the AK–47 rifle costs. Where would USAID find fault in this table? 

Go ahead, Mr. Trent, if you could explain. I want to make sure 

Mr. Thier has an chance to catch up to it. 

Mr. TRENT. This is the APPF fee schedule off of the APPF 

website that was published, that we used to calculate our estimation of increased cost. All of these items, I think there are 14 

various categories from basic salary to medicine, etcetera, can be 

lumped into what is referred to in the industry as a burden rate. 

We calculated a burden rate for current PSC operations under 

current AID implementing partners’ contracts, from which we 

pulled a number of invoices for the year 2011. We determined the 

burden rate. We took that basic salary, average salary rate and we 

punched it into the APPF fee schedule, which is the table that is 

under discussion here. And that is how we arrived at our estimation that costs were going to increase between 25 and 46 percent. 

I have no information that costs are other than what are published on the APPF website. 

Mr. CHAFFETZ. Mr. Thier? 

Mr. THIER. Thanks. So as to these costs, I don’t have disagreement, per se, with—— 

Mr. CHAFFETZ. But the administrator, the person on the ground, 

Mr. Yamashita, he summarily dismissed it, said it was inaccurate. 

Mr. THIER. Well, I think what he was concerned about was the 

conclusion of the estimation of cost increases that were used in this 

report versus our own work, because, as I said, we actually looked 

at 15 different contracts side-by-side to capture every single aspect 

of the security costs that would be incurred, and we came up with 

a far lower figure. And in talking to our implementing partners, we 

did not come to the same conclusion about the need to triple the 

number of expatriates. So I don’t think he was disagreeing with the 

table; I think he was just disagreeing with the conclusion about the 

estimated cost increases when you compare apples to apples. 

Mr. CHAFFETZ. That is not exactly what he said. He said he disagreed with the report in its entirety, which would lead me to believe he disagrees with this table. 

But, Mr. Trent, do you care to respond to that? 

Mr. TRENT. I would like to say that the—and this goes a bit back 

to a prior question, but the increased costs that we foresee are 

not—security costs do not hinge on a signed contract, and having 

contracts now signed or even the initial lay-down of contracts sideby-side. The true cost of security is going to hinge on APPF’s ability 

to deliver security services as we move forward passed this contract 

signing phase. That is where we have serious concerns over APPF’s 

capacity. 

The September 11th assessment was damning, if you will, on 

APPF, and as I understand, I have heard that there has been significant progress made since then. We are concerned that the December 9 month assessment has not been completed or published, 

20 

which I think would have given certainly SIGAR a better insight 

as to what progress had been made between September and December. We are now at the 12 month assessment point, and we 

look forward to seeing the documentation on increases of APPF capacity between September and the next assessment that comes out, 

if and when that is finalized and published. 

So I think it is important to understand that expatriate costs 

that we estimate here are not, we did not imagine that the RMCs 

and the IPs were going to go out on March 20th and hire additional 

expat staff. As APPF capacity is either built or isn’t built to meet 

the needs of the implementing partners’ adequate security, we have 

the estimations from OSAC and PSC, as well as a number of implementing partners, they will hire more expats to fill the security 

gaps that the APPF cannot fill, if they are not able to develop the 

capacity; and that is where we see the increase in expat costs coming in the next year. 

Mr. CHAFFETZ. Mr. Thier? 

Mr. THIER. No, I just wanted to respond because I very, very 

strongly agree with Mr. Trent and just want to make clear that, 

first of all, we do not know what is going to happen in months from 

now, and I don’t want you to have—— 

Mr. CHAFFETZ. Okay, wait, wait, wait. Let’s examine that comment because what the Inspector General is saying, they are foreshadowing what might happen in the future, and you summarily 

dismissed it; no, absolutely none of that is going to happen. No increased costs; there is not going to be increased safety costs; nobody is going to leave the country. Don’t worry about it. You guys 

are flat out wrong. 

You are very nice gentlemen, you are very nice to Mr. Trent 

here, but don’t sit here and tell me that you agree with him when 

the person on the ground said we totally disagree with you and everything that you wrote. 

Mr. THIER. Because I think we are talking about very different 

things, and this, I think, is a critical point to make. We are analyzing the situation, a rapidly evolving situation on the ground as 

it exists today. We are talking to our partners every day. Literally, 

I had to change my testimony because a new contract was signed 

overnight. So the situation is evolving. 

What I can tell you is what we know right now. 

Mr. CHAFFETZ. But isn’t what the Special Inspector here doing 

is looking into the future and giving a warning shot, saying, look, 

beware? Isn’t that fair? That is why I am just stunned that you 

would just summarily dismiss all of this. But you are saying we 

don’t know what is going to happen. 

Mr. THIER. We don’t. We can’t know what is going to happen. I 

don’t think any of us can say that we know what is going to happen. We have very elaborate contingency plans that try to think 

through all of these issues. I think that what I am trying to clarify 

here is that we don’t know whether costs will go up; we don’t know 

whether costs will go down. 

Mr. CHAFFETZ. But you just—— 

Mr. THIER. We don’t know whether the need for guards will go 

up or whether the need for guards will go down. What we are seeing—— 

21 

Mr. CHAFFETZ. So then why is the Inspector General wrong? 

Mr. THIER. I think that all—he is not wrong. What we found—— 

Mr. CHAFFETZ. That is not what was written. 

Mr. THIER. All we found is that the conclusions in this report we 

do not feel are supported by the data that we currently have in 

hand, and that is the best that we can do, is to look at what we 

have now and make a determination about what we think is happening. 

It is really critical because I think what we all have to understand here is that six months ago, when we saw this report, we all 

had very grave concerns about what was going on, and we are 

working literally on a day-to-day and hour-to-hour basis to make 

this transition as successful as possible and to reduce the costs not 

only for these contracts, but over all that we incur for security in 

Afghanistan so we can spend more of the taxpayers’ money on the 

things that we are trying to accomplish there. 

Mr. CHAFFETZ. Okay, I am sorry. I have gone way over my time. 

I recognize the gentleman from Massachusetts. 

Mr. TIERNEY. Thank you. 

You know, we have real issues with a lot of things that are happening over there in terms of insight into contracts, and particularly subcontracts and the whole contracting process. In the trucking contracts there was no insight at all to the subcontracts; they 

had no idea who were the drivers, no idea who was providing security. No oversight on that. 

On the oil delivery, the Department of Defense and Department 

of State couldn’t even tell us who the company was. They knew the 

name of the corporation. They had no idea who the principals were 

or where they were organized. No insight into that contract. The 

Defense Logistics Agency and the food contract now arguing over 

almost $1 billion or $2 billion of costs because they drew up what 

appears to be a questionable contract and their lack of oversight in 

coming to terms even over a multi-year period on that. 

This is a concern here. You have very little insight into these 

contracts and now somebody comes along and says this is what we 

foresee could happen. It seems to me you plan for the worst. You 

hope for the best, but you plan for the worst. I think Mr. Trent has 

given you the worst case scenario of what might happen here. You 

are acknowledging that you don’t know, it might happen. So are 

you planning for what Mr. Trent has said may well happen, or are 

you just hoping for the best and not planning for the worst? 

Mr. THIER. No. We are planning for the worst. We have—— 

Mr. TIERNEY. How? 

Mr. THIER.—with our implementing partners, detailed contingency plans about what happens if, what happens. We did this all 

the way through this transition process and we continue to put 

those in place. 

Mr. TIERNEY. Well, what if all 32 remaining companies that need 

security end up needing the APPF, find out that that is not really 

totally up to speed, end up having to hire risk companies on top 

of that and then paying the 20 percent on that? What is the cost 

increase when all that happens? 

Mr. THIER. We don’t know the answer to that question. Literally 

on a project by project basis we require contingency plans to think 

22 

through all of these eventualities. Some of those projects may 

choose to increase their RMCs; some of them may choose to operate 

in a different fashion. 

Mr. TIERNEY. But as you do that, at some point you have that 

information and you aggregate it, and you turn around and you say 

this is the worst case scenario by our best analysis. I suggest that 

that is not a bad plan right now, to go and do that. 

Mr. Trent, when you talked to people and you got your projections, I assume you went and talked to some of Mr. Thier’s partners, the people that he deals with on the ground, right? 

Mr. TRENT. That is correct, sir. 

Mr. TIERNEY. It would be the same people, Mr. Thier, that you 

talk to. 

Mr. THIER. Absolutely. 

Mr. TIERNEY. So, Mr. Trent, you got one story and, Mr. Thier, 

you got another? Because Mr. Trent is saying that when he talked 

to them they saw some issues, and you are saying that you had a 

nice talk with them and they got everything planned out and everything is okay. 

So, Mr. Trent, tell me a little bit about how your conversation 

with those people went. 

Mr. TRENT. Well, Congressman, we met with six of AID’s implementing partners. One of them indicated to us very clearly that 

they would be withdrawing if security services could to be provided. 

Let me, if I may, say Dr. Yamashita’s response to us, there are two 

tipping points here, the first being March 20th and contracts to be 

signed and the risk of reconstruction projects, disruption or termination on the 21st and people are walking away from jobs. 

I think that Dr. Yamashita’s letter to us, one, exhibits some of 

the frustration that is ongoing in this process by all people involved 

and, two, I think it is focused more on March 20th and that everything is going to be all right on March 20th. And from what I understand, there are a number of contingency plans in place with existing guards with USAID on March 20th. There is a flurry of contracts, more being signed every day. 

But the implementing partners, OSAC, PSC, have indicated to us 

that it is the ability of the APPF to deliver the security that is ultimately going to be the tipping point on the risk that development 

of projects face, and that the IP, implementing partners, face. So 

I think there is some explanation for the tone and tenor of the AID 

response to SIGAR in respect of focusing on the 20th and all the 

efforts that were underway to sign contracts so that everything was 

fine on the 21st, everything kept going on the 21st. 

But the bigger issue here, from our perspective, from SIGAR’s 

perspective, is the capacity of the APPF to function, and we are 

concerned about that in light of the general ministerial capacity in 

Afghanistan, and that we were trying to stand up a 25,000 man organization here in a relatively one, two year period, and we find 

that there are just numerous issues involved with that that are 

going to have real risk impact on developmental projects as we go 

forward. 

Mr. TIERNEY. Mr. Chairman, just as an aside, I might suggest 

that would be a great hearing for us to have. We have had hearings in the past on capacity of the security in Afghanistan, but this 

23 

specific aspect of maybe getting in an international crisis group or 

some other third party analysis of that and our own folks and see 

where we are at on that, because I agree with you, this is going 

to be a huge determinative what happens going forward. 

Let me just get back, if I can, Mr. Thier, to the 20 percent issue. 

For some reason it is sticking in my craw that we particularly fund 

the standing up of these security folks and then we pay for a per 

person basis. And even though it is not a supposedly profit-oriented 

group, I assume the ones making the profit are going to be the socalled management risk people; they are going to make a pretty 

good profit. But then why are we paying 20 percent on top of that? 

And how do we explain that to the taxpayers? We just keep circling 

our money back and at some point somebody is taking it out, but 

it ain’t us. 

Mr. THIER. To put it simply, my understanding of the 20 percent 

is to make the APPF self-sufficient, it is not to distribute profit to 

any individual that is not part of the charter; it is to make the organization able to carry on its business operations in the future. 

Mr. TIERNEY. What is the per person cost for if not that? 

It is broken down to how many different things, Mr. Trent, twenty something? 

Mr. TRENT. Fifteen items. 

Mr. TIERNEY. Fifteen items. And they are paying for each single 

thing down there to make themselves sufficient. So why the 20 percent on top of that? 

Mr. THIER. Again, my best understanding of it is that what they 

are trying to do is to make this a self-sufficient entity. Part of what 

this APPF is designed to do, frankly, is to protect what is hopefully 

going to be a growing private sector in Afghanistan as well, so they 

were looking at the standing up of this new entity as something 

that would be around for a number of years and would need to be 

sustaining so that they could provide those security services as 

they continued to come online. Again, it was not to provide profit 

to any individual. 

Mr. TIERNEY. I don’t buy it, but I hear your explanation; I thank 

you for it. So when you talk about some of these implementing 

partners saying that they are no longer going to need security, 

what are they doing differently that allows them to negate that 

cost? 

Mr. THIER. Several things have been done. Some projects that required significant amounts of private security have gone away. For 

instance, we are doing much less in terms of things like road building, because we feel we have built enough roads and the roads that 

are built need to be maintained. So that has diminished the need. 

Some projects have gone to more of a community engagement approach, and that is combined with the fact that we have tried to 

cut out subcontracting levels, something that you raised before, and 

often contract directly with the Afghan implementing partners, 

who the for-profit companies were subcontracting with. And by cutting out that layer and having more Afghans doing the direct implementation and having a greater degree of community engagement, that has also required a lesser amount of guards. 

Overall, in the last 18 months, there has been a dramatic overall 

reduction in our need for security, and given how these costs have 

24 

risen over the last few years, that savings is enormous, because 

that is money that is now going directly to projects instead of to 

the security to protect them. 

Mr. TIERNEY. What is AID’s plan to get the remaining 32 onto 

that notion or that idea that they won’t need security either? In 

other words, putting it all down into the local people’s capacity to 

build their own roads, take care of their own water treatment facilities, do whatever other projects you have, and then being so invested maybe they won’t find their neighbors coming in and 

trashing them when they are working on them, or at least they will 

protect against that. 

Mr. THIER. I think in some areas it is going to remain necessary 

to have some of those projects with that sort of protection, both because the expatriate managers of programs in Kabul and other 

urban centers will continue to require that level of surety. In some 

cases it is equipment that needs to be protected. 

So there will continue to be some small, I think, but diminishing 

demand for those services. We also continue to work in extremely 

dangerous locations side-by-side with the military, and particularly 

in those locations there is often a need for security and, frankly—— 

Mr. TIERNEY. What is the military for? 

Mr. THIER. Well, our military is there to perform a different mission, and we don’t want them performing the mission of protecting 

our AID programs, so they can do the job that they were sent to 

Afghanistan to perform. 

Mr. CHAFFETZ. There was a 90-day extension granted by the Afghan government. Why was that? 

Mr. THIER. As we were all working madly to reach the March 

20th deadline successfully, it was evident that all of the projects 

would not have contracts with either the APPF or the RMCs in 

time, so we negotiated with the Ministry of Interior to grant licenses anywhere from 30 to 60 to 90 days for those companies that 

had entered into the negotiation or contracting process to ensure 

that there were no disruptions in that process, and they granted 

those licenses just days before the transition, and that has opened 

up the space for the remaining companies to enter into those contracts without having any disruption to the security that they are 

provided. 

Mr. CHAFFETZ. Mr. Trent, do you care to add anything to that? 

Mr. TRENT. I would like to add one thing to Congressman 

Tierney’s comment on the profit. 

Mr. CHAFFETZ. Sure. 

Mr. TRENT. And certainly SIGAR doesn’t have any opinion on 

profit amounts; 20 percent, 5 percent, 8 percent, 100 percent, we 

don’t have a position on that. But I would point out that in the 

APPF schedule of fees there is an administrative and overhead cost 

which is 65 percent of base salary of an Afghan guard. One would 

think might serve to make the APPF a stand alone agency with 

those administrative costs. And then we have profit on top of that. 

But that is just to point out; I make no judgment on that. 

I would also like to mention that we are conducting, this alert 

letter originated out of a large private security contractor audit of 

AID implementing partners, private security contracts, which is 

still ongoing. But during that audit we looked at 35 of the largest 

25 

AID projects conducted in Afghanistan between 2009 and 2011, 

and those 35 projects accounted for 70 percent of all funds disbursed by USAID during that time period; and of those 35 projects, 

29 of them all had security services, most through PSCs and one 

through their own internal security. So during that time frame 

SIGAR’s observation was that all the large USAID projects are associated, or were during that three-year time frame, associated 

with security up until December of this year. 

Mr. CHAFFETZ. I recognize the gentleman from Massachusetts. 

Mr. TIERNEY. Mr. Trent, let me just ask you this. When this report was written, and now after this hearing, what ideally would 

be the result that you would hope would come from this? 

Mr. TRENT. Well, the alert letter was sent just to communicate 

to AID our concerns over what we see as a clear possibility for increased costs. We would hope that AID would take those considerations as they move forward and at some point here security costs 

and overhead charges, if security can be termed to be part of the 

overall overhead for a project or contract, at some point we would 

want all implementing agencies to be considering the perceived 

benefit from projects against the overhead of what it costs to administer and implement the project; and with security costs going 

up, we hope that AID, as well as other implementing partners, will 

be factoring that in to their decisions. 

When we go to conduct an audit on a particular program, and I 

am being somewhat hypothetical here, and we see overhead 

charges at 70 percent of the cost, we make no comment on whether 

that is appropriate or not, but what we would like to see is a reasoned determination from the outset of that project that the risks 

and the realization that the overhead exceeds the money going into 

the project, that there was a policy decision made knowingly, objectively made to carry out the project notwithstanding the security 

costs or the overhead costs. From an audit perspective, we would 

like to see that. 

So that is all we are asking AID to do here, is to consider those 

costs and plan for them. 

Mr. TIERNEY. Mr. Thier, can we accommodate that? 

Mr. THIER. Absolutely. I mean, as I think you know, the first 

time we met, when I was a private citizen, I have been writing 

about and concerned about for years rule of law in Afghanistan and 

the costs of our reconstruction effort, and one of the pleasures of 

having this opportunity to serve in the government has been to try 

and bring these practices to bear on what we are doing. I think 

that we have made some great gains in the accountability of our 

program in Afghanistan in the last 18 months, and we will continue to do that. 

Let me also be clear. We welcome the SIGAR’s role. We welcome 

our IG’s role. We have worked with them very effectively over the 

last year and a half, and we will continue to do so. 

Mr. TIERNEY. Well, thank you. What I really want to know, and 

I hope what this Committee wants to know, is are you going to 

make the kind of analysis that Mr. Trent just described, and give 

us a feeling of whether or not you have considered all those things 

and what the benefit is particularly when the costs outweigh, the 

management costs and the overhead outweigh the project costs 

26 

itself, so that this Committee can then look to you to find out why 

we are proceeding with a particular project if that is the case. So 

if you would do that for us. 

If you would also project out those 32 projects that are going on 

in the worst case scenario for us, just in case. Give us that reasonably soon so we have an idea on that. And, lastly—and you can do 

those things? 

Mr. THIER. Absolutely. 

Mr. TIERNEY. Thank you. And the last thing is why has the assessment or the progress of the APPF not been released? 

Mr. THIER. I am afraid I can’t speak to that. The December report, I have never seen that report and I can’t say why it has not 

been released. 

Mr. TIERNEY. It must concern you? 

Mr. THIER. I understand that it is the U.S. Government, the Afghan government, and ISAF that jointly conduct that, and I honestly have no idea what is in that report or why—— 

Mr. TIERNEY. But it should weigh heavily on you because that is 

such a large part of your analysis going forward, I would think. 

Have you made any requests for it or asked to see it? 

Mr. THIER. I have not personally. What I would add is that, as 

Mr. Trent and I both acknowledged, the situation has evolved so 

substantially in the past few months that I don’t know whether the 

conclusions of that report would still be relevant, but it would certainly be interesting to see. 

Mr. TIERNEY. Thank you, Mr. Chairman. I hope that we would 

press for it as well and move on from there. 

Thank you both gentlemen. 

Mr. CHAFFETZ. I just want to give each of you an opportunity. Is 

there anything that you would like to add as we conclude here? We 

will start with Mr. Thier and then Mr. Trent. 

Mr. THIER. Thank you. 

Mr. CHAFFETZ. Mr. Trent? 

Mr. TRENT. I would just point out that the next assessment, Congressman Tierney, is due out this month, the 12-month assessment, and I think we are all looking forward to seeing that one, 

and we certainly hope that that is finalized and published here in 

the next month or two. 

Mr. CHAFFETZ. I want to thank both of you for your commitment 

to this Country and the work that you do. It is difficult. 

I need to tell you that in this particular situation I do, again, 

find it stunning, the tone of Mr. Yamashita’s genera comments. I 

think that I am concerned when there is such a disparity between 

the two entities. I think everybody is probably trying to achieve the 

same goal, but personally I am offended by the direction that Afghanistan is going. 

When we talk about same guards, different uniforms, and then 

we are adding on profit and overhead, that is their words, not my 

words, profit and overhead, we are going to spend more for exactly 

the same thing in order to pad somebody’s bank account. I hope we 

don’t wake up one day and just find all this money sitting over in 

Dubai or something like that, which I am afraid is really what we 

are ultimately doing. 

27 

I don’t think we have visibility in what has happened in the past. 

I don’t think we have visibility in what is moving forward in the 

future. In fact, I think this nation-building exercise is a huge debacle. I feel for the people who are pouring their hearts and souls and 

lives into trying to help what is happening here in Afghanistan, 

but we need more exposure and oversight. 

I don’t expect somebody with a pencil and a pad of paper standing next to each person, but we are moving, in my estimation, in 

the wrong direction. We pay for everything. The American taxpayers have poured out their pocketbooks time and time and time 

again, and for the Afghan government to come in and say, well, 

now we need a profit, that is a deep concern. 

Mr. TIERNEY. Mr. Chairman, might I just jointly ask before any 

of those contracts get signed or we get committed to them with a 

20 percent profit, can we get from your folks an explanation, a 

heads up that it is going to happen and a full explanation of why 

they think it is necessary to put that amount in there, and then 

have a conversation about that? I find it just incredibly disturbing 

that that is going on and I would like to think that we can get out 

in front of this. 

Mr. CHAFFETZ. And to add on to those comments, my concern is 

that USAID has just issued unilateral waivers. They can go sign 

these contracts and, I guess maybe that is the recognition that 

there is no other option. The Afghan government is saying you 

have no choice, you have to do this. I think we are being pushed 

around and I don’t think the State Department is doing enough to 

stand up for what we are doing. We are paying for everything; we 

should be able to provide the security that is needed there. 

Mr. Thier, go ahead. 

Mr. THIER. So just to answer the waiver question, the purpose 

of a sole source waiver, if you have no other source, and in this 

case the sovereign Afghan government has required this, so you are 

exactly correct, Mr. Chairman, the only reason for that waiver, it 

does not diminish any kind of oversight or anything like that, it 

just says that there is not a competition because this sole source 

is in fact required. 

And just to respond, Representative Tierney, just to be clear, 

there have been 23 contracts signed already, and those are in operation. 

Mr. TIERNEY. Shame on us. Shame on us, because there is an option: You tell Mr. Karzai that everything stops unless he stops this 

sort of thing, I don’t want to use a word that will get taken out 

of context, but when you put it out there that you can’t do this unless you pay us another 20 percent on top of all the other costs or 

whatever, enough is enough. 

I have watched his act for a long time and I know he is a man 

trying to do a job and things of that nature, but there is enough 

questionability going on about the nature of transactions in that 

country and who is making the profit and where the money is 

going, not being able to be traced or whatever, that somebody in 

our chain should have stood up and said it may be a sole source, 

but there is always one last option, we just don’t do it. 

Just like you won’t put the APPF out there; we won’t put our 

people at risk if those are the terms. And instead we rolled over 

28 

again. So there are remaining contracts. Maybe we ought to think 

about watching them a little bit closer. 

Mr. CHAFFETZ. Can USAID provide us an explanation, at least 

try to extract from the Afghan government why there is a 65 percent overhead on the cost of the personnel plus the 20 percent profit? I mean, this is just taken from their website. So I think it does 

demand an explanation and you are in the best position to get that 

explanation. 

Mr. THIER. Absolutely. Your concern about the 20 percent is loud 

and clear, and I will make sure that we get a more comprehensive 

explanation of exactly what those funds are intended for. 

Mr. CHAFFETZ. And I guess I would ask that SIGAR watch that 

closely. We don’t want to just see them change the name, suddenly 

you see overhead go to 85 percent and suddenly they get rid of that 

word profit. I think they are probably being as honest as they can 

here. I think they are saying, yes, this is the Dubai account and 

we will go ahead and just transfer that right into the Karzai family 

account. So please keep your eye on that; it is sickening, this whole 

thing. 

With that, this Committee stands adjourned. 

[Whereupon, at 9:33 a.m., the subcommittee was adjourned.] 

29 


Insert offset folio 7 here 74755.007
30 


Insert offset folio 8 here 74755.008
31 


Insert offset folio 9 here 74755.009
32 


Insert offset folio 10 here 74755.010
33 


Insert offset folio 11 here 74755.011
34 


Insert offset folio 12 here 74755.012
35 


Insert offset folio 13 here 74755.013
36 


Insert offset folio 14 here 74755.014
37 


Insert offset folio 15 here 74755.015
38 


Insert offset folio 16 here 74755.016
39 


Insert offset folio 17 here 74755.017
40 


Insert offset folio 18 here 74755.018
41 


Insert offset folio 19 here 74755.019
42 


Insert offset folio 20 here 74755.020
43 


Insert offset folio 21 here 74755.021
44 


Insert offset folio 22 here 74755.022
45 


Insert offset folio 23 here 74755.023
46 


Insert offset folio 24 here 74755.024
47 


Insert offset folio 25 here 74755.025
48 


Insert offset folio 26 here 74755.026
49 


Insert offset folio 27 here 74755.027
50 


Insert offset folio 28 here 74755.028
51 


Insert offset folio 29 here 74755.029
52 


Insert offset folio 30 here 74755.030
53 

Æ 


Insert offset folio 31 here 74755.031