U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

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

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

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

46–109 PDF 2009

FEDERAL CONTRACTING: DO POOR PERFORMERS

KEEP WINNING?

HEARING

BEFORE THE

SUBCOMMITTEE ON GOVERNMENT MANAGEMENT,

ORGANIZATION, AND PROCUREMENT

OF THE

COMMITTEE ON OVERSIGHT

AND GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

JULY 18, 2007

Serial No. 110–105

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

(

Available via the World Wide Web: http://www.gpoaccess.gov/congress/index.html

http://www.oversight.house.gov

(II)

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

HENRY A. WAXMAN, California, Chairman

TOM LANTOS, California

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

CAROLYN B. MALONEY, New York

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

DANNY K. DAVIS, Illinois

JOHN F. TIERNEY, Massachusetts

WM. LACY CLAY, Missouri

DIANE E. WATSON, California

STEPHEN F. LYNCH, Massachusetts

BRIAN HIGGINS, New York

JOHN A. YARMUTH, Kentucky

BRUCE L. BRALEY, Iowa

ELEANOR HOLMES NORTON, District of

Columbia

BETTY MCCOLLUM, Minnesota

JIM COOPER, Tennessee

CHRIS VAN HOLLEN, Maryland

PAUL W. HODES, New Hampshire

CHRISTOPHER S. MURPHY, Connecticut

JOHN P. SARBANES, Maryland

PETER WELCH, Vermont

TOM DAVIS, Virginia

DAN BURTON, Indiana

CHRISTOPHER SHAYS, Connecticut

JOHN M. MCHUGH, New York

JOHN L. MICA, Florida

MARK E. SOUDER, Indiana

TODD RUSSELL PLATTS, Pennsylvania

CHRIS CANNON, Utah

JOHN J. DUNCAN, JR., Tennessee

MICHAEL R. TURNER, Ohio

DARRELL E. ISSA, California

KENNY MARCHANT, Texas

LYNN A. WESTMORELAND, Georgia

PATRICK T. MCHENRY, North Carolina

VIRGINIA FOXX, North Carolina

BRIAN P. BILBRAY, California

BILL SALI, Idaho

JIM JORDAN, Ohio

PHIL SCHILIRO, Chief of Staff

PHIL BARNETT, Staff Director

EARLEY GREEN, Chief Clerk

DAVID MARIN, Minority Staff Director

SUBCOMMITTEE ON GOVERNMENT MANAGEMENT, ORGANIZATION, AND PROCUREMENT

EDOLPHUS TOWNS, New York, Chairman

PAUL E. KANJORSKI, Pennsylvania

CHRISTOPHER S. MURPHY, Connecticut

PETER WELCH, Vermont

CAROLYN B. MALONEY, New York

BRIAN P. BILBRAY, California

TODD RUSSELL PLATTS, Pennsylvania,

JOHN J. DUNCAN, JR., Tennessee

MICHAEL MCCARTHY, Staff Director

(III)

C O N T E N T S

Page

Hearing held on July 18, 2007 ............................................................................... 1

Statement of:

Smith, Robin, former Wackenhut security officer at DHS Headquarters;

Lawrence Brede, senior vice president, Wackenhut Services, Inc.; and

Scott Amey, general counsel, Project on Government Oversight .............. 96

Amey, Scott ................................................................................................ 133

Brede, Lawrence ........................................................................................ 105

Smith, Robin .............................................................................................. 96

Woods, William, Director, Acquisition and Sourcing Management, Government Accountability Office; Elaine Duke, Chief Procurement Officer,

Department of Homeland Security; Richard Skinner, Inspector General,

Department of Homeland Security; William Desmond, Associate Administrator, accompanied by Tyler Przybylek, Senior Adviser to the

Administration, National Nuclear Security Administration, Department

of Energy; and Gregory Friedman, Inspector General, Department of

Energy ............................................................................................................ 10

Desmond, William ..................................................................................... 64

Duke, Elaine .............................................................................................. 23

Friedman, Gregory .................................................................................... 74

Skinner, Richard ....................................................................................... 34

Woods, William .......................................................................................... 10

Letters, statements, etc., submitted for the record by:

Amey, Scott, general counsel, Project on Government Oversight, prepared

statement of ................................................................................................... 136

Brede, Lawrence, senior vice president, Wackenhut Services, Inc., prepared statement of ........................................................................................ 107

Desmond, William, Associate Administrator, National Nuclear Security

Administration, Department of Energy, prepared statement of ............... 66

Duke, Elaine, Chief Procurement Officer, Department of Homeland Security, prepared statement of .......................................................................... 25

Friedman, Gregory, Inspector General, Department of Energy, prepared

statement of ................................................................................................... 76

Skinner, Richard, Inspector General, Department of Homeland Security,

prepared statement of ................................................................................... 36

Smith, Robin, former Wackenhut security officer at DHS Headquarters,

prepared statement of ................................................................................... 99

Towns, Hon. Edolphus, a Representative in Congress from the State

of New York, prepared statement of ........................................................... 4

Woods, William, Director, Acquisition and Sourcing Management, Government Accountability Office, prepared statement of .............................. 13

(1)

FEDERAL CONTRACTING: DO POOR

PERFORMERS KEEP WINNING?

WEDNESDAY, JULY 18, 2007

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON GOVERNMENT MANAGEMENT, ORGANIZATION, AND PROCUREMENT, COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM, Washington, DC.

The subcommittee met, pursuant to notice, at 2:10 p.m., in room

2154, Rayburn House Office Building, Hon. Edolphus Towns (chairman of the subcommittee) presiding.

Present: Representatives Towns, Murphy, Welch, Maloney,

Bilbray, and Platts.

Staff present: Michael McCarthy, staff director; Rick Blake, professional staff member; Cecelia Morton, clerk; John Brosnan, minority senior procurement counsel; Emile Monette, minority professional staff member; Brian McNicoll, minority communications director; and Benjamin Chance, minority clerk.

Mr. TOWNS. The hearing shall come to order.

We are here today to consider an important question: Is there

any penalty for poor performance as a Federal contractor? This

committee’s investigation has gathered evidence of serious, welldocumented performance problems with large Federal contracts.

But these problems never seem to prevent the companies involved

from getting new work.

I remember the old saying, ‘‘Fool me once, shame on you; fool me

twice, shame on me.’’ Well, in my view, the taxpayers are being

fooled time and time again. This must stop.

I hear from my constituents and from small minority-owned businesses nationwide that they can’t get contracts with the government, only subcontracts from these enormous firms that get all the

prime contracts. I am very concerned that when the government

does not expect existing contractors to meet high standards, innovative new companies are effectively frozen out.

We could really shake up Federal contracting if we could cut out

the middleman and give some new people a shot. And it would be

an incentive for everyone to step up their performance if they knew

that doing a lousy job would mean the next contract went to someone new.

For this hearing we have put together some case studies to look

at how the system for measuring past performance works or does

not work, as the case may be. I want to focus on the policy behind

managing for performance. How is the contractor’s performance

measured? How is it weighed in the selection process? Do our conVerDate 11-MAY-2000 10:57 Jan 09, 2009 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 C:\DOCS\46109.TXT KATIE PsN: KATIE
2

tracting officers have the tools they need? Does it matter when contractors don’t pay their taxes, violate labor laws or face court judgments for fraud or discrimination? These are the types of questions

we should consider today.

Our first case study is Wackenhut. Wackenhut has provided security for the Department of Energy at the Oak Ridge nuclear site

since 2004. The Department of Energy inspector general reported

that Wackenhut tipped off guards to a security drill, making the

drill useless, required personnel to work overtime in excess of safety guidelines, and falsified records of security guard training. The

IG found that Oak Ridge security cost nearly double during the

Wackenhut 5-year term, and that the company may have unduly

profited. But Energy officials are pleased with Wackenhut’s performance, they have awarded ratings of 98 and 99 percent, granted

millions in award fees and renewed the Wackenhut contract.

Wackenhut also provided security at DHS headquarters; we have

a former Wackenhut guard who will tell us about security breaches

and mismanagement in that contract. In fact, DHS has decided not

to employ Wackenhut at DHS headquarters anymore. But just a

few months after that decision, the Border Patrol within DHS hired

Wackenhut for a 5-year, $250 million contract to transport immigration detainees in the Southwest.

Our second study is Bechtel, one of the largest contractors in the

world. At the Department of Energy, Bechtel holds a massive construction contract for nuclear waste storage at the Hanford site in

Washington. Under Bechtel’s management the project’s estimated

cost has increased more than 150 percent to about $11 billion, and

the completion date has been extended from 2011 to 2017. GAO attributed most of the cost increase and delays to Bechtel’s poor performance.

The Department of Energy also experienced problems with security and management at Los Alamos National Laboratory which

was managed by the University of California. The problems got so

bad that Energy decided to rebid the contract and look for new

management. They found new management, a joint venture between Bechtel and the University of California.

After Katrina, Bechtel got an emergency no-bid contract to install and maintain trailers. The cost of that contract spiraled out

of control and auditors found more than $55 million of incorrect

charges. More than 6 months after the emergency, DHS finally put

the contract out for competitive bids. After the competition, Bechtel

received a new contract to continue its trailer work.

Let me point out, I am not against contracting or contractors. I

am against weak management and shoddy work. I know responsible contractors share my views. The flaws in the system are just

as frustrating for companies who do high-quality work as they are

for Congress and the taxpayers.

From a policy view, one problem seems to be that contracting officers often don’t have a clear view of company track records when

making procurement decisions. There is no easy access to relevant

information like audit reports, IT reports, a court decision reviewing previous work.

3

My colleague from New York, Carolyn Maloney, has introduced

a bill to acquire a data base for this type of information, and we

should discuss that approach today.

At this time, I would like to yield to the ranking member of the

committee, Congressman Bilbray from California.

[The prepared statement of Hon. Edolphus Towns follows:]

4

5

6

7

Mr. BILBRAY. Thank you, Mr. Chairman, I thank you for having

this hearing.

Mr. Chairman, I have served in many different functions in government. At 25, I was a city council member, at 27 I became

mayor; I served 10 years for a small little group of citizens called

the county of San Diego, 3 million, and had the privilege of coming

here and serving in Congress. In that time, the one thing that has

become obvious to me is that there are different schools of thought

about the best way to provide services to the public.

Frankly, I was forced as a young mayor when we lost 40 percent

of our city funding under Proposition 13 to eventually eliminate the

police department and contract out that service. We did it because

the in-house bureaucracy had become so loaded and inefficient that

we needed to add competition to the process; the only way to do

that was to bring in outside agencies.

Today I am looking at the explanation of this hearing, and I

would like to remind everybody that poor performance, keep getting the contracts, also applies to those of us who are in government. But poor performance is not a monopoly resting on private

contractors. I will give you an example.

I am shocked this town and the media didn’t jump more on the

horrendous performance of the RTC with the liquidation of the billions and billions of dollars of public assets. If you think they were

very efficient, take a look at the huge profits of the people who

bought up those assets of the RTC during that period and said

those profits could have been resources of the taxpayer.

So we see the savings and loan debacle, we look at the private

sector. I spent most of my career in the public sector realizing it

was those on this side of aisle who really ripped off the taxpayers

by mismanaging those assets.

The lack of performance is something I think we need to look at.

One of things that I have seen is that fair competition is where

contracting really gives the ability to get effectiveness.

There are some people I have worked with here as a government

official; I saw great success in some of these companies. I would

only say, I see contracting as being an essential part of the ability

of the Federal Government to provide cost-effective service to the

American people.

This hearing today should not be a crucifixion of the private sector; it should be a way of being able to improve a system that is

essential, because when I came here to Washington and looked

around and looked at situations like a powerhouse owned by the

government that is still burning coal at the turn of the century, all

I thought was, My God, there has to be a better way than having

the Federal Government try to do it all in house.

Mr. Speaker, there is a reason why today, across this country

and around this world, we have private contractors defending our

Naval bases and securing our facilities and that is because we cannot afford not to. So I hope that this hearing is a way to be able

to take a system that is essentially to the protection of the American people and improve it and get the most cost-effective way of

providing services, because honestly there is no way we can make

that claim if we try to say we abolished the participation of the private sector and try to do it all in house.

8

I think the record will show we will not go back to the 1930’s.

We need to do it with a competitive system, and hopefully this will

correct misconceptions and find some situations that we can improve as partners in this concept of providing essential services to

the American people.

I yield back at this time, Mr. Chairman.

Mr. TOWNS. Thank you very much, Mr. Bilbray.

Congressman Welch.

Mr. WELCH. I have no opening statement.

Mr. TOWNS. Congressman Murphy.

Mr. MURPHY. Thank you, Mr. Chairman. Just a brief remark to

say, I think what we discuss here today is not a crucifixion of the

private sector, not to create a justification to end Federal contracting as we know it, but to ask a simple question: When the Federal

Government knows about inefficiencies and lapses of judgment

with a contractor doing business with the Federal Government,

what are our responsibilities? If there is an indictment to be made

today, I think it lies with both the private and public sectors.

In the State of Connecticut we spent a great deal of time in

Southington remediating a situation with a contractor who did

some major work on schools that was millions upon millions of dollars over budget, or was well beyond schedule; and came to find out

that this contractor had had a long history of problems in other

school districts, unbeknownst and undisclosed to the small town of

Southington.

This isn’t that situation. This is a situation where we are not

talking about information undisclosed; we are talking about public

information that U.S. Government agencies have regarding the inefficiencies and poor work performance of private contractors.

The question to be asked today is not necessarily, to the ranking

member’s point, whether or not we go with more or less Federal

contracting, but what do we do with the information? The way we

are doing it now is not working. I certainly think that can lead to

an appropriate conversation as to whether we are doing far too

much over the private sector, but today’s conversation is how we

utilize taxpayer dollars when we have already made the decision

to send that money into private hands.

I look forward to testimony of the witnesses before us.

Mr. TOWNS. Thank you very much, Congressman Murphy.

Congresswoman Maloney.

Mrs. MALONEY. Thank you, Mr. Chairman, for calling this hearing on a critically important issue. It is really Congress’ responsibility to ensure that the taxpayers’ dollars are used wisely and

not wasted on contracts that will not be fulfilled or be fulfilled up

to standards.

I will say that the chairman and I grew up in the rough and

tumble of New York City politics where we have had our share of

contract scandals. I chaired the committee on contracts in New

York City and authored a bill called VINDEX. It basically says, before a procurement officer lets a contract, they must go into the

centralized data base and check whether or not that contractor has

good credit, whether or not that contractor has completed the work

on time, whether or not that contractor has cost overruns, whether

or not that contractor has a record of having completed work and

9

done it well, or if they have a record of debarments and fines and

penalties and punishment. And that VINDEX system allows procurement officers to make good choices when they make a decision

to spend taxpayers’ dollars for a service.

The bill that I introduced does exactly that, it is built on the copy

of the H.R. 3033, Contractors and Federal Spending Accountability

Act and it will really put teeth behind and fortify the current Federal suspension and debarment system.

When we put this into context, the United States is the largest

purchaser of goods and services in the entire world, spending more

than $419 billion on procurement awards in 2006 alone and $440

billion on grants in 2005. Yet the Federal Government’s watchdogs,

the Federal suspension and debarment official, our procurement officers, currently lack the information that they need to protect our

taxpayers’ dollars and the interest of business and government in

getting a contract built and done on time in the right manner.

To what our bill does is that right now we have no centralized,

confidential, governmentwide method to study and account for the

performance of our contractors and to assist the procurement officers in making informed choices on who can get the job done right.

I do want to cite data from the Project on Government Oversight

on a report that they did in 1995 of the top 50 Federal contractors,

based on the total contract dollars received. Mine have a total of

12 resolved cases, totaling $161 million in penalties paid; so my

question is, why in the world are we giving contracts to people who

are being penalized for poor performance? Obviously our procurement officers do not have access to this information, this bill would

give them that information. Additionally, these 50 contractors paid approximately $12 billion

in fines and penalties. I mean, so we really can do a better job and

this bill would help create a system that would allow us to have

a more open and transparent government so that our procurement

officers could make better decisions on wisely investing taxpayers’

dollars in—over $400 billion in private contracts.

So I thank you for calling this hearing, I think that one of the

things we have to continue to work on is better oversight, better

decisions, better procedures to protect taxpayers’ dollars, and this

hearing and this bill will do that.

I yield back, thank you.

Mr. TOWNS. Thank you very much, Congresswoman Maloney.

Let me add, we invited Bechtel to this hearing and they declined.

I just want the record to indicate that, they declined.

Will the witnesses please stand? We always swear in our witnesses here.

[Witnesses sworn.]

Mr. TOWNS. Let the record reflect they all answered in the affirmative.

You may be seated.

Let me introduce our witnesses at this time. William Woods is

the Director of Acquisition and Sourcing Management with the

Government Accountability Office, an agency he has served with

since 1981. He is responsible for GAO’s reviews of Federal agency

contracting and is an expert in the field.

Welcome.

10

Mr. WOODS. Thank you.

Mr. TOWNS. Elaine Duke is Chief Procurement Officer at the Department of Homeland Security. Ms. Duke previously served as Department of Homeland Security’s Deputy Chief Procurement Officer and as the Assistant Administrator for Acquisitions for the

Transportation Security Administration. She spent much of her career in acquisition for the U.S. Navy.

Welcome.

Richard Skinner is the Inspector General at the Department of

Homeland Security. He was formerly the FEMA IG, and has previously served with the Department of State, Department of Commerce, the Arms Control Disarmament Agency and other Federal

agencies.

Welcome.

Mr. William Desmond is Associate Administrator for Defense Nuclear Security at the National Nuclear Security Administration in

the Department of Energy. He is a career executive who has held

a number of senior management posts in nuclear security. Mr.

Desmond is accompanied by Mr. Przybylek; is that correct?

Mr. PRZYBYLEK. Yes, it is.

Mr. TOWNS. I want you to know I have been struggling with that.

He was Senior Adviser to the Administrator at NNSA.

Gregory Friedman is Inspector General at the Department of Energy. He has served at the Department since 1982 and has worked

in the Federal auditing field since 1968.

Mr. Woods, why don’t you proceed with your opening statement

and let me just say, we would like for you to speak for 5 minutes

at the most; and then, of course, we allow the committee the opportunity to ask questions. And, of course, thank you so much; we will

begin with you, Mr. Woods.

STATEMENTS OF WILLIAM WOODS, DIRECTOR, ACQUISITION

AND SOURCING MANAGEMENT, GOVERNMENT ACCOUNTABILITY OFFICE; ELAINE DUKE, CHIEF PROCUREMENT OFFICER, DEPARTMENT OF HOMELAND SECURITY; RICHARD

SKINNER, INSPECTOR GENERAL, DEPARTMENT OF HOMELAND SECURITY; WILLIAM DESMOND, ASSOCIATE ADMINISTRATOR, ACCOMPANIED BY TYLER PRZYBYLEK, SENIOR ADVISER TO THE ADMINISTRATION, NATIONAL NUCLEAR SECURITY ADMINISTRATION, DEPARTMENT OF ENERGY; AND

GREGORY FRIEDMAN, INSPECTOR GENERAL, DEPARTMENT

OF ENERGY

STATEMENT OF WILLIAM WOODS

Mr. WOODS. Thank you, Mr. Chairman, Mr. Bilbray, Mrs.

Maloney, Mr. Murphy. Good afternoon, it is a real pleasure to be

here, and I thank you for inviting me.

As Mrs. Maloney pointed out, the Federal Government is the largest single buyer in the world, spending over $400 billion annually on goods and services. Many of our agencies are highly reliant

these days on the use of contractors to carry out their vital and important missions; and that makes it all the more important and

critical that we make sure that we award contracts only to responVerDate 11-MAY-2000 10:57 Jan 09, 2009 Jkt 000000 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 C:\DOCS\46109.TXT KATIE PsN: KATIE
11

sible contractors and that we have systems in place to hold them

accountable.

What I would like to do in a few minutes I have available today

is to run through some of the existing ways in which contractor

performance is considered in the award and performance of government contracts.

Second, how that actually happens in practice, I will have to

point out that we are not involved in an in-depth evaluation of the

contractor performance, but we do know a little bit about how that

process is supposed to work; and I hope we can provide that information to the committee this afternoon.

Third, we have a mechanism at GAO, a bid protest function that

allows us a particularly illuminating picture into how past performance and other issues in the award of government contracts actually happened on the ground; and I will illustrate—my statement

illustrates some cases where the use of past performance has been

an issue in some of those bid protest decisions.

First—there are basically four ways in which a contractor’s performance might come into play, first, in the area of source election.

Now we as consumers in our ordinary day-to-day lives would certainly agree that past performance is important as we would pick

contractors to perform services for us, but surprisingly, it is not

until relatively recently that past performance became a required

evaluation factor in selecting government contractors.

It was in the mid-1990’s that Congress enacted legislation, largely shepherded by this committee, as well as others, requiring that

past performance be a critical and important evaluation factor. The

Federal Acquisition Regulation was subsequently revised to require

that past performance be an evaluation factor in all government

procurements.

The second way that contractor performance might come into the

play is in the area of responsibility. Now, once an agency selects

a contractor going through the evaluation process, weighing the

various evaluation factors and selecting a contractor, it must then

determine that selected contractor is responsible; and that means

that he has the business resources, has the key personnel available, as well as the ethical foundation in place, to be able to adequately carry out the contract.

The third area is in the area of surveillance. The government is

responsible for the day-to-day monitoring of contracting performance, and at the end of contracts is responsible for completing a

performance evaluation for all of the contractors and making that

available governmentwide, entering it into a governmentwide data

base.

And then fourth, where contractors fail to perform in a very serious manner, there is a process, suspension and debarment, and the

Federal Acquisition Regulation specifically says that a contractor

who has a history of not performing up to the requirements of a

contract, that contractor may be debarred from further contracts,

and the debarment process can last up to 3 years.

There are a number of guidance regulations, that is, policy documents, etc., that are outlined in my statement—I won’t get into detail on those; some of those are governmentwide, the Federal acquisition I mentioned. The Office of Federal Procurement Policy within

12

OMB also issued guidance on the use of past performance in selecting contractors. There are also specific guidance documents that individual agencies have; the Department of Homeland Security, for

example, Department of Defense, Department of Energy all have

their own guidance documents that provide further elaboration on

how past performance ought to be considered.

Basically, there are a number of key points that must be considered as contractor performance is factored into the source selection

process. First of all, agencies have very broad discretion in how

they are going to weigh past performance. As I said, it is a required

evaluation factor, but it is up to the agencies to decide how much

weight that factor is going to apply in individual procurements.

Mr. TOWNS. Can you summarize?

Mr. WOODS. I certainly will.

The key to all of this is whatever the solicitation says as to how

past performance is going to weigh, the agency must adhere to that

evaluation scheme. They do not have the discretion to depart from

an announced evaluation scheme.

Thank you, sir.

Mr. TOWNS. Thank you very much.

[The prepared statement of Mr. Woods follows:]

13

14

15

16

17

18

19

20

21

22

23

Mr. TOWNS. Ms. Duke.

STATEMENT OF ELAINE DUKE

Ms. DUKE. Good afternoon, Chairman Towns, Ranking Member

Bilbray and members of the subcommittee. Thank you for the opportunity to speak before you and meet with you this afternoon. I

am the Chief Procurement Officer for the Department of Homeland

Security and a career executive, with most of my 23 years in public

service in the procurement profession.

Before addressing the responsibility determinations, I would like

to convey my top three priorities, which are essential to enhancing

DHS’s ability to procure from responsible contractors. Those priorities are first, to build the DHS acquisition work force; second, to

make good business deals; and third, to perform effective contract

administration.

As the Chief Procurement Officer, I provide oversight and support to eight procurement offices within DHS. I provide the acquisition infrastructure by instituting policies and procedures that allow

DHS contracting officers to operate in a uniform and consistent

manner.

Mr. Chairman, I know that you are very interested in ensuring

that DHS and its components procure goods and services on behalf

of the American taxpayer from responsible contractors. I can assure

you that we share your interest and take seriously our obligation

to award only to responsible contractors.

In my written testimony, I outline in detail the processes and

systems we rely on to ensure that we do business with contractors

holding a good track record of performance. In addition to following

the processes described in the regulations, we have developed further guidance within DHS to ensure contracting professionals

make appropriate business decisions based on the particular facts

of each given situation.

Our Homeland Security acquisition regulations and Homeland

Security acquisition manual supplement the Federal guidance and

reiterate the requirement that our contracting officers are to perform responsibility determinations prior to making a new contract

award. Thus, if a contracting officer finds that a company has a

record that includes negative information, he or she must assess its

relevance in the requirement before award.

The role past performance plays in DHS-negotiated best-values

procurements is receiving increased attention. Just last month my

office issued an extensive, practical guide to source selection to all

components. The guide stresses the requirement for evaluating

past performance on all negotiated competitive acquisition above

the simplified acquisition threshold.

At the Department we are increasingly emphasizing comparative

adherence to the processes and the mechanics of contracting processes. Very recently, the Under Secretary for Management issued

a memorandum to all members of the DHS acquisition community,

reinforcing the requirement to perform performance evaluations on

all of our contractors.

In response to the central question of this hearing, why do poor

performers keep winning, we are making concerted efforts to imVerDate 11-MAY-2000 10:57 Jan 09, 2009 Jkt 000000 PO 00000 Frm 00027 Fmt 6633 Sfmt 6633 C:\DOCS\46109.TXT KATIE PsN: KATIE
24

prove contractor accountability and minimize those instances

where a poor performer receives a DHS contract award.

This fiscal year our eight components have executed over 59,000 contract actions representing total obligated dollars over $6.5 billion, involving 12,000 different vendors. In compliance with the

FAR, contracting professionals are consulted and we participate in

the Interagency Suspension and Debarment Committee.

I will address two specific businesses, Wackenhut and Bechtel. In

April 2006, DHS awarded a contract for guard services for our Nebraska Avenue complex to Paragon Systems incorporating lessons

learned from DOD and more stringent requirements. The predecessor Wackenhut contract was a legacy, made, awarded and based

on a operations contract vehicle for significantly less robust security requirements. That contract was with armed Navy active duty

personnel.

The Wackenhut contract awarded Customs and Border Protection to transfer immigration detainees to consider past performance

as a key evaluation factor as part of the source selection process.

Positive feedback from two Federal agencies was received by Customs and Border Protection, and thus far performance has been

satisfactory.

The Wackenhut contract awarded by Immigration and Custom

Enforcement [ICE], for guard services were awarded as task orders

of the General Services Administration schedule. GSA makes the

required responsibility determinations and monitors contract performance on key aspects of contractor compliance through the life

of the contract.

With regard to Bechtel, the past performance questionnaires

were sent to the company and individuals, returned in sealed envelopes, and past performance was considered in the competition of

the Individual Assistance-Technical Assistance Contract at FEMA.

We continue to grow and train our work force in DHS and look

forward to answering questions this afternoon.

Mr. TOWNS. Thanks you very, very much, Ms. Duke.

[The prepared statement of Ms. Duke follows:]

25

26

27

28

29

30

31

32

33

34

Mr. TOWNS. Mr. Skinner.

STATEMENT OF RICHARD SKINNER

Mr. SKINNER. Good afternoon, Chairman Towns, Ranking Member Bilbray and members of the subcommittee. It is a pleasure to

be here.

There are several points I would like to make. The first deals

with acquisition resources. It should not be a surprise to anyone

there is acquisition management crisis within the Federal Government today, the problem is not a new one.

For the past decade, management capabilities have been

downsizing while procurement workload was on the rise. Procurement spending in the Federal Government has more than doubled

just in the past 6 years alone from $203 billion to $412 billion.

I also think it is important to note that when the Department

of Homeland Security was created, it was shortchanged. On one

side of the ledger, it required the entire assets and programs of 22

disgruntled agencies. Yet on the other side of the ledger, it did not

require proportionate share of the acquisition management assets

needed to support those programs and operations.

DHS contract spending has tripled over the past 3 years from

$3.4 billion to $15.8 billion. DHS is now one of the largest user of

contractors in the Federal Government after the DOD and Energy;

yet while its contract spending has grown significantly, its ability

to manage those contracts has been unable to keep pace.

My second point goes to expediency over substance, schedule concerns trump performance concerns. Like many other Federal agencies, the Department of Homeland Security is in a catch 22 situation. The urgency of this mission demands rapid pursuit of major

investments programs. The contracts, however, limit the time

available for adequate procurement claims and development of

technical requirements, acceptance criteria and performance measures.

Without the basic provisions that specify precisely the expected

outcomes and performance measures, the government has no basis

to assert that a contractor failed to perform and, thus, no basis to

pursue suspension and debarment or other remedies to protect the

taxpayer in future procurements. The government must lay the

groundwork from the very beginning of the acquisition process, not

after millions have been spent with little or nothing to show for it.

My final point is the contracting vehicles being reported today to

ensure procurement of goods and services. The Department of

Homeland Security, like many Federal agencies, has become increasingly reliant upon risky contract types that can be easily

abused unless properly managed. These contracting vehicles, such

as the performance based contract, indefinite delivery, indefinite

quantity, IDIQ contracts, and time and material contracts should

only be used in limited circumstances, fully justified, and only

when an agency acquisition infrastructure is in place, to provide

sufficient oversight.

Before I close my statement, Mr. Chairman, I would like to say

a few words about contract performance information and the ability

of agencies to share access to such information.

35

For many years, the Federal Government has pursued data bases

that contain contractor performance information and provide easy

access to agencies planning to award new contracts. In fact, several

systems with varying levels of functionality exist today. Nevertheless we do not have a single system that includes all relevant information. For example, consent decrees, negotiated settlements, reports of investigation, audit reports, State government information

are not readily available in these systems.

The current task force is with our inspector general at GSA. The

Justice Department initiated this effort last fall and focused the resources and talents of U.S. attorneys, inspector generals and other

parts of the government we’re finding procurement fraud.

Our legislative committee is looking at what statutory changes

would be needed to strengthen the tools to prevent and remedy

misconduct in Federal contracts. One proposal we are exploring

would address the issue of sharing contractor performance information.

I understand, Congresswoman Maloney, that you have introduced legislation just this past Friday, cosponsored with Chairman

Towns.

Mrs. MALONEY. Yes.

Mr. SKINNER. I applaud you for that and look forward to working

with you and exploring ways that we can improve information

sharing in the Federal Government on procurement operations.

In summary, DHS and the Federal Government can do a better

job protecting public interest in major acquisitions. The long-run

solutions include strong, clearly articulated program goals, defined

program technical requirements, performance measures and acceptance terms, well-structured contacts and sole costs and performance oversight.

In the near term, DHS mitigates risk exposure through such actions as writing shorter-term contracts with smaller incremental

tasks, using contract vehicles that better share risk between government and the vendor and ensuring the government has a negotiating bar with decision points and options.

Mr. Chairman, this concludes my remarks. I will be happy to answer any questions you or the committee may have.

Mr. TOWNS. Thank you very much, Mr. Skinner.

[The prepared statement of Mr. Skinner follows:]

36

37

38

39

40

41

42

43

44

45

46

47

48

49

50

51

52

53

54

55

56

57

58

59

60

61

62

63

64

Mr. TOWNS. Mr. Desmond.

STATEMENT OF WILLIAM J. DESMOND

Mr. DESMOND. Good afternoon, Mr. Chairman, Ranking Member

Bilbray and members of the subcommittee. I appreciate the opportunity to appear before you today to discuss your concerns with the

performance of Department of Energy security contractors.

Let me briefly begin by introducing myself and providing a description of the roles and responsibilities of the Office of Defense

Nuclear Security within the National Nuclear Security Administration. I have worked in various security positions since July 1967,

encompassing a wide range of activities, including the implementation of security programs at nuclear facilities, the formation of nuclear security policy and site security program direction and management. These positions have spanned the U.S. Department of

Energy and the Nuclear Regulatory Commission. I believe my experience affords me a unique perspective on nuclear security.

As the Associate Administrator, I am responsible for the overall

direction and management of physical security programs at these

sites. I serve in the organization for providing engineering, technical operational and administrative security support and oversight

to both headquarters line management and field elements. This includes physical security, personnel security, nuclear materials control, accounting, sensitive information protection and technical security programs.

In carrying out my responsibilities, I work with the NNSA site

offices which, in turn, has many service security programs at the

laboratories and the plants. I have also been designated as the

Chief, Defense Nuclear Security, pursuant to section 3232 of the

National Security Administration Act. As such I am responsible for

the implementation of security policies as directed by the Secretary

and the Administrator.

With respect to the recent selection of Wackenhut Services, Inc.,

as the protective force contractor at the Oak Ridge Reservation, I

served as source selection official and made the final decision to

award the contract to WSI. This was after reviewing the proposals

and the evaluation report prepared by the source evaluation board.

I made the best-value decision in selecting the winning proposal.

As part of the evaluation and selection process, they carefully reviewed the materials submitted by each offeror for a technical approach, business management approach and relevant past experience. The SEB also evaluated responses to customer feedback questionnaires, interviewed references contained within the RFP submissions and reviewed independent reports as a DOE Inspector

General, and the Defense Contract Audit Agency.

We also evaluated the information available from the governmentwide past performance information retrieval system and the

Excluded Parties List system. We paid particular attention to four

recent DOE IG reports providing security at the Oak Ridge site. As

with most criticisms, some of the findings were precisely on target,

some we disagreed with and some seemed exaggerated.

In one report it was alleged that protective force personnel cheated on force and force exercise. While NNSA agreed that the scenario of information control procedures were insufficient, we noted

65

that the performance test was conducted for training, not protection evaluation purposes; therefore, the loss had no impact on Y–

12 security. The Y–12 site office took coordinated action with the

operating contractor and WSI management to improve the planning, coordination and execution of performance tests to ensure the

integrity of the results. There have been no recurrence of this problem.

In another case, NNSA disagreed with the IG in its conclusion

that protective force personnel had been given credit for training

that they did not receive. However, NNSA concurred with the findings and recommendations as a means to improve the quality in

the administration of the protective force program. My written testimony, Mr. Chairman, provides more details on these and other

issues raised by the IG.

Based on the information we received in the evaluation and selection process that was followed, this award was thorough, fair

and honest; the process followed departmental acquisition guidelines.

As you have mentioned, I am accompanied by Mr. Thomas

Przybylek, the Senior Adviser to the NNSA Administrator and the

NNSA’s former General Counsel. Mr. Przybylek served on the

Source Evaluation Board for the Los Alamos National Laboratory

management and operations contract, which was awarded in December 2005, and was the source selection official for the Livermore National Laboratory management and operations contract,

which was awarded this past May. He and I will be pleased to answer your questions, Mr. Chairman.

Mr. TOWNS. Thank you very much, Mr. Desmond.

[The prepared statement of Mr. Desmond follows:]

66

67

68

69

70

71

72

73

74

Mr. TOWNS. Mr. Friedman.

STATEMENT OF GREGORY H. FRIEDMAN

Mr. FRIEDMAN. Mr. Chairman, it is entirely up to you. Given the

size of the panel and the hour, I would be more than happy to

waive my short statement, whatever you prefer.

Mr. TOWNS. Go ahead and proceed.

Mr. BILBRAY. You have been patient.

Mr. FRIEDMAN. I have done this before and am more than happy

to pass, if you would prefer.

Mr. Chairman, Mr. Bilbray and members of the subcommittee, I

am pleased to be here today, at your request, to testify on issues

pertaining to contract management of the Department of Energy.

The Department is highly dependent on its contractor work force.

There are about 15,000 Federal employees at the Department; in

contrast, there are about 100,000 contract employees plus a significant number of subcontract employees who operate the Department’s national laboratories, production facilities and all environmental remediation projects.

The operations performed by contractors consume at least threequarters of the Department’s project. As we have reported annually, contract administration is one of the most pressing management challenges facing the Department. This permeates every aspect of the Department’s programmatic and administrative activities, including those of the National Nuclear Security Administration. Our work is documented and the Department administers its

contracts.

Specifically, contract activities very often were not conducted in

an economic, efficient manner; and health and security issues,

which are extremely important in the Department of Energy setting, were not always given the attention they deserved. Most importantly, contractors were not always held accountable for their

actions.

The subcommittee expressed its interest in agency contracts with

Wackenhut Services, the Bechtel Corp., and the University of California, three of the Department’s most prominent contractors. In

my shortened testimony, I was planning to discuss our findings

with regard to three examples; I refer you in my full testimony

where those are described, and I will proceed from there.

Each of these reports is different in terms of scope and purpose,

but they are representative of the Department’s continuing challenge to effectively manage a contract work force.

As to those who have proceeded before me, there are a number

of changes in process in the Department of Energy, but clearly the

Department needs to do a better job in contract administration. As

we have testified previously, the Department should first ensure

that its contracts are structured properly and that competition is

maximized, establish realistic expectations of desired outcomes and

achievable contractor metrics, effect monitor performance and hold

individuals in contractors accountable when expectations are not

met.

With reference to accountability, contracting officials need to be

aggressive in redirecting work assignments, making fee determinaVerDate 11-MAY-2000 10:57 Jan 09, 2009 Jkt 000000 PO 00000 Frm 00078 Fmt 6633 Sfmt 6633 C:\DOCS\46109.TXT KATIE PsN: KATIE
75

tion evaluations and making cost allowability determinations, and

when called for, pursuing contractor suspensions and debarments.

Regarding suspensions and debarments, I would like to point out,

the Department of National Nuclear Security Administration currently had 54 individuals and companies on their debarment, or excluded parties, list; each one of these actions resulted from the investigations and recommendations by the Office of Inspector General. To fully achieve the goals of the agency, the Department must

place square emphasis on the deference to adopt and maintain salary contract administration practices.

Furthermore, as the Department explores new governance models, it is imperative fundamental oversight principles are maintained as a means of ensuring accountability and protecting

against waste and mismanagement.

Mr. Chairman and the members of the committee, this concludes

my statement, and I would be pleased to answer any questions you

may have.

[The prepared statement of Mr. Friedman follows:]

76

77

78

79

80

81

82

83

84

85

Mr. TOWNS. Thank you very much. Now we would like to ask a

few questions.

Mr. Desmond, I want to ask more about the Wackenhut contract

at Oak Ridge. I don’t understand how Wackenhut can be caught

cheating on a drill and still receive—I heard your statement, a 97

or 98 score on the final evaluation.

When I was in school, if you were caught cheating on a test, your

score was zero. You either flunked—in some instances, they would

put you out.

It seems that a seventh grader is actually held to a higher standard than the nuclear security contractors. Could I get your answer?

I heard you say—but I want to hear more about this, yes.

Mr. DESMOND. Mr. Chairman, there are a variety of tools in the

toolkit that we use to assess the performance of our contractors.

They range from full-scale exercises, red team against blue team,

down to security surveys done by our—self-assessments done by

contractors.

In the present exercise, which occurred in June 2004, a test was

established to evaluate the adequacy of the strategy that was used

to implement a brand-new design basis threat policy of the Department of Energy. It was not used to evaluate the performance of the

contractor because the policy had just been instituted and was not

fully required for implementation for several years. So this was determined a diagnostic test; in fact, it was a training exercise.

In this exercise there was a security system called JCATs, Joint

Combat Assessment Tool, where blue and red teams will gain security strategy. Two of the supervisors of the protective force had access to the scenario the day before. And while it was not permitted,

our procedures had been changed to prevent that from recurring in

the future. This was not an organized activity by the part of the

company, but initiative by two of the individual supervisors.

Nevertheless, the Department of Energy, NNSA, Wackenhut,

took this as a very serious event, and have changed our procedures.

And Wackenhut was, in fact, penalized during that award period

for this activity, for not having better controls in place. So, hence,

I say it had no impact, sir, on the security of Y–12, but it did impact the diagnostic evaluation at that particular time.

Mr. TOWNS. Can you give me an example of a security contract

in DOE where the contractor got low scores?

Mr. DESMOND. No scores?

Mr. TOWNS. Low scores, l-o-w.

Mr. DESMOND. Within the National Nuclear Security Administration we have a variety of models of security contracting, from direct

contracts to the government to proprietary contracts——

Mr. TOWNS. What led to the low scores?

Mr. DESMOND. When there are instances of low scores, it would

be based upon performance, inadequate or performance that did

not meet our expectations. There have been examples, Mr. Chairman, at Nevada in a particular test in December—excuse me, August 2004—in which the contractor was given a very low score for

that reporting period. We have only two contractors who are separately evaluated for security purposes and those are the security

contracts at Y–12 and at Nevada.

Mr. TOWNS. OK.

86

Let me ask—I guess this is to all of you—are contracting officers

really the most objective people to be grading performance? Don’t

they have a stake in the success of the contract?

Let me go down the row here very quickly.

Mr. WOODS. Well, certainly when we enter into a contract, we

want the contract to be successful certainly. But the contracting officer is not the customer of the required goods or services; in many

cases, he is acting on behalf of a program official, for example, to

acquire goods or services from the private sector. So—he is not directly impacted by the quality of the goods and services, so he may

be in a better position to provide that kind of evaluation.

Mr. TOWNS. Well, if you lose a contract they won’t have anything

to evaluate, that is—I mean, doesn’t that play into it? For instance,

if for any reason they lose a contract and the person that is responsible for it, you know, isn’t that a reflection?

Mr. WOODS. As I said all, parties want the contract to be successful—the contractor, the contracting officer and the end user of the

goods and services, they all want the contract to be successful. But

they all have an interest in ensuring that the performance is what

it needs to be, particularly the end user; and we’ve seen a number

of instances where that end user has not been reluctant to provide

low scores to contractors that don’t perform as required.

Mr. TOWNS. Let me run just down the line, and ask about procurement.

Ms. DUKE. Sure.

I agree with Mr. Woods: The person that owns the budget, owns

the mission, is the program office, the customer. They are in the

best position to valuate the contractor’s performance. They are the

ones responsible for delivering performance by in-house personnel

or contractor, and the contracting officer provides the business

partnership to that program office.

In DHS, we require the COTRs and contracting officers, the technical representatives, to evaluate performance so that, from the

technical side, they are talking about the technical issues of performance; from the contracting officer’s side, we evaluate their

business abilities, whether they are performing in the right business fashion.

So I think both are important.

Mr. PRZYBYLEK. Mr. Chairman, the way we do it in the National

Nuclear Security Administration is that each program that has

funding at a particular facility and a statement of work has a contracting officer representative. That person, at the end of the year,

is responsible for providing to our contracting folks an evaluation

of the performance of that specific piece of work. So it is very much

the way Ms. Duke described it.

The contracting officers then roll out the overall evaluation of

that contractor’s performance, and at the end of the year our administrator looks across all eight of our facilities to make sure we

consistently evaluate the performance of the contractor, so that we

are neither too severe nor too lax in terms of evaluating the performance, and then he ultimately sets the amount of fee that they

earn for the year.

Mr. TOWNS. Mr. Friedman.

87

Mr. FRIEDMAN. Mr. Towns, I think you hit upon it and you have

it right. It is a partnership, and it has to be on a wholistic approach. It needs the program officials, as well as the procurement

officials, to make those kinds of evaluations intelligently. And there

have to be metrics in place, because you evaluate the contract and

they have to be quantifiable and outcome oriented. So I agree with

your point.

Mr. TOWNS. Any other comments?

Mr. SKINNER. I agree with Ms. Duke and Mr. Woods and others

on this panel.

The CO is in a good position to put together an evaluation of the

contractor’s performance, but we have to ensure that there are, in

fact, performance measures, metrics in place so there is consistency

when we do those evaluations.

Also, I think there has to be discipline. A lot of our contracting

officers are spread very, very thinly, and therefore they cannot always go out to do outreach, to ensure those performance measures,

performance reports are, in fact, obtained and input into any systems that we may have. We need discipline, we need metrics.

The final thing, I think, that concerns me most is, we are not always reaching out to other parties that have input. For example,

audit reports are now oftentimes overlooked when they do the performance evaluation, reports of investigation, whether they turn

anything up, criminal or not, nonetheless should be taken into consideration. But there are no avenues or means to do this at this

point in time, and that is one of the concerns we have.

Mr. TOWNS. Also you indicated that there were 3 billion, and now

up to 15 billion, and the staff has been decreased to be responsible

for the monitoring of it. That, to me, is very disturbing.

Mr. SKINNER. I didn’t want to discuss that the staff has been decreased. As a matter of fact, the Department of Homeland Security

and Ms. Duke recognize the situation that we are in here, that our

procurement activity is increasing faster than our ability to hire

staff to manage these contracts. It is not an easy task to bring in

and train the program managers and the COTRs and project managers and other experts necessary to provide oversight to these

complex, large contracts that—the projects that the Department

has ongoing. We have a long way to go before we can reach a level

of assurance that we have the resources needed to manage these

contracts.

Mr. TOWNS. Thank you very much.

I yield to the ranking member, Mr. Bilbray.

Mr. BILBRAY. Thank you.

Mr. Skinner, in a small way, it reminds me of what happened

with the Roosevelt administration in the late 1930’s- early 1940’s,

when there was no way the bureaucracy was ever on line to be able

to do that contracting. Would that be a fair comparison?

Mr. SKINNER. Yes.

Mr. BILBRAY. Mr. Woods, I have to agree with the chairman, I

think we hear a lot of hoopla about private contractor accountability, but it does come into the system—the in-house employees’ accountability, bureaucracy—inherently the Civil Service system insulates bureaucracy so often that when we were talking about the

concept of having the outcome reflect on the future employment or

88

future engagement of private contractors, some say maybe the outcome doesn’t affect the bureaucracy and their future employment,

future engagement.

Is there a way we can sort of put the heat on those who are actually administering these contracts, so they have a personal, vested

interest in success and a dread of failure here, along with the taxpayers?

Mr. WOODS. Of the things that can be done, No. 1, Mr. Skinner

mentioned the number of personnel that we have assigned to this

area. I couldn’t agree more that we need more folks that are involved in the administration of contracts. No. 1, that is a challenge

across the Federal Government.

The other response that I would have is, we looked in-depth at

the Department of Defense, at their ability to monitor contracts

and the mechanism, the bureaucracy, that they had in place to do

that. Ms. Duke mentioned the contracting officer’s technical representatives; those are really the frontline people that are responsible for monitoring contractor performance.

We found a number of deficiencies at the Department of Defense

in that regard. They were not properly trained. There were not

enough of those people, they were not properly motivated, and they

did not have—as you were alluding to—the right incentives to do

their job. For many of them, it was other duties assigned; it was

not their primary responsibility, and frankly, it became a secondary

consideration for them.

So I think there are actions that can be taken across the board

in that regard.

Mr. BILBRAY. We run across these problems, and it is inherent,

basically, with the public service system that there is job protection. We don’t want to go to the score system, but the flip side is,

that insulation may create the feeling that I really don’t—my job

is invested with the outcome—just as long as the process looks

good and I keep my supervisor happy one way or the other. I guess

what we need to look at here is how to turn the heat up on this.

Mr. Skinner, one of the things you were saying about the exchange of information, a lot of this I looked at as fire walls, basically information fire walls. A lot of these were created after Watergate with a lot of information about agencies not sharing information, individuals not sharing information; and when you say it

is time to put that behind us and start sharing information more

and more in the Federal Government, rather than always being

paranoid worrying about Big Brother knowing too much about

us——

Mr. SKINNER. I don’t think the worry is so much fire walls. We

do have systems to provide information on contractor performance.

We looked at some of those systems as we prepared to do our reviews as DHS contract management. We are finding that there are

gross inconsistencies on how people put information into these systems. It doesn’t appear that there is any discipline or standards on

what needs to be put in, what format should be put in.

As we looked at several of the contractors that we knew had historic problems, we found nothing in these systems there across the

government saying anyone ever had a problem with these contractors; and we know, in fact, there were problems. So there is not so

89

much the fire wall as it is the discipline; it is the standards, the

guidelines to ensure that certain basic information, in fact, is input

into the system.

Mr. BILBRAY. It is not exclusive to this operation. Lateral transfer has been the greatest scam, for one government agency to shift

problems over to somebody else, Yeah, he was a great guy; go

ahead and take him.

The Wackenhut test supposedly—let’s face it, we make statements up here, our staff gives us these statements, everybody is

cheating, whatever, when you are doing this exercise. As the head

of the Public Protection Agency for San Diego County, we did exercises. We said, we are going in because a cruise ship has sunk and

everybody has to respond.

They knew the test was coming. Rather than someone screaming

that it was cheating, cheating, it sounds to me more like what

every teacher in America is doing now, that is, teaching to the test.

Was that a situation where you use a testing process as part of

the learning process and actually throw the test out there, because,

I mean, cheating is pretty hard work?

Mr. DESMOND. The test was a training exercise. There was not

a conscious attempt to train to the test, but in fact, that is what

happened, sir, yes.

Mr. BILBRAY. So if we want to be outraged at Wackenhut, maybe

we ought to be outraged at the national education system that is

basically doing the same thing with our children year after year.

I just think it is fair. You can take these situations, spin it a certain way and really put them out there.

I don’t think any reasonable person would say the American educational institution is teaching our kids to cheat, though some

would love to say that, but I think that in all fairness we ought

to be balanced in the approach.

Thank you very much for my time, Mr. Chairman.

Mr. MURPHY [presiding]. I would like to ask Mr. Friedman if he

has any comments on that last issue.

Mr. FRIEDMAN. First, it is my report that covered this issue; you

have very lofty goals for this hearing.

We got into this at the request of the Federal site manager at

Y–12. He was concerned because the actual results of this test were

far superior to the computer-generated, anticipated results, and he

could not make the—he could not understand—there was a disconnect which he could not understand.

He initiated his own inquiry and found, in fact, there was a compromise of the test, but he wanted a third party to look at it; and

as many Federal administrators do in terms of the inspector general, we took on the responsibility and our results speak for themselves. I think the report stands on its own, and it is one that I

stand behind. We did not use the word ‘‘cheating’’ in the report, but

the test was compromised.

Mr. BILBRAY. So, in other words, you think they—would it be fair

to say, they were teaching to the test in this exercise?

Mr. FRIEDMAN. I am not sure teaching to the test is the right

way to characterize it, Mr. Bilbray. But what I will tell you is that

the defender force was given information about the offender force’s

90

strategy. When you have that information prior to the test, obviously the test is compromised and the results are questionable.

Mr. MURPHY. Thank you.

Mrs. Maloney.

Mrs. MALONEY. I want to thank all of the panelists for their testimony, and I want to really followup on Mr. Skinner’s offer to look

at the legislation and put your input in it. I will send it to you and

maybe we can make an appointment next week to meet on it and

see where it goes.

You were saying that we could put standards and format in

place, and I think we could do that, but how long do you think it

would take to fix this? You say it is not working. How many systems are there out there? You say there is no centralized system,

but——

Mr. SKINNER. There is no single system, and I can’t say how

many systems are out there categorically—Elaine might know that

better than I.

The point I am making, there is no consistency as far as what

we are putting in there from our Departments—from DHS, Department of Energy, DOD. It is all across the board.

Mrs. MALONEY. It seems simple to come out with a list of format

and standards and have everyone follow them. There should be

some performance metrics in place.

If we could hear from you, what you think they should be—I

think it should be whether or not they have the history of the company, whether or not they have financial standing, whether or not

they have gotten prior contracts, if they were completed on time,

whether there are cost overruns, are they listed with the organized

crime businesses—there are just a few.

What else would you put in as a metric?

Mr. SKINNER. Those are exactly the types of things that we had

in mind as well, to deliver the product or service as a contractor.

Do we do it on time? Do we do it within budget? These types of

basic information in a standard format that is consistent across the

board.

Also using other input, the evaluations from OIGs or others

that—including GAO. If we can come up with an inventory of

things that need to go into this system, we can do it in a standard

fashion, I think it will help the contracting officer when they query

these systems.

Mrs. MALONEY. It would remove really the intuition; you would

have specific indicators there.

I would like to ask all the panelists to submit to the committee

and to my colleagues what you think would be the indicators that

should be part of a centralized system. I think that would be helpful.

Can anyone answer my original question: How many systems are

out there and why are they not working?

What gets me is, you always say—a lot of times we will say, oh,

we have a system, and it is OK; but repeatedly, you see usually the

same people get the contracts again and again, and there are billions of dollars oftentimes in cost overruns and waste on the previous work, and this is really an example of a process that is not

working.

91

So could you elaborate, Ms. Duke, on how many systems or centralized data processing areas are out there now?

Ms. DUKE. There are three primary systems we use to make your

responsibility determinant. One is Dun & Bradstreet, a commercial

system we use principally for financial responsibility-type issues.

The second is the Excluded Parties List, administered by the

GSA, where we look to see if a party, an individual or company has

been suspended or disbarred. Past Performance Retrieval System

[PPIRS], that is where we store past performance information. So

as Federal agencies do past performance evaluations, they are required to put it into the PPIRS system.

There is no system for some of the things Mr. Skinner talked

about—IG reports, GAO reports, other indicators; I would put those

all in the administrative realm.

In terms of, if we cross into the legal realm—potential indictments, cases going on, legal areas—I believe right now there is consciously no system to either allow access or to aggregate that information.

Mrs. MALONEY. Are you required to access the three existing systems now before making a decision as a procurement officer?

Ms. DUKE. We are required to check PPIRS and the Excluded

Parties List. Dun & Bradstreet was discussed. It doesn’t mandate

that you use Dun & Bradstreet, that’s just the standard practice.

Mrs. MALONEY. Why are there so many mistakes? How do the

same people get contracts over and over again?

Why can’t we break them down into smaller ones? Sometimes

they hand out huge contracts to manage an entire country. Why

are there so many scandals in our contracting process now?

Ms. DUKE. I think when we look at the scandals in our contracting process—Mr. Skinner in his opening statement talked about

setting the requirements up front.

The contracting officer has always talked about procurement;

procurement is the result of a process where the government says

what it wants, how it wants it and negotiates a deal with industry.

I think if you don’t have that solid foundation, then that is where

the deals go awry.

It is not only selecting the right contractor, but it is having the

right requirements and having clarity of what you want from that

company, or not having clarity. And that is a very big challenge,

especially in Homeland Security as we have the urgency of our mission; where a new mission arises, we have to very quickly develop

the program and go with a contract.

I think sometimes we are choosing to meet the mission and

choosing to consider that over some of the more deep processes,

and then we end up having to manage out of that or do some of

the partnership steps later in the process; where if we had more

time, I think we would set a more solid foundation.

It is just like someone renovating your home. You want a real

meeting of the minds between you and your contractor before they

bring a sledge hammer to your basement. And that is really the

key.

Mrs. MALONEY. I am told by staff that there are actually more

than 50 existing data bases that can be used; is that true?

92

Ms. DUKE. I am not familiar what specific ones. There are many

data bases. The ones I listed are the three principal ones for responsibility.

Mrs. MALONEY. Could you look into how many data bases are out

there? I am sure my colleagues would like to see the list, in addition to the three that you have given us.

My time has expired, thank you very much.

Mr. MURPHY. Thank you, Mrs. Maloney.

Mr. Platts, we have votes coming up in 10 minutes, we will try

to finish this panel.

Mr. Platts.

Mr. PLATTS. Thank you, Mr. Chairman. I will try to be quick. I

would like to thank all of the witnesses here for your participation

in this hearing.

Mrs. Maloney has introduced legislation to try to strengthen the

information available. I know there are various sources of information—past performance, an information retrieval system that is

easily accessed.

I want to focus, Ms. Duke and Mr. Przybylek, with your direct

involvement in procurement, on the other information that is also

out there and specifically deals with liens, tax debt owed that is

not automatically included in that retrieval system.

How easy do you find it to become aware of that information, and

what do you and your staff seek out regarding potential contractors?

Ms. DUKE. Right now, there is a requirement in the Representations and Certifications for Contractors to disclose any criminal activity, as specified in the Federal Acquisition Regulations, for a

company in the specified period, and that specifies what type of activity, convictions they have to disclose.

There is also a Federal Acquisition Regulation case ongoing that

will require contractors to certify if they have similar problems

with the Internal Revenue Service in terms of taxes.

Other types of activity—criminal activity, current tax issues—

that is not information that contracting officers can receive, unless

it is available in the public. We have no more rights to that information than the public in terms of receiving that.

Mr. PRZYBYLEK. In addition to what Ms. Duke just described, we

looked at the Nuclear Regulatory Commission Data base on notices

of violation, our own departmental nuclear safety rules, Price-Anderson data base.

We try to get information concerning environmental noncompliances, and as I mentioned to staff, we actually use common search

engines to see if we can find any more information to help us in

making that judgment.

Mr. PLATTS. Is that a common practice at DHS as well,

proactively searching in open domain information of potential contractors?

Ms. DUKE. Not totally. It is more, principally—looking at past

performance references on other similar Federal and commercial

contracts would be the principal driver of the decision.

Mr. PLATTS. On the information required under FAR to disclose

regarding criminal record activity or civil liability, such as tax debt,

93

are there instances that you have had contractors not disclose that,

that you later learned they had a tax debt?

Ms. DUKE. Yes, we can consider that. There is one caveat; if we

are going to use negative past performance information gathered

from other than the contractor as part of our decisionmaking, we

have to give the contractor an opportunity to comment on that.

Mr. PLATTS. If they submitted a contract bid, not disclosed a tax

debt they should have, what action does the Department take in

response to that failure to disclose as required by law?

Ms. DUKE. That isn’t in play yet. Once it is finalized, that is certification, and we would consider that potential fraud, and we

would turn it over to the inspector general, because any suspected

fraud we immediately turn over to the inspector general.

Mr. PLATTS. I am going to run out of time.

Mr. Skinner, how would you approach that? Would that be

grounds for pursuing debarment, that failure to disclose?

Mr. SKINNER. I personally think it would be grounds for debarment, and therein lies the problem, when you start talking about

the bad behavior or criminal past. Or it may not reach the level

of criminality; there is no one place you can go to identify whether

anyone has had fees, fines, penalties, has been indicted, has negotiated settlements. Working under PTAMs, there is just no place

for the contracting officer to go to determine whether these people

have a history.

It is particularly problematic when you start thinking about

State of New Jersey has just debarred one of DHS’s contractors for

the State of New Jersey. But there is no place for anyone in the

Federal Government to go find——

Mr. PLATTS. That is automatically made available to you?

Mr. SKINNER. It doesn’t exist. This is something we are exploring

right now.

Mr. PLATTS. I see my time is up.

In relation to that Mr. Skinner and other procurement officials,

I assume the effort of Mrs. Maloney in terms of trying to better legislate that requirement so that there is a one-stop shop per se is

something that in theory would be beneficial to your efforts to ensure that credible individuals are doing business, and those who

are less trustworthy are identified early on?

Ms. DUKE. I would add one caveat to your statement. We have

to be careful not to put contracting officers in the position of GS–

9s, in the position of having to judge whether an indictment in a

particular peculiar area of law, be it labor or tax, is grounds for debarment from the government.

I think it is clear-cut that this is right or wrong if they have a

tax lien, but I think when we start in the area of indictments and

fines, the regulations require us to consider mitigation. I really

think we have to be careful that there is a system in place that

adequately can use that information and appropriate uses it so we

don’t end up creating in essence a blackballing system without the

right people in charge of that.

Mr. PLATTS. Thank you, Mr. Chairman. My thanks again to all

the witness.

Mr. MURPHY. Mr. Welch.

94

Mr. WELCH. Why isn’t it possible, as part of the application process, to require the person or company seeking a multimillion dollar

contract from the taxpayers to disclose whether they have been indicted, whether they have had labor disputes that have resulted in

actions, that they have had ethical complaints?

Does somebody want to answer that question?

Mr. WOODS. If I could start, there are provisions in the standard

solicitation for contractors to make those kinds of disclosures. It

may not be a totally comprehensive list, but as Ms. Duke pointed

out, efforts are under way, for example, to add tax liens to that.

Mr. WELCH. Why doesn’t that work? If the governmental entity

is going to issue a contract, why isn’t it known immediately upon

receipt of the application whether the person or the company seeking the contract is a felon?

Why do we have to set up some elaborate process that requires

an enormous amount of computer software, another expense, to get

information that nobody’s going to read?

Mr. WOODS. They are required to make certifications in terms of

criminal activity, etc., but the problem is they are not required to

certify to a whole range of other actions that some may want to

consider in determining whether this is a responsible contractor.

Mr. WELCH. The obvious things are, A, have they had disputes

with the government where they have had to repay because of poor

billing, ripping off the taxpayer, any number of things that your office investigates. Why can’t that simply be on the form?

If they have had disputes with labor that have resulted in action,

that result—as a result of that action that they had poor labor relations. That is relevant to the contracting officer; that information

can be made immediately available on the application process. You

do not have to have a G–9 make an evaluations about whether this

is a threshold event or not.

Is there a problem in doing that, in getting the information that

Representative Maloney, in her effort, is seeking?

Mr. PRZYBYLEK. We routinely in large competitions ask for and

provide a questionnaire that we want the customer—a Federal contracting officer, for example—to fill out and send back to us, so our

evaluation board can take that into account.

The other thing——

Mr. WELCH. Wait. Is it done or is it not done?

Mr. PRZYBYLEK. We do it routinely.

Mr. WELCH. I am mystified because, in a short time, there has

been one example after another of colossal rip-offs of the taxpayers.

I have yet to find anyone—anywhere, for any reason, for performance, for just massive fiscal rip-off—pay any consequence whatsoever. And it is mystifying to all of us that it doesn’t seem to matter

what you do, why you do it or how you do it.

You all are coming in to investigate, and I would think it would

be kind of frustrating to you if your work was ignored, in effect.

Mr. WOODS. There are some consequences. For example, in preparing for this hearing and going through some of our bid protest

decisions, there are many instances where, in rating past performance contractors, contractors will be downgraded in some cases

very severely for the kinds of abuses that you identified.

95

Mr. WELCH. Mr. Friedman, let me ask you—when you have to

make a decision about when and whether to investigate, let me ask

you about that incident about the anthrax out there at the nuclear

facility where Wackenhut had a contract, and there was an envelope that was opened in the vicinity of Mr. Chertoff, I think, of

Homeland Security; and no investigation occurred, even though

that was potentially a very serious national security issue.

What is the threshold to make you decide, ‘‘yes’’ or ‘‘no,’’ to do

an investigation when the mistake, negligent or intentional, goes to

the heart of the performance required, namely national security?

Mr. FRIEDMAN. Maybe this is the ultimate answer to your question. I am not aware of that situation.

Mrs. MALONEY. Wackenhut. That is Skinner.

Mr. WELCH. Mr. Skinner. Thank you.

Mr. SKINNER. Yes, with the Wackenhut incident, that contract

was actually a Department of Defense contract. It was—we received allegations in, I believe, February 2006, and the contract

was about to expire in March 2006. That—coupled with the fact

that we were doing the preliminary work on those allegations, we

were asked to step down by the two Senators who referred the allegation to us for fear that those who made the allegation would become known to the contractor.

Given those variables——

Mr. WELCH. You were asked by what?

Mr. SKINNER. The allegations came to us through Congress. They

came from employees of Wackenhut through Congress and were referred to us.

We were in the process of taking a close look at those allegations

to determine whether they merited a close investigation or a further review, when we discovered the contract was not a Department of Homeland Security security contract, but it was a DOD

contract. Because the facility at that time, early on, was in fact a

DOD facility, and the Department of Homeland Security had just

moved in in March 2003.

And Department of Homeland Security—Elaine, I believe you

were involved in this as well—was in the process of rebidding a security contract, the contract that was about to expire in March; and

I believe we actually took and bid and hired another contractor in

June.

Mr. WELCH. The investigation was never completed, correct?

Mr. SKINNER. That is correct. That does not mean that we will

not continue to take a very close look at that.

Mr. WELCH. Take a close look at that now?

Mr. SKINNER. The contract expired. The contractor is no longer

providing services for that facility; however, they are providing

services at other facilities, so our concern now is, if they, in fact,

had problems at that facility, who is to say they are not going to

have problems at other facilities?

Mr. WELCH. If it happened a while ago and you think it is still

relevant, why hasn’t it been investigated?

Mr. SKINNER. The incident at the unit—because that contractor

is no longer employed there.

Mr. WELCH. This is not making sense to me, with all due respect.

Mr. MURPHY. You may want to wrap up. We are about to——

96

Mr. WELCH. You say it is still relevant to you because

Wackenhut has other contracts at other places and it is relevant,

what happened there, to determine whether the work they do elsewhere meets the requirements of the taxpayer.

So obviously it means that if you want to get that information,

getting it sooner is better than later, right?

Mr. SKINNER. Yes. And we are, in fact, planning to do that.

You have to understand, we have very limited resources as well;

and it had to work its way up the chain. It is something that is

on our to-do list.

Mr. WELCH. We are all saved by the vote.

Mr. MURPHY. Thank you very much, Mr. Welch.

One of the downsides of being a substitute chairman: We have

nine votes that we expect to take about an hour, so we will be back

here in approximately an hour to reconvene with our second panel.

We thank all of our six panelists this afternoon, and we thank

you very much.

[Recess.]

Mr. TOWNS. I’d like to welcome our second panel.

As with the first panel, it is our committed policy that all witnesses are sworn in. So please rise and raise your right hands.

[Witnesses sworn.]

Let the record reflect that they have all responded in the affirmative. You may be seated.

Robin Smith was a Wackenhut security officer at DHS headquarters. Robin is a veteran of the U.S. Air Force where she guarded aircraft on alert with nuclear weapons for the Strategic Air

Command, and she has worked as a security contractor at other

Federal facilities.

Welcome to the committee.

Lawrence Brede is senior vice president at Wackenhut Services,

Inc. He has worked on security at several Federal nuclear sites and

has retired from the U.S. Army.

Welcome to the committee.

Scott Amey is general counsel for the Project on Government

Oversight where he has worked on investigations of government

waste, fraud and abuse since 1993.

Your entire statements will be put in the record, so I ask that

you summarize in 5 minutes and, of course, allow us the opportunity to be able to raise some questions with you.

So why don’t we start with you, Mrs. Smith—Ms. Smith.

STATEMENTS OF ROBIN SMITH, FORMER WACKENHUT SECURITY OFFICER AT DHS HEADQUARTERS; LAWRENCE BREDE,

SENIOR VICE PRESIDENT, WACKENHUT SERVICES, INC.; AND

SCOTT AMEY, GENERAL COUNSEL, PROJECT ON GOVERNMENT OVERSIGHT

STATEMENT OF ROBIN SMITH

Ms. SMITH. Chairman Towns, Ranking Member Bilbray and distinguished members of this committee, thank you for the opportunity to tell you about my experience as a Wackenhut security officer.

97

My work in private security has been an extension of my military

service. It’s a privilege to serve my country and keep it safe. I knew

that serving in Homeland Security made my work even more important, but I see my managers didn’t take the work that seriously.

While working for Wackenhut at the Department of Homeland

Security, my duties included monitoring the cameras located in different buildings on the site, ensuring that all individuals entering

the building were properly identified, cleared and documented.

That gave me a lot of experience witnessing the problems we had

before access control: lack of training, careless weapon-handling,

open posts, failed security tests, security breaches, falsified documentation, and the irresponsible handling of hazardous substance

attacks. I saw the careless storage of weapons that could have had

grave results. On several occasions, I saw the weapon armory wide

open and unattended. When officers come off post, they go to the

armory to return their weapons and ammunition. The armory was

in the Program Manager’s office. There have been times when I

saw the sergeants leave the armory open and unattended. I also

saw unattended weapons left in the lead weapon barrel instead of

being secured. There were times when the door to the armory was

left open, unlocked and unoccupied. If the door is open, anyone can

access the weapons armory.

There are many contractors working onsite at the Department of

Homeland Security. There have been times when I have walked

through the armory and have seen a loaded weapon there, a weapon that could have been accessed by anyone. Any disgruntled contract employee could easily walk through the open door, pick up a

weapon and ammunition, and any terrorist could do the same.

There is a reason for some of this. We had a really high turnover

for the officers who worked extended shifts. Some officers were so

tired that they would make up for their lost sleep on the job. On

many occasions, there were supervisors and officers caught sleeping on the job, but management never reprimanded them.

But you can’t blame sleeplessness for the way Wackenhut security managers handled a suspicious letter that came to the building

where Secretary Chertoff’s office was. This was at the height of the

anthrax scare. A DHS employee opened the letter which contained

an unidentified white powder. Some of it spilled onto the employee’s body. Two security officers got a report of this incident and notified their superiors. When the two lieutenants arrived at the

scene, they could have isolated the contaminated area and kept

other DHS employees from entering the area, but they didn’t do

that. Instead, they told the employee to wash the powder off of herself, so she did that by crossing the hall, passing Secretary

Chertoff’s office and potentially contaminating a larger part of the

building. The white powder should be considered to be potentially

dangerous, but it was apparent that proper safety precautions were

not taken. Everyone in the vicinity could have been contaminated

if the white powder had been a chemical threat. The two lieutenants observed and handled the envelope from all angles. They

didn’t evacuate the section. The ventilation system was still on,

which left easily carried particles of the white powder to other

buildings with the—to other sections of the building. The building

was only evacuated when Federal Protective Services arrived at the

98

very late stages of the event. I firmly believe that Wackenhut knew

of these problems and did nothing to rectify the situation.

I hope that my testimony today will help paint a more complete

picture of Wackenhut’s performance, which I think deserves congressional investigation.

I thank you, once again, for the opportunity to meet with you

today.

Mr. TOWNS. Thank you very much, Ms. Smith, for your testimony.

[The prepared statement of Ms. Smith follows:]

99

100

101

102

103

104

105

Mr. TOWNS. Dr. Brede.

STATEMENT OF LAWRENCE BREDE

Mr. BREDE. Chairman Towns, Ranking Member Bilbray, and

members of the subcommittee, I too appreciate the opportunity to

participate in this subcommittee hearing today.

My name is Dr. Lawrence Brede, and since 2005 I have served

as the senior vice president and executive general manager for the

Department of Energy Operations in Wackenhut Services, Inc.

In that role, I oversee our protective services contracts at five Department of Energy facilities: Oak Ridge, the Savannah River Site,

the Nevada Test Site, the Office of Secure Transportation, and the

Department of Energy headquarters. Prior to that time, I managed

our contract at the WSI Savannah River Site for more than 12

years.

For 26 years, I was privileged to serve our country in the U.S.

Army, including service in three armed conflicts: Vietnam, Operation Just Cause in Panama, and Operation Desert Storm in Iraq.

I commanded the elite military forces during my last two combat

tours.

Today, I am privileged to oversee other elite forces. Wackenhut

Services’ operations include paramilitary protective services, response teams equipped with rapid fire and other special weapons,

armored vehicles, helicopters marine patrol, and other state-of-theart security technologies. We are proud to have served the U.S.

Government for more than 40 years at the Nevada Test Site, nearly 25 years at the Savannah River Site and, since the year 2000,

at Oak Ridge where we were recently awarded a 5-year contract.

During that entire period, we have consistently been awarded

high performance ratings. For example, in 9 of 10 DOE performance ratings over the past 5 years at the Nevada Test Site, we

have received scores over 95 percent. In our last 10 DOE performance ratings at Savannah River Site, we have scored 96 percent or

higher, including five perfect scores of 100 percent. And at Oak

Ridge, all of our performance ratings were 93 percent or higher,

with an average score of 97 percent.

In addition, we have won numerous awards for our work, including the South Carolina Governor’s Quality Award, the highest level

of recognition in the South Carolina State Quality Award process,

and we won a similar award in the State of Nevada. Underscoring

our technical competence, WSI Security Police Officers have won

the national level Department of Energy’s Security Police Officer

training competition 4 years in a row.

I understand the primary reason we were invited to this hearing

is because of DOE IG reports regarding our contract sites at Oak

Ridge, TN. The conclusions drawn from each of those reports have

been challenged by senior Federal officials at both the local and

headquarters levels. It has been incomplete because of a failure to

consider all pertinent information provided to the inspector general

during those investigations. In at least one case, the DOE’s Office

of Independent Oversight—the technical oversight organization

within DOE—conducted an inspection of our training practices and

arrived at an entirely different conclusion than the DOE IG.

106

Our security contracts receive extensive repeated scrutiny by the

government, not only by contracting officer technical representatives at the local level, but also by the DOE’s Office of Independent

Oversight, the GAO, the Defense Contract Audit Agency, and other

ad hoc special review teams.

Given the subject of this hearing, I am surprised and, quite

frankly, disturbed at how WSI’s past performance on government

contracts could possibly be characterized as ‘‘poor,’’ considering the

overwhelming evidence to the contrary. The 8,000 men and women

who work for Wackenhut Services are dedicated, hardworking, patriotic individuals. Most come from a military or a law enforcement

background, and our protective forces include former Army Rangers, Navy SEALs and personnel from other Special Operations

Forces.

I welcome this opportunity to address any concerns you may

have about our service to the government. We are proud that many

of our Security Police Officers have taken leave to serve on Active

Duty in Afghanistan and Iraq. We look forward to their return, and

we honor the memory of those Wackenhut employees who, sadly,

will not be returning to us, having made the ultimate sacrifice of

dying for our country in the war on terror.

Mr. Chairman, I have submitted some additional materials concerning our performance for the record. I thank you for this invitation to set the record straight.

In summary, I will just reiterate how proud I am of the work we

do for the U.S. Government. Our protective forces are well-trained

and are as capable as any of the elite forces with which I have

served.

I will be glad to take your questions this afternoon.

Mr. TOWNS. Thank you very much, Dr. Brede.

[The prepared statement of Mr. Brede follows:]

107

108

109

110

111

112

113

114

115

116

117

118

119

120

121

122

123

124

125

126

127

128

129

130

131

132

133

Mr. TOWNS. Mr. Amey.

STATEMENT OF SCOTT AMEY

Mr. AMEY. Good afternoon, Chairman Towns and Ranking Member Bilbray and members of the subcommittee. Thank you for inviting me to testify today about the state of the Federal contracting

system. I am Scott Amey, general counsel and the senior investigator with the Project on Government Oversight, a nonprofit, public

interest, watchdog organization founded in 1981.

POGO investigates and exposes corruption and other misconduct

in order to achieve a more accountable Federal Government.

Throughout its 26-year history, POGO has created a niche in investigating, exposing, and helping to remedy waste, fraud and abuse

in government spending.

The subject of today’s hearing is near and dear to POGO, and I

am excited to share POGO’s view about contractor accountability.

I agree with everything that IG Skinner said on panel I, except for

one fact. There is one central depository—repository for responsibility determinations, and that is the Project on Government Oversight. POGO back in 19—or back in 2002 introduced a Federal contracting misconduct data base. Today, we are re-releasing that data

base that is more user-friendly and with more instances. Currently,

it has the top 50 government contractors, and it will eventually be

expanded to the top 100.

The difference—and I talked to IG Skinner after his testimony—

is we are a ‘‘dot org’’ rather than a ‘‘dot gov,’’ but it is a repository

that government contracting business should go to.

For years, POGO has been scaring public sources to compile instances of misconduct for the top 50 Federal contractors. The new

data base, which covers instances of misconduct from 1995 to the

present, includes the source documents for each instance, drawing

on government documents. That is DOJ press releases, U.S. Attorney press releases, DOE press releases, and the like. POGO hopes

that the contracting officers will use it as a resource when awarding contracts, to assure that taxpayer dollars are only being sent

to responsible contractors. POGO will expand the Federal contractor misconduct data base to 100 contractors later this year.

Contractor misconduct is not on the wane. Currently, there is

widespread evidence of waste, fraud and abuse in Federal contracting. The Department of Justice has recovered $18 billion since

1986, and just last year they reported a record $3.1 billion that has

been returned. The President’s Council on Integrity and Efficiency

and the Executive Council on Integrity and Efficiency reported last

year that they have $9.9 billion in potential savings from audit recommendations and $6.8 billion in investigatory findings. These

councils identified procurement and management—or ‘‘procurement

and grant management’’ and ‘‘performance management and accountability’’ as two of the most serious management and performance challenges facing Federal agencies. Federal contracting officers need to have comprehensive information on contractors’ culture of responsibility that is more readily available than what we

have here, than what we have now—misinformation.

The Federal Acquisition Regulations state that contracts are only

supposed to go to responsible contractors. I argue that they are not.

134

Without this information, major contracts continue to be awarded

to risky contractors.

As we can see by the discussions that we had earlier today with

panel I and also by even the Army’s recent awarding of the

LOGCAP IV contract, Dyncorp has 3 instances of misconduct in our

data base; KBR has 5; and Flour has 21 instances of misconduct.

Their misconduct histories include false claims against the government in violations of the Anti-Kickback Act, fraud, conspiracy to

launder money, retaliation against worker complaints, and environmental violations. Some of those companies have had questionable

histories in Iraq and also in responding to Hurricane Katrina.

First, the Federal Contractor Misconduct Data base reveals that

50 percent of our contract dollars are going to those top 50 government contractors. As Representative Maloney stated earlier, we

also have instances where—we have 376 instances that account for

$12.5 billion. I don’t claim that we have every instance of misconduct. That’s only what we’ve been able to find, as someone mentioned on panel I, doing Google searches and also going through

Federal press releases. There are eight contracts which have zero

instances. So I have heard the complaint before that when you

have so much Federal contracting dollars that it’s just inherent

that you’re going to have misconduct. But with 8 of the 50 having

zero instances, I think there are good contractors out there for the

government contractors to turn to.

Monetary penalties range from a relatively small $2,400 penalty

paid by Honeywell in a State environmental enforcement action to

a record-setting $3.56 billion civil verdict against ExxonMobil for

gas royalty underpayments. The legislation proposed by Representative Maloney, the Contractors and Federal Spending Accountability Act, H.R. 3033, which mandates that the government create a

contractor performance and responsibility data base and requires

contractors to report such instances when bidding on the contracts,

will help to ensure taxpayer dollars are going to responsible contractors.

For example, it will provide governmentwide access to administrative agreements that are not shared by agencies. Nearly a year

ago, POGO FOIA’d administrative agreements, and I have yet to

have that for you in an insert. Why is H.R. 3033 needed, and why

is POGO into this business? Because there isn’t currently a central

repository for this type of information. The government claims that

they search papers, that they go to the excluded parties’ list. Past

performance isn’t the same as contractor responsibility in all terms,

and the excluded parties’ list had 7,300 cases last year in 2006.

None of them were—no large contractor was on the suspension and

debarment list. In our research, we have shown that Boeing is the

only contractor in the last 10 or 15 years to be on that list, and

they’ve had that suspension waived on three occasions, and it only

lasted 18 months.

I will just sum up that—I conclude by quoting President Bush,

who earlier this year stated ‘‘Accountability is not a way to punish

anyone. Accountability to taxpayers isn’t punishment. It’s a way to

improve the way the government works.’’

135

Thank you again for this opportunity to share POGO’s views on

responsibility in contracting. I am pleased to answer any questions

that you may have.

Mr. TOWNS. Thank you very much for your testimony.

[The prepared statement of Mr. Amey follows:]

136

137

138

139

140

141

142

143

144

145

146

147

148

149

150

151

Mr. TOWNS. Let me begin with you, Ms. Smith. You indicated

certain things.

Were top DHS officials aware of the problems with the performance at Wackenhut? Were the top officials aware of it?

Ms. SMITH. I would say yes.

There was an incident where Secretary Chertoff came in and

caught guards, several times, acting inappropriately; and maybe

about 2 weeks into it, in one incident they lost control; they lost

the building, building 1, which was his office. At one time, we had

his office. There were guards that weren’t performing, and I don’t

know if he personally said something, but shortly after that, we

lost that one building.

Mr. TOWNS. So you think that he might have known about the

unprofessional behavior?

Ms. SMITH. I think it probably took some time before certain

things got to his attention, but at a certain point in time, it was

just so blatant that you’d have to be blind not to see it.

Mr. TOWNS. All right. Well, you have served in sensitive security

posts in both the Air Force and with other private-sector employers. Were there any differences in the approaches of delivering security services for a classified installation between these experiences and the experiences you had with Wackenhut? Was there

any difference?

Ms. SMITH. I’ve never seen anything like the way Wackenhut ran

Homeland Security. Homeland Security, I think, on any other contract would have been considered the most prestigious contract you

could have next to the White House. I’ve worked with other security companies, and any time there has been an issue of officers’

sleeping, inappropriate behavior, falsifying documentation, I have

never seen 24 hours go past without someone from corporate headquarters coming down to investigate, and I’ve never seen a situation in which people will repeatedly do the same thing and report

to duty the next day. I have never seen it. I have never seen—I

have never seen officers falsify documentation, fill out their time

sheets for the month in a guard mount and the supervisors never

say anything. I have never seen officers leave a site with a weapon

in D.C. not being an SPO, and not being reprimanded for it. I have

never seen an armory left wide open. I have never seen an armory

in a project manager’s office. I have never seen—I’ve never—I’ve

been—I worked at the Department of Interior, and we’ve had several incidents with suspicious powder. I have never seen it handled

that way. I have never seen anyone take an envelope and not know

what the substance was and walk down the hall, walk past the

Secretary’s office, look at it, call people over to witness what they

have, take it outside, let a few other people see it, discuss it with

people, and then call FPS Services to investigate. I have never

seen, never seen anything run the way Wackenhut ran Homeland

Security. I have never seen any company disrespect a government

contract to that proportion.

Mr. TOWNS. Let me just ask you some questions.

Were you ever terminated for poor performance?

Ms. SMITH. Never.

Mr. TOWNS. What were your on-the-job performance evaluations

while you were with the company? Was it——

152

Ms. SMITH. In the year that I worked there, we never got a performance determination.

Mr. TOWNS. So, I guess we would have to say it was good. You

weren’t fired.

Ms. SMITH. I wasn’t fired.

Mr. TOWNS. I think that’s the conclusion there.

Do you have any lawsuits against Wackenhut?

Ms. SMITH. No.

Mr. TOWNS. Why did you come forward at this time with what

you saw?

Ms. SMITH. I have to be honest. Initially, I didn’t come forward.

Another officer came forward and called me and asked if—I was

one person there who had access and knowledge of several events,

of probably any major event that would go on, because I monitored

the cameras and because I was emergency dispatcher. So if something happened, I would get the call first, and then I would notify

the supervisors.

So I was one of three people, because there was three different

shifts that would have firsthand information. And the other officer

was really disgusted with some of the things he’d seen. He went

to the press, and I guess he got a lot of flack for it, because nobody

else would validate what he said. And I have to be honest. I told

him that I wouldn’t bring the information forward because I didn’t

believe anyone would really act on it. I felt that this was Homeland. I knew Wackenhut’s top officials knew what was going on, because I witnessed several phone calls, and I’ve made several myself, so I knew that the head of the company knew, and I knew

that nothing had been done. And I really didn’t think anyone was

going to investigate, and if they did, I thought it would probably

be handled—that it would make a news article; you know, a lot of

people would read it, and then, the next day, it’d be shoved under

the cover like so many things are.

So I really didn’t believe that anyone really cared how the contract was working on that site, but another officer asked me, and

I told him that—you know what? If somebody asks me, if someone

asks, I’d be open and honest and tell what I knew. And someone

asked me, and that’s why I’m here today.

Mr. TOWNS. Thank you very much.

At this time, I yield to Ranking Member Bilbray.

Mr. BILBRAY. Thank you.

Mr. Amey, you were discussing the problems with Boeing. Do you

think that they should be eliminated from consideration for any

contracts? Should they be disqualified based on what you know

about them?

Mr. AMEY. Should they be disqualified? That’s a judgment call

where I think you need some flexibility. But what I think we need

is we need openness in the system; we need to make sure that contracting officers are taking a look at their overall record, not just

their performance record.

Like I would imagine, and as the doctor has testified, his company has a wonderful performance record. I’ll predict that contractors have satisfactory performance grades. But are contracting officers taking a look at their criminal history, their civil history and

153

their administrative history? If they’re not, then the taxpayers

aren’t getting the best deal.

Mr. BILBRAY. Well, wait. Whoa, whoa, whoa, whoa.

Now I’m asking you about somebody you do know. And first of

all, when you talk about some of these histories, I have a real problem in trying to figure out—if it wasn’t a company, if it was an individual, and I was a public employee saying, I’m going to consider—I’m going to now—you’ve worked for me in the past and I

find out that you’ve got something in your record that you didn’t

disclose.

Now that’s the question you get into. Are you talking about

something they were required to disclose or are you talking about

something like—a good example is misconduct. Are we talking

about—what constitutes misconduct? Is that being charged with

misconduct? Is that being proven with misconduct, or is it both?

Mr. AMEY. In our data base, we do have both. We have actual

instances of misconduct, and we have pending cases.

Mr. BILBRAY. You know, I’ll tell you something. If it’s an individual—and if I tried to do this as a mayor, to somebody who is one

of my employees—I’d be dragged out before the courts right and

left, based on charges.

The fact is, you know, we’ve had to abandon the concept of ‘‘Have

you ever been arrested?’’ in the State of California. You have to

say, ‘‘Have you ever been convicted or sentenced?’’ Just to be

charged has never in this country been an assumption of guilt.

Mr. AMEY. Well, our pending cases aren’t. Our pending cases are

left very open, and I think our data base is very fair. In instances

of misconduct when they move over from a pending case, when we

combine instances where there’s been a fine, a settlement, a penalty, we do have what we call ‘‘investigative findings,’’ but those

are left as administrative and with a zero balance. We include

them in there only so that contracting officers and government officials have the full scope of a contractor’s performance and responsibility record.

Mr. BILBRAY. Do you agree that allegations being included play

suspect on the whole thing because it becomes part of an angle? I

know the fact that—competing companies. You have competing

companies who love to play these games. You have people at organized labor that will use this as part of a tactic to be able to—as

part of the negotiation games. The fact is—we can get so many employees to charge, but the fact is, if allegations are given weight,

that raises a whole lot of concerns about the credibility of the entire process.

Mr. AMEY. I agree with you, and that’s—the purpose of our data

base is, actually, not to include a labor violation where somebody

didn’t have their hardhat on.

What we’ve tried to do is get to real instances of misconduct in

which there’s a violation of Federal law—arms export violations,

false claims—you know, things that are very germane to the government.

Mr. BILBRAY. But where it has been proven——

Mr. AMEY. Yes.

Mr. BILBRAY [continuing.] Not just where somebody has accused

them?

154

Mr. AMEY. Yes.

Mr. BILBRAY. OK.

Mr. AMEY. Down to—also, into administrative agreements. We do

include those, which I know the contracting industries do get upset

with us for including those types of cases. But we do include them

when they’re fined penalties and settlements that are attached to

them.

Mr. BILBRAY. You start by saying we consider—we include the

charges without their being proven. Now you’re saying that you

want to go back and say it should be only those things that have

been adjudicated.

Mr. AMEY. No. I said that we do include pending cases. We do

have them on a side column, but they are not part of our instances

of misconduct.

Mr. BILBRAY. Well, pending cases can last for 10, 15 years.

Mr. AMEY. No doubt about it.

Mr. BILBRAY. You’re putting a cloud over somebody’s head who’s

just been charged, and I’ll tell you that’s a big concern. But I’m

back to Boeing.

Mr. AMEY. Right.

Mr. BILBRAY. You identified Boeing as being a bad character in

this process. If we struck Boeing out of the process, would that be

good or bad?

Mr. AMEY. Well, personally, the Project on Government Oversight would say, ‘‘Well, that’s probably a good thing because I think

there are other places you can go for that business.’’

Mr. BILBRAY. And where would we go?

Mr. AMEY. I think there are other contractors out there. I think

if we debundle contracts, there are other vendors that we can go

to to provide that work.

Mr. BILBRAY. OK.

Mr. AMEY. What I heard from the government in asking about

the listing of Boeing’s suspension when I talked to the official was

they said, ‘‘Off the record, I will tell you we had to waive it on

three occasions because we had nowhere else to turn.’’ It ended up

being a consolidation of the industry issue, which is bad for the

taxpayer overall; which POGO’s fought consolidation for many

years in the defense industry, and I think we’ll have to get into it

in the IT sector, but——

Mr. BILBRAY. Well, let me tell you something. You talk about the

big guy. The fact is that I’ve seen again and again in my 30 years

in politics where Washington, DC, and government intervention

has killed the little guy, killed the little guy. And then it complains

when there’s a monopoly for the big guy because the little guy did

it.

I mean—I’ll just digress, Mr. Chairman, but people are wondering why big oil has such an influence in this country. It’s because

we’ve killed little oil with government regs and with tax cuts.

We’ve basically run the competitors out of the market. And it’s

Washington doing this, saying, ‘‘We’re going to protect the consumer.’’ And we’ve shafted the consumer down the line, and I’m

just concerned that when we do this oversight, we make sure we

do it with an outcome that matters. And, you know, I have to say

155

that effect on competition has to be a consideration; wouldn’t you

agree?

Mr. AMEY. 100 percent. We have been fighting the bundling issue

for many, many years.

Mr. BILBRAY. And bundling is there. You heard my reference to

the liquidation of the savings and loan assets.

Mr. AMEY. Right.

Mr. BILBRAY. A classic example. Now, that was in-house. That

was Federal Government employees making a decision——

Mr. AMEY. Right.

Mr. BILBRAY [continuing.] And throwing billions of dollars of taxpayers’ money away because they didn’t want to bother with the

little guy.

Mr. AMEY. Right.

Mr. BILBRAY. Wouldn’t you agree?

Mr. AMEY. Yes.

Mr. BILBRAY. Mr. Chairman, I just want to make sure that as

we get into this that we make sure that we keep an eye on the fact

that—let’s not go in and do more damage and then wonder about

the problems we’ve done in the past. The outcome of how we handle this is what is going to be really critical, and I think—I appreciate your testimony on that. I just want to make sure that when

we go in there and start whipping, we understand that we may be

whipping the only, you know, horse that can pull us on here, or

keep as many horses in so we can pick the best one, so we don’t

end up in a situation of not having a choice into it.

Now let me just say publicly—I want to say something because

I happened to have the privilege, when I was very young, of building the most cost-effective transit system in America in a place

where people said you couldn’t do it: San Diego, CA, Southern California. And we built that line, and there were people that built political careers on that. Congressmen went out there. You’ve got

Pete Wilson, who became Governor and Senator, if you’ll remember, and Bechtel built that line, and I will go to my grave knowing—I don’t know what they’re doing with these other contracts,

but there was no way in the world I wouldn’t testify that Bechtel

was the best company that I could ever work with. It created miracles, and they did great things.

Now, people may want to attack them—and they’re not here

today to defend themselves—but I will say for the history that

when I built a system in San Diego County with some—the toughest problems in the world, Bechtel delivered in a way that the people of San Diego County are going to benefit for 100 years on.

With that, Mr. Chairman, I will yield back.

Mr. AMEY. If I may just say, I agree with the ranking member

and your comment earlier with the first panel.

This isn’t to point fingers at contractors. This is really a genuine

issue of contracting officers and the way we’re awarding contracts.

It really gets down to a very circular argument about government

contracts. And you hit the nail on the head with competition. If you

only have five different or two different vendors that come forward,

then at that point you do have to make a best-value determination

and pick the best of those two.

156

My hope here is that we can incorporate all of these things together, get more competition and pick the best vendors available

without picking risky vendors. That’s where I think the question

comes in. Are we picking responsible vendors or are we picking

risky vendors?

Mr. BILBRAY. And I appreciate that, and I thank you very much.

And let me just say, because we brought up this hearing and we’re

specifically looking at security in some of these facilities—if I could

ask the chairman to consider one thing, which is that one of the

shocks I’ve had working on Homeland Security stuff when I—when

the voters gave me my 5-year sabbatical from Congress, is that

today, as far as I know, the Pentagon is still using the same antiquated access system/swipe card that it was using on 9/11, with no

biometric confirmation, with no face recognition technology. It’s basically using technology that’s 30 years old and have not—anybody

who ends up being able to acquire one of those cards, either by

theft or by persuasion, could enter that facility. And I think that

we ought to be looking at what we’re doing to make sure that we’re

doing the right thing so contractors can do the right thing.

I yield back, Mr. Chairman.

Mr. TOWNS. Thank you very much.

Mr. Murphy.

Mr. MURPHY. Thank you, Mr. Chairman.

I want to thank the panel for being here today and sticking with

us throughout our votes.

Mr. Brede, I want to thank you for being here, especially given

the fact that the other subject of our hearing today chose not to attend.

Ms. Smith, I want to thank you very much for your service, prior

to your work in private security, in the U.S. Air Force and would

appreciate you opining for a moment on the comparison between

the training. You’ve talked a little bit about your experience on the

job. I want to talk for a second about the training that you received

prior to your time in preparation for your service in the Air Force

and during your service there, versus the training that you received as an employee of Wackenhut.

Ms. SMITH. The training—I want to be fair to Wackenhut also.

The training doesn’t compare to the training I received in the Service because it was intense. It was a test program. They enlisted—

at that point in time, there weren’t women combat-trained in the

Air Force; other branches, but not the Air Force. So when they enlisted the 125 women, the training was intense.

We went to Camp Bolus. We trained at an Army base. The training was very, very intense. And as far as the Air Force goes, you

had women in there, and the government wanted to make sure

that if those women went to war, we could stand beside any man

and do our job. And I believe we could.

As far as the training with Wackenhut, I went to the range and

I qualified, and that was pretty much it. I wanted to qualify at the

range, and I’d already known how to shoot. I’d been trained previously. When I went to Wackenhut, I went with my credentials.

So me personally, I felt I was already very well-trained. What I

have to say is that—taking me out of the situation—I ask, how

were the rest of the guards as far as training?

157

At Homeland Security, there were guards who never qualified at

the range. They were still allowed to carry a weapon. We had several—we had three—to my knowledge, we had three guards and

there probably were more, but I’m only going to talk about what

I know personally. We had three guards who failed the range five

times and were still working, still carrying a weapon, never passed

the range. At a certain point in time when we knew there was a

new contractor coming in when the contract—when the contract

was almost at its end—and I’m going to say 2 months before the

contract officially ends is when they started sending us to training

so that we’d have something official on the record.

But initially, when I came in, I came in with my SPO. I have a

license in Maryland and Virginia, and the only thing I had to do

was qualify at the range, which I did. So I said it to say that the

person sitting on my right and my left may or may not be able to

handle a weapon, may or may not be able to shoot.

Mr. MURPHY. How about training in the disposition of suspicious

packages or training in regards to the proper response to a chemical attack or a nuclear attack?

Ms. SMITH. We had extensive training in the military on that, obviously, training on crowd control, training as far as—we played

war games. It was Strategic Air Command, so I was always on

alert. For a week at a time, the alarm would go off, and once that

happened, you had to react. So, being in the SAC, it was 24 hours

a day of playing war, and we played it serious. There were consequences if you didn’t perform.

As far as Wackenhut goes, other than qualifying at the range, I

worked there 8 months without any kind of official training. The

only time training took place was at the end of the contract when

the rumor was that there was going to be—the new contract was

going to require GSA training, GSA certification. So at that point

in time, when that information was given out at the last few

months of the contract, they had a GSA class that we went to. But

prior to that, I worked on that contract 8 months with no training.

Mr. MURPHY. And had you not had training in the Armed Forces

related to terror attacks and suspicious packages, you would not

have received the training up front?

Ms. SMITH. No. Actually, I worked for another company, and the

HAZMAT training I received from them and the weapons training

and the crowd control—all of that I received at another company,

and I brought that to Wackenhut. As far as being trained by

Wackenhut, the only official training I received was qualifying at

the range.

Mr. MURPHY. Dr. Brede, that leads to an obvious question. I take

Ms. Smith’s testimony. I put it together with articles in the paper

referencing interviews of 14-some-odd employees under the same

contract, one of which testified that when he was presented with

a suspicious package, he said, ‘‘I didn’t have a clue what to do.’’

And I wonder whether that makes you reconsider a statement

made under oath here today, that you believe that the employees

of Wackenhut are as well-trained and as capable as a member of

the U.S. Armed Forces.

It strikes—and I guess I ask that question because I’m not sure

that they should be as well-trained as members of the U.S. Armed

158

Forces. I think that they should receive much more training than

it sounds like they have. But your statement today strikes me as

a bit out of line, given the testimony that we’ve received today and

testimony of other employees, and I would like to know if you

would like to reconsider that statement.

Mr. BREDE. I will consider that statement, and I stand by it.

What I said was—and I oversee elite forces that are equivalent to

the forces that I served with in the United States—and I do. I oversee our DOE Special Police Officers, Security Police Officers.

You have to understand the contract that we had at the DHS

building was not a DHS contract. In fact, what it was—it started

out as a facilities maintenance contract with the Department of the

Navy. There was a small security piece of 12 officers. Our contract

with the Navy required minimal security training. DHS later

moved into that facility and, over time, eventually took over the

building but not the contract. In fact, we were held to contractual

requirements by the Department of the Navy. We still have that

contract today and continue to serve the Navy. The training that

we provided our officers met the requirements of the contract.

To a point made by the ranking member earlier, allegations are

easy to come by and we are hearing some of them for the first time

today from Ms. Smith. We’ve heard a few others in the past from

disgruntled employees who’d been terminated and, in fact, who

have been co-opted by the Service Employees International Union,

an organization with an agenda that has mounted a campaign

against us, a corporate campaign to besmirch our reputation. They

have——

Mr. MURPHY. Are you alleging that Ms. Smith is part of that——

Mr. BREDE. I don’t know if she is or not.

I’m saying that the only allegations we have previously heard are

those who have—those that had been made by disgruntled, terminated employees who have gone to the press and which we have

investigated. I am hearing others today for the first time.

Mr. MURPHY. You draw issue with the reports of that contract in

which individuals were not properly trained in terms of how to dispose of suspicious packages or with regard to potential instances of

terrorism there. Do you believe that there was proper training for

those potential incidents at that facility?

Mr. BREDE. No. What I said was that there were—the training

that we conducted at that facility met the requirements of the

Navy contract. I would tell you that DHS expected a higher level

of security training, and when they let out—let their procurement,

they looked for a higher level of security. We did not win that contract, but we never had one with them there in the first place. It

has been mischaracterized as a DHS contract and one which we’ve

had, and we have not—we did not have one with them there. We

have several contracts with DHS elsewhere.

For example, during Katrina, we were called upon because no

other security company—or at least security companies called before us, could not deliver the number of officers to be trained and

put out to the field in time to meet that awful disaster.

Mr. MURPHY. Mr. Chairman, I know I’ve gone well over my time

here. I understand the tried-and-true method of deflecting accusations is to try to dispute the integrity of those who would accuse.

159

I think we have made it very clear that Ms. Smith here has no ax

to grind; in fact, she was an accomplished employee. And I would

just say that I think the allegations that have been made are not

necessarily that you didn’t live up to the terms of the contract. It

was the allegations being made here that the compromise—that

the safety of that institution was compromised. That may be related to the work of Wackenhut. That may be related to the specs of

the contract. But I think at least we leave here understanding that

those—that those accusations that have been leveled in the Associated Press report and those by Ms. Smith today are ones that I

hope we can all agree need to be addressed going forward.

Mr. BREDE. I have invited the DHS IG to look at the incident.

I hope he does, as he was asked to do earlier; to look at the incident involving the white powder, an incident in which no WSI employee handled that powder. We wrote to the Secretary, pointing

that out, and we would—we will certainly welcome any investigation looking at that particular incident.

Mr. MURPHY. Thank you, Mr. Chairman.

Mr. TOWNS. Thank you. Thank you very much.

Let me just sort of go further here, Dr. Brede. You know, Ms.

Smith came here and I asked her some questions. I asked her, I

said, ‘‘Were you terminated because of poor performance?’’ she said,

‘‘No.’’ I asked her were you—‘‘What were your evaluations?’’ she

said, ‘‘Good.’’ Then I asked her did she have any lawsuits, you

know, with the company, and she said ‘‘No.’’ And then I asked her,

you know, ‘‘Why would you wait until this point to come forward?’’

she indicated, you know, and gave an answer that, I think, was

very acceptable, you know, and I’m sure that she was struggling

with it and finally made a decision, you know, to come. And she

indicated some things there that—and I would like to just hear you

respond to them because, you know, she didn’t get fired, you know.

Mr. BREDE. She did not.

Mr. TOWNS. She didn’t have a bad evaluation. She didn’t have

any of those things. She comes to us, as I get it, out of real concern.

And to me that’s important.

So I would like for you to sort of respond to the things that she

talked about here in terms of—you know, could you just sort of go

over that and let me know in terms of what happened, you know,

as far as you’re concerned?

Mr. BREDE. I can respond to two of them.

As I pointed out earlier, I am hearing the others for the first

time today. One of the allegations, I believe, had to do with access

control. Once again, it’s a criticism leveled at us through the news

media, again, by a terminated employee co-opted by the SEIU. We

performance-tested that particular measure and, quite frankly, did

quite well at it. We had layers of security. And you have to understand, in a facility like that, you’ve got layers of security, and the

closer you get to potential targets, the tougher that security is.

The other, I believe, in her testimony had to do with time sheets.

We conducted an internal audit of that. I am not familiar with the

results of that audit, but I could certainly take that for the record

and make that available to you.

160

Those are the only ones that I’m familiar with. I’m not familiar

with the others, and I’m not, quite frankly, prepared to address

them today.

Mr. TOWNS. Ms. Smith, let me ask you, did you ever report any

of this to Wackenhut or to DHS, any of this?

Ms. SMITH. When I worked at Wackenhut, I was there 2 weeks,

and so I can’t tell you how what I am about to explain came into

it. I can only tell you that 2 weeks into the job, an official from

Wackenhut, from their corporate office from Florida—I don’t know

if it’s the corporate office. An official from Florida came to the site

because, I’m assuming, prior to that there were so many complaints from officers that somebody from Wackenhut came to the

site to see what was going on. I’d only been with the company 2

weeks. I was actually going offsite when someone said, ‘‘There’s a

meeting you’re supposed to be at,’’ and I said, ‘‘Well, I didn’t know

about it.’’ So I went to the meeting, and what happened was this:

The officers started telling them different issues that were—that

was going on. As they went around the table, when they got to me,

I said, ‘‘Well, you know what? I’ve only been here 2 weeks, so anything I can say can only be based on a 2-week observation.’’ And

I don’t remember the gentleman’s name—I could find out—but he

said, ‘‘Well, in 2 weeks, what have you seen, and what do you

think?’’ I said, ‘‘In the 2 weeks that I’ve been here, I would seriously, seriously make some changes.’’ I said, ‘‘You have employees

who—you’re working them—some employees are working pretty

close to 24 hours a day.’’ I said, ‘‘You have an employee who came

in to work’’—my shift started at 6 a.m. I said, ‘‘When I came to

work, he was there,’’ which meant he had been there on the night

shift. I said, ‘‘When I went to lunch, he was here.’’ I said, ‘‘When

I came back from lunch, he was gone.’’ I said, ‘‘But when I left—

when I went to go home, he was here,’’ which means he lives someplace near, got about 2 to 4 hours’ sleep and came back. I said,

‘‘He’s been here for 24 hours. He’s carrying a weapon.’’

I said, ‘‘In the 2 weeks I’ve been here, the weapon I drew out the

other day fell apart.’’ The barrel came off the .38, which means that

it had just been placed up there, which means it had to be damaged. I said, ‘‘So you have several weapons in there that don’t even

have handles on them.’’

I said, ‘‘In the 2 weeks I’ve been here, you have officers who are

sleeping on posts.’’ I said, ‘‘So my concern is that there are things

going on here that your corporate office may not know about.’’ I

said, ‘‘The things—all the things that I see are things that can be

addressed. I do not see any—I’ve only been here 2 weeks, so I don’t

see anything major,’’ I said. ‘‘but I see something that’s starting to

build, and if it were my site, I’d be concerned and I would start

asking the supervisors what is going on here.’’

And he said they were going to do a thorough investigation. He

pulled me to the side later. We talked a little bit about my previous

experience, and he said—he guaranteed and assured me that, you

know, he appreciated me telling him the things I’d seen. And I

even told him, I said, ‘‘I don’t know. I said this is the first time I’ve

ever met the project manager of this site. I didn’t even know who

he was,’’ I said, ‘‘so I don’t want him in a situation that maybe he

doesn’t know, but these are the things that are going on that I’ve

161

seen within 2 weeks,’’ I said, ‘‘and they need to be addressed,’’ you

know. And he assured me that it was going to be taken care of. He

left. I never heard from him again, and it escalated. It just went

from bad to worse.

Mr. TOWNS. Well, you know—thank you very much, Ms. Smith.

You know, Dr. Brede, I come from the school of thought that

where there’s smoke there’s fire. And of course, you know, there’s

a lot of allegations that have been passed along here in reference

to the company. Now I’d say maybe one was not accurate, two

maybe, but there’s just too many things here, you know. And I’m

just listening to Mrs. Smith—Ms. Smith—who indicated in terms

of her experiences here—and she has no reason, you know, to make

up or to create, you know, and I just want to hear you.

I think that there’s some things here that need to be corrected.

I mean—and I think they’re very serious because of the fact that

when it comes to security, that’s a very serious matter in this day

and age, and more than ever. And I think that you need to revisit

this and to try and straighten these things out, I think, rather than

saying, you know—you know, there are allegations, but the point

is that there’s a lot of allegations here, and I think that there’s just

too many for me to just sort of brush them off or push them off

as just statements or somebody, you know, making some comments

or some union that’s upset.

There’s a lot going on here. And of course, I need to hear you respond to that. I mean, of course, I know you’re saying that you

weren’t aware of it and you didn’t know about it, only two of them.

But this is a lot not to know about. I mean, let me ask you this:

Do you read the paper?

Mr. BREDE. I certainly do read the paper, and I would tell you

once again—and I don’t think we can easily dismiss the reports

that are prompted by—specifically by the Service Employees International Union.

One of the things I would wonder is if Mrs. Smith has been

prompted in any of this, for example, by the SEIU. There are distortions of fact. There is misinformation continuously put out in an

effort for that union to displace—the unions that I’ll represent are

fine officers. It’s something that we have refused to submit to. We

don’t take allegations lightly.

For example, the allegation of cheating at Oak Ridge. I am very

much offended by that. Once the IG looked at that, we did an internal investigation. Not only that, but there was yet another review

conducted by the National Nuclear Security Agency. They came to

a completely different conclusion than the—than the IG.

For example, someone asked the question earlier, you know, was

that really cheating? What that incident had to do with was a validation of a computer model, using an exercise on the ground to

validate the validity of a training tool. Hence, people were indeed

briefed on the scenario. We found that there was a difference between the computer simulation tool and the way our response

would be executed on the ground. So that information was provided

to the IG. We never heard anything again back.

So we do take investigations—allegations seriously. We investigate them. If we knew of all of these at the time Ms. Smith was

there, believe me, we would certainly investigate them. And I inVerDate 11-MAY-2000 10:57 Jan 09, 2009 Jkt 000000 PO 00000 Frm 00165 Fmt 6633 Sfmt 6633 C:\DOCS\46109.TXT KATIE PsN: KATIE
162

vite an investigation of them now, as I told the IG from the Department of Homeland Security today.

Mr. MURPHY. Mr. Chairman, can I ask just one last question?

Thank you, Mr. Chairman.

I just want to note for the record this isn’t just promotional material sent out by SEIU. This hearing is convened because of reports from the IG’s office, because of independent media reports by

fairly reputable organizations such as the Associated Press. So this

is not simply one particular group with an agenda. These are independent sources as well. That’s a comment.

The question is this: In our interchange, you talked about the

changing circumstances on the ground in that contract, and you

created a distinction between meeting the parameters of the requirements of the contract versus doing what may or may not be

necessary to truly secure that facility.

As the—if you believe—and this is a question I’m just curious

about: If you believe as a contractor that the requirements of the

contract are not sufficient in order to meet the security needs of the

building, if the tenant changes in this case, which would prompt

the security force to be elevated, do you believe it’s the responsibility of the contractor of the agency providing security to either

change of their own volition the security standards for that facility

or to go back to the contracting agency and suggest that the contract be changed?

Mr. BREDE. That’s a fair question.

I believe it is our responsibility as a security contractor to offer

our professional advice to the agency and advise them as to what

is needed.

Mr. MURPHY. Thank you, Mr. Chairman.

Mr. TOWNS. Thank you very much.

Let me just ask you something really quickly.

You know, Carolyn Maloney, who is a member of this committee,

has a bill, and of course—in terms of data base and on the contract

performance, and I know you have.

What’s the difference between what she has and what you’re

doing?

Mr. AMEY. Very little. And we’ve supported Representative

Maloney with that bill for many years, back to when she first introduced it in 2002. That was when our original contractor misconduct

data base came out, and we’ve supported her every year since then.

So I’ve actually taken a look at the bill. I’ve seen the provisions in

the bill. The things that she’s added has changed a little bit this

year from the previous years, but I think she’s getting two—what

Inspector General Skinner stated earlier was she’s getting two very

objective standards that can be used by contracting officers to

evaluate the responsibility level of Federal contractors, and that’s

what we need. We have a real gap there.

Mr. TOWNS. Let me thank all three of you for your testimony,

and I think that it’s very, very important that we do not take this

lightly and—because, as I indicated early on, you know, security is

very important. And I don’t think we can just sort of like pass this

off as some labor union is creating an issue or creating a problem,

you know. I think this is something that needs to be addressed and

needs to be addressed very seriously. And I want you to know

163

that’s my views and my feelings on it, and we’re not going to go

away. We’re not going to go away. There’s just too much of this

going on, and we have to do something. And of course, this is the

committee to do it.

Thank you very, very much. I appreciate your testimony.

This hearing is adjourned.

[Whereupon, at 5:50 p.m., the subcommittee was adjourned.]

Æ