S. Hrg. 110–331

DECONSTRUCTING RECONSTRUCTION:

PROBLEMS, CHALLENGES, AND THE WAY

FORWARD IN IRAQ AND AFGHANISTAN

HEARING

BEFORE THE

COMMITTEE ON 

HOMELAND SECURITY AND 

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UNITED STATES SENATE

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

MARCH 22, 2007

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Printed for the use of the 

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DECONSTRUCTING RECONSTRUCTION: PROBLEMS, CHALLENGES,

AND THE WAY FORWARD IN IRAQ AND AFGHANISTAN

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34–413 PDF 2008

S. Hrg. 110–331

DECONSTRUCTING RECONSTRUCTION:

PROBLEMS, CHALLENGES, AND THE WAY

FORWARD IN IRAQ AND AFGHANISTAN

HEARING

BEFORE THE

COMMITTEE ON 

HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

MARCH 22, 2007

Available via http://www.access.gpo.gov/congress/senate

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 

BARACK OBAMA, Illinois 

CLAIRE McCASKILL, Missouri 

JON TESTER, Montana 

SUSAN M. COLLINS, Maine 

TED STEVENS, Alaska 

GEORGE V. VOINOVICH, Ohio 

NORM COLEMAN, Minnesota 

TOM COBURN, Oklahoma 

PETE V. DOMENICI, New Mexico 

JOHN WARNER, Virginia 

JOHN E. SUNUNU, New Hampshire

MICHAEL L. ALEXANDER, Staff Director 

TROY H. CRIBB, Counsel 

KRISTINE V. LAM, Research Assistant 

BRANDON L. MILHORN, Minority Staff Director and Chief Counsel 

JAY W. MARONEY, Minority Counsel 

MELVIN D. ALBRITTON, Minority Counsel 

TRINA DRIESSNACK TYRER, Chief Clerk 

(III)

C O N T E N T S 

Opening statements: Page 

Senator Lieberman ........................................................................................... 1

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

Senator McCaskill ............................................................................................ 22

Senator Coleman .............................................................................................. 24

Senator Coburn ................................................................................................. 26

Senator Levin .................................................................................................... 29

Senator Warner ................................................................................................ 32

WITNESSES 

THURSDAY, MARCH 22, 2007

Stuart W. Bowen, Jr., Special Inspector General for Iraq Reconstruction ......... 6

Hon. David M. Satterfield, Senior Advisor to the Secretary and Coordinator 

for Iraq, U.S. Department of State ..................................................................... 9

Major General Ronald L. Johnson, Deputy Commanding General, U.S. Army 

Corps of Engineers ............................................................................................... 13

Mark S. Ward, Senior Deputy Assistant Administrator, Bureau of Asia and 

the Near East, U.S. Agency for International Development ............................ 14

ALPHABETICAL LIST OF WITNESSES

Bowen, Stuart W. Jr.: 

Testimony .......................................................................................................... 6

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

Johnson, Major General Ronald L.: 

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

Prepared statement with attachments ........................................................... 71

Satterfield, Hon. David M.: 

Testimony .......................................................................................................... 9

Prepared statement .......................................................................................... 65

Ward, Mark S.: 

Testimony .......................................................................................................... 14

Prepared statement with attachments ........................................................... 106

APPENDIX 

Documents submitted by Senator Coburn ............................................................. 35

Letter to Hon. Alberto R. Gonzales, Attorney General, from Senator Warner, 

dated March 15, 2006 .......................................................................................... 55

Information and documents submitted for the Record from Mr. Ward to 

Senator Coburn .................................................................................................... 124

Questions and responses for the Record from: 

Mr. Bowen ......................................................................................................... 208

Mr. Satterfield .................................................................................................. 211

Gen. Johnson .................................................................................................... 220

Mr. Ward ........................................................................................................... 226

Iraq Reconstruction, Lessons in Program and Project Management, Report 

Number 3, March 2007 ........................................................................................ 264

(1)

DECONSTRUCTING RECONSTRUCTION: 

PROBLEMS, CHALLENGES, AND THE WAY 

FORWARD IN IRAQ AND AFGHANISTAN 

THURSDAY, MARCH 22, 2007

U.S. SENATE,

COMMITTEE ON HOMELAND SECURITY AND

GOVERNMENTAL AFFAIRS, 

Washington, DC. 

The Committee met, pursuant to notice, at 10 a.m., in room SD–

342, Dirksen Senate Office Building, Hon. Joseph I. Lieberman, 

Chairman of the Committee, presiding. 

Present: Senators Lieberman, Levin, McCaskill, Collins, Coleman, Coburn, and Warner. 

OPENING STATEMENT OF CHAIRMAN LIEBERMAN 

Chairman LIEBERMAN. The hearing will come to order. Good 

morning, and thanks to all of you for being here, particularly 

thanks to our witnesses. I appreciate your presence very much. 

In today’s hearing we are going to focus on a challenge that is 

critical to our success in Iraq and Afghanistan, but beyond that, in 

the larger war on terror and in other conflicts and post-conflicts, 

in terms of securing the future and rebuilding countries that we 

are involved in so they can fully and finally break from the legacies 

that they have had—in the case of Iraq and Afghanistan, obviously, 

the dark legacies of Saddam Hussein and the Taliban. 

If we want these nations to become free and prosperous societies 

that will be our allies in the war on terror rather than falling back 

into dictatorships that offer a haven and headquarters for those 

who would attack us, we must help them build the infrastructure 

upon which prosperity and freedom depend: Schools, roads, power 

projects, water and sewer systems, health care facilities, and communications systems. And, of course, we also need to help them 

strengthen democratic foundations that are necessary for long-term 

prosperity, freedom, and stability. 

Here in this country, the American people may be divided over 

the handling of the war in Iraq, but I do not think we are divided 

in our hope that the Iraqi and Afghani people will soon enter the 

community of peaceful, stable, and democratic nations. And that is 

the focus of the hearing today. 

Widely reported instances of waste and fraud in our reconstruction efforts have left many Americans wondering whether we are 

able to deliver this needed assistance effectively. They rightly ask 

what we have gotten out of the $38 billion spent in Iraq on reconVerDate 0ct 09 2002 14:33 Apr 29, 2008 Jkt 034413 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 P:\DOCS\34413.TXT SAFFAIRS PsN: PAT
2

struction and the $4.3 billion spent in Afghanistan. They wonder 

whether contractors have been held accountable when they overcharge or defraud our government, and in some sense, I think at 

the extreme, they ask whether the nations that we are trying to 

help are spending the money that we are investing in them effectively and ethically. 

Today’s hearing is quite creatively titled—I do not take any credit for it; it is from a staff member—‘‘Deconstructing Reconstruction,’’ subtitled ‘‘Problems, Challenges, and the Way Forward in 

Iraq and Afghanistan.’’ And we are going to look today at what is 

working so we can build on our successes and what is wrong so we 

can fix it. 

I want to thank our witnesses: Stuart Bowen, Special Inspector 

General for Iraq Reconstruction, now adding a new acronym with 

great resonance to our vocabulary—SIGIR; the Hon. David M. 

Satterfield, Senior Advisor to the Secretary of State and Coordinator for Iraq; Major General Ronald L. Johnson, Deputy Commander, U.S. Army Corps of Engineers; and Mark Ward, Senior 

Deputy Assistant Administrator for the Bureau of Asia and the 

Near East for the U.S. Agency for International Development. 

We know that reconstruction in Iraq and Afghanistan is taking 

place in a very difficult and dangerous context. That is why the 

current clear, hold, and build strategy being carried out under General Petraeus is so important, not just to create security but to create security for the purpose of enabling the reconstruction and economic recovery and the political strengthening of the country. 

Each of the witnesses today before us, as well as the men and 

women who work for their organizations, have put themselves in 

harm’s way to help the United States carry out its mission in Iraq 

and Afghanistan, and we thank them truly and deeply for that. 

Even with these security challenges, the audits of reconstruction 

projects done by the SIGIR show, if I may state it simply, that 

where projects were well planned and well supervised, the rate of 

success has been high. It is as simple as that, and yet it is a much 

more complicated story, as the Special Inspector General himself 

knows and will make clear. 

The problem is that there were too many projects that were not 

well planned and well supervised, and those rightfully agitate the 

public and Members of Congress because a lot of money appears to 

have been wasted. And it is a waste and a cost that is measured 

not just in dollars but in the undermining of the overall U.S. mission in these critically important countries. 

This is infuriating and heartbreaking, both to the American taxpayers, whose money we have spent and who want us to succeed, 

and to the people of Iraq and Afghanistan, the overwhelming majority of whom desperately also want and need us to succeed. 

I have in my prepared statement a number of examples of the 

waste, fraud, and abuse that the Special Inspector General has uncovered, and I am just going to enter them into the record. Unfortunately, it is not a short list. But today I think we are going to 

go from the focus on the scandalous, infuriating outrages of waste, 

fraud, and abuse to the lessons we learned from both what has 

worked and what has not worked. And this is an important turning 

point as we consider the fundamental reforms that we may want 

3

to make here because we also, as the witnesses will testify, I am 

sure, are at something of a turning point in terms of the relationship of our government to the reconstruction of Iraq. In some measure, as I was discussing with Mr. Bowen yesterday, we are completing the phase of large-scale American responsibility for the reconstruction of Iraq, and we are transitioning to what looks a lot 

more like a foreign aid program as the Iraqis are more capable of 

standing up on their own economically. 

The lessons that we hope to discuss today that we have learned 

from our experience in Iraq will help us help the Iraqis, help us 

as we offer assistance, and, most important of all, probably help us 

if and—more likely not if, but when we confront similar challenges 

and opportunities to rebuild countries that we have, with others, 

liberated from tyranny and terrorism. 

There are some very interesting ideas that Mr. Bowen has in his 

report. I am particularly taken by these ideas because I serve, 

along with Senator Collins, on the Armed Services Committee, and 

we do a lot of work on trying to implement the Goldwater-Nichols 

mission of making our military a joint operation. You can state it 

in a simple insight, in a sentence that Congress had at the time 

of Goldwater-Nichols: Warfighting will be joint; therefore, we must 

organize jointly to fight jointly. 

In this case, I think what we have seen with the involvement of 

the Department of Defense, the Department of State, and USAID 

is that each go their own way sometimes in the economic reconstruction of Iraq and Afghanistan. We know that these kinds of reconstruction missions, nation building, if you will, will always be 

joint and, therefore, we have to explore ways to organize jointly, 

which I believe is the charge and the challenge that the Special Inspector General is giving us in his report and testimony today. And 

to paraphrase, we do not shrink from the challenge. We welcome 

it because it is important to our Nation’s future, to the cause of 

freedom, and also to the exercise of our responsibility on this Committee as an oversight committee. 

So I thank you all for being here. I look forward to your testimony. 

[The prepared statement of Chairman Lieberman follows:]

PREPARED STATEMENT OF SENATOR LIEBERMAN 

Good morning. In today’s hearing we will focus on a challenge that is critical to 

our ultimate success in Iraq, Afghanistan and the larger war on terror—helping 

those nations rebuild so they can fully and finally break free from tyrannical legacies of Saddam Hussein and the Taliban. 

If we want these nations to become free and prosperous societies that will be our 

allies in the war on terror, rather than dictatorships that offer headquarters for 

those who would plot to attack us, we must help them build the infrastructure upon 

which prosperity and freedom depends—schools, roads, power projects, water and 

sewer, health care and communications systems—And we must help them strengthen democratic foundations that are necessary for long-term prosperity. 

Americans may be divided over the handling of the war but we are not divided 

in our hope that the Iraqi and Afghan people will soon enter the community of 

peaceful, stable, democratic nations. 

But widely reported instances of waste and fraud in our economic aid have left 

many Americans wondering whether we are able to deliver the needed reconstruction effectively. They rightly ask what we have gotten out of the $38 billion spent 

in Iraq on reconstruction, and the $4.3 billion we have spent in Afghanistan. They 

wonder whether contractors are held accountable when they overcharge or defraud 

4

our government. They ask whether independent contractors are spending the money 

we give them efficiently and ethically. 

With today’s hearing—‘‘Deconstructing Reconstruction: Problems, Challenges, and 

the Way Forward in Iraq and Afghanistan’’ we will look at what’s working, so we 

can build on our successes, and what’s gone wrong so we can fix it. 

I want to thank our witnesses for joining us today: Stuart W. Bowen, Jr. Special 

Inspector General for Iraq Reconstruction—or SIGIR; Honorable David M. 

Satterfield, Senior Advisor to the Secretary of State and Coordinator for Iraq; Major 

General Ronald L. Johnson, Deputy Commander, U.S. Army Corps of Engineers; 

and Mark S. Ward, Senior Deputy Assistant Administrator for the Bureau of Asia 

and the Near East for the U.S. Agency for International Development. 

We know that reconstruction in both of these countries is taking place in extremely difficult and dangerous circumstances that is why clear, hold and build 

strategy by General Petraeus is so important. Each of the witnesses today, and the 

men and women who work for their organizations, have put themselves in harm’s 

way to help the United States carry out its mission in Iraq and Afghanistan. 

But even with these challenges, audits of reconstruction projects show that where 

projects were well-planned and well-supervised, the rate of success has been high. 

Where we’ve seen failure is when the U.S. Government failed to plan projects 

carefully and then failed to keep a close watch over contractors and now we’ve seen 

billions of dollars wasted—a cost measured not just in dollars but in the undermining of the overall U.S. mission in these war-torn countries. 

This is infuriating and heartbreaking both to the American taxpayers whose 

money we have spent want us to succeed and the people of Iraq and to Afghanistan 

who desperately need us to succeed. 

Some examples:

• In 2004, the U.S. government rushed into 12 large contracts worth billions 

of dollars to rebuild critical sectors of the Iraqi economy, like electricity, public works, water resources, transportation. The contractors were told to head 

to Iraq immediately. But when they got there, the government waited months 

to give the contractors specific projects, although their clocks were ticking 

away and the bills were piling up. For example, Halliburton’s subsidiary, 

KBR, arrived in Iraq in February 2004 to work on oil infrastructure projects 

and then sat around for the next nine months with little to do because no 

one had mapped out what projects KBR was supposed to do. During that 

time, the government paid KBR $52.7 million for salaries, housing, food and 

other administrative costs. • $43.8 million was spent on a residential camp for a police training academy 

in Baghdad that has stood empty for months. This spending included $4.2 

million on work that was never authorized by the U.S. government, including 

an Olympic-sized swimming pool. As of the SIGIR’s last report on this project 

January, this facility was still sitting empty. 

• The SIGIR has found that the Department of State, under its contract with 

DynCorps for the training of Iraqi security forces, spent $36.4 million for 

weapons and equipment that cannot be fully accounted for. 

• KBR burned through more than $75 million in a matter of weeks on the crucial Al Fatah oil pipeline crossing under the Tigris River and accomplished 

nothing because the company ignored warnings that their engineering plan 

was fatally flawed and doomed to failure. 

• Efforts to build Primary Healthcare Centers in Iraq have been beset by performance troubles. Last year, only 6 of 142 planned Primary Healthcare Centers had been completed in Iraq. The U.S. terminated the contract for the 

healthcare centers with the primary contractor, Parsons, and re-awarded the 

work to Iraqi firms. But only two more have been completed since that time. 

• In Afghanistan in 2004, USAID canceled most of its contract with the Louis 

Berger Group for reconstruction of school and health facilities because the 

completion rate for the projects began to lag far behind schedule. 

• Yet USAID has just entered into a $1.4 billion contract—given to a joint enterprise led by Louis Berger—to undertake the full range of infrastructure 

projects, from roads to energy projects in Afghanistan. This seems astounding 

on its face and today we must ask USAID whether we have any assurance 

that this mega contract will not suffer from the same cost overruns and 

delays.

I could go on. There are many other examples—the cost overruns at the Basrah 

Children’s Hospital, which are already $100 million over the original $50 million 

price tag—and still climbing—and the $73 million Baghdad Police Academy with 

such poor plumbing sewage is leaking through the ceilings. 

5

These things cannot be allowed to continue and we look forward to hearing from 

Mr. Bowen and our other witnesses about what fundamental reforms we can make, 

not just to improve contractor performance in Iraq and Afghanistan, but across the 

whole range of these kinds of contracts. 

The war against terror will not be won by military might alone. We must show 

the world that we are serious in our efforts to keep liberating nations like Iraq and 

Afghanistan from slipping into chaos by helping them build a strong democratic 

foundation and a modern infrastructure that promotes the dreams of a prosperous 

future. 

I agree with the SIGIR that the State and Defense Departments and USAID must 

work together much more effectively on post-conflict reconstruction and I will examine possible legislative fixes to achieve that goal. 

I look forward to today’s testimony so that we may find a better way forward. 

I note that this is our Committee’s second hearing on reconstruction, and today 

we will build on the hearing that Senator Collins chaired in August last year, at 

which Mr. Bowen presented his lessons learned findings on contracting. 

And with that, I turn to Senator Collins for her opening statement.

Senator LIEBERMAN. I would yield now to the Ranking Member, 

Senator Collins. 

OPENING STATEMENT OF SENATOR COLLINS 

Senator COLLINS. Thank you very much, Mr. Chairman. I very 

much appreciate your convening this important hearing. 

Reconstruction efforts, whether in war zones abroad or disaster 

areas at home, require careful planning, effective oversight, and 

wise stewardship of the taxpayers’ investment. Regrettably, our reconstruction operations in Iraq have been plagued by a lack of coordination, poor management of many projects, and an overreliance 

on costly noncompetitive contracts. 

Today, we have the opportunity to learn from these serious mistakes as the Special Inspector General for Iraq Reconstruction releases his third and final Lessons Learned report. It includes nine 

thought-provoking recommendations. The most significant, as the 

Chairman has mentioned, calls for a new Goldwater-Nichols type 

of approach to coordinate efforts among the Departments of Defense and State, the U.S. Agency for International Development, as 

well as other agencies and departments involved in future reconstruction efforts. Other recommendations call for more funding of 

reconstruction and stabilization planning, clarification of who exactly is in charge, more involvement of local people in reconstruction, and improved management of non-U.S. funds. These are 

sound recommendations, and I look forward to hearing more about 

them today. 

Reflecting its disarray and uncertainty, the Federal Government 

has adopted four different strategies and structures to deal with reconstruction in Iraq. Each approach has experienced difficulties in 

making the progress necessary to improve the lives of the Iraqi 

people and to pave the way for the time when our troops can come 

home. 

The heart of the American reconstruction effort in Iraq and Afghanistan is an enormous network of contracts. The Department of 

Defense has a large role in managing the more than $30 billion appropriated for reconstruction, and the Army alone has an estimated 

60,000 contractor employees supporting its operations. 

The Special Inspector General has uncovered many disturbing 

cases of egregious waste and mismanagement, and in some instances, outright fraud, in Iraq reconstruction contracts and 

6

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

projects. His work strongly suggests that Congress should revamp 

the way the Federal Government conducts significant relief and reconstruction efforts, whether it is in Iraq, Afghanistan, or even in 

the Gulf Coast of the United States. 

It was the Special Inspector General’s investigations as well as 

the findings from this Committee’s Hurricane Katrina hearings 

that led me to introduce the Accountability in Government Contracting Act, with the welcome support of our Chairman and Senators Carper, Coleman, and McCaskill. This bill aims to improve 

our stewardship of taxpayers’ money while increasing the fairness 

and transparency of Federal dealings with suppliers of goods and 

services. 

The fact is, obstacles exist to fair, effective, and open competition, as well as effective oversight, including inadequate documentation requirements, the overuse of letter contracts that fail to 

include all the critical terms, excessive tiering of subcontractors, 

and insufficient public data on Federal contracts. An example is a task order for an oil project that cost some $84 

million. When the Defense Contract Audit Agency looked into the 

charge, it discovered that the work had been completed for more 

than a year before DOD negotiated the final terms of the contract. 

Unfortunately, the record of Federal contracting in Iraq is replete 

with this kind of lax oversight. 

The Special Inspector General last July identified 194 individual task orders valued at $3.4 billion that were classified as 

‘‘undefinitized contract actions;’’ in other words, they were missing 

key terms of the contract, such as defining the scope, the schedule, 

or even the price. The provisions of our contracting reform legislation would help to avoid such outrageous contracting abuses. 

Mr. Chairman, our witnesses today can offer us invaluable observations and guidance in our work to improve our reconstruction efforts overseas with corollary benefits to Federal reconstruction efforts at home, particularly on the Gulf Coast. I am very eager to 

hear their comments, and again, thank you for scheduling this important hearing. 

Chairman LIEBERMAN. Thanks, Senator Collins. 

We are now ready to go to the witnesses. Again, I thank you for 

being here. We really look forward to your testimony. This is important business. 

Stuart Bowen, Special Inspector General for Iraq Reconstruction, 

thanks for all you have done. Thanks for being here today, and we 

are ready to hear from you. 

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

GENERAL FOR IRAQ RECONSTRUCTION 

Mr. BOWEN. Thank you, Mr. Chairman. 

Chairman Lieberman, Ranking Member Collins, Members of the 

Committee, thank you for this opportunity to address you today on 

the important issues raised by our latest Lessons Learned report, 

which contains an extensive review of program and project management in Iraq reconstruction. But before I begin, let me briefly 

summarize what I learned in my last trip to Iraq—I returned last 

7

week—my 15th trip since I was appointed 3 years ago. And I returned with a sense of cautious optimism about the progress in the 

Baghdad Security Plan. 

I met with the senior leadership, across-the-board military, and 

in the embassy, and in particular had very good visits with General 

Petraeus, and what I learned is that the preliminary results of this 

latest initiative in the Baghdad Security Plan have been positive. 

And so I wanted to begin my discussion by saying that cautious optimism is a good sign and something that I had not returned from 

Iraq with I guess over the last 20 months. 

Chairman LIEBERMAN. I appreciate your beginning with that. 

That is good news. And your reaction was qualitatively different 

than on the previous visits you had made? And you said you have 

made 15 visits to Iraq? 

Mr. BOWEN. Yes, sir. 

Chairman LIEBERMAN. In the last 20 months? 

Mr. BOWEN. In the last 3 years. But it has been about 20 months 

since I have returned from Iraq with a sense of cautious optimism. 

I have that now. 

Chairman LIEBERMAN. That is very encouraging. I do not want 

to interrupt you anymore. I will ask you some more questions during my time period. Please go on. 

Mr. BOWEN. Yes, sir. 

SIGIR began the Lessons Learned Initiative 2 years ago. The 

purpose of it is to draw from the Iraq experience methods, processes, instructive lessons that can improve both what is going on 

in Iraq and Afghanistan and improve government preparedness for 

future post-conflict contingency relief and reconstruction operations. 

The first report was released a year ago, lessons learned on 

human capital management, and notably the government has been 

responsive to several of the recommendations raised in that report. 

Specifically, emphasis has begun on developing a civilian reserve 

corps, and that has been an initiative within the State Department’s Office of Stability and Reconstruction, S/CRS. And I have 

met with Ambassador Herbst. He is focused on that, and the Federal Government is developing plans to ensure that we can adequately resource with human capital future post-conflict operations. 

The second report was released at a hearing last August in front 

of this Committee on contracting, and I am very pleased that a 

number of the recommendations raised by that report have been directly and accurately and effectively addressed in the Accountability in Government Contracting Act of 2007, Senator Collins’ 

bill, and in particular, I think these kinds of reforms are exactly 

what will save taxpayer dollars in a post-conflict contingency environment and address very directly the problems that have been experienced in contracting in Iraq. Most notably, I think it is wise to 

put a cap on indefinite delivery indefinite quantity (IDIQ) contracts 

just to deter their overuse. I think it is important to legislatively 

mandate definitization, which means getting control of costs in 

cost-plus contracts on time. I think that ensuring that we have 

enough contracting officers ready to go and work in a situation like 

8

this is essential to steward the taxpayers’ dollars. So I really express my strong support for this act. 

Now to our latest report. This is the result of years’ worth of research of all sorts, looking to the documentary evidence, visiting 

with all of those who were involved in program and project management in Iraq, convening a day-long conference a year ago—General Johnson was part of that—that examined the preliminary findings. The analysis at that conference drove the recommendations 

thereafter, and it has been vetted throughout the interested agencies, and I think has now been reduced down to what the core lessons are and the core recommendations. And, Mr. Chairman, as 

you pointed out, the most significant recommendation is the first 

one, and it takes account of the need to achieve jointness in postconflict contingency relief and reconstruction operations. The Goldwater-Nichols reference is just an allusion to the success of the 

jointness achieved as a result of that 1986 Act, and subsequent 

conflict campaigns have reflected the success of that reform measure that Congress implemented. 

Pushing the same sort of jointness in post-conflict operations 

could yield the same fruit. It is a challenging proposal, I acknowledge that, because it involves interdepartmental interests, and, of 

course, every post-conflict operation is going to be different in many 

respects. But, nevertheless, I believe from my experience, from the 

experience of those who participated in this, in all of these Lessons 

Learned programs, and really from anyone who has spent extensive 

time in Iraq, that promoting jointness in planning and structuring 

the United States’ capacity to carry out contingency operations is 

a worthy endeavor. 

Our second recommendation proposes the authorization of the 

State Department’s Office of Coordinator for Reconstruction and 

Stabilization. This is a good idea put forward by the President in 

NSPD 44, but it needs financial strength and legislative authority 

to carry out the good work that it has begun. And without that, I 

do not think that is going to make the kind of progress that is necessary to continue to reform how the United States approaches 

post-conflict situations. 

The third recommendation calls for clarity about leadership in 

post-conflict operations. Unity of effort, unity of command, those 

are buzz words that point to the need for better coordination in operations like this, and the occasional weakness in those two areas 

in Iraq has limited some of the progress of reconstruction. 

The fourth recommendation asks that the agencies implement 

that which they have learned in the course of Iraq reconstruction. 

The story of Iraq reconstruction is one of gradual progress. Systems 

have been developed along the way that have improved operations, 

and they should be captured and institutionalized, like the CERP 

program, as we recommended in our contracting report. 

Recommendation 5, program managers should integrate local 

populations at every level of planning from the outset. That emphasis has evolved over time in Iraq, and now a majority of contracting 

actions go to Iraqi firms. But it is more than just direct contracting 

with Iraqis. It is engaging the interests of the local population as 

much as possible in developing the program itself moving forward. 

9

1The prepared statement of Ambassador Satterfield appears in the Appendix on page 65. 

Recommendation 6, funding should be designated in a more coherent fashion; in other words, try to depart from the supplemental-based funding streams and move toward a more comprehensive funding stream with the end in mind. I realize that contingencies and developments on the ground limit that capacity to 

a certain extent, but it is a worthy goal to pursue. 

Develop policies and procedures for managing non-U.S. funds. 

That is Recommendation 7. It takes account of the problems that 

my office has identified with respect to the management of the Development Fund for Iraq. Those rules, those processes should be 

worked out ahead of time. 

Recommendation 8, develop planning from the outset for effective 

capacity development. We had an audit about that in our latest 

quarterly that came out at the end of January, and there continue 

to be concerns about the capacity of the Iraqi Ministries to carry 

out their core duties and especially execute their capital budget 

programs. An effective, coordinated, joint strategy for capacity development that is well funded should be an essential element of 

any planning for any post-conflict contingency relief and reconstruction operation. 

And, finally, effective independent oversight present as part of 

the program from the outset will promote efficiency and deter 

fraud, waste, and abuse. And, finally, on that last point, fraud has 

not been a significant component of the U.S. experience in Iraq reconstruction. Part of that, I think, has been the robust deterrent 

presence of investigators on the ground. The real challenge has 

been waste, as you pointed out, Mr. Chairman, and I think that 

taking account of the lessons learned, applying them here, reforming how planning is done in the future by promoting jointness will 

ameliorate some of the problems and some of the issues that my 

office has uncovered in its work over the past 3 years. 

So thank you again, Mr. Chairman, for this opportunity to address the Committee. 

Chairman LIEBERMAN. Thanks, Mr. Bowen. You have done a 

great job in your investigations and in the Lessons Learned reports, too, so I look forward to the questioning. 

Ambassador Satterfield, thanks very much for being here today. 

We look forward to your testimony. 

TESTIMONY OF HON. DAVID M. SATTERFIELD,1 SENIOR ADVISOR TO THE SECRETARY AND COORDINATOR FOR IRAQ, U.S. 

DEPARTMENT OF STATE 

Ambassador SATTERFIELD. Mr. Chairman, Senator Collins, Members of the Committee, thank you very much for the chance to appear before you today to discuss the progress we are making in implementing the President’s strategy for Iraq to review what has 

been achieved with the foreign assistance Congress has provided 

and to highlight the steps that we are taking, based in significant 

measure on the excellent work of the Special Inspector General, to 

improve the administration of taxpayer monies. 

On January 10, the President outlined a new strategy for Iraq. 

On January 11, Secretary of State Rice provided further detail on 

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how specifically we are pursuing jointly—the U.S. agencies, State, 

the other civilian agencies of government, and the U.S. military—

our New Way Forward along four critical tracks: Economic, political, security, and diplomatic. 

As part of the New Way Forward, the focus of our efforts in Iraq 

is changing. As Iraqis increasingly take the lead, as they must, in 

furthering progress along each of these four tracks, we have shifted 

our focus from large infrastructure projects—Reconstruction with a 

capital R—to capacity development and technical assistance programs that increase the capacity of Iraqis to better plan and execute their capital budget, manage their reconstruction projects, and 

improve governance at national and provincial levels. 

A major focus of our efforts is the expansion of the Provincial Reconstruction Teams. While we will continue to work closely with 

the central government in Baghdad, we are extending and expanding our reach beyond the Green Zone to help local communities and 

leaders transition to self-sufficiency, and we are working to improve the relationship, including the financial relationship, between the center and local governments. 

Secretary Rice has appointed Ambassador Tim Carney as our Coordinator for Economic Transition in Iraq. Ambassador Carney already has forged a relationship with Iraqis that has begun to show 

progress. Implementation of a hydrocarbon law, an investment law, 

beginning of debt negotiations with Saudi Arabia—these are all 

positive signs that Iraqis understand the seriousness and are reacting appropriately to advancing economic reform. 

Questions have been raised—and we certainly understand the 

concern of the American people and the Congress—regarding allegations of fraud, abuse, and waste of Iraq Relief and Reconstruction Fund monies appropriated by the Congress. Secretary Rice has 

emphasized her complete commitment to transparency and accountability. She and we, both in Baghdad and here in Washington, have coordinated closely with the Special Inspector General. We will continue to do so. We welcome his most recent report. 

We look forward to an intense study of the recommendations that 

he has provided. We concur that out of the experience of the past 

4 years in Iraq, lessons need to be learned, lessons need to be implemented. We are in the process of doing so and have been over 

these past years. 

Moving forward, the task at hand, accelerating transition to Iraqi 

self-reliance while providing critical U.S. oversight, will be a challenge. But we have begun to see progress along several critical 

fronts. 

As you know, the President decided to augment our own troop 

levels in Baghdad and Anbar Province to support Iraqi troops and 

commanders, who are now in the lead, to help clear and secure 

neighborhoods and create the conditions necessary to spur local 

economic development. The State Department is contributing 

robustly to this effort by expanding our own presence and by closely coordinating in a joint fashion, a wholly joint fashion, with our 

military counterparts in and outside of Baghdad, as well as with 

the Iraqi Government, to capitalize on security improvements by 

creating jobs and promoting economic revitalization. 

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Critical to this effort is the expansion of our Provincial Reconstruction Teams. We are doubling the number of PRTs from 10 to 

20. We will be adding more than 300 new civilian personnel. The 

first phase of PRT expansion is soon to be complete, as the 10 new 

interagency PRT core teams will arrive in Iraq by March 31. These 

core teams recently completed the first specialized interagency PRT 

training course given at the Foreign Service Institute. This is part 

of our joint approach to putting a team together that works as a 

team, from the moment they are identified in Washington until and 

through their arrival and performance in the field. New PRTs are 

going to be collocated with Brigade Combat Teams engaged in security operations. Over this next month, PRT team leaders will work 

jointly with brigade commanders to develop plans for the ‘‘build’’ 

phase of clear, secure, and build. 

To demonstrate our unity of effort, on February 22, the State Department and the Department of Defense signed a memorandum of 

agreement to codify, to make formal this joint civilian-military effort. 

PRTs will target both civilian and military resources, including 

foreign assistance and the Commanders’ Emergency Response Program, against a common strategic plan to bolster moderate Iraqi 

leaders through targeted assistance, promotion of economic growth, 

and creation of new jobs. They will work jointly on developing provincial and local capacity to govern in an effective and a sustainable manner. PRTs will continue to play a leading role in coordinating U.S. programs funded by the Congress, including Iraqi Provincial Reconstruction Development Councils and USAID’s local 

governance, community stabilization, and community action programs. We intend to complete fully our PRT expansion and staffing 

by the end of the calendar year. This completion, however, is dependent, Mr. Chairman, both on the level of funding appropriated 

in the fiscal year 2007 supplemental as well as circumstances on 

the ground in Iraq. 

Iraqis, Mr. Chairman, understand they are in the lead, and the 

Iraqi Government is committed to doing its part to invest in its 

own economic development, including spending $10 billion from the 

fiscal year 2007 budget to help create jobs, foster economic growth, 

and further national reconciliation. The Government of Iraq has 

made progress, as I noted before, on the vital hydrocarbon framework law. The Council of Ministers approved a draft of this law on 

February 26. The law will be submitted shortly to the Council of 

Representatives when a revenue sharing attachment to that law 

has been approved by the cabinet. 

The Council of Representatives is also discussing a provincial 

powers law and is considering several drafts for significant deBa’athification reform. The Iraqi Constitutional Review Committee 

will present its report, including any recommended amendments to 

the Constitution, to the Council of Representatives in a few 

months’ time. And at a conference co-hosted by U.N. Secretary 

General Ban Ki-Moon on March 16, Iraq agreed to implement the 

comprehensive economic reform programs laid out in the International Compact with Iraq. 

The most pressing fiscal challenge preventing Iraq from being 

self-sufficient in economic affairs, Mr. Chairman, is Iraq’s lack of 

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capacity to execute its budget. The Iraqis have responded by designating budget execution as a high priority in 2007, and to this end, 

the government of Iraq has formed a budget execution task force 

led by Deputy Prime Minister Barham Salih, Finance Minister 

Bayan Jabr, and Planning Minister Ali Baban. In coordination with 

Ambassador Carney, this task force already has held a conference 

for ministries and provinces to introduce new budget regulations 

and to dispel concerns about corruption allegations that in part stymied Iraqi spending in 2006. The Iraqi Ministry of Finance has 

made early efforts to jump-start spending by allocating 10 percent 

of capital budgets released following February’s passage of the 

2007 budget. We remain cautiously optimistic that Iraqi resolve 

coupled with our support will result in better budget execution in 

February 2007. Very frankly, Mr. Chairman, we see this year, 

2007, as a critical transition period, a bridge period, to Iraqi selfsufficiency so that their monies, their capital resources can be 

spent instead of U.S. taxpayer monies on the civilian assistance 

side. 

Iraq will need the help and support of its neighbors, not just the 

United States and not just the coalition, to foster a stable, prosperous, and peaceful future. On March 10, Iraq hosted a Neighbors 

Conference in Baghdad attended by high-level officials from each of 

Iraq’s neighbors, plus the P5 of the U.N., the Arab League, and the 

Organization of the Islamic Conference. This is an important step 

for Iraq’s engagement with its regional and international partners 

to discuss political reconciliation, security, and economic engagement, and we support efforts to continue this process. 

Finally, while our focus is on the way forward, we are determined to effectively manage the remaining funds in the Iraq reconstruction account. Despite challenges, including insurgent attacks, 

IRRF projects have made significant contributions and improved 

the life of Iraqis. Water, sewerage, electrical supply, despite difficulties, have been augmented. Iraqis are benefitting, and we expect to complete most of the remaining IRRF II projects during the 

course of 2007 and the beginning of 2008. 

I want to emphasize again that the State Department is strongly 

committed to oversight of the funds Congress has appropriated to 

us for our efforts in Iraq. We have supported 14 audits by the Government Accountability Office, more than 80 audits and reports 

issued by the Special Inspector General’s office, and audits done by 

the individual agency Inspector Generals. We will continue to work 

closely with SIGIR, with the GAO, and with agency Inspector Generals to maintain the highest standards of oversight and accountability in Iraq. 

Thank you very much, Mr. Chairman. 

Chairman LIEBERMAN. Thanks, Ambassador, and I know you had 

to make some adjustments in your schedule to be here, and I appreciate that you did. 

General Johnson, I just want to say for those who do not know, 

brings to our hearing the benefit of wide-ranging service in the 

Army, including his previous assignment as the Commanding General of the Gulf Region Division of the Corps. He also served as a 

U.S. Deputy Director of the Coalition Provisional Authority. 

13

1The prepared statement of General Johnson with attachments appears in the Appendix on 

page 71. 

So thank you for being here, and I look forward to your testimony now. 

TESTIMONY OF MAJOR GENERAL RONALD L. JOHNSON,1 DEPUTY COMMANDING GENERAL, U.S. ARMY CORPS OF ENGINEERS 

General JOHNSON. Mr. Chairman, Senator Collins, and Members 

of the Committee, thank you for the opportunity to be here today. 

I am the Deputy Commanding General of the entire U.S. Army 

Corps of Engineers and the Deputy Chief of Engineers. 

In 2004, I had the privilege of being the first Commanding General of the Corps’ Gulf Region Division in Iraq, and from that experience I can tell you that the $18.4 billion Iraq reconstruction mission has been one of the most extensive and challenging construction programs of all time. It has also been one of the most important. 

Let me say up front that, as public servants, I and the entire 

Corps of Engineers take our responsibilities as stewards of taxpayer money very seriously. As engineers and construction managers, we also have a professional commitment to doing the job 

right. And as soldiers and civilians and members of the Army 

team, we also know that success in Iraq and in the global war on 

terror depends on our ability to help the Iraqi people build the infrastructure of a strong and functional democracy. 

Over the past 3 years, the U.S. Army has completed over 2,800 

Iraq Relief and Reconstruction Fund (IRRF) funded projects out of 

a planned total of 3,450 projects. The U.S. Army Corps of Engineers has had approximately 4,000 personnel deployments in support of the reconstruction effort. Consisting of both military personnel and civilian volunteers, these individuals have admirably 

served in an often hostile and dangerous environment. The accomplishments of these dedicated professionals did not come without a 

price. To date, we have had 14 casualties, with 12 personnel having 

been seriously injured and 2 personnel having given the ultimate 

sacrifice while supporting this reconstruction effort. 

The U.S. Army is proud of our accomplishments in Iraq. We have 

completed 13 refurbished hospitals that can serve 5,500 patients a 

day. We have restored water treatment facilities, benefiting over 

2.3 million Iraqis. We have completed over 250 border forts, helping to secure more than 2,000 miles of Iraqi borders. We have completed over 800 new or renovated schools, serving 325,000 Iraqi 

children. We have increased electric power generation, benefiting 

1.3 million homes. And we have increased crude oil production by 

300,000 barrels a day over pre-war levels. 

I understand that despite these accomplishments, the successful 

projects are not usually the ones that receive the attention. Often 

most of the attention goes to projects experiencing problems. I will 

be the first to say that we have had our problems. However, where 

problems have been identified, the Corps of Engineers on its own, 

and also with the assistance of the Special Inspector General for 

Iraq Reconstruction (SIGIR), have taken a look at the way we do 

14

1The prepared statement of Mr. Ward with attachments appears in the Appendix on page 

106. 

business. We have identified where improvements can be made and 

have incorporated lessons learned. 

Due to our experience in the reconstruction of Iraq, the Corps of 

Engineers is today a stronger, more capable organization. I realize 

that even in a challenging environment like Iraq, the people of the 

United States expect us to do our job right, on time, and on budget. 

We share that same expectation. 

It is important to note that, despite all the attention that goes 

to the problem projects, at least 80 percent of all the projects assessed by the SIGIR have met contract specifications, and in the 

SIGIR’s most recent quarterly report, around 90 percent of the core 

projects have met contract requirements. For projects that do not 

meet those contract requirements, deficiencies are identified and 

corrective actions are taken to ensure that ultimately a quality 

project is delivered. Those same actions are then incorporated into 

other projects spirally to prevent problems before they occur with 

other projects. 

The Iraq Reconstruction Program is yielding positive, tangible results every day and has significantly improved the lives of the Iraqi 

people. Certainly, the work in Iraq is challenging and difficult, but 

reconstruction efforts are a vital component to our campaign in 

Iraq and in Iraq’s progress toward stability and peace. With your 

continued support, I am confident we will succeed. 

Thank you also for your service to the Nation during this time 

of war, and I look forward to our discussion today on reconstruction 

in Iraq. 

Chairman LIEBERMAN. Thanks, General Johnson. That was excellent. 

Our final witness on this panel is Mark Ward, a dedicated public 

servant who has been with USAID for almost 20 years and has had 

many assignments during that time, including being chair of the 

agency’s Tsunami Task Force following the devastating tsunami 

that so wounded communities on the Indian Ocean in 2004. Mr. 

Ward has also previously served as the USAID Mission Director in 

Pakistan. 

Thank you very much for being here, and we welcome your testimony now. 

TESTIMONY OF MARK S. WARD,1 SENIOR DEPUTY ASSISTANT 

ADMINISTRATOR, BUREAU OF ASIA AND THE NEAR EAST, 

U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT 

Mr. WARD. Mr. Chairman and Ranking Member Collins, other 

Members, thanks very much for the opportunity to discuss this 

very important topic with you this morning: Improving procurement and program management for our programs in Iraq and Afghanistan. The letter inviting USAID to participate asked us to 

talk about Afghanistan as well, and so I will. 

We understand your concerns. There have been problems in both 

countries, but we have learned a lot in the last couple of years, and 

we stand ready and look forward to the opportunity to work with 

your Committee and Senator Collins on how to address the probVerDate 0ct 09 2002 14:33 Apr 29, 2008 Jkt 034413 PO 00000 Frm 00020 Fmt 6633 Sfmt 6601 P:\DOCS\34413.TXT SAFFAIRS PsN: PAT
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1The slides submitted by Mr. Ward appear in the Appendix on pages 115–123. 

lems in a manner that best addresses our overall reconstruction 

goals. 

It is important to sensitize the Committee to the unique challenges of procurement and program management in conflict situations—they are exceedingly complex—and just to draw your attention to some issues that stand in inherent tension. 

USAID has to balance a number of important concerns in the 

procurement process: The imperative that the U.S. procurement 

follows a realistic, comprehensive plan involving multiple partners; 

but it also has to be flexible in order to adjust to a rapidly evolving 

country context; it has to be as expeditious as possible and ensure 

rigorous accountability for work done by grantees and contractors 

and all the way down to the level of scores of subcontractors. 

Despite these difficulties and the fact that our work is taking 

place, as you have said, during active hostilities in an ongoing insurgency, much has been accomplished, and we have passed out 

some slides that I think will highlight for you some of those accomplishments that I think we can be very proud of.1

As the General has said, our programs together have added almost 1,300 megawatts of electric generating capacity to Iraq’s 

power grid, serving over 7 million Iraqis. Repairs and refurbishments of some major water and water treatment plants have provided more than 3 million more Iraqis access to potable drinking 

water and expanded sewage treatment to more than 5 million 

Iraqis. Our rural water program is supplying clean water to over 

400,000 villagers every day. 

The results in Afghanistan, a country that I have a lot more experience with, started from a much lower baseline and maybe are 

even more impressive for that reason. Six years ago, when the 

Taliban ruled large parts of Afghanistan, fewer than 1 million children were in school. Today, thanks to the U.S. and other donors 

around the world, almost 6 million children attend school every 

day. Six years ago, it was estimated that less than 10 percent of 

the people had access to health care of any kind. Today, thanks 

again to all of us in the international community, that number 

stands at 80 percent. Before, fewer than 50 kilometers of paved 

roads were usable. Today, it is more than 6,000 kilometers of 

paved, gravel, and cobblestone roads, and the U.S. contribution to 

that number is more than 4,000 kilometers. 

There is a long way to go, but it is important to see what we 

have accomplished. 

As the Committee may know, USAID is a much smaller agency 

today than it was in the past. While we are still bringing basic education and health care to communities and some of the other infrastructure that we have talked about, the way we bring that assistance has changed a lot. In the past, one would have seen Foreign 

Service officers, like me, working at the local level on various 

projects around the world. Today, we have similar projects, but 

U.S. and local contractors and grantees are carrying out most of 

the work, with occasional visits by Foreign Service officers to monitor progress. The same holds true for the Corps of Engineers and 

other U.S. agencies. And in dangerous environments like Iraq and 

16

Afghanistan, visits by Foreign Service officers to monitor progress 

may be very rare. Security concerns often make it very difficult for 

us to leave the relative safety of the capital and the American embassy. That is one reason why we are such fans of the PRTs that 

Ambassador Satterfield talked about, the Provincial Reconstruction 

Teams. 

USAID’s contractors and grantees and the people who work for 

them take on tremendous challenges and assume great risks. Many 

have been killed or injured in fulfilling the noble and urgent tasks 

that we have given them. I grant you, one or two may have abused 

the system, and we will find them. But most are doing very good 

work in very dangerous circumstances. 

Now, I know there are two principal criticisms of USAID’s procurement practices. I used to be in charge of USAID’s procurement 

shop before I went to Pakistan. One is that a relatively small group 

of USAID contractors and grantees continue to win the lion’s share 

of contracts and grants and that our procurements are too large for 

smaller firms and NGOs, and they just cannot compete. We appreciate this concern, and we are trying to increase the pool of firms 

that will bid on our work. 

But it is important to understand why we use such large procurements in places like Iraq and Afghanistan. In conflict situations and after natural disasters, we have to move quickly and with 

as much flexibility as possible. Speed is of the essence because 

hearts and minds of local communities are in the balance. Iraq is 

a good case in point. 

Even before U.S. and British troops entered Iraq 4 years ago this 

month, USAID was actively developing a reconstruction program to 

be implemented as soon as the cessation of hostilities. We used 

what assessment tools we had at our disposal. We consulted with 

as many experts as we could, but we did not have the benefit of 

on-the-ground assessments. We relied on 40 years of development 

experience and made the best, prudent assessments of needs and 

costs with the information at hand. 

Had we waited for hostilities to subside and for more detailed assessments and cost estimates before announcing procurements, we 

would have waited a year or more, and that simply wasn’t an option. The need for speed and flexibility required a contract that 

would allow us to assign a range of task orders as needs were identified. This meant a large contract covering many skill areas, and 

a program of this nature and scale would be beyond the capacity 

of the best of the small firms. 

The procurement and program management challenges in Iraq 

and Afghanistan are, I hope, a cautionary tale to those who might 

hamstring the agency in ways that might result in a better planned 

and slower procurement process at the expense of flexibility and 

quick response to changing circumstances. No one wants us to cede 

our position as the leader among major donors to respond quickly 

to conflict situations and natural disasters. 

The time to seek out smaller contractors and grantees for jobs is 

there, after the initial broad-scope contracts have been awarded 

and the work is proceeding. This is the way we have worked in 

Iraq and Afghanistan with some success. For example, smaller 

companies are involved in the building of district, provincial, and 

17

cobblestone roads in Afghanistan, as well as courthouses and district centers. 

More can be done to open up the procurement process to local 

firms. This is the second most common criticism of USAID and one 

that is included in Mr. Bowen’s recent report. We should not lose 

sight of why the U.S. Government is present in developing countries in the first place. Building capacity in Iraq and Afghanistan 

is difficult but a critical element of our strategy for both countries. 

U.S.-based firms have always been higher priced relative to local 

firms, but much more expensive today in conflict areas because of 

the need to hire additional security, which currently amounts to as 

much as 15 to 20, even more than 20 percent more for comparable 

work in other countries. Extra costs for U.S. or foreign firms at the 

beginning of a reconstruction effort can be defended when it is 

clear that local firms do not yet have the capacity to do the work 

to acceptable standards. But at some point, several years into the 

campaign, a shift should be seriously considered. This is happening 

in Iraq now. Arguably, it may still be too early in Afghanistan. But 

at some point, sticking exclusively with U.S. firms too long becomes 

counterproductive to our goals. 

Let me just close by saying there is definitely room for improvement in the way USAID procures goods and services and manages 

programs and conflict in emergency situations where speed and 

flexibility are paramount. Senator Collins, we really appreciate the 

fact that your staff has already reached out to us for comments and 

suggestions on the legislation, and we look forward to more such 

dialogue. I also look forward to your questions. 

Mr. Chairman, thank you. 

Chairman LIEBERMAN. Thanks very much, Mr. Ward. 

I want to first ask you, Mr. Bowen, to build a little bit on your 

reaction on your most recent trip to Iraq. I believe you said you 

came back about a week or so ago. 

Mr. BOWEN. Last week, that is right. 

Chairman LIEBERMAN. Last week. And you have been there 15 

times, but when you say that you came back cautiously optimistic 

and you had a more positive reaction to what you saw than you 

have in the last 20 months, I take it seriously and significantly, 

and I think most people who have followed your work do because 

you have gained a reputation as a straight talker. You are not a 

spinmeister, if I might say so. 

So obviously I am encouraged by that, but I wanted to ask you 

to just talk in a little more detail. What did you see that brought 

you back from your last most recent trip to Iraq cautiously optimistic about how our cause was proceeding there? 

Mr. BOWEN. Well, first of all, what I experienced in my visits 

with senior leadership was a different tone, a more optimistic view 

of how the Iraqis are responding at this phase, differing from how 

they responded during Operation Forward Together I and II last 

year. And let me also say that the cautious optimism applies both 

to how the Baghdad Security Plan is moving forward on the military side and how the embassy is moving forward with its strategy 

in Iraq. 

To the first, what I saw every morning at the battle update assessment briefing was a true and effective and progressive coordiVerDate 0ct 09 2002 14:33 Apr 29, 2008 Jkt 034413 PO 00000 Frm 00023 Fmt 6633 Sfmt 6601 P:\DOCS\34413.TXT SAFFAIRS PsN: PAT
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nation of the Baghdad Security Plan between General Petraeus 

and General Odierno, the operational commander of Multi National 

Corps-Iraq (MNC–I). 

February was a tough month. Let’s be clear. Things have not gotten better in an instant. That is not what I am saying. What I am 

saying is that although February was the worst month for vehicle 

borne improvised explosive devices (VBIEDs), for example, by the 

last week the number of attacks had dropped significantly, and 

that has continued to be the case into March. 

Chairman LIEBERMAN. In Baghdad? 

Mr. BOWEN. In Baghdad. And that is also true with insurgent attacks within Baghdad, and I noticed it myself. Having been there 

so often, I have a sense of the security situation in the Green Zone 

itself, and I noticed a difference just in my immediate surroundings. I traveled a couple of times into the Red Zone and sense 

some difference as well. I visited a project, the Fire Brigade headquarters about 10 minutes northeast of the Green Zone, and also 

visited the President of the Board of Supreme Audit and got some 

sense there of an incipient change for the better. 

On the embassy side, what I saw was real progress on the PRT 

program. General Olson, who is the leader of that, is an excellent 

manager, and it has turned into a lesson learned itself about 

jointness. I think its own story will be one that we would like to 

tell in our report at the end of the year, the story of Iraq reconstruction, because it is Exhibit A for how a Goldwater-Nichols-like 

reform can be experienced. It is fundamentally a mixture of DOD, 

State, and USAID assets, with a mixed mission as well. 

Chairman LIEBERMAN. With a lot of local input, too. 

Mr. BOWEN. I think there are so many elements to the story of 

the PRTs that are important to learn from for future post-conflict 

contingency planning. 

So, in sum, I have a sense of cautious optimism, but definitely 

a wait-and-see attitude about that with respect to the developments of the Baghdad Security Plan. As I tell people, there are a 

thousand problems in Iraq, and then there is one, and that one is 

security in Baghdad. 

Chairman LIEBERMAN. Right. 

Mr. BOWEN. And that is the essential prerequisite to solving the 

rest of those problems. 

Chairman LIEBERMAN. OK. I really appreciate that report, and it 

means a lot to me. We are involved in a debate or a discussion here 

that is going to be on the floor of the Senate again next week. My 

position is known. But it is helpful to me, in that context, to have 

an independent voice like yours and eyes and ears like yours coming back and saying you see some progress and you are cautiously 

optimistic. Nobody is ready to say this is over, all the problems are 

gone. Obviously not. It seems like a very strange time to order the 

beginning of a withdrawal of American troops within 120 days, as 

we are beginning, as a result of the infusion of new troops, to turn 

the corner in the way you describe. So I am going to leave the rest 

of my debate on that for the floor. But I thank you for it. 

As I listened to you, Inspector General, as well as the three of 

you from the agencies, you are reminding us that, notwithstanding 

the episodes and instances of waste, fraud, and abuse in the Iraq 

19

reconstruction program on which you have spent billions of taxpayer dollars, we are carrying out the reconstruction to complete 

our mission. We liberated Iraq from Saddam Hussein. I suppose 

another nation might just have left. But we understood that we 

could not do that if we were going to secure what we had gained. 

So we have spent on a large scale. This is not unlike the Marshall 

Plan, although the Marshall Plan at this hindsight looks a lot better than Iraqi reconstruction. 

I am hearing you say that, notwithstanding the public instances 

of waste, fraud, and abuse, a lot of good things have happened. So 

I am going to ask you to do something arbitrary, if you don’t mind. 

If you were grading Iraqi reconstruction, would you give it an A, 

B, C, D, or F on balance based on what we have done? I do not 

know. Mr. Bowen, do you want to start? 

Mr. BOWEN. I would hesitate to give a grade because we are still 

carrying out an oversight mission. 

Chairman LIEBERMAN. OK. How about Ambassador Satterfield? 

Ambassador SATTERFIELD. I, too, would hesitate to assign a 

grade—— [Laughter.] 

For two reasons: First, because not just are many of these works 

still in progress, but also because in many cases, as most of the 

case for electricity, extraordinary efforts, which I would give an 

outstanding grade to, went into providing generation capacity. But 

security reasons, reasons related to issues of maintenance fueling 

Iraqi responsibilities, have failed. In general, I would give U.S. efforts on these critical areas—sewerage, water, electricity—high 

marks. I would not give similar marks to the process of 

transitioning over past years to full Iraqi responsibility for the 

maintenance and security of the investment we have made. 

Chairman LIEBERMAN. So you have opted for what they call at 

college a pass/fail grading system. [Laughter.] 

That is OK. General Johnson. 

General JOHNSON. Sir, I shall not deviate, I shall not leave fallen 

comrades behind. [Laughter.] 

But I think reconstruction is a graduate-level course, so pass/fail 

would probably be appropriate. I could do the math for the Corps 

and the 11 projects out of the 2,280 we would deliver might suggest 

that we are doing better than we are. 

I think based upon what we have seen and what the SIGIR reports, we have treated reconstruction as if it were football, and 

with football and the transitions between offense and defense, the 

referee stops and allows the defense or offense to come back on the 

field. But reconstruction, I would say, is more like soccer. You have 

to be able to change your transition without changing the people 

on the field, and whether you are offense or defense, you have to 

know what to do with that ball. 

So we have to be able to deliver this more like soccer than we 

have been delivering it like football. 

Chairman LIEBERMAN. Are we winning the game, the soccer 

match? 

General JOHNSON. Sir, soccer is a long game. [Laughter.] 

There have been no red cards. 

Chairman LIEBERMAN. No red cards. OK, that is good. Mr. Ward. 

20

Mr. WARD. I remember the report cards I used to bring home, 

and I used to say to my parents, ‘‘Don’t focus on the grade. Look 

at the teacher’s comments.’’ [Laughter.] 

And the one I used to like to see was, ‘‘Needs improvement but 

showing progress.’’

Chairman LIEBERMAN. Yes. 

Mr. WARD. And I think what is very encouraging to me in both 

countries, but particularly in Afghanistan that I follow so much 

more closely, is that we are adapting to a changed situation on the 

ground. We are getting the local communities involved so much 

more now than we were before. We have learned how to talk to the 

Afghans, and we are learning through the PRTs how to talk more 

to the Iraqis as well. 

Recommendations like we get from SIGIR are very useful to us, 

and recommendations that we get from our own Inspector Generals 

are going to, I am confident, lead us to the day where I will share 

that grade with you. 

Chairman LIEBERMAN. Thank you. Thank you all. Senator Collins. 

Senator COLLINS. Thank you, Mr. Chairman. 

First, let me caution the witnesses that in answering me, I do 

not want to hear any sports metaphors at all. [Laughter.] 

Since I have no idea what a red card is in soccer, but I gather 

it is not good. 

First, Mr. Bowen, I, too, want to thank you for your report. As 

one who has had a lot of concerns and skepticism about the President’s policy for a surge, I welcome the evidence that you are bringing to us because, like the Chairman, I know that you are an individual who calls it as he sees it, and your report is very helpful. 

I also want to thank you for your support for our contracting reform bill. Many of the provisions in the bill were drawn directly 

from the recommendations and findings of your previous report, so 

I thank you for that as well. 

Mr. Ward, one of the important recommendations of the Inspector General deals with the need to involve local populations at 

every level of the planning and execution process, including contracting with local firms. And your statement in some ways anticipated the question that I am about to ask you. 

USAID has recently entered into a new contract with LBG, the 

Louis Berger Group, for Afghanistan reconstruction work despite a 

lot of problems with this contractor, which was hired to build 

schools and clinics in Afghanistan. It is my understanding that the 

contract is valued at $1.4 billion and that it covers a wide scope 

of reconstruction work. 

Putting aside the problems that USAID has had with this contractor, I want to focus on whether or not going ahead with such 

an enormous contract with this firm runs counter to the recommendation that we have just heard from the Inspector General. 

It seems that in Iraq, applying the lessons that we have learned, 

we have been moving away from these large design-build contracts 

and toward smaller, more flexible contracts with local contractors 

so we can put local people to work, which is part of the reconstruction process, and we can also save money. 

21

So it seems to me that the award of this enormous contract runs 

exactly counter to Mr. Bowen’s recommendation, and I would like 

to hear your response. 

Mr. WARD. Very good question, and I think were it not for the 

renewed insurgency in the south and the southeast in Afghanistan, 

they would not have decided to go that way. But what that large 

infrastructure contract provides to our team in Kabul is the opportunity to respond quickly and flexibly with infrastructure in those 

areas of the country where it is still too hard to get in, to anticipate 

the needs, and then to get in and do the full kind of assessment 

and costing that we would like to do. 

I wish very much that we had the private sector capacity and 

even the public sector capacity in Afghanistan that Iraq has. As the 

Chairman said, I was the aid director in Pakistan for a couple of 

years after September 11, 2001. I did not have to hire very many 

U.S. firms because of the capacity of the private sector in Pakistan. 

We could use Pakistani firms for the most part. They were very 

good, thanks in part to help from the United States over a number 

of years. 

In Iraq now, they are, as you said, turning much more to local 

content, local firms, and that is a very good thing. And we look forward to the day when we can do that in Afghanistan. One of the 

challenges that we have, Senator Collins, is that when we award 

a contract or a grant to a U.S. firm in Afghanistan, it is to make 

part of the scope of work—and I think your legislation touches on 

this—the mentoring so that they leave behind what I would call an 

‘‘Afghan child’’ who can be mentored and who can then get the follow-on contractor grant. USAID has had a lot of success with this 

around the world, particularly in the former Soviet Union. And this 

is where I think we have to focus more effort now. But for this particular contract that you are talking about, I think it is a response 

to the insurgency. 

Senator COLLINS. Thank you. 

Mr. Satterfield, in your testimony you mentioned that you expect 

to double the number of PRTs in Iraq from 10 to 20, and it is my 

understanding that these teams can have as many as 100 people 

drawing from different agencies and departments. I have also been 

told repeatedly, primarily by DOD, that the State Department has 

had a very difficult time in staffing the PRTs with State Department employees. Is that still the case? 

Ambassador SATTERFIELD. It is not and has not been the case. 

Of the PRT teams that have existed, the 10 extant missions are 

fully staffed with State Department, USAID, and other civilian 

agency personnel. The rotations that will replace those individuals 

with new staffers for the 10 existing PRTs this summer are largely 

complete; officers have been assigned. And for the 10 new PRTs 

with respect to State/AID core staffing, those individuals have both 

been identified and, as I noted in my testimony, are currently in 

training. 

The large number of additional individuals, the some 300 civilians who will come, will not for the most part be U.S. Government 

employees currently serving with USG agencies, whether the State 

Department or other. They will be specialists who have skills which 

are not found in the Federal Government—agronomists, soil chemVerDate 0ct 09 2002 14:33 Apr 29, 2008 Jkt 034413 PO 00000 Frm 00027 Fmt 6633 Sfmt 6601 P:\DOCS\34413.TXT SAFFAIRS PsN: PAT
22

ists, veterinarians. They will be brought in under a contracting 

mechanism which the State Department will oversee, but they will 

not be State Department personnel. 

We are very pleased, Senator, at the volunteers that we have 

over these last 4 years placed into Iraq service, and I would add 

Afghanistan, Pakistan, and Saudi service. We have risen to the 

challenge. The State Department and the Foreign Service continue 

to rise to that challenge. 

Senator COLLINS. Thank you. 

Chairman LIEBERMAN. Thank you, Senator Collins. Senator 

McCaskill. 

OPENING STATEMENT OF SENATOR MCCASKILL 

Senator MCCASKILL. Thank you. 

Following up on Senator Collins’ line of questioning, currently in 

Afghanistan we know that the most serious problem—and let me 

start by saying that terrorism is a tactic. It is not an enemy. It is 

a tactic. And if you look beneath the tactic, there are—it is just 

hard to say. We have a global war on economic and social circumstances and religious conflict that breeds a certain kind of fanaticism that brings about a sense of hopelessness and a belief that 

hurting other people and killing yourself is the right thing to do. 

That is too long. So we say a war on terror when it really is a war 

against a tactic. 

Now, underlying that in Afghanistan, of course, is the economy 

that is based on poppy, an economy that is based largely on a deadly drug. So agriculture, it seems to me, in Afghanistan should be 

the big enchilada. It should be the primary focus of what we are 

doing there. How many current employees of the U.S. Department 

of Agriculture are currently in the country of Afghanistan? 

Mr. WARD. Senator, I do not know. I do know this: That USAID 

provides funding so that six or seven USDA employees can serve 

in the PRTs. And in the past—I would have to check to see if this 

is still the case—through what we call a participating agency 

agreement, we have USDA staff embedded in our offices in Kabul, 

and then they have their own office where an officer goes back and 

forth between Islamabad and Kabul. 

If you look at the supplemental request that was submitted for 

fiscal year 2007 for Afghanistan, you will see a large increase in 

funding not just for agriculture programs but, more specific to your 

point, alternative development programs to combat the scourge of 

poppy. 

So we do not disagree with you at all, but it is important to note 

that President Karzai’s priorities for the United States and Afghanistan sound something like this: Roads, roads, roads, and power. 

Senator MCCASKILL. Right. 

Mr. WARD. And so we try to listen to that as well. 

[Information submitted for the record from Mr. Ward follows:]

VERIFICATION OF USDA EMPLOYEES IN AFGHANISTAN 

There are currently eight employees from the U.S. Department of Agriculture (USDA) serving in Afghanistan. All eight are funded by USAID. 

Seven are funded with a 632(b) Participatory Agency Services Agreement 

(PASA) for staffing at the PRTs and one is funded from a separate 632(b) 

PASA to work on livestock and animal health issues. 

23

It is our understanding that USDA has an advisor (which they are funding) serving as the Agriculture Attache ́ in Islamabad who makes periodic 

visits to Afghanistan.

Senator MCCASKILL. If you could find out that number. I have 

been told it was six in the entire country, which brings me to the 

Ambassador and what you just said with Senator Collins. What I 

am frustrated about is what I have learned since I have been here 

in regards to the PRTs, even with the new PRTs that are going 

over, we are talking about fewer than 1,000 people in the entire 

country of Iraq that will be working in this effort. Isn’t that correct? 

Ambassador SATTERFIELD. Senator, let me take a moment, if I 

may, to explain how we came to the numbers of staffers for those 

PRTs because in that lies, I think, an important point. 

Senator MCCASKILL. OK, briefly, because I want to make sure I 

get to my underlying point, which is how many Federal employees 

are actually being used. 

Ambassador SATTERFIELD. Our underlying point, Senator, is how 

many civilians are of use in Iraq, not abstract numbers, because 

the numbers are not as significant as the mission to be performed. 

Our brigade combat team commanders, our existing PRT leaders, 

divisional commanders, and the embassy reviewed area of operation by area of operation—no cookie-cutter approach—who was 

needed down to specific skill sets. Not just numbers but the position descriptions needed for each of these specialized employees, 

and they are not, for the most part, Federal Government employees 

currently serving. We do not have soil chemists who are able to 

serve in a combat area, who have the requisite skills and ability 

to undertake that kind of deployment. We are going to get them. 

We are in the process of arranging for them now. But the numbers 

are based upon the assessment of our mission, military and civilian, in the field. They are based upon an assessment of what is 

needed and what Iraq is capable of absorbing and, frankly, Senator, what protection we can provide and life support we can provide for them in what in many instances—because these new PRTs 

are located in conflict areas—is an active combat zone. 

Senator MCCASKILL. Well, in a previous hearing I was in, by 

someone else within your Department, it was said that the problem 

that—I know we have the requisite skills in the Federal workforce 

on any issue as it relates to agriculture, on any issue as it relates 

to education. We have a very large Federal workforce with incredibly diverse and extraordinary skill. And it was explained to me in 

another hearing that the problem was that it was very difficult to 

get Federal employees because we had not incentivized them to volunteer to do this work, and as a result, we are paying an extraordinarily high amount of money to contract out with non-Federal 

employees. 

Do you have the same ability to leverage incentives with Federal 

employees that you have in terms of entering into contracts with 

civilian employees? And if you have that same leverage, I would be 

shocked if we did not have a number of Federal employees that 

want to respond to the call of their chief executive officer, of the 

President they work for, who is saying we need to give more, we 

need to do more, and clearly—I do not think you answered my 

24

question. I believe it is less than 1,000 people we have total in the 

country as it relates—even with the new addition, there will be 

fewer than 1,000 people in the entire country doing the work that 

everyone seems to recognize is the most important key to our success, and that is the political success that is necessary for Iraq to 

stand up. 

Ambassador SATTERFIELD. Senator, we do have incentives that as 

a department we offer to our employees to serve in Iraq, and we 

have received the volunteers necessary to fully staff the State Department commitment. We have requested from the Congress the 

authority to reimburse other Federal agencies for the service of 

their employees. And, of course, in the first instance, we look to 

Federal Government employees who have the requisite skill sets, 

the requisite medical clearances, the ability to serve in an active 

combat area. This is not the U.S. military. These are civilians being 

asked to serve in a fire zone, living in areas where the physical 

conditions are extraordinarily difficult. They will live as our troops 

live, no different, embedded with these brigade combat teams. That 

is a unique set of individuals both for skills and for abilities. 

We do have incentives to bring them to the field. We look to that 

service. But we will be relying as a government for the majority of 

these positions, based on the totality of these criteria, on individuals from outside the current Federal workforce. It is the nature 

of the very specialized skills and willingness and ability to meet 

the challenge of serving in a combat zone that leads us to that. 

Senator MCCASKILL. If you could get me the amount of money 

that we are spending for these employees that we are hiring, these 

private individuals we are hiring, as opposed to the salaries that 

are being paid, whatever Federal agency employees we have volunteering and what that number is. It is my understanding it is very 

low. It is my understanding they are getting paid much less than 

what we are paying to those people whom we are hiring to go into 

these zones that have the same skill set the Federal employees 

have. Thank you. 

Chairman LIEBERMAN. Thank you, Senator McCaskill. 

By the rules we are following in terms of recognition, Senator 

Coburn was here earlier, though his presence was not continuous. 

Senator COBURN. I am happy to yield to the Senator from Minnesota. 

Chairman LIEBERMAN. I just wanted to know whether Senator 

Coleman has time pressure that would lead him to want to go now. 

Senator COLEMAN. If it is possible, Mr. Chairman, that would be 

helpful. 

Chairman LIEBERMAN. Yes, and thanks, Senator Coburn. 

Senator COLEMAN. I thank Senator Coburn. 

Chairman LIEBERMAN. And then I will go right to you afterward. 

OPENING STATEMENT OF SENATOR COLEMAN 

Senator COLEMAN. Thank you, Mr. Chairman. 

First, I want to thank you. This has been a great panel, informative, candid, very helpful. I want to associate myself with the comments of the Ranking Member. I, too, have had concerns about the 

surge in Baghdad, particularly before getting the kind of commitment I think we needed to get from the Iraqis to hold up their end. 

25

I did not see that when I was in Baghdad in December, but it is 

encouraging to hear a little bit of optimism, but very cautious. But 

I agree with the Chairman that it would be foolish to tell the 

enemy we are leaving now and here is the date that we are going 

to be gone and at a time when at least there is the possibility of 

a better future for Iraq. 

The question I have is for Mr. Bowen. The first recommendation 

talks about the Goldwater-Nichols-like reform, greater integration 

of DOD and the State Department. One of the things that struck 

me in my visits in Iraq is conversations with both State Department and DOD personnel in which literally talking about having 

a meeting and the enemy, the other side—it was not the Iraqis, it 

was not the insurgents. It was the State Department talking about 

DOD. The divide between the two was something anecdotal I heard 

many times. 

Were those anecdotal experiences way off the mark? If they are 

not off the mark, is this a legislative fix that is required or something else? 

Mr. BOWEN. As I said in my opening statement, anyone who has 

spent an appreciable amount of time working within the Iraq Reconstruction Program understands the tensions that exist among 

the departments carrying out the program. And that is why I alluded to Goldwater-Nichols in this recommendation because the 

need for jointness is essential. I have called it ‘‘altering the DNA 

of post-conflict management,’’ and that means ensuring that the 

three agencies that have significant responsibilities in that environment fully understand and are familiar with one another, their 

operations, their language, their approach, and essentially are integrated in their planning and in their structures. 

How to do that I did not specify in the recommendation. I suggested to the Chairman and Senator Collins yesterday that a commission might be a good first start to pull together experts that review the evidence, that hear from those who have worked there 

and get some good, solid data that supports the anecdotes that you 

heard and that some of us have experienced so that from that could 

develop perhaps a legislative reform. 

Senator COLEMAN. Leadership—not always but oftentimes—from 

the top down makes a difference. I would hope at the secretary 

level that the secretaries would fully recognize this. My sense was 

in the past that was not the case and would kind of demonstrate 

the kind of commitment, which I hope we have now, but I am just 

saying in the past I did not see it, and I felt it when I was on the 

ground. 

Mr. BOWEN. Let me just say that NSPD 44 and DOD Regulation 

3001.05 have both proposed internal departmental remedies to improve post-conflict management. My concern is that they could perpetuate the Balkanization of that process, that jointness is essential to succeed. 

Senator COLEMAN. Ambassador Satterfield, did you want to respond to that? 

Ambassador SATTERFIELD. Certainly. Senator, I think it is wrong 

to believe that, inevitably in any institution the size and complexity 

of the civilian military mission in Iraq or in Baghdad, there are not 

individual anecdotal personality issues. It is real. It happens everyVerDate 0ct 09 2002 14:33 Apr 29, 2008 Jkt 034413 PO 00000 Frm 00031 Fmt 6633 Sfmt 6601 P:\DOCS\34413.TXT SAFFAIRS PsN: PAT
26

where. But the jointness of the civil-military operation at the embassy and in the field in Iraq is greater than that of any mission 

of this kind, I think, in U.S. history. The commitment by outgoing 

Ambassador Khalilzad and former Commanding General George 

Casey to a jointly evolved campaign plan, a joint mission statement 

that guides the efforts of all of our common lines of operation and 

action really is without parallel. And certainly General Petraeus 

and incoming Ambassador Crocker will be continuing that cooperation, and it very much, Senator, is reflected in the coordination between Secretaries Rice and Gates, Chairman Pace, and all of us 

who work this issue. 

Senator COLEMAN. I appreciate that, and clearly it is essential. 

On Recommendation 5, talking about integrating with local populations, one of the things that has struck me, particularly on my 

last visit to Iraq, was that if you are an Iraqi and if you are seen 

talking—at least in Baghdad in certain areas—to a coalition person, there is the threat of death. How do you get cooperation with 

the local population if we still have an environment, 4 years after 

we entered Iraq, where simply the act of conversing with a coalition person may, in fact, mark you for death? 

Mr. BOWEN. Well, these recommendations are aimed at adjusting 

the system so that the planning structures are improved. It is a 

prospective one. I think that your point is well taken. It is dangerous in Iraq, and the conditions in Iraq define behavior as you 

describe. But as the Congress looks at how to improve planning for 

post-conflict contingency relief and reconstruction operations, ensuring that incorporating local populations as an essential element 

is key. And the last point on the jointness, I agree with Ambassador Satterfield that today the jointness is better than it has been 

ever. The recommendation addresses not what is going on in Iraq 

now in particular, but it looks at the planning, the pre-war planning for relief and reconstruction operations and how that process 

is fundamentally structured. 

Senator COLEMAN. Thank you, Mr. Chairman, and I thank the 

Senator from Oklahoma. 

Chairman LIEBERMAN. Thanks very much, Senator Coleman. 

At about 11:30, there will be four votes going off, so we have 

enough time for Senator Coburn and then Senator Levin, and then 

probably we will adjourn. 

Senator Coburn. 

OPENING STATEMENT OF SENATOR COBURN 

Senator COBURN. Thank you, and I thank all of you. I have read 

your testimonies. 

Inspector Bowen, in comparison to the funds that have been 

spent both in Afghanistan and Iraq, did you look at—and I have 

not had a chance to read this. It will be airplane reading for me. 

Did you do any comparison to CERP funds versus AID funds 

versus other funds in terms of waste, fraud, abuse, or misuse? 

Mr. BOWEN. First of all, we do not have oversight in Afghanistan. 

Second, we have not done intra-departmental comparisons of how 

one agency has done vis-a-vis another. Our mission is to oversee 

the Iraq Relief and Reconstruction Fund, its investment, and the 

additional jurisdiction that the Congress has provided us. 

27

1 Information and documents submitted for the Record from Mr. Ward to Senator Coburn appear in the Appendix on page 124. 2The picture submitted by Senator Coburn appears in the Appendix on page 52. 

Senator COBURN. All right. Thank you. 

I have a few questions. This Subcommittee last year did oversight on USAID, and I have several questions for Mr. Ward. This 

all relates to Afghanistan. USAID claims to have built and handed 

over to the Afghanistan Government 140 medical clinics. Our Subcommittee received a letter from the Minister of Public Health stating that it had no record of the clinics. When we asked USAID to 

provide those, they gave us a list of 39 clinics, and that took them 

6 months to provide that answer to the Subcommittee. 

A couple questions come from that. First of all, why didn’t the 

Afghanistan Government know where those clinics were? And 

where are the other 101 clinics that USAID claims to have provided? 

Mr. WARD. Senator, as you know, we have provided to you and 

to your staff a more recent letter from the Minister of Public 

Health that verifies that we have turned over a much larger number of clinics. 

Senator COBURN. But not 140 clinics. 

Mr. WARD. It is a much larger number. 

Senator COBURN. Than 140? 

Mr. WARD. Yes. 

Senator COBURN. OK. But what you have given to us, what they 

can account for, in other words, the listing of the clinics, where 

they are, it is 39 in terms of formal testimony from USAID, isn’t 

it? The question really relates to—I do not doubt that they are 

there. Why can’t USAID tell us where they are? And why doesn’t 

the Afghani Government know where they are, when they are completed, and why does it take 6 months? 

The second question I have is in regard to the Louis Berger 

Group. They had a $1.4 billion contract for upgrading critical infrastructure in Afghanistan. But this was after USAID was forced to 

remove Louis Berger Group from the school and clinic construction 

for substandard performance and after this group did such a poor 

job on a section—not all of it, but a section of the Kabul to 

Kandahar highway, and I understand some of that was weather related. Also, our Subcommittee found some photo evidence of fraud 

where the Louis Berger Group claims to work on clinics it never 

did work on but still got paid for. 

Some of that can be disputed, some of it cannot. Why would we 

again go back and issue a contract to a firm that we have had 

those kind of problems with? 

Mr. WARD. If I may just quickly respond on the last part, we 

have actually provided to your staff photographs of all of the clinics 

so that you know where they are, and those have been provided in 

some hefty binders, and we brought another copy with us.1

Senator COBURN. Yes, but, again, that is 15 months. It took them 

15 months to provide that evidence, and I would submit for the 

record—here is one of the pictures of the clinics they supplied. This 

is not a completed clinic, as the Committee can obviously see. It is 

a foundation with some pieces of steel rising.2

28

And this at the time, by the report from the Louis Berger Group, 

it reported that it was up to the bond beams, which this has—obviously, there is some inconsistency. 

I know it is tough over there. I am not trying to pick on that. 

I am just saying, with the lack of communication, with the lack of 

knowledge, with the lack of what is going on, why do we recontract? Are they the only ones that can do this? Is that why we are 

doing that? 

Mr. WARD. Senator Collins asked about this as well. There were 

six firms that competed for this second large infrastructure contract. The firm that won, Louis Berger, was in a joint venture with 

a very good firm in the power sector, Black and Veatch. The fact 

that they fell behind on the schedule for the schools and clinics 

under the first contract certainly had an impact on the evaluation, 

but the fact that the Louis Berger firm did so well overall on the 

Kabul to Kandahar and the U.S. portion of the Kandahar to Herat 

road, which is a large portion of this new contract, and has such 

good contacts with the firms that have to be hired to execute the 

work in Afghanistan, the fact that they are there now and mobilized, I mentioned before in response to Senator Collins’ question 

the urgency of being able to keep infrastructure going because of 

the insurgency in the south and the southeast, and the fact that 

their joint venture partner, Black and Veatch, is so strong in the 

power sector outweighed the negatives, and they did win. 

Senator COBURN. So has USAID, given those very good reasons, 

set up a more stringent oversight and information flow so that you 

can factually watch where the money is going, how it is going, and 

so that you have timely information to know, not 6 months, not 15 

months after the fact, but on a timely basis so you can judge the 

quality of their work? 

Mr. WARD. Senator, it is a great question, and we talked earlier 

about the challenges of working in the south and the southeast. If 

it were in another part of the country, I would answer you very 

quickly yes. I would be able to make sure that my officers were getting out there regularly. I would be able to ensure that Government of Afghanistan officials were getting out regularly. That will 

occur in those parts of the country where they can get out. 

Senator COBURN. And most of that is a security-related issue 

rather than a—but you have set up a more formalized structure 

under which you are following both the claims and the contracts 

under which this major contract has been issued. Is that correct? 

Mr. WARD. That is correct. We still have in place in our own staff 

an engineering staff; it is supplemented by seven officers from the 

Corps of Engineers, thanks very much to General Johnson, although I think we pay dearly for them. 

Senator COBURN. But they are worth it. 

Mr. WARD. Yes, they are worth it. We also have a structure that 

we have put in place of Afghan engineers to be able to get out without as many concerns about security, so if maybe the Foreign Service Officer engineers cannot get out, the Afghan engineers can get 

out. 

We also have—and we have talked about this a lot—the PRTs 

now and plussing up the numbers of people in the PRTs and making them aware of what national programs are going on in their 

29

AOR. This is something—we have talked about lessons learned, 

and this is clearly one of them. 

In the past, if I would visit a PRT—and I visited a lot of them 

in Afghanistan—the civilian and military advisers were very good 

at telling me about the projects that they were funding with CERP 

and USAID funds made available to the PRT. And that is great. 

But what they were not so good at telling me was what about the 

schools and clinics and roads and teacher training and other 

projects that are part of a national project funded out of Kabul that 

are going on in your province. We have come a long way on that, 

and now the PRTs know what national projects are going on in 

their neighborhood, if you will, so that they can be even more eyes 

and ears for us to know what is going on. 

Senator COBURN. That is great to know. 

Mr. Chairman, given the time constraints, I am going to submit 

three other questions having to do with shelter for life and also 

roofs that collapsed in, I think, 102 out of 105 schools from substandard construction, and the questions that we need to have for 

that. 

I thank you for your straightforwardness. Raising the problems 

so that we solve them is very important because money misspent 

means less confidence by the Afghani and Iraqi people in what we 

are trying to do for them, and I thank you for holding the hearing. 

Chairman LIEBERMAN. Absolutely. Thank you, Senator Coburn. 

Without objection, we are going to keep the record open for 15 days 

for your questions and others that other members might have. 

Senator Levin. 

OPENING STATEMENT OF SENATOR LEVIN 

Senator LEVIN. Thank you, Mr. Chairman, and thank you for 

holding this hearing. 

The Inspector General’s report is just full of discouraging examples of key facilities that suffered from poor design, sloppy construction, inadequate quality control, and barely functional buildings. One example in Mr. Bowen’s report was that plumbing was 

so poorly installed at the Baghdad Police College that dripping 

sewage not only threatened the health of students and instructors 

but could affect the structural integrity of the building. He found 

that the security walls built for the Babylon Police Academy in 

Hilla were full of gaps and deficiencies, while lighting systems and 

guard towers called for in the contract were never installed, which 

left the academy vulnerable to attack. 

First of all, General Johnson, do you agree with Mr. Bowen’s 

findings regarding the condition of the Baghdad Police College and 

the Babylon Police Academy? 

General JOHNSON. Sir, we do. 

Senator LEVIN. Can you tell us why the Corps failed to identify 

and correct the deficiencies in these facilities and require the contractor to correct them before the construction was completed or accepted? 

General JOHNSON. Sir, let me offer this. The SIGIR discovered 

those deficiencies in September. We asked the SIGIR to come out 

and do an assessment. We had discovered the same deficiencies, at 

30

least at the Baghdad Police College, in June 2006 during part of 

our commissioning. 

As stated by USAID and Ambassador Satterfield, there are challenges with construction in Iraq. We have construction management teams that we put on every project here in Iraq. In every one 

of our districts, about half of the employees in those districts are 

Iraqi associates. These are qualified engineers that we use forward 

at project sites for quality assurance. The contractor is responsible 

for quality control. The U.S. Army Corps of Engineers is responsible for quality assurance. 

Senator LEVIN. You are also responsible for paying—apparently, 

you approved the payment on these contracts. These are cost contracts, as I understand, but you do not have to pay for work that 

is poorly done. Was money paid for poorly done work? 

General JOHNSON. Sir, all of the deficiencies, the warranty work 

was completed within the budget that was allowed for those 

projects. 

Senator LEVIN. Well, in other words, we did not pay for—all 

these stories that we read in this report, that they were all repaired at the expense of the contractors? 

General JOHNSON. Sir, all of the repairs that were made to those 

buildings were within the funds that were allocated for——

Senator LEVIN. I am not sure what that means. Did we pay anybody to do something which they should have done without being 

paid extra? 

General JOHNSON. Sir, we did not. We did not pay additional 

costs to fix what should have been——

Senator LEVIN. And where roofs were falling and sewage was 

dripping through pipes and all the rest, those repairs identified in 

this report were all made at the contractor’s expense? 

General JOHNSON. Yes, sir. By October 22, 2006. 

Senator LEVIN. All right. Is that your finding, Mr. Bowen? 

Mr. BOWEN. Our report did not address how the contractors were 

paid to make those improvements. We have follow-up reports that 

detailed the scope of the problems, and in it we noted that the 

Corps had pursued, I believe with AFCEA, contracting to make 

those repairs, and those repairs were ongoing. 

The latest visit we made in January of this year indicated that 

the solution with respect to the plumbing was to construct outdoor 

facilities. 

Senator LEVIN. My question has to do with payment. You have 

not gone into that issue? 

Mr. BOWEN. No, we have not. 

Senator LEVIN. Now, also, the Inspector General said that the 

Army Corps spent $186 million on primary health care centers 

throughout Iraq and then terminated the contract with only six 

health care centers completed, 135 partially constructed, and the 

remainder de-scoped. 

Did we pay any money for the 135 partially constructed health 

care centers, do you know, General? 

General JOHNSON. Sir, we did. We paid the contractor that had 

that building and health project for the expenses they incurred and 

the construction. There were about 97 of those primary health care 

centers that were turned over to us at 95 percent complete. We deVerDate 0ct 09 2002 14:33 Apr 29, 2008 Jkt 034413 PO 00000 Frm 00036 Fmt 6633 Sfmt 6601 P:\DOCS\34413.TXT SAFFAIRS PsN: PAT
31

scoped those projects. We took them in the Gulf Region Division, 

and we did direct contracting with the Iraqi firm that was doing 

the construction because we thought the contractor was not capable 

of delivering. We thought they were not prepared to do adequate 

quality control at these project sites, and we typically terminated 

for convenience of the government. 

Senator LEVIN. And when we terminated them, we had paid 

them for the work that they had completed? 

General JOHNSON. Sir, we had paid them for the work that they 

had completed and for the pay that they were due based upon their 

expenses. 

Senator LEVIN. But even if we went to added expense to finish 

them, we still paid them? 

General JOHNSON. Sir, once we terminated them, we paid them 

what they were due. They were not paid for the additional work 

that was done. 

Senator LEVIN. And that additional work cost us money, though. 

General JOHNSON. Sir, it absolutely did. 

Senator LEVIN. Then the question is: Since it obviously would 

have cost us more money to pay somebody else to complete the 

work, did we recoup that money from the contractors that we had 

paid? Inspector General, can you tell us that? 

Mr. BOWEN. This is the cost-plus contracting issue that Senator 

Collins’ bill will address in part, and the answer is: Under that 

particular kind of contract, we pay the contractor for the work completed, whether that project is finally completed or not. 

Senator LEVIN. Now, under a cost-plus contract, we are not required to pay contractors for work that they do not complete when 

it is their fault they are not able to complete it; we are able to 

withhold the cost of completion. 

Mr. BOWEN. We pay them for the amount of work accomplished, 

not the full value of the contract. You are right. And that is what 

has happened here. 

Senator LEVIN. Should we not have withheld money to finish 

those contracts? Under the cost-plus approach, can you not withhold money necessary to complete a contract when a contractor 

fails to do the work or do the work properly? 

Mr. BOWEN. When the contractor is under contract, yes. This 

contract was terminated for convenience, and as a result, the billings continued to come in, and they had to be paid. 

Senator LEVIN. Should we have terminated this contract for convenience without withholding enough money to complete this contract and make the repairs as well? Should we not have withheld 

that at the time we terminated it? 

Mr. BOWEN. I think that would have been a reasonable approach. 

I think perhaps termination for default would have been a reasonable approach as well. 

Senator LEVIN. But that was not used? 

Mr. BOWEN. That was not. 

Senator LEVIN. All right. General, do you want to have a chance 

to comment on that? 

General JOHNSON. Sir, there is probably a reason why we did not 

TFD, or terminate for default, and I will tell you, the U.S. Army 

Corps of Engineers was not innocent here. We had responsibility 

32

1Letter submitted for the record by Senator Warner appears in the Appendix on page 55. 

for quality assurance. Again, we relied upon our Iraqi associates 

because they provide less of a footprint of coalition, they can help 

us get work done without the threat of bad guys destroying these 

facilities. But you accept risk in doing that. 

The other thing I would tell you is this: This company that came 

in and competed to get one of these large design-build contracts, 

they have a very good record, but I think they learned that construction in a contingency environment with bullets flying is not 

like doing it in the State of Delaware. 

Senator LEVIN. Thank you. Thank you, Mr. Chairman. 

Chairman LIEBERMAN. Thanks, Senator Levin. It looks like we 

are having a joint meeting of the Homeland Security and Armed 

Services Committees right now. 

Senator Warner, I believe we have time for you to have a round 

before we adjourn. 

Senator WARNER. Just very quickly, if both of you want to go on 

to the vote, I will join you. Just let them know I will be over there. 

Chairman LIEBERMAN. Good. 

OPENING STATEMENT OF SENATOR WARNER 

Senator WARNER. A very distinguished panel we have here, Mr. 

Chairman, and I have had the privilege of working with each of 

them through the years. 

First, to you, Stuart Bowen, you talked about the need for Goldwater-Nichols. Senator Levin and I worked on Goldwater-Nichols 

years ago. But in the last Congress, when I was privileged to be 

Chairman of the Armed Services Committee, exactly 1 year ago I 

wrote to the heads of all of our departments urging their participation in the Presidential Directive 44, which is to try to bring about 

the management of interagency efforts concerning reconstruction. I 

would like to have a copy of that letter follow my questions here, 

Mr. Chairman, in the record.1

Chairman LIEBERMAN. Without objection. 

Senator WARNER. Then, specifically, our 2007 Defense Authorization Act required the President to issue a report to the Congress 

on how to improve interagency integration. The report is to provide 

Congress with a baseline assessment of the situation. It is due in 

April. 

Did you participate in the preparation of that report? 

Mr. BOWEN. I have not. 

Senator WARNER. Well, it would seem to me that whoever has 

that report on their desk, they certainly should solicit and receive 

your views because this is one that the entire Congress is going to 

review. 

Mr. Satterfield, did you work on that report? 

Ambassador SATTERFIELD. No, Senator, I did not. 

Senator WARNER. Well, I wonder if both of you would look into 

it because it is due to come to Congress to say what Congress can 

do to help the President enable people from each of your agencies 

and departments to come and join the overall effort. Repeatedly, 

the generals before our Committee, the Armed Services Committee—and my colleague here from Connecticut is a member of 

33

that Committee—have said, with their usual modesty, ‘‘We are 

doing the military part of it, but we can only pull on the oars so 

hard unless the other departments and agencies can come along 

and do their portion.’’ And this has been a lingering problem for 

some time. 

Mr. Satterfield, you have got a marvelous reputation here before 

the Congress, and your testimony and drawing on your experience 

in-country over there. I think it would be very important that you 

solicit through the Secretary, because it was directed to your Secretary, that you have an opportunity to review that report in its 

present status and hopefully make a contribution before it comes 

to the Congress. 

We also did other things in our bill. We introduced legislation to 

provide the heads of the agencies with certain authorities so that 

they could pay additional stipends and other things to the employees of your agencies who could step forward and be willing to take 

on the risk of going to what is truly what we call a 360-degree combat zone. There are no safe places. Just this morning, the report 

that the head of the United Nations was over there, and he experienced—fortunately, no harm to him personally and others with 

him—a mortar attack. It is serious business. So we think that some 

special benefits should be accorded to your employees that go in on 

this. 

Also in the 109th Congress, we introduced the Employee Combat 

Zone Tax Parity Act to give them a little financial inducement for 

the taxes. So I think the Congress has done a considerable amount, 

Mr. Chairman, to try to support our President in getting the people 

over there. 

What is the current status with the Department of State, Mr. 

Satterfield, on your ability to meet your—I do not know whether 

the word is ‘‘quota’’ or your ‘‘obligations’’ to participate in Iraq? 

Ambassador SATTERFIELD. Senator, we have fully staffed the embassy in Baghdad, the largest in the world. We have fully staffed 

the existing PRTs. Our core teams for——

Senator WARNER. That is a very good report. You are up to full 

staff? 

Ambassador SATTERFIELD. We are essentially full staff. 

Senator WARNER. Those are the teams that are going right out 

with the troops and working side by side with the coalition of 

forces, notably the United States and the Iraqi troops in Baghdad. 

Ambassador SATTERFIELD. Senator, the core Foreign Service and 

USAID staff for those 10 new PRTs not only have been identified, 

they are currently in joint training together. They will be boots on 

the ground by the end of this month in Iraq. 

Senator WARNER. Very encouraging. 

Ambassador SATTERFIELD. Where we are working still is on identifying and recruiting, both from within Federal Government ranks 

but more significantly from outside Federal Government ranks, the 

very specialized civilians who will fully staff by the end of this year 

those new PRTs and augment the existing PRTs. 

Senator WARNER. My recollection is that the Presidential memorandum tasked the Secretary of State to be the coordinating Cabinet officer for all the other departments. 

Ambassador SATTERFIELD. That is correct, Senator. 

34

Senator WARNER. Is that part of your responsibility? 

Ambassador SATTERFIELD. Yes, it is, Senator. 

Senator WARNER. Well, we know where to look now. We will welcome you back again. [Laughter.] 

Thank you very much, to each of you. Sorry that I will have to 

terminate my questions. 

Thank you, Mr. Chairman. 

Chairman LIEBERMAN. Thank you, Senator Warner. Very important questions. 

Thanks to the four of you. It has been an excellent morning of 

testimony. If I was to try to summarize it, I would say that Iraqi 

and Afghani economic reconstruction has gone better than probably 

most people think based on an understandable media focus on the 

shortcomings. But the reconstruction has not gone as well as any 

of us want it to or have a right to expect it to, and, therefore, we 

have more work to do. 

I think you continue to make a very substantial contribution, Mr. 

Bowen, and I am particularly taken with the notion that we need 

as much unity of command in post-conflict management of economic and political reconstruction activities, governmental reconstruction, as we do need unity of command in battle. How we do 

that is not clear to me, as it is not to you, exactly, but Senator Collins and I are going to proceed perhaps with legislation to create 

a short-term commission—we do not want to give it a long time 

frame—to take a look at that, and obviously a commission would 

want the input of all four of you. 

In the meantime, on behalf of the Committee I thank the four 

of you for what you are doing. I specifically say to the three of you 

who lead the agencies involved to please extend our gratitude to 

those who work with you for an important job being done in a very 

difficult environment and a job that is being done better than a lot 

of people think. 

Thank you very much. The hearing is adjourned. 

[Whereupon, at 11:49 a.m., the Committee was adjourned.] 

(35)

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Æ


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