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75–272 PDF 2012

S. Hrg. 112–659 

THE COMPREHENSIVE CONTINGENCY 

CONTRACTING REFORM ACT OF 2012 (S. 2139) 

HEARING 

BEFORE THE

AD HOC SUBCOMMITTEE ON CONTRACTING 

OVERSIGHT 

OF THE

COMMITTEE ON 

HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED TWELFTH CONGRESS 

SECOND SESSION 

APRIL 17, 2012 

Available via http://www.fdsys.gov 

Printed for the use of the Committee on Homeland Security 

and Governmental Affairs 

( 

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(II) 

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

JOSEPH I. LIEBERMAN, Connecticut, Chairman 

CARL LEVIN, Michigan 

DANIEL K. AKAKA, Hawaii 

THOMAS R. CARPER, Delaware 

MARK L. PRYOR, Arkansas 

MARY L. LANDRIEU, Louisiana 

CLAIRE MCCASKILL, Missouri 

JON TESTER, Montana 

MARK BEGICH, Alaska 

SUSAN M. COLLINS, Maine 

TOM COBURN, Oklahoma 

SCOTT P. BROWN, Massachusetts 

JOHN MCCAIN, Arizona 

RON JOHNSON, Wisconsin 

ROB PORTMAN, Ohio 

RAND PAUL, Kentucky 

JERRY MORAN, Kansas 

MICHAEL L. ALEXANDER, Staff Director 

NICHOLAS A. ROSSI, Minority Staff Director and Chief Counsel 

TRINA DRIESSNACK TYRER, Chief Clerk 

JOYCE WARD, Publications Clerk and GPO Detailee 

AD HOC SUBCOMMITTEE ON CONTRACTING OVERSIGHT 

CLAIRE MCCASKILL, Chairman 

THOMAS R. CARPER, Delaware 

MARK L. PRYOR, Arkansas 

JON TESTER, Montana 

MARK BEGICH, Alaska 

ROB PORTMAN, Ohio 

SUSAN M. COLLINS, Maine 

JOHN MCCAIN, Arizona 

JERRY MORAN, Kansas 

MARGARET DAUM, Staff Director 

BRIAN CALLANAN, Minority Staff Director 

KELSEY STROUD, Chief Clerk 

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C O N T E N T S 

Opening statement: Page 

Senator McCaskill ............................................................................................ 3 

Senator Portman .............................................................................................. 5 

WITNESSES 

TUESDAY, APRIL 17, 2012 

Hon. Jim Webb, a United States Senator from the State of Virginia ................. 2 

Patrick F. Kennedy, Under Secretary for Management, U.S. Department of 

State ...................................................................................................................... 8 

Richard T. Ginman, Director, Defense Procurement and Acquisition Policy, 

U.S. Department of Defense ................................................................................ 10 

Angelique M. Crumbly, Acting Assistant to the Administrator, Bureau for 

Management, U.S. Agency for International Development .............................. 11 

Lynne M. Halbrooks, Acting Inspector General, U.S. Department of Defense .. 28 

Harold W. Geisel, Deputy Inspector General, U.S. Department of State ........... 30 

Michael Carroll, Acting Inspector General, U.S. Agency for International Development .............................................................................................................. 31 

ALPHABETICAL LIST OF WITNESSES

Carroll, Michael: 

Testimony .......................................................................................................... 31 

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

Crumbly, Angelique M.: 

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

Prepared statement .......................................................................................... 81 

Geisel, Harold W.: 

Testimony .......................................................................................................... 30 

Prepared statement .......................................................................................... 108 

Ginman, Richard T: 

Testimony .......................................................................................................... 10 

Prepared statement .......................................................................................... 56 

Halbrooks, Lynne M.: 

Testimony .......................................................................................................... 28 

Prepared statement .......................................................................................... 98 

Kennedy, Patrick F.: 

Testimony .......................................................................................................... 8 

Prepared statement .......................................................................................... 44 

Webb, Hon. Jim: 

Testimony .......................................................................................................... 2 

Prepared statement .......................................................................................... 39 

APPENDIX 

Background Memo ................................................................................................... 130 

Statements submitted for the Record: 

Center for American Progress Action Fund ................................................... 149 

Katherine V. Schinasi, Former Commissioner, The Commission on Wartime Contracting in Iraq and Afghanistan ................................................. 152 

Charles Tiefer, Professor of Governmental Contracting at the University 

of Baltimore Law School ............................................................................... 157 

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THE COMPREHENSIVE CONTINGENCY 

CONTRACTING REFORM ACT OF 2012 (S. 2139) 

TUESDAY, APRIL 17, 2012 

U.S. SENATE,

AD HOC SUBCOMMITTEE ON CONTRACTING OVERSIGHT,

OF THE COMMITTEE ON HOMELAND SECURITY

AND GOVERNMENTAL AFFAIRS, 

Washington, DC. 

The Subcommittee met, pursuant to notice, at 10:32 a.m., in 

Room 342, Dirksen Senate Office Building, Hon. Claire McCaskill, 

Chairman of the Subcommittee, presiding. 

Present: Senators McCaskill and Portman. 

Senator MCCASKILL. I want to welcome everyone to this hearing 

this morning. 

I know that Senator Portman will be arriving shortly. I did not 

want to keep our first witness waiting. 

My colleague, Senator Jim Webb, is here to give testimony about 

our subject today. As a brief introductory remark, I am not going 

to go into who he is and why he is here because I think most people know who he is. But I do want to say just about why he is here. 

When I came to the Senate in 2007, Senator Webb and I quickly 

found that we had a place we wanted to work on, and that was contracting and contingencies. His background in the military was a 

great asset to us as we put together the War Contracting Commission legislation, and he and I worked on it together and succeeded 

back in the day. Before Senator Warner had retired, Senator Warner, as the Ranking Member of the Armed Services Committee was 

a tough sell. I mean, people need to remember the context that this 

legislation was brought forward in. It was when President Bush 

was still President, and I think there was a fear that this Contracting Commission was a political exercise. And, of course, it was 

far from that. It was something that was really needed to take a 

hard look at what had gone wrong with contracting and contingencies and to build a body of work that could change the culture 

around contracting and contingencies for the long haul. 

I want to thank him for his friendship and his hard work on this 

issue and look forward to his comments today as we look at legislation trying to implement the recommendations of the Commission 

that we worked hard to create together. 

Senator Webb. 

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1The prepared statement of Senator Webb appears in the appendix on page 39. 

TESTIMONY OF HON. JIM WEBB,1 A UNITED STATES SENATOR 

FROM THE STATE OF VIRGINIA 

Senator WEBB. Thank you very much, Madam Chairman and 

Ranking Member Portman and other Members of the Subcommittee. I know you have two full panels. I will be brief here. 

I would ask that the full written testimony that I have would be 

included at the end of my brief oral remarks. 

Senator MCCASKILL. Without objection. 

Senator WEBB. Thank you. I am here to basically express the 

strongest support possible for the movement of this legislation that 

you, Madam Chairman, and I have worked on in different capacities for now, I guess, 5 years. At a time when the Senate is continually bogged down in symbolic votes rather than issues of governance, I am very proud of what we have been able to do on this 

issue since 2007. I would say it has been one of the great pleasures 

of being in the Senate, to have been able to get this legislation into 

place, the first round of it with the Wartime Contracting Commission and hopefully with this recommendation that will be implementing some of the findings of that Wartime Contracting Commission. 

As the Chairman mentioned, she brought a strong background in 

auditing to the Senate. I spent 5 years in the Pentagon in different 

capacities, including 4 years on the Defense Resources Board. One 

of my eye openers coming to the Senate was sitting on the Foreign 

Relations Committee in 2007 when we had a hearing on Iraq reconstruction programs with the State Department and they mentioned 

in their testimony that they had $32 billion in Iraq reconstruction 

programs that had been appropriated and were in some form of 

being put into play. And I asked, in a way that I would normally 

have asked if I were in the Pentagon years before, to see the contracts and the amount and who the contractor was and what the 

state of implementation was on these different contracts and they 

could not tell us. We worked with them for months and they could 

not tell us where $32 billion had been spent in a specific way 

where we could evaluate the results. 

That was one of the motivations that caused me to start working 

as avidly as I did, along with Chairman McCaskill, to see if we 

could not have the management structures in place, catch up with 

the realities of what had happened in the post-9/11 environment of 

military commitments overseas. This is a particular problem in the 

State Department and the United States Agency for International 

Development (USAID). I do not think they had anticipated these 

sorts of programs before the situation that existed once September 

11, 2001 occurred. 

We were very lucky, as Chairman McCaskill mentioned, to have 

the support of Senator John Warner when we were advancing this 

legislation through the Senate. He was my senior Senator, was a 

Republican. I had worked with him when I was a young Marine, 

my last year in the Marine Corps, when he was Secretary of the 

Navy. I had followed him as Secretary of the Navy. And he, by 

stepping forward and demonstrating that this was an issue with 

wide concern and from people like himself who had spent time in 

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management positions in the Pentagon, really helped us push this 

over the threshold and into reality. 

We had a bipartisan Wartime Contracting Commission. I think 

they did a really fine job. I personally will say I am very disappointed that a lot of the findings have been sealed up for 20 

years. But the overall recommendations, I think, are something 

that we will be able to work on in terms of implementing legislation that get into management, policies, and how we bring rigor to 

the process. 

And I would like to emphasize here, as I did in our press conference earlier, that I believe, and I want to acknowledge that the 

great majority of the contractors who participated in this process 

since September 11, 2001, are not only reputable, but they have 

really done a very fine job in an environment that a lot of people 

had not anticipated. So this is not a piece of legislation nor was it 

a major goal of this process simply to bash wartime contractors. We 

cannot get along without them. This has been an effort to put the 

right kind of structure into place so that we can have efficiently 

run, well managed, and effective wartime contracting and operational contingencies now and in the future. 

So I was very pleased to have worked in detail on this legislation 

as it was developed. It has my strongest support and I thank Senator McCaskill for her untiring efforts here in order to bring good 

governance into this body. 

Thank you, Madam Chairman. 

OPENING STATEMENT OF SENATOR MCCASKILL 

Senator MCCASKILL. Thank you, Senator Webb. 

I will make a brief opening statement and then turn it over to 

my colleague, Senator Portman, for a brief opening statement, and 

then we will ask our first panel of witnesses to come to the table. 

On August 31, 2011, the Commission on Wartime Contracting 

(CWC) in Iraq and Afghanistan presented its final report to Congress. On February 29, 2012, Senator Webb and I introduced S. 

2139, the Comprehensive Contingency Contracting Reform Act of 

2012. This legislation is based on the findings and recommendations of the Commission. 

This morning, I have the honor of hearing the distinguished representatives of the Defense Department (DOD), State Department, 

USAID, and respective agencies’ Inspectors General (IG) present 

their views on this important legislation. Based on their contributions and what we have heard from many of the stakeholders with 

whom I and the Subcommittee staff have met with over the last 

few months, and on the input of other Senators, we will revise the 

legislation and introduce a new version for consideration by the 

Homeland Security and Government Affairs Committee (HSGAC). 

This legislation will increase accountability for wartime contracting 

and transform the way the Federal Government awards, manages, 

and oversees wartime contracts. It will help ensure that the waste, 

fraud, abuse, and mismanagement that we saw in Iraq and Afghanistan will never happen again. 

I want to make a few points about today’s hearing. First, we are 

here today to seek input from the Executive Branch agencies and 

Inspectors General because we want to get this right. The SubH605-41331-79W7 with DISTILLER

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committee has previously met with contractors and other stakeholders regarding this legislation. However, major portions of this 

bill deal with accountability and responsibility for the government, 

and that is by design. Therefore, I encourage you to share any suggestions you have to improve this legislation. 

Second, this legislation builds on existing structures and rules to 

solve the problems identified by the Commission. S. 2139 requires 

each agency responsible for wartime contracting to establish clear 

lines of authority and responsibility for all aspects of contingency 

contracting. It requires the Department of Defense, the State Department, and USAID to improve their training and planning for 

contract support and contingencies. The legislation reduces reliance 

on noncompetitive contracting practices and restricts subcontracting practices that have resulted in a lack of transparency and 

visibility. 

The legislation requires agencies to conduct risk analyses before 

relying on private security contractors (PSC) and to terminate 

unsustainable reconstruction and development projects. It also 

strengthens tools to combat human trafficking. This approach is 

pragmatic and will reduce the potential for waste, fraud, and abuse 

in future wars. 

Many of the witnesses today have already testified numerous 

times before this Subcommittee about lessons learned in Iraq and 

Afghanistan. I commend the Departments, particularly the Defense 

Department, for recognizing that they have shortcomings in implementing changes. However, the Commission concluded in its final 

report that, quote, ‘‘meaningful progress will be limited as long as 

agencies resist major reforms that would elevate the importance of 

contracting.’’ I want to put you all on notice today that such resistance is no longer acceptable. 

Today and in the weeks and months to come, we have an opportunity to make a real change in the way government spends money 

during wartime. It is not too late to prevent further waste in Afghanistan, and it is not too late to prevent the problems in Iraq 

and Afghanistan from occurring in the next war, whenever and 

wherever that may be. 

Everyone knows that contracting in a wartime environment is 

not going to go away. It will be here with our Nation in the future. 

It is imperative that we no longer make excuses, rationalizations, 

or hide behind existing structures to defend the gross inadequacies 

that our government has displayed during contracting processes in 

Iraq and Afghanistan. We must fix these problems now while the 

memory is fresh, while the memory of these failures are fresh, and 

before the harsh lessons of Iraq and Afghanistan are forgotten. 

I remember on my first trip to Iraq on contracting oversight, I 

remember being accompanied by a general, a high-ranking general 

in the Army, and I remember the conversation where it was said, 

‘‘You know, we did a lessons learned after Bosnia. I just do not 

know what happened to it.’’ I want to make sure that those same 

sentences are not uttered during the next contingency as we face 

contracting in the most difficult environment that contracting occurs, and that is when our men and women are putting their lives 

on the line for our security and our freedom. 

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I thank the witnesses for being here today and I look forward to 

their testimony. 

Senator Portman. 

OPENING STATEMENT OF SENATOR PORTMAN 

Senator PORTMAN. Thank you, Madam Chair. I appreciate your 

comments and I am pleased that our witnesses are experts who can 

give us some input, as you say, and it was good to hear from our 

colleague from Virginia, Senator Webb. 

It is an incredibly important hearing and it is an opportunity to 

examine the lessons we have learned from wartime contracting, 

from our experience over the last decade, 10 years in Afghanistan, 

9 years in Iraq. And it is a chance to hear from witnesses on some 

of these reforms that are necessary to improve the stewardship of 

our taxpayer dollars in some very challenging environments. 

This past August, as was noted, the Bipartisan Wartime Contracting Commission issued their final report on its investigation of 

our government’s use of contractors in Iraq and Afghanistan. In my 

view, the Commission came to a very troubling bottom-line conclusion. It was estimated by the Commission that out of the $206 billion we spent on service contracts in Iraq and Afghanistan, which 

includes everything from building military installations to training 

election workers, between $31 billion and $60 billion was lost to 

what they termed to be avoidable waste. So out of $206 billion 

spent on service contracts, between $31 and $60 billion lost to 

avoidable waste. 

It is a difficult environment. Winston Churchill once famously 

said, ‘‘The only thing certain in war is that it is full of disappointments and also full of mistakes,’’ and it is true. It is a tough environment. But when it comes to wartime contracting, we certainly 

have a responsibility to look back and understand what reforms are 

necessary to avoid making more costly mistakes. 

And this is not just a retrospective exercise, of course, because 

contractors are still very much engaged, particularly in Afghanistan, where the United States still has, as we count them, over 

100,000 private contractors. Even in Iraq today, after the last U.S. 

troops returned home in December, the Departments of Defense 

and State maintain roughly 30,000 private contractors. At this time 

of serious fiscal challenges and trillion dollar deficits, we must do 

all we can to avoid waste and to get the best possible value out of 

the taxpayers’ dollar. 

The Wartime Contracting Commission along with a long series 

of Inspector General reports identified some of the issues we should 

be focused on. The challenges range from improving the use of reliable price information, which we will talk about today, to ensure 

that the government is getting a fair deal, to tightening restrictions 

on the use of non-competitive contracts, to strengthening oversight 

of subcontractors, who are too often insulated from direct accountability. 

In addition, looking ahead, one of my principal concerns is that 

of sustainability, and by that I mean how do we ensure that our 

work, reconstruction, development work, and so on, will last and be 

carried on by the Afghan and Iraqi government and the people of 

those countries. The issue is critically important because it is about 

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making sure that our good investments do not go bad. That means 

we have to consider not only, for example, how many additional 

schools and health clinics we can construct, but who is going to 

sustain them. Do they have the medical professionals and the 

teachers to be able to sustain them and keep them going? On this 

issue, the Wartime Contracting Commission was not very optimistic, and I will look forward to hearing from our panel on what 

steps are needed to reduce this risk of future waste or, again, lack 

of sustainability. 

Of course, beyond ensuring that wartime contracting is fiscally 

sound, we have also got to ensure it is performed consistently with 

our deeply held values as Americans. On that score, it was concerning to see the Commission’s report on what they called the 

tragic evidence of the recurrent problem of trafficking in persons 

(TIP) by labor brokers or subcontractors of contingency contractors. 

The report said that existing prohibitions on such trafficking have 

failed to suppress it. Labor brokers or subcontractors have an incentive to lure third-party nationals into coming to work for U.S. 

contractors, only to be mistreated or exploited. 

One of the Commission members, Dov Zakheim, a former Reagan 

and Bush Administration defense official, testified before the 

Armed Services Committee here in the Senate that these findings 

were, in his view, just the tip of the iceberg. And both DOD and 

State Department IGs have told us that we lack sufficient monitoring to have clear visibility into labor practices by contractors 

and subcontractors. 

As many of you know, that is why we introduced legislation recently. Senator Blumenthal and I are the original sponsors, but it 

is bipartisan legislation. We have been joined by Senator 

McCaskill, the Chair here this morning, as well as Senator Rubio, 

Senator Lieberman, Senator Collins, Senator Franken, and it is intended to strengthen the existing protections against human trafficking directly in connection with overseas government contracts. 

Broadly defined, human contracting means forced labor and 

other coercive labor practices that contribute to trafficking. It includes recruiting workers to leave their home countries based on 

fraudulent promises, confiscating passports to limit the ability of 

workers to return home, charging workers recruitment fees that 

consume more than a month’s salary, and many other forms of 

abuse that were mentioned in the Commission’s report. 

We should be clear that the overwhelming majority of U.S. contractors and subcontractors are law abiding and reputable and they 

are doing a good job in a difficult situation. They have made it a 

priority to ensure that abusive labor practices play no role in this 

challenging work they are doing in Iraq and Afghanistan. 

Our proposal is designed to ensure that the best practices adopted by those contractors become standard practice for all contractors, and they include requiring contractors to have a compliance 

plan in place and reporting and monitoring requirements to ensure 

that credible evidence immediately triggers an investigation and 

giving contracting officers more tools to hold violators accountable. 

I am hopeful we can work to make these commonsense and bipartisan reforms the law of the land. 

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7 

We have invested heavily to achieve the goal of building up civil 

institutions, functioning economies, and stable constitutional governments in both Afghanistan and Iraq, and our military men and 

women have done everything they have been asked to do and more 

in Iraq and Afghanistan. They perform with extraordinary skill 

and bravery under the toughest of circumstances. Getting this 

overseas contracting right, especially in the area of reconstruction 

and development, is critical to consolidating the hard-won gains 

that they have achieved. 

Madam Chair, again, thanks for holding this hearing. I look forward to hearing from our witnesses today. 

Senator MCCASKILL. Thank you, Senator Portman. 

If our first panel of witnesses would come forward, and while you 

are doing that, I will introduce you. 

Richard Ginman assumed the position of Director of Defense Procurement and Acquisition Policy (DPAP) in June 2011. Mr. Ginman 

retired as a Rear Admiral from the U.S. Navy after 30 years of 

service in 2000. Prior to assuming his current position, he served 

as Principal Deputy to the Director from 2008 until 2010, and Deputy Director, Contingency Contracting and Acquisition Policy, from 

2010 until assuming the position as Director. 

Patrick Kennedy has served as Under Secretary for Management 

for the United States Department of State since 2007. He has been 

with the Department of State for 39 years and has held positions 

including Director of the Office of Management Policy, Rightsizing 

and Innovation, Assistant Secretary for Administration, U.S. Representative to the U.N. for Management and Reform, Chief of Staff 

of the Coalition Provisional Authority in Iraq, and Deputy Director 

of National Intelligence for Management. 

Angelique Crumbly is the Acting Assistant to the Administrator 

for the Bureau of Management for the United States Agency for 

International Development. She is a member of the Senior Executive Service (SES) with more than 20 years of Federal service and 

has held several key positions at USAID, including Senior Deputy 

Assistant Administrator in the Bureau for Management and Director of the Office of Management, Policy, Budget, and Performance. 

It is the custom of the Subcommittee to swear in all witnesses 

that appear before us, so if you do not mind, I would ask you to 

stand. 

Do you swear that the testimony you will give before this Subcommittee will be the truth, the whole truth, and nothing but the 

truth, so help you, God? 

Mr. KENNEDY. I do. 

Mr. GINMAN. I do. 

Ms. CRUMBLY. I do. 

Senator MCCASKILL. Let the record reflect that all the witnesses 

have answered in the affirmative. Please be seated. 

We will be using a timing system today. We would ask that your 

oral testimony be no more than 5 minutes. Your written testimony 

will be printed in the record in its entirety. 

I am told that we have committed a protocol gaffe, Mr. Kennedy. 

That under the hierarchy of Under Secretaries versus Directors 

and Assistant Administrators that you should be first in the pecking order at this hearing, so we will call on you first for your testiH605-41331-79W7 with DISTILLER

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1The prepared statement of Mr. Kennedy appears in the appendix on page 44. 

mony concerning your input into this legislation from the perspective of the Department of State. 

TESTIMONY OF PATRICK F. KENNEDY,1 UNDER SECRETARY 

FOR MANAGEMENT, U.S. DEPARTMENT OF STATE 

Mr. KENNEDY. Madam Chairman, I certainly defer to the Chair 

and you may please call upon the witnesses in whatever order you 

wish. 

Senator MCCASKILL. It is fine. You can go ahead, Secretary Kennedy. 

Mr. KENNEDY. Thank you. Chairman McCaskill, Ranking Member Portman, thank you for inviting me to discuss the Comprehensive Contingency Contracting Reform Act of 2012. We share your 

desire to strengthen contingency contracting. Our review of the bill 

continues and we very much welcome, Madam Chairman, your request that we work with you. We have met with your staff once 

and we very much appreciate your invitation. We look forward to 

continuing to do so. 

This legislation builds on the important work of the Commission 

on Wartime Contracting, an independent, bipartisan panel that 

you, Chairman McCaskill, created with Senator Webb. The Department worked continuously with the Commission from its formation 

in 2008 until its sunset, gaining valuable insight. We have taken 

many steps to improve our contingency contracting based on the 

work of the CWC and other oversight entities and our own lessons 

learned. We are now engaged with the Government Accountability 

Office on its review of the Iraq transition, contingency contracting, 

and the CWC’s final report. We have learned much from the Iraq 

transition, working closely with DOD, USAID, and interagency 

partners. 

On April 3, Secretary Clinton, addressing cadets at the Virginia 

Military Institute, described the Iraq transition as the largest military to civilian transition since the Marshall Plan. We are now taking the lessons learned in Iraq and applying them to contracting 

planning and execution in Afghanistan. 

State’s centralization of acquisitions for goods and services in our 

Acquisitions Management Office, which together with its two regional procurement support offices handle over 98 percent of our 

contracted dollars. This centralization of acquisitions obviates the 

need for the extensive additional policy guidance and oversight in 

a dispersed acquisition organization. We have hired 103 additional 

acquisition management staff since 2008 using our working capital 

funds, 1 percent fee on all procurements. This has enabled us to 

devote 37 contracting officers and support personnel to Iraq and Afghanistan, and we have trained and deployed more contracting officer representatives, with 1,080 certified contracting officer representatives (CORs) in 2011 and 1,200 total projected by the end 

of this year. 

To elevate accountability for contracting as called for in the Secretary’s Quadrennial Diplomacy and Development Review, the requesting bureau must now ensure that adequate resources are 

identified early in planning. The cognizant Assistant Secretary 

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must certify that planning and oversight is adequate for every 

service contract valued at an annual expenditure of over $25 million and also verify annually that oversight continues to be sufficient. 

We have also increased accountability by mandating that contract oversight work elements include in performance appraisals of 

technical personnel with contract management responsibilities. All 

CORs and government technical monitors (GTMs) must now complete a 40-hour training course, which we updated to be more interactive, skills based, and adult learning focused. A separate class 

session has been tailored for diplomatic security CORs who deal 

with local guards and other security programs overseas. All Department CORs supporting DOD-issued contracts for our Iraq mission take additional DOD training in the contingency environment 

and any other specialty training related to that specific contract. 

This ensures that State personnel managing DOD contingency contracts meet the DOD standard. 

To improve our suspension and debarment efforts, we have 

issued detailed procedures and provided training to grants officers 

and contracting officers. Suspension activities increased from no 

suspension in 2009 to five each in 2010 and 2011 and 19 actions 

halfway into fiscal year (FY) 2012. Debarment activity increased 

from no debarments in 2009 to six issued thus far halfway through 

2012. This increase is due to more active coordination between the 

Department and our Office of Inspector General (OIG) investigators, stronger referral activity, and improved processes and focus 

within the suspension and debarment office (SDO). 

Contingency contracts now require special vigilance against trafficking in persons, and initiatives have been undertaken at State 

to address TIP contracting issues. Contracting officers and CORs 

are trained as our front line in preventing contractor TIP and 

worker abuses. Contracting officers tailor specific oversight requirements on local, service, and contract type. Contracting officers travel overseas to monitor performance at the site and enforce TIP programs. In some locations, we have hired a direct hire program 

manager or a contracting officer representative lives onsite with 

construction and security staff at their housing areas. New solicitation language regarding recruitment includes recruitment plans, 

and submission of agreements has been developed to prevent maltreatment of workers. We continue to strive for zero tolerance of 

trafficking in all our contracts. 

The Department has taken a significant number of positive steps 

to improve our contracting function. As the CWC recommended, we 

have strengthened contract administration in conflict affected 

States through hiring and training adequate Federal personnel to 

provide strong governmental oversight of contractors. 

The bill you have introduced, S. 2139, has many positive elements and we look forward to working with you on contingency 

contracting. 

Thank you very much, and I look forward to your questions. 

Senator MCCASKILL. Thank you very much. 

I apologize for mispronouncing your name. Mr. Ginman, we will 

take your testimony now. Thank you. 

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1The prepared statement of Mr. Ginman appears in the appendix on page 56. 

TESTIMONY OF RICHARD T. GINMAN,1 DIRECTOR, DEFENSE 

PROCUREMENT AND ACQUISITION POLICY, U.S. DEPARTMENT OF DEFENSE 

Mr. GINMAN. I have learned to respond to almost any pronunciation. 

Senator MCCASKILL. I know the feeling. [Laughter.] 

Mr. GINMAN. Chairman McCaskill, Ranking Member Portman, I 

welcome this opportunity to discuss the proposed Comprehensive 

Contingency Contracting Reform Act of 2012, the impact the legislation would have on the Department of Defense. 

I have addressed the Department’s position on each of the provisions in the proposed bill in my written testimony, so I am not 

going to repeat that now. 

Senator McCaskill, you and Senator Webb also cosponsored the 

legislation that created the Commission on Wartime Contracting, 

and I would like to thank both of you for your leadership on this 

important topic. The Commission’s efforts spanned 3 years, and 

their August 2011 final report recommendations are the basis for 

many of the provisions of this bill. 

The Department maintains a scorecard to manage our progress 

against all of the Commission’s recommendations. The Government 

Accountability Office is currently evaluating the Department’s implementation of the Commission’s recommendations and we have 

been actively providing information on our progress to them. 

The Department has been and continues to be focused on improving operational contract support. It has been a journey and we believe we are making good progress. The bill we are here to discuss 

today is another positive step in that journey. 

The Department of Defense concurs with many of the provisions 

of the bill, but we do have some concerns and we would like to 

work with the Subcommittee to resolve those. 

We are committed to enhancing contingency contracting and is in 

favor of legislative efforts to augment the ongoing Departmental 

initiatives to oversee contingency operations. We are especially appreciative of the 2012 National Defense Authorization Act (NDAA) 

coverage of no contracting with the enemy, access to subcontractor 

records in an overseas contingency operation (OCO), and the increased authorities provided to the reachback cell that supports the 

joint theater support contracting command. 

In closing, I wish to reiterate the Department’s appreciation for 

your continued commitment to improving operational contracting. 

Like you, the Department is focused on meeting the warfighters’ 

current and future needs while judiciously managing DOD’s resources and balancing risk. Much has been accomplished, but, of 

course, challenges remain. 

Thank you for the opportunity to provide you the Department’s 

reactions to this bill. I ask my written testimony be submitted for 

the record and I welcome your questions. 

Senator MCCASKILL. Thank you, Mr. Ginman. Ms. Crumbly. 

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1The prepared statement of Ms. Crumbly appears in the appendix on page 81. 

TESTIMONY OF ANGELIQUE M. CRUMBLY,1 ACTING ASSISTANT 

TO THE ADMINISTRATOR, BUREAU FOR MANAGEMENT, U.S. 

AGENCY FOR INTERNATIONAL DEVELOPMENT 

Ms. CRUMBLY. Chairman McCaskill, Ranking Member Portman, 

thank you for the opportunity to discuss the potential impact of the 

Comprehensive Contingency Contracting Reform Act on the U.S. 

Agency for International Development. I will briefly summarize my 

remarks and ask that my full statement be entered into the record. 

Madam Chairman, Senator Portman, as you know, more than 

9,000 men and women of the USAID work to provide effective economic development and humanitarian assistance in support of U.S. 

foreign policy goals. How we improve our contracting practices, including in contingencies, directly impacts the success and sustainability of our mission. Accountability to Congress and the U.S. taxpayer for the funds we use is a duty and it is a duty that we take 

very seriously. 

In November 2011, when USAID Administrator Rajiv Shah 

asked me to lead the Bureau for Management, he did so because 

he knew that I was a career civil servant with more than 20 years 

of experience making things work at the Agency. Throughout my 

career, I focused on making our business practices more efficient 

and effective with the overall goal of enhancing performance while 

reducing unnecessary cost, so I understand the motivation behind 

this legislation very well. It addresses many of the management 

challenges highlighted in the report of the Commission on Wartime 

Contracting that you, Senator McCaskill, created along with Senator Webb. It also addresses some of the most important issues in 

our current engagements in Afghanistan and Iraq and those we 

could contend with in future contingencies. 

USAID has already begun to implement the lessons learned from 

Iraq and Afghanistan. Over the past 2 years, Administrator Shah 

has instituted one of the most comprehensive reform packages I 

have seen in my time with the agency. Our USAID Forward Reforms, as we have named them, are designed to ensure that we 

provide a more effective business model and deliver more sustainable and results driven development programs. 

Implementation and procurement reform is a key element of 

USAID Forward, and I want to note that this reform agenda is 

complementary to many of the recommendations of the CWC, so 

USAID has already made great strides in enhancing the oversight 

and accountability for our acquisition and assistance portfolio. 

For example, we are increasing transparency. We have been 

working actively with our Department of State colleagues to make 

foreign assistance data available to the American public. As a result, anyone can view USAID spending, including overseas contingency operations, online at foreignassistance.gov. 

We have been actively engaged in strengthening our oversight. 

In February 2011, we stood up a Compliance Division within the 

Bureau for Management’s Office of Acquisition and Assistance 

(M/OAA) to serve as the central repository for any and all referrals 

of administrative actions, including suspension and debarment. In 

just one year, the Division has issued 102 administrative actions 

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12 

and recovered nearly $1 million in taxpayer funds, compared to 

eight such actions between 2003 and 2007. 

We are promoting enhanced competition. In 2010, we established 

a Board for Acquisition and Assistance Reform (BAAR). In its first 

year alone, the Board’s recommendations resulted in a 31 percent 

increase in prime awardees, from 29 to 38. This is significant because it means we are broadening our partner base and reducing 

dependence on any single organization. 

USAID has instituted several cost saving measures and our acquisition savings plan has yielded approximately $171 million in 

cost savings or cost avoidance since 2010. 

While we have had some difficult challenges in Iraq and Afghanistan, we have also achieved some significant successes. As Administrator Shah noted before the CWC, in Afghanistan, we have put 

more than 2.5 million girls back in school, helped rebuild the Afghan civil service, aided farmers in growing legitimate crops, and 

assisted in dramatically improving health care, particularly among 

women. In Iraq, we have made significant contributions toward diversifying the economy and promoting women’s participation in the 

market. 

With regard to your legislation, my written statement details 

comments and concerns that we have on specific provisions of the 

bill and I am happy to address any particular section that you 

wish. But I would like to take this opportunity to compliment you 

and your staff for your leadership on this issue and your willingness to engage in a dialogue because we all share the same goal, 

enhanced accountability in overseas contingency operations. 

Again, thank you for the opportunity to be here today and for 

your support of USAID. I look forward to our discussion. 

Senator MCCASKILL. Thank you. 

I am going to really try to make an effort today to take off my 

typical hat in this Subcommittee, where I am kind of tough on 

folks and try to point out inadequacies and make a point by using 

the power of almost a cross examination, and I am going to really 

try—because I really do want this to be about how we can get this 

legislation in a place that it is not going to be just something that 

is ignored or that is checking a box that we are completing the 

work of the Wartime Contracting Commission. I really want this 

legislation to be a framework that is workable for your agencies. 

And so I want to underline my sincerity about getting your 

input, and whether it is today in the give-and-take of this hearing 

or whether it is by members of your staff sitting down and slogging 

through the difficult process of going through phrases and going 

through sections of the bill and double-checking. What I do not 

want to have happen is for us to get this legislation passed, in its 

entirety or partially, and then have a hearing several years down 

the line and realize that nobody paid much attention to it. 

So this is your opportunity, and with that will come the danger 

that I hope I or somebody who will sit in this chair will not let you 

off the hook or your agencies off the hook in a few years when you 

say that legislation just was not workable. I do not want those 

words to ever come out of the mouth of you or your successors in 

yours jobs as it relates to improving contracting. 

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13 

So with that, let me get started on what is one of my—I have 

several overarching concerns about this, but in the interest of time, 

I am going to hone in on some of my, quote-unquote, ‘‘favorites,’’ 

and I mean that sarcastically. 

Let me start with debarment and suspension. I think the Air 

Force has provided such a good role model for everyone as it relates 

to suspension and debarment. I was interested to hear in your testimony, Ms. Crumbly, about how you all have really stepped it up 

in terms of looking at performance on contracts and whether or not 

a suspension or debarment is something that should be considered. 

Just to give you some big numbers, according to the Defense Department, over a 5-year period, we had—let me get the exact numbers, because I want to make sure I get it right—in 2011, the Defense Department found that over a 10-year period, the Department had awarded $255 million to contractors who were convicted 

of criminal fraud, and $574 billion to contractors involved in civil 

fraud cases that resulted in a settlement or judgment against the 

contractor, many of whom were never suspended or debarred. In 

2011, the General Accounting Office (GAO) reported that the State 

Department had only had six suspension or debarment cases with 

over $33 billion in outstanding contracts. Now, look at Air Force. 

Air Force had 367 suspension or debarment actions in a single year 

last year. The State has had six in 5 years. 

The Air Force suspension and debarment officer is independent 

from the acquisition chain. So somebody who is involved in acquiring stuff is not involved in determining whether or not there should 

be a suspension or a debarment. The State Department SDO does 

not have those attributes. The State Department’s suspension and 

debarment officer has other duties involved especially also in acquisition. 

Why do you not speak to that, Secretary Kennedy, about any resistance or reluctance you might have to separating out the suspension and debarment officer from any duties particularly related to 

acquisition. It is kind of hard to be in charge of buying something 

or buying services and then turning around later and say, I really 

screwed up and gave it to a bad guy. It seems to me that separating that duty makes so much commonsense, and I am curious 

as to your input on that. 

Mr. KENNEDY. Senator, I fully agree with you, but I believe that 

is the process that we have in place at the State Department now. 

We have a head of contracting activity, a senior career Senior Executive Service civil servant, who is responsible for all of our contracting activities. It is her responsibility to buy and it is her warranted contracting subordinates who do all our buying. 

We have a separate Senior Executive Service career civil servant 

who we call our Procurement Executive. He has no responsibilities 

to actually buy anything. He sets the policies and the practices of 

the State Department but does not engage in buying. He is in 

charge of the suspension and the debarment activity. 

So we fully agree with you, Senator. We believe that it is absolutely correct to split the duty of buying from, in effect, the duty 

of oversight with due respect to our Inspector General, who also 

has the larger oversight framework. And so it is our Procurement 

Executive who is the debarment official and who, thanks to his 

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14 

good work, we have increased the number of suspension and 

debarments significantly, as I outline in my testimony. So we agree 

with you, Senator. 

Senator MCCASKILL. So in our briefing, we were told that Corey 

Rindner is in the Office of Procurement Executive (OPE), an office 

that also assists State in contracting for supplies and services. 

That is incorrect? 

Mr. KENNEDY. He writes the policies, ma’am. He does not buy 

anything. He is a warranted contracting officer, yes, but he does 

not procure any goods or services for the State Department. We 

have hired—and it was actually my predecessor who hired him— 

someone with wide and deep experience in contracting, because 

who would better know how to set policies and to discover when 

you should suspend or debar someone if you do not have that background. But he does not engage in procurement activities. 

Senator MCCASKILL. Would it make sense for you to have somebody full-time just on suspension and debarment? With the amount 

of money that is being contracted by State, would it not be better 

to have someone whose full responsibility was just suspension and 

debarment? 

Mr. KENNEDY. He has staff assisting him, and that staff is a professional staff, and so we believe that we have constructed a pyramid in the Procurement Executive of professionals who know how 

to write the regulations so that we can hold contractors responsible, and then implement a full-fledged suspension and debarment 

program should it become necessary for us to take that action. So 

we believe that we are complying with both the letter and the spirit of what you put forward because we agree with you. It is our responsibility to ensure that every single taxpayer dollar is administered and used to the best interest of the national security of the 

United States. 

Senator MCCASKILL. OK. I am hoping that we can get you to 

have somebody that is at the top of the organization of suspension 

and debarment. I do not know whether you need assistance under 

him, but who has just that responsibility, because we think it is 

that important in terms of setting the tone. But we can talk about 

that going forward. 

Another one of my big problems is sustainability in terms of 

projects, and I have a—we tried to do our greatest hits list here 

for this hearing and this is examples of waste, fraud, and abuse on 

projects in Iraq and Afghanistan. I think if I asked all of you to 

guess three or four of the projects that would make this list, I am 

hopeful that you would know what they were without me reminding you, because it is not good. And I think that the notion that 

we have actually done a full-bore sustainability analysis is just not 

borne out by the results of many of these projects and I think it 

is very important that this legislation include something that requires a certification on sustainability. 

I know under the Foreign Assistance Act, USAID is required to 

have a certification. That is because AID traditionally has been the 

one doing these projects, and as we know, it is a whole new world 

out there with Afghanistan Infrastructure Fund (AIF) and with, 

what I call the Commander’s Emergency Response Program 

(CERP) and Son of CERP and, the way CERP has morphed into 

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something far beyond what was explained to me when I first arrived in the Senate. 

In a report by the International Security Assistance Force 

(ISAF), which I previously discussed, there is no persuasive evidence that the commander’s emergency response program has fostered improved interdependent relationships between the host government and the population, arguably the key indicator of counterinsurgency success. This legislation would impose a much more rigorous review of these projects, and I have circled several of them. 

I have a USAID project in Afghanistan which is the power plant, 

$300 million power plant. Clearly whatever certification was required, it was flawed, because that is not sustainable. I’ve got the 

Khost and Gardez Road in Afghanistan. I have the water treatment plant that the State Department did in Iraq, it was almost 

$277 million that we know the Special Inspector General for Iraq 

Reconstruction (SIGIR) found was operating at only 20 percent of 

capacity because of the failure of the Iraqi folks to knowing how 

to operate or maintain it. I have the Fallujah water waste treatment system, which was a State Department-Defense Department 

joint project. 

Is there any argument or push-back from any of you on the sustainability front that this has been a failure and that even going— 

as we speak, we are building things in Afghanistan that will not 

and cannot be sustained? 

Mr. GINMAN. So clearly, at least from the Defense Department 

perspective, we have not always covered ourselves in glory on this 

area, and you have listed those examples. 

In August, we did create the Afghanistan Resource Oversight 

Council (AROC). I think we are in our fourth or fifth meeting of 

that. It has been chaired by Alan Estevez, the Assistant Secretary 

of Defense for the Logistics and Material Readiness (L&MR) and 

basically filling in just as the principal deputy. Mike McCord is the 

principal Deputy and the CFO. And by Jim Miller, who, in his current acting role, has continued to be the Chair. And sustainability 

has clearly been on the topic and the agenda in each of those meetings for what we can do or not do. 

I think when Mr. Kendall testified before the Senate before with 

General Bash, they expressly talked about what we had attempted 

to do, to go in, particularly in the Corps of Engineers when we 

were evaluating projects, to ensuring the sustainability. It was an 

issue that was discussed and addressed. 

And I know as the CERP projects currently come through and 

are reviewed at the OSD level, over $1 million, we are asking the 

question up front, what is the sustainability. 

So have we done it well in the past? No, Senator. Are we attempting to do a significantly better job as we go forward? Yes. Do 

I think we have put the structures in place to ensure that we can 

do a better job? I think we have done that, as well. 

Senator MCCASKILL. I guess my biggest problem with this is that 

I know and understand that our military is the best in the world, 

because there is nothing—there is no mission they cannot accomplish if we set our minds to it and put the power of the resources 

of this country behind it. 

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And it feels like, to me, that in some room somewhere there is 

not an acknowledgement that we are using fairy dust to really justify what this country can do when we leave and what they are capable of doing when we leave. Now, I am not even talking about 

the security forces. I am not even talking about creating an army 

for a country that has never had a centralized army. I am not even 

talking about creating police forces that are capable of sustaining 

the rule of law after we leave. I am just talking about who is going 

to pay to fix the roads. I am just talking about who is going to operate power plants. I am just talking about who is actually going 

to have the technical expertise on these water projects. 

It is just hard for me to imagine, with the gross domestic product 

(GDP) of this country, once you take out the huge influx of American dollars, they do not have any money. I mean, is somebody 

being brutally honest about going forward with these reconstruction projects as it relates to the reality of what this country is once 

we are gone? 

Mr. GINMAN. So again, from the ARPC perspective, I mean, those 

three individuals are consciously looking at what are the current 

projects that are there, what do we think the long-term tail is. 

CSTC–A/NTM–A, the people who are, in fact, overseeing the training of the military forces and the ability to do it, are participants 

in that discussion. I mean, from my standpoint, I think we have 

the right people together to, in fact, attempt to address that question and can we, in fact, afford it, and then how is it going to be 

paid for in the future. 

Senator MCCASKILL. We are building highways for a country that 

does not even have a highway department. I mean, they do not 

even have any revenue to support their highways. They have no— 

there is no fuel tax. There is no tax out there that would sustain 

a highway, and it is just—I just think that this certification included in this—what about the others in terms of sustainability, 

and then I will turn it over to Senator Portman. Is there anything 

that you want to add on the sustainability? And, Ms. Crumbly, how 

did this power plant get built? I mean, who decided a dual-fuel 

$300 million power plant was a good idea in Tarakhil? I know that 

is not what it is typically called. I do not know if I am pronouncing 

it right. 

Ms. CRUMBLY. I call it Kabul power plant. 

Senator MCCASKILL. Yes. I always say it is in Kabul somewhere, 

so—— 

Ms. CRUMBLY. Exactly. In essence, it was an interagency decision 

to move forward with the power plant. And I do want to note that 

the power plant is working in terms of performing at peak or surge 

capacity. I know we were talking—— 

Senator MCCASKILL. Yikes. Three-hundred million dollars for— 

that is one expensive generator in an emergency. 

Ms. CRUMBLY. No, I understand, and we have turned it over to 

what they call DABS or the Afghan utility portion of the government. So we are looking at how that can be sustainable in the long 

term. So it is meeting some needs in the country. 

You noted that the Foreign Assistance Act requires that we focus 

on sustainable development, and we do that in USAID programs. 

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It is a key factor for consideration whenever we are developing program or projects. 

I would say that we have had some work to do and we have 

taken seriously the CWC recommendations and, in essence, we 

have put together a sustainability policy in Afghanistan. And actually, I was talking with the Deputy Director of our Office of Acquisition—I am sorry, Afghan and Pakistan Affairs, and he noted that 

when he was out in Afghanistan recently, they are implementing 

the sustainability policy at the provincial reconstruction team level. 

So we are taking it seriously. We are, indeed, putting policies into 

place and we are looking at the longer-term sustainability in Afghanistan. 

Senator MCCASKILL. Anything from State, Secretary? 

Mr. KENNEDY. I would agree that there, clearly, are issues. We 

have tried to do a lot in very difficult environments, and obviously 

we have not succeeded completely. I think my two colleagues have 

addressed that. 

The major State Department activity in this regard is our police 

program. We are working very carefully with both the government 

of Iraq and the government of Afghanistan to ensure that we are 

providing them the kind of training that they need and the kind 

of training that will have a long-term positive impact in their police 

programs. We have a senior State Department officer who is assigned in both Iraq and Afghanistan as the coordinator for foreign 

assistance to make sure that we are focusing on sustainability. 

Senator MCCASKILL. OK. 

Mr. KENNEDY. But it is just as the Admiral said. There is a lot 

that we can do better and I believe we have learned our lessons. 

Senator MCCASKILL. OK. 

Mr. KENNEDY. And we welcome the dialogue, as you suggest, on 

how we can ensure that sustainability is institutionalized and carried forward. 

Senator MCCASKILL. Let me know if there is anything about the 

sustainability portions of this legislation that you think are not 

sustainable. 

Secretary Portman—Senator Portman. [Laughter.] 

Senator PORTMAN. I have had a lot of titles. I cannot keep a job. 

But it has never been Secretary yet. [Laughter.] 

First of all, thanks for getting into the sustainability issue. I did 

not get to hear the entire dialogue, but I think that is a critical 

part of what needs to be done, as we talked about in the opening 

remarks. I know you also talked about enforcement, suspension, 

debarment, and other ways to have enforcement play a more credible role. 

I want to talk a little about database of pricing information, 

which is something that is in Senator McCaskill’s bill and it has 

also been talked about by the Wartime Contracting Commission, 

and a number of the IG reports have talked about it, as well. It 

is basically how do you get a fair price, and competition, I think, 

is the best way. But another way, of course, is to ensure that we 

have a database of pricing information that is transparent, that is 

accessible, and that is one that the agencies and departments can 

rely on. 

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One dramatic example is a report that came out of the Special 

Inspector General’s office in July last year which found that one 

Department of Defense contractor was charging $900 for a control 

switch that was worth $7. In some cases, the IG found contractors 

overloading the government with markups ranging from 2,300 percent to 12,000 percent. So we have, again, had plenty of examples 

of this brought forward by IG reports and by the Commission itself. 

And again, enhanced competition is a powerful tool, but I would 

like to hear from our witnesses about the feasibility of a more systemic way to approach this issue, tracking pricing information to 

ensure that contracting agencies are getting a good value. 

Mr. Ginman, if we could start with you, that would be great. I 

understand DOD has established a pilot program under the Director of Defense Pricing, and the notion here is to create a more 

transparent and accessible, again, accurate database on prices. Can 

you talk about the status of that program and whether you think 

it is working? Is it producing savings? 

Mr. GINMAN. Certainly. So I will start out that the Department 

agrees unequivocally that competition is the best way to get good 

pricing. The pricing database, or the pricing effort pilot that is 

under the Director of Defense Pricing is born from, frequently, we 

do not have good competition, and it is an effort to—what is it we 

need to do to be able to put into the hands of contracting officers 

when they are negotiating with companies the information they 

need. 

So examples I would give, the Director, from his former life he 

speaks, he frequently, when he would negotiate missile buys with 

the Army, Navy, and Air Force, he would be the one person at the 

table that, in fact, understood what the entire Department was 

doing because the Army, Navy, and Air Force did not speak with 

each other well and understand. So the thought process behind the 

information that we are gathering is to put in one place, so when 

a Navy contracting officer is doing a missile buy or buying a ship, 

whatever, for that particular company, they can turn to this database and find what was the last negotiation that was done, what 

were the overhead rates that were there. They can turn to the Defense Contract Management Agency (DCMA) again in one place 

from an overhead rate structure. 

It is interesting when I know that an overhead rate for a company is 20 percent this year, 21 percent the next year, 22 percent 

the following year. What I really want to know is, so tell me how 

they executed to that rate, so that if, in fact, not a 20, 21, or 22, 

what they actually executed was 18, 19, and 20, I would like the 

contracting officer to understand when they are negotiating the 

contract that, in fact, they under-executed what their rate is that 

they are bidding, so that you are putting the contracting officer on 

at least fair footing with equal knowledge that is there. 

We have created, it is called the Contractor Business Analysis 

Repository (CBAR), and I apologize that I cannot do the acronym, 

but it is a database where we will put up all of the business clearances that are done. We will put up all of the pricing information, 

all of the rate information that is available to us so that when you 

are negotiating with any of the major defense contractors, you will 

be able to go to this one place and see what has everybody else 

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done before you. What did they actually negotiate? What were their 

examples? 

I would say, from the way the legislation is written, and asking 

in ways that it be changed, that we are a little leery that the way 

it is read is that this is, tell us pricing information. So if I am buying, port-a-potties, what was the price we paid for port-a-potties? 

I do not think that is what you are intending. So that what we are 

attempting to do is when we do not have the forces of competition 

behind us, what we will have is the ability to provide the contracting officers with tools. We are going to make it available—we 

have agreed that we will make it available to the Office of Federal 

Procurement Policy (OFPP) and to any other agency that is dealing 

with those that has the appropriate need to be able to see this information. 

We believe—let me step back. When I started doing this as a 

Lieutenant JG in 1973, we expected contracting officers to be 

skilled pricers. Probably in the—about 1990 coming forward, as we 

downsized within the Department, we more or less gave away the 

pricing capability within the contracting community. So while 

today we have pockets of people in various commands, we do not 

have a strong skill set. 

So one of the other parts of the pilot project that is there is creating in DCMA groups of people that are experts in pricing and 

knowledgeable of the specific major companies so that when the 

different contracting officers are negotiating, they can turn to this 

group of experts to help. 

We have also, not part of the legislation, but we have also reintroduced what we call mid-level training courses to get the 1102 

community to again regain the skills that are necessary to be able 

to adequately price contracts. It is not—— 

Senator PORTMAN. Admiral, let me interrupt you just for a second. We have a vote in 5 minutes and have to run over there. Although the Chair and I are very fast, we are going to have to take 

off here in a minute. 

If you could get back to us in writing with how you think the 

pilot is working, it sounds like you have three or four good ideas 

that are agency-wide that have potential, but tell us how you actually think it is working, that would be helpful. 

And then to the other panelists, any thoughts, obviously, on this 

issue of the pricing database and how to be sure that we are getting a fair price, as was talked about by the Commission. 

And then, second, on the trafficking bill with regard to the provisions in the McCaskill bill, if you could get back to us in writing, 

just give us any comments you have. 

And again, I apologize. I am going to run to the floor to vote. I 

appreciate you being here today and I thank the Chair for holding 

the hearing. 

Senator MCCASKILL. And what I will do is I will ask you all to 

hold. I will run over, vote quickly, and come right back. I just have 

a little bit more for this panel and then we have the remaining 

panel of the IGs. I will be right back. [Recess.] 

I would like to look at subcontracting as an area that I would 

like your input on. There has been—and especially, I would like 

you to speak before you all leave the stand about whether or not 

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you think any of the limitations we have put in here on suspension 

and debarment or on limitations on subcontracting, if you think 

they are workable in a contingency. Do they cause you pause, especially if you consider the waivers that we—the provisions that we 

have in there, the 6-month lead time before any of these requirements would go into effect, the noncompetitive requirements that 

we have in here. 

Let me start with that. Do any of those cause you all problems 

as it relates to contracting in wartime? 

Mr. GINMAN. So, Senator, the one tier, I think is a problem, and 

I think what the Commission on Wartime Contracting was really 

trying to get to was why were we unable to break out work that 

was under the Logistics Civil Augmentation Program (LOGCAP) 

expressly and to go through that, and I think that is a good question. But then the translation of that to one tier, from our perspective, in any scenario, wartime or not, is just simply unworkable. I 

mean, I cannot imagine a situation with almost anything we do 

that I could get to a single tier of subcontracts in doing it. So we 

think there are ways that can be rewritten that will get to what 

I believe the Commission was really trying to get to and the objective that would help, and we are happy to work with the staff to 

come up with those words. 

Senator MCCASKILL. Well, as you know, we had a Tamimi problem in the LOGCAP contract where we have kickbacks with KBR, 

and that is one of those large duration wartime contracts that is 

kind of the poster child for contracting gone badly. The Khost 

Trucking contract, with the multiple layers of subcontracts, really 

had a security risk associated with it as it related to where the 

money was going. And clearly, we figured out that some of the 

money was going to the bad guys. 

So what we are looking for here is we do not want to get away 

from the efficiencies that subcontracting might provide, but we 

have to really get to a much more transparent situation. 

Mr. GINMAN. So expressly with Tamimi, and in my opening oral 

statement, the legislation that the NDA gave us in 2012 that 

grants this as an overseas environment for access to subcontractor 

records, where they refused to provide records, that legislation 

should open the door for us to be able to go and demand those 

records and get them. Task Force 2010, which is really the group 

that is trying to follow the money and get there, they really wanted 

that legislation and we very much appreciate the Senate’s help in 

providing that legislation to us. So I am hopeful that we will not 

face Tamimi again, at least from a standpoint of not being able to 

get the records, that legislation has now given us the authority to 

go get it. 

Senator MCCASKILL. And what about the recompeting contracts 

more frequently? 

Mr. GINMAN. Well, I think the Department’s position writ large 

is we prefer shorter length periods of contract. But in all instances, 

it depends. What is the scenario I am in? What is the frequency 

with which we want to turn over contracts? I mean, the express example I gave in my written testimony was as we were pulling out 

of Iraq and we were looking at recompeting some task orders, the 

Combatant Commander came in and said, I mean, I can focus us 

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on getting out of Iraq or I can focus on transitioning contractors. 

I would much prefer to focus on getting us out of Iraq. Could you 

please just leave the contractors in place? So we did that. 

Senator MCCASKILL. Would that not be a waiver situation under 

this? 

Mr. GINMAN. I think—— 

Senator MCCASKILL. Is that not envisioned with the waiver? I 

would think that would be just custom tailored for a waiver situation, when you would document that there was an either/or here 

and that moving people out was more important than recompeting 

at that particular juncture. 

Mr. GINMAN. Yes. I mean, we have basically said for all our contracts, particularly in those where the technology moves quickly, 

we do not want contracts that exceed 3 years. I mean, that has 

been the Department’s position. If we are in sole source contracts, 

we would like to find ways to get the competition. But if I am in 

a scenario where I cannot get the competition, I am going to have 

a lot of waivers. I mean, if I really am in a situation of sole source, 

it is going to be sole source for an extended period of time, then 

you would see a lot of waivers to go do that. 

I mean, the waiver provision certain provides the out, but I think 

that length of term of a contract is truly dependent. Tell me where 

I am. Tell me what the opportunities are. Tell me the technology 

of what I am buying. And then tell me how well I can price it. 

The other issue we have with long contracts is it is difficult to 

price effectively for a long period of time at a fixed price. So we 

look for shorter contracts. 

Senator MCCASKILL. You just know—— 

Mr. GINMAN. Yes. 

Senator MCCASKILL [continuing]. That if a contract is more than 

3 or 4 years old, that someone is on the bad end of it. 

Mr. GINMAN. Yes. 

Senator MCCASKILL. Now, in some instances, it may be the contractor. Unfortunately, not often enough. I mean, I should not say 

that. I do not want the contractor to be on the bad end of it. I am 

focused on saving the government money, so I think that the more 

frequent recompetes—and I know that there is a culture that kind 

of weighs against recompeting because it is a pain to compete. This 

is not like an exercise that everyone looks forward to, either the 

ones bidding or the ones running the competition. 

And clearly, I mean, the notion that KBR was a noncompete 

came from Bosnia. Everyone then turned to Halliburton KBR because they had done it in Bosnia. And it was, like, everybody is sitting around, who can do it? Well, we know they can. They were in 

Bosnia and they got it noncompete and made a huge amount of 

profit off that contract, much more than they needed to make had 

we been more aggressive about overseeing it. 

Mr. KENNEDY. Senator, if I may—— 

Senator MCCASKILL. Yes. 

Mr. KENNEDY. We are in favor, absolutely, of full and open competition, and all the points that you made are absolutely correct. 

But if I could just posit one scenario. The State Department has 

put out, in effect, competitively bid, a number of master contracts 

and then we issue recompetitively bid task orders once we have 

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22 

qualified a group of companies. We would want to make sure that 

nothing in the exact legislation could be interpreted to mean that 

we would have to back away from that activity. We go out. We note 

something either on food service or security service or whatever, go 

to a number of major companies, competitively bid, then award and 

put them on the master list, and then we award them task orders. 

We would not want this limitation to say, well, since that contract is, in effect, over 2 years old, you cannot then issue a task 

order that is valid for more than 1 year. That would set us back, 

because we are trying, as you have put forward almost in the preamble of your legislation, to make sure that we have planned. And 

so one of the steps that we are taking to plan for the future is to 

have master contracts in place, competitively bid, that then we can 

utilize them, having obtained the best price, and issue task orders. 

Senator MCCASKILL. I am curious, how long do you envision the 

master contracts being in place? 

Mr. KENNEDY. Five years, ma’am. And then we issue task orders 

that would run the duration. 

Senator MCCASKILL. And was the security contract a master contract at the embassy in Kabul? 

Mr. KENNEDY. No. That is one of the steps we have taken since 

then, to put this into place. 

Senator MCCASKILL. OK. So there was not a master contract 

with subs—— 

Mr. KENNEDY. No. Those were individually bid. 

Senator MCCASKILL. OK. 

Mr. KENNEDY. So we want competition. We want to do the best. 

But we want to make sure that our planning that has led to a contract in place would e available to us given a fluid situation. 

Senator MCCASKILL. OK. Ms. Crumbly, could you speak—in response to a report by the Senate Foreign Relations Committee, 

your administrator wrote, in Afghanistan, quote, ‘‘now includes a 

subcontractor clause in new awards that permits USAID to restrict 

the number of subcontract tiers and requires the prime contractor 

to perform a certain percentage of the work.’’ Have these changes 

been implemented? 

Ms. CRUMBLY. Yes, they have. 

Senator MCCASKILL. And so they are in every contract now in Afghanistan? 

Ms. CRUMBLY. That is correct and the limitations are to a twotier subs, so—— 

Senator MCCASKILL. Two tier? 

Ms. CRUMBLY. Two tiers, exactly. We found that is what works 

operationally best in Afghanistan—— 

Senator MCCASKILL. And have you found any problem with having the two-tier requirement? Is there anything that you think 

that, in terms of value of competency, that you have sacrificed for 

a two-tier limitation? 

Ms. CRUMBLY. I would say not as yet, but we need time to see 

the implementation—— 

Senator MCCASKILL. How long has this been in place? 

Ms. CRUMBLY. I want to say within the last 6 months? Mm-hmm, 

6 months. 

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23 

Senator MCCASKILL. Kudos, and I would be very anxious to see 

if you hit any bumps—— 

Ms. CRUMBLY. OK. 

Senator MCCASKILL [continuing]. Because that seems reasonable 

to me—— 

Ms. CRUMBLY. Mm-hmm. 

Senator MCCASKILL [continuing]. That you can restrict the number of tiers and requires the prime to do something other than taking a cutoff the top. 

Ms. CRUMBLY. Right. 

Senator MCCASKILL. We have a lot of those around, too many 

prime contractors that just take a cutoff the top. That just means 

that they are managing the contract because we are not in a position to manage it ourselves. I would like to see those kinds of contracts go away. 

Let me now turn to a broad-based question. What is not in this 

legislation that you think should be? Should we go further in any 

places? Have we adequately addressed training? I worry that we 

have not gone far enough on training. Obviously, we hollowed out 

the acquisition force in the 1990s and paid a dear price. Think of 

the money that we lost because we had nobody minding the store 

in contracting. It is just mind boggling. 

I mean, this is what is so hard about funding our government, 

because what sounds good in the short run, in a budget cycle, we 

do not have a tendency to think in decade-long implications. And 

I think that we have to be very careful as we go toward a much 

leaner government, which we must do, and toward a Defense Department where DOD does not get everything it asks for, in fact, 

is looked upon to find savings many places. 

I think I know the concerns. Your staffs have visited with us. We 

know where your concerns are. Is there any place that you would 

like to see us go further than we have or to clarify something that 

is in the legislation that you do not think is clear? And if you do 

not have anything for the record today, I certainly will take it in 

a followup after the hearing. 

Mr. GINMAN. Well, so things that particularly concern me is in 

the area of past performance, not giving—when the Commission 

made this recommendation, we objected to it then and it is in the 

legislation—not giving contractors an opportunity to rebut negative 

past performance. We use the past performance for other contractors to make decisions when they award going forward. Anything 

that is negative requires the contracting officer in that competition 

to go out and ask industry, explain to me this negative past performance. So I can do it one time up front or I can have 10 people 

afterwards do it. So from my standpoint, not giving the contractors 

an opportunity, if there is negative past performance, to rebut it is 

only setting us up downstream where a contracting officer fails to 

do what they are supposed to do and go ask. It becomes a protest 

risk and we would do much better to give them an opportunity up 

front, and particularly if for whatever reason it was an unfair 

statement. Letting one level above the contracting officer to have 

the authority to say, all right, I have looked at what the contractor 

said, looked at what the contracting officer said, this is what I 

think the final answer should be, it just makes sense to us. 

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24 

Senator MCCASKILL. Secretary Kennedy. 

Mr. KENNEDY. I think that there are two issues that I think I 

would like to see in the bill and one that I have some doubts and 

will communicate that to your staff. 

But on the two that I would like to see, at times, lowest price 

is not the best value for the American taxpayer. And so we have 

had some legislative exceptions from time to time allowing us to 

award contracts on the basis of best value, because the best value 

over time actually does result in a lower price than just the first 

bid and that. And so that is something we would be interested in 

discussing with you and your staff. 

The second is that the ability to use direct hiring authority, to 

hire 1102s, to hire professional contracting officers, that authority 

legislatively expires on the 30th of September. As we are trying, as 

you rightly say, to regrow the contracting community, anything 

that would enable us to bring in a new generation and get them 

trained up as fast as we can is of very great interest to us. 

The one issue that we will be discussing with your staff that we 

are concerned about is in the section on security contracting, there 

is a statement that the Combatant Commander in the theater has 

the final say on all security activities. That is of great concern to 

us because that substitutes the judgment of the Combatant Commander for that of the Secretary of State in determining what is 

the best way to ensure that the diplomatic and consular and assistance programs are protected as opposed to the Combatant Commander, who is focused on protecting the troops and engaged in 

force projection rather than force protection. And so that is the remaining large item of concern. 

Senator MCCASKILL. OK. So you have a sincere fear that the 

Combatant Commander would perhaps view the protection of the 

State Department’s personnel as not mission specific enough in 

terms of his decision—his or her decisionmaking power? 

Mr. KENNEDY. That is correct. 

Senator MCCASKILL. OK. 

Mr. KENNEDY. And the charge of the Secretary of State in what 

is usually known as the Inman legislation, the Omnibus Diplomatic 

Security Act—— 

Senator MCCASKILL. Right. 

Mr. KENNEDY [continuing]. That vests the responsibility for protecting of civilian employees overseas in the Secretary of State. 

Senator MCCASKILL. And I want to followup on a previous statement you made. It is my understanding that the State Department’s worldwide protective services umbrella contract is 10 years, 

not 5 years. 

Mr. KENNEDY. There is a base contract and then we award these 

task orders for no more than 5 years. 

Senator MCCASKILL. OK, but the umbrella contract that they can 

be awarded under is not 5 years, it is actually 10 years, correct? 

Mr. KENNEDY. Yes. Right, but the task orders are 5 years. 

Senator MCCASKILL. That seems like a long time. 

Mr. KENNEDY. Because the pricing, as my colleague, and as you 

both referred to, you want to make sure that the price is always 

best. The price is determined in the task orders that are awarded, 

and so that is where we ensure that the quality is still there and 

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25 

the price is in the best interest of the government. And so you have 

the master. You have qualified the firms to compete for the task 

order. 

Senator MCCASKILL. Well, and this is getting a little far afield 

and I will not go too far in the weeds on this, but I would love to 

spend more time, your staff with the staff of the Subcommittee, 

working on this, because I, frankly, I am not sure that we should 

ever not have private security forces at embassies in a contingency. 

I mean, I think there is a strong argument that can be made, if 

we are in a country where we are fighting a war, that the security 

of that embassy should be by our military and not by Third World 

nationals that are being hired by a subcontractor under a 10-year 

umbrella contract. I mean, obviously, we had bad things happen in 

Kabul, as was a subject of a different hearing here. And I am not 

saying that is a fault of the contracting that went on, but I just 

think that if we are in a contingency, I think that the people of 

that embassy could be best protected by American military. 

Mr. KENNEDY. We would certainly, and we benefit greatly now 

and over time with cooperation from our military colleagues. But 

we also know that the U.S. military is exceedingly stretched. And 

when I first served in Iraq in 2003, the U.S. military was protecting the civilian contingent. But over the course of time, as the 

demands on the U.S. military increased, they could not and did not 

have the resources to protect us. 

I have less than 2,000 diplomatic security special agents and officers for the entire world, 285 embassies and consulates, plus their 

responsibilities for security protection of foreign dignitaries in the 

United States. And so I am caught in a bind here. I am required 

to ensure that we can continue diplomatic and consular operations, 

not only in war zones or zones of conflict, but also everywhere else 

in the world, and the ability to do that is constrained by my internal resources and the resources that the DOD is able to put at my 

disposal. And the compromise there is to do, I think, the better job 

that we are now doing with more training and these master contracts that will have a better quality control so that we avoid the 

problem that you alluded to in Kabul 2 years ago. 

But I would note, just as an aside, the U.S. Embassy has been 

attacked twice in the last 6 months and it is that same security 

personnel who have done heroically in defending the U.S. Embassy 

against both the attacks, both the one this past Sunday and the 

one several months ago. 

Senator MCCASKILL. But that is a new contractor. 

Mr. KENNEDY. No, it is the same one. 

Senator MCCASKILL. I thought EODT was terminated. 

Mr. KENNEDY. EOD has been terminated, but EOD never started. The previous contractor that was involved with a small unit of 

specific people, those individuals were replaced, the upper level 

management replaced. The company is still there and will be there 

until the new contractor arrives. 

Senator MCCASKILL. I did not realize that. So Armor is still there 

under the British contract. 

Mr. KENNEDY. Yes, ma’am. 

Senator MCCASKILL. OK. And, Ms. Crumbly. 

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26 

Ms. CRUMBLY. I would like to support the points raised by my 

fellow panel members, but I also want to note, as Under Secretary 

Kennedy mentioned, he has a working capital fund that is able to 

supply a steady stream of resources to support his acquisition assistance workforce. We, too, are requesting that authority. So if 

there is a way to go further and have support for that working capital fund authority for USAID so we have that steady stream, I 

think that is important for us. 

One other thing I did want to correct, in terms of the subcontracting, while we are at the two tier, we do have the flexibility or 

an approval process where the Assistant Administrator for the Bureau would approve it if you go beyond those three. So we do still 

want some flexibility on subcontracting, so I did want to note that, 

as well. 

Senator MCCASKILL. Yes, and I think we have—every place that 

we have said, this should be the rule, we put in waivers. And so 

what we are looking for is a change in what is the primary conduct 

of contracting and contingencies. And, obviously, because it is a 

contingency and stuff happens, there are going to be times that 

waivers will be necessary. But at least if waivers are necessary, 

that means you are going to get documentation, which is one of the 

challenges we have had in this area. 

Well, I want to thank all three of you. I know that in some ways 

I have been a broken record on this subject for 5 years, but I have 

a tendency—I am going to try to be kind to the institution that I 

am lucky to serve in. Sometimes this place has the attention span 

of a kindergarten class, and I have noted that things like this, once 

they move off the front pages, have a tendency to fall through the 

cracks. And so I have really tried to stay on this and want to get 

this across the finish line in terms of getting these changes into 

law and monitoring the continued progress as we cleanup contracting and contingencies. 

One thing I would let you know, Mr. Ginman, is that I did have 

an amendment to pull all the AIF funds out of Afghanistan and 

have them to into the United States Highway Trust Fund. People 

did not think I was serious. I was serious, and the reason I am serious is the projects that are now on the board for AIF, which is 

the morphing of CERP into infrastructure by the Defense Department as opposed to AID, that has traditionally done all this work, 

is that the projects we have ongoing now are not going to be completed until 2014. 

So if we are adding additional resources for the next fiscal year, 

that means we are starting new projects. And I have not yet gotten 

from the Defense Department what they are envisioning what 

these new projects would be. And what I am envisioning is if we 

are starting new infrastructure projects in Afghanistan as we are 

trying to pull out of Afghanistan, then we may end up with that 

reality that I think is very hard for Americans to understand, that 

our military would, by and large, be gone from Afghanistan, but we 

would have a full force of contractors that we would be paying on 

the ground for years to come on projects that we really would 

struggle to provide the security necessary for completion under 

that scenario. 

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So I continue to wait to find out what this new $400 million that 

has been requested is supposed to be building in Afghanistan over 

the next 2, 3, 4, 5, 6 years, and hope you can spread the word over 

there that I am drumming my fingers waiting for that information. 

Mr. GINMAN. Yes, ma’am. 

Senator MCCASKILL. OK. Thank you all very much for being 

here. [Pause.] 

I will introduce these witnesses. The first witness is Lynne 

Halbrooks. She became Acting Inspector General for the Department of Defense in December 2011. She joined the Department of 

Justice as an Assistant U.S. Attorney in 1991 and has served as 

General Counsel for the Special Inspector General for Iraq Reconstruction, and General Counsel for the DOD Inspector General. 

Prior to her appointment as Acting Inspector General, she served 

as the principal Deputy Inspector General. 

Harold Geisel has served as the Deputy Inspector General for the 

State Department since June 2008. He has more than 25 years of 

experience with the State Department and previously served as 

Acting Inspector General in 1994. 

Michael G. Carroll has served as Deputy Inspector General for 

the U.S. Agency for International Development, USAID, since February 2006. Mr. Carroll is a member of the Senior Executive Service with more than 26 years of government service. Prior to his appointment, Mr. Carroll served as the Director of Administration for 

the Bureau of Industry and Security in the Department of Commerce. 

It is the custom of this Subcommittee to swear all witnesses that 

appear before us. If you do not mind, I would ask you to stand. 

Do you swear that the testimony you will give before this Subcommittee will be the truth, the whole truth, and nothing but the 

truth, so help you, God? 

Ms. HALBROOKS. I do. 

Mr. GEISEL. I do. 

Mr. CARROLL. I do. 

Senator MCCASKILL. We will ask you to try to hold your testimony to 5 minutes. I must say that the attention you will get today 

is much less than your colleague Brian Miller will get this week, 

but that is probably a good thing. I am not sure that we will have 

any injuries of TV cameramen trying to follow you down the hallway. If you are going to talk about Las Vegas, warn me ahead of 

time because—and I joke about this, but I must say, every once in 

a while, something happens in the world of Inspectors General that 

highlights your work. And for most of the time, your work is done 

in the shadows. No one pays a whole lot of attention. Unfortunately, sometimes the agencies do not pay a whole lot of attention. 

It is very important to me that we get this legislation right from 

your perspective because you are the front line. And while there 

may be a hit every once in a while that gets the bright glare of 

camera, you toil away most of the time in relative obscurity. Most 

Americans have no idea what Inspectors General are and they do 

not realize the work you do. They do not understand the capacity 

you have to look after your interests. And they certainly do not get 

to watch those small but important battles that you wage every 

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1The prepared statement of Ms. Halbrooks appears in the appendix on page 98. 

day with people who lead your agencies toward a goal of more accountability, transparency, and saving the taxpayers money. 

So as I always try to say to Inspectors General that I am honored 

to deal with in these hearings, thank you for your many years of 

service in this area. You are great examples of public servants that 

are painted with a broad brush, overpaid, underworked, too many 

of you. There are not enough of you and you will never hear me 

say that you are underworked or overpaid. So thank you, and we 

will begin with you, Ms. Halbrooks. 

TESTIMONY OF LYNNE M. HALBROOKS,1 ACTING INSPECTOR 

GENERAL, U.S. DEPARTMENT OF DEFENSE 

Ms. HALBROOKS. Thank you, Chairman McCaskill, and thank 

you for your appreciation for the IG community’s work. That means 

a lot to us. Thank you today for inviting me to express our views 

on the Comprehensive Contingency Contracting Reform Act of 

2012. 

As the Acting Inspector General at the Department of Defense, 

oversight of contingency operation remains my No. 1 priority. I am 

committed to continually refining and improving our oversight approach. 

Last week, I was in Afghanistan and had the opportunity to observe firsthand how the oversight organizations currently plan, coordinate, and deconflict audits and assessments. At the most recent 

Shura oversight meeting that I attended, IG staff from Defense, 

State, USAID, the Special Inspector General for Afghanistan Reconstruction (SIGAR), the GAO, and local command IGs discussed 

critical oversight challenges and exchanged information in a productive and collaborative manner. 

I also met with senior commanders there to determine how the 

DOD IG can continue to provide the best independent and objective 

oversight of contingency operations in Afghanistan. The senior 

commanders understand the need for transparency and oversight, 

and the men and women serving deserve to know that every dollar 

spent for their health, safety, and security is spent efficiently and 

effectively. I believe that the organizations that do oversight and 

the commands are working well together to make this happen. 

To make this effort even more effective, we at DOD IG have a 

special Deputy Inspector General for Southwest Asia (SWA) who 

functions as the authoritative source to plan, coordinate, deconflict, 

and facilitate effective oversight. He also serves as Chairperson of 

the Southwest Asia Joint Planning Group, which is the principal 

Federal interagency forum to promote coordination and cooperation 

for comprehensive oversight. This group meets at least quarterly, 

and is comprised of representatives from over 25 DOD and Federal 

oversight agencies, functional components, and command IGs. 

We as an oversight community have developed considerable experience in conducting timely and relevant audits, inspections, and 

investigations of overseas contingency operations. At DOD IG, we 

have the capacity to deploy anywhere in the world and are prepared to respond effectively, of course, in coordination with other 

H605-41331-79W7 with DISTILLER

29 

Federal agencies and internal DOD oversight offices, to address future contingency operations overseas. 

With this background, I would now like to discuss the Comprehensive Contingency Contracting Reform Act of 2012. Overall, 

I support the legislation and, in general, support the provisions of 

Section 103 of the bill, which calls for a lead IG in overseas contingency operations. 

Based on the strong working relationship that has evolved between the Department of Defense, State, and USAID IGs, I do not 

believe there is a need, as the bill is currently written, for the 

Chair of the Council of Inspectors General on Integrity and Efficiency (CIGIE) to designate a lead IG in a contingency. Given that 

the bill defines a contingency operation as, quote, ‘‘a military operation outside the United States and its Territories and possessions,’’ I believe the legislation should recognize the Department of 

Defense Inspector General as the lead IG. Alternatively, a determination of the lead IG could be made based on the amount of 

funding appropriated to the respective agencies. 

Congress mandated in Section 842 of the National Defense Authorization Act of fiscal year 2008 that the DOD IG, in conjunction 

with multiple Federal IGs and DOD oversight agencies, issue an 

annual comprehensive oversight plan for Southwest Asia. I recommend the Subcommittee consider similar requirements to develop a joint oversight plan under the direction of the lead IG that 

would include a focus on strategic issues and contingency operations oversight. 

I would also like to work with the Subcommittee further to refine 

the reporting requirements in the proposed legislation. While compilation of data on obligations and disbursements is primarily a 

management function, an IG can add value by independently analyzing this data. Therefore, we believe a requirement to compile the 

data should be assigned to each Department and the IGs should review the quality of that data as part of their oversight plan and 

use it to inform their work. We believe that a semi-annual or even 

annual reporting requirement would provide Congress with meaningful data and necessary transparency. 

Finally, the provision in the bill authorizing the lead IG to employ annuitants and other personnel on a temporary basis will definitely enhance our ability to move the right people in country 

quickly to establish an immediate overseas presence. However, I 

believe the special hiring authorities would be most effective if they 

are not time limited. 

With the few changes that I have outlined above, plus a funding 

mechanism to resource the hiring of additional staff, the proposed 

legislation would be an efficient, effective way to ensure independent and comprehensive oversight of future overseas contingency operations. 

Thank you for your support of the community. I appreciate the 

opportunity to testify today and express our views and look forward 

to answering any questions you might have. 

Senator MCCASKILL. Thank you. Mr. Geisel. 

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1The prepared statement of Mr. Geisel appears in the appendix on page 108. 

TESTIMONY OF HAROLD W. GEISEL,1 DEPUTY INSPECTOR 

GENERAL, U.S. DEPARTMENT OF STATE 

Mr. GEISEL. Thank you, Chairman McCaskill, for the opportunity 

to discuss our views on strengthening oversight of government contracts during contingency operations. I ask that my full testimony 

be made part of the record. 

We commend the Subcommittee for its leadership and tenacity in 

developing this critical legislation. Madam Chairman, we believe 

that S. 2139 is a positive effort to ensure that statutory IGs have 

the tools needed to provide efficient and effective oversight in the 

most challenging overseas environments. 

The effect of the bill’s provisions on OIG would be broad, positive, and certainly manageable. OIG agrees with and supports Sections 101 and 103 in the bill with three suggested revisions. First, 

we recommend a small but important revision to Section 101. We 

suggest an automatic percentage-based funding mechanism be included in the operations budget for IG oversight. IGs will need immediate additional funds to offset the unforseen and unbudgeted 

costs of doing business in a contingency environment. A model for 

these mechanisms can be found in the American Recovery and Reinvestment Act, where funding for all of the involved IGs was provided to oversee the Act’s significant new appropriations. 

Second, Section 103 of the bill would mandate that the Chair of 

the Council of Inspectors General on Integrity and Efficiency designate a lead IG for the contingency operation and resolve conflicts 

of jurisdiction between the participating IGs. We suggest that at 

the onset of a contingency operation, the relevant IGs would first 

determine which agency is expected to have the largest share of the 

operation’s funding and that agency’s IG would become the lead IG. 

It would then follow that the agency with the next highest level of 

funding would become the operation’s associate IG. 

In recent years, the statutory OIGs worked well together to oversee contingency operations. For example, conflicts on jurisdiction 

and work deconfliction have been resolved efficiently by both the 

Southwest Asia Joint Planning Group and the International Contract Corruption Task Force for work in Iraq, Pakistan, and Afghanistan. These groups, which are comprised of all IGs working 

in these countries, meet quarterly and have been a success. This 

approach would save time and simplify the process during the hectic period at the onset of the contingency operation. 

Last, we support the provision for semi-annual IG reporting. We 

do suggest one adjustment, that this reporting be scheduled to coincide with the IG’s semi-annual reporting cycle. However, the 

quarterly reporting provision in Section 103 would mandate that 

IGs provide detailed financial data, specific obligations and expenditures, a project-by-project, program-by-program accounting of incurred costs, foreign investment revenues, seized or frozen asset information, agency operating costs, and detailed contract and grant 

financial information. All of this data resides in the Department or 

agencies, not in OIGs. We suggest the participating Departments 

provide a periodic stream of data to Congress and to the particiH605-41331-79W7 with DISTILLER

31 

1The prepared statement of Mr. Carroll appears in the appendix on page 114. 

pating statutory IGs. We can use this information on a semi-annual basis to better plan and prioritize our oversight work. 

Finally, our recent successes in OIG are a result of the increased 

confidence in our work and the resulting congressional funding increases appropriated since 2009. These increases have enabled our 

OIG to increase audit inspection reports by more than 56 percent. 

Similarly, suspension and debarment actions based on our referrals 

have increased dramatically, from zero in 2008 to 17 in 2011. And 

today, we are operating in five overseas offices, from Cairo to 

Kabul. So when Congress provides the necessary funding, we deliver good results. 

That said, when you set out to rebuild an organization, take it 

to new regions, and modernize its approaches, it is not always 

about the money. That is why we appreciate your efforts to provide 

the new hiring authorities and the legal framework adjustments 

that support more effective law enforcement. 

Thank you, Chairman McCaskill, for this opportunity, and I am 

prepared to answer your questions. 

Senator MCCASKILL. Thank you very much. Mr. Carroll. 

TESTIMONY OF MICHAEL G. CARROLL,1 ACTING INSPECTOR 

GENERAL, U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT 

Mr. CARROLL. Chairman McCaskill, thank you very much, and 

Senator Portman and distinguished Members of the Subcommittee. 

Thank you for inviting me here today. 

You may recall my impassioned plea the last time I testified before you in November 2010 on behalf of the statutory IGs. I said 

then that you had what you needed right here and nothing in the 

last 18 months has changed my mind on that. So this is truly, I 

think, a step in the right direction, the legislation not only on behalf of the agencies for performance and accountability, but also 

giving us the resources and authorities we need to do our job in 

a contingency operation. So I really appreciate this opportunity 

today. 

I would also like to thank you for the inclusive nature of the deliberative process, working with your professional staff on both 

sides. They have been really open to our suggestions and I would 

like to think that is reflected in the bill, that there are not a lot 

of major changes that we think need to be made. I think it is well 

down the road to be where it needs to be. We just have a couple 

of issues that we just want to nail down, if I could. 

As it relates to Section 103, I agree with my colleagues that 

based on the way you have defined a contingency operation, it is 

clear that DOD IG—it is clear to me that DOD IG would be the 

lead IG in this particular case, and then whether it is AID IG or 

State IG on an associate IG basis. So we do not see a need for 

CIGIE. If, somehow, that came to pass that CIGIE was part of this 

equation, then we would hope that there would be some committee 

that the three of us participated in that would be able to inform 

the CIGIE committee on whatever needed to be done. But we do 

not think there is a need for CIGIE, a role for CIGIE in this process. 

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On the funding and the authorities, as you know, we are a foreign service organization and our auditors and investigators are 

stationed around the world. We just want to make sure that the 

authorities for rehired annuitants and dual compensation waivers 

not only address Title V employees, but address Title XXII employees, as well, retired Foreign Service Officers, so we could then 

reach back to our cadre of retired auditors and investigators to be 

able to do the job. 

There is one aspect not in the legislation that I would like to propose, and I know you asked that question to the previous group of 

witnesses, and that is based on our experience in Pakistan, we 

have had great success with a national hotline on the Kerry-Lugar 

implementation, and I can share the stats we have and the successes we have had with you and your staff and I would like to possibly work with you to include something like that. I have talked 

to my colleagues. In principle, they agree. We could work through 

the jurisdictional issues and that sort of thing with no problems. 

But I think it would enhance the oversight of whatever the programs are in a contingency situation. 

Related to the agency and the agency’s oversight, on suspension 

and debarment, as it currently is written, there is an automatic 

trigger for suspension and debarment if there is an indictment and 

I would say that we should talk about that. I think there are times 

when an agency has demonstrated already that they have addressed the issues that we brought up in our investigations, even 

though they admit there may be an indictment on a criminal or 

civil referral. So I would ask that you just consider the possibility 

of that being a case-by-case basis rather than an automatic trigger. 

And I think from an agency point of view—I am not here to advocate on behalf of the agency, but I do endorse what Ms. Crumbly 

said. I think the agency has made huge strides since our audit of 

2009 that was borne out of a bit of frustration on our part about 

how the agency was proceeding with our referrals. So I think the 

AED case in Pakistan is a great example of the agency stepping 

up and being able to make the hard decisions, even when it impacts potential program implementation. 

On TIP, which is very important to Senator Portman, I just 

wanted to let you know that, recently, we have met with the agency personnel responsible for trafficking in persons. We are attempting to, with our colleagues at State and DOD, to come up with a 

training package for our auditors and investigators because this is 

not in our sweet spot. We are contract procurement fraud investigators and auditors, and so this is different than what we normally do. So we want to create a training package that we could 

implement at the Federal Law Enforcement Training Center 

(FLETC) and at CIGIE, the IG Academy at CIGIE, that would 

train our auditors and investigators. 

And I can also let you know that both for sustainability and TIP, 

they are standard audit provisions and audit objectives in each one 

of our audits, regardless of whether it is in Iraq, Afghanistan, Pakistan, Haiti, wherever. Those are two audit objectives we are always 

going to have in our audits. 

So with that, I appreciate the opportunity again and look forward 

to answering any questions that you might have. 

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Senator MCCASKILL. So it looks like that all three of you agree 

that in contingency, the three of you should work together with 

DOD as lead. 

Mr. CARROLL. Yes. 

Senator MCCASKILL. And there is no reason to do the CIGIE decision and all that, that both State and AID acknowledge that if 

it is contingency, then in reality, the vast majority of the resources 

that are going to be brought to bear are going to be coming out of 

the Defense Department. Therefore, in any kind of decision as to 

risk and work, it is all yours, Lynne. 

Ms. HALBROOKS. Yes, ma’am. [Laughter.] 

We are ready to step up and assume that responsibility. I think 

that the last few years have taught us all as an oversight community a tremendous amount about how to work well together, and 

I think we would be able to respond quickly and effectively. 

Senator MCCASKILL. And let me just say, I think I should point 

out for the record that none of you are the official full-time appointed and confirmed IGs. I guess you are, Mr. Carroll. 

Mr. CARROLL. No, I am not. I am acting right now—— 

Senator MCCASKILL. No, you are not, either. 

Mr. CARROLL [continuing]. And my authority is running out—— 

Senator MCCASKILL. Yes. That is right. So we do not have 

SIGAR. We do not have DOD. We do not have State. And we do 

not have AID in terms of an appointed and confirmed Inspector 

General. And let me say, in case anyone is—let me disabuse anyone of the notion that I am not willing to criticize the White House. 

I find it appalling that these people have not been appointed. There 

is a long list of qualified people to hold these jobs, and I am sure 

that some of you are on those lists, if not all three of you. And I 

do not understand why this is taking so long. I mean, if you look 

at the world of Inspector Generals and the money that is being 

spent, how these positions can go vacant for this period of time is 

beyond me, and I am hoping that the White House gets busy and 

starts announcing the appointment of some Inspectors General. 

Let me ask about suspension and debarment. As you know—I 

mean, what this legislation is trying to do is move a boulder, that 

there has been cultural reluctance on suspension and debarment. 

There has been cultural reluctance to not give performance bonuses 

in government as it relates to contracting and there has been a cultural predisposition to not suspend or debar, with the exception of 

the Air Force. I do not know what they are drinking at the Air 

Force, but I like it that they are aggressive about suspension and 

debarment. 

So we are trying to encourage aggressiveness. Now, obviously, 

this is controversial, because several people have said they do not 

like the automatic suspension or debarment upon criminal indictment. Should we not, at a minimum, require an assumption that 

there would be a debarment that would trigger a requirement to 

document why not? 

Mr. CARROLL. Yes. 

Mr. GEISEL. Yes. 

Senator MCCASKILL. Ms. Halbrooks. 

Ms. HALBROOKS. Yes. I think memorializing the decisionmaking 

would be fine, yes. 

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Senator MCCASKILL. I do not know, and I am not saying that we 

would change the legislation at this juncture as it related to that, 

but there clearly have been bad actors where there has not even 

been a ripple. It seems to me that a criminal indictment of a contractor should be an event that requires some folks in that agency 

to take a hard look, do some scrubbing, and figure out what the 

problem is, and if the problem is an isolated bad employee, that be 

documented thoroughly with some kind of formalized process. Do 

you envision you all being engaged in that process? Would it make 

sense to have a justification for non-suspension or debarment in 

light of criminal or civil fraud, that be forwarded to the Inspectors 

General? 

Ms. HALBROOKS. I would want some time to consider that option 

in a little more detail, but it would definitely sort of change the culture of the suspension and debarment programs, which typically 

are not about punishment. They are about making business decisions and making sure the Department is working with responsible 

contractors. 

I can say that I think in the case of a criminal conviction, at 

least from the point of view of our IG agents, the Defense Criminal 

Investigative Service, we do play a role in that we are the referring 

entity often for a potential suspension and debarment and we do 

not just wait until there is a criminal conviction. One of the remedies in our tool kit is to make a referral to the suspension and debarment authority. 

I do not think that we need to play a role in management of that 

program. We should oversee it. We issued a report in July 2011 on 

the Service agencies and the Defense Logistics Agency (DLA); and 

DLA was actually fairly aggressive in the sample that we looked 

at in terms of taking the contracting officers’ recommendations and 

proceeding. So I think that we have a role. I do not think it is oversight of the specific decisions that the SDO authority makes, but 

I do think that as a referring agency, we can help to ensure that 

the Departments are promoting the suspension and debarment program and training the contracting officials properly in the process 

and how to make those referrals, absolutely. 

Senator MCCASKILL. What about limiting the amount of time for 

contractors to respond to past performance reviews? Do any of you 

believe that makes sense? Do you have any problems with that? 

That also has received some attention from folks, that they think 

that allowing contractors to respond to past performance reviews 

before they are submitted to the government’s database, lowering 

that from 30 days to 14 days is unreasonable. Do you all have any 

view on that particular provision? 

Ms. HALBROOKS. I do not have any view today, but we could certainly look at that in more detail and provide you our opinion. 

INFORMATION FOR THE RECORD 

We believe that 14 days should be a reasonable amount of time for the contractor 

to review and comment on the performance reviews that are done by the government contracting officer representative and should not place an undue burden on 

the contractor. 

Mr. GEISEL. I would like to look, as well, and give you something 

in writing, but I would point out that you have used a word repeatH605-41331-79W7 with DISTILLER

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edly which I think is very useful, and—well, two words which 

mean the same, actually, and that is waivers and documentation. 

And that is really what we are looking for, yes. A good law will always have provisions for what are we going to do now, this is different, but it has to be documented. So many people are much more 

inclined to do the right thing if they have to sign their name to a 

piece of paper. 

Senator MCCASKILL. Right. And besides that, it provides an audit 

trail, right? 

Mr. GEISEL. Right. I like—— 

Senator MCCASKILL. I remember. I liked it when we found documentation. This is a good day for an auditor. 

Mr. GEISEL. I like—— 

Senator MCCASKILL. When there is no documentation, it is a 

problem. 

Mr. GEISEL. I like saying that to the former Auditor General of 

Missouri. 

Senator MCCASKILL. There you go. 

What about you, Mr. Carroll, on past performance problems and 

whether or not the contractor should be given time to respond before it goes into a database? 

Mr. CARROLL. I think that they should. What the agency does 

with that information is up to them. I would think 14 days, 30 

days, there is really not a material difference there and I do not 

think it would have a material impact on an agency, or on a contractor or an agency, so I think giving them the benefit of the 

doubt, giving them the extra 16 days, whatever it would be, I do 

not see a downside to that. 

Senator MCCASKILL. OK. For the State Department, the State 

Department continues to say that it does not need the structural 

or organizational changes envisioned by this legislation. They have 

also said that they can meet any demands that arise in a contingency by relying on the working capital fund. Do you believe that 

they are correct, that they do not need any organizational or structural changes, from your position as the Inspector General for the 

Department? 

Mr. CARROLL. I definitely feel that they need tweaking. One 

point that came out here that I would like to speak to them more 

about is, for example, whether they need a separate suspension 

and debarment official. What they have now, I agree with what 

Under Secretary Kennedy said, that the current person who is in 

charge of suspension and debarment does not have a role in the acquisition except in the most general way. But I think anything we 

can do to encourage the Department to focus on suspension and debarment is good, and we have seen progress. I think I would give 

the Department the benefit of the doubt, but I would hold them accountable. 

Senator MCCASKILL. OK. You all mentioned this in your statements, and I assume that all of you think that it would be a good 

idea to have a percentage-based funding requirement for Inspector 

Generals in contingencies, just as we did for the American Recovery and Reinvestment Act (ARRA), that we would set aside sufficient resources to keep track of the money as we appropriate the 

money. 

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Mr. GEISEL. Madam Chairman, I would point out that when I 

came to OIG on June 2, 2008, and since that time, thanks to what 

I assume is the good work we have done, Congress has doubled our 

resources. And as a result, we have been able to do a much better 

job. And the best way to ensure that we do not have what happened in Iraq, where there was a big delay until we got the resources, to have an automatic mechanism, I think serves everyone 

well. And it enables us to buildup, but it also forces us to go down 

again when the—— 

Senator MCCASKILL. Right. That is what I like about it, because 

it does not build the agency beyond the capacity that is needed permanently. It does it as it relates to the contingency, and it also allows you to really buildup a body of expertise in this area, which 

has always been the argument for SIGAR and SIGIR. I mean, I 

went around and around with some of you about this in the past, 

that having that body of expertise, having a special Inspector General for contingencies. But if you did that, some of the people you 

hire in connection with that are just by the nature of the agencies 

going to stay on and would be there with some kind of history as 

it relates to contingency contracting going forward. So I do think 

it makes sense. 

And we all know that for every dime we spend on auditors, we 

get back a dollar—— 

Mr. GEISEL. More. 

Senator MCCASKILL. Or more. I just use dime and dollar because 

it is safe and I am conservative because you have to be able to back 

it up, right? So that is why I think it is very important that we 

do not—as we cut the size of government and spend less money in 

government, we have to make sure that we maintain a robust oversight function in these agencies because, frankly, it would be very 

hard for us to do our work without you all. I do not think people 

realize that you are so many times the communication that provides the oversight that Congress performs. 

Is there anything else that we have not addressed in the legislation that you all want to speak to before we close the hearing? 

Mr. CARROLL. If I could just go back to suspension and debarment for a second, the IG by its very nature just loves independence. I think that is what makes us so effective. And so we do endorse—I know we are at odds with the agency on this, but we think 

that the S and D official should, in fact, be very independent of the 

political decisionmaking process in the agency. 

Senator MCCASKILL. Yes. I mean, with all due respect to Secretary Kennedy, even if the person in charge of SDO at State is not 

buying anything, they are helping write the policies that are telling 

them how to buy it. So if those policies failed and allowed some bad 

actors to be included in contracting, I think it is harder sometimes 

to hold that mirror up. So I am going to continue to push for that 

independence in the Suspension and Debarment Office that I think 

that is dictated by the legislation and that makes sense in terms 

of functions of an SDO official. 

Anybody else? Yes, Ms. Halbrooks. 

Ms. HALBROOKS. I just wanted to add that while I agree with 

Acting Inspector General Geisel that funding is a critical element 

to ensure that we get started in oversight quickly on a contingency 

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operation, I think that the parameters of the legislation that require coordination and coordinated planning and reporting by a 

lead IG will be effective, as well. As that funding takes a while to 

gear up, the DOD IG, because of our size, has the agility to immediately plug a trained group of auditors into a contingency. So 

while the funding is critical, the language in the legislation that I 

think in some ways documents the coordination and collaboration 

and the lessons learned in the past contingency operations oversight will go a long way to ensuring that there is no gap in oversight when one begins. 

Senator MCCASKILL. Yes, Mr. Geisel. 

Mr. GEISEL. I, of course, agree with my colleague from DOD. I 

would also point out that one other very important part of the legislation should be our ability to use Title V and Title XXII annuitants because they have just what you were talking about, that 

very necessary experience. And if we can get them quickly when 

we need them, it will be a great help to getting the right people 

who can do the job. 

Senator MCCASKILL. OK. And I think Mr. Carroll mentioned that 

previously, that we needed to be able to get at that workforce, 

which makes sense. 

Well, I want to thank all three of you for your great work and 

for being here today. I am continuing to work on this legislation. 

If anything else you think we need to be working on as we tweak 

it and adjust it and get it into final form that hopefully we can get 

at least part of it enacted in the defense authorization bill this 

year—that is our goal—so we continue to improve it. I think we 

have some great input from you today. I think it is very clear that 

we can make a change in terms of how we provide for the lead Inspector General in contingencies and I think that will work out 

very well. 

So thank you very much for that, and onward. If you have good 

reports coming, do not forget to let us know. Thank you. 

Mr. GEISEL. Thank you. 

Senator MCCASKILL. The Subcommittee is adjourned. 

[Whereupon, at 12:44 p.m., the Subcommittee was adjourned.] 

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A P P E N D I X 

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Senator Jim Webb 

Subcommittee on Contracting Oversight 

Senate Committee on Homeland Security and Government Affairs 

April 17, 2012 

Madam Chairman, Ranking Member Portman, and members of the Subcommittee. Thank you for 

inviting me to appear before you today to discuss my views on the Comprehensive Contingency 

Contracting Reform Act of2012. Following careful consideration and revision of an earlier draft of 

this bill, I was pleased to join Senator McCaskill as an original cosponsor in early March. 

I wish to acknowledge and compliment my good friend and colleague Claire McCaskill for the 

diligence and resolute determination that she and her Subcommittee staff displayed in taking the lead 

to draft this bill over the past six months. She can be justifiably proud of this achievement. 

The Congress faces a compelling requirement to respond affirmatively to the work and 

recommendations of the Commission on Wartime Contracting. It is my sincere hope that today's 

hearing will allow us to take the Comprehensive Contingency Contracting Reform Act of2012 to 

the next level by identifying any needed modifications and developing broad-based bipartisan 

support for its passage this year-replicating our initial experience in 2007 that led to the creation of 

the Commission. 

As the members of this Subcommittee know well. we cannot continue to tolerate the waste of 

billions of dollars in any future overseas military contingency operation. 

As [ noted earlier this year, this comprehensive legislation affirms the important work that has been 

done by the great majority of our wartime-support contractors. At the same time, however, it 

recognizes the necessity to improve government oversight, management, and accountability in the 

contracting processes that resulted in totally unacceptable costs, excessive waste, and substandard 

performance in far too many areas. 

This comprehensive bill represents five years of collaboration with Senator McCaskill since we first 

introduced the legislation that led to the establishment of the independent and bipartisan 
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Commission on Wartime Contracting. Our goals at that time were straightforward. [n seeking to 

create a modern-day equivalent of Senator Harry Truman's special oversight committee of the 

1940s, we saw a necessity to eliminate the many systemic deficiencies in wartime-support 

contracting ... to root out waste, fraud, and abuse ... and to hold accountable those found to be 

responsible. 

The bill we have introduced is responsive to the findings and recommendations of the Commission's 

final report that was issued last year. We owe Commission Co-Chairs Michael Thibault and 

Christopher Shays, their fellow commissioners, and their professional staff our thanks for their 

exemplary three-year effort. They surpassed my challenge to them in 2009 to be aggressive in 

satisfying their ambitious statutory mandate. As I have said more than once, the Commission 

demonstrated the way congressional committee should work-bipartisan, independent, thorough, 

and totally committed to its task. 

In addition to finding that at least $31 billion, and possibly as much as $60 billion, has been lost to 

contract waste and fraud during contingency operations in Iraq and Afghanistan, the Commission 

illuminated the additional costs of a number of major projects that can't be sustained, which will 

ultimately drive costs even higher. One of the Commission's principal findings is particularly 

telling. It concluded that poor planning, management. and oversight of contracts ... damaged our 

defense, diplomatic, and development objectives. 

Senator McCaskill and I brought varied backgrounds to the challenge of assessing such findings and 

others documented in the Commission's 240-page final report, its two interim reports and 25 public 

hearings. She drew extensively on her service as a state auditor. I relied on my years of experience 

in senior executive positions in the Pentagon to try to ensure the bill describes what federal agencies 

must do ... not how ... to correct slich deficiencies as poor planning, vague contracting 

requirements, substandard contract management and oversight, weak interagency coordination, and 

substandard performance. 

It was not always possible to adhere to this principle while writing this bill, however. Not all 

agencies have been equally diligent or responsive in addressing the Commission's past 
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recommendations contained in its interim reports. I believe the Department of State and the U.S. 

Agency for International Development, for example, each require additional structural improvements 

to establish clear lines of authority and responsibility if they arc to manage more effectively their 

contracts for services in support of overseas contingency operations. For this reason, several of the 

bill's provisions for multi-agency matters are more prescriptive than other sections. 

The bill we introduced is, admittedly, complex and multifaceted, but it is framed to address not only 

the Commission's numerous recommendations, but other contracting deficiencies revealed during 

hearings conducted by full committee and subcommittees of both the Senate Armed Services 

Committee and the Homeland Security and Government Affairs Committee. 

I believe the Congress is at a pivotal moment in our need to reassert good governance and improve 

our stewardship of taxpayer dollars. For this reason, major sections of the bill would strengthen 

contracting practices and improve accountability by: 

• Elevating oversight responsibility, improving management structures, expanding planning 

requirements, and reforming contracting practices during overseas military contingencies. In 

this, the bill is carefully framed to be consistent with the definition of the term "contingency 

operation" stipulated in Title lO-an operation designated by the Secretary of Defense as an 

operation in which members of the armed forces are or may become involved in military 

actions, operations, or hostilities against an enemy of our country or against an opposing 

military force. 

The bill will also require the federal government to identify how it will pay for military 

operations overseas. The President will be required to ensure that any request to Congress for 

funds in support of contingency operations includes information on all requested amounts by 

appropriation account, program, project, and authority. Specific information must also be 

provided on the proposed means to finance such operations, either by increases in revenues, 

decreases in other programs or activities, borrowing by the federal government, or other 

means. In the future, Congress must exercise its "power of the purse" more diligently to 

prevent such fiscally irresponsible practices as using large, so-called "emergency 

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supplemental appropriations" to fund operations-as we did year after year in Iraq and 

Afghanistan. 

• A number of provisions in the bill aim to improve contracting processes through greater 

transparency, competition, and professional education. 

• Other provisions will institute additional measures (0 improve contractor accountability. 

In developing this legislation, we sought (0 avoid imposing requirements that would lead to the 

creation of large, new bureaucratic organizations. The Commission, for example, recommended 

such measures as the development of deployable cadres for acquisition management and contractor 

oversight, creating a new directorate on the Joint Staff for contingency contracting, and creating a 

permanent office of inspector general for contingency operations. 

While we appreciate the import of the findings that led the Commission to make such 

recommendations, we do not believe that creating larger bureaucracies is necessary. Inspectors 

general perform critical roles overseeing agency performance, for example, but we believe it is 

sufficient to build on the existing structure of the Council ofInspectors General on Integrity and 

Efficiency to strengthen IG functions during overseas contingency operations. Insofar as possible. 

we sought to avoid legislating burdensome provisions that would add more people to the ranks of the 

federal bureaucracy. 

During the weeks since Senator McCaskill and I introduced our bill, our staffs have met jointly with 

a number of important stakeholders associated with overseas contingency contracting, including 

senior executives from dcfense companies and professional associations representing the interests of 

the contracting community. A number of provision in the bill, notably thosc relating to the 

evaluation of contractor performance and others tied to suspension and debarment, understandably 

raised a number of questions and some concerns in their minds. 

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Their feedback and constructive recommendations will be helpful to us as we continue to refine this 

complex bill. Similarly, witnesses at today's hearing will provide important insights into the steps 

agencies have taken to date to implement the Commission's recommendations and what additional 

measures might be needed to address fully the Commission's substantial body of work. We also will 

benefit later this spring by the work of the Government Accountability Office when it completes its 

report for our consideration on the degree to which the Department of Defense, the Department of 

State, and US AID have or have not adopted the recommendations contained in the Commission's 

final report. 

Again, thank you for inviting me to appear before you today. 

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STATEMENT BY 

Patrick F. Kennedy 

Department of State, Under Secretary for Management 

BEFORE THE 

Homeland Security and Governmental Affairs Committee, 

Subcommittee on Contracting Oversight 

United States Senate 

April 17, 2012 

Good morning Chairman McCaskill, Senator Portman, and distinguished 

members of the subcommittee. Thank you for your invitation to appear here today 

to discuss Senate bill 2139, the Comprehensive Contingency Contracting Reform 

Act of2012. 

We share the Committee's desire to ensure that efforts continue to 

strengthen contingency contracting. S. 2139 raises a number of important issues. 

While our review of the bill is ongoing, we welcome the opportunity to discuss our 

initial views on the bill's provisions. 

We understand that this legislation builds on the recommendations ofthe 

Commission on Wartime Contracting in Iraq and Afghanistan - an independent, 

bipartisan panel that you, Senator McCaskill, created along with Senator Webb in 

2007. The State Department worked continuously with the Commission on 

Wartime Contracting (CWC) from when it was formed in early 2008 until it sunset 

last August, and gained valuable insight from the Commission's efforts. We have 

taken many steps to improve our contingency contracting over the past several 

years, based on the CWe's reports, recommendations from other oversight entities, 

and our own lessons learned. 

The Department's participation in CWe's study was headed by the Office of 

the Under Secretary for Management and the Bureau of Administration. In 

addition to numerous meetings with the CWC, senior Department officials testified 

at seven formal CWC hearings. 
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Although the CWC has sunset, we continue to work with our other oversight 

entities on our contracting program. Currently GAO is reviewing the Iraq 

transition, contingency contracting, and the CWe's Final Report in three separate 

engagements. We are taking GAO's input to heart, and will work to improve our 

contracting administration, including Interagency Agreements, and address other 

GAO findings. 

We have also learned much from the Iraq transition, where we worked 

closely with DoD and other interagency partners. As recently as April 3, when 

Secretary Clinton addressed a class of cadets at the Virginia Military Institute, she 

stated that the Iraq transition was the largest military to civilian transition since the 

Marshall Plan. We can now take the lessons learned in Iraq and apply them to 

contract planning and execution in Afghanistan and future contingencies. 

The Department has been involved in overseas contingency operations with 

DoD for 10 years in Iraq and Afghanistan. The U.S. Military launched Operation 

Enduring Freedom in Afghanistan in October 2001, and Embassy Kabul re-opened 

in 2002. Operation Iraqi Freedom began in March 2003, and Embassy Baghdad 

re-opened in 2004. DoD and State have worked closely together in these conflict 

areas since that time, and we continue to work closely on a daily basis. We have 

also counted on USAID's efforts to assist in stabilizing these societies. 

The Department's contracting function has grown from $1.8 billion in 2001 

to $8.8 billion in 2011, primarily due to programming growth since 9111 and in 

support of State Department activities in Iraq and Afghanistan. As our contracting 

activity has increased, we have hired additional Acquisitions Management staff 

using funding in the Working Capital Fund, which is generated through a 1 percent 

fee on all procurements. The Working Capital Fund has provided sufficient 

funding and flexibility to allow us to hire lO3 additional staff in the Office of 

Acquisitions Management since 2008. 

Oversight by Inspectors General (Sec. 103) 

State agrees that there must be independent, objective oversight of 

contingency operations, and we support the IG concept outlined in proposed 

Section 103. The oversight outlined by S. 2139 ensures that inspections are carried 

out by experts who understand the agency mission, policy, procedures, and 

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operations, and provides an approach for the coordinated efforts of existing agency 

Inspectors General. We do observe that the reporting requirements are intensive, 

which would result in resource implications for the IGs, and would flow down to 

the agency program offices. 

We note that this section requires publication of information on the Internet 

of potential offerors and potential grantees. We are concerned that such disclosure 

available to both the general public and hostile overseas elements of some of these 

organizations, companies, or individuals may endanger their safety and may reduce 

competition. We recommend that provisions be developed for retaining the 

confidential ity of some of this information based on determinations of danger or 

program impact. 

State Adoption of DoD Management Structure for Services Acquisition (Sec. 

111) 

With regard to section Ill, State has been working closely with DoD on 

contractual efforts in Iraq and Afghanistan. In Iraq we are receiving support from 

the LOGCAP program under a LOGCAP IV Task Order competed among LCIV 

contractors for life support services, and other DoD contracts for food, fuel, 

equipment maintenance, logistics, and information technology support. 

We do not believe successful management of services acquisition requires 

that State's management structure mirror that specified in statute for DoD. Unlike 

DOD, State centralizes acquisition of goods and services in our Acquisition 

Management Office (AQM), which together with the two Regional Procurement 

Support Offices (RPSOs), handle over 98% ofthe contracted dollars. This 

centralization of acquisition in AQM obviates the need for extensive additional 

policy guidance and oversight of other acquisition organizations. There is no need 

to designate by statute a lead policy official since all State acquisition is already 

under centralized policy guidance and acquisition. 

State further centralizes acquisition with special construction, security guard, 

and information technology branches. These contracting officers are de facto 

Commodity Managers by virtue of their acquisition expertise and their central role 

in purchasing their service commodities. We also have 37 contracting officers, 

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specialists and support service personnel devoted to contracting efforts in Iraq and 

Afghanistan. 

State develops and maintains policies, procedures, and best practices 

guidelines that address the procurement of contract services. We are examining 

the list in 10 U.S. Code 2330 to determine if additional policies applicable to 

State's operations should be developed. 

We would note that the Department participated in Office of Management 

and Budget (OMB) working groups regarding the Office of Federal Procurement 

Policy's (OFPP's) efforts to clarify the definition of the term "inherently 

governmental." When the final definition was released in OFPP Policy 11-01, our 

regional and functional executive directors were briefed about the new definition 

and requirements. 

In addition, consistent with OMB's guidance to identifY areas that warrant 

priority attention (e.g., because they are at heightened risk of overreliance), the 

Department will annually analyze its largest contracts for the purpose of 

determining whether or not an overreliance on contractors exists and whether 

inherently governmental functions are being performed by contractors. Existing 

Department practices already include review of statements of work for inherently 

governmental functions, when we are procuring a service. However, the 

Department intends to strengthen this management practice by requiring a written 

pre-award determination and requesting the program office to ensure the statement 

of work does not include inherently governmental functions. We expect to 

implement this practice by the fall of 20 12. 

Suspension and Debarment (Sec. 112 and Sec. 113) 

Currently our Office of the Procurement Executive (OPE) serves as our 

Suspension and Debarment Official (SDO). We have worked to improve our 

efforts, reviewing suspension and debarment processes to make them more 

effective. We have: 

• Contacted other agencies to identify best practices in their suspension and 

debarment programs. 

• Created a suspension and debarment log to track actions. 

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• Established regular meetings with the Office of the Inspector General 

Investigations Office to ensure cases are dealt with expeditiously. 

• Participate in monthly Interagency Suspension and Debarment Council 

(ISDC) meetings; participated in the website subcommittee and attended 

S&D training and conferences. 

• Provided training on suspension and debarment to grants officers and 

contracting officers. 

• Attended training on debarment and suspension to improve skills. 

• Issued detailed debarment and suspension procedures including procedures 

to require a written determination on action taken regarding referrals for 

suspension or debarment from Contracting Officers and/or the Office of the 

Inspector General. 

We believe that our Office of the Procurement Executive is capable of 

handling suspension and debarments with the necessary level of impartiality to 

consider and apply suspensions and debarment whenever necessary and, for this 

reason, are concerned with a requirement that would preclude a suspension and 

debarment official from being located within the Bureau of Administration of the 

Department. We will continue to look at the staffing of the suspension and 

debarment function as part of overall Department of State resource planning. We 

believe we do not need a separate SDO or staff as proposed in Section 112. 

Suspension activity increased from no suspensions in FY2009 to five each in 

FY 2010 and FY20II and 19 actions halfway into FY2012. Debarment activity 

increased from no debarments issued in FY2009 to six issued thus far in FY20l2. 

This increase is due to more active coordination between the Department's OIG 

investigators, stronger referral activity, and improved processes and focus within 

the suspension and debarment office. 

With regard to the automatic suspension provisions set out in proposed 

Section 113, we believe that the current, long-standing policy requiring a reasoned 

decision from the SDO based on a totality of information remains a sound 

approach, and would have concerns with a provision that imposes automatic 

suspension and debarment which will likely lead to due process challenges by the 

affected contractor community and potential court action that could delay 

necessary action in crisis situations. 

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Reorganization of Contracting Function (Sec. 131) 

We respectfully do not concur with the re-organization of our contracting 

function proposed in Sec. 131. Defining the acquisition organization of the 

Department of State in statute would reduce our flexibility and codify the structure, 

making future adjustments to support new 21 st century challenges cumbersome and 

time consuming. Future legislation would have to be drafted and passed to allow 

the Department to adjust to the fast changing world of diplomacy, rendering the 

Department less agile and thereby potentially handicapping the Department's 

ability to respond to contingencies. Also, the proposed re-organization would 

constitute a bureau with not only the contracting function but logistics, motor 

vehicles, diplomatic pouch, household effects, shipping and storage. If a bureau 

were to be formed with only the contracting program, it would not be of sufficient 

size to warrant bureau-level status. 

As noted earlier, the Department of State acquisition model uses a 

centralized contracting approach, with a primary Washington, D.C. based central 

office and two Regional Procurement Support Offices to provide additional 

forward deployed support. The Department centralized the acquisition of 

worldwide local guard services using this Washington, D.C. based approach with 

great success. 

The Department's Chief Acquisition Officer (CAO) is the Senate confirmed, 

Assistant Secretary of Administration, an individual with worldwide experience 

with our acquisition needs and challenges, as well as experience working with our 

Department of Defense colleagues. The Head of Contracting Activity is a 

seasoned professional with a solid record of acquisition accomplishments. We also 

believe that the separation of the Office of the Procurement Executive from the 

Acquisitions Management Office (AQM) provides a decision making process 

removed from direct acquisition responsibility. 

As Under Secretary for Management, I work hand in hand with the CAO on 

acquisition issues, especially contingency contracting. Major decisions on 

contingency contracting policy, such as how to strengthen private security 

contractor oversight, are made by me. Solutions to any acquisition issues are 

facilitated by the current flexible, well coordinated structure. Neither access nor 

authority is a problem under the current structure. 

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The Department acknowledges that improvements are always possible in our 

contracting oversight and management, and we continue to strive to enhance 

accountability for contracting throughout our organization. The examples of 

contracting challenges cited by the CWC in its final report are not a function of the 

organizational location or strength of our acquisition staff, but rather of the need 

for more effective contract administration support. 

As our contracting activity increased, we faced two challenges: 1) we 

needed additional acquisition personnel to support our procurement efforts; and 2) 

the requirements offices needed to better support our acquisitions with up front 

planning and contract administration oversight. 

As noted above, we increased our acquisitions staff through the Working 

Capital Fund - hiring 103 staff since 2008, in line with CWC Recommendation 13. 

The increase in staff can be directly attributed to direct-hire authority being 

obtained for "l102s," the contracting specialist series in March 2010, and we will 

continue to augment our direct-hire staff. Our additional staff has improved 

operation of the office, decreasing the time to complete a simplified acquisition by 

4.4 days or 23%. 

As part of the implementation of the Secretary's Quadrennial Diplomacy 

and Development Review, which called for elevating accountability for 

contracting, the Assistant Secretary of a performing bureau now needs to ensure 

that adequate resources, both personnel and funding, are identified early in 

program planning to make certain contract administration is not an afterthought. 

Department guidance issued in a Procurement Information Bulletin in June 2011 

requires the cognizant Assistant Secretary to certifY that planning and oversight is 

adequate for every service contract valued at an annual expenditure of$25 million 

or more, and also to verifY in their annual management control reviews that they 

have examined these contractual arrangements and judged oversight to continue to 

be sufficient. The guidance also highlights the appropriate use of contractor 

support in contract administration and discusses how to mitigate potential 

contractor conflicts of interest and violations of non-personal services 

requirements. 

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The Department also increased accountability for contract oversight by 

mandating the inclusion of contract oversight work elements in performance 

appraisals of technical personnel with contract management responsibilities, 

creating an award to recognize outstanding contract administration by a 

Contracting Officer's Representative (COR), and by creating and maintaining a 

community for CORs to share experiences and best practices, including shared 

websites. 

Contracting is a team effort at the Department with close relationships 

between acquisition and requirements personnel; collaboration is essential to 

anticipate upcoming requirements, allow sufficient lead time, consider various 

methods of procurement, and otherwise increase the efficiency of the acquisition 

process. The Contracting Officer from Acquisitions strives to appoint a COR as 

soon as a requirement is initiated, so that the COR can assist in the solicitation 

process. The Contracting Officer may appoint an additional individual-a U.S. 

government employee known as a government technical monitor (GTM)-to assist 

the COR in monitoring a contractor's performance. 

Over the past few years, we have trained and deployed more CORso In 

FYI! the Department had! ,080 employees certified to carry out COR duties and 

projects an increase to 1,200 by the end of FYI2. 

We believe our ability to increase our acquisitions staff through the Working 

Capital Fund, coupled with the steps taken to elevate accountability of the 

requirements offices for contracting - serves as a solid foundation for our 

contracting function at State. 

QDDR / Contractor Readiness (Sec. 132) 

As Secretary Clinton has noted, the QDDR is a valuable tool to provide us 

with short-term and long-term blueprints for how to advance our foreign policy 

objectives and our values and interests. We have seen tangible results from our 

first QDDR, such as the establishing of three new bureaus within the Department 

dealing with counterterrorism, energy, and civilian stabilization. We firmly 

believe that there should be a regular quadrennial review of this sort. We look 

forward to working with the Congress to institutionalize the QDDR. 

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The Department's current acquisitions process awards to contractors who we 

believe are ready to carry out our national security needs. In conjunction with all 

the offices that support our expeditionary diplomacy, we put into place contracts 

that can be accessed on short notice. If contractor readiness falters during the term 

of the contract, we would take remedial action. When new requirements are 

anticipated, the Department conducts market research to determine the extent and 

capability of the potential contractor pool. 

Training (Sec. 133) 

The Department supports increased training for contract administration 

personnel. We have updated COR training to be more interactive, skills based and 

adult learning focused. All CaRs and GTMs, both domestic and overseas, must 

complete a 40-hour approved training course. A separate COR class session has 

been tailored for CaRs from the Bureau of Diplomatic Security to include special 

issues dealing with oversight of local guards and other security programs overseas. 

All Department of State CaRs supporting DOD issued contracts for our Iraq 

mission take additional DOD training in the contingency environment and any 

other specialty training related to the specific contract. This ensures that 

Department of State personnel managing DOD contingency contracting programs 

meet the DOD standard. 

Reduced Length for Contingency Contracts/ One-Tier Subcontracts (Sec. 201) 

The Department objects to imposing contract term limits, as proposed in 

Sec. 201, that reduce contract performance periods for competitively awarded 

contingency contracts to three years. This limitation would require a continuous 

cycle of solicitation and contract award when resources are most constrained. 

Shorter contract periods may also reduce the amount of initial competition. 

Contracting Officers continually assess the need to exercise contract options to 

determine if continuing with an existing contractor represents the best decision for 

the Government. 

Limitation of contractors to a single tier of subcontractors is not practicable 

for large contracts, and may require significant additional contracting and contract 

administration capability in contingency operations where these resources are most 

scarce. It may also result in prime contractors attempting to do more work 

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themselves, regardless of cost or other efficiencies, to maintain a single 

subcontracting tier. 

Private Security Contractors (Sec. 202) 

The Department has a long history of using contract guards for protection of 

facilities and personnel stretching back to the 1970s, with enhanced capabilities in 

the 1990s. Private security contractors (PSCs) are critical to our readiness and 

capability to carry out American foreign policy under dangerous and uncertain 

security conditions. Maintaining this capability is particularly important when the 

Department is taking on expanding missions in contingency operations 

environments or areas that are transitioning from periods of intense conflict, such 

as in Iraq and Afghanistan. 

That said, we appreciate the intent of section 202. We have sought to reduce 

risks associated with using contractors through robust oversight of our PSCs, as in 

CWC Recommendation 4. Contractors are operationally overseen and 

contractually managed by direct hire Department of State personnel, and we have 

instituted cultural training requirements, and contractor behavioral standards of 

conduct to ensure the professionalism of PSC personnel. The Department is 

staffed to properly oversee PSC compliance with these contractual requirements in 

Iraq and Afghanistan. 

State strongly disagrees with the language of paragraph Sec. 202 (b)( 1), 

which has the combatant commander determining whether performance of security 

functions by contractor personnel for the Department of State in overseas 

contingency areas is appropriate and necessary. This language is too open-ended 

and is not acceptable as it infringes upon the Secretary of State's primary role in 

leading and carrying out foreign policy. The Secretary of State and the Chief of 

Mission have statutory responsibility for the safety and security of personnel under 

Chief of Mission authority. We routinely discuss the security situation in-country 

with DoD and other agencies present at post; and in situations where U.S. military 

forces are present, that coordination is intensified and ongoing. We fully comply 

with OFPP's new Policy Letter on inherently governmental and critical functions, 

and our PSCs never engage in combat operations. We hope to work with you and 

your staff to 'find mutually acceptable language in this section. 

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GSA Contracting Writing System (Sec. 211) 

State supports the use of consistent, clearly written contracts; however we do 

not support the provisions of211(a) calling for the Administrator of General 

Services to establish and maintain a single contract writing system applying to all 

Executive Agencies other than DoD. The Department of State spent considerable 

resources deploying our current contract writing system and, given the likely 

complexity of trying to create a single system, would be concerned about the 

expense and investment of resources needed to deploy another system. 

Trafficking in Persons (Sec. 222) 

The Department continues to support strengthening measures to combat 

Human Trafficking. State's Trafficking in Persons (TIP) office combats 

trafficking as a foreign policy mission, and we have also been vigorous in our 

efforts to ensure none of the contracts written by the Department are with 

contractors abusing their employees. We have identified contracting programs 

which may result in the hiring of unskilled or semi-skilled labor from third 

countries, including our facility construction and guard services. Major 

approaches/or initiatives undertaken at State to address these TIP contracting 

issues include: 

• Training Contracting Officers and CORs as our front line in preventing 

contractor trafficking in persons and worker abuses. The Department 

worked closely with the Federal Acquisition Institute (F AI) and the 

Department of Homeland Security (DHS) to develop on-line training for 

Contracting Officers across the government, including at State. 

• Oversight Recommendations - We have implemented many of the 

Commission on Wartime Contracting, GAO and OIG recommendations for 

contract oversight in Iraq and Afghanistan throughout our contracting 

program. Several Contracting Officers are collocated with bureau staff 

outside the contracting office to provide oversight, and Contracting Officers 

travel to overseas performance sites, as called for by CWC Recommendation 

2. When Contracting Officers are on temporary duty in a region, they look 

at other programs in the area that use contractors, taking extra steps to 

monitor and enforce TIP programs. In some locations, this includes having 

a direct-hire Project Manager or COR living on-site with construction or 

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security staff at their housing areas, and unannounced inspections of housing 

compounds for DS local guard programs . 

• Procurement Information Bulletin, PIB 2011-9 on TIP (issued March 24, 

2011) by State's Office of the Procurement Executive, is used by 

Contracting Officers to tailor specific oversight requirements based on 

locale, service, and contract type. New solicitation language regarding 

recruitment, including a recruitment plan and submission of agreements, has 

been developed for our contracts to prevent maltreatment of workers. 

Contingency contracts require special vigilance against trafficking in 

persons. We continue to strive for zero tolerance of trafficking in all our contracts. 

In conclusion, the Department has taken a significant number of positive 

steps to improve our contracting function. Because of our involvement in the Iraq 

and Afghanistan contingencies, and our reliance on support service contracts, we 

have increased the number of our contracting staff through the Working Capital 

Fund; improved our training; and enhanced our contract monitoring and oversight. 

As the CWC recommended, we have strengthened contract administration in 

conflict-affected states through the hiring and training of adequate federal 

personnel to provide strong governmental oversight of contractors. We also 

believe that S. 2139 has many positive elements that can be used to further 

strengthen our contracting program, and we look forward to working with you. 

Thank you for providing me with this opportunity to appear before you and 

for your ongoing support for the Department of State. I will be pleased to answer 

any questions that you have. 

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HOLD UNTIL RELEASED BY THE 

U.S. SENATE 

WRITTEN STATEMENT OF 

MR. RICHARD T. GIN MAN 

DIRECTOR. DEFENSE PROCUREMENT AND ACQUISITION POLICY 

BEFORE 

U.S. SENATE HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS COMMITTEE 

CONTRACTING OVERSIGHT SUBCOMMITTEE 

ON 

THE COMPREIlESIVE CONTINGENCY CONTRACTING REFORM ACT OF 2012 

April 17,2012 

HOLD UNTIL RELEASED BY THE 

U.S. SENATE 
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Chairwoman McCaskill, Scnator Portman, and distinguishcd members of the 

subcommittee, I welcome this opportunity to discuss the proposed "Comprehensive 

Contingency Contracting Reform Act of2012," the associated Commission on Wartime 

Contracting recommendations, and the impact the legislation would have on the 

Department. You asked me to specifically discuss the legislation's requirements for the 

management of service contracts, suspension and debarment, lines of authority for 

contingency contracting support, inclusion of contract support in planning documents and 

professional training, use of risk analyses for private security contracting (PSC) 

functions, uniform contract writing systems, contractor performance evaluations, 

strengthened provisions to combat trafficking in persons, and sustainability analyses. 

These topics all correlate to a provision in the proposed Act. as shown in Table I below. 

Each is addressed in my testimony, in the relevant provision section. 

Table 1. Subc()mmittee's Interest Areas/r()m Invitati()n Letter. 

Sub.iect Section 

Management of Service Contracts III 

Suspension and Debarment 1121113 

Lines of Authority for contingency contracting support 121 

Contract Support in Planning and Professional Training 1221123 

Risk Analysis for PSC Functions 202 

Uniform Contract Writing System 21 J 

Contractor Performance Evaluations 224 

Combating Trafficking in Persons 222 

Sustainability Analyses 231 

I am the Director of Defense Procurement and Acquisition Policy (DPAP) in the 

Office of the Under Secretary of Defcnse for Acquisition, Technology. and Logistics 

(USD(AT &L»), where I am responsible for Department-wide contingency contracting 

policy and functional leadership. I am a Career Civil Servant. with more than 40 years 

experience in government and commercial business in the fields of contracting, 

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acquisition, and financial management. Before assuming DPAP duties in October 2006, I 

held several private sector positions including Vice President ofGencral Dynamics 

Maritime Information Systems and Director of Contracts for Digital System Resources. 

served in the United States Navy for 30 years, retiring as a Rear Admiral, Supply Corps. 

In addition to three tours afloat, I servcd in a variety of contracting and acquisition 

positions that included Commander, Navy Exchange Service Command; Deputy for 

Acquisition and Business Management in the office of the Assistant Secretary of the 

Navy, Research Development and Acquisition; and Deputy Commander for Contracts, 

Naval Sea Systems Command. 

Before we get too far, I'd like to take a moment to acknowledge Senators 

McCaskill and Webb for their commitment to support of our troops. In addition to 

authoring the legislation we are here to discuss today, Senators McCaskill and Webb 

were also the co-sponsors of the legislation that created the Commission on Wartime 

Contracting (COWC), whose efforts spanned from 2008 to 2011 and whose August 2011 

final report recommendations are the genesis for some of the legislative provisions in the 

Comprehensive Contingency Contracting Reform Act. 

DoD Support of Commission on Wartime Contracting 

The Department is determined to identify, correct, and prevent contracting efforts 

inconsonant with U.S. objectives in Iraq and Afghanistan and wasteful of U.S. tax 

dollars. The Department supported fully the Commission's independent study by 

providing them with personnel, data, interviews, and insights. Some examples of the 

Department's support to the Commission include: 

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• DPAP served as the foeal point to faeilitate the Commission's efforts. The 

Department designated lJSD(AT&L) to serve in this role at the outset of 

Commission in 2008. 

• The Department detailed subject-matter experts (SMEs) to augment the 

COWCs 40-member staff. 

• The Department participated in 18 COWC hearings. 

• The Department analyzed each COWC publication, including its June 

2009 first interim report, February 2011 second interim report, and August 

2011 tinal report, as well as their various flash reports. 

In short, the Department interacted regularly with the Commission throughout its 

endeavors and continues to carry the torch to ensure improvements in the way ahead for 

addressing contracting challenges now, and in the future. We have made progress against 

the Commission's Final Report recommendations; for example-

• We have set annual eompetition goals for contingency contracts and will 

be reporting progress against them annually to Congress. This complies 

with Section 844 of the National Defense Authorization Act (NDAA) for 

Fiscal Year (FY) 2012 and comports with the Commission's final report 

recommendation 10. 

• We are committed to the Department's "zero tolerance" policy for 

trafficking in persons. In November 2011, the Department published 

additional contract administration duties to maintain surveillance over 

contractor compliance with trafficking in persons requirements for all 

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DoD contracts. This commitment to combating trafficking in persons 

echoes the Commission's final report recommendation 12. 

• With Congressional help, we have protected the government's interests in 

two important ways: Sections 841 and 842 of the NDAA for Fiscal Year 

2012 provide the Department with "no contracting with the enemy" 

remedies and access to subcontractor records. This aligns with the 

Commission's final report recommendation 13. 

These are just a few examples of the initiatives we are embarked upon that relate 

to the Commission's recommendations. We maintain a scorecard to manage DoD 

progress against all the Commission's recommendations. We currently are working with 

the Government Accountability Office (GAO), which is engaged under job number 

J 21 042 in evaluating the Department's progress against the Commission's 

recommendations. We have provided GAO with a copy of the Department's scorecard. 

DoD Reaction to Comprehensive Contingency Contracting Reform Act 

Senators McCaskill and Webb introduced S.2139 on February 29, 2012, to 

"enhance security, increase accountability. and improve the contracting of the Federal 

Government for overseas contingency operations, and for other purposes." This 

"Comprehensive Contingency Contracting Reform Act of2012" contains 23 provisions, 

19 of which apply to DoD (the others apply only to State and/or USAID). The 19 DoD 

provisions are far-reaching. They fall under the purview of different DoD stakeholders, 

including the USD(AT &L), who serves as the DoD technical lead on the legislation; the 

Under Secretary of Defense (Comptroller); the Under Secretary of Defense (Policy); the 

DoD Inspector General; and the Chairman, Joint Chiefs of Staff. Since the bill was 

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introduced just over a month ago, the various 000 stakeholders continue to analyzc its 

provisions. Today, we offer high-level reaction to the provisions applicable to 000. 

Before embarking on a discussion of the bill's individual provisions, it is 

important to emphasize that 000 supports the legislation's goals to enhance security, 

increase accountability, and improve contracting for overseas contingency operations. 

The Department is committed to providing the leadership. policies, and innovative tools 

needed for contracting in support of our overseas contingency operations, as well as 

preparing for our future contingency endeavors. Legislation is often a necessary means 

of achieving this end, as evidenced by the provision recently provided in Section 842 of 

the NOAA for FY 2012 for access to subcontractor records. An example of a welcome 

provision in the Comprehensive Contingency Contracting Refonn Act is the requirement 

that contractors certify they have not engaged in trafficking and have procedures to 

prevent such activities. 

Title I-Organization and Management of Federal Government 

for Contracting for Overseas Contingency Operations 

The Department understands the need to be well organized, trained, and equipped 

to manage any of our contracts; whether it be stateside or an overseas contingency 

operation (OCO). The USD(AT&L), USD(Policy), Joint Staff, USD(Personnel and 

Readiness) (P&R), Defense Contracting Management Agency (DCMA), Defense 

Contracting Auditing Agency (DCAA), Defense Logistics Agency (DLA), 

USD(Comptroller), and Major Commands-to name a few-jointly monitor planning, 

execution, and oversight of the funds appropriated by Congress. This is a true team 

effort. Each of these organizations brings their own unique subject matter expertise in 

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oversight of contingency contracting that tics back to the resources and expertise of the 

acquisition system as a whole. 

In the past, the Department was not properly organized and staffed to effectively 

manage contractors on the battlefield: we had a shortfall of acquisition oversight and 

lacked a program management approach to Operational Contracting Support (OCS). 

However, the Department has made great strides in the near-tenn leveraging the work of 

various task forces and senior level working groups to implement new policy, guidance, 

training, new initiatives to improve management of contractors on the battlefield and 

assisting the permanent planning function at Geographic Combatant Commander (GCC) 

level to ensure their contracting, logistics and materiel readiness needs are included both 

now and in the future. 

Subtitle A-Government-wide Matters 

Subtitle A contains four sections: Sections 101, 102, and 103, which apply to 

000: and Section 104, which does not apply to 000. 

Section 101 provides for responsibilities of the President regarding financing of 

OCO and requires funding requests to identify specific information. Section 102 details 

responsibilities of the Director of the Office of Management and Budget (OMB) 

regarding OCO and requires OMB to provide cost estimates and annually report 

obligations and expenditures. 

The provisions of Sections 101 and 102 appear aimed at ensuring proper 

planning, execution, and oversight of the funds appropriated for overseas contingency 

operations. 

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Both of these provisions are matters over which the OSD Comptroller has 

cognizance for the 000. The Department can meet most of the requirements of Sections 

101 and 102, but defers to the OMB for comment since it has the insight into the 

budgeting and reporting capabilities of the rest of government. Some of the requirements 

of section 102. such as OCO estimates for "future costs" or "anticipated contracting 

costs," would be very difficult to accurately predict due to the dynamic. evolving nature 

of contingency operations. The 000 OCO budget is a bottom-up budget preparation 

each year, configured to support current national policy and military strategy. and 

Commander needs on the ground. Consequently. 000 estimates of future OCO 

requirements, even at the aggregate, could be inaccurate and even unhelpful. Lastly, the 

000 has existing legislation for the quarterly reporting of OCO obligations and 

expenditures, and while the proposed legislation does not disagree, we would welcome 

the opportunity to work with the Committee to consolidate OCO reporting requirements. 

Section 103 makes appointment of a designated lead Inspector General (IG) a 

requirement for any designated overseas contingency operation that exceeds 30 days. 

This recommendation falls within the purview of the office of the 000 IG. Ms. Lynne 

Halbrooks, Acting Inspector General, is also testifying today and therefore. I will defer to 

her comments on this provision of the legislation. 

Section 104 expands responsibilities of the Chief Acquisition Officers (CAOs) of 

Federal Agencies to include oversight of contracts and contracting activities for overseas 

contingency operations. Although this is a provision for agencies other than 000, which 

is specifically excepted from 41 USC 1702. I support the notion of having a CAO be 

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responsible for OCO contracting issues. At DoD, the lJSD(AT &L) is the CAO 

responsible for oversight of contingency contracting. 

Subtitle B-Multi-Agency Matters 

Subtitle B contains three provisions. all of which pertain to 000: section III, 

112, and 113. 

Section 11 1 adds OCO in the definition of the types of services covered by 

Section 2330 of title 10, United States Code, and adds a reporting requirement on 

implementation, which applies to 000, the State Department, and USAID. 

The Department is focused on improving all services acquisitions. For example, 

we published a comprehensive architecture to guide the acquisition of services. This 

requirement is encapsulated in Department of Defense Instruction, DoDI 5000.02, 

Enclosure 9. In reviewing contracted services, we seek to ensure that the requirements 

are clear and well defined, the acquisition approach and business strategy are appropriate 

and that there are mechanisms in place to provide for proper oversight of contractor 

performance. More recently, in September 20 I 0, USDfAT&L) embarked on a Better 

Buying Power Initiative, and one of its mandates was to "improve tradecraft in services 

acquisition." Among other things, the Under Secretary directed the Department to more 

aggressively manage the more than $200 billion it spends annually on services (such as 

information technology services, weapons-systems maintenance, and transportation) -

more than 50 percent of the Department's contract spend. He also requircd thc military 

departments and defense components to establish a senior manager for the acquisition of 

services at the General Officer, Flag, or SES level. These senior managers are 

responsible for governance in planning and execution of service contracts. Furthermore, 

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the Department has established for the first time a common taxonomy of types of services 

to organize procurement of services into six portfolio categories to make fact-based 

decisions, facilitate the sharing of best practices and lessons learned, and institutionalize 

strategic sourcing. 

Section 112 requires at least one suspension and debarment official (SDO) for 

each department or agency. specifies the SDO cannot be located or co-located within the 

acquisition office, and imposes limits on the SDO's duties. The Service SDOs have 

primary cognizance over this provision. In DoD, Service SDOs are independent of both 

acquisition and the IGs. This independence serves the Department well. 

DoD components already have very mature suspension and debarment programs. 

While ensuring that our SDOs remain independent, we leave the construct of suspension 

and debarment programs to the Components. Air Force and Navy have dedicated SDOs 

who also handle fraud matters; the Army and DLA separate SDO duties from fraud 

matters. The Components have structured their programs to best fit their requirements 

from both effectiveness and efficiency perspectives. This autonomy has worked well. 

Annually the DoD SDO program leads the federal government in terms of the number of 

actions taken, and the DoD SDOs provide both infonnal and formal leadership in the 

various Suspension and Debannent-related forums, including the Interagency Suspension 

and Debarment Committee (lSDC), the DoD Procurement Fraud Working Group, and 

public-private professional associations, such as the American Bar Association's Section 

of Public Contract Law, Debarment and Suspension Committce. Rather than impose thc 

proposed statutory "one size fits all" approach, we think it would be more appropriate for 

language to allow DoD thc nexibility to continue to tailor its approach to unique 

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component situations. We would welcome the opportunity to work with Congress on 

appropriate language. 

Section 113 provides additional basis for suspension of contractors from 

contracting with the federal government, specifying circumstances where suspension 

would be automatic. Like Section 112. the Service SDOs have primary cognizance over 

this provision. 

There are severe consequences to a company when it has been suspended or 

debarred. However, the goal of the suspension and debarment process is not to be 

punitive, but to protect the government's interests and to ensure that in the future we only 

do business with reputable contractors. Our suspension and debarment process works as 

well as it does because it gives contractors the opportunity to defend themselves in 

response to allegations. If suspension and debarment is perceived by the contractor 

community to be unfair or automatic, that increases the chances that a suspension or 

debarment will be litigated in the courts rather than handled through a relatively quick 

and efficient administrative process. We believe each situation is best addressed through 

the current administrative process, which vests the SDO with discretion to carefully 

weigh the facts, consider the existence of mitigating facts and remedial measures, 

evaluate the contractor's present responsibility. and make a decision that is in the best 

interests of the government on a case-by-case basis. We do not believe that automatic 

suspension that denies contractors due process is in the government's interest. 000 

opposes mandating automatic suspension because for the suspension and debarment 

process to have legitimacy and credibility, SDOs need independence, freedom of action, 

and discretion (0 exercise judgment regarding whether an exclusion is appropriate. 

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Subtitle C-Department of Defense Matters 

Subtitle C contains three provisions, all of which pertain to DoD: section 121, 

122, and 123. 

Section 121 would require the Secretary of Defense to prescribe the DoD chain of 

authority and responsibility for policy. planning, and execution of contract support for 

overscas contingency opcrations. This is a provision that invokes DoD-wide equities, 

from USD(AT &L) to USD(Policy) to the Chairman, Joint Chiefs of Staff. I support 

cnsuring that the importance ofOCS is inculcated throughout the Department and 

welcome efforts to assist the Department in eliminating waste. fraud and abuse in 

wartime contracting. In March 20 I 0, USD(A T &L) created a permanent board to provide 

strategic leadership to the multiple stakeholders working to institutionalizc OCS. The 

board includes all relevant OCS stakeholders, including USD(AT&L) who is rcsponsiblc 

for OCS policy; Joint Staff who is charged with joint OCS planning and formulating 

doctrine; and the Combatant and Service Component Commanders who have the duty of 

OCS planning, and selccting organizational options for thcater and external contract 

management and OCS execution. An ongoing GAO engagement 351692 is examining 

the Department's implementation ofOCS initiatives. The results of this GAO 

engagement should help guide the way forward for this activity. 

Section 121 also contains a reporting requirement that a combatant command 

report several elements of contract data upon commencement of a contingency operation 

that exceeds 30 days. While such a reporting requirement seems reasonable for long term 

operations, it is impractical to assume such data would be available or be of value in the 

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very early phases of an operation. Therefore, DoD believes a more substantial time lag, 

perhaps six months, for the reporting to begin would be appropriate. 

Section 122 requires the Chairman of the Joint Chiefs of Staff, in coordination 

with a number of other individuals to provide quarterly assessment ofOCS capability to 

support current and anticipated wartimc missions. and recommended resources required 

to improve/enhance support and planning for such operational contact support. This 

recommendation is primarily in the Military Services and Joint Staffs domain. 

The Department already requires planning for contract support in its strategic 

planning guidance. While the Department supports increasing resources to meet new 

planning requirements, this provision to adjust CJCS functions appears unnecessary as 

those requirements will already be identified by the time legislation is enacted via a 

manpower study due out in the next month. 

Section 123 requires inclusion of contingency operations matters in joint 

professional military education in senior and intermediate schools. and specifies 

curriculum: defining requirements, contingency program management. contingency 

contracting, and the strategic impact of contracting cost on military missions. The scope 

of this recommendation primarily belongs to the Joint Staff and military services. 

We agree that OCS should be recognized in professional military education. The 

Joint Staff and military serviccs have produced doctrine for OCS, which is the basis for 

professional military education. Further, the curriculum for each phase of joint and 

Service-specific professional military education should include OCS content appropriate 

for each phase of an officer's professional development and in a manner consistent with 

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doctrine. This provision will help 000 and the Services focus on improving OCS 

coverage in professional military education. 

However, we do not support having specific topics prescribed. Indeed, the 

appropriate content goes well beyond those areas specified so. as written, the provision is 

limiting. Additionally. the provision focuses only on joint professional military 

education, which affects a relatively small percentage of officers. A more holistic 

approach would include OCS education requirements for both joint and Service 

professional military education. We would like to work with the committee on this 

provision. 

Subtitle D-Department of State and Related Agency Matters 

Subtitle 0 contains three provisions, all of which do not pertain to 000: sections 

131, 132, and 133. Therefore, I will not comment on them. 

Title II-Transparency, Sustainability, and Accountability in Contracts for 

Overseas Contingency Operations 

Subtitle A-Limitations in Contracting 

Subtitle A contains three provisions that all fall within USD(AT&L) purview: 

Sections 201, 202, and 203. 

Section 201limits contract periods to 3 years (competitive contract) or I year 

(non-compctitive contract; and only one bid received); it also limits service contracts to a 

single tier of subcontractors. This falls under USD(AT &L) cognizance. While waiver 

provisions are offered. the provision unnecessarily constricts the needed flexibility during 

contingency operations. 

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Reducing performance periods could have the unintended consequence of 

increasing workload of the contracting and oversight workforce, stressing the contractor 

accountability system (the Synchronized Predeployment and Operational Tracker, or 

SPOT), decreasing competition as overloaded contracting officers "sole source" contracts 

to sustain needed support, and increasing cost. 

Management and oversight of contractors performing in deployed locations 

requires a cadre of military members and government civilians to perform Contracting 

Officer's Representative (COR) duties. CORs are the eyes and ears of the government to 

monitor contractor performance. The Department has recognized that inadequatc 

surveillance of contracts has left us vulnerable to the potential that we are paying full 

price for less than full value. Therefore, over the past two years, we have developed 

COR certification and training standards to professionalize this vital function and instill 

rigor in the management and oversight process. On March 29, 2010, USD(AT&L) issued 

a memorandum to formalize standards for certification and training for our CORso On 

March 22, 2012, the Department published the DoD COR Handbook, which addresses 

key aspects of contract quality surveillance and roles and responsibilitics of the 

contracting officer, the COR, and the requiring activity. In addition, the Panel on 

Contracting Integrity developed a draft DoD Instruction to institutionalize these 

requirements for CORso This DoD! is significant, not only because it will standardize 

COR functions, but also because it will require the Defense Components to plan and 

budget for COR requirements. 

Contract options allow the flexibility in performance periods that is critical to 

providing requirements in fluid operations. That said, I agree, especially for services, 

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that length of time for eontracts and task orders needs to be tempered with the difficulty, 

in a warzone environment, oftransitioning from one contractor to another. As an 

example, we extended many task orders and contracts supporting the Iraq mission, rather 

than recompete them, to allow leadership to focus on the drawdown through calendar 

year 20 II rather than focus on transitioning contract which would be of short duration 

when the period of performance ended on December 31, 20 II. 

Limiting service contracts to one subcontract tier to bolster accountability and 

improve transparency is unworkable. As an example, LOGCAP task orders today cover 

a wide range of base support services; if this provision is enacted. we would need to write 

multiple individual task orders for eaeh service (e.g., food serviee, power distribution, 

water, fuel, and so forth). Even with this approaeh it is likely that one tier of 

subcontracting is not possible. The Department bas been proactive in contracting 

strategies to ensure transparency. For example the Department recompeted and 

restructured the Host Nation Trucking contract utilizing fair opportunity, in order to 

eliminate layers of subcontractors and to allow more transparency into the contracted 

support that provides security for supply truck convoys. 

Section 202 requires an OSD review, risk analysis. and Congressional report on 

the performance of security functions. It further requires a Combatant Commander 

review, risk analysis, and documentation of sourcing security functions, considering 

military, civilian or contractor performance. It prohibits the use of contractors to conduct 

such risk analysis. This falls under USD(AT &L) cognizance. with Logistics and Materiel 

Readiness (L&MR)/Program Support lead. 

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I fully support efforts to strengthen planning, oversight. and accountability for 

Private Security Contractors (PSCs); however, Section 202 is duplicative from the 

Department's perspective, in light of existing DoD Instructions 3020.41 (Operational 

Contract Support) and 3020.50 (Private Security Contractors Operating in Contingency 

Operations, Humanitarian or Peace Operations, or Other Military Operations or 

Exercises). Additionally, Section 833 of the NDAA for FV 2011 requires business and 

operational standards that will enhance PSC planning, oversight, and accountability. Our 

efforts to implement this provision are ongoing. The Department of Defense has 

significantly increased its oversight of private sccurity contractors in recent years, and we 

are working to implement Section 831 of the NDAA for FV 20 I I. which rcquires the 

Department to take further steps to assign sufficient personnel to oversee private security 

contracts. We will continue these cfforts. At the same time, PSCs continue to be 

necessary to perform certain security functions. 

Section 203 requires a justification and approval (J&A) for sole-source contracts 

under the unusual and compelling urgency exception to the requirement for full and open 

competition; it also specifies reporting to several Congressional Committees annually. 

I agree that competition drives the best deal for the Government. This is a central 

tenet of the USD(AT&L) Better Buying Power Initiative. USD(AT &L) is focused on 

improving competition in Defense procurements, regardless of whether they occur in a 

conventional or contingency environment. To emphasize the importance of competition 

in the contingency environment, USD(AT &L) has established competition goals for 

Operation Enduring Freedom. The Department's progress in this area will be included in 

the annual DoD Competition Report. 

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Section 203 is broader than contingency contracts. It requires a compilation and 

reporting of all J&As that use unusual and compelling urgency to limit competitive 

procedures. 

I am concerned that Section 203 imposes an administrative burden to collect and 

report annually, particularly given the fact that J&As already are posted on the Federal 

Business Opportunities public webpage. 

Subtitle B--Enhancements of Contracting Process 

Subtitle B contains two provisions that all fall within USD(AT&L) purview: 

Sections 21 1 and 212. 

Section 211 requires a uniform contract writing system for DoD and another for 

Federal agencies. This translates to a requirement for DoD to have one contract writing 

system for all agencies/components/departments. I believe this unnecessarily specifies a 

solution to a challenge that DoD is already addressing. A single system for all DoD 

activities is not workable. 

DoD contract writing systems have to operate in a variety of surrounding system 

and organizational environments, each of which may have its own interfacing requiring 

systems and financial systems. Rather than specify a system-specific solution that may 

not be usable in all organizational operating conditions, DoD has mandated common 

output data formats, data sources, and internal controls that any DoD contract writing 

system must meet. This mandate will achieve the same goal without requiring a single 

system to operate in a range of environments beyond what is efficiently achievable. The 

Standard Procurement System, as a single system, was never fully successful. We are 

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working with the Services and the Joint Staff on a common set of capabilities for use in 

contingcncy environments. 

Section 212 requires the establishment and maintenance of a database of prices 

charged under government contracts to be used for monitoring price 

developments/trends, cost/price analysis and price reasonableness determinations, and 

source selections. It requires use of the Director, Defense Pricing pilot project, where 

appropriate. This initiative falls under the purview of USD(AT &L). 

I support the idea of empowering our contracting workforce with pricing 

information so they can obtain the best deal for the government. While it would be 

helpful to have informed pricing for recurring purchases, pricing information for unique 

items and/or unique environments would benefit less from the database. Purchases made 

in a contingency environment typically yield different prices than those in a conventional 

environment. As Section 212 indicates, the Director, Defense Pricing is undertaking a 

pilot and the Department will certainly share information with the Office of Federal 

Procurement Policy and other appropriate organizations on this initiative. The Director. 

Defense Pricing together with the Defense Contract Management Agency, is exploring 

tools and other resources (such as establishing Defense pricing centers of excellence) to 

best build and equip the DoD pricing community. 

Subtitle C-Contractor Accountability 

Subtitle C contains four provisions that all fall within USD(AT&L) purview: 

Sections 221 , 222, 223, and 224. 

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Section 221 requires contractor (subsidiary, parent or successor entity, and 

subcontractors) consent to personal jurisdiction for civil actions on overseas contracts 

valued at greater than $5M. 

We agree in broad terms that the Department of Defense needs to have remedies 

available to handle contractors who may not be subject to U.S. law. This provision is 

similar to that drafted by the Homeland Security and Governmental Affairs 

Subcommittee on Contracting Oversight titled "LTC Dominic 'Rocky' Baragona Justice 

for American Heroes Harmed by Contractor Act." 

Legal issues surrounding this provision are extremely complex and we would like 

to work with the Congress to develop an effective approach to ensuring contractors can 

be held accountable. Some local subcontractors will not consent to US jurisdictionparticularly in immature theaters-potentially leading to a lack of subcontractors to 

provide the essential logistics support to engaged forces, risking lives and the mission. 

Further, countries where we might have contingency operations and where judicial 

systems may be less objective and sophisticated, may insist on reciprocal provisions for 

U.S. contractors in their countries, which might limit U.S. contractor participation or 

increase their costs. 

Civil jurisdiction is covered by treaty obligations, such as the Ilague Convention, 

and various Executive level agreements such as Status of Forces Agreements (SOFAs) 

and stationing agreements (some of which are classified or otherwise not public). Where 

such agreement requires that host nation nationals be subject only to host nation law, 

operations would be severely impactcd. Section 221 may complicate international 

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negotiations related to contingency operations and may adversely affect the ability to 

support the warfighter engaged in a contingeney operation. 

Section 222 authorizes termination of contracts if a contractor/subcontractor 

engages in severe forms of trafficking. It also requires contractor certification that they 

have not engaged in trafficking and have procedures to prevent such activities. We 

would welcome legislative language requiring the contractor certification. 

Section 222 would amend the Fraud in Foreign Labor Contracting Act to address 

"Wark Outside the United States" to include trafficking in persons violations associated 

with recruiting, soliciting or hiring. With regards to Combating Trafficking in Persons 

(CTlP), we fully support the Federal Government and Defense Department's zero 

tolerance policy. USD(AT&L) works with the USD (Personnel and Readiness) who 

manages the DoD Trafficking in Persons Program required by the Trafficking Victims 

Protection Act of2000 and subsequent Reauthorizations. AT&L ensures that contracting 

regulations and policy communicates this zero-tolerance message. To improve 

awareness and the effectiveness of DoD's CTIP Program within the DoD contracting 

community, USD(AT &L) has included information on CTIP in contingency contracting 

handbooks and issued brochures and business-type cards in seven different languages in 

the theater. DoD contracts performed in Iraq and Afghanistan contain clauses that 

provide contractors the guidance on required actions to take should alleged offenses by or 

against contractor personnel occur. We are in the process of expanding these clauses to 

make them applicable worldwide for contractors supporting all contingency, 

humanitarian or peacekeeping operations. 

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Section 223 requires Federal Awardee Performance and Integrity Information 

System (FAPIlS) include information on any parent, subsidiary, or successor entities of 

the corporation. We do not have this information at this time. We support corporations 

explaining their corporate structure (e.g., the relationship between any parent, subsidiary, 

or successor entities (family tree». We believe this information should be provided in 

the registration process for an identification number. Applications such as FAPIIS could 

then use the family tree information. 

Section 224 impacts contractor performance evaluations and the Past 

Performance Information Retrieval System (PPIRS). Specifically, it terminates the 

regulatory requirement to submit an agency evaluation to the contractor, and to pennit 

contractor response and to retain this response in PPIRS. This is under USD(AT &L) 

purview. 

Section 224 wou Id remove the right of the contractor to respond to performance 

evaluations and to have such evaluations rcvicwed at a level above the contracting 

officer. The COWC provided a similar recommendation to which the Department 

objected on the grounds that it removes due process. Allowing unadjudicated comments 

in the past performance system invites additional justification for protest when the 

information is relied upon for award decisions. The Department believes a contractor 

should have the ability to respond to a contracting officer's performance evaluation. We 

understand the importance of the government having timely access to past performance 

assessments. Section 806(c) of the NDAA for Fiscal Year 2012 (P.L. 112-81) would 

shorten the comment time from 30 days to 14 days, as a means to accelerate entries while 

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still providing for due process. The Department is in the process of implementing this 

legislative mandate. 

For many years, the FAR has required agencies to provide for review of agency 

evaluations at a level above the contracting officer to consider disagreements between the 

parties regarding the evaluation. Some have raised concern that the appeal process increases 

burden on contracting officials without associated benefit. Others contend that the appeal 

process helps to ensure that evaluations are merit based. The FAR Council is considering the 

merits ofmodiJYing FAR requirements governing the appeal process and evaluate whether 

this change would improve or wcaken the effectiveness of past perfonnance policies and 

associated principles of impartiality and accountability. The Department would oppose 

removal of the regulatory appeal requirements unless this review concludes that such action 

is in the best interests of the government. 

Subtitle D-Other Matters 

Subtitle D contains one provision that falls within USD(Policy) purview: Section 

231 on sustainability. 

Section 231 mandates that new capital projects over $1 million, funded through 

the Commander's Emergency Response Program (CERP). the Afghanistan Infrastructure 

Fund (AIF), and the Afghanistan Security Forces Fund (ASFF), cannot begin until 

SECDEF and CDR USFOR-A certify Afghanistan capability; it also mandates that 

existing capital projects cannot continue without such certification. This provision falls 

under the purview of USD(Policy). 

USD(Policy) is concerned about the provision's impact on the commander's 

flexibility, and unduly delaying an already arduous process for CERP and AIF projects 

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which require Commander CENTCOM approval. Currently, the Office of the Secretary 

of Defense reviews all CERP projects over $1 million. In addition, the requirements for 

Secretary of Defense approval and congressional notification already exist for CERP 

projects over $5 million, and for all AIF projects. We do not think this provision is 

necessary. 

From the AT&L perspective, I am an advisor for the Afghanistan Resources 

Oversight Council (A ROC), which oversees funds appropriated to the ASFF. The 

Department chartered the AROC in August 20 II, charging it with responsibility for 

ensuring proper planning, execution, and oversight of the funds appropriated for various 

projects associated with the current overseas contingency operations. AROC was 

established in accordance with the Senate Committee Report 111-295 to establish a 

council to oversee funds appropriated to the ASFF. The AROC is jointly chaired by 

USD(AT&L), USD(Policy) and USD(Comptroller). This council provides oversight for 

the ASFF, AIF, and CERP. Proper planning, execution, and oversight of the funds 

appropriated for these programs are essential for good stewardship of these resources. 

The Department continues to expand the AROC's focus to ensure the success of capital 

projects. Most recently, AROC has been charged with approving requircment and 

acquisition plans for ASFF, CERP, and AIF, within certain thresholds. 

Conclusion 

Finally, I wish to reiterate our appreciation for your continued commitment to 

improving contingency contracting. Like you, the Department is focused on meeting the 

warfighters' current and future needs while judiciously managing DoD resources and 

balancing risk. Much has been accomplished, but of course challenges remain. Wc are 

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not complaccnt and acknowledge we still have more work to do. We appreciate the work 

of the Commission on Wartime Contracting and this Subcommittee in maintaining a 

focus on this critical area. We welcome Congressional interest in this topic, as evidenced 

by Senators McCaskill and Webb authoring the Comprehensive Contingency Contracting 

Reform Act. I thank you for the opportunity to provide you with the Department's 

reactions to this bill's provisions and I welcome your questions. 

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STATEMENT BY 

Angelique M. Crumbly 

U.S. Agency for International Development (LJSAID) 

Acting Assistant to the Administrator, Bureau for Management 

BEFORE THE 

Homeland Security and Governmental Affairs Committee 

Subcommittee on Contracting Oversight 

United States Senate 

April 17, 2012 

Chairman McCaskill, Ranking Member Portman, and distinguished members of the 

Subcommittee on Contracting Oversight. thank you for the opportunity to discuss the 

potential impact of Senate bill 2139 (S.2139), the Comprehensive Contingency Contracting 

Reform Act of 20 12, on the United States Agency for International Development (USAID). 

The more than 9,000 men and women of USAID work to provide effective 

economic, development, and humanitarian assistance in support of our U.S. foreign policy 

goals. How we improve our contracting practices, including our contingency contracting 

practices, directly impacts the success and sustainability of our mission. Accountability to 

Congress and the U.S. taxpayer for the funds we use to develop successful programs is our 

duty. And it is a duty that we take very seriously. 

Therefore, LJSAID understands the significance and motivations behind this 

legislation. It addresses many of the management challenges that were highlighted in the 

report written by the Commission on Wartime Contracting (CWe). that you. Senator 

McCaskill, created along with Senator Webb. It also addresses some of the most important 

issues that we contend with through engagements such as Afghanistan, Iraq, and expect to 

contend with in a potential future contingency. 

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USAID has supported the cwes goals, provided access to our missions and data, 

testified at its formal hearings, and implemented its interim recommendations to the 

greatest extent practicable. 

This legislation represents a measure to strengthen accountability on behalf of the 

U.S. taxpayer, and goes far in an effort to re-establish trust in the government's ability to 

manage its contracts portfolio undertaken as a result of contingency operations. USAID 

agrees we must institutionalize accountability in contingcncy contracting. 

In the past two years, USAID Administrator Rajiv Shah instituted one of the most 

comprehensive reform packages I have seen in my 23 years of service in the federal 

government. Our USAID Forward reforms, as we have named them, target and challenge 

the status quo within the Agency, ensuring that we provide a more effective business model 

and deliver more sustainable and results-driven development programs. 

Implementation and Procurement Reform is a key element of the Agency's overall 

operational USAID Forward refonn agenda. This reform agenda is complementary to 

many of the recommendations of the cwe and as a result, USAID has already made great 

strides in enhancing our oversight and accountability of the Agency's acquisition and 

assistance portfolio. 

As the Acting Assistant to the Administrator, Bureau for Management, it is my 

responsibility to ensure that we take the practical and cost-effective steps necessary to 

improve our business processes and systems in order to achieve our broader development 

mission. In my capacity, I oversee the Agency's Chief Information, Financial and Senior 

Procurement Executive Officers as well as provide oversight of the Agency's almost $2 

billion Operating Expense budget. My staff is intimately involved in instituting our 

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operational reforms under USAID Forward. We are conditioned-and thereby arc 

conditioning our overseas staff-to ask how we can improve the way we do business to 

produce better, more cost-effective and appropriate results. 

Accountability and oversight require serious attention and resources-not just in 

designated contingency zones but wherever USAID works. Countries with weak rule of 

law, little or no infrastructure, war-torn social or governmental obstacles. or reduced 

economic capacity are whcrc wc work every day - and can test the most stringent oversight 

standards we put in place. It is no secret that contingency operations in Afghanistan and 

Iraq have tested USAID's capacity and capabilities beyond the norm. In those cases, we 

worked on development solutions in the midst of active military engagements. In many 

cases, we succeeded, but in some, we did not. 

Today, I will provide some updates on the work that we have been doing to meet 

your, the CWe's, and our own expectations on improving management, oversight, and 

accountability at USAID. Following are some examples of enhanced accountability and 

stewardship of U.S. taxpayer dollars: 

• Committing to transparency: The public can now view our spending, 

including spending on overseas contingency operations, through an on-line 

dashboard called ForeignAssistancc.gov. 

• Strengthening oversight: In February 2011, we stood up a Compliance 

Division within the Bureau for Management's Offlee of Acquisition and 

Assistance (M/OAA) to serve as the central repository for any and all 

referrals of administrative actions, including suspension and debarment 

actions. In just one year the Division issued 102 administrative actions and 

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recovered nearly $1 million. Compare this to the eight (8) administrative 

actions issued between FY 2003 and FY 2007. 

• Promoting enhanced competition: We established the Board for 

Acquisition and Assistance Reform (BAAR) in 20 I O. In its first year alone, 

the BAAR's recommendations resulted in a 31 % increase (from 29 to 38 

awardees) in the number of prime contract awards, representing a total 

combined ceiling of$15.9 billion. The mere presence of the BAAR has led 

to a significant increase in competition and a broadening of our partner base. 

• Instituting cost savings: Initiated in 2010, our Acquisition Savings Plan 

yielded approximately $171 million in cost savings or avoidance. 

USAID has learned some difficult lessons from Iraq and Afghanistan, but we have 

also achieved some significant successes. As Administrator Shah noted to the CWC last 

year, here are a few examples: 

• Afghanistan: We have put more than 2.5 million girls back in school; 

integrated into the Afghan public sector 16.000 civil-serviee trainees; aided 

farmers transitioning towards growing legitimate crops; and helped 

dramatically improve health care, particularly among women. 

• Iraq: Financing to more than 30,000 women has enabled $63 million in 

economic activity, and agribusiness programs have created 40.000 

sustainable jobs. 

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As you requested, I will now turn to offering my comments on the provisions that 

directly impact USAID within the proposed Comprehensive Contingency Contracting 

Reform Act of 20 12, 

Responsibilities ofInspector General (Sec. 103) 

I defer to our USAID Office of Inspector General for comment. 

Suspension and Debarment Officials (Sec. 112) 

USAID agrees that the Suspending and Debarring Official (SDO) must maintain 

autonomy from the contracting agents to make the tough decisions. We do, however, have 

concerns with requirements that the SDO and his/her staff may not be located or co-located 

within the acquisition office. After our discussions with the CWC, and a review of the 2009 

USAID Office of Inspector General report on suspension and debarment, we reviewed the 

management structures with the Bureau and determined that it was best to separate the 

duties for suspension and debarment cases into a dedicated unit within the Office of 

Acquisition and Assistance (M/OAA) - the Compliance Division that I described 

previously. Currently. this unit reports directly to the Director of M/OAA within the 

Bureau for Management, who also serves as the current SDO for the Agency. 

Because USAID contracts are most often "cradle to grave" actions-requiring a 

contracting officer to manage the initial start up of an activity, oversee it through its 

lifespan, and then close out the contract activity-the Compliance Division in Washington, 

D.C. serves the important function of keeping worldwide records on partners and their 

performance across a wide range of contracts or grants. 

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This Division is staffed by procurement analysts to maintain a necessary level of 

technical expertise for review of tips and information that come into the division via 

contracting officers, contractors, the USAID Inspector General, or another source. After 

receiving tips and actionable information that poor performance. waste, fraud, or abuse 

may be occurring under a USAID award, the Compliance Division collects and reviews the 

case, develops a recommendation, sends it to the General Counsel for approval, and then 

submits the recommendation to the SDO. The SDO performs a review of the case and 

issues a final decision. The duties and the interests of those who conduct the program with 

the affected contractor and those who recommend the case go forward remain separate 

from our current SDO. 

Internally, the Division works closely with our Office of General Counsel; in fact, 

one member of the team is a General Counsel detailee. I also appreciate the work of the 

Office of the Inspector General (OIG) in supporting this Division and its efforts to provide 

relevant information for ongoing cases. The coordination offered by the OIG has played a 

critical role in allowing us to pursue the number of cases we have in this past year alone. 

By sharing relevant information from ongoing investigations, we are more able to address 

and correct situations immediately rather than waiting until an investigation ends and a 

report is issued. The Division also actively engages with the Interagency Committee on 

Debarment and Suspension, attending each meeting and weighing in on necessary activities 

to kcep other agencies abreast of ongoing cases. 

In addition, under the direction of our Administrator, we created the Suspension and 

Debarment Task Team, which is spearheaded by the USAID Deputy Administrator and 

directly engages the SDO and the Compliance Division. This task team triggers whenever 

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an issue arises involving the potential waste, fraud, abuse, or poor performance of one of 

our major partners, It serves as a real-time vehicle to keep the Administrator's office well 

informed of the situation and abreast of any aetions taken by USA I D or by the eontractor, 

The intention of the legislation to improve the independent authority and role of the 

SDO is welcomed by USAID, and in fact we are already considering changing the SDO 

designation to a more senior level of Senior Deputy Assistant Administrator within the 

Bureau for Management. However, Seetion 112(b)(2) negatively impacts USAID in that 

we do not agree that the unit should be separated from M/OAA because we believe that the 

current structure has the necessary safeguards against conflicts of interest. We believe that 

a legislative mandate to separate the unit would negatively impact the unit from a technical 

as well as an efficiency perspective. 

Automatic Suspension and Discretionary Authority (Sec, 113) 

I understand the bill seeks to ensure that apparent cases of fraud, waste, or abuse are 

dealt with swiftly and appropriately. We agree with swift action when these situations are 

uncovered. We must take issue, however, with any mandate that removes the procedural 

protections for a casc-by-case review of allegations, or reduces the discretionary authority 

of the SDO. USAID has learned a number of lessons from previous suspension and 

debarment cases where apparent actions appeared necessary, especially those in 

contingency situations, when in actuality they were not. We take seriously our role to stop 

fraud, waste, or abuse as soon as it is discovered. This means that we review all necessary 

administrative actions independent of the contractor's work with the Agency or the 

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development programs that may be affected by any necessary administrative action. Simply 

stated, we do not play favorites. 

One of the greatest lessons learned from our experience with suspensions and 

debarments in recent years is that information sharing early in the process is critical. Thus, 

we are engaging more actively with our OIG, as well as within the interagency, through our 

new Compliance Division as soon as potential fraud, waste, abuse, or other serious issues 

arise. 

Reorganization of Contracting Function (Sec. 131) 

We do not concur with the re-organization of our contracting function proposed in 

Sec. 131. While we appreciate the intention to elevate the acquisition function to the topmost level within our organization, we believe that USAID's current organizational 

structure already provides this elevation and the direct line of sight to the Administrator 

that goes with it. As an acquisition professional with more than 20 years of experience in 

public service. specifically at USAID. I am aware of its importance and have supported a 

dotted-line reporting relationship of the Senior Procurement Executive to the 

Administrator. as is the case with our Chief Information Officer and Chief Financial 

Officer. 

In addition, codifying the acquisition organization of US AID in statute would 

reduce our flexibility to make future adjustments as the need arises. For a small, nimble 

agency with a mission that entails immediate response to unpredictable global 

circumstances, it is critical that we be able to rapidly adapt to changing circumstances. 

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Finally, the acquisition function is integrally related to the other functions within 

the Bureau for Management and they work together coliaboratively. As a unified service 

Bureau focusing on helping employees carry out our development mission efficiently, 

effectively, and in compliance with the law, we bring together contracting, IT, finance, 

operational budget, and real property professionals, 

Another point for reconsideration is the requirement under Section 131 (b) that the 

Director ofM/OAA be appointed as a non-carecr employee. The Director ofM/OAA 

effectively carries out the relevant duties of a Chief Acquisition Officer (CAO); and, in line 

with other key positions held by career employees within our Agency, including the Chief 

Financial and Information Officers, the Director of M/OAA is a career officiaL We have 

found that this Senior Foreign Service career designation affords the institutional expertisc, 

ovcrseas experience, and organizational continuity necessary and crucial for thc position. 

Finally, the annual reporting requirement under Section 131 appears to duplicate 

many other reports required by Congress. We would ask for consideration as to whether 

there is an opportunity for sharing data points from other existing rcporting requirements. 

Training (Sec. 133) 

USAID supports increased training for contract administration personneL One 

immediate improvement I look forward to kicking off this May is a large-scale acquisition 

and assistancc training class for Mission Directors and Deputy Mission Directors who are 

the most senior officials for our overseas divisions. Responsibility for planning and 

execution of our specific overseas programs via contracts or grants remains with them, This 

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executive course will help our senior staff to be more accountable for the types of awards 

we make in contingencies, as well as in non-contingency situations. 

Reduced Length of Time for Contingency Contracts/One-Tier Subcontracts 

(Sec. 201) 

USAID concurs with the spirit of this provision; however, we have some concerns 

about the practical aspects of its implementation and would welcome the opportunity to 

discuss this further. Though intended to promote competition, this requirement could 

ultimately cause unintended outcomes. Specifically, legislatively imposed time limits. 

subcontract tier requirements, and additional work requirements may not produce the 

results desired in terms of more competitors. 

We certainly share the Subcommittee's goal of dealing with potentially inflated 

costs, limited competitions, and abuses that can arise during wartime contracting. In order 

to protect U.S. taxpayer investments, we have made a series of management improvements 

to shape the way we do business. In Afghanistan, for instance, we have: 

• Instituted a policy to limit our Afghanistan awards to one-year mechanisms 

and smaller amounts in part to contend with reports of rising fraud and 

abuse; 

• Included a subcontractor clause in all new awards since 2011 that permits 

USAID to restrict the number of subcontract tiers, requires the prime 

contractor to perform a certain percentage of the work and prohibits 

subcontract "brokering" or "flipping." which is when a subcontractor passes 

the work to someonc else. which can increase the risk for corruption; 

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• Established ajoint program with the USAID Inspector General, for 

concurrent audits on all locally incurred costs of program-funded USAID 

contractors and grantees; 

• Increased our contracting staff from three (3) Contracting Officers in 2007 

to 19 Contracting Officers today with approximately eight (8) who are 

dedicated to administrative actions; 

• Created new positions for On-Site Monitors at program sites in order to 

devolve projeet monitoring responsibilities to USAID personnel in the five 

regional commands. 

In Iraq, we made a number of management changes to meet our mission's needs 

including modifying contracts to include more stringent reporting requirements. We also 

increased the number of Contracting Officer Representatives (CORs) in country and 

provided them with additional guidance on ensuring compliance related to reporting. As we 

have moved forward in Iraq and Afghanistan. we have found that the management and 

oversight of the awards remains the critical factor in protecting against, waste, fraud and 

abuse. 

In some contracts, time limitations on an award may be suitable. But for the 

majority of USAID awards, longer timelines are necessary in order to achieve the needed 

development outcomes, as is the case for example with rule of law or health programs. This 

is one of the reasons we ask that time limits be set at the discretion of the contracting 

officer and those managing the program in country. They are the ones who know the 

market on the ground and the specific technical needs and can actively monitor the award 

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process, reducing its time as needed. USAID has invested resources to integrate more 

rigorous development program planning into our training for the acquisition workforce 

which we believe will assist in limiting the longer, less clearly defined contract awards that 

we have seen in the past. 

For these reasons, we do not support the legislation's proposal in Section 

20 I (a)(2)(A) or (B) which requires a hard-stop of three-year contract periods during a 

contingency and imposes a requirement that a full and open competition which receives 

only one bid must be re-competed after one year's time. 

We also have concerns regarding the legislation's limitations on the number of tiers 

under a prime contract. Based upon our experiences in Iraq and Afghanistan, USAID 

believes that we will need a requirement of no less than two tiers in the majority of cases. 

In fact, two tiers is the most common level we are implementing for new awards in 

Afghanistan. 

The legislation does allow for the waivers, which we greatly appreciate to meet 

those situations where appropriate. However, rather than legislating a process that will 

potentially add to the administrative burdens of those working in war zones, USAID 

suggests that this language be revisited to better meet the realities of contingency 

contracting requirements on the ground. 

Performance of Certain Sccu rity Functions in Overseas Areas (Sec, 202) 

I defer to our Department of State colleagues. I can share with the members of this 

Subcommittee that USAID engages closely with State Department's Office of Diplomatic 

Security in Washington D.C. and with its Regional Security Officers overseas for 

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appropriate guidance in contingency zones. We will continue to follow Chief of Mission 

guidance to address the security needs of our projects. contractors and grantees. 

Justification and Approval for Sole Source Contracts of Unusual and 

Compelling Urgency (Sec. 203) 

This section addresses one of the persistent concerns we have had throughout our 

engagements in Afghanistan and Iraq. In fact, our procurement reforms have helped to 

significantly expand competition for USAID awards and achieve the best value for the U.S. 

Government. Sole source awards are one option in a very large toolbox for acquiring 

necessary services and is also a tool that we may utilize during urgent and compelling 

situations. However, it should be noted that whenever possible, our policy is to limit these 

types of awards. As mentioned earlier, USAID chartered a new body in 20 I 0 called the 

Board for Acquisition and Assistance Reform which reviews any proposed sole source 

award over $15 million. More importantly. Administrator Shah instituted a new policy 

where any sole source award (for contingency contracting) above $20 million that serves as 

a follow-on activity must be personally approved by him before award. 

We agree with the additional approval requirements for sole source awards in this 

section, but are concerned about potential dupl ication of effort. Justifications and 

Approvals (J&As) are automatically posted online on the e-Gov website 

FedBizOpps.gov. Any request for a J&A can be made directly to this existing resource. We 

are concerned that an additional annual reporting requirement places a heavier workload 

burden on our staff: Therefore, as a manager who strongly promotes efficiency. I request 

that the FedBizOpps solution be considered more closely. 

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Uniform Contracting Writing System (Sec. 211) 

USAID has spent considerable resources deploying our current contract writing 

system for our unique operational environment, which involves "cradle-to-grave" 

procurements in a wide variety of countries and situations around the world. It allows us to 

write, manage. oversee, and report on USAID awards from anywhere. This system, called 

the Global Acquisition and Assistance System (GLAAS), became fully operational for all 

USAID operating units, including Afghanistan and Iraq, this past fall. The system, which 

was an off-the-shelf product that we tailored to meet USAID contracting requirements. 

manages more than 80 percent of all USAID obligated funds, including contracts. grants. 

and cooperative agreements. We have consulted with both the Departments of State and 

Defense and found that our contract writing needs arc different and unique. Therefore. we 

belicve that retaining thc GLAAS system would be the most efficient and cost-effective 

way to manage USAID's acquisition and assistance portfolio. 

Database on Prices of Items and Service Under Federal Contracts (Sec. 212) 

USAID agrees that Section 212: Database on Prices of Items and Service Under 

Federal Contracts could be a beneficial tool to the U.S. Government, particularly for those 

contractors who work across agencies via multiple awards. We have actively participated in 

the Office of Management and Budget's Acquisition Cost Savings Initiative, and we are 

utilizing shared tools, such as the GSA schedule, as much as possible. In many cases, 

however, USAlD works with host country local awardces where services and fee structures 

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do not meet the needs of a U.S. domestic agency. We would ask for consideration to be 

given to the type of information that would be required within this database. 

I would like to share with the members of this Subcommittee our efforts to avoid 

future cost overruns or wasteful spending. As part of our own management structure 

improvements, we resoureed a new team within M/OAA to serve as dedicated cost and 

price analysts to provide surge capacity and additional analytic capability to our contracting 

officers around the world. The unit will spccifically focus on providing data and analysis 

for high level procurements, including those within a contingcncy operation as needed. We 

will use this new team to: 

• Review and analyze cost and price data in contractors/subcontractor and 

recipient/sub-recipient proposals as required for field and Washington, D.C. 

procurements; 

• Liaise, coordinate, and participate in Contractor Purchase System Reviews; 

• Review advance and progress payments; 

• Conduct pre-award audits and/or surveys as needed; and 

• Review and/or assist with market surveys at project design stage and prior to 

exercising contract option periods. 

Trafficking in Persons (See. 222) 

USAID, along with the Department of State, continues to support strengthening 

measures to combat human trafficking, including the legislative remedies listed in S.2139. 

These measures are built into our GLAAS system, which contains provisions to punish 

awardees using U.S. govcrnment funds to engage in this activity. 

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We take the issue of human trafficking to be a priority contracting concern. In 

February 20 II, we implcmented an Agency-wide Counter Trafficking in Persons (CTIP) 

Code of Conduct, which informs USAID employees about: 1) the due diligence protocol to 

be conducted prior to hiring contractors; 2) training for Agency personnel to recognize and 

report out on signs of abuse, in addition to fraud awareness training conducted by the OIG; 

3) a standardized protocol for conducting investigations; and 4) development of legal 

sanctions for responding to abuses. USAID has been following the provisions as outlined in 

the Trafficking Victims Protection Act and would welcome clarification on Section 222 to 

determine if our current CTIP clause contained in all USAID awards will be appropriate to 

meet this legislation. 

Contractor Comments in Past Performance Systems (Sec. 224) 

USA I D proposes that official responses still be received by contractors and become 

part of the permanent record within the Past Performance Information Retrieval System 

(PPIRS). Allowing contractors to present their side of the story, however, is a step we 

strongly believe maintains the integrity of the record and improves the accountability of 

USAID. We would welcome the opportunity to discuss this further with you or your staff. 

Finally. it is easy to say that we will produce sustainable programs, be more 

accountable. and remain as transparent as possible. As you are well aware. sustainability is 

one of the greatest challenges we face during a time of war or conflict. In fact, last year the 

Administrator released detailed sustainability guidance for our programs in Afghanistan. 

USAID continues to internalize lessons learned in contingency operations in order to shape 

our future efforts. That is why the ongoing work of this Subcommittee. and our own 

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USAID Forward reform efforts, informed by the ewe's study results, are so important. 

We applaud the emphasis that S. 2139 places on accountability and look forward to 

working with you to refine and implement the goals of the bill which are to enhance 

security, increase accountability, and improve contracting for overseas contingency 

operations. 

Thank you for providing me with this opportunity to appear before you and for your 

ongoing support of USAID. I will be pleased to answer any questions that you have. 

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_ .......... April 17, 2012 

Lynne M. Halbrooks 

Acting Inspector General 

Department of Defense 

before the 

Expected Release 

10:00 a.m. 

Senate Homeland Security and 

Governmental Affairs Committee 

Subcommittee on Contracting Oversight 

on 

"The Comprehensive Contingency 

Contracting Reform Act of 2012" 
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Chairwoman McCaskill, Ranking Member Portman, and distinguished members of this 

Subcommittee, thank you for the opportunity to appear before you to present our views on 

S. 2139, the Comprehensive Contingency Contracting Reform Act of2012. and the impact this 

proposed legislation would have for the Department of Defense Inspector GeneraL J would also 

like to take this opportunity to thank the Subcommittee for convening a number of hearings to 

direct attention to the importance of maintaining strong and effective oversight of overseas 

contingency operations. 

I am pleased to see the recommendation in the proposed legislation that would create a 

lead IG for contingency operations. This approach strategically leverages the existing structure, 

expertise, and interagency relationships of Department of Defense IG (DOD IG), Department of 

State IG (DOS IG), and U.S. Agency for International Development IG (USAID IG). The IG 

community has come a long way in integrating lessons learned over the past decade into our 

planning process and strategic oversight. The proposed legislation builds on the already strong 

interagency working relationships among the DOS IG, USAID IG and DOD IG. The 

Subcommittee's support and intercst in this important area have contributed significantly to the 

achievements and progress that we have made. We look forward to working with the 

Subcommittee to refine the proposed legislation. 

Last week 1 was in Afghanistan and 1 had an opportunity to observe first-hand how the 

oversight organizations coordinate and deeontlict audits and inspections when 1 attended the 

most recent "Shura" oversight meeting. During this meeting, which included members from 

DOD IG, DOS IG, USAID IG, Special Inspector General for Afghanistan Reconstruction, GAO, 

and local command IGs, critical oversight challenges were discussed and information was 

exchanged. In addition, I met senior commanders to assess the overall level of oversight and its 

etIects on the mission. We discussed areas where the DOD IG can assist commanders and 

received their input on areas where the DOD lG can continue to provide the best independent 

and objective oversight of contingency operations in Afghanistan. The input we received will 

help us in assisting the Subcommittee with this important initiative. 
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Current DOD IG emphasis on Oversight of Overseas Contingencv Operations. 

As the Acting IG, oversight of overseas contingency operations in Southwest Asia 

(SWA) remains my number one priority. My predecessor, the Honorable Gordon Heddell 

instituted a number of organizational changes to the structure and focus of the work of the DOD 

IG, and significantly increased our in-theater presence of auditors, investigators, evaluators and 

support staff. As Principal Deputy Inspector General, I supported the changes started by Mr. 

HeddelL and I remain committed to continuously refining and improving our oversight approach 

to support the Department's efforts in SWA or wherever the next contingency operation takes 

place. I believe strongly that an in-theater presence is essential to engage with military and 

civilian leadership while conducting oversight. Our experience in SW A has been 

institutionalized at the DOD IG. The DOD IG is prepared to respond effectively and 

aggressively - in coordination with other Federal agencies and internal DOD oversight offices 

to address future overseas contingency operations. Today we are an agile, flexible, and 

aggressive oversight organization with a capacity to deploy anywhere in the world, and we have 

developed considerable experience in conducting audits. investigations and assessments of 

overseas contingency operations. 

Auditing. Our audits of SW A-related activities provide timely and relevant oversight in 

the areas of health and safety, acquisition, contract oversight and management, accountability of 

equipment, logistics, financial management. and sustainability. In FY 2011. our Audit 

component expended approximately 100 work years on audits for Southwest Asia. 

In FYs 2010 and 2011, we issued 83 audit reports related to overseas contingency 

operations in Iraq and Afghanistan, including contracts for training and equipping the Afghan 

Security Forces and logistical support. force protection, health care. financial management, and 

asset accountability. These reports included 651 recommendations and identified a total 01'$4.98 

billion in potential funds that could be put to better usc. During this time we also issued 25 quick 

reaction memorandums on critical issues requiring immediate corrective action. 

Assessments. Our Office of Special Plans and Operations (SPO) has been a key DOD IG 

asset in assessing the effectiveness of the mission to train and equip the security forces ofIraq 

and Afghanistan. Established in 2007, SPO significantly enhanced DOD IG capability by 

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providing an expeditionary team capable of rapid deployment to SW A to conduct timely 

assessments of the military's efforts to train, equip. and mentor the Iraq and Afghan army and 

policc forces. 

SPO oversight work has had a significant impact in improving elements of the train and 

equip mission in both Afghanistan and Iraq. The SPO operational model stresses the rapid 

deployment of assessment teams comprised of cxperienced and highly professional civilian and 

military personnel, fortified by interdisciplinary and interagency SWA subject matter experts. 

The teams provide a thorough out-brief to field commanders before departing, which enables 

immediate and expeditious command corrective actions. 

Additionally, SPO has providcd important oversight of other SW A matters. These 

assessments include the accountability and control of sensitive equipment such as weapons and 

ammunition, night vision devices, medical equipment and supplies provided to the Iraq and 

Afghan security forces; the development of the logistics sustainment capability of the Iraq and 

Afghan security forces; U.S. security assistance and cooperation programs; the building of the 

operational effectiveness of the Iraq and Afghan army and police forces via partnering and 

mentoring by U.S., Coalition, and NATO forces; and the drawdown of U.S. Forces in Iraq. 

Investigations. The Defense Criminal Investigative Service (vcrS) has also made 

investigations of significant fraud and corruption impacting SWA contingency operations its 

highest priority. 

vcrs has a deployable workforce of criminal investigators prcpared not only to take on 

the remaining challenges in SW A, but also are ready to effectively respond to the next 

contingency operation - wherever it may be. DCIS agents prepared for the challenges of a 

contingency operation environment by completing the four-week Deployment Readiness 

Program at the Federal Law Enforcement Training Center. Our commitment to this training 

program enables our agents to surge and deploy to expeditionary environments worldwide. 

DCIS recognizes the need to maintain a mutually beneficial relationship with our DOD 

"customers" and to constantly coordinate with our law enforcement partners to accomplish our 

core mission of combating fraud, waste, and abuse. These established relationships, combined 

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with a highly trained, deployable workforce, have prepared DCIS and its investigative partners te 

quickly and effectively address future contingency operations. 

Over the last five years, DClS S W A-related investigations have yielded 121 federal 

criminal indictments, 93 criminal informations. 105 arrests, and 81 felony convictions. These 

cases have resulted in 420 years of confinement, 30 I years of probation, 150 entities debarred 

from contracting with the U.S. Government, 220 entities suspended from contracting, over $387 

million paid to the U.S. Government in restitution, over $64 million in fines and other penalties, 

over $21.8 million in asset forfeiture, and almost $3 million in recovered government property. 

The operational model the DOD IG is using to conduct timely and relevant audits, 

assessments and investigations of critical missions in SW A could continue to be used effectively 

in future contingency operations. 

Effective and Efficient Federal and Departmental Coordination. 

The DOD IG is responsible for providing oversight of defense programs and operations 

within the United States and around the world. In this role, DOD IG oversees and ensures there 

are no gaps in the stewardship of DOD resources. In furtherance of this responsibility, my office 

is committed to maintaining effective working relationships with other oversight organizations, 

including other federal agencies, to minimize duplication of effort and to leverage resources to 

provide comprehensive oversight. To best accomplish this important coordinating function, we 

have a Special Deputy Inspector General for Southwest Asia (SDIG-SW A), who serves as our 

senior executive level representative in S W A to coordinate and deconflict oversight efforts. 

The SDIG-SWA is forward deployed to SWA. and continues to improve the 

communications within the DOD and Federal oversight community by functioning as an 

authoritative source to coordinate. deconflict. and facilitate effective oversight. The SDlG-SW A 

also serves as a liaison with DOD leadership and the supporting commands in SW A to identify 

oversight requirements, and to facilitate effective command interaction with oversight 

organizations. 

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As one of the key coordinating efforts for SW A, the SDJG-SWA also serves as 

chairperson of the Southwest Asia Joint Planning Group, established in April 2007. This group, 

which was conceived and deveJopedjointly by DOD, DOS and USAID IGs, is the principal 

federal interagency forum to promote coordination and cooperation among the member 

organizations toward the common objective of providing comprehensive SWA oversight. The 

Southwest Asia Joint Planning Group, which meets quarterly or more frequently as needed, is 

made up of representatives from over 25 DOD and Federal oversight agencies, functional 

components, and command IGs. The Southwest Asia Joint Planning Group compiles and issues 

the Comprehensive Oversight Plan for Southwest Asia in response to the FY 2008 National 

Defense Authorization Act. The group also deconflicts oversight projects that may overlap, and 

helps to ensure the least impact on operations. 

Within the Department, DOD IG coordinates and works closely with other DOD 

oversight organizations. The Army Audit Agency, Naval Audit Service and Air Force Audit 

Agency provide critical oversight of operations. The Defense Contract Audit Agency (DCAA) 

also plays a critical oversight role not only for the Department but also for other Federal agencics 

such as Department of State and U.S. Agency for International Development as requested. The 

Service IGs also have a significant oversight role as does the Defense Contract Management 

Agency (DCMA), and the Defense Logistics Agency (DLA). As part of a comprehensive 

Department oversight community, the DOD IG coordinates and works closcly with all of those 

oversight agencies. 

Our Auditing and Investigations components collaborate extensively with their 

counterparts. My Deputy Inspector General for Auditing meets with the Service Auditors 

General and the Director of DCA A on a quarterly basis to discuss current issues within the 

Department, including coordinating, deconflicting, and identifying areas for oversight or 

impacting oversight. This collaborative effort provides a highly effective oversight approach 

which consists of a combined oversight force of 6,500 auditors within these five primary audit 

organizations. Similarly, DCrS uses task forces to coordinate their investigative efforts. The 

International Contract Corruption Task Force (lCCTF) combines the resources of nine 

investigative agencies, when there is overlapping investigative jurisdiction, to effectively and 

efficiently investigate, deconf1ict, and prosecute cases of fraud and corruption in SWA. DC IS 

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also supports Task Force 2010 in Afghanistan, a military led task force that utilizes intelligence 

analysts, criminal investigators, auditors, and forensic financial analysts to focus on the flow of 

contracting funds in order to prevent the U.S. government from doing business with insurgents, 

corrupt officials, and criminal groups. 

The DOD IG strives to ensure dfective and efficient coordination and collaboration 

within the DOD and between other Federal oversight organizations. Within the Federal 

oversight community, the DOD IG has a well-deserved reputation for engaging in interagency 

collaboration with our Inspectors General colleagues. This includes critical efforts in export 

control, interagency purchases, Guam realignment, and numerous SWA-related activities. It is 

especially important to note that with regard to SWA-related efforts, the collaboration and 

coordination with the DOS JG and USAID IG remains particularly robust, and has been 

recognized by the Council of the Inspectors General on Integrity and Efficiency with an award 

for excellence. 

A recent and highly successful example of interagency collaboration and coordination is 

the series of joint DOD IGIDOS IG audit reports on the Afghan National Police (ANP) Training 

Program. The DOD IG and the DOS IG determined that performing joint oversight of the 

building efforts of the ANP was essential to respond to the requirements of Section 1235 of the 

National Defense Authorization Act for Fiscal Year 2011. Public Law 111-383. The law 

required, among other things, that the DOD IG, in consultation with the DOS IG, report to 

Congress within 180 days ofthe transition of ANP contract from the DOS to the DOD. As a 

result. ajoint interagency team was formed to provide comprehensive oversight of the ANP 

training efforts that crossed agency authorities. 

This joint team consisted of over 20 linancial and performance auditors and management 

analysts. The team issued three reports and made 25 recommendations. The joint effort revealed 

that DOS officials did not appropriately obligate or return to DOD about $249 million of 

Afghanistan Security Forces Fund appropriations that were intended for the ANP training 

program. The joint team identified potential monetary benefits totaling more than $200 million 

that, when recovered, could be used for valid ANP training programs or other DOD 

requirements. If not corrected. obligations of approximately $75 million could result in potential 

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Antideficiency Act violations. Also DOD and DOS had not developed a comprehensive plan or 

memorandum of agreement to guide. monitor. and assign transition responsibilities. 

Specifically. the report noted that the incoming contractor did not have 428 of the 728 required 

trainer and mentor positions in place, placing the overall mission at risk. DOD also did not have 

136 of the 170 contracting officer representatives (COR) in place to provide the necessary review 

of contractors' activities. Based on information I gathered last week while in Afghanistan, DOD 

has made progress in filling these COR vacancies but still struggles to have well qualified CORs 

consistently in place. 

Lead Inspector General for Overseas Contingency Operations. 

I would now like to discuss S. 2139, the Comprehensive Contingency Contract Reform 

Act of2012. I support the proposed legislation recently introduced by Chairwoman McCaskill 

and Senator Webb, and generally endorse the provisions of Section 103 of the bill, which call for 

a lead Inspector General for overseas contingency operations to provide effective, independent. 

and comprehensive oversight of overseas contingency operations in coordination with other 

agency Inspectors General. 

We strongly support the goal ofthe proposed legislation. However, we do not believe it 

is necessary for the chair of the Council of Inspectors General on Integrity and Efficiency 

(CIGIE) to designate a lead IG for contingency operations. Given that the bill defines an 

overseas contingency operation as "a military operation outside the United States and its 

territories and possessions ... ," we believe the lead IG should be the DOD IG. Based on the 

strong working relationship and the history of coordination and cooperation between the DOD 

lG, DOS lG and USAID IG, including the CIGlE chair in the process would not be necessary to 

enhance the oversight of overseas contingency operations. An alternative approach could be to 

identify the lead IG based on the amount of funding appropriated for the contingency operation 

to the respective agencies. This would provide flexibility as the contingency operation evolves. 

Using Iraq as an example. the DOD fG would have served as lead IG, but DOS IG would 

become the lead IG as the majority of the funding transitions to DOS, as was the case in FYI2. 

Quarterly Reporting Requirement. We would like to work with the Committee further 

to refine the quarterly reporting requirement. Periodic reporting to Congress enhances 

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transparency and oversight of contingency operations and is contingent on management 

providing sufficient reliable data. However, the compilation of data on obligations and 

disbursements is primarily a management function of each Department. To maximize the benefit 

of this reporting requirement, the data needs to be analyzed. An lG adds value by independently 

assessing the quality of the data and identifying trends. Therefore, the requirement for 

compilation of the data should be assigned to each Department, with a requirement for the IUs to 

review the quality of the data as part of the oversight plan. 

Compilation and analysis of the data on a quarterly basis may also become overly 

burdensome. An annual or semiannual, rather than quarterly, compilation and reporting 

requirement would provide Congress with transparency and more meaningful data analyzed by 

the reporting IGs. 

Development of a Comprehensive Oversight Plan. Congress mandated in Section 842 

of the National Defense Authorization Act for FY 08. Public Law 110-181, that the DOD IG, in 

coordination with multiple federal IGs and DOD oversight agencies, issue the Comprehensive 

Oversight Plan for Southwest Asia. This plan includes the planned and ongoing oversight efforts 

of the IGs of the DOD, DOS, and USAID; the Special Inspector General for Iraq Reconstruction; 

the Special Inspector General for Afghanistan Reconstruction; and the ongoing efforts of the 

Government Accountability Office. The plan also includes the planned and ongoing audit work 

of the U.S. Army Audit Agency, Naval Audit Service, and Air Force Audit Agency. A similar 

requirement to develop ajoint oversight plan under the direction of the lead IG would enhance 

Congressional oversight. 

Using the existing cooperative planning model as a road map, wc also believe Congress 

would benefit from an IG reporting requirement focusing on planning for, and identification of, 

oversight ofrelevant strategic issues for contingency operations oversight. This plan, developed 

through a joint planning group, would identify strategic issues for future projects, for example, 

reconstruction; the operations of U.S. forces; training, equipping, and capacity building; and 

security cooperation and assistance; and humanitarian assistance. The plan would include audits, 

evaluations, and inspections of U.S. government operations related to the particular overseas 

contingency operation. In fact, Congress has used this approach with respect to DOD 

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realignment efforts involving Guam. The DOD IG is the chair of the Interagency Coordination 

Group ofInspectors General for Guam Realignment and produces an annual report detailing the 

oversight of Guam realignment efforts by various IGs, as required by Section 2835 of Public 

Law 111-84. 

Special hiring authority. The provision in the bill authorizing the lead IG to employ 

annuitants and other personnel on a temporary basis, when necessary, is essential to provide for 

an oversight surge capability at the beginning of a contingency operation. Getting the right 

people in-theater as quickly as possible establishes an immediate and effective oversight 

presence and capability. However, we believe that for the hiring authority to be most effective 

there should be no time-limit associated with special hiring authorities. An imposed time limit 

on the hiring authorities will result in a disruption for the IGs. as their surged staff will need to 

find new employment opportunities prior to the expiration of the hiring authority. In addition, 

there should be a funding mechanism added to the bill to resource the hiring of additional staff. 

I am confident that establishing the DOD IG as the lead IG for Overseas Contingency 

Operations will be an efficient, effective way to ensure independent and comprehensive 

oversight of future overseas contingency operations. The IG community has learned important 

lessons regarding oversight of contingency operations over the past 10 years, and we have 

incorporated those lessons into our strategic planning process. 

The key to comprehensive oversight is planning and coordination among IGs with 

jurisdiction over the issues associated with a particular contingency operation. Within the 

Inspectors General community. as well as the Defense oversight community. we maintain close, 

effective cooperation, collaboration and partnership. We look forward to working with this 

Subcommittee and the Congress in refining and developing the use of the statutory Inspectors 

General community to provide effective oversight of contingency operations. We also note the 

importance of Congressional oversight. In closing, I would like to thank the Subcommittee for 

the opportunity to discuss our work, and I look forward to answering any questions you may 

have. 

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TESTIMONY OF 

HAROLD W. GEISEL 

DEPUTY INSPECTOR GENERAL 

OFFICE OF INSPECTOR GENERAL 

U.S. DEPARTMENT OF STATE AND 

THE BROADCASTING BOARD OF GOVERNORS 

BEFORE THE 

UNITED STATES SENATE 

COMMITIEE ON HOMELAND SECURITY AND GOVERNMENT AFFAIRS 

AD HOC SUBCOMMITIEE ON CONTRACTING OVERSIGHT 

ON 

EFFECTS ON INSPECTOR GENERAL OVERSIGHT OF S. 2139, THE 

"COMPREHENSIVE CONTINGENCY CONTRACTING REFORM ACT OF 2012" 

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Thank you, Chairman McCaskill, Ranking Member Portman, and Members of the 

Subcommittee, for the opportunity to discuss our views on strengthening oversight of 

government contracts during contingency operations. 

We commend the Subcommittee for its leadership and tenacity in developing this critical 

legislation. 

Madam Chairman, the Office of Inspector General (OIG) believes that Senate Bill 2139 is 

a positive effort to ensure, among other things, that statutory Inspectors General (IGs) have the 

tools needed to provide efficient and effective oversight in the most challenging overseas 

environments. 

You have asked for our views on the legislation's impact on OIG, additional OIG 

responsibilities in these operations, the role of the Lead IG in coordinating the oversight effort, 

the congressional reporting provisions, and an enhanced hiring authority for IG personnel 

directly involved in these audits, inspections, evaluations, and investigations. You also 

requested our views on management of logistics contracts, strengthening the suspension and 

debarment process, clear lines of authority for contingency contracting support, and how that 

support finds its way into the planning and training regimes. Lastly, you asked for our views on 

the provisions addressing trafficking in persons. 

The overall effect of this legislation on OIG is significant, positive and certainly 

manageable. OIG agrees with and supports Sections 101 and 103 of this legislation, with three 

suggested revisions, which we believe could make this new approach even more efficient and 

effective. 

IG Funding for Contingency Operations 

First, I suggest a revision to Section 101's funding request provisions to expressly require 

that each contingency operation funding request include an automatic, percentage-based 

funding allocation for inspector general oversight. Because the Inspectors General would not be 

directly involved in developing such contingency operations funding requests, this statutory 

reminder is necessary to ensure adequate OIG contingency funding is factored into any request 

submitted to Congress. Including OIG costs at this early stage would ensure that the resulting 

contingency appropriation funds the required OIG oversight, as was the case in the American 

Recovery and Reinvestment Act (ARRA, Public law 111-5) where all of the involved IGs were 

appropriated a small portion of the overall funding to address new oversight needs associated 

with the expanded mission of overseeing ARRA programs. 

Similar mechanisms have appeared occasionally in previous funding bills. Oversight of 

contingency contracting is clearly an instance where such a provision is warranted. Simply 

stated, the IGs performing the oversight of overseas contingency operations will need 

immediate additional funds to offset the unforeseen and un budgeted costs of doing business in 

a contingency environment. 

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The lead Inspector General 

Second, Section 103 of the bill would mandate that the Chair of the Council of Inspectors 

General on Integrity and Efficiency (or ClGIE) designate a Lead Inspector General for the 

Contingency Operation and resolve conflicts of jurisdiction between the Inspectors General 

involved in the operation. 

We suggest an approach that might be more expeditious. At the onset of a particular 

contingency operation, the three Inspectors General should determine which of them will lead 

the oversight effort. One possible method for doing that would be to determine which agency 

will be appropriated the largest share of the overseas contingency operations (OCO) funding. It 

would follow that the agency with the next highest level of OCO funding would become the 

Associate Inspector General for the operation. 

In recent years, statutory OIGs have worked well together to oversee agencies in 

contingency operations. For example, conflicts on jurisdiction and work de-confliction have 

been resolved efficiently and routinely in both the Southwest Asia Joint Planning Group and the 

International Contract Corruption Task Force for work in Iraq, Pakistan and Afghanistan. These 

working groups, which are comprised of alllGs working in these countries, meet quarterly and 

have been a success. This approach would save time and simplify the process, just at the right 

moment - during the hectic period at the onset of a contingency operation. 

Periodic Reporting 

We appreciate the cooperation of the Subcommittee on the provisions for semiannuallG 

reporting. OIG suggests a minor clarification to ensure that this reporting would be synchronized 

with the OIG's current semiannual cycle. 

Regarding quarterly reporting, Section 103's amendment to the Inspector General Act by 

inserting a new Section 8L would, at paragraphs (d)(3)(E) and (d)(4)(A) through (F) of that new 

section, mandate the Lead IG report quarterly on a large amount of operational financial 

information, relating to all federal agencies, specifically including: 

Obligations and expenditures; 

A project-by-project, program-by-program accounting of incurred costs and projected cost for 

completion; 

Operation-related foreign investment revenues; 

Related seized or frozen asset information; 

Agency operating costs and; 

Detailed contract, grant or agreement financial information. 

All of this information is resident within the respective department or agencies, not within 

the participating OIGs. OIG suggests that the affected Departments or agencies be mandated to 

provide a periodic stream of data to Congress and to the participating DepartmentallGs in a 

format similar to the List of Contracting Actions and Grants data presentation produced by the 

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speciallGs in their periodic congressional reports. These lists are useful to plan and prioritize 

oversight work. They address, though not in complete fashion, the speciallG mandates for 

reporting, which are identical to the quarterly reporting requirement in Section 103. The 

statutory OIGs can use this information, on a semiannual basis, to further their oversight 

mission. 

Section 3161 and Rehired Annuitants 

Regarding the provision for Section 3161 hiring authority, we appreciate the 

Subcommittee's intent to enhance our contingency oversight capacity by ensuring the IGs have 

the right tools to quickly and temporarily hire qualified people who are willing to work in these 

environments. Had the previous speciallGs not had this authority, they would not have had the 

experienced staff that enabled them to be successful in their contingency oversight mission. This 

authority provides an OIG a surge hiring capacity which is essential to quickly staffing our 

oversight response to contingency operations. These additional hiring authorities are critical to 

conducting the contingency oversight mission and provide an OIG more flexibility and speed to 

hire for a contingency environment while simultaneously allowing OIG to retain focus on the rest 

of their important missions. 

Acquisition Management Structural Changes and Lines of Authority 

Section 111 proposes a new management structure for the procurement of contract services 

for a contingency operation. On face value, these provisions might achieve clearer lines of 

authority for contracting support. In our work over the last four years, we have found issues, 

conditions, and systemic problems that might have been avoided or lessened by clearer lines of 

authority in contracting support. In our previous work in Iraq and Afghanistan, including joint 

oversight work with other IGs, we have found serious contract management shortcomings and 

some critical internal control problems. The Department agreed with our recommendations, 

and we continue to monitor its record of compliance. 

For example, our three joint audits, conducted in 2010 and 2011 with the Department of 

Defense Inspector General (DoDIG) on the Afghan National Police Training Program found 

numerous issues, such as a lack of planning for the transition in both Departments, contract 

oversight issues within the Bureau of International Narcotics and law Enforcement, a lack of 

guidance for the transfer of contract administration from State to 000, and internal control 

issues. In each case, both Departments agreed with our findings and recommendations. 

As another example, OIG has found that the use of contractors to supplement staffing in 

support of acquisition management has increased risk. These acquisition staff contractors are 

not required to complete annual financial disclosure statements even though they are heavily 

involved in the procurement process and may have substantial personal conflicts of interest. 

Additionally, these contractors are not government employees, and therefore are not subject to 

prosecution under Federal conflict of interest statutes. 

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The current bill contemplates significant changes to how contracts would be procured and 

managed during a contingency operation. Based on our previous work, OIG cannot say whether 

or not these proposed structural changes would be effective or efficient. We believe the bill 

could be improved with provisions to ensure an adequate number of properly trained 

contracting officer representatives (CORs) who are not contractors, but Government employees. 

OIG inspections, audits and reviews have noted the lack of properly training CORs as a 

vulnerability in ensuring proper monitoring of performance and costs incurred on contracts. 

Changes to U.s. contracting management structures that are enacted should accommodate 

the broad differences that can be found from one contingency operation to the next. 

Contingency operations are not all alike. Providing security for u.s. personnel in Iraq, for 

example, differs from the way it is done in Afghanistan. 

Suspension and Debarment Provisions 

OIG supports a robust suspension and debarment system that protects the interests of the 

U.S. Government, is fair to all parties, and enhances effective enforcement. OIG believes the 

proposed legislation would strengthen the suspension and debarment system. 

OIG believes Section 112 would generally enhance suspension and debarment by ensuring 

adequate resources are dedicated to this important function and by providing additional clarity 

regarding the organization, roles and responsibilities of those involved in the process. We defer 

to the involved agencies, however, for any specific comments regarding the impact of this 

legislation (including Sections 112 and 131) on their personnel, resources and organizational 

structure. 

Regarding Section 113's automatic suspensions, OlG strongly supports prompt and effective 

suspension and debarment actions to protect the United States Government from additional 

exposure to contractors who misappropriate government funds or otherwise engage in criminal 

activity. OlG urges further analysis, however, to ensure that vital government operations or 

objectives are not inadvertently jeopardized by automatic suspensions. 

Combating Trafficking In Persons 

OIG appreciates the Subcommittee's efforts in Section 222 to expand and improve the 

tools available to combat trafficking in persons (TIP) violations associated with government 

contracts. OIG also supports the companion efforts within the Senate and House this year to 

combat TIP, including 5. 1301 and HR 4259. Due to the overlap among these efforts and the 

extensive discussions and comments received by Congress in conjunction with each effort, OIG 

urges Congress to combine and fully reconcile these efforts to produce the most effective 

legislation possible to address this important issue. 

In addition to supporting the improvements proposed in Section 222, as well as 5. 1301 

and HR 4259, OIG strongly supports the Department of Justice's (DOJ) call for a robust and 

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comprehensive Civilian Extraterritorial Jurisdiction Act (CEJA). CEJA would provide clear and 

unambiguous criminal jurisdiction to prosecute non-Department of Defense government 

contractors and employees for a broad spectrum of overseas misconduct, some of which are TIP 

violations but aren't specifically addressed in the current drafts of Section 222, S. 1301, or HR 

42S9. 

We do, however, suggest CEJA use the same approach as the Military Extraterritorial 

Jurisdiction Act (MEJA) and provide jurisdiction over all conduct outside the United States that 

would constitute an offense punishable by imprisonment for more than one year (18 U.s.c. 

felony offenses). The MEJA approach provides the greatest flexibility for fighting crime 

associated with U.S. overseas activities and reduces the potential that CEJA might be rendered 

confusing or obsolete by future amendments to the specific crimes enumerated in 18 u.s.c. 

Thank you, Chairman McCaskill and Ranking Member Portman for this opportunity to 

present our views. I am prepared to answer your questions. 

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TESTIMONY OF 

MICHAEL CARROLL, 

ACTING INSPECTOR GENERAL, 

U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT 

BEFORE THE 

SUBCOMMITTEE ON CONTRACTING OVERSIGHT OF THE 

SENA TE COMMITTEE ON HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

"THE COMPREHENSIVE CONTINGENCY CONTRACTING REFORM 

ACT OF 2012" 

APRIL 17,2012 

Chairman McCaskill and Ranking Member Portman, and members of 

the Subcommittee, I am pleased to appear before you to testify on behalf of 

the Office of Inspector General (OIG) of the U.S. Agency for International 

Development (USAID). I welcome this opportunity to discuss the 
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Comprehensive Contingency Contracting Reform Act of2012 (S. 2139) and 

how it relates to our oversight responsibilities for overseas contingency 

operations. We support efforts by the Subcommittee to reform and enhance 

the effectiveness of contingency contracting and generally agree with the 

direction of the bill. Feedback on specific provisions of this legislation is 

included in my testimony. 

Oversight in contingency settings is an important feature of our work. 

We have provided oversight in conflict and post-crisis situations for decades. 

Our staff has demonstrated tireless commitment to strengthening the 

effectiveness, efficiency, and integrity of USAID's development and 

reconstruction assistance programs by repeatedly responding in the wake of 

natural disasters and during active military engagements. 

Our unique mix of Civil and Foreign Service personnel enables us to 

respond rapidly to emerging oversight needs by immediately deploying staff 

on the ground while maintaining key support services and institutional 

knowledge at home. We currently provide effective oversight in conflict 

and post-crisis settings in Afghanistan, Haiti, and Iraq. 

Drawing on a strong in-country presence in Iraq and Afghanistan, we 

provide comprehensive audit coverage of US AID programs and implement a 

vigorous investigative program. From the start of reconstruction efforts in 

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Iraq and Afghanistan in fiscal year (FY) 2003 through the end of the second 

quarter of FY 2012, our office issued more than 300 audits and reviews of 

USAID programs and activities and made 462 recommendations to USAID 

managers to improve their programs. We supervised financial audits of 

more than $6 billion in expenditures. Meanwhile, our investigations led to 

157 administrative actions (e.g., contract cancellations or employee 

terminations), 25 indictments, and 21 convictions and pleas. In total, our 

work in these countries has produced more than $437 million in sustained 

questioned costs, funds put to better use, and investigative savings and 

recoveries. 

Rigorous audit and investigative work by our staff in Iraq and 

Afghanistan has translated into net returns on our oversight spending. For 

each dollar we have obligated in these countries, we have returned nearly 

$11 to the government in the form of sustained questioned costs and funds 

put to better use as well as investigative savings and recoveries. 

The results of our work in contingency environments have only served 

to underscore the very risks to u.s. taxpayer dollars that the Subcommittee 

is seeking to address with this legislation. Security conditions often hamper 

program implementation and complicate monitoring and evaluation efforts. 

Pressures to quickly demonstrate tangible program results sometimes 

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overcome planning requirements with the result that too many programs fail 

to meet their objectives or produce sustainable development gains. Surging 

personnel needs and frequent staff rotations contribute to shortcomings in 

compliance, weaknesses in contract oversight, and diminished internal 

controls. 

Over the past 2 years, 68 percent of our performance audits and 

reviews in Iraq and Afghanistan have found significant problems with the 

direction of the programs we examined. Our December 2011 review of the 

USAID Local Governance and Community Development Project in 

Afghanistan, for example, highlighted serious deficiencies in project 

procurement practices, including procurements that were noncompetitive 

and inadequately documented, and identified nearly $7 million in questioned 

costs. Meanwhile, our audit last month of the USAID Electoral Technical 

Assistance Program in Iraq found that, after 7 years and more than $100 

million in expenditures, a key strategic objective of the program-to help 

establish Iraqi processes and institutions capable of managing electoral 

events-had not been met. Iraq's Chief Electoral Officer and other highlevel officials acknowledged that the Independent High Electoral 

Commission could not function without continuing assistance and did not 

have plans or systems in place to provide for its future sustainability. We 

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also reported last month in our audit of the Sustainability of Selected 

USAlD-funded Information Technology Systems in Iraq that 10 of 24 

systems, with an aggregate value of $62 million, were not completed, not 

functional, or not used by the Government of Iraq as intended. 

In addition to presenting greater challenges to program execution, 

contingency settings are also host to high-stakes operations. The success or 

failure of our development assistance efforts in these settings critically 

affects our national security interests. The anti-fraud hotline we established 

in Pakistan should serve as a model to combat fraud in future contingency 

environments. In January 2011, the OlG and USAlD/Pakistan launched a 

very successful anti-fraud hotline in Pakistan, facilitating the reporting of 

allegations of fraud, waste, and abuse in English, Urdu, Pashto, Sindhi and 

Balochi by phone, conventional mail, email, and through a web-based 

interface on the hotline website, www.anti-fraudhotline.com. The OlG is 

solely responsible for investigating these complaints and taking appropriate 

measures to address them. This hotline has been widely advertised and 

received 2,368 calls in FY 2011 with between 72 and 80 calls received each 

week. Allegations are uploaded to the hotline database for review by the 

OlG for action. 

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We welcome the Subcommittee's focus on improvements to 

contingency contracting, and are pleased to note that the Comprehensive 

Contingency Contracting Reform Act seeks to address a number of 

challenges that we have encountered in our work, including suspension and 

debarment, the pricing of goods and services, oversight of sub-contractors, 

U.S. jurisdiction for certain crimes committed by contractors or their 

employees abroad, and trafficking in persons. 

One topic addressed by the legislation that has been a major focus of 

attention for our office in recent years is suspension and debarment. In late 

2009, we audited USAID's suspension and debarment program and 

observed a number of problems with Agency practices and decision-making 

processes. USAID had not considered the use of suspension and debarment 

in many circumstances that would have warranted the use of these 

authorities and had taken suspension and debarment actions in response to 

only nine investigations in four years. Even when USAID pursued 

suspension and disbarment actions, it did not always enter related 

information into the Federal database of excluded parties or document the 

actions that it took. Finally, in 20 of 54 cases that we examined, US AID 

could not establish that it had performed required checks on suspension and 

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debarment information during the bidding and award process to determine 

eligibility for awards. 

We made a dozen recommendations to correct these problems and 

have intensified our engagement with Agency suspension and debarment 

personnel to encourage the exercise of suspension and debarment authorities 

where appropriate. In response to one of our recommendations, USAID 

established and staffed a dedicated unit in its Office of Acquisitions and 

Assistance with a singular focus on suspension and debarment and 

compliance issues. Whereas in 2009 USAID had no staff with a primary 

focus on suspension and debarment, the Agency now has a division with 

eight acquisition, assistance, and audit positions supported by an attorney 

from its Office of the General Counsel to handle these matters and other 

contractor accountability functions. 

This change and an increased commitment by USAID's leadership to 

hold implementing partners accountable have produced noticeable results. 

While USAID scarcely used suspension and debarment in years past, 

USAID reported that in FY 2011 it took 63 suspension or debarment actions 

(suspension, proposed and actual debarments). This year, the Agency is on 

pace to exceed that total. Perhaps more significantly, USAID has 

demonstrated a willingness to hold its implementing partners accountable 

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regardless of their size. One particularly high-profile case demonstrated the 

Agency's commitment. In late 2010, after we provided evidence of serious 

corporate mismanagement, misconduct, and a lack of internal controls on the 

part of the Academy for Educational Development, USAID took the 

extraordinary step of suspending the firm-one of USAlD's largest 

implementing partners-from future Federal awards. 

The changes that USAID has implemented in the structure of its 

suspension and debarment program have reinforced accountability in 

development assistance. In recent years, we believe that USAID has 

generally exercised appropriate discretion in applying suspension and 

debarment authorities. 

Based on the positive change that we have observed in USAID's use 

of suspension and debarment, we are cautious about the approach being 

taken with this legislation. Any new requirements for agencies to apply 

suspension and debarment should be carefully structured so as not to 

jeopardize ongoing investigations or penalize firms that are working with us 

to address corporate or employee fraud. Changes to the Federal Acquisition 

Regulation that would mandate the suspension of contractors in all cases in 

which they or their employees are charged with a crime or civil fraud, have 

the potential to limit agency discretion in counterproductive ways. 

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Exceptions may be necessary in fraud cases involving employees that are 

brought to the attention of the U.S. government by the contractors 

themselves, or in which a non-negligent contractor may be unaware of the 

fraud. Even where there is widespread, significant fraud, there may be 

situations in which suspension would not be in the best interest of the U.S. 

government - for example in instances involving open and ongoing criminal 

investigations. In cases in which the contractor has already taken corrective 

actions, instituted appropriate controls, and established its present 

responsibility, it may be counterproductive to take suspension or debarment 

actions. 

Once suspension and debarment actions have been taken, they must 

be properly considered by acquisitions and assistance personnel along with 

data on firms' past performance and integrity. This information is a key 

consideration in the contracting process and can help the Government make 

better contracting decisions and spend taxpayer dollars more wisely. For 

this reason, we are encouraged to see provisions in the bill that seek to 

clarify past performance reporting requirements. 

The legislation seeks to strengthen the independence of USAID's 

suspension and debarment staff and increases the accountability of Agency 

procurement officials. By separating the suspension and debarment 

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personnel from the Office of Acquisition and Assistance (OAA), the bill 

enhances the posture to undertake suspension and debarment actions without 

any real or perceived conflict of interest. Under the bill, OAA's role in 

overseeing the procurement functions that guide USAID's development and 

reconstruction contracts, grants, and agreements also receives the heightened 

visibility and accountability that contracting-including overseas 

contingency contracting-deserves by establishing a direct reporting 

relationship with the Administrator. 

The pricing of goods and services is another key consideration in 

contingency contracting. We have found many cases in which US AID 

implementing partners have overpaid and excessive payments sometimes 

form the basis for criminal schemes involving kickbacks and procurement 

fraud. For example, in our November 2011 audit of USAID/Afghanistan's 

Afghanistan Stabilization Initiative for the Southern Region, we found that 

the contractor paid more than $18,000 each month per vehicle to rent 13 

armored vehicles when our audit staff obtained quotes for vehicle rentals 

ranging from $13,000 to $14,000. Greater transparency and availability of 

pricing information could help reduce related waste. With access to a 

database of pricing information in contingency settings along the lines 

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proposed in S. 2139, contracting staff would be in a better position to 

identify cost savings and reduce waste. 

Contingency operations make for challenging accountability 

environments. Security conditions delay monitoring activities and prevent 

evaluators from conducting impromptu site visits. Subcontractors are 

sometimes insulated from day-to-day oversight by layers of sub-awards. 

Local court systems that may still be developing basic capabilities are, in 

many cases, the only venues available for prosecuting the crimes that we 

uncover. In this context, additional measures to reinforce contractor 

accountability are welcome. By clearly establishing U.S. civil jurisdiction 

for certain crimes committed by contractors or their employees abroad and 

by strengthening contractor accountability for trafficking-in-persons 

violations in the Federal Acquisition Regulation, S. 2139 promises needed 

improvements. 

While our military service members, diplomats, and development 

professionals face the greatest difficulties operating in contingency settings, 

oversight work by OlOs is not without its challenges. The Comprehensive 

Contingency Contracting Reform Act includes welcome provisions intended 

to help address these challenges. 

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The principal challenges we face as an OIG in responding to the 

intensive oversight requirements of a contingency operation relate to staffing 

and funding. When contingencies arise, we reset our priorities and 

reallocate budgetary and personnel resources accordingly. We work quickly 

to establish a strong in-country presence by deploying our experienced cadre 

of Foreign Service auditors and investigators, and increasing awareness of 

our efforts to combat fraud, waste, and abuse through aggressive outreach. 

Under zero-sum staffing and budgeting conditions, increased 

oversight in contingency settings means less oversight elsewhere in USAID 

OIG's $31.5 billion oversight portfolio for development assistance. When 

we have had to reassign resources to support contingency operations, we 

have not lost sight of our other responsibilities. Fortunately, in past years, 

we have received dedicated appropriations for our oversight work in 

Afghanistan, Iraq, and Haiti, and have successfully maintained needed 

oversight of other important areas such as global health, democracy and 

governance, and education. From FY 2003 through the second quarter of 

FY 2012, nearly 85 percent of our performance audits were accomplished in 

countries other than Iraq or Afghanistan, demonstrating our ability to 

provide concurrent oversight of both traditional USAID operations and 

USAID work supporting contingency operations, made possible through 

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additional funding from dedicated appropriations for these contingency 

operations. Additional funding to support oversight activities during future 

contingency operations is essential for the USAID OIG to continue the 

quality and scope of our oversight of USAID programs and activities around 

the world. 

In 2010, Congress provided us with enhanced personnel authorities 

that give us vital surge capacity. Unfortunately, our enhanced personnel 

authorities will begin to expire at the end of this fiscal year, constraining our 

operations. Section 103 of the Comprehensive Contingency Contracting 

Reform Act of 2012 offers relief through a provision that would allow us to 

hire temporary employees and bring aboard reemployed annuitants for up to 

5 years. The enactment of these provisions would enable us to respond to 

emerging oversight requirements without the need for Congress to 

periodically reauthorize special OIG personnel authorities during future 

contingency operations. 

However, in providing new personnel authorities, the legislation 

appears to address only the rehiring of Civil Service annuitants. While Civil 

Service annuitants currently provide important assistance to our office in 

Afghanistan, Haiti, and Iraq, we would also benefit from the international 

experience of retired Foreign Service officers during future contingency 

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operations. Most of our reemployed annuitant positions filled under current 

personnel authorities to provide oversight in Iraq, Afghanistan, and Haiti, are 

done so with Foreign Service investigators. Accordingly, if the legislation 

addressed the hiring of reemployed Foreign Service personnel as well, it 

would greatly enhance our ability to respond to the pressing personnel 

requirements of contingency operation oversight. 

The public has a vital interest in transparency regarding contingency 

operations. Routine reporting helps keep the Congress and the public 

informed of key aspects of these operations. We recognize the importance 

of this reporting, and for that reason we publish quarterly and semiannual 

reports on our oversight efforts in Afghanistan, Pakistan, and Iraq. With 

respect to Pakistan, we also coordinate the development of a report on the 

progress of the U.S. Government's civilian assistance program that also 

details oversight plans and activities. The Comprehensive Contingency 

Contracting Reform Act of 20 12 includes a requirement for similar quarterly 

reporting, akin to the current requirements for the Special Inspector Generals 

for Iraq and Afghanistan, on the part of inspectors general during 

contingency operations. 

The legislation also seeks to establish a framework for the 

coordination of contingency oversight. Under S. 2139, the chair of the 

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Council of Inspectors General on Integrity and Efficiency (CIGIE) would 

designate a lead inspector general for a given overseas contingency 

operation from among the Inspectors General for the Department of 

Defense, the Department of State, and USAID. The designated lead 

inspector general would, in turn, be responsible for (l) conducting oversight 

of areas over which none of the statutory inspectors general have principal 

jurisdiction, (2) determining principal jurisdiction for oversight 

responsibilities in areas of overlapping jurisdiction, (3) authorizing the 

employment of temporary employees and annuitants by inspectors general in 

support of contingency operations, and (4) reporting to Congress on the 

progress of contingency operations and oversight activities. This framework 

for coordination is simpler, less bureaucratic, and more streamlined than the 

establishment of a new institution to address contingency operations under 

other proposals or utilized in Iraq and Afghanistan. This framework relies 

on the proven capabilities of the existing statutory OIGs and our strong track 

record of working together to ensure oversight of multiagency matters. It 

would greatly simplify planning, clarify authorities, and establish 

jurisdiction for each OIG and avoid the duplication of efforts, redundancy, 

and inefficiencies that the establishment of a Special Inspector General for 

Overseas Contingency Operations would generate. 

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We also suggest consideration of the formation of a "contingency 

operations oversight" subcommittee within CIGIE with representatives of 

the Inspectors General from the Department of Defense, the Department of 

State, and US AID, to address needs, mediate disputes, and make 

recommendations to the CIGIE chair, including the designation of the lead 

inspector general. This subcommittee should also request each respective 

inspector general to identify work force requirements to support 

determination of designation of temporary staff and rehired annuitants by the 

lead inspector general, as specified in the legislation, as well as serve as a 

forum for discussing oversight lessons learned from contingency operations. 

Thank you for this opportunity to address the Subcommittee. We are 

encouraged by your continued attention to the important challenges that 

contingency operations present. We look forward to continuing to work 

with Congress and the Administration to meet these challenges and 

capitalize on opportunities to advance national security while saving 

taxpayer's dollars. I would be happy to answer any questions you may have 

at this time. 

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To: Chairman McCaskill 

MEMORANDUM 

April 16, 2012 

Fr: Subcommittee on Contracting Oversight Staff 

Re: Hearing on The Comprehensive Contingency Contracting Reform Act of 2012 

(S.2139) 

On Tuesday, April 17,2012, at 10:30 a.m., the Subcommittee on Contracting Oversight 

will hold a hearing entitled, "The Comprehensive Contingency Contracting Reform Act of 20 12 

(S.2l39)." Senator McCaskill and Senator Webb introduced S.2139 on February 29, 2012. 

Senators Blumenthal, Franken, and Tesler have joined as co-sponsors. The legislation is based 

on the findings and recommendations of the Commission on Wartime Contracting in Iraq and 

Afghanistan (the Commission), which were presented in its final report to Congress in August 

2011. 

The purpose of this hearing is to review S.2139. The hearing will examine how S.2139 

remedies systemic problems in contingency contracting. The hearing will also provide an 

opportunity to discuss what additional steps, if any, may be required to fully address findings in 

prior hearings and investigations by the Commission, Congress, and others regarding contracting 

in overseas military contingencies. 

In preparation for the hearing, this memorandum provides background information on 

S.2139. A table with additional background on problem contracts in Iraq and Afghanistan will be 

provided separately. 

I. Background 

In 2007, Senator McCaskill and Senator Webb introduced legislation to create an 

independent Commission on Wartime Contracting to assess and examine potential waste, fraud. 

and abuse in contracting in Iraq and Afghanistan. The Commission was modeled on the Truman 

Committee, which investigated waste and fraud during World War ll.l The legislation was 

incorporated in the National Defense Authorization Act for Fiscal Year 2008, which was signed 

by tbe President on January 28, 2008 2 The Commission submitted its final report to Congress 

on August 31, 2011. 

The Commission found that at least $31 billion, and possibly as much as $60 billion. was 

wasted through government contracts in Iraq and Afghanistan. According to the Commission, 

"waste and fraud during contingency operations in Iraq and A fghanistan averages about $12 

million every day/or lhe paslIO years." This assessment did not include the costs of projects 

I Government Executive, Senate Dems Seek Probe of Wartime Contracting (Sept. 25, 

2007). 

2 Pub. L. 110-181, § 841, National Defense Authorization Act/or Fiscal Year 2008 (Jan. 

28,2008). 
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that cannot be sustained, which will increase the estimate by billions. In addition to the financial 

costs, the Commission found that poor planning, management, and oversight of contracts 

damaged the United States' strategic and diplomatic objectives. The Commission also made 15 

sweeping recommendations to improve the management and oversight of contingency 

contracting, from changes to the management structure at the Defense Department, State 

Department, and the United States Agency for International Development (USAID) to improving 

the government's use of data and information technology. The Commission concluded that 

"[mJeaningful progress will be limited as long as agencies resist major reforms that would 

elevate the importance of contracting ... ,',J 

Following the completion of the Commission's work, Congress held several hearings on 

the Commission's final report and recommendations. At a hearing of the Senate Armed Service 

Subcommittee on Readiness and Management Support that Senator McCaskill chaired in 

October 20 II. Commissioner Dov Zakheim testified: 

[W]asteful contract outcomes in Iraq and Afghanistan demonstrate that federal 

agencies still do not see the heavy reliance on contractors as important enough to 

warrant thorough planning for and effective execution of the goods and services 

acquisitions that contingency requires 4 

In his testimony, Commissioner Zakheim emphasized that legislative action by Congress 

would bc necessary to ensure that federal agencies implemented the Commission's 

recommendations. He concluded, "[pJolicies are easy to make. Implementation ... is really 

what counts,"; 

II. The Comprehensive Contingency Contracting Reform Act of2012 (S.2139) 

S.2I39 builds upon the Commission's recommendations in its final report to Congress 

and on investigations conducted by the Subcommittee on Contracting Oversight, the Government 

Accountability Oftice (GAO), inspectors gencral. and other federal auditors and investigators. 

If enacted, the legislation would implement comprehensive reforms by (l) increasing 

accountability for contingency contracting and (2) transforming the way the federal government 

awards, manages, and oversees contracts in contingencics. 

) Commission on Wartime Contracting in Iraq and Afghanistan. Final Report to 

Conwess: Tran.~forming Wartime Contracting: Controlling Costs. Reducing Risks (Aug. 31. 

20 II ). (emphasis in original). 

4 Senate Armed Services Subcommittee on Readiness and Management Support. Hearing 

to receive testimony on the Final Report of the Commission on Wartime Contracting in Iraq and 

Afghanistan. Testimony of Dov Zakhcim, Commission on Wartime Contracting in Iraq and 

Afghanistan (Oct. 19,2011). 

5 Scnate Armed Services Subcommittee on Readiness and Management Support, Hearing 

to receive testimony on the Final Report o{the Commission on Wartime Contracting in Iraq and 

Ajghanistan, Testimony of Dov Zakheim, Commission on Wartime Contracting in Iraq and 

Afghanistan (Oct. 19,20 II). 

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A. Accountability for Contingency Contracting 

If implemented, S. 2139 will increase accountability across government and within 

federal agencies for contingency contracting. S.2139 requires the federal government to address 

how it will pay for contingency operations. The legislation also establishes clear lines of 

authority for contingency contracting support within departments and requires inclusion of 

contract support in planning documents and professional training for departments and agencies. 

The legislation also strengthens oversight of contracting in contingencies. 

1. Consideration of Costs 

Lack of controls on spending for contingencies has contributed to skyrocketing costs in 

Iraq and Afghanistan, including the costs of contracting. Over 90% of the Defense Department's 

spending in Iraq and Afghanistan, which accounts for over 94% of the $1.3 trillion spent to date 

in those contingencies. has been provided through emergency or supplemental appropriations. 

This type of funding is exempt from the ceilings and limitations applicable in normal 

appropriations by Congress. Between 2003 and 2008. requcsts to Congress for wartime 

spending increased by 13% to 41 % each year.6 

The growing costs of the wars in Iraq and Afghanistan have been overwhelmingly 

financed through borrowing by the federal government. Earlier wars were paid for with a 

combination of tax increases. cuts in non-essential domestic spending, and borrowing. During 

World War [l, for example, tax increases accounted for approximately 45% of the cost of the war 

and cuts to federal programs in combination with borrowing paid for the remaining 55%. During 

the length of the wars in Iraq and Afghanistan, however, the government has neither increased 

taxes nor cut domestic spending to pay for war funding. making borrowing the single mechanism 

to finance the nation's mi litary efforts. 7 

S.2139 requires the Executive Branch to address how it will fund overseas contingency 

operations in the future. The President is required to ensure that any future request to Congress 

for funds in support of overseas contingency operations includes the proposed means to finance 

the requested amount, either by increases in revenue, decreases in federal programs. borrowing 

by the federal government. or by other means. The Director of the Office of Management and 

Budget must advise the President on the means to finance such requests in consultation with the 

6 Congressional Research Service. The Cost of Iraq. Afgham~~tan, and Other Global War 

on Terror Operations Since 9/// (March 29. 2011). Defense Department war costs are in 

addition to regular costs such as salaries, training, regular weapons procurement, and research 

and development. Id. 

7 Steven M. Kosiak, Center for Strategic and Budgetary Assessments. Cost o{the Wars in 

Iraq and Afghanistan, and Other Military Operations Through 2008 and Beyond (Dec. 15, 

2008); U.S. Congress Joint Economic Committee, Hearing on The Costs o{the Iraq War (Feb. 

28.2008). 

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Secretaries of Defense, State, and Treasury, and must report to Congress on all such obligated 

funds 8 

2. Management Structures for Contingency Contracting Support 

The Commission found that inadequate contract management at the Defense 

Department, State Department, and USAlD contributed to waste, fraud, and abuse in Iraq and 

Afghanistan, and that most of the waste, fraud, and abuse was "foreseeable and avoidable." 

With respect to USAlD, the Commission found: 

[T]he decentralized structure has not served the agency well. The gravest 

example is the fallout from the collapse of the Kabul Bank, showing that 

processes and rules that work elsewhere may be unsuitable in the midst of 

wartime opcrations.9 

The Defense Department's management of contracts has been identified by GAO as a 

"high-risk" area for waste, fraud, and abuse since 1992. Among the significant and ongoing 

problems identified by GAO has been the Department's "approach to managing services 

acquisitions." GAO has found that these problems extended to contingency contracting. 10 

The Defense Department was required to develop a structure for management of its 

service contracts in non-contingencies over six years ago. lIThe department has struggled to 

comply. The State Department and USAID have never had such requirements. 

S.2139 requires the Defense Department to include services contracts in support of 

contingency operations within its existing management structure for the procurement of service 

contracts. S.2139 also requires the State Department and USAID to develop their own 

management structure for procurement of services contracts, including contracts in support of 

contingency operations. The State Department and USAlD must evaluate whether to include 

elements such as guidelines and procedures for acquisition planning, solicitations, contract 

oversight, contract performance evaluations, and risk management, as part of their management 

structures. The Departments must then report to Congress on those areas included in their 

respective management structures and those elements not included. 12 

3, Accountability within the Defense Department 

8 S.2139 §§ 101, 102. 

9 Commission on Wartime Contracting in Iraq and Afghanistan, Final Report to 

Congress: Transforming Wartime Contracting: Controlling Costs, Reducing Risks (Aug. 31, 

2011). 

10 Government Accountability Office. High-Risk Series (Feb. 2011) (GAO-I 1-278). 

11 Pub. L. 109-163, § 812, National Defense Authorization Actfor Fiscal Year 2006 (Jan. 

6,2006). 

12 S.2139 § 111. 

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In its final report to Congress, the Commission cited a lack of clear lines of responsibility 

as a major problem in Iraq and Afghanistan. The Commission concluded that "poor planning. 

management. and oversight of contracts ... damaged IU .S. defense. diplomatic. and 

development] objectives."I) 

At the Defense Department, there is no single individual or office below the Secretary 

who is currently responsible for all aspects of contingency contracting in Afghanistan. 

According to the Department's Director of Expeditionary Business Operations: 

Today's Afghanistan contingency contracting offices do not yet operate 

synergistically. Dozens of different offices operate independently ... A single 

acquisition leader must be given the responsibility - and authority - to 

coordinate and manage end-to-end acquisition processes, systems, and 

controls ... Not only is streamlined leadership essential to creating and 

implementing unified strategy, but it is also necessary to ensure progress is 

institutionalized and lessons are noted. 14 

The Defense Department's actions to date to streamline and centralize acquisition 

planning and oversight have not been adequate to address these problems. In 2006, Congress 

required the Secretary of Defense to develop joint policies for planning. staffing. training, and 

assignment of responsibility for contingency contracting. However, a subsequent review by 

GAO in 2008 found that the Defense Department had either failed to fully develop the required 

policies or had not implemented those policies it had developed. I) 

In March 2010, the Department established an internal Functional Capability Integration 

Board (FCIB) to coordinate operational contract support planning, program management. 

requirements definition, and related issues. including the requirements established by Congress 

in 2006. 16 The FCIB's work is ongoing. 

13 Commission on Wartime Contracting in Iraq and Afghanistan, Final Report to 

Congress: Trans/orming Wartime Contracting: Controlling Costs, Reducing Risks (Aug. 31. 

2(11). 

14 Andrew S, Haeuptle. Renanah Miles, Defense Acquisition University (DAU) Defense 

AT &L Magazine, Effects Through Acquisition, Leveraging Ihe Power of Contingency 

Contracting (Feb. 2012). 

15 Pub. L. 109-364. § 854, National Defense AllihorizationAcrfor Fiscal Year 2007 (Oct. 

17,2(06); Pub. L. 110-181, § 849(a), National Defense Authorization Act/c)r Fiscal Year 2008 

(Jan. 28, 2(08); U.S. Government Accountability Office, Contract Management: DOD 

Developed Draft Guidancefor Operational Contract Support but Has Not Met All Legislative 

Requirements (Nov. 20, 2(08) (GAO-09-114R). 

16 Department of Defense, Under Secretary 01 Defense for Acquisition, Technology, and 

Logistics, Memorandum: Establishment of the Operational Contracl Support (OCS) Functional 

Capability integration Board (FClB) (March 29, 20 I 0). 

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S.2 J 39 requires the Secretary of Defense to determine the chain of authority and 

responsibility within the Department for policy, planning. and execution of contract support for 

overseas contingency operations, including the responsibilities, roles, authorities, and objectives 

of officials within that chain, as they relate to contract support for overseas contingency 

operations. The Secretary must establish the chain and report to Congress within one year of the 

bill's enactment. Within 18 months, the Comptroller General must report on whether the chain 

of authority established by the Secretary enables the Department to achieve effective policy, 

planning. and execution of contract support for overseas contingency operations. 17 

4. Responsibilities of Chief Acquisition Officers within the State 

Department and USAID 

The Commission concluded that meaningful progress in contingency contracting reform 

would not happen at the State Department and USAID without changing the role of the Chief 

Acquisition Officer. According to the Commission, "without a focus on contingency contracting 

in both State and USAIO, skill sets, tradecraft. and knowledge gleaned from lessons learned will 

be soon forgotten and the benetits of any staffing gains will be lost:· 18 

The Commission found that the State Department had failed to comply with the 2003 

Service Acquisition Reform Act, which requires most federal agencies to designate a Chief 

Acquisition Officer (CAO) who reports directly to the agency head. Under current law, the CAO 

must be a non-career employee with acquisition management as his or her primary duty. The 

Commission found that the State Department's CAO is several levels below the agency head and 

deals with procurement issues as "just one item in a grab-bag of unconnected duties.,,19 

The Commission also found that lJSAID had failed to comply with of the intent of the 

law. The agency believes that it is not statutorily required to have a CA02 (1 It docs, however. 

17 S.2139 § 121. 

18 Commission on Wartime Contracting in Iraq and Afghanistan, Final Report to 

Congress, Transforming Wartime Contracting: Controlling Costs, Reducing Risks (Aug. 31, 

2011). 

19 These requirements in the Service Acquisition Reform Act were adopted in the fiscal 

2004 NDAA. See Pub. L. 108-136, § 1421, National Defense Authorization Actfhr Fiscal Year 

2004 (Nov. 24, 2003). See also 41 U.S.c. § 1702; Commission on Wartime Contracting in Iraq 

and Afghanistan, Final Report to Congress. Transfiwming Wartime Contracting: Controlling 

Costs, Reducing Risks (Aug. 3 1,2011). 

20 Department of Defense, Department of State, and USA 10, Joint Briefingfor 

Subcommittee Staff(April 10,2012). 

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have an individual who fulfills many CAO functions. This individual is a career employee, with 

multiple additional responsibilities, who does not report directly to the agency's administrator,21 

S.2139 requires that CAOs advise agency and department leadership regarding applicable 

contracting policy for overseas contingency operations and ensure compliance with policy 

requirements. S.2139 also requires the head of acquisition functions for the State Department 

and VSAID to be the Chief Acquisition Officer for the department and agency, It sets direct 

reporting requirements to the Secretary and Administrator and requires that the CAO comply 

with all aspects of the Service Acquisition Reform Act of2003. 22 

5. Collecting and Maintaining Information on Contingency Contract 

Support at the Departments of Defense and State 

Congress and the public still do not have access to even basic information regarding 

contracts performed in Iraq and Afghanistan. Although the Defense Department Slate 

Department, and Vnited States Agency for International Development (USAlD) have been 

required to report annually to Congress regarding contracts performed in Iraq and Afghanistan 

since 2008. the agencies have failed to provide complete and accurate information. 

In 20 II, GAO found that agencies provided inaccurate information on contract spending 

and personnel figures in their annual report to Congress because none of the sources they used to 

report on contractor personnel and spending numbers were reliable. According to GAO, the 

agencies' 2010 joint report understated the three agencies' obligations on contracts and grants in 

Iraq and Afghanistan by at least $4 billion.2J 

S.2139 requires the Defense Department and State Department to report annually to 

Congress during overseas contingency operations on the total number, value, and the extent of 

competition for contracts performed in the area of the contingency, total number of contractor 

personnel working under reported contracts, total number of contractor personnel performing 

security functions, and the total number of contractor personnel killed or wounded under 

reported contracts. S.2139 also requires that reports include assessment of policy, planning, 

management, and oversight of contract support by the departments.14 

6. Contingency Contract Support Planning and Training at the 

Departments of Defense and State 

21 Commission on Wartime Contracting in Iraq and Afghanistan, Final Report to 

Congress. Transforming Wartime Contracting: Controlling Costs, Reducing Risks (Aug, 31, 

2011). 

22 S.2l39 §§ 104, 131. 

13 Government Accountability Office. Iraq and Afghanistan: DOD. State, and USAlD 

Cannot Fully Accountfor Contracts. Assistance Instruments. and Associated Personnel (Sept. 

15,2011) (GAO-I 1-886). 

24 S.2139 §§ 121, 131. 

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A shortage of trained personnel has severely hampered the management and oversight of 

contracts in Iraq and Afghanistan. According to Special Inspector General for Iraq 

Reconstruction Stewart Bowen: 

[sJupplying adequate numbers of personnel with the requIsite expertise 

emerged as a critical bottleneck early in the reconstruction effort ... Although 

personnel recruitment improved somewhat as the reconstruction enterprise 

matured, at no time were there sufficient numbers of experienced advisors to 

meet Iraq's critical capacity-building needs 25 

Neither the Defense Department nor the State Department has adequately addressed the 

lack of trained personnel. Since 2006. the Secretary of Defense has been required by Congress 

to develop joint policies for training to address contingency contracting. In 2008, Congress 

required the Department to expand its policies to include development of requirements for 

training of military personnel outside the acquisition workforce. Despite these requirements, 

GAO has reported that the Defense Department has not fully developed or implemented 

adequate training policies26 

In March 2012, GAO reported that Defense Department has continued to fail to provide 

sufficient, trained personnel to oversee contracts in Afghanistan. GAO concluded that. while the 

Department has taken steps to improve its training, "the required training does not fully prepare 

[officials] to perform their contract oversight duties in contingency areas such as Afghanistan."n 

The Defense Department has also failed to comply with its own guidance related to 

planning for contingency contracting. The Defense Department has required the combatant 

commands to include planning for operational contract support in their planning since 2006. 

However, GAO found that only four operational plans had been approved containing the 

required sections addressing operational contract support. 28 

25 Stuart W. Bowen. Jr., Hard Lessons: The Iraq Reconstruction Experience (2009). 

26 Pub. L. 109-364, §854, National Defense Authorization Act for Fiscal Year 2007 (Oct. 

17, 2006): Pub. L. 110-181. § 849(a). National De/ense Authorization Act/or Fiscal Year 2008 

(Jan. 28. 2008); U.S. GovernmcntAccountability Office, Contract Managemf'nt: DOD 

Developed Draft Guidancefor Operational Contract Support hut Has Not Met All Legislative 

Requirements (Nov. 20, 2008) (GAO-09-114R). 

27 Government Accountability Office, Operational Contract Support: Management and 

Oversight Improvements Needed in Afghanistan (March 29, 2012) (GAO-12-290). 

28 Department of Defense, Joint Chiefs of Staff, Joint Publication j-O, Joint Operational 

Planning (Dec. 26, 2006); Government Accountability Office, Warfighter Support: DOD Need5 

to Improve its Planningjor Using Contractors to Support Future Military Operations (March 30. 

2010) (GAO-IOA72). 

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Neither the State Department nor USAID require personnel outside of their acquisition 

departments to be trained on contingency contracts. In addition, neither agency is currently 

required to include plans for the use of contractors in contingency planning. 29 

S.2139 requires professional education for Defense Department and State Department 

officials to include curriculum on contracting in contingencies. Military education must include 

requirements for contingency program management and the strategic impact of contract costs in 

contingencies. State Department professional education must develop curriculum to cover these 

areas as well as acquisition matters specific to the Department of State in support of overseas 

contingency operations. 3D 

S.2139 also requires the Defense Department and State Department to add operational 

contract support as a requirement in planning documents. Contractor support must be reviewed 

quarterly in reports to Congress as a capability under the Department's existing readiness 

reporting system. The Secretary of State must establish a readiness reporting system for the 

State Department that includes review of contract support. The Secretary of State must also set 

requirements for performance of a Quadrennial Diplomacy and Development Review (QDDR), 

within the Department with elements to include contractor support for diplomatic and overseas 

development strategy and roles and responsibilities of contractors within the Department31 

7. Suspension and Debarment Officials 

Federal agencies have failed to adequately use suspension and debarment to protect the 

government. In 20 11, the Defense Department found that, over a I O-year period, the Department 

awarded $255 million to contractors who were convicted of criminal fraud and $574 billion to 

contractors involved in civil fraud cases that resulted in a settlement or judgment against the 

contractor, many of whom were never suspended or debarred. 32 In 2011. GAO reported that 

over a five year period from 2006 through 20 I 0, the State Department, with over $33 billion in 

contracts, had only six suspension or debarment cases33 

29 Department of State, U.S. Agency for International Development, Briefinr;for 

Subcommillee StajJ(April 10, 2012) . 

. 10 S.2139 §§ 123, 133. 

31 S.2139 §§ 122, 132. A similar requirement to assess roles and responsibilities of 

contractors was adopted in the fiscal 2012 NDAA for the Department of Defense to be included 

in its Quadrennial Defense Review. Pub. L 112-81, § 820, Nalional Defense Authorization Act 

for Fiscal Year 2012 (Dec. 31, 20 II). 

32 Department of Defense, Under Secretary of Defense for Acquisition, Technology, and 

Logistics, Report to Congress on Contractinr; Fraud (OCL 20 II). 

)3 Government Accountability Office, Suspension and Debarment: Some Ar;en(y 

Programs Need Greater Attention, and Governmenlwide Oversir;ht Could Be Improved (Aug. 

31,2011) (GAO-I 1-739). 

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Agencies, including the State Department, which failed to adequately use suspension and 

debarment procedures to safeguard the government's interests, share similar characteristics: no 

full time dedicated suspension and debarment staff, lack of detailed policies and guidance, and 

absence of established practices to encourage referrals 34 By contrast, the Air Force suspensions 

and debarment program, which had 367 suspension or debarment actions in 2010 and is widely 

regarded as successful, owes its effectiveness to a dedicated staff with a full-time. career official 

in charge who is separate from the acquisition chain. and "empowered" to protect the 

government,35 

S.2139 requires Suspension and Debarment Officials (SDOs) for the Defense 

Department, the military departments, the State Department, and USAID to maintain a dedicated 

staff. adopt and comply with guidance on policies and procedures, and implement training and 

uniform practices for suspension and debarment activities. Each agency must maintain at least 

one full time official, whose duties are limited to the direction, management, and oversight of 

suspension and debarment activities. The legislation prohibits locating the SDO within the 

acquisition offices of the department or agency and requires that SDOs maintain membership and 

provide information to the Interagency Committee on Debarment and Suspension (ICDS) to 

assist the ICDS in fulfilling its annllal reporting obligations to Congress. 

S.2139 also provides for automatic suspensions where a contractor has been indicted, a 

civil or criminal action alleging fraud has been filed by the government, or there has been a final 

determination of a contractor's failure to pay outstanding obligations. This section applies only 

to suspension, not debarment, and its requirements may be waived at the discretion of the SDO.36 

8. Responsibilities of Inspectors General 

Congress has previously attempted to address the lack of oversight in contingencies by 

creating new Inspectors General. [n 2003, Congress created the Special Inspector General for 

Iraq Reconstruction (SIGIR) and in 2008. it created the Special Inspector General for 

Afgh~nistan Reconstruction (SIG.AR) .to provide a comp~ehensive and. indcfindent means .for 

overSIght of programs and operatIons In Iraq and AfghanIstan, respectlvely.- In the past nIne 

years, SIGIR has issued over 200 audit reports and estimates that over $644 million has been 

recovered or saved based on actions taken hy government agencies in response to SIGIR findings 

34 Government Accountahility Office, Suspension and Debarment: Some Agency 

Programs Need Greater Attention, and Governmentwide Oversight Could Be Improved (Aug. 

31,2011) (GAO-I 1-739). 

35 Senate Committee on Homeland Security and Governmental Affairs, Hearing on 

Weeding out Bad Contractors: Does the Government Have the Right Tools? (Nov. 16,2011). 

36 S.2139 §§ 112, 113. 

l7 Pub. L. 108-106, § 300 I, Emergency Supplemental Appropriations Act for Defense and 

for Reconstruction of Iraq and Afghanislan (Nov. 6, 2003). The Inspector General of the 

Coalition Provisional Authority was fe-designated as the SIGIR under Pub. L. 108-375; Pub. L. 

110-181, § 1229, National Defense Authorization Actfor Fiscal Year 2008 (Jan. 28, 2008). 

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and recommendations. As of January 2012, SIGAR has completed 53 audits over a four year 

period, identifying over $259 million in funds that should be returned to the U.S. Investigations 

by SIGIR and SIGAR have resulted in over $224 million in recovered funds in Iraq and 

Afghanistan.38 

Statutory Inspectors General have also made major contributions to the detection and 

prevention of waste, fraud and abuse in Iraq and Afghanistan. In 2011, GAO found that across 

government, the Inspectors General reported potential savings of about $43.3 billion resulting 

from their work in 2009 alone, which represents a return of approximately $18 for every dollar 

spent on the Inspectors General,',39 In just the six month period between April and September 

20 II, the Defense Department Inspector General conducted over 80 audits identifying $547 

million in funds which eould be better spent 40 

S.2139 works within existing structures to increase the authority and responsibility of 

Inspectors General upon declaration of contingency operations. S. 2139 does not implement the 

Commission's recommendation that Congress create a permanent Office of Inspector General for 

Contingency Operations with authority to increase or decrease staff in the event of an overseas 

contingency. The Inspectors General for the Defense Department. State Department, and USAID 

have expressed concerns regarding this recommendation, including whether such an office could 

be effective. [n addition, fiscal concerns remain about the efficacy of creating a new inspector 

general office. staff, and fund, all of which would be required by the creation of a permanent 

Inspector General for contingencies. 41 

S.2139 amends the Inspector General Act of 1978 to require the Chair of the Council of 

Inspectors General on Integrity and Efficiency (CIGIE) to designate a Lead Inspector General for 

Contingency Operations from among the existing Inspectors General for the Department of 

Defense, Department of State, and USAlD. The Lead Inspector General is responsible for 

conducting oversight of all aspects of a contingency and must report annually to Congress on all 

overseas contingency operations, The Lead Inspector General is also responsible for resolving 

jurisdictional disputes and, along with the other covered inspectors general, may employ rehired 

38 Special Inspector General for Iraq Reconstruction, Quarter~v and Semiannual Report to 

the United States Congress (Jan. 30, 2(12); Special Inspector General for Afghanistan 

Reconstruction, Quarterly Report to the United States Congress (.Ian. 30, 2(12). 

39 Government Accountability Office, Inspectors General: Reporting on Independence. 

'tffectiveness. and Expertise (Sept. 21, 2(11) (GAO-I 1-770). 

40 Department of Defense Office of Inspector General, Semiannual Report to the 

Congress (Sept. 30, 20 II). 

41 Senate Committee on Homeland Security and Governmental Affairs, Subcommittee on 

Contracting Oversight, Hearing on Oversight of Reconstruction Contracts in Afghanistan and 

the Role of the Special Inspector General (Nov. 18, 20 I 0). 

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ann~itants and tem~orar;; personnel for up to five years to assist in conducting oversight of 

contmgency operattons. -

B. Contract Award, Management, and Oversight 

S.2139 requires agencies to reduce rei iance on noncompetitive contracting practices and 

restrict subcontracting practices that have resulted in a lack of visibility regarding where U.S. 

dollars flow in contingencies. The legislation also requires agencies to conduct risk analyses 

before relying on private security contractors and to terminate unsustainable reconstruction and 

development projects. It also strengthens tools to combat human trafficking. 

1. Limitations on Noncompetitive Contracts 

The Commission found that lack of competition contributed to the waste, fraud, and 

abuse of contracts in Iraq and Afghanistan. In just one example, the Commission estimated that 

failure to implement competition at the task-order level at the beginning of the $6 billion Army 

logistical support contract known as LOGCAP III and delays in awarding its competitive 

successor contract, LOGCAP IV, resulted in over $3.3 billion in waste. 43 

S.2139 limits the time period for contracts entered into by the Defense Department, State 

Department, and USAID in contingency operations to three years for competitively bid contracts 

and one year for all non-competitive contracts. These limitations can be waived depending on 

compelling needs of departments in contingencies if senior officials provide written 

justifications. The limitations do not take effcct until six months after the commencement of an 

overseas contingency operation.44 

S.2139 requires that when agencies solicit contract proposals from only a single source, 

use of the "unusual and compelling urgency" exception provided for in the Federal Acquisition 

Regulation (FAR) as the basis for entering into sole-source contracts, must be documented by the 

agency in a written justification and approval (J&A) of the reasons necessary for using this 

authority. The legislation requires agencies to compile these J&As and submit them annually in 

a report to Congress:5 

2. Subcontractor Transparency and Oversight 

The government's inability to conduct adequate oversight of subcontractors has also 

contributed to waste. fraud, and abuse. For example, in 20 II, the Justice Department filed a 

False Claims Act case against KBR on the LOGCAP III contract based on allegations of 

42 S.2139 § 103. 

4} Commission on Wartime Contracting in Iraq and Afghanistan, Final Report to 

Congress: Transforming Wartime Contracting: Controlling Costs. Reducing Risks (Aug. 31, 

2011) (emphasis in original). 

44 S.2139 § 201. 

45 S.2139 § 203. 

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kickbacks to one of its subcontractors, Tamimi. According to the Commission, Tamimi, which 

held subcontracts worth over $700 million, and whose general manager was subsequently 

convicted of related felonies, was legally entitled to refuse to provide a complete record of its 

subcontracts to the Defense Contract Audit Agency or to the Commission.46 

In June 2011, in response to a report by the Senate Foreign Relations Committee on U.S. 

foreign assistance to Afghanistan which found that USAID relied heavily on contractors, had 

limited oversight and visibility of prime contractors and subcontractors, and concluded that the 

U.S. should review Afghan aid policy to ensure that it engages only in projects that are 

"necessary, achievable, and sustainable", USAID implemented a number of improvements to 

address contractor accountability and enhanced oversight at USAID. These improvements 

include new limitations for subcontractors. USAID states that it now includes a clause in new 

contract awards in Afghanistan which permits USAID to restrict the number of subcontract tiers 

and requires the prime contractor to perform a certain percentage of the work47 

S.2139 limits the number of tiers that can be subcontracted for service contracts. These 

limitations can be waived depending on compelling needs of departments in contingencies if 

senior officials providc written justifications. The limitations do not take effect until six months 

after the commencement of an overseas contingency operation.48 

3. Reliance on Private Security Contractors. 

Problems with armed private security personnel in Iraq and Afghanistan have been 

widely reported. The most notorious incident occurred in September 2007, when guards 

employed by the private security company Blackwater allegedly shot and killed 17 civilians in 

Iraq's Nisur Square.49 In Afghanistan, multiple private security contractors working for the 

Defense Department have been found to be funneling U.S. taxpayer dollars to Afghan warlords. 5o 

The performance of many private security contractors has also been found to be so inadequate 

that their failures "directly alTeet the safety of U.S. military personnel."SI 

46 Commission on Wartime Contracting in Iraq and Afghanistan, Final Report to 

Congress: Transforming Wartime Contracting: Controlling Costs, Reducing Risks (Aug. 31, 

2011) 

47Senate Committee on Foreign Relations, Evaluating Us. Foreign Assistance to 

Afghanistan (June 8, 2011) (S. Rept. 112-21); Letter from USAID Administrator Rajiv Shah to 

Chairman John Kerry (June 1,20 11). 

48 S.2139 § 20 I. 

49 US. Contractor Banned by Iraq Over Shootings, New York Times (Sept. 18,2007). 

50 Senate Committee on Armed Services, Report: Inquiry Into the Role and Oversight of 

Private Security Contractors in Afghanistan (Sept. 28, 2010). 

51 Senate Committee on Armed Services, Report: Inquirv Into the Role and Oversight of 

Private Security Contractors in Afghanistan (Sept. 28, 20 I 0). 

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In 2008, Congress required increased training and reporting requirements for private 

security contractor personnel in contingencies as well as new contract clause provisions to ref1ect 

these changes. However, over four years later. regulations addressing selection, training, 

equipping, and conduct of contractor personnel performing private security functions in areas of 

contingency operations have still not been fully enacted. 52 

In its final report, the Commission concluded that existing standards do not provide 

adequate guidance to federal agencies about when private security contractors should be used in 

contingency operations. Those standards only address when the government is legally entitled to 

use such contractors, not whether it is advisable. The Commission recommended that agencies 

conduct a realistic risk assessment and noted that there could be circumstances, like those 

currently present in Afghanistan, where the risks outweighed the benefits of contracting for 

security functions. 53 

S.2139 requires that. for contingency operations that exceed six months, the commander 

of combat activities in a contingency, in consultation with the Secretaries of Defense or State, 

must perform a risk analysis consistent with the obligations for analysis under Defense 

Department Instruction 1100.22 to determine whether the continued performance of personal, 

mobile, or static security functions by contractors is appropriate. The Act requires the 

Secretaries of Defense and State must each report annually to Congress on the continued use of 

contractors to perform these security functions in overseas contingency operations. The review 

must incorporate the risk analysis performed by the combatant commanders and explain the 

departments' plans for maintaining performance of these functions 54 

4. Uniform Contract Writing Systems and Information on Priees. 

The award and management of contingency contracts could be improved through better 

implementation of information technology. For example, GAO has identified five overlapping 

51 Pub. L. 110-181, § 862, National Defense Authorization Actfor Fiscal Year 2008 (Jan. 

28,2008). In 2011, The Defense Department prescribed regulations that fulfilled the first 

requirement in section 862. However, the Federal Acquisition Regulation (FAR) has not yet 

been revised to require a contract clause to reflect these regulations for covered contracts 

performed in areas of contingency operations, as required by the second requirement in that 

section. See Pub. L. 110-181, § 862. As of March 2012, the proposed FAR change has been 

submitted to the Office of Information and Regulatory Affairs in the Office of Management and 

Budget for review. See DFARS Case 2011-029: Contractors Performing Private Security 

Functions. 

53 Commission on Wartime Contracting in Iraq and Afghanistan, Final Report to 

Congress: Transforming Wartime Contracting: Con/rolling Cosls, Reducing Risks (Aug. 31, 

2011). 

54 S.2 139 § 202. 

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and duplicative contract writing systems at the Air Force alone. which the Air Force has recently 

begun work to consolidatc.55 

There are also opportunities to achieve savings in contingency contracts through better 

sharing of information among agencies. The Defense Department's Director of Defense Pricing 

is developing a pilot system called the Contractor Business Analysis Repository (CBAR). which 

will give contracting officials tools to compare the price histories and the proposed rates on 

goods and services across the Department.,6 If expanded and shared. this type of information 

presents an opportunity for cost savings across the government. 

S.2139 requires civilian and military agencies each to establish and maintain a single 

contract writing system for executive branch agencies. Agencies may use contract writing 

systems of another agency if the Office of Management and Budget determines that such use will 

result in cost savings to the federal government. S.2139 also requires that the Office of Federal 

Procurement Policy establish a database on prices for services and items charged to the federal 

government under existing contracts to assist acquisition personnel in monitoring price changes 

and conducting cost analyses regarding the reasonableness of prices for items and services57 

5. Combating Trafficking in Persons and Consent to Jurisdiction. 

The Commission found that existing laws have been insufficient to stem human 

trafficking under contracts in Iraq and Afghanistan. The Commission stated: 

At many times during its travels and hearings, the Commission uncovered 

tragic evidence of the recurrent problem of trafficking in persons by labor 

brokers or subcontractors of contingency contractors. Existing prohibitions on 

such trafficking have fai led to suppress it. Labor brokers or subcontractors 

have an incentive to lure third-country nationals into coming to work for 

United States contractors, only to be mistreated or exploited.'R 

The Commission also noted that there are limited opportunities for accountability for 

contractors because civil and criminal jurisdiction for foreign contractors operating overseas 

remains uncertain due to lack of personal jurisdiction in U.S. courts. 

55 Government Accountability Office, Il'!formation Technology: Department of Defense 

and Energy Need to Address Potentially Duplicative Investments (Aug. 17,2012) (GAO-12-

241). 

56 DCMA Leads Acquisition 'Revolution' Federal News Radio (Nov. 16.2011). 

57 S.2139 §§ 211, 212. 

58 Commission on Wartime Contracting in Iraq and Afghanistan. Final Report to 

Congress: Transforming Wartime Contracting: Controlling Costs. Reducing Risks (Aug. 31. 

2011). 

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S.2139 makes it illegal to solicit, recruit or hire persons for work on contracts performed 

outside the United States by fraudulent means, such as material misrepresentations or promises 

regarding employment. The legislation also requires that these contracts include a termination 

clause applicable if any prime contractor, subcontractor, or labor broker employed under a 

contract with the Defense Department, State Department, and USAID engages in trafficking in 

persons, the procurement of commercial sex acts, or the use of forced labor, such as failure to 

repatriate an employee upon the end of employment or confiscation or concealment of an 

employee's immigration documents. Contractors would be required to annually certify to the 

government that no such activity has occurred by persons employed by them under the 

contract.59 

S.2139 requires that foreign entities who choose to enter into contracts with the United 

States must consent to personal jurisdiction in the United States in suits brought by the 

government and authorized individuals for actions involving wrongful death. serious bodily 

injury. rape, or sexual assault.60 

6. Information on Past Performance 

The Commission found that agencies were not effectively using information about 

contractors' past performance in contingencies. According to the Commission, "agencies lack 

the necessary insight into contractor performance and have an increased risk of awarding 

contract to habitual poor performers." The Commission also found that the current process of 

performance evaluations. including contractor appeals, discourages candid evaluations and 

unduly delays sharing past performance information among contract officials. The Commission 

recommended that contractors not be allowed to appeal agency performance evaluations. 61 

In 20 II, Congress partially addressed the problem of contractor evaluations by changing 

the applicable timc period for the process for Defense Department contracts. Defense 

Department officials arc now required to rcport past performance information into the 

government's past performance system 14 days after sharing it with the contractor, regardless of 

whether contractors provide rebuttals or additional information to contracting officials for 

inclusion in their evaluations.62 

S.2139 requires that information about past performance and integrity of contractors 

currently maintained by the government in the Federal Awardee Perfonnance and Integrity 

Information System (FAPIIS) must include information about an entire corporation, including 

59 S.2139 § 222. 

60 S.2139 § 221. 

61 Commission on Wartime Contracting in Iraq and Afghanistan, Final Report to 

Congress: Transforming Wartime Contracting: Controlling Costs, RedUCing Risks (Aug. 31, 

2011). 

62 Pub. L. 112-81, § 806. National Defense Authorization Actfor Fiscal Year 2012 (Dec. 

31.2011). 

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any parent, subsidiary, or successor entity, not just an individual vendor. The legislation also 

amends the Federal Acquisition Regulation to require agencies to use the Contractor 

Performance Assessment Reporting System (CPARS) when submitting information to the Past 

Performance Information Retrieval System (PPIRS). It also eliminates the obligation for 

agencies to wait 30 days in order for contractors to respond to performance evaluations prior to 

sUbmission.6

] 

7. Sustainability 

The federal government has spent hundreds of millions, if not billions, on projects in Iraq 

and Afghanistan which cannot he sustained by the host government. In just one example, the 

Commission found that the United States spent $40 million to partially construct a prison in Iraq, 

even though the Iraqi government explicitly stated it would not complete construction or occupy 

the prison after it was completed.64 

The government of Afghanistan will be unable to sustain the overwhelming majority of 

projects built by the United States. In June 2008, the Senate Foreign Relations Committee 

released a report which found that 97% of Afghanistan's GDP is comprised of spending related 

to the military operation and international support. The Foreign Relations Committee report 

recommended that the Administration and Congress review Afghan aid policy to ensure that it 

engages only in projects that are "necessary, achievable, and sustainable.,,65 

The majority of funding for reconstruction projects in Iraq and Afghanistan has come 

from the Defense Department. Overall, the Defense Department has spent more than $6.9 billion 

in Iraq and Afghanistan on projects funded by the Commanders' Emergency Response Program 

(CERP) and the Afghanistan Infrastructure Fund (AIF).66 In one year, under the AIF alone, the 

Defense Department received over $400 million for reconstruction and development projects, 

including approximately $130 million for continuation of a power transmission project in 

Kandahar, $101 million for a power transmission project in Chimtala-Ghazni, and $23 million 

for a road construction project in Helmand Province. These projects were approved with cursory 

63 S.2139 §§ 223, 224. 

64 Commission on Wartime Contracting in Iraq and Afghanistan, Final Report to 

Congress: Tran~ftJrming Wartime Contracting: Controlling Costs, Reducing Risks (Aug. 31, 

2011). 

65 Senate Committee on Foreign Relations, Evaluating U.S. Foreign Assistance to 

Afghanistan (June 8, 2011) (S. Rept. 112-21). 

66 Congressional Research Service, The Cost of Iraq. Afghanistan, and Other Global War 

on Terror Operations Since 9/1 I (Mar. 29, 20 II); Congressional Research Service, Afghanistan: 

U.s. Foreign Assistance (Aug. 19,2011). 

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~~:~:~~:~~~7S by the Department regarding how the host country might sustain these projects in 

Under current law, sustainability analyses are already required to be performed for 

projects administered by USAID. The Foreign Assistance Act of 1961 requires that a 

sustainability analysis be conducted and certification of a host nation's ability to sustain a project 

be provided for any infrastructurc projects over $1 million that are funded out of developmentrelated accounts.6R 

S.2139 prohibits the Defense Department from entering into large reconstruction related 

projects in contingencies unless the Secretary of Defense in consultation with the U.S. 

commander of military operations in the country in which the project is to be carried out jointly 

certify that the host country can sustain the project once completed. Certifications must be 

provided to Congress and current projects in Afghanistan must be terminated unless they can be 

certified as sustainable or a determination is made by the Secretary that the project is necessary 

to the military mission.69 

III. WITNESSES 

The following witnesses will testify at the hearing: 

Panel I 

The Honorable Jim Webb 

U.S. Senator 

Panel II 

Richard T. Ginman 

Director. Defense Procurement & Acquisition Policy 

U.S. Department of Defense 

The Honorable Patrick Kennedy 

Under Secretary for Management 

U.S. Department of State 

Angelique Crumbly 

Acting Assistant to the Administrator. Bureau of Management 

U.S. Agency for International Development 

Panel III 

67 Department of Defense. Afghanistan Infrastructure Fund: Approved FY2011 Projects 

Supporting the Afghanistan Infrastructure Fund (June 27. 2011). 

6R 22 U.S.C. § 2361. 

69 S.2139 § 231. 

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Lynne M. Halbrooks 

Acting Inspector General 

U.S. Department of Defense 

Harold W. Geisel 

Deputy Inspector General 

U.S. Department of State 

Michael G. Carroll 

Acting Inspector General 

U.S. Agency for International Development 

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Center for American Progress :\ction Fund 

! -

Statement for the Record 

1333 H Street, NW, 10" Floor 

Washington, DC 20005 

Tel: 202682.1611·202682.1867 

The military has relied on contractors since the Revolutionary War. But since the end of 

the Cold War. when the Department of Defense cut its military and civilian logistical and 

support personnel. reliance on contractors has increased dramatically. Beginning with 

the operations in the Balkans and continuing with the wars in Iraq and Afghanistan. 

contractors have composed about half of the Department of Defensc's personnel incountry. In Iraq and Afghanistan alone. more than 260.000 private workers- most of 

them not American citizens-have been deployed. This explosion in the use of 

contractors in contingency operations has undermined U.S. strategic and financial 

interests. outsourced essentially governmental functions. and distanced American 

policymakers from the moral hazards of their decisions. 

If the U.S. is to protect its vital national interests in a cost-etfective manner. now and in 

the future. the Congress must pass and the President should sign S.2139. the 

Comprehensive Contracting Reform Act of2012. as soon as possible. If we do not act 

expeditiously. we will continue to needlessly squander blood and treasure and undermine 

our image in current and future conflicts. War and peace are matters of national interest 

and national endeavor. and it is not appropriate to impose a management structure or 

ethos more appropriate ;n the corporate world. 

S.2139 addresses most of the structural. systemic. and technical problems identitied by 

the Commission on Wartime Contracting in Iraq and Afghanistan. This group. which was 

created through legislation introduced five years ago by Senators Claire McCaskill (DMO) and Jim Webb (0-V A). has made a number of recommendations to deal with the 

problems created by the overreliance on contractors in warzones and the waste. fraud. 

and abuse pervading the awarding and implementation of contracts. 

This legislation is necessary because officials in the Executive Branch have shown that 

they are unable or unwilling to implement most of the Commission's recommendations. 

If this legislation does not pass. tbese problems will remain unresolved. as they have not 

just over the past decade but since the I 990s when we deployed forces to the Balkans. If 

S.2139 is not passed. large amounts of appropriated money will continue to be wasted: in 

Iraq and Afghanistan at least $31 billion and possibly as much as $61 billion of $200 

billion appropriated to contracts has been lost to contractor fraud and waste. 

Additionally. if S.2139 does not pass. contractors will continue to pcrform activities that 

are inherently governmental. thus frequently undermining the mission. 

Close examination of Titles I and II of this legislation makes it clear that. if enacted. most 

of the recommendations of the Commission will be implemented. However. the 

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legislation could be improved by adding a Title III. Hopefully. this additional section can 

be added in committee. on the noor. or in conference. 

Title I deals with the organization and management of the Federal Government for 

contracting for oversees contingency operations and is focused on the responsibilities of 

the President. the Office of Management and Budget (OM B). and the Departments of 

State, Defense, and USAID in their oversight. 

The first title mandates that the President include information and the Director ofOMB 

provide the Congress with details of why Overseas Contingency Operations (OCO) funds 

are needed and subsequently report in detail on how those funds were spent. To ensure 

that these funds are spent efficiently and effectively. it amends the Inspector General Act 

of 1978 to mandate that a lead Inspector General be designated for any Overseas 

Contingency Operation lasting more than 30 days. Similarly, it amends the Services 

Acquisition Reform Act of 2003 by adding responsibilities to the Chief Acquisition 

Officers for OCO. Hopefully these provisions will limit the various agencies' tendency. 

exploited in particularly egregious fashion by the Department of Defense. to transfer 

items more appropriately included in the core budgets into the OCO accounts to hide 

budget growth and cost -overruns. 

The second part of Title I focuses on issues that cut across agency lines and requires 

Department of Defense. State, and USAID to establish a management structure to 

manage contracts in support of OCO and requires them to maintain and staff Suspension 

and Debarment Officials (SDO's) outside the Acquisition Ot1ices. This measure is 

intended to ensure that there will be no cont1icts of interest when it comes to suspending 

and disbarring contractors who do not perform. which has been a serious problem in the 

last decade. 

The third and fourth subtitles of Title I outline the responsibilities of the Secretaries of 

State and Defense and the Head of USAID in ensuring that contracting activities in OCO 

are awarded and executed satisfactorily. 

Title II focuses on Transparency. Sustainability, and Accountability in Contracts for 

OCO. The first subtitle specifies limitations of contract periods and subcontracting titles. 

It demands that, unless there is a waiver granted. contracts should be limited to three 

years for competitively bid contracts and one year for non-competitive contracts, that 

contracts have only a single tier of subcontractors. and that the Secretaries of State and 

Defense perform an annual review to determine for which functions it is appropriate to 

use contractors. The provision also limits the Secretaries' authority to enter into sole 

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www ar:".,er:ca!191 ogressaCilOn.Org 

source contracts. Senators McCaskill and McCain have been particularly tireless in 

targeting sole source contracts. which are particularly vulnerable to fraud and abuse. 

The next two subtitles enhance the contracting process by establishing a uniformed 

contract writing system and a database of federal contracts; improves contractor 

accountability by requiring them to consent to personal jurisdiction in the United States. 

so fraud and abuse can be prosecuted; and makes it illegal to make misrepresentations 

regarding employment to potential workers. to counter the prevalent abuse of foreign 

workers by contractors in dangerous environments. 

The final subtitle focuses on sustainability requirements for capital projects. It prohibits 

Department of Defense from entering into contracts over for over $1 million unless the 

project can be sustained by the host country and requires that all current capital projects 

be terminated within six months aller passage of the act unless it is determined that the 

projects are vital to United States military and security objectives. 

The legislation could be improved in at least two ways. First. the executive branch 

should be required to provide Congress with a list of specific activities that are inherently 

governmental. Second. rather than designating a Lead Inspector General from among the 

existing Inspectors General after the beginning of Overseas Contingency Operations 

lasting more than 30 days. the legislation should create a small. expandable permanent 

office of Inspector General that can provide oversight from the outset of contingency 

operations. 

These provisions aim to end the waste of American taxpayers' money on large. 

frequently superlluous projects which are likely fall into disrepair or disuse after the 

departure of American personnel. We need funds for nation building at home. and can no 

longer finance non-essential projects abroad. 

Lawrence J. Korb 

Senior Fellow 

Center for American Progress Action Fund 

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Statement for the Record 

Katherine V. Schinasi, Former Commissioner, 

The Commission on Wartime Contracting in Iraq and Afghanistan 

on 

S.2139 

The Comprehensive Contingency Contracting Act of 2012 

For the Subcommittee on Contracting Oversight 

U.S. Senate Committee on Homeland Security and Governmental Affairs 

SD-342 Dirksen Senate Office Building 

Washington, DC 

April 17, 2012 

I appreciate the opportunity to provide this statement for the record regarding S. 

2139, the Comprehensive Contingency Contracting Act of 2012, which has been 

introduced by Senator Claire McCaskill and Senator Jim Webb. 

As a former member of the Commission on Wartime Contracting in Iraq and 

Afghanistan, I appreciate this Subcommittee's continuing attention to what we 

found to be serious problems in the way the U.S. government identified, 

awarded, and managed its contracts and contractors in the Iraq and Afghanistan 

conflicts. Many of those problems continue today. My statement will draw on the 

body of work the Commission conducted, including the recommendations we 

made in our final report "Transforming Wartime Contracting: Controlling Costs, 

Reducing Risks." That report, and the Commission's other publications, can be 

found at www.commissiononwartimecontracting.gov. 

The Commission sunset on September 30, 2011, so my statement today is in my 

capacity as a private citizen. I can assure you, however, that nothing in this 

statement conflicts with the solid consensus that developed among the eight 

members of the Commission. In the too often rancorous atmosphere that 

permeates Washington, the Commission's consensus is noteworthy. Designed 

to have bipartisan membership-four Democratic and four Republican 

appointees-we went well beyond that and functioned as a non-partisan body. 

Our work sessions, travels, and public hearings featured lively discussions and 

debates, but were never marred by dissension along partisan lines. Our reports 

have no dissenting or alternative views. We are unanimous in our findings and 

our recommendations. 

Before I turn to some individual sections of the bill, many of which are in keeping 

with the intent of the Commission's recommendations, let me make three points 

about Congressional responsibility in this matter. 
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First is the need for legislation itself. Although we saw some progress during the 

course of our work, particularly by the Department of Defense, it is clear that the 

agencies cannot or will not make the systemic and lasting changes needed to 

raise acquisition to a core function on their own. The ad hoc solutions agencies 

attempted in Iraq and Afghanistan have been ineffective. The policy issues 

embedded in the decision to use contractors to carry out sensitive government 

functions, the management and evaluation of contractor performance once 

employed, and the billions of dollars at stake In Iraq, Afghanistan and future 

contingency operations require some sweeping changes that will only be 

accomplished through legislation 

The second is the need to more fully establish accountability. Contracting 

practices are important, but they are an outcome of a series of decisions that 

begin with Agency leaders defining goals and objectives and then deciding to use 

a contracted workforce to support them. Contract outcomes are not just the 

responsibility of contracting officers or even of the acquisition community. 

Instead, the seeds of success and of failure are established by the decisions 

made by mission teams and leadership priority. Our findings and 

recommendations make clear that the low level at which the decision to use 

contractors is made and the absence of consequences-on both the contractor 

and government side-- when contracted goods and services are not delivered as 

promised call out for greater accountability. Establishing responsibility and 

authority in new, focused positions will enhance accountability for the results. 

Contractor accountability needs to be strengthened through the better use of 

tools already available to the government and, in some cases, by creating new 

incentive and enforcement mechanisms. 

And, finally, correcting the problems the Commission identified in its work on 

contingency operations in Iraq and Afghanistan could have important and 

positive spillover effects for government contracting as a whole. Although it was 

outside the scope of the Commission's mandate, many of the problems we 

identified are well known across the government. As a former managing director 

at the Government Accountability Office, I sawall too frequently the high risks 

and costly results associated with many of the same contracting issues that were 

present during contingency operations. 

Next, let me turn to some specific bill provisions. 

Given the high cost of failure, the need for greater attention and accountability is 

paramount in order to institutionalize the lessons learned in Iraq and Afghanistan. 

The bill appropriately addresses structural changes as part of the solution. Yet, I 

do not believe-nor do the Commission's recommendations support-that it goes 

far enough. A few examples: 

Strategic national security decisions, the impact of which can drive the 

inappropriate use of contractors, poor contract outcomes, and mission 
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failure, do not consider resource conditions. The bill directs greater 

involvement by the Office of Management and Budget in advising the 

President on the costs and means of financing of operations. Although a 

good step, the Commission believes that resource considerations need to 

be part of the ongoing discussion of contingency related issues. The 

Commission recommended creating a dual-hatted, Senate-confirmed 

position to ensure that resource issues represented by the Office of 

Management and Budget become a normal part of policy discussions 

conducted by the National Security Council. With contractors representing 

almost half of the workforce employed by the United States in Iraq and 

Afghanistan, and likely as well in future contingencies, it is only prudent to 

recognize monetary and other costs when developing and deliberating 

national security options. This dual-hatted position is also key in 

representing the interagency character of contingency operations to 

ensure that each relevant agency has the necessary financial resources 

and policy oversight to carry out its contingency-related mission. 

Policy direction, such as that contained in then Defense Secretary Gates' 

memo on operational contract support in January 2011, is welcome. Yet, 

that memo took years to get through the Pentagon bureaucracy even after 

its need was recognized. Further, translating those policy changes into 

practice will not happen automatically. The bill gives the Secretary of 

Defense a year to determine the correct alignment of roles, authorities, 

and responsibilities for operational contract support. The Commission, 

however, goes further in recommending that a position in the Office of the 

Joint Chiefs of Staff be created now, in part to institutionalize the many 

lessons that have already been learned and to make needed changes in 

current operations. The current placement of operational contract support 

under a colonel within the logistics directorate reflects outdated thinking 

that contracting is only a method to achieve logistical support-not the full 

spectrum of intelligence, communications, construction, security, training, 

and other non-logistics services for which contractors are employed in Iraq 

and Afghanistan contingencies and will likely continue to be in most future 

operations. As the Joint Staff goes through its ongoing reorganization to 

position itself for future operations, they have an opportunity now to 

increase effective leadership by capturing diffuse responsibilities and to 

establish greater accountability for the role contractors play in DOD 

contingency operations. 

It is clear that the State Department does not take stewardship of its 

resources seriously, with only two acquisition professionals out of 

approximately 200 Senior Executive Service and senior Foreign Service 

Officers under the authority of the Under Secretary for Management. In its 

response to our interim report, State indicated that its model was working 

well and that there was no need for additional training, even as it took over 
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the many new and critical missions in Iraq for which it decided to rely on 

contractors. The bill establishes a new acquisition-focused office. The 

Commission's recommendation to require regular reporting from State 

may be the forcing function needed for this office to make changes in 

policy and practice. Including measurements in those reports, by which 

the agency can be held accountable, would also provide an incentive for 

State officials to actually apply lessons learned. The significant waste and 

other problems encountered in contracting for police training, for the new 

Embassy compound in Baghdad, and for the Pol-i-Charki prison in Kabul, 

to name just a few, show that the current State Department model is not 

working. 

Under the decentralized structure at the U.S. Agency for International 

Development (USAID), the Administrator's procurement reform agenda 

has not reached those officials who are responsible for deciding when to 

use a contractor workforce, how to develop measurable and enforceable 

contract requirements, or how to effectively monitor contractor progress in 

hostile environments. The bill creates a new acquisition-focused office in 

USAID. Again, regular reporting from this office will be key to improving 

accountability. More than any other agency involved in the Iraq and 

Afghanistan operations, USAID relies on a contract workforce. Yet, it has 

the farthest to go in understanding the need for and applying sound 

contracting practices. For example, despite numerous project and 

program shortfalls, it is not clear that USAID officials believe that any 

changes are needed in Iraq at all as military operations there have 

ceased. 

A number of other bill provisions reflect Commission intent. Those include 

• establishing a management structure for service contracting in State and 

USAID, 

• better tracking of contractor performance 

• providing alternatives to agencies using private security contractors when 

their use is inappropriate, 

• more closely managing the length of contract terms and the number of 

sole source procurements, 

• requiring additional training in acquisition matters, and 

• explicitly including the role of contractors in planning exercises. 

The bill also rightly calls out the need for interagency action in several areas. In 

addition, the bill's requirement to establish a management structure for service 

contracting in the State Department and USAID, which is valuable in and of 

itself, also has the potential to bring needed and Significant improvement in 

contract outcomes well beyond the contingency context. In many areas, such as 

the requirement to cancel unsustainable project, making changes now will have 

a positive impact in the short term and also set out standards to avoid future 

failures. 
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Finally, I would urge the Congress to recognize its own role in supporting 

enhanced agency cooperation and improving contract outcomes in contingency 

operations. The lines drawn between Committee portfolios should not be used 

as a wedge against change. The very interagency nature of contingency 

operations means that Congress must come together across jurisdictional 

boundaries to support integrated executive branch efforts and to provide and 

reallocate resources to achieve reforms. 

It is well established that poor contracting results in mission failure and wasting 

dollars we can ill afford. Even were the agencies to make needed policy 

changes, such changes are only good until the next set of administrators comes 

in with perhaps different priorities. Without a legislative mandate, business as 

usual means that the United States will continue to confront problems that 

resulted in our estimate of $31 billion to $60 billion of taxpayer money lost to 

waste and fraud related to contracting in the Iraq and Afghanistan contingency 

operations between FY 2002 and FY 2011. As we also reported, billions of 

additional waste are likely to develop as U.S.-funded projects prove 

unsustainable by host-nation governments. Much of that actual and emerging 

waste was avoidable. Although the U.S. presence in Iraq and Afghanistan will 

wind down, future overseas operations will continue to rely on contracts and 

contractors. 

As restructurings take place in the current climate of spending reductions, S.2139 

provides the perfect opportunity to establish sound structures, principles, and 

practices to avoid similar waste in the future. Starting reform now is also 

important because changing organizational culture, policy, doctrine, and 

regulations can take months or years-time that must not be lost when the next 

urgent need develops. 

Again, I thank the Subcommittee for its efforts and for inviting this submission for 

the record. 
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Statement about the Contingency Contracting Reform Act. 

I am Charles Tiefer, professor of governmental eontracting at the University of Baltimore 

Law School. I was a Commissioner in 2008-2011 on the Commission on Wartime 

Contraeting in Iraq and Afghanistan. This is my statement on the Contingency 

Contracting Reform Act ("the Act"). The Act does a good job of going the next step 

from the recommendations of my Commission. I support the Act as a whole. I have 

singled out the ten provisions of the Act for which I personally am most familiar as a 

result of my work on the Commission. 

Section 112. Requirements and limitations for suspension and debarment officials. 

While some agencies have properly structured their arrangements for suspension and 

debarment officials (SDOs), some components of the Department of Defense have not. 

Restructuring might facilitate the Department of Defense's moving ahead better with its 

suspension and debarments. The enormous Prime Vendor contract by the Department of 

Defense with Agility in Iraq should have produced an earlier suspension long before 

Agility's felony indictment. Another example is Parsons Delaware, Inc. Parsons botched 

vital work for thc Department of Defense on the Baghdad Police College, which did not 

produce a suspension even when the Special Inspector General for Iraq (SIGIR) produced 

a blistering report. 

Section 112 would usefully make agencies like the Army pull their suspension and 

debarment officials out of organizations like the Judge Advocate General. Without 

making the SDOs independent, they will certainly have the appearance, and quite 

possibly, of having diminished clout and independence. 

A strongly supporting instance looked into by the Commission, and particularly by 

myself, was AID's lack of reaction to Louis Berger pleading - as a company - to 

criminal fraud in its billing of U.S. contracts. AID deeided not to require Louis Berger to 

go through even one single day of suspension, just an administrative agreement. The 

AID decision was made without even one single page of public explanation. 

Besides section 112's comprehensive overhaul of suspension and debarment officials, its 

subsection I 12(b)(8)requires "a description of the basis for any final decision declining to 

pursue suspension or debarment and infonnation on any administrative agreements in 

lieu of suspension or debarment.'· That is precisely what was missing as to Louis Berger. 

A description would assist oversight by Congress and the press to see whether the deal 

represents agency coziness with a criminal contractor. The Commission saw such a need. 

(Commission final report. p.156-57)(discussion of Louis Berger). 

Section I 13. Additional bases for suspension of contractors. 

A strongly supportive instance looked into by the Commission were kickbacks in KBR's 

LOGCAP 1!I contract by managers to a Kuwaiti company, Tamimi. (Commission final 

report, p.79.) KBR also had civil false claims charges filed against it for making 

payments, in violation of government rules, to armed subcontractors. Neither ofthese 
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instances bccame the basis of cven one single day of suspension. Section 112 would 

properly make these the basis of automatic suspension. 

Industry has complained that automatic suspension does not give enough due process. 

However, automatic suspension has long been the rule when contractors are indicted. 

When the government had probable cause to file criminal or civil fraud charges, that in 

itself provides the basis for suspension in order to protect the government. The 

contractor will have its day in court to deal with those government charges. After alL 

suspension does not deprive the contractor of existing contracts, just new ones. Let the 

contractor clear its name before being given further and increased access to the Treasury. 

Section 201. Limitations of contingency contracts. 

Section 20 I would limit the duration of some contingency contracts to one year, others to 

three years. This would address the problem that contracts used to handle the beginning 

of a contingency, the KBR's LOGCAP III for Iraq in 2003, stay in place for many years 

instead of getting competed. (Commission final report, p.75). 

Some might ask whether this will inhibit contracting needed in the early phase of a 

contingency. This should not be a serious concern. Section 201 cuts more than enough 

slack for the agencies' contracting -- both by having the contract period limitation not 

kick in until 180 days after the operation starts, and, by expressly authorizing agency 

heads to grant a waiver. Without some kind of duration-limiting mechanism like this 

section 20 I, contracts where there was little or no real competition with last as long as a 

long contingency - many years for Iraq and more than a decade for Afghanistan. 

The Commission devised the standard this section uses, namely. that it applies to (among 

others) to "competitively bid contracts for which only one offer was received by the 

covered agency." Some would urge that competitively bid contracts are always 

competitive enough, but, all too often, a contract may be bid in a way that discourages all 

but one contractor (for example. when a contract comes to an end, slanting the 

"competition" so only the incumbent has a good shot at getting the successor. In plain 

English. these are the all-too-numerous "no-bid contracts." 

Section 20 I (b) would limit subcontractor tiering. Too many levels of tiering leads to 

abuses. The infamous private security contract for convoys that came to light after the 

2004 Fallujah incident had four tiers from KBR at the top to Blackwater at the bottom. 

The Commission held a hearing on a poorly structured contract involving translators 

(Commission report. p.79) .. Another example of a tiering-type arrangement looked into 

by the Commission was Paravant - a security contractor having a hidden and all-tooconvenient close relationship with Blackwater. 

Section 202. Performance of certain security functions. 

Section 202 requires risk analyses of private security contracts. In the entire bill. this is 

the most significant provision about which I had the view that a tougher provision, that 

closed down some wrong uses of security contractors, would be better. The Commission 

came to see the shadow the aftermath of the terrible incident of Blackwater in Nisur 

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Square in 2007. The internal State Department report had said that State would have to 

consider. after Nisur Square. whether the continuation of the Blackwater contract was "in 

the interest of the United States," but the State Department responded with a degree of 

evasion about this that matched the continuing harm Blackwater did in generating antiAmerican feeling among Iraqis. 

Quite distinctly, Afghanistan had its own bad scandals about the problems in 

performance of private security contractors. A House subcommittee issued, in a report 

Warlords, Inc., a powerful indictment of PSCs in Afghanistan. The Commission started 

from there and went further, discovering the cutting-edge findings that in Afghanistan, 

funding from U.S. contracts was being diverted by security subcontractors to the Taliban. 

(Commission final report, p. 73). Indeed, diverted security subcontractor funding was the 

second largest source of funding for the Taliban. The many incidents in the past year of 

violence against American soldiers from Afghans in "allied" positions lends a new 

concern to this subject. In 2012 an Afghan contractor (a translator) drove a truck that may 

have been intended as a suicide attack, onto an airfield when Defense Secretary of 

Defense Panetta was landing. 

The start of any reforms of PSC issues is risk analysis, as the Commission devoted an 

entire chapter, in significant measure, to discussing (Commission final report, at 52-61). 

So as to that, section 202 is a good start. But, the provision should go further, as the 

Commission did, and describe some uses of PSCs that ought to be ended. 

Section 203. Justification and approval for sole source contracts. 

The Commission discussed several of the most famous problems of competition failure, 

such as Dyncorp's training contract in Iraq and KBR's RIO contract in Iraq (Commission 

final report, at 78, 83). The Commission proposed a number of recommendations. 

(Commission final report, p.153). Requiring a J&A of this kind is a useful first step. 

Section 221 Contractor consent to jurisdiction. 

This Subcommittee has compiled an impressive record to support this under the rubric of 

the "Rocky Baragona" bill. The Commission similarly recognized the problem that 

foreign contractors or subcontractors should consent to U.S. jurisdiction. (Commission 

final report, p.158). 

Industry may say that this would discourage foreign contractors. That is implausible. 

The Commission saw how avidly foreign contractors pursue contingency contracts - how 

lucrative such contractors are for foreign contractors. As an example of what needs to be 

done, construction work by foreign suhcontractors proved all-too-often to be faulty, and 

food services, like dining facilities, could have risks like foreign workers with 

communicable discases. Our troops deservc at least the rights about such contracting, as 

to foreign contractors and subcontors, that thcy rightly have today about U.S. contractors. 

Section 222. Combating trafficking in persons. 

This section has both an excellent list of concrete examples of trafficking, and, the right 

approach of making prime contractors responsible for their subcontractors and labor 

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brokers. The Commission similarly found the problem acute and in need of vigorous 

action .. (Commission final report, p.160) The problem here is passive inaction both by 

the agencies and by the prime contractors. who shrug their shoulders and contend they 

are doing ali they can. Congressional action is necessary to deal with the problem. 

Section 223. Information on contractors through FAPIIS 

The Commission obscrved that the new government database of contractor performance. 

FAPIlS, often did not include many dramatic contractor abuses on the public record, such 

as criminal or civil charges and administrative scandals whether reported in the press. An 

example would be the KBR "negligent electrocutions" scandal in Iraq. (Commission 

final report, p.89). 

Even when a contracting officer might learn off very bad contractor performance, all too 

often they simply do not enter it in the database. The Commission found that for years 

of the KBR logistics contracting, either some data had been entered in an obscure and 

hard-to-find way, or, most often, had not been entered at all. For example, contracting 

officers failed to record DCAA questioning of costs or adverse findings about business 

systems. The lame came back from agencies that future contracting officers could just 

contact the present or past ones for information about KBR. Just think about how lame 

that answer is. There is no substitute for putting important information in the database. 

The Project on Government Oversight keeps an entire public database of instances of 

contractor abuse which is largely unreflected in F APIIS. This section would take the 

government database in the right direction. 

Section 224. Contractor performance evaluations and PPIRS 

The Commission found a severe problem with getting timely and frank evaluations into 

the PPIRS database: contracting officers face delay and difficulty from contractor replies 

drawing on unlimited legal resources. (Commission final report, p.155-56) This section 

would go right to the heart of that problem. There is such a problem with contracting 

officers learning the facts about past performance, that every effort should be made to 

further this. Industry may say that it needs to respond for future source selections. Let us 

first make sure that the source selection officials hear of the past performance problems. 

and then contractors, having made sure the source selection officials have heard. can say 

what they want at that later stage. The current system is deterring what it is most vital to 

encourage. 

Section 231. Sustainability requirements for DoD projects. 

The Commission did extensive work on the problems of sustainability. particularly in 

DoD projects in Afghanistan. (Commission final report, Chapter 2). Thcse include the 

training facilities for CSTC-A in Afghanistan (Commission final report. p.72). This 

section is vitaliy nee3ded today because the drawdown in Afghanistan is accompanied by 

the pouring of billions of dollars into projects in Afghanistan, which may not be 

sustainable. This section is a vital step to making sober judgments about what to fund. 

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Never before has there been so large a rolc for the Defense Department in reconstruction 

as in Iraq and, at least as importantly, today and in years to come in Afghanistan. The 

Commission noted that many billions of dollars has been spent on Commandcr"s 

Emergency Response Program (CERP) projects in Iraq and Afghanistan, including how, 

in 2011 alone, Defense programmed more than 4000 projects in Afghanistan 

(Commission final report, at 133). CERP funding of projects that the Afghans will not 

sustain, is grossly wasted. Similarly. the Commission found "the $6.4 billion per year in 

training, equipping. and otherwise supporting the Afghan National Security Forces goes 

far beyond what the government of Afghanistan can sustain" (Commission final report, at 

72). 

Take an important example of initiating, contracting for, or funding electricity generating 

or transmitting in Kandahar and Ileimand provinces. I personally studied this during 

my trip to Kandahar, and then brought up at Commission hearings. 000 funded projects 

that AID would not. Some of these projects appeared to have been initiated just to make 

an immediately favorable impression among Afghans -like diesel generating plantswhen there was little reason to think that, in years to come, Afghans would be able to 

sustain the projects. 

Section 103. Responsibilities of inspectors general. 

There is a real need to report to inspector general system for contingencies. It took too 

long in Iraq to have a response to the contingency - scandals had their roots in the 

buildup in Kuwait in 2002-2003, and then bloomed in 2003-2004, yet it was not until 

2004 that a special inspector general was given charge. (Commission final report. p.I46). 

This section is a sensible step to putting in place rapidly a lead inspector general as early 

in the contingency as possible. Thc work by the special inspectors general in Iraq and 

Afghanistan has been highly commendable. But. there is a need to have a mechanism in 

place to respond swiftly in future wars, that will kick in if and until Congress docs not set 

up a special inspector general. 

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