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INVESTIGATION OF PROTECTION PAYMENTS FOR

SAFE PASSAGE ALONG AFGHAN SUPPLY CHAIN

HEARING

BEFORE THE

SUBCOMMITTEE ON NATIONAL SECURITY

AND FOREIGN AFFAIRS

OF THE

COMMITTEE ON OVERSIGHT

AND GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED ELEVENTH CONGRESS

SECOND SESSION

JUNE 22, 2010

Serial No. 111–144

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

(

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

http://www.house.gov/reform

(II)

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

EDOLPHUS TOWNS, New York, Chairman

PAUL E. KANJORSKI, Pennsylvania

CAROLYN B. MALONEY, New York

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

JOHN F. TIERNEY, Massachusetts

WM. LACY CLAY, Missouri

DIANE E. WATSON, California

STEPHEN F. LYNCH, Massachusetts

JIM COOPER, Tennessee

GERALD E. CONNOLLY, Virginia

MIKE QUIGLEY, Illinois

MARCY KAPTUR, Ohio

ELEANOR HOLMES NORTON, District of

Columbia

PATRICK J. KENNEDY, Rhode Island

DANNY K. DAVIS, Illinois

CHRIS VAN HOLLEN, Maryland

HENRY CUELLAR, Texas

PAUL W. HODES, New Hampshire

CHRISTOPHER S. MURPHY, Connecticut

PETER WELCH, Vermont

BILL FOSTER, Illinois

JACKIE SPEIER, California

STEVE DRIEHAUS, Ohio

JUDY CHU, California

DARRELL E. ISSA, California

DAN BURTON, Indiana

JOHN L. MICA, Florida

JOHN J. DUNCAN, JR., Tennessee

MICHAEL R. TURNER, Ohio

LYNN A. WESTMORELAND, Georgia

PATRICK T. MCHENRY, North Carolina

BRIAN P. BILBRAY, California

JIM JORDAN, Ohio

JEFF FLAKE, Arizona

JEFF FORTENBERRY, Nebraska

JASON CHAFFETZ, Utah

AARON SCHOCK, Illinois

BLAINE LUETKEMEYER, Missouri

ANH ‘‘JOSEPH’’ CAO, Louisiana

BILL SHUSTER, Pennsylvania

RON STROMAN, Staff Director

MICHAEL MCCARTHY, Deputy Staff Director

CARLA HULTBERG, Chief Clerk

LARRY BRADY, Minority Staff Director

SUBCOMMITTEE ON NATIONAL SECURITY AND FOREIGN AFFAIRS

JOHN F. TIERNEY, Massachusetts, Chairman

CAROLYN B. MALONEY, New York

PATRICK J. KENNEDY, Rhode Island

CHRIS VAN HOLLEN, Maryland

PAUL W. HODES, New Hampshire

CHRISTOPHER S. MURPHY, Connecticut

PETER WELCH, Vermont

BILL FOSTER, Illinois

STEVE DRIEHAUS, Ohio

STEPHEN F. LYNCH, Massachusetts

MIKE QUIGLEY, Illinois

JUDY CHU, California

JEFF FLAKE, Arizona

DAN BURTON, Indiana

JOHN L. MICA, Florida

JOHN J. DUNCAN, JR., Tennessee

MICHAEL R. TURNER, Ohio

LYNN A. WESTMORELAND, Georgia

PATRICK T. MCHENRY, North Carolina

JIM JORDAN, Ohio

JEFF FORTENBERRY, Nebraska

BLAINE LUETKEMEYER, Missouri

ANDREW WRIGHT, Staff Director

(III)

C O N T E N T S

Page

Hearing held on June 22, 2010 ............................................................................... 1

Statement of:

Phillips, Lieutenant General William, Principal Military Deputy to the

Assistant Secretary of the Army for Acquisition, Logistics, and Technology, Office of the Assistant Secretary of the Army for Acquisition,

Logistics, and Technology, U.S. Army; Gary Motsek, Assistant Deputy

Under Secretary of Defense for Program Support, Office of the Under

Secretary of Defense for Acquisition, Technology and Logistics, Department of Defense; and Brigadier General John Nicholson, Director of

the Pakistan/Afghanistan Coordination Cell, the Joint Staff, Department of Defense ............................................................................................ 95

Motsek, Gary ............................................................................................. 102

Nicholson, Brigadier General John .......................................................... 112

Phillips, Lieutenant General William ...................................................... 95

Schwartz, Moshe, Specialist in Defense Acquisition, Congressional Research Service; Carl Forsberg, Research Analyst, Institute for the

Study of War; Colonel T.X. Hammes, senior research fellow, Institute

for National Strategic Studies, National Defense University; and S.

Frederick Starr, Ph.D., the Paul H. Nitze School of Advanced International Studies, John Hopkins University ................................................ 148

Forsberg, Carl ............................................................................................ 167

Hammes, Colonel T.X. ............................................................................... 179

Schwartz, Moshe ....................................................................................... 148

Starr, S. Frederick ..................................................................................... 201

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

Forsberg, Carl, Research Analyst, Institute for the Study of War, prepared statement of ........................................................................................ 169

Hammes, Colonel T.X., senior research fellow, Institute for National Strategic Studies, National Defense University, prepared statement of ......... 181

Issa, Hon. Darrell E., a Representative in Congress from the State of

California, followup question and response ................................................ 127

Motsek, Gary, Assistant Deputy Under Secretary of Defense for Program

Support, Office of the Under Secretary of Defense for Acquisition, Technology and Logistics, Department of Defense, prepared statement of ..... 104

Nicholson, Brigadier General John, Director of the Pakistan/Afghanistan

Coordination Cell, the Joint Staff, Department of Defense, prepared

statement of ................................................................................................... 114

Phillips, Lieutenant General William, Principal Military Deputy to the

Assistant Secretary of the Army for Acquisition, Logistics, and Technology, Office of the Assistant Secretary of the Army for Acquisition,

Logistics, and Technology, U.S. Army:

Followup questions and responses ....................................................... 120, 137

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

Schwartz, Moshe, Specialist in Defense Acquisition, Congressional Research Service, prepared statement of ........................................................ 151

Starr, S. Frederick, Ph.D., the Paul H. Nitze School of Advanced International Studies, John Hopkins University, prepared statement of ........ 203

Tierney, Hon. John F., a Representative in Congress from the State

of Massachusetts, prepared statement of ................................................... 5

(1)

INVESTIGATION OF PROTECTION PAYMENTS

FOR SAFE PASSAGE ALONG AFGHAN SUPPLY CHAIN

TUESDAY, JUNE 22, 2010

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON NATIONAL SECURITY AND FOREIGN

AFFAIRS,

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM,

Washington, DC.

The subcommittee met, pursuant to notice, at 2:30 p.m., in room

2154, Rayburn House Office Building, Hon. John F. Tierney (chairman of the subcommittee) presiding.

Present: Representatives Tierney, Murphy, Foster, Quigley,

Welch, Issa, and Flake.

Staff present: Andrew Wright, staff director; Talia Dubovi and

Scott Lindsay, counsels; Boris Maguire, Aaron Blacksberg, Brendon

Olson, Victoria Din, and Alexandra Mahler-Haug, interns; John

Cuaderes, minority deputy staff director; Rob Borden, minority

general counsel; Jennifer Safavian, minority chief counsel for oversight and investigations; Adam Fromm, minority chief clerk and

Member liaison; Seamus Kraft, minority director of new media and

press secretary; Justin LoFranco, minority press assistant and

clerk; Tom Alexander, minority senior counsel; and Christopher

Bright and Mark Marin, minority senior professional staff members.

Mr. TIERNEY. A quorum being present, the Subcommittee on National Security and Foreign Affairs hearing entitled, ‘‘Investigation

of Protection Payments for Safe Passage Along the Afghan Supply

Chain’’ will come to order.

I ask unanimous consent that only the chairman and ranking

member of the subcommittee be allowed to make opening statements up to 10 minutes each. Without objection, so ordered.

I ask unanimous consent that the hearing record be kept open

for 5 business days so that all members of the subcommittee will

be allowed to submit a written statement for the record. Without

objection, so ordered.

In our constitutional democracy, Congress is charged with overseeing that the executive branch executes its responsibilities in accordance with the law. Toward that end, this Congress has invested the Subcommittee on National Security and Foreign Affairs

with a clear mandate to root out waste, fraud and abuse wherever

we may find it. Real oversight is a powerful tool for transparency

and accountability, not for political grandstanding.

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Today’s report by the majority staff represents the best tradition

of constructive oversight. After 6 months, 31 witnesses, 25,000 documents, hundreds of hours of work, and, yes, even meeting with

one of the warlords at the heart of the investigation, the report provides the subcommittee, the Congress, and the American people

with significant insight into how the Department of Defense has

managed the supply chain for the U.S. troops in Afghanistan.

An investigation of this nature is akin to a puzzle. We have laboriously gathered the pieces on the table, fit together the edges, and

filled in enough sections for us to understand what the picture will

look like, but there are still portions to be completed. Though the

puzzle is unfinished and important questions remain, the portrait

that emerges is of the Department of Defense’s systematic failure

of management and oversight of contractors along the Afghan supply chain.

In the past 8 years the United States has placed an enormous

burden on our brave men and women in uniform. The military has

been asked to fight two grueling conflicts in some of the most difficult and hostile conditions imaginable. The challenge of supplying

our troops in the field is simply staggering.

To absorb the strain of these burdens the Department of Defense

has increasingly looked to civilian contractors. In some cases using

contractors rather than military personnel makes sense. What initially was a cost effective expediency, however, has morphed into

an institutionalized reliance and wht can be a dangerous shortcut.

As the Congressional Budget Office put it, the recent increase in

the size and scope of contractor support in the battlefield has been

unprecedented in U.S. history. In Afghanistan today we have

roughly 90,000 troops but reportedly use almost 110,000 contractors. As the Department of Defense has increased its reliance on

contractors in conflict zones, it has not sufficiently increased its capability and expertise to manage and oversee those contractors.

At the Defense Contract Management Agency, for example, the

civilian work force fell by 60 percent between 1990 and 2006. The

combination of a massive increase in contracting and insufficient

management and oversight capability is a recipe for disaster. In

the case before us today we have just such a disaster. The Department of Defense outsourced almost all operational components of

the supply chain that provides our troops with the food, water, fuel,

and equipment they need to do their job.

Critically, despite laws and regulations mandating strict oversight of armed private security guards in conflict areas, the Department outsourced management responsibility for those hired gunmen to other contractors. The Department put trucking contractors, many of which only had two or three employees in theater,

in charge of procurement, management, and oversight of small armies of private security contractors. The trucking companies were

then directed to send their subcontracted trucks and subcontracted

security through many of the most dangerous locations on Earth

while carrying millions of dollars of critical supplies for our troops.

According to the report, many in the Department of Defense apparently took comfort in these arrangements. The responsibility for

security and risk of loss was on the contractors and their subcontractors. The prevailing attitudes seemed to be that as long as

3

the trucks got to their destination, don’t rock the boat. When problems did arise, the response was to rap the prime contractors on

the knuckle and remind them to follow the terms of the contract.

To their credit, many of the contractors immediately recognized

that they could not adequately procure, manage, or oversee mass

scale security services in Afghanistan and they raised red flags.

They told the military that they were being extorted, making massive protection payments for safe passage and possibly, ‘‘funding

the insurgency.’’

These extraordinary warnings appear to have fallen on deaf ears.

The contracting officers, contract managers, and relevant regulators consistently responded that the companies just needed to get

the trucks to their destination. Contractors raised serious concerns

about extortion payments funding warlords within 2 days of the

contract performance beginning, and here we are 14 months later

and nothing has changed. Nothing has changed.

The benefits of outsourcing trucking and security in the supply

chain are clear: No U.S. troops are put in harm’s way and they can

instead focus their energies on higher priority missions.

This report, however, must also weigh the cost of contracting out

the supply chain. In short, this contract appears to have fueled

warlordism, extortion, corruption, and maybe even funded the

enemy. U.S. taxpayer dollars are feeding a protection racket in Afghanistan that would make Tony Soprano proud.

Further consideration must now be given to determine whether

the Department of Defense’s failure to provide management, or

properly manage or oversee its supply chain logistics contracts has

undermined the overall U.S. mission.

In January of this year, Major General Michael Flynn, our principal military intelligence officer in Afghanistan, wrote a public report saying that the United States is largely blind, deaf, and dumb

when it comes to understanding local politics, power dynamics and

economic structures within Afghanistan. I would add that the

United States is also largely blind, sometimes willfully so, to the

corrupting influences of our own contracting and development

work. We must be self-aware of how our massive footprint in Afghanistan could affect such a sensitive environment.

Before I close, I want to address a recurring retort to this investigation. Some say this is just the way things are done in Afghanistan. Others have compared the funding of warlords and possibly

insurgents in Afghanistan to the Anbar Awakening in Iraq. There,

General Petraeus used cash and other incentives to strategically

co-opt insurgents. Blindly funding warlords by extortion and corruption in Afghanistan through multiple layers of invisible subcontracting is no Anbar Awakening. If the Department of Defense

wants to co-op warlords or strongmen or insurgents with U.S. taxpayer dollars, military commanders in the field need to take direct

responsibility for those relationships in order to ensure absolute accountability.

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This oversight committee is charged by Congress with the stewardship of American taxpayer dollars, and rooting out waste, fraud

and abuse wherever we may find it. With this report in hand, we

intend to hold the Department of Defense accountable to the subcommittee, to Congress, and to the American people.

With that, I defer to Mr. Flake for his opening remarks.

[The prepared statement of Hon. John F. Tierney follows:]

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Mr. FLAKE. I thank the chairman for holding this hearing and I

thank the chairman for initiating this very thorough, enlightening,

and very sobering investigation.

The chairman has already summarized the report, so I won’t go

into detail. Let me just make a couple of broad observations.

The counterinsurgency plan that we are employing in Afghanistan is dependent on a central government in Kabul that will extend its writ beyond Kabul. This report presents strong evidence

that this is not occurring. The counterinsurgency plan we are employing in Afghanistan is dependent on our ability, the ability of

our military and those of our NATO partners, to provide security

to the Afghan citizenry. This report presents strong evidence that

this is not occurring. In fact, it seems that security in any meaningful sense does not extend beyond the security gates of our military bases.

I hope that the Department of Defense takes the recommendations contained in this report seriously. But let’s face it, even if the

recommendations are implemented in their entirety, we are just

tinkering at the margins here. In my view, the real value of this

report is that it presents more irrefutable evidence that our overall

strategy in Afghanistan needs to be examined and overhauled. It

is not something that can be salvaged with time and troop levels.

I look forward to the witnesses’ statements.

Mr. TIERNEY. Thank you very much, Mr. Flake. The subcommittee will now receive testimony from the first panel before us here

today. I will take a moment to just introduce all three before we

start the testimony.

Lieutenant General William Phillips is the Principal Military

Deputy to the Assistant Secretary of the Army for Acquisition, Logistics and Technology, as well as the Director for Acquisition Career Management. He served previously as the commanding general of the Joint Contracting Command in Iraq and Afghanistan

and the program executive officer for ammunition. Lieutenant General Phillips holds a BS from Middle Tennessee State University,

an MS in procurement and materials management from Webster

University, and a Master’s of Personnel Management from Troy

State University. In 2001, he was named the Army’s Acquisition

Commander of the Year.

Mr. Gary Motsek is the Assistant Deputy Under Secretary of Defense for Program Support. In his current capacity Mr. Motsek is

the principal adviser to the Office of the Secretary of Defense leadership on policy and program support to the Geographic Combatant

Commands. Previously, he served as the Deputy G3 for Support

Operations, the Assistant Deputy Chief of Staff for Ammunition in

the U.S. Army Material Command, among other positions within

the U.S. Army and NATO. Mr. Motsek received a BS in environmental engineering from Syracuse University, an MS in management from Troy State University and a level three certification

from the Defense Acquisition University.

Brigadier General John Nicholson is the Director of the Pakistan/

Afghanistan Coordination Cell on the Joint Staff, where he is responsible for synchronizing the military activities of the services

and combatant commands in the region. Previously, he served in

Afghanistan as the Deputy Commanding General for Regional

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Command South as part of the International Security Assistance

Force and Deputy Director for Operations for the National Military

Command Center. General Nicholson has a Bachelor’s Degree from

the U.S. Military Academy and Georgetown University, a Master’s

in Military Arts and Science from the School for Advanced Military

Studies, and an MA in National Security Studies from the National

Defense University.

I want to thank all of you for making yourselves available today

and for sharing your substantial expertise. It is the policy of this

committee to swear in the witnesses before you testify, so I ask you

to please stand and raise your right hands.

[Witnesses sworn.]

Mr. TIERNEY. Thank you. The record will please reflect that all

the witnesses answered in the affirmative.

I think, as you gentlemen know, that your full written statement

will be entered into the record by previous agreement of the committee. I would ask you to summarize it if you could within as close

to 5 minutes as possible. You will be able to determine that from

the lights before you. When it is green you go, when it is amber

you have about a minute left, and when it is red if you would

please start to wind up and bring it to a conclusion so we can have

time for people to ask questions as well.

General Phillips, if you would.

STATEMENTS OF LIEUTENANT GENERAL WILLIAM PHILLIPS,

PRINCIPAL MILITARY DEPUTY TO THE ASSISTANT SECRETARY OF THE ARMY FOR ACQUISITION, LOGISTICS, AND

TECHNOLOGY, OFFICE OF THE ASSISTANT SECRETARY OF

THE ARMY FOR ACQUISITION, LOGISTICS, AND TECHNOLOGY, U.S. ARMY; GARY MOTSEK, ASSISTANT DEPUTY

UNDER SECRETARY OF DEFENSE FOR PROGRAM SUPPORT,

OFFICE OF THE UNDER SECRETARY OF DEFENSE FOR ACQUISITION, TECHNOLOGY AND LOGISTICS, DEPARTMENT OF

DEFENSE; AND BRIGADIER GENERAL JOHN NICHOLSON, DIRECTOR OF THE PAKISTAN/AFGHANISTAN COORDINATION

CELL, THE JOINT STAFF, DEPARTMENT OF DEFENSE

STATEMENT OF LIEUTENANT GENERAL WILLIAM PHILLIPS

General PHILLIPS. Chairman Tierney, Congressman Flake, distinguished members of the Subcommittee on National Security and

Foreign Affairs, thank you for this opportunity to discuss the role

of the U.S. Army in the Department of Defense’s management and

oversight of the Host Nation Trucking contract in Afghanistan. I

am pleased to represent the Army leadership and the over 40,000

members of the Army acquisition work force, to include contracting,

and the more than 1 million soldiers over 81⁄2 years who have

served in combat in support of our country in Iraq and Afghanistan.

Most importantly, I have worked with the Host Nation contract

as the Commander of Joint Contracting Command in Iraq and Afghanistan where we have served greatly to provide supplies, services, and equipment at the right place and right time for our soldiers and all our service members.

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As I mentioned, Mr. Chairman, I had the privilege of serving as

Commanding General of Joint Contracting Command Iraq and Afghanistan [JCCIA]. Although my duties and my office was in Baghdad, I traveled frequently throughout Iraq and to Afghanistan.

Let me state from the outset that the Host Nation Trucking contract is absolutely vital to the sustainment of our forces in Afghanistan. Contracting for, obtaining, and overseeing services in an austere environment and a fragile economy with a poor financial system, limited rule of law and during hostilities is a dangerous and

difficult task that is being performed daily throughout Afghanistan.

Through the Host Nation Trucking contract, more than 90 percent

of our forces in Afghanistan receive food, water, equipment, ammunition, construction materials, and other badly needed supplies.

In the last year, or since May 2009, there have been more than

60,000 trucking missions performed by Host Nation Trucking. Each

mission is a critical and effective means to meet the needs of our

warfighters, whose numbers today will soon reach about 90,000 in

Afghanistan.

Mr. Chairman, in all Army contracting operations worldwide we

strive to be responsive to our warfighters while ensuring proper

physical stewardship of taxpayer dollars. Our progress in these

areas has been steady, even though expeditionary military operations have placed extraordinary demands on the contracting system and our contracting professionals. Upholding the highest ethical standards of discipline in contracting is of paramount importance, sir, as you indicated in your opening comments. And even

though we have confidence in the talent and professionalism of our

Army’s contracting work force, we remain vigilant at all times. We

are working continually throughout the Army to actively engage

with the Department of Defense to eliminate areas of vulnerability

in contracting.

During my time in JCCIA, I was deeply committed to maintaining high standards of ethics and discipline in all contracting operations. My team and I conducted over 11 internal procurement

management reviews of regional contracting center operations, and

we have identified some of the hard lessons and deficiencies and

we have worked hard to institutionalize those processes inside everything that we do by applying lessons learned.

I often refer to my contracting work force that served in Iraq and

Afghanistan as contracting warriors because they serve beside our

warfighters in areas throughout Iraq and throughout Afghanistan.

Last March, another comprehensive procurement management

review was undertaken in Afghanistan. The final report is nearly

complete, and the findings indicate strongly that contracting officers continue to maintain the highest ethical standards and discipline in their daily work. These positive findings are attributed

to the extraordinary talent of our contracting officers. Again, I call

them contracting warriors.

Sir, there really are five elements that I implemented as JCCIA

to work on ethics and discipline in everything that we do. Briefly,

first, before they enter theater they have to complete the Defense

Acquisition University ethics training.

Second, all personnel upon arrival must attend a newcomers ethics briefing.

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Third, all personnel must complete the Department of Defense’s

standards of conduct annual ethics training.

Fourth, our judge advocate generals as they go around theater

also provide ethics training twice a year to every contracting officer.

And fifth, during weekly meetings we focus on ethics.

Mr. Chairman, we are working constantly to improve our contracting operations, our educational training ethics and discipline

in everything that we do. Our progress is significant.

The Host Nation Trucking contract is a prime example. We adhere to the statutes under the Federal acquisition regulations for

open and fair competition while ensuring that our warfighters receive badly needed material and supplies.

Mr. Chairman, I assure you that we take the allegations that you

have outlined in your opening statement very seriously within the

Department of Defense and we will work hard to fix the areas of

concern.

Sir, thanks to you and this subcommittee for this opportunity to

appear before you. I look forward to your questions.

[The prepared statement of General Phillips follows:]

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Mr. TIERNEY. Thank you, General. We appreciate your comments.

Mr. Motsek, if you would please.

STATEMENT OF GARY MOTSEK

Mr. MOTSEK. Chairman Tierney, Ranking Member Flake, and

members of the committee, thank you for this opportunity to appear before you today to discuss the program management and

oversight of private security contracts.

As the Quadrennial Defense Review acknowledged, contractors

are part of the total force along with military forces and government civilians and, as the chairman noted, provide an adaptable

mix of unique skill sets, local knowledge, and flexibility that a

strictly military force cannot cultivate or resource for all scenarios.

Contractors provide a broad range of supplies, services, and critical

logistics support in many capability areas, while reducing the military footprint and increasing the availability and readiness of resources. Typically, there’s a higher reliance on contracted support

during the post-conflict phases of an operation. This is especially

true in this current operation where we are conducting multiple

phases of the operation simultaneously and not sequentially.

Current operations in the U.S. Central Command Area of Operations require private security contractors to fulfill a variety of important security functions for the Department of Defense, Department of State, and other U.S. Government entities supporting both

Iraqi Freedom and Operation Enduring Freedom. Relief, recovery

and reconstruction of a post-conflict region are traditionally civilian

functions, and thus it is entirely appropriate for civilian resources

to be used to protect them. By using civilian resources to accomplish these selected civilian tasks, military forces can focus on the

military mission.

DOD’s use of local nationals to perform private security functions

support the U.S. CENTCOM Commander’s counterinsurgency

strategy. These local national jobs are central to the COIN operations. In Afghanistan today 93 percent of DOD contracted PSC

employees are local nationals. Many have assumed risk and have

sacrificed protecting key movements and facilities and freeing up

key combat capability.

However, even as the COIN strategy is enhanced by employing

local nationals as armed contractors, security and reliability concerns must be considered, especially in countries where there are

no reliable data bases for traditional vetting and where personnel

and company records are limited or nonconsistent.

As required by statute and noted in this committee’s report,

DOD’s policies on armed PSCs apply to all employees at any contract tier. With impetus from senior DOD leadership, there has

been a concerted effort now to improve the compliance with these

policies. A number of significant challenges impact this effort, and

DOD is working to address these challenges to facilitate compliance. However, we do acknowledge there are risks and we must address them.

In spite of these challenges DOD policy requires all contract personnel regardless of nationality to comply with our DOD regulations, as well as the applicable laws of the United States and the

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host country. There is no immunity clause to protect contractors

from local law. U.S. Government PSCs, again, at any tier are required to comply with host nation registration and be properly licensed to carry arms in accordance with host nation law. DOD employees are also required, consistent with their terms of contract,

to obey the orders of the commander in the area which they are

operating.

Finally, individual companies have their own standards of conduct, and DOD contractors have generally demonstrated a consistent pattern of terminating employment of individuals who violate

these standards. On a whole U.S. PSCs are operating in accordance

with host nation laws and support the overall COIN objectives.

The intent of the Ministry of Interior in Afghan is to transition

in the future most of the security functions presently performed by

PSCs to the Afghan National Police as it matures. We take any allegations of corruption seriously, and to my knowledge we have

several organizations charged with investigation, and we will take

action on those that can be legally documented with the appropriate level of forensic evidence.

Contractors employed to perform security functions for DOD are

only a fraction of the total private sector security, public-private

and international forces in the CENTCOM Area of Responsibility.

Many of the same contractors the United States employs also perform for other countries, the host nation, nongovernment organizations and private organizations. This is one of the principal reasons

that OSD is supporting the initiative to move beyond the Montreux

document and implement an industry-led, government supported,

international accountability regime that will apply to all PSCs in

all operational environments. This will change the present paradigm of primarily relying on the MOI, Ministry of Interior, license

with an independent third party to assess compliance with the

standards. I believe the committee’s efforts have been instrumental

in getting into the House version of the 2011 NDAA language that

requires this third-party certification in the future, and I welcome

it and I thank you for that.

Whether or not the U.S. Government employs PSCs there will always be PSCs in the contingency area. The draft standard that I’ve

just referred to has been developed and is being refined by a working group drawn primarily from the United States, the U.K. And

the Swiss governments with participation from the private security

industry and nongovernmental organizations active in human

rights and the law of armed conflict. The aim of this is to standardize the principles and to attain an accountability mechanism later

this year.

I thank you and would be happy to answer any of your questions.

[The prepared statement of Mr. Motsek follows:]

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Mr. TIERNEY. Thank you, Mr. Motsek. And General Nicholson, if

you would please.

STATEMENT OF BRIGADIER GENERAL JOHN NICHOLSON

General NICHOLSON. Chairman Tierney, Ranking Member Flake,

and other members of the committee, thank you for the opportunity

to appear before you today to discuss how we can better link contracting and the flow of U.S. Government contracting funds to a

winning counterinsurgency strategy in Afghanistan.

The focus of our COIN strategy in Afghanistan is the Afghan

people. This population-centric counterterrorism operation rests on

a couple of principles. One, enabling and expanding an effective Afghan National Security Force, securing the population in key areas,

and then connecting the government of Afghanistan to its people

through improved governance and economic development. So optimizing the effects of our contracting dollars in support of this approach is crucial to our success.

In order to do that, in order to more effectively link U.S. contracting to desired operational effects in a winning COIN strategy,

the chairman of the Joint Chiefs of Staff directed the establishment

of Task Force 2010. It has been chartered by the Commander of

U.S. Forces in Afghanistan. Task Force 2010 will improve visibility

of U.S. contracting flows in Afghanistan in order to ensure that

U.S. dollars can complement the COIN campaign more effectively.

This improved visibility of the contract funds will provide awareness on how money flows from contractors to subcontractors to

tribes, factions, individuals.

This is no easy task, and it involves and integrated effort at all

levels to gain visibility of the money flow, understand and shape

perceptions of the Afghan people, correct the behavior of some Afghan contractors, and gaining awareness and a level of control over

the second order effects of U.S. contract spending on the environment.

Task Force 2010 is led by Rear Admiral Kathleen Dussault, U.S.

Navy, a former Commander of the Joint Contracting Command

Iraq and Afghanistan. She is in the country now. She is leading an

experienced forward deployed task force of about 25 planners, intelligence analysts, auditors, contracting experts, law enforcement

personnel, and strategic communication specialists. They will integrate with other efforts in theater, including the threat finance cell

and the anticorruption task force. We’ve established working

groups in the Pentagon to provide reach-back support for her task

force in the areas of financial intelligence, contracting policy, and

in COIN effects.

Contracting provides—and I speak now, sir, as a customer of contracting as a former commander in Afghan. Contracting provides

much needed products and services to our soldiers, sailors, airmen

and marines. Contracting for products and services such as Host

Nation Trucking reduces the risk for our service men and women.

Given that 60 percent of our casualties in Afghanistan are caused

by IEDs, it is logical that the fewer service members who are on

the road, the fewer service members are exposed to the threat of

IEDs and then ideally the fewer will become casualties.

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Contracting in the ‘‘Afghan first’’ policy has the great potential

to produce very positive COIN effects: job creation, capacity building, providing for business growth. All are necessary to create a

self-sustaining Afghan economy, an economy that’s been racked by

30 years of war. The key here from our perspective is optimizing

the positive effects of our contracting investment while sustaining

the positive effects for our service members.

And, Sir, we look forward to working with the committee to

achieve this improved capability and optimizing effects of those

contracting dollars in country. Thank you.

[The prepared statement of General Nicholson follows:]

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Mr. TIERNEY. Well, thank you. Thank all of you for your testimony. I want to set a tone of respectfulness here, because we do

respect all the service that you gentlemen have given to your country. And we do that very sincerely, and I want to make sure that

we do that today.

I listened to some of the testimony with a little bit of incredulity,

not because I doubt anybody’s intention or the hard work that went

into a lot of the systems that were set up. I do have an issue with

how anybody could think that it is actually being carried out on the

ground that way, and I’m going to talk about that a little bit.

General Nicholson, I think you get it. Listening to your testimony, the idea here is you have two choices. One is either we have

the wrong strategy and we have to look at that. If that’s the case,

how are we going to do this other than the way we are doing it

now. And the other is if you’re going to continue on with the strategy, the other option is how do you get better management and better oversight involved, which clearly from this report is not there.

So I thought that your comments most directly addressed the situation that we have.

But General Phillips, let me start with you if I can on a question.

And I’m going to try—I think on page 12 of the report I recall a

little chart to sort of see where you gentlemen fit in on this because

it gets to be a little convoluted. But, General Phillips, you are the

Army Acquisition Executive. You are right now the principal military deputy to the Army Acquisition Executive, right?

General PHILLIPS. Yes, sir.

Mr. TIERNEY. So you directly meet with the Secretary of the

Army’s Office. You were the Joint Contracting Command for Iraq/

Afghanistan, which would be—now reports to you, I guess would be

the case on that.

General PHILLIPS. Sir, not directly to me. I am not in the chain

of command for the Commanding General of JCCIA. It would flow

through CENTCOM. But the contracting authority actually flows

through Mr. Ed Herrington, who works for Dr. O’Neill, the Army

Acquisition Executive. I am not in that chain of command.

Mr. TIERNEY. So let me talk to you as the former JCCIA, as you

say. Under the terms of the Host Nation contract there are eight

prime contractors and they’re required to provide security for their

trucks and the supplies that are carried in those trucks. The security provisions in the contract specify about 6 security vehicles and

24 guards as armed security for every 20 trucks. The Host Nation

Trucking companies run up to about 8,000 truck missions per

month that require the procurement, management and oversight of

a small army of thousands of Afghan security guards.

So my question to you is, do you believe it is appropriate to have

trucking contractors, many of which only have two or three at most

of their employees in theater and they have never been on the

road, do you believe it is appropriate to have them managing and

overseeing thousands of armed security guards in a war zone?

General PHILLIPS. Sir, under the Host Nation contract that we

have with those eight vendors, part of that, as you just described,

is that they provide their own private security. And then they go

out and subcontract for that, which is allowable under the terms

and conditions of the contract that we put into place.

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Mr. TIERNEY. But I guess my question is how appropriate is—

once you do that, I know sort of the suave thing to say is like, all

right, that’s done, you know, give it to them and it is all on their

shoulders now, but when we know that there’s only two or three

people in their company that are in country and that they have

never been out on the road, do we think that’s the appropriate

oversight and management here?

General PHILLIPS. Sir, it is important that when we vetted each

of those contractors up front, before we actually signed the Host

Nation contract, it was important that we made sure that they had

the right management in place.

Mr. TIERNEY. So you thought that two or three was sufficient or

you didn’t know that two or three were all that they had?

General PHILLIPS. Sir, to make the award we clearly considered

the management structure of each one of those eight contractors

sufficient in terms of being able to oversee the contract.

Mr. TIERNEY. I want to pin you down a little bit here if I can.

So you thought the two or three were sufficient to oversee those

thousands of Afghan security guards, because that’s all they had?

Did you not know that’s all they had or did you think that would

be just fine, two or three is fine?

General PHILLIPS. Sir, at that time I had no visibility into how

many people, at my level how many people actually were involved

in the day-to-day management of the contract.

Mr. TIERNEY. And I guess my other problem is nobody seems to

have visibility into that, because if you read the report, you get

down that even people between you and those contractors could

never tell you who was doing it?

General PHILLIPS. Sir, I can assure you that the principal assistant responsible for contracting in Afghanistan, that’s PARC-A, the

colonel that ran it, as well as the contracting officer, used a very

rigorous source selection evaluation criteria. When they looked at—

there were 35 initial vendors who submitted proposals for the Host

Nation Trucking contract. When we looked at it initially we narrowed that down to 10 vendors. And we looked at technical capability, managerial experience, they looked at past performance as well

as past experience, security, how they planned to execute security,

and price, price was a key factor. But all those factors went into

the final decision to select them.

Mr. TIERNEY. So I guess I’m still unclear whether the criteria of

two or three people in that company to manage the whole thing

was OK with them or they didn’t know that. Did they not know

that they were paying warlords to do some of it or did they think

that was OK, it is the cost of doing business? Those are the things

I think we need to ask.

General PHILLIPS. Sir, I can’t answer your question. I would have

to go back and look at the actual decision that was made for the

source selection and determine based upon the bids of those contractors the exact management structure of each one of them. I

personally can’t recall a discussion, whether there were two, three

or more within a management structure of the eight prime vendors

to manage Host Nation Trucking.

Mr. TIERNEY. Well, when you were the JCCIA, the Joint Contracting Command for Iraq and Afghanistan, were you aware that

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prime contractors were regularly complaining that they were making protection payments for safe passage, or ‘‘possibly funding the

insurgency?’’ Did that ever get to your attention?

General PHILLIPS. Sir, I was personally not aware of that.

Mr. TIERNEY. Mr. Flake.

Mr. FLAKE. Thank you. General Phillips, can you tell me how

many times the Department of Defense has gone outside of the

gates to actually ride with some of these convoys or these shipments going from base to base?

General PHILLIPS. Sir, the contracting officer representatives that

work for the 419th Movement Control Battalion, very rarely will

they go outside the fence line in terms of monitoring the operations. But what they do that through is through the in transit and

visibility that’s on board about 84 percent of the vehicles that operate in and out of Afghanistan.

Now, beyond that, if they are transporting things like MRAPs,

we will have government military that will accompany those convoys for items like MRAP or high visibility items.

Mr. FLAKE. How often is that?

General PHILLIPS. Sir, I don’t know. I would have to take that

for the record and get you an answer. Whenever they are moving

heavy equipment like MRAPs or MATVs in or out of theater they

will normally put a military convoy with that. I don’t know exactly

how often, sir.

[The information referred to follows:]

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Mr. FLAKE. If you could get back to us on that, that would be

helpful.

General PHILLIPS. Sir, will do.

Mr. FLAKE. In the times that you have been off base, any Department of Defense officials, have you witnessed any of the activities

that have been detailed in the report?

General PHILLIPS. No, sir, I do not have any personal knowledge,

nor has it been presented to me, of those allegations occurring. I

do know there’s an ongoing investigation that General Nicholson

mentioned up front that continues to try to determine what the

facts are associated with the allegations that were discussed earlier. So the investigation is ongoing by CID, I’ve had discussions

with them, and I know they continue to pursue it very aggressively.

Mr. FLAKE. Mr. Motsek, you mentioned that people at all levels

of the contracting process have to abide by the regulations of DOD,

which includes no up-armored convoys, nothing more than an AK–

47, I believe, is supposed to be carried along. Are you aware of or

do you dispute the findings in this report that indicate that virtually every convoy that goes out is guarded by subcontractors who

carry things far in excess of what the Department of Defense allows?

Mr. MOTSEK. Sir, let me answer that part of the question first.

Generally speaking, PSCs by the fragmentation order, fragmentary

orders issued by the commander in field, are restricted to what you

and I would consider small arms; however, it is not a unilateral

stop. When I read the report, I hadn’t had a chance to research

this, but when I read the report there is a process to go to the

Army office that the commander has in the field, the four star commanders in the field, to be authorized to carry weapons beyond a

762 or a 556 or a 9mm small arm. So that’s one part of it.

So generally speaking, the vast majority of our PSCs in Afghanistan and Iraq, quite frankly, carry small arms, as you correctly

mentioned.

Mr. FLAKE. So that picture there of that truck with the armor,

sir, that would be in violation?

Mr. MOTSEK. I can’t tell you—I saw that picture this morning.

I cannot tell you specifically if that’s a violation, because there is

a possibility that contractor had the authority—requested and received authority—to carry additional weapons.

Mr. FLAKE. Can you tell me how many people, if anybody, at

DOD has interviewed beyond the prime contractor level, under the

prime contractor level? As we know from the report, the prime contractors rarely know who even provides the security of the subcontractors below them. Has DOD interviewed anyone beyond the

prime contractors?

Mr. MOTSEK. At the DOD level, sir, I am not aware of anyone

that did that. And it also brings up the second question that you

brought up earlier. The challenge I think we have had is that we

have relied on the licensing process that the Minister of the Interior had. Minister Atmar, the previous Minister of Interior, was

very aggressive in trying to make that the standard to the extent

we were restricted to the number of companies we could operate

with, the numbers of contractors they could have. As I told you in

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my opening testimony, however, I feel that is insufficient. We need

this third party.

Mr. FLAKE. In my remaining seconds I just want to say, if you

haven’t ridden along with the convoys, very, very rarely, if ever,

and if you haven’t interviewed anybody beyond the prime contractor, then it is tough to know what’s really going on. And beyond

that it seems that we—I would feel a lot better to hear somebody

say, hey, this is the price of business in Afghanistan, this is all we

can do. We can’t be like the Soviets who devoted three-quarters of

their force structure to protecting supply routes. That is not the

most efficient way. We understand that. But just to say, it is not

occurring, we don’t see it so it must not be occurring, that just

seems a little too much to hear.

Mr. TIERNEY. Thank you, Mr. Flake. Mr. Foster.

Mr. FOSTER. I would like to start, if I may, by yielding back such

time as the chairman may consume for followup.

Mr. TIERNEY. Thank you. I appreciate that. I just wanted to

make one point if I could. Mr. Motsek, the fact of the matter is that

the record indicates that the request was sought for authorization

of heavy up-armor and denied. But that truck that you see over

there, the emblem on the front of it is Watan Risk Management,

and that in the back is a DSHK 50-caliber rifle, which is certainly

not authorized. And Commander Ruhullah, when asked about

whether or not he is in compliance with the regulations, his response was what regulations.

And if I might, I yield back to Mr. Foster.

Mr. FOSTER. Thank you. First, do contractor truck convoys receive any level of tactical support, air support, this sort of thing?

And could you contrast what a contractor truck convoy looks like

compared to a military one, you know, with U.S. troops, in terms

of the support it gets and the procedures?

Mr. MOTSEK. So with the exception of MediVac, medical evacuation, generally speaking there is no additional support provided to

a private or commercial shipment as it transits. They don’t have

the capability of calling close air support or something of that nature. Depending upon where you are in the country, if there is an

issue you can request support, but it is not normally part of the

package.

Part of our challenge and part of our responsibilities as the U.S.

forces is to make a threat assessment each and every time that

you’re going to authorize a convoy to go out. And the commander

on the ground has to weigh whether or not the risk assessment, the

force protection requirements, are such that he will permit the

movement or not permit the movement. And that’s generally the

process that they use to maintain an overall security package

around the convoy.

A military convoy is clearly, clearly that. Its forces are indigenous. They are military forces operating under rules of engagement, not on the rules of use of force. The primary difference is

that if a military convoy is attacked—let me step back. Generally

speaking, if a civilian convoy is attacked their mission is to leave,

their mission is to protect themselves and to egress the area as

rapidly as possible. A military convoy, because it is a military operation operating under rules of engagement may elect to close with

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the enemy and engage them in combat. So there is a profound difference in what could happen after the attack.

But there are infrequent times, as General Phillips noted, when

we have mixed convoys out there where the military and a civilian

convoy are mixed. And in those instances, to my knowledge, they

are clearly under pure military control. The military exerts the authority over the whole convoy, movements and stoppages. Again,

the PSCs are not to operate in an offensive mode.

Mr. FOSTER. So what I am fishing for maybe more explicitly is

whether a higher level of support for the civilian contractors might

teach the bad guys a lesson, so to speak, that it is not a good idea

to go and attack the non-U.S. military convoy. Has that been tried?

Do you have any comments on whether or not that’s a useful strategy?

General NICHOLSON. Yes, sir. Generally we have not done that

with ISAF forces. However, the Afghan forces, Afghan police and

Afghan army, might be the first responders in the case of a Host

Nation truck or convoy that would encounter problems. And as Mr.

Motsek mentioned, in cases of medical evacuation being required

and then if we received a call from an Afghan police unit or military unit that there were injured civilians, then we might respond

to that based on the specific conditions of the incident.

Mr. FOSTER. For example, do we even monitor the roads for unauthorized checkpoints, things like that, which I presume could be

done from the air?

General NICHOLSON. Yes, sir. The military for ISAF and Afghan

forces are doing partnered operations across Afghanistan now. And

part of that is the police and the army enforcing the rules, laws of

the state. As you’re probably aware, the MOI has been seeking to

certify these private security companies. So Afghan police or military would certainly question—if they see weapons and they didn’t

know who they were, they would typically try to ascertain if is this

an authorized force with these weapons, you know, do they have

that kind of authorization.

I would also mention President Karzai has indicated a desire to

reduce the number of private security contractors. And given that

the Congress has funded the growth of the Afghan security forces,

military and police to 300,000 by the end of 2011, he set that rough

target date as a time to legitimize these private security companies. So there has been an expression of will on the part of the Afghan Government to reduce the number of private security contractors on the battlefield commensurate with the growth that we are

enabling in their own security forces so they can exercise their sovereign responsibility as a nation to provide security within their

own borders.

Mr. FOSTER. Thank you. I see the red light is on.

Mr. TIERNEY. Thank you. Mr. Issa.

Mr. ISSA. Thank you, Mr. Chairman. Mr. Chairman, I will ask

the best questions I can. I would note that if the majority report

had come out before 10:30 last night it would have been easier for

our committee to have all questions available.

Additionally, Mr. Chairman, there appears to continue to be an

absence of any written transcription of many of the interviews. Are

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there written transcriptions that can be made available to us or

only the notes from oral testimony?

Mr. TIERNEY. Are you yielding for that?

Mr. ISSA. Yes, sir.

Mr. TIERNEY. As you know, Mr. Flake and I discussed the issue

of transcriptions at the outset. And, Mr. Flake and I, the ranking

member, were in agreement that we would proceed and take notes

at those interviews. All of the interviews were attended by both the

majority and minority staff. Notes were produced of each interview

and sent to both majority and minority staff. And in 6 months we

have not heard back any comments on the notes about whether

they were not inclusive or whether there was an error or whether

there was an edit or anything of that basis and we proceeded, of

course, with the assumption that everything was acceptable. And

so the report may not have come out until last night, although we

gave minority an opportunity to work with us on the report and assumed that they were doing their own. That turns out not to be

the case.

Mr. ISSA. I thank the chairman. Reclaiming my time, General

Phillips, if there were transcriptions and they showed any level of

criminal activity, would that aid in the Department of Defense

making such changes, including criminal prosecutions, and if not,

are you able to work with written notes from oral testimonies

equally well?

General PHILLIPS. Sir, again, we take the allegations very, very

seriously. And I think if that information——

Mr. ISSA. Would you take them as seriously when they’re notes

as you would if they were verbatim transcription?

General PHILLIPS. Yes, sir. If there were facts and evidence that

was made available to CID or to us that there was criminal activity

or bribery or those kinds of things that are ongoing within the Host

Nation Trucking contract, I would assure you that under my command the contracting officers would have taken quick action to address the situation.

And during my—if I could add real quickly, during my 1 year in

Iraq we took numerous actions to do show cause notices, cure notices and letters of concern to contractors when they would step out

of line and violate the rules and regulations, terms and conditions

of our contracts.

Mr. ISSA. Thank you. General Nicholson, you’re the lucky man

here today. It appears as though making sure that our two allies,

Pakistan and Afghanistan, do their job in the war on terror falls

to you, is that correct, the coordination of that?

General NICHOLSON. Yes, sir, it is my responsibility to synchronize the activities of the Joint Staff and the services in execution of this campaign strategy, yes, sir.

Mr. ISSA. Now, in World War II, Korea, and Vietnam, there were

civilian contracts for transport of military goods and military support goods just as there are in Afghanistan, correct?

General NICHOLSON. Yes, sir, I believe so.

Mr. ISSA. Did we ever pay tribute to the enemy, like the Vietcong

in order to move our goods safely to our troops?

General NICHOLSON. If that occurred I’m not aware of it, sir.

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Mr. ISSA. So would it be reasonable to say that you have communicated to both our allies, Pakistan and Afghanistan, zero tolerance

for any moneys being skimmed off or paid in order to provide safe

transport?

General NICHOLSON. Sir, our intent to not provide any aid or assistance to the enemies are very clear to our allies.

Mr. ISSA. No, I was more specific. The Pakistan government and

military—the Afghan government and military, are they aware of

that expectation of zero tribute, whether directly to aid the enemy

or simply skimming off for purposes of funding individuals of some

rank in their governments?

General NICHOLSON. Sir, I would think so. I would have to go

back and check with the commanders on the ground who do that

coordination if you wanted specifics of that.

Mr. ISSA. Do you have a written policy delivered to those two

governments making it clear that we consider it a breach of our relationship as allies if any money is skimmed off by any government

person and not rigorously enforced?

General NICHOLSON. I have to defer back to the contracting side

with respect to financial arrangements.

General PHILLIPS. Sir, we would take action if we had any—

again, if we had any evidence that——

Mr. ISSA. General, that wasn’t the question. The question was as

to our two allies, we are funding both Pakistan and Afghanistan

to a huge extent, and although they’re slow Afghanistan is expected to ramp up a huge amount of troops, troops capable of

riding alongside with guns to protect convoys and to do so at no

additional cost beyond the support we give them of weapons, food,

ammunition, radios, the works. Is there a record, a documented

written record, of our dealing both militarily and at a government

level to that expectation that there will be no skimming, no payola,

no payment, whether it goes to the enemy or simply goes to connected people in their governments?

General PHILLIPS. Sir, under ‘‘Afghan first’’ policy within Afghanistan, which was my authority during my tenure there, our contracts and our clauses prohibited that kind of activity. And if it is

brought to our attention we would not tolerate it. We would take

action.

Mr. ISSA. Mr. Chairman, I don’t want to belabor the point. My

time is expired. But I would like an answer as to whether has that

been communicated to the government, not the question of is it in

the contract with the various people contracted. The answer is not

responsive to the question. I apologize, but I would like that answer.

Mr. TIERNEY. Well, if any of you gentlemen feel that you want

to change your answer or add to it, I will give you a moment to

do that. Otherwise we will move on and we can pursue that afterwards?

Mr. MOTSEK. We are stuck as we are not policy folks.

Mr. ISSA. ‘‘I don’t know’’ is acceptable. We don’t know if the government has received that in writing would be OK.

Mr. MOTSEK. And we would have to take that for the record.

Mr. ISSA. If you would, I would appreciate it.

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Mr. TIERNEY. Thank you, Mr. Issa.

Mr. Quigley, you are recognized for 5 minutes.

Mr. QUIGLEY. Thank you, Mr. Chairman. Mr. Chairman, I’ve

been here 14 months now and this is the kind of work that the

committee should be about, so I applaud your efforts and your staff

efforts.

Gentlemen, put yourself in our place. I understand your lack of

awareness of what was taking place, but what would concern—you

or us, but what is concerning is the fact that it took the committee

and staff to ask these questions. Now, sir, you call them allegations, they are called findings here, but either way at least they are

asking the right questions.

Were you aware if any of these questions were asked at all by

anybody else within your command?

General PHILLIPS. Sir, I will start and then let my teammates

join in. Under Host Nation Trucking, I was not personally aware

of the kind of allegations that are being made. But I have to say

that we take them seriously, just as you and this committee have

taken them seriously. When the allegations are presented, we need

to research them to determine what the facts and the evidence are,

and then to take—have the evidence that we can take hard actions,

whether it is contractually or legally, in some kind of way, and

then eventually I would assume go back and work with the government of Afghanistan.

So I guess my message to you understanding where the committee is today and the report that was issued last night or this morning, we do take those allegations seriously and we will work them

accordingly within the Department of Defense.

Mr. MOTSEK. Sir, I can’t comment on the specific findings of the

report because I was not aware of them. However, for example, I

took the Commission of Wartime Contracting to Afghanistan in December, and I participated in the briefing with one of the anti-corruption task force briefings. So I was aware that there was a broad

spectrum of investigation ongoing inside Afghanistan to root out

corruption. I was aware that CID was taking many allegations seriously. I was also aware that many, many allegations they did not

legally substantiate and get on with that. And I was also aware,

as we were told, that they had transmitted to the Afghan Government their concern, and that the anti-corruption court had just

started, if I recall correctly, and that since then they had two prosecutions and convictions there.

General PHILLIPS. And, sir, if I could add one real quick. I was

referring to a legal substantiation of evidence that we could use

within our contracts to take action. And I don’t think anyone would

argue with that, that there is corruption that exists inside Afghanistan, and I think that’s pretty clear, if you look at what some of

the senior leaders have said, both within the Department of State

and the Department of Defense. But in contractual actions against

contractors we always look for the hard evidence that we can stand

behind to take action to correct behavior or to terminate a contract.

Mr. QUIGLEY. I guess the line ‘‘gambling at Rick’s, I’m shocked’’

comes to mind. But we are talking about Afghanistan, arguably the

most corrupt country on the face of the Earth.

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Getting back to my original point, if you have that mindset going

in, you would assume that there would be overlaying, overlapping

areas of oversight to ask these questions all the time. And I understand that there are folks who are concerned, perhaps not a criminal investigation or investigations that require change, but at some

point you have a pretty good idea that there’s a problem and you

want to act regardless of having not meeting the burden perhaps

in a criminal court or a civil court, but recognizing where you are

and what’s taking place so far. And again, back to why weren’t

questions like this asked by the DOD earlier.

General NICHOLSON. Sir, I can offer another perspective on that,

having been in southern Afghanistan last year. We introduced

20,000 U.S. troops into southern Afghanistan last year requiring a

significant increase in the amount of Host Nation Trucking and

contacting to support the internal forces.

So, as we did that, the commanders on the ground are primarily

concerned about did the product or service get delivered on time;

and they don’t have the visibility on what happened en route to

that point. But as these intelligence reports began to come in, as

has been indicated in the study, these were referred to U.S. Forces

Afghanistan who then had enough anecdotal information to warrant requesting assistance from the Criminal Investigation Command to begin an investigation to determine if there were violations. That eventually escalated into the introduction of a CID

Task Force to really ramp up the investigation and which is still

ongoing to make that determination.

So in answer to your question, sir, these reports have flown in

and commanders have forwarded them to appropriate authorities

to begin this kind of investigation.

In Afghanistan, as you point out, there is a lot of corruption. In

southern Afghanistan, there are at least six major drug trafficking

organizations. So we have a nexus of criminality and insurgency

that occurs down there.

So there is a significant amount of criminality there, and we are

always looking at the linkages between criminality, insurgency and

the government. And, in fact, we have established Special Intelligence Task Forces which look at these linkages which then feed

into our Anti-Corruption Task Force and our Major Crimes Task

Force. These task forces have successfully arrested and are now

prosecuting some Afghan government officials. So it is not at the

level we would like to see it, but it has begun, and we are assisting

the Afghans in getting after this corruption.

Mr. QUIGLEY. I will close, Mr. Chairman.

I do thank the gentleman. I can only begin to understand how

complex the chore is. But I do hope there are some lessons learned.

Thank you.

Mr. TIERNEY. Thank you, Mr. Quigley.

Mr. Welch, you’re recognized for 5 minutes.

Mr. WELCH. Mr. Chairman, I want to repeat your remarks. I’m

amazed at your capacity to get goods from here to there. I don’t

think the American people have any appreciation for how incredibly, incredibly complex and difficult it is, so thank you very much

for your work.

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The big question I think is whether in the accomplishment of

that and in the doing of that, the approach that’s been chosen by

others, not by you, essentially to pay $2 billion to a half a dozen

or so private contractors who will then transport and provide security to equip our soldiers is the right approach. Or would it be better to do what frequently has been done in our history and that is

to assign that responsibility to ISAF and the Afghan security force

where they would be under the direct control and supervision of

our commander?

I would be interested in your opinions about the pros and cons

of each approach. And I guess I will start with you, Mr. Motsek,

because people are looking at you, but I want to give deference

here to our men in uniform as well.

Mr. MOTSEK. Sir, as General Nicholson said, we don’t believe

that the Afghan security forces are clearly mature enough to take

over this mission. In a perfect world, in fact, this would be their

responsibility. This is the normal securing of your interstates, if

you will——

Mr. WELCH. Let me just stop there. Because I think that is an

issue. I accept your judgment on that, that they are not in a position to do it now. And this is something that we can’t mess around

with because our soldiers need what you’re delivering. But, on the

other hand, is there a collateral consequence that, since we are giving this to a half a dozen contractors who, in turn, hire 1,000 guys

with guns, that there is a down-the-road counterforce to what we

hope will be the force of Afghan security forces?

So can you comment on that?

Mr. MOTSEK. Sir, you raise the key issue, as the chairman alluded to and your report alludes to it. We built the template where

the responsibility to secure your convoy was a subcontracted responsibility. We made that decision in the Host Nation Trucking

contract.

Conversely, with LOGCAP in Iraq, we told KBR they were not

responsible for the security, that the U.S. Government would contract separately for the private security contractors to manage that.

So we took a template, and we are living with that template now.

I’m here to tell you that we have to relook at it both ways. It

may be appropriate——

Mr. WELCH. I appreciate you saying that. And, again, that is not

your call. Because, again, I think the chairman made it very clear

we have to get that stuff to our soldiers. However we get it there,

it has to be done. There is no compromising on that. But there are

consequences to how we do it.

Obviously, you would have great confidence in the ability of our

soldiers if we had enough to deploy to provide the security and

transport the equipment. It would be at some risk to them, and

they’re in risk obviously in theater right now.

But perhaps I will ask you, General, if you could comment on

that.

General PHILLIPS. Sir, I can only address it really from the perspective of the requirement and flowing in.

When we originally built the—we didn’t build the requirement

but the warfighters in Afghanistan, we felt we would have a need

for about 100 trucks per day. And, as you just described, the need

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for equipment, supplies, ammunition, fuel, water, etc., that grew to

well over 200 trucks per day and 200 missions per day. So it grew

exponentially over time.

And we first signed the contract in March 2009. There were

about 30,000 troops that were in Afghanistan, about; and it was

growing to about 60,000. Now we are growing to about 90,000. So

you can see the tremendous growth and the need to have this capability.

Now the other piece of it is the Afghan National Army and Police. President Karzai, made a declaration through the government

a while ago that said we wanted to migrate all private security contractors to the Afghan National Police or Afghan National Army or

another government agency, and they wanted that to occur within

2 years. I think we are 6 months down the road toward that piece.

Not my lane in terms of operation, but it’s going to take some while

for us to buildup the appropriate forces to be able to take over that

private security mission to include convoy escort.

Mr. WELCH. General Nicholson, I will ask you—here is the worry

I have, and I will ask you to comment on that.

If while we are trying to make that transition—and I know that’s

the policy and there’s a great effort being put into it by General

McChrystal and others to have the Afghan National Army take

over more responsibility, but as we are doing it over this 2-year

timetable, there is a $2 billion contract that is going to basically

private individuals who now have under their command a separate

army dependent on them for millions of dollars.

Are those two developments incompatible? That is, on the one

hand, wanting to buildup capacity in Afghanistan under the control

of the government while, at the same time, we are providing an

enormous financial incentive to a private army which is not going

to lightly give up the benefits of these contracts? General.

General NICHOLSON. Sir, we view this as a temporary necessity

until we build our security forces to a level necessary so they can

take over the security. For example, right now they are beginning

to field these units. They are beginning to field these units in a position along the highways to provide additional security.

Sir, we all share this concern about additional armed groups in

Afghanistan. The international community went to great lengths at

the beginning of the war to disarm the various armed groups, the

DIAG process; and we don’t want to take a step back toward rearming people or creating regional power brokers with guns. So we

share this concern.

And this gets to the positive second order COIN effects to which

we are referring. Hence, President Karzai’s guidance to a reduction

of an armed group or a reduction of private security contractors,

the growth of the ANSF, and the focus within the command on

what we call freedom of movement, which is providing the ability

for the Afghan economy to move freely along the roads within the

country.

So this is a priority of the commend, sir; and we share your concern.

Mr. WELCH. I thank the witnesses for your testimony and yield

back.

Mr. TIERNEY. Thank you on that.

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Mr. Murphy, you’re recognized for 5 minutes please.

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

Let me join Mr. Welch in appreciating the complexity of the task

of moving people and goods.

When Mr. Welch and I and Mr. Tierney were in Afghanistan last

year, we listened to agricultural ministers explain to us that for a

simple agricultural shipment the particular farmer or the entity

that they were contracting with were being stopped 20 to 25 times

along that route for varying forms of illegal payments and tributes

and bribes. I can’t imagine the added complexity when you’re dealing with security concerns of military shipments, military convoys.

My question I guess to you, Mr. Motsek, is on the issue of reports

that our investigators detail were made to the Department from

the different contracting entities. I appreciate the fact that a lot of

this information is new to you. You have to figure out what to do

with it. But we certainly have a volume of reports that went from

contracting agencies to the Department of Defense that detailed a

variety of different levels of information regarding payoffs.

One memo from one particular contractor to a contract manager

detailed how he was approached by Taliban personnel to talk about

payments for the safe passage of convoys through the area. We

have talked to other carriers that are making missions through

those areas that are paying the Taliban for safe passage. According

to another contract manager, everyone is aware of the issue of

these protection payments.

Clearly, something was missed in terms of the reports initially

being made to contract managers and whether or not that information got up the chain. Can you just tell me what the obligation of

contract managers are on the ground when they receive reports of

direct information of payoffs or potential payoffs to varying levels

of the insurgency or Taliban? Just give me a sense of what the

duty to report is and what we may have missed here.

General PHILLIPS. Sir, during my tenure as the CG for JCCIA,

on numerous occasions when information like that was presented—

and it often was in Iraq and Afghanistan—I would call in the Procurement Fraud Task Force. And, normally, it would be CID that

I would task to go out and validate the anecdotal evidence that you

might be presented with when someone says this might have occurred? Can you validate that this actually did occur? Can you investigate and use all the resources that they have at their hand?

And once they complete their analysis and present those findings

to you, we would take the appropriate contractual remedies, and

we did often to make sure that we corrected the behavior and we

held the client contractor accountable for their performance. That’s

our fiduciary responsibility to the American taxpayer and required

by our contract clauses.

Mr. MURPHY. I guess my question is, how does it get to you?

What level of obligation on the contract managers that are potentially receiving this information is there to report what they are

hearing from the field?

General PHILLIPS. Sir, it would often come through the contractual chain of command, maybe through a COR, contracting officer,

represented to the contracting officer, to the principal assistant responsible for contracting eventually in Afghanistan. And they

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would—if they were significant enough, they would report it to me;

and then we would figure out a way ahead to pursue the evidence

and the allegation, teaming with, potentially, the Procurement

Fraud Task Force, or CID, whoever might be appropriate to do the

research.

In some cases, you might simply appoint a 15–6 officer to go out

and do a commander’s inquiry or investigation and report back. If

it’s serious enough, like the allegations that you are talking about,

it would be CID; and there is an ongoing investigation by CID to

look into the allegations.

Mr. MURPHY. With respect to existing contract standards—Mr.

Motsek, you referred to a sort of universal standard of conduct that

is being developed for all PSCs. What is the level of proof that you

need in order to take action? What level of evidence do you need

that money has gone to a particular contractor and ended up in the

hands of the Taliban or in the hands of the insurgents? At what

level is just knowledge that a particular contractor has relationships with Taliban or local insurgents enough to be able to take action or pull a particular contract? What is the level of proof here

that we need to take action?

General PHILLIPS. Sir, you need a preponderance of the evidence

to show that, or have a level of confidence that something did

occur. And each case is different, so it would be difficult to talk

about one case versus the other. I would simply rely upon the investigating official, whoever that might be—it might be CID, it

might be FBI—and they would present you that level of evidence.

In my case, I have a legal staff that looked at everything that

we executed in terms of action we would take against a contractor,

and we would have a legal staff review it. And, in some cases, we

might reach back to the army staff or the DOD to also leverage

some of their experience and then take the appropriate action. But

each case would be different, sir.

Mr. MURPHY. One last question, Mr. Chairman.

Do you need actual specific evidence of a direct and immediate

payment being made? Or is evidence of a link in association between a contractor and the Taliban, for instance, enough to be able

to take action or to pull a particular contract?

General PHILLIPS. Sir, you would need facts. And facts might be

a sworn statement. It might be two or three different individuals

who might corroborate that something had occurred. But you would

have to have fact-based evidence that something had occurred that

you can take action against.

In our contracts, we uphold the Federal acquisition regulations,

which are derived by statute and law; and we also charge our contractors to uphold, in the case of Afghanistan, the government of

Afghanistan’s laws. So it would have to withstand the scrutiny of

our legal analysis.

Mr. TIERNEY. Thank you very much.

Ms. Chu, you are recognized for 5 minutes.

Ms. CHU. I find it disturbing that our budget for private security contractors is $2.16 billion; and that is such a large percentage of

the GDP of Afghanistan, which is $13 billion. It’s one-fifth of the

GDP of the entire country of Afghanistan. Therefore, this money is

a lucrative source of revenue for the people of Afghanistan. So my

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questions have to do with whether a portion of our taxpayers’ dollars are going to the Taliban?

And so, first, let me ask General Nicholson about one summer,

2008, incident where Commander Ruhullah’s agents accompanying

a Host Nation Trucking contractor along highway 1 allegedly

tipped off insurgents about an approaching convoy and were then

allowed to pass unharmed before the insurgents attacked the convoy. Doesn’t that suggest that Ruhullah, who is responsible for the

lion’s share of convoy security in southern Afghanistan, has a

working relationship with the Taliban?

General NICHOLSON. Ma’am, I would have to take that incident

and examine it. I don’t have the details of that incident at my fingertips. If that was in the report we received this morning, we will

gladly get together with our investigative team in country and further develop that and see if the investigative team can tell us what

they found.

General PHILLIPS. Ma’am, if I could make one clarification. The

Host Nation Trucking contract is $2.16 billion, but it’s not just for

private security contractors. The majority of that actually goes for

the short and long haul for the aid contractors that are serving

every day. We increased it to $2.16 billion. The expenditure today

is about $700,000 per day on average for trucking operations.

To date, since we awarded the contract in March 2009, we have

expended about $350 million against a ceiling of $2.16 billion. The

contract will expire I believe around April or May 2011. So we are

about 9 or 10 months from expiration. It’s very doubtful that we today will spend the total $2.16 billion, given the current burn rate of $700,000 per day. It was simply a

ceiling that we knew or were assured that we could have the right

number of trucks available to be able to deliver the equipment and

supplies to warfighters, but it is doubtful today that we will reach

the ceiling.

Ms. CHU. And your estimate of how much we will actually spend

is what?

General PHILLIPS. Ma’am, I will have to get back with you on

that. But we could look at it and do the math and look at the surge

operations that are going to occur and then give you an estimate

of where we might be in a year from now. But, in my personal

opinion, I doubt if we will get to $1 billion or much over $1 billion

in terms of execution by the end of the actual contract. But I will

get back with you with a more firm answer from JCCI.

[The information referred to follows:]

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Ms. CHU. I would have to say, though, that even if it’s $1 billion, $1 billion versus $13 billion for the entire GDP of Afghanistan still

is substantial.

General Nicholson, beyond the incident involving Ruhullah’s

agents reportedly tipping off insurgents, several other Host Nation

Trucking contractors have stated that Ruhullah openly coordinates

with and pays off Taliban insurgents to help secure safe passage

when it’s convenient for him to do so. And there was an incident

report that was filed by a contractor in 2007 explicitly stating that

a Taliban commander had demanded money for the safe passage

of goods and the Host Nation Trucking contract project managers

requested greater armament authority from the Department of Defense to protect themselves and avoid paying an estimated $1.6 to

$2 million per week to the insurgency.

So even if a small percentage of this money is reaching the

Taliban, what are the consequences for counterinsurgency strategy?

General NICHOLSON. Yes, ma’am.

First off, that would be unacceptable, U.S. taxpayer dollars going

to the enemy; and it’s something that every commander in Afghanistan certainly would be concerned about and would want to stop

immediately.

When we receive anecdotal intelligence reports or human intelligence, then those don’t constitute evidence as General Phillips described. But we take those and look for the linkages between criminal networks and the government, criminal networks and contractors and pass that information to our investigative agencies to examine that so we can then take the appropriate action; and that

may include referring it to the Afghan government for arrests. For

example, we have recently seen some arrests of Afghan general officers and the border police who have been engaged in corrupt practices. We have seen arrests of district police chiefs in RC South, for

example, for drug running.

So there is a nascent and growing capacity within the Afghanistan government to act against corrupt officials. But under no circumstances will the funneling of U.S. dollars to the enemy be acceptable to any of us. The key is getting that information, developing it more fully, and then being able to take the appropriate action.

Another thing I wanted to followup on, ma’am, that you mentioned earlier. We have tremendous potential with this money to

have a positive effect on the Afghan economy, and so looking for

ways to build capacity at the local level and encourage the growth

of small businesses and reinvigorate local economies is paramount

to the success of our COIN campaign. And so as we look at how

we address the execution of our contracts, one of the objectives of

Task Force 2010 is how to optimize the effect of dollars, not to just

avoid or eliminate fraudulent activities but how to optimize the effect of these dollars so they in fact enhance the overall effects of

what we are achieving with our investment in Afghanistan.

Mr. TIERNEY. Thank you, Ms. Chu.

You know, it’s amazing. Two days after this contract went into

effect there was a stream of complaints already filing in. People

were reporting problems with the people they were paying, and

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that they were having to pay off people for security. The 25,000

documents are replete with e-mails, incident reports, and reports of

situations where people thought there might be payments to the insurgents. They were concerned about paying warlords. They were

concerned about the collective effect.

So to say that now we have heard about it we are going to find

out if it’s real or not, we are going to try to get enough evidence

to prosecute, brings to mind a couple of points. One is, it has been

14 months, go out and talk to Commander Ruhullah. He has

noever met a single person in the U.S. Government. He will admit

openly, as he did to the committee staff, ‘‘yeah, I’m getting paid

tens of millions of dollars to take care of a certain road over here.

Yes, I drive around with equipment that has not been approved or

authorized. I don’t even know about the rules that they have. Then

I’m paying off police, and I’m paying off members of the Afghan national military as well.’’

So I think there was a lot to go on to get people started on this

thing quite some time ago.

General Phillips, I look at your statement—actually, Mr.

Motsek’s statement here—notwithstanding media coverage regarding incidents regarding private security contractors, the frequency

of serious incidents by DOD private security contractors is extraordinarily low. These numbers seem to demonstrate that, on the

whole, U.S. private security contractors are operating in accordance

with the host nation laws in support for overall counterinsurgency

objectives.

That leads me to believe that you think that, just because there

haven’t been enough reports, that in and of itself is proof that everything is going just fine, the host nation laws are being complied

with, our counterinsurgency strategy is intact. When, in fact, Commander Ruhullah says he has lost 454 guys. He hasn’t filed a single report.

Now your own rules and regulations require that every time

there is a discharge of a weapon there is supposed to be a report,

never mind anytime that somebody dies. So, obviously, that isn’t

happening. This idea that there aren’t any reports filed isn’t conclusive evidence that is the case.

Who is supposed to be responsible on the ground to actually having eyes-on proof of whether or not there are checkpoints set up

from time to time, whether there are bribes extracted for police or

the national military in Afghanistan?

Just because you don’t get a report that it’s happening doesn’t

mean that it may not be happening. In fact, you got reports—I’m

not saying you particularly—but all up and down the chain there

were reports that it was happening; and yet nobody that I know

of, not a contractor and not anybody in the military that is supposed to be in charge of responsibility for oversight, ever went out,

except during one incident that occurred on your list when they

went out about 200 or 300 yards from the gate. And he said, when

I got out there, it seemed that they changed their behavior and

stopped doing what they were doing, but I wasn’t allowed to go out

again or go any further.

So unless somebody is going out and seeing whether or not there

are these checkpoints set up for bribes, unless someone is going out

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and seeing a fellow like Ruhullah getting paid off gobs of money

and then whether or not he is paying anybody else, whether or not

you’re going out——

And we have a list here of 44 different areas of the roads said

to be controlled by different people: Commander Matiullah, Masud,

Anga, Bamad, Masoud, Sharb, Habubulah, Koka, Trejah, and

Ruhullah. Unless somebody is out there seeing that these people

are getting paid who is responsible for doing that?

Because you may never hear about it further up the chain. But

if we’re not letting anybody go out and do periodic inspections, if

we’re not letting somebody go out and put eyes on, then I don’t see

how you can say you’re managing and overseeing these contracts.

And just the fact the contractors didn’t file incident reports, if that

is how you reach a conclusion that everything is fine, I think that

should be problematic for us.

So I just leave that as a rhetorical question. I think the answer

is pretty clear.

But, General Nicholson, I will say this to you. I understand you

think it is a terrible thing the Taliban is being paid. We all should

be horrified to think that might be happening. But isn’t it also a

problem if you know somebody like Ruhullah, who has hundreds of

militia under his authority, controls big segments of the country

areas, isn’t it also problematic that they are getting tens of millions

of dollars by their own admission and they have armies that don’t

answer to the Afghan government, never speak to our people, just

do whatever they want to do, and are known as ‘‘the butcher’’ as

they drive through towns? How does that affect our

counterinsurgency strategy?

General NICHOLSON. Yes, sir. The existence of any armed force

that is not a part of the Afghan government eventually, as President Karzai stated, needs to go away. And the international community supports that. We support that. And it is counter to our

counterinsurgency strategy in the sense that they are a surrogate

for a lack of capacity on the part of the government. So, clearly,

sir, we want to get to an end state where we don’t need private security contractors because——

Mr. TIERNEY. But there were reports of this since 2 days after

the contract started to be implemented. So where is the action?

You go through the documents over there. The contractor says, ‘‘I

reported it up and I was told I can’t deal with that.’’ The legal department said they have to rebid the contract, so they are not going

to deal with it. Another contractor said, ‘‘I reported it up, and there

is nothing they can do about it, and they just look the other way.’’

They were met with indifference, was what one contractor said.

So for 14 months, less 2 days after we got started on that contract, there has been an indifferent response or looking the other

way or saying it’s the cost of doing business. Where is the response? If you think it’s a cost of doing business, if that is the legitimate argument that the Department of Defense wants to put

forward, then where is the oversight and management aspect to

make sure guys like Ruhullah aren’t getting enriched and having

militias out there with competing interests with the Afghanistan

government and the United States? Where is the enforcement, the

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management, the oversight to make sure that the ANP and the

ANA aren’t getting paid off?

We just don’t see that happening; and, 14 months later, that is

why I think the report is as disturbing as it is.

General PHILLIPS. I can add a couple of data points, sir.

One of the issues we have had, in particular, many of these reports you have in your writing were focused on the southern region

of Afghanistan, a new area for American forces. We began last year

with adding 20,000 troops there. We are adding another 15,000 this

year. These additional troops enable us to partner with the Afghan

security forces.

Additionally, we are roughly doubling the size of the Afghan National Army and significantly increasing the size of the police in

the southern region.

Mr. TIERNEY. Can I just interrupt you there?

You wish. I don’t mean to be a wise guy to say that, but we have

been out there and looked at the training programs for the military

and police, and you want to double them, but you don’t want to

give us a projection of whether you think there is any realistic

prospect that they are going to be doubled with any capacity to actually accomplish the missions that we assigned.

General PHILLIPS. Yes, sir. They have needed to be doubled for

a long time.

One of the points I wanted to add, sir, was that by partnering

with the Afghan police in particular our goal is to curb and limit

and, to the extent we can, to eventually eliminate these corrupt

practices you were referring to, these illegal checkpoints, by

partnering with Afghan units, by having sufficient ISAF forces and

a sufficient number of Afghan forces that are properly trained.

And, of course the Afghan police in the timeframe we are discussing last year, 70 percent of them were not even trained. They

had uniforms, they had guns, but they are not on the road, they

have low pay, they are not properly trained, and they are engaged

in these corrupt practices.

Through the funding provided by the U.S. Congress and the efforts of the NATO training mission in Afghanistan, we have now

increased the amount of training, we are eventually going to eliminate that deficit of untrained police, and we are going to be able

to partner with the police units to increase their accountability and

professional standards. And this is one of the approaches toward

eliminating these illegal checkpoints which will be shaking down

the drivers which will result in these things you report rightly——

Mr. TIERNEY. I hope what you say about training them and getting them up to capacity is going to happen. We have looked at this

in the past, we have done reports on that, and I suspect we will

have to go out again and take a look at it. Because the concern is

that retention rates are difficult and the success rates are difficult.

But I don’t want to take up all Mr. Flake’s time.

Mr. Flake.

Mr. FLAKE. Thank you, Mr. Chairman.

If I might borrow this, this is in the report. This is the list that

the chairman read from—it lists who controls which miles of the

road. Are you aware of how many miles or any in particular that

are controlled by the Afghan security forces? Mr. Motsek.

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Mr. MOTSEK. That was the first time I saw that chart.

Mr. FLAKE. Aside from the chart, are you aware of certain areas?

Mr. MOTSEK. We are aware, and it goes back to what is in the

report. I think it’s safe to say that virtually everything in the report was, in fact, reported to many authorities. I’m assured that

most of it was investigated by the appropriate task forces or is

being investigated by the appropriate task forces. But the reality

is we may not have gotten to a level of evidence that permits us

to do something in every case that would meet the requirement.

Clearly, the information, in general, has come forward. The Secretary of State made the comment that is in the preface of your report. The Secretary of Defense has said we are concerned about

corruption. The U.N. does a survey inside the urban areas of Afghanistan. The No. 1 issue is corruption. Fifty-nine percent of the

Nation cares about it. We’ve got it. Admiral Dussault was over

there with another additional task force, with forensic accountants—not just accountants but forensic accountants—to try to

track the dollars.

I would caution you that one of the frustrations I have, I used

to be a part-time policeman in New Jersey, and I know from talking to my old detective buddies how difficult it was to get a case

against organized crime. It took years. And that was an environment with a baseline banking system, a baseline pay system, a

baseline telecommunication system.

We are doing this in another environment where it is not going

to happen, in my estimation, overnight. But I assure you we are

taking it all seriously. I would be as frustrated as you are that you

have seen the issues being reported and you don’t see an effect

being incurred very, very quickly, but——

Mr. FLAKE. That is the frustration.

Mr. MOTSEK. If I was a cop on the other side, I would say, damn

it, I’m doing what I can with what I got.

Mr. FLAKE. This investigation has been going on for 6 months,

the committee’s investigation. Yet there seems to be very little

awareness—in fact, we only got last week any indication that the

Department of Defense was doing really anything on the subject,

and that was just in the form of a PowerPoint presentation.

But, as the chairman mentioned, there is very little evidence that

people are moving outside of the security gates or that you are taking reports of casualties or fire that have to be, under our law, reported. We either have to say we are taking those reports and ignoring them or assuming that there are no bad actors out there

and none of this is happening. It can’t be both.

Let me just ask General Nicholson, you mentioned that if this activity is occurring, these payoffs to warlords, a parallel authority

structure outside of the Afghan government, that is counter to our

COIN strategy in Afghanistan. At what point do we say, if these

allegations are true, if half of these allegations are true, if a 10th

of these allegations are true in this report that we have to adjust

our strategy because this runs so counter to the COIN strategy?

Where is the tipping point?

And at what point will we, as a committee that has oversight

here, hear the Department of Defense simply say, hey, this is just

the cost of doing business, and it’s more important to move goods

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and services, or we simply can’t tolerate this kind of parallel authority structure outside of the Afghan government operating in

the countryside?

General NICHOLSON. Yes, sir.

Our activities to counter corruption are central to the campaign.

We are engaging at all levels of our government. As you know,

President Obama met with President Karzai. U.S. units are

partnered with police inside Kandahar City trying to improve performance and accountability with their Afghan partner. So this is

a high priority for us.

Mr. FLAKE. Let me just say we hear that on the top. We heard

the statement from Secretary Clinton that is in the report. We

have heard the statements in the report that President Obama has

said. We see this report, all of these findings, this overwhelming

evidence from this investigation that this is occurring. Yet in the

middle from those who have authority to address the situation actually on the ground by amending the contract or stripping somebody of the contract or making sure that this is not occurring, we

don’t see any activity there. And that is where the frustration lies.

I’m out of time.

Mr. MOTSEK. Sir, if I may, a particular contractor which you

have raised by name a couple of times, a large private security contractor in Afghanistan, in part the reason that the next TWSS contract, which was going to be the large private security contract, a

bundled contract, if you will, which would have made it easier for

the contracting agency to manage that contract, that process was

killed; and they are going back to individual awards for that contract in part because that particular individual was perceived to

have a nationwide advantage if we awarded a contract nationally.

And so we are going back to local awards of private security contracts, as opposed to a nationwide award. So there is knowledge

and there is a cause and effect in some areas because of this.

General PHILLIPS. Sir, would it be possible for me to cover a couple of things where we have taken some action real quick?

Sir, contracting officer representatives, we talked a little bit

about that and alluded to them from time to time. Less than a

month after I arrived into theater we had an issue or a problem

with contracting officer representatives. And I met with the commanding general of Army Materiel Command and the Army acquisition executive who, before I went to Iraq, was my boss. And we

knew that we had issues and problems, and we took that on as an

Army, and we have made I think great strides in contracting officer

representatives. And that also includes the pieces where people are

monitoring what is happening with Host Nation Trucking.

The Army has executed—or issued an execution order for CORs

in December 2009 that requires a brigade to have up to 80 CORs

trained and receiving a certificate and being able to perform COR

functions on various contracts. That is a great advancement or improvement from where we were 18 months ago, and we continue

to make improvements with CORs.

I have had personal discussions with division commanders before

they get deployed into Iraq.

And, sir, the other point I want to make sure that you understand is that we are taking great strides in subcontractor manageVerDate 11-MAY-2000 15:36 Jun 09, 2011 Jkt 000000 PO 00000 Frm 00147 Fmt 6633 Sfmt 6633 C:\KATIES\DOCS\65553.TXT KATIE PsN: KATIE
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ment. The committee has talked a lot about that piece. I spoke to

the JCCIA commander just this week and have an ongoing dialog

with her. They are now putting forth a new clause that will go into

our contracts in Afghanistan and potentially in Iraq, I believe, that

will give us greater visibility into subcontractors to include the private security contractors that would work on a Host Nation Trucking contract. It would give us greater visibility into banking and financial efforts. So we might be able to see if there is some kind

of activity occurring. I think that is still in review, but I suspect

that we will have something in place that we will begin to put in

our contracts very soon.

Mr. TIERNEY. Thank you for that.

But I made two points. Now one is, none of your CORs, as you

call them, ever get outside the gate; and the JCCIA now is going

to fix up the legal paperwork. And that is good. That is a step in

the right direction. But unless somebody actually gets out and

checks to see whether or not that is being complied with leads us

back into the same boat.

I just want to take quick issue. A couple of times there has been

a tendency where we think, gee, if we just had the hard facts, we

would be able to do something. It took one e-mail to Watan Risk

Management to set up an interview with both the principals of that

company—both of whom have done jail time in the United States,

incidentally, before they got their present position—and to have

them bring along Commander Ruhullah to an interview with the

committee staff where he then readily admitted that he was making huge piles of money and had an extraordinarily large militia;

that he was driving around with weaponry that wasn’t allowable

without paper authorization; that he basically controlled areas of

the road and other people controlled other parts of different roads

and what their conduct had been; and that he had paid off certain

members of the ANA and ANP and named names for everybody.

It wasn’t like he wasn’t out there for somebody to get.

I just want to make that point.

Mr. Welch, you have 5 minutes. I welcome you to it.

Mr. WELCH. Thank you very much, Mr. Chairman.

General Nicholson, as a former commander in the south, my

question to you is, do you believe it is sufficient for us to wait until

there is a criminal indictment and completion of a criminal investigation or is there a core strategic decision that needs to be made

more promptly?

General NICHOLSON. Sir, it’s clear as we learn these lessons we

need to integrate them so we can improve our performance. And

this is one of the reasons why the chairman chartered Task Force

2010, to bring in another set of eyes—Admiral Kathleen Dussault,

who had been a former commander of the contracting command—

with a group of subject matter experts to enable the command to

really focus on this issue and very quickly generate, No. 1, effects

in the south. So her initial focus is Kandahar and how we can then

begin to achieve this effect I mentioned earlier of optimizing contracting in support of the COIN company at Kandahar. So that will

be their initial focus, and that was designated as such in order to

more directly link these lessons learned and best practices and get

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them into the ongoing campaign. So, clearly, we want to move as

quickly as possible.

Having said that, sir, it’s also important to achieve these prosecutions, to enable the Afghans to develop the kind of capacity they

need to arrest and prosecute these folks; and, to date, they have

arrested and are prosecuting a handful of senior officers in the border police and the Afghan police.

Mr. WELCH. Thank you.

But, you know, again, I go back to what I think is a fundamental

question as to whether or not the long-term goals of the United

States are best served when our military, who are being asked to

carry out and execute on those long-term goals, are better served

by putting the security of these convoys under the direct supervision of our commander and the direct protection of our soldiers,

who we know are accountable, versus $2 billion that is getting

spread out and then we try to rely on lawyering up and criminal

prosecutions.

But that is my statement, and I know that is not the decision

that you have made.

But, Mr. Motsek, let me read you something. According to Lieutenant Colonel David Elrod, the Commander of the 484th Joint

Movement Control Battalion that was in charge of overseeing and

managing the Host Nation Trucking contract in Afghanistan, the

battalion didn’t have the vehicles, the weaponry, or the manpower

to carry out oversight. It just didn’t have what it needed, and they

are stretched thin. I understand that. But they couldn’t travel

along the Afghan roads because it would have been, according to

him, a combat mission.

And also the Department of Defense instruction issued in April

stated that ‘‘security is inherently governmental if it is to be performed in environments where there is such a high likelihood of

hostile fire by groups using sophisticated weapons and devices that

in the judgment of the military commander the situation could

evolve into combat.’’

And according to the Congressional Research Service, private security contractors working for the Department of Defense in Afghanistan are more than 41⁄2 times more likely to be killed in action than even U.S. military personnel. That number is even higher

for private security companies providing convoy service.

So, the question I had, Mr. Motsek, is that, in light of these statistics, can you explain what you meant in your statement when

you said that the roles of the private security contractors providing

convoy security are ‘‘analogous to civilian security guard forces, not

combat forces.’’

Mr. MOTSEK. Sir, I can’t comment on the numbers by CRS, but

four times more likely, just on the raw numbers based upon what

I know of casualties, it doesn’t track. But that notwithstanding,

first off, it goes back to my initial comment where the force protection mission, the force protection requirement is that of the commander. The commander makes the assessment and is responsible

for the risk assessment.

The guards that guard both movement and static positions in Afghanistan are just that, they are guards. They have no authority

to execute any sort of combat role.

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A great many of the incidents that we are talking about today

in a normal sense are considered criminal elements, not a military

enemy in the traditional sense. We are talking about warlords attacking. These are criminal elements that are engaged. They are

not——

Mr. WELCH. Again, I don’t have your experience, and I don’t have

your knowledge, but I do appreciate that if we don’t get those supplies to our troops, our troops are going to be in peril. And I would

think it’s a standard tactic of the enemies of our troops, the ones

who want to do them harm, that they would frequently use as a

tactic of trying to cutoff their supply. And that leads to combat, correct?

Mr. MOTSEK. It’s an action, yes, sir. It’s an action.

Mr. WELCH. Well, does this whole policy depend on whether the

folks who are killing and attacking, killing the security folks and

attacking the convoys that are destined to serve our troops, whether they are doing it for a criminal purpose or for the Taliban?

Mr. MOTSEK. No, sir. But the preponderance are more criminal

than they are Taliban. Again, we cannot guarantee no attack.

Mr. WELCH. We understand that. I just want to again reiterate

I think there is a fundamental strategic question here about

whether we want to give $2 billion to folks who have no particular

motivation other than to make money versus have that be under

control of our troops, particularly when that alternative force is ultimately going to be in the opinion of some a threat to capacity

building of the Afghan Army and the Afghan government.

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

Let me ask if you gentlemen would be willing to answer further

questions that might be asked in writing at some point in time if

we give you time to do that?

I appreciate that. Thank you.

Also, I just want to run through a couple of things following up

with Mr. Welch.

If, in fact, the United States decides to continue using small armies of private security contractors to defend the supply chain in

the war zone, has there been any discussion or can we expect any

discussion about getting direct authority and accountability over

the private security companies, as opposed to going to them as subcontractors? Does anybody know if that is being considered?

General PHILLIPS. Sir, I can share this. Part of my answer before

on the subcontractor clause would give us visibility into the

subcontractor——

Mr. TIERNEY. Separating them out from the trucking companies

so you get trucking companies going one way and contractors who

really don’t have expertise in this area and are also directly in

charge of these security people.

General PHILLIPS. You mean go directly to a private security

contractor——

Mr. TIERNEY. Make security contractors directly responsible to

our military as security people, not through a trucking contract,

not passing it off to the trucking contractors who seem perfectly incapable of doing it.

Mr. MOTSEK. Sir, in my capacity, I’m going to force that consideration to be made.

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Mr. TIERNEY. Thank you.

And I know you already talked about—at least General Nicholson has talked about the potential future role of the Afghan national forces.

You have already talked, also, about contract transparency, the

subcontractors. We appreciate that.

We still, I think, need to work on the oversight and the management, getting people outside the gate and getting eyes on the road.

And I think I heard everybody say—and I’ll ask General Nicholson

again, one more time, is there a conversation going on now at the

Department of Defense about the effects of coalition contracting on

Afghan corruption? Is that larger strategic conversation going on?

General NICHOLSON. Yes, sir, it is.

Mr. TIERNEY.I want to thank all of you for taking your time and

bringing your expertise and information to the committee. We appreciate it a great deal, as well as your agreement that you will

answer further questions in writing.

With that, we will take about a 5-minute recess; and, again,

thank you.

[Recess.]

Mr. TIERNEY. A quorum being present, the Subcommittee on National Security and Foreign affairs hearing entitled Investigation of

Protection Payments for Safe Passage Along the Afghan Supply

Chain will return to order.

We are now going to receive testimony from our second panel of

witnesses, and thank you for your patience in waiting while we had

the first panel testify and answer questions.

I’m going to do the same thing. I will introduce our panelists all

at once, and then we will start again with Mr. Schwartz at the beginning for testimony.

Moshe Schwartz is a Specialist in Defense Acquisition at the

Congressional Research Service. Before joining the Congressional

Research Service, he served as a Senior Analyst at the Government

Accountability Office and as an Assistant District Attorney in

Brooklyn, New York. He received his BA from Yeshiva University

as well as a JD from Yeshiva University’s Benjamin N. Cardozo

School of Law, an MBA from Carnegie Mellon’s Tepper School of

Business and a masters in public policy management from Carnegie Mellon’s John Heinz III School of Public Policy and Management.

Carl Forsberg is a Research Analyst at the Institute for the

Study of War, where he focuses on the security dynamics and politics of Southern Afghanistan. Previously, he worked at the Marine

Corps Intelligence Headquarters and for Uganda’s State Minister

for Disaster Relief and Refugees in Kampala, Uganda. He holds a

B.A. in history from Yale University.

Colonel T.X. Hammes is a retired U.S. Marine Corps Colonel and

an expert in U.S. military strategy. He is currently a Senior Research Fellow at the Institute for National Strategic Studies at the

National Defense University. He has also served at all levels of the

operating forces, to include command of the Rifle Company and Intelligence Company in the Chemical Biological Incidence Response

Force. He is author of The Sling and The Stone: On War in the

21st Century and numerous articles and opinion pieces. Colonel

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Hammes is currently pursuing a Ph.D. in modern history at Oxford

University.

Dr. S. Frederick Starr is the founding chairman of Johns Hopkins University Central Asia Caucasus Institute. He is an expert

in Afghanistan, Central Asia, and the Caucasus, Russia and the

former Soviet Union. Over the course of his career, Dr. Starr has

authored or edited 20 books and more than 200 articles on Russian

and Eurasian affairs. He received his doctorate from Princeton

University in history.

So thank you all for making time available for us and sharing

your substantial expertise.

Again, it is the policy of this subcommittee to swear you in before

you testify. So I ask you to please stand and raise your right

hands.

[Witnesses sworn.]

Mr. TIERNEY. Let the record please reflect that all of the witnesses answered in the affirmative.

We will put your written testimony as well into the record, so

you needn’t read it in its entirety. If you can summarize it in about

5 minutes for us, remembering that the light goes amber when you

have about a minute left, it goes red when you’re out of time, and

then we will hope you will wind it up. Thank you very much.

Mr. Schwartz, you are recognized.

STATEMENTS OF MOSHE SCHWARTZ, SPECIALIST IN DEFENSE

ACQUISITION, CONGRESSIONAL RESEARCH SERVICE; CARL

FORSBERG, RESEARCH ANALYST, INSTITUTE FOR THE

STUDY OF WAR; COLONEL T.X. HAMMES, SENIOR RESEARCH

FELLOW, INSTITUTE FOR NATIONAL STRATEGIC STUDIES,

NATIONAL DEFENSE UNIVERSITY; AND S. FREDERICK

STARR, PH.D., THE PAUL H. NITZE SCHOOL OF ADVANCED

INTERNATIONAL STUDIES, JOHN HOPKINS UNIVERSITY

STATEMENT OF MOSHE SCHWARTZ

Mr. SCHWARTZ. Chairman Tierney, Ranking Member Flake, distinguished members of the subcommittee, thank you for the opportunity to appear before you today to discuss the Department of Defense’s use of private security contractors in Afghanistan.

According to the Department of Defense, as of March 2010, there

were over 110,000 contractors and almost 80,000 troops working

for DOD in Afghanistan. Contractors made up 51 percent of the

total DOD work force. Over 60,000 of these contractors in Afghanistan were armed private security contractor personnel. Over the

last three quarters, the number of armed security contractor personnel increased four times faster than that of troops in Afghanistan. Since December 2009, there have been more armed security

contractor personnel working for DOD in Afghanistan than in Iraq.

Contractor personnel risk death and injury at the hands of insurgents in Afghanistan. According to DOD, from June 2009, to April

2010, 260 security contractor personnel working for DOD have

been killed in Afghanistan compared to 324 U.S. troops.

Adjusting for the difference in the number of PSC personnel compared to troops, PSC employees working for DOD are 41⁄2 times

more likely to be killed than uniformed personnel. More contractor

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personnel, 188 people, were killed providing convoy security than

any other type of security.

Regardless of how one analyzes the number of armed contractors

working for DOD, PSCs play a critical role in U.S. efforts in Afghanistan. Many observers have pointed out that the extensive

DOD reliance on PSCs and other contractors was not planned and

was executed without a clear strategy, exacerbating the risks inherent in using armed contractors on the battlefield.

This unprecedented reliance on PSCs raises some fundamental

questions. First, what are the benefits and risks of using PSCs in

military operations? Two, to what extent should contractors be

used in contingency operations? And, three, what can be done to

ensure that DOD improves its planning for the use of contractors

in future operations?

PSCs can provide significant operational benefits to the U.S.

Government. They can be hired and released quickly, allowing

agencies to adapt to changing environments. Contractors can possess skills that the government work force lacks, such as knowledge of the terrain, culture, and language of the region.

According to many analysts, both DOD and the Department of

State would be unable to execute their missions in Iraq and Afghanistan without PSCs. According to these analysts, the risk of

not using PSCs is nothing short of depriving DOD of the resources

it needs to succeed in its mission.

There have been reports of local nationals being abused and mistreated by PSCs working for the U.S. Government. Such incidents

continue to be reported in Afghanistan; and unlike Iraq, where

many of these incidents involve contractors who are U.S. citizens,

in Afghanistan many of the guards causing the problems are reportedly Afghans.

The question can be asked, is the problem that DOD is using

contractors to perform the critical function of armed security, or is

the problem that DOD is not sufficiently managing contractors and

holding them accountable?

For analysts who believe that armed security should not be contracted out, options include increasing the size of the military, rethinking current force structure, or choosing not to engage in certain contingency operations.

For those who believe that the problem is insufficient planning

and poor management, the solution may be to develop an effective

strategy for using PSCs, improving operational planning, and enhancing oversight.

The Department of Defense has taken steps to improve its management of PSCs. According to many analysts, these efforts have

improved the management, oversight, and coordination of PSCs. At

the same time, many analysts maintain that more needs to be

done.

The extent to which DOD plans the use of contractors in the future can help ensure that DOD puts a similar effective management system in place. Such planning could ensure that contractors

are used to improve overall operational effectiveness and not because DOD unexpectedly had insufficient military personnel to perform critical functions.

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This opinion was expressed in 2008 by a colonel who was responsible for overseeing PSCs in Iraq. While discussing efforts to improve contract management, he stated that the question is not

whether DOD is going to fix the problem now. Rather, he stated

the real question is why DOD was not thinking about this issue 10

years ago when steps could have been taken to avoid the situation

we are in today.

This raises another question, namely, is DOD assessing when

and to what extent security contractors and even contractors in

general should be used in future military operations?

Some analysts argue that DOD missed an opportunity to address

the issue in the 2010 Quadrennial Defense Review. Despite not

being included in the QDR, DOD has begun to examine the issue.

DOD has set up a task force to examine the extent to which it relies on contractors and to use the analysis to plan for future operations and help plan DOD’s future force structure. The task force

has already briefed the most senior levels of the Department. A

number of analysts believe that this effort is a step in the right direction.

Mr. Chairman, distinguished members of the subcommittee, this

concludes my testimony. Thank you again for the opportunity to

appear before you to discuss these issues. I will be pleased to respond to any questions that you might have.

[The prepared statement of Mr. Schwartz follows:]

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Mr. TIERNEY. Thank you very much, Mr. Schwartz. We will have

some questions, so I appreciate you being here for that.

Mr. Forsberg, if you would please, 5 minutes.

STATEMENT OF CARL FORSBERG

Mr. FORSBERG. Mr. Chairman, Ranking Member Flake, and

members of the subcommittee, thank you for the opportunity to testify this afternoon on the issue of Host Nation Trucking contracts.

I’m honored to testify on this subject of great significance for our

country and Afghanistan, and I appreciate the committee’s leadership on this pressing question.

I want to address today the strategic context of contracts like the

Host Nation Trucking contract to highlight their implications for

the U.S. campaign to degrade and defeat the Taliban and to leave

behind an enduring Afghan government.

The chief strategic concern with current contracting practices is

that private security companies in Afghanistan tend to subcontract

to or pay predatory Afghan militias that further the ends of the

poor brokers who own them often at the expense of enduring stability.

To understand why this is such a concern, it is helpful to remember that when you are engaged in a counter insurgency fight, it is

largely a question of establishing the legitimacy of a government.

Lack of government legitimacy is, after all, the root cause of an insurgency. And if the Afghan government were widely viewed as legitimate, we would not be fighting the current campaign.

The Afghan government has lost considerable standing by forming alliances since 2001 with factional actors, including predatory

warlords and now militias. Afghan leaders at many levels have

taken sides in local disputes and alienated significant elements of

the Afghan population.

It is noted that the Taliban rose to power in southern Afghanistan in 1994 because the population there deeply resented the behavior of militia commanders. Some of the very same commanders

the Taliban expelled with popular support back then are now directly or indirectly operating on ISAF contacts.

Kandahar province, the focus of ISAF’s insurgency efforts this

summer, offers a prime example of how ISAF contracting practices

have inadvertently supported small groups of government-affiliated

commanders. Ahmed Wali Karzai, the half brother of President

Hamid Karzai and the chairman of the Kandahar Provincial Council, has close links with a number of Kandahar’s key private security and militia commanders. Several of these commanders control

key logistics routes and are heavily relied upon by almost all the

Host Nation Trucking companies operating in southern Afghanistan. Ahmed Wali Karzai has used his connections to the Afghan

government and to ISAF to build this network and, in some cases,

to influence the awarding of contracts to his own allies.

It is notable that one of the major private security companies in

Kandahar, Watan Risk Management, is owned by cousins of the

Karzai brothers, as well as, until recently, another group, Asia Security Group. These militias significantly outnumber the Afghan

police force in Kandahar City. The army and police force thus find

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themselves competing with private security companies, especially

when it comes to recruitment.

For the population, meanwhile, the government is in essence

seen as an exclusive and predatory oligarchy. It must be kept in

mind, ultimately, that ISAF has not created the militias that exist

throughout Afghanistan. These militias were largely the product of

the anti-Soviet resistance and the civil war of the 1990’s. That said,

ISAF contracts have made these militias far more lucrative. And

cutting these militias off from the indirect benefits of U.S. contracts

will be a necessary step in dismantling their influence and replacing them with the Afghan army and police. This step cannot be

taken completely and immediately, however. What is needed is a

careful strategy to unwind the contracts, find gainful employment

for the foot soldiers, and ensure that ISAF or the Afghan army and

police are available to fill the security demands that contractors

are now fulfilling.

The issue of illegal militias in Afghanistan is challenging, but it

is one that ISAF can solve. The U.S. troop surge has given the

United States and its ISAF allies resources to reform and investigate contracting practices. ISAF has already begun standing up

structures for reviewing and reforming contracting, including Joint

Task Force 2010. Having additional boots in the ground is providing ISAF with insurgent intelligence on how contracting networks

in Afghanistan operate and gives ISAF more options in providing

oversight for these problems.

The United States does have leverage at this point over the militias and local commanders who subcontract from the coalition.

Once ISAF organizations like Joint Task Force 2010 have understood the complex networks by which contracts support militias,

these contracts can be restructured in ways that account for the dynamics of local Afghan politics. ISAF has announced its intention

to do this, although the details of its plans are naturally still

vague. But because the problem of illegitimate militias is more

than a problem with ISAF’s own contracting practices, reforming

contracting should be part of a broader campaign to identify Afghan militias, and to eventually disarm and disband these groups;

and once their command and control structures are severed, to integrate them into the Afghan National Army.

In conclusion, current contracting practices are problematic and

play into large trends that undermine the legitimacy of the Afghan

government, but the situation can be addressed. The recent increase in U.S. force levels has given our commanders the resources

to reform the oversight and management of its contract in practices, and this will be crucial for the U.S. counterinsurgency mission.

Thank you, Mr. Chairman, Congressman Flake and members of

the subcommittee, for the opportunity to address you this afternoon.

I look forward to taking your questions.

[The prepared statement of Mr. Forsberg follows:]

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Mr. TIERNEY. Thank you very much, Mr. Forsberg.

Colonel, if you would.

STATEMENT OF COLONEL T.X. HAMMES

Colonel HAMMES. Chairman Tierney, Ranking Member Flake,

thank you for the opportunity to appear today.

Mr. Schwartz has provided a comprehensive view of the current

status, so I will not attempt to duplicate his work.

Instead I would like to briefly discuss the good, the bad, and the

key question about using contractors in combat zones.

The good: The primary value of private contractors is that they

replace troops. Further, they can mobilize and deploy large numbers of personnel very quickly. And as soon as a crisis is resolved,

they can be demobilized. Another critical advantage is that contractors may be able to do jobs that U.S. forces simply can’t.

In Afghanistan we lack the forces to provide security for our primary secure line to Pakistan. And if history is any guide, even a

heavy presence of U.S. troops would not guarantee the delivery of

supplies. Fortunately, Afghan contractors have the mix of force,

personal connections, and negotiating skills to do so.

The bad: When serving in a counterinsurgency, contractors create problems from the tactical to the strategic level. Three are particularly important. The first, quality control, is a well publicized

issue that DOD has worked to resolve. Yet even if DOD enacts all

planned reforms, how exactly does one determine the military

qualifications of an individual, much less a group such as personnel

security detail, before hiring them? We need to acknowledge we

have no truly effective control over the quality of the personnel

hired as armed contractors.

The second issue compounds the problem of the first. The government does not control the contractor’s daily contact with the population. Nothing short of having qualified U.S. Government personnel accompanying and in command of every contractor detail will

provide that control. We do not accompany the Afghan security

companies that escort the supply convoys throughout Afghanistan,

and thus, we have no idea what they are doing with the population.

The lack of quality and tactical control greatly increases the impact of the third major problem. The United States is held responsible for everything the contractors do or fail to do. Despite the fact

that we have no effective quality or operational control, we pass

the authority to use deadly force in the name of the United States

to each armed contractor. Since insurgency is essentially a competition for legitimacy between the government and the insurgents,

this factor elevates the issue of quality and tactical control to the

strategic level.

There are also a number of indirect consequences of employing

armed contractors. First, it opens the door for local organizations

to build militias under the cover of being a security contractor.

Major General Nick Carter, Commander of NATO Region Command-South, has noted that warlords in Kandahar have been allowed to build militias that they claim were private security companies.

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In addition, private security companies compete directly with

host nation’s attempts to retain military and police personnel. In

2010, Major General Michael Ward stated that Afghan police were

deserting in large numbers for the better pay and working conditions associated with private companies.

And that leads us to the key question: Contractors clearly have

a number of direct strategic level impacts on counterinsurgency operations. But most important are the reduction of political capital

necessary to commit U.S. forces to war, the impacts on the legitimacy of the counterinsurgency effort, and the perceived morality

of that effort. Both proponents and opponents admit the United

States would have required much greater mobilization to support

Iraq or Afghanistan without contractors, thus we are able to conduct both wars with much less domestic political discourse.

But is this a good idea? Should it be easier to take this nation

to war? Along the same lines, we should ask, is it a good idea to

pass authority to use deadly force in the name of the United States

to people we don’t know? Should we hire poor Third World nationals to sustain casualties for us? Any examination of the U.S. use

of contractors must conclude they undercut the legitimacy and morality of our efforts in counterinsurgency.

Given the central role that legitimacy and morality play in

counterinsurgency, it is essential we ask the real question: Is it

strategically a good idea to use contractors in combat zones?

While it is too late to debate this question for our current conflicts, it is essential we make it a critical part of our post-Afghanistan force structure discussions. The size and type of force we build

for the future depends upon the issue.

Mr. Chairman, distinguished Members, that concludes my testimony. I look forward to answering your questions.

[The prepared statement of Colonel Hammes follows:]

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Mr. TIERNEY. Thank you, Colonel.

Dr. Starr.

STATEMENT OF S. FREDERICK STARR, Ph.D.

Mr. STARR. Mr. Chairman, Mr. Flake, I have nothing to add to

the various interventions regarding the tactics of contracting.

Mr. TIERNEY. Well, then it is a rap, and we will start again. No.

Mr. STARR. However, I would like to suggest that none of these

will affect the bigger picture of the fate of the mission in Afghanistan.

And let me get to this point by a couple of simple questions.

Why do we need so much protection along the roads? Well, the

answer is obvious; because there are Taliban forces and other

criminal groups floating about.

Second, why do they move about so freely? Again, the answer is

obvious; because the population at large is totally passive. It is indifferent to this.

Then, why are they not engaged in the protection of their roads?

Well, because they don’t see any benefit from the roads being open.

These are being opened for transport of U.S. military equipment,

not for the transport of their local crops, their local products, let

alone for regional transport, let alone for continental transport

from which they could richly benefit. So they are spectators.

And beyond that, of course, you might note that the defeat of the

Taliban and the crippling of al Qaeda are perceived as our objectives. They don’t see where our objectives mesh with their personal

objectives, which is economic betterment.

So let me raise the question, what kind of strategy would work?

What is needed? Well, obviously, an economic strategy, and both

Presidents Bush and Obama have spoken about that. We have a

lot of economic projects; we don’t have a strategy.

What would meet that criteria for us—what are the criteria that

must be met for such a strategy? Well, I would say there are three

or four. First of all, it has to benefit locals. If they don’t see a benefit from it, they are going to be neutral or opposed to anything we

do, including transport. Second, it must support our military effort,

and it has to go simultaneously with it. Third, it has to be able to

provide an income stream for the government. We are paying all

Afghan civil service salaries today. That isn’t a sustainable arrangement. And finally, it has to work fast.

Now, the only strategy that meets such criteria, the only one that

I am aware of is exactly the subject that we are discussing today,

transport and trade. I would submit this is a much more important

hearing, even than has been suggested by our very competent previous speakers.

What do we mean? We are talking about opening up local channels of trade for local trade. We are talking about regional channels

of trade, Afghanistan and its immediate neighbors. And we are also

talking about the great continental trade routes that literally go

from Hamburg to Hanoi, connect Europe and the Indian subcontinent. This potentially is a money machine. Once it starts to flow

at the most local level, everyone will take advantage of it. You

don’t have to advertise it. Everyone will know, and they will beVerDate 11-MAY-2000 15:36 Jun 09, 2011 Jkt 000000 PO 00000 Frm 00205 Fmt 6633 Sfmt 6633 C:\KATIES\DOCS\65553.TXT KATIE PsN: KATIE
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come the defenders of the open road rather than the passive observers or worse.

Now, you could say, well, aren’t we doing this anyway with the

Northern Distribution Network and so on. Yes, we are doing fantastic stuff in transportation, whatever the problems are, and they

are serious. Nonetheless, it is a major achievement. Yet we have

no plan for engaging the local economies in this, we have no plan

for opening this to local shippers, local producers, farmers and so

on, we have no exit plan, no transition plan on this to privatize,

if you will, civilianize these transport groups. And therefore, everyone is skeptical or opposed.

Now, what is needed? Very simply, the United States needs to

adopt this as a fundamental strategy on par with its military strategy, because without this, the military strategy will not succeed.

And one might say, well, isn’t this very expensive? Aren’t you talking about building masses of roads? But we have heard from several of the Congressmen today that, in fact, the biggest impediments are actually bureaucratic and people imposing long delays at

borders and these sorts. It is a managerial problem; it is not an infrastructure problem fundamentally.

And beyond that, let me say that this bigger development I am

talking about is being actively promoted by, well, all the major

international banks, especially Asia Development Bank, ECO,

World Bank and so on; also by China, India, Pakistan, Iran, all the

central Asian countries, Saudi Arabia, Japan and so forth.

In other words, this is happening. What I am speaking about is

going to break through. The question is whether the United States

is savvy enough to put itself at the head of this to be the coordinator and convenor for the effort that opens the cork which Afghanistan now presents to the system as a whole. If we do, I think we

are on the road to success in Afghanistan. If we don’t, all the efforts, the commendable suggestions that have been made here with

regard to transport, will be for naught.

Thank you, sir.

[The prepared statement of Mr. Starr follows:]

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Mr. TIERNEY. Thank you.

And thank all of you.

It is great food for thought.

Let me start, if I might, with Mr. Schwartz. When you count the

contractors, the armed contractors in theater, is there any way you

can actually count the people that might be part of one of the commanders’ militia if they are not registered, or do we just assume

that it is whatever number you count plus a whole lot more people

who are unregistered working as militia forces?

Mr. SCHWARTZ. There have been questions raised as to the ability to accurately count those people. The Department of Defense

has acknowledged that difficulty. The easiest segments to count

are, of course, the U.S. nationals and third-country nationals, particularly those that need permission to come in and get arming authority from the PSCs that are properly regulated.

But it is a question that many people have raised, including

DOD, as I said: the issue of the ability to accurately count private

security contractor personnel that are working for local militias, beyond Kabul for sure.

Mr. TIERNEY. Thank you.

Has CRS or anybody that you know done an analysis comparing

the risk of using, or I should say the risk of not using private security contractors in a counterinsurgency sort of situation against the

risk of using them but not managing and overseeing them properly?

Mr. SCHWARTZ. I am not familiar with a particular study that

analyzes specifically Afghanistan beyond what some of the other

people here on the panel have discussed. But there have been concerns expressed by people in uniform over there in Afghanistan

that some of the events that are occurring are in fact making their

mission much more difficult.

Mr. TIERNEY. Mr. Forsberg, Ahmed Wali Karzai, in your research

and your work, have you heard recent contemplations that he

might be behind or somehow connected with a desire to have a

Kandahar security operation where they consolidate a number of

the different people that have been adding security to the southern

area so far?

Mr. FORSBERG. There have been several media reports to that effect. Dexter Filkins has done several of these pieces. If you look at

Ahmed Wali Karzai’s connections, there are linkages between him

and some of the figures involved in the Kandahar security force, including Commander Ruhullah, and reporting that Minister Atmar

had asked Ahmed Wali Karzai to take a role in achieving the formation of the Kandahar security force.

Mr. TIERNEY. Thank you.

Dr. Starr, I have to ask you this. If I am hearing you right, are

you saying that the U.S.’ strategy would be better served if we took

our military forces and used them to protect the transportation

lines and that could open up a whole host of other possibilities over

there, as opposed to paying off warlords or others, but to use our

forces and concentrate them on keeping those transportation lines

free and then using them for the regional, local and continental

trade?

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Mr. STARR. Yes, sir. Keeping open—the opening and maintenance

of the transportation corridors should be a high strategic objective.

Mr. TIERNEY. Colonel, do you have an opinion on that?

Colonel HAMMES. Sir, if you take—the figures on the GDP of Afghanistan are disputed. But if you take the $13 billion here, Afghanistan has a GDP of $500 per person. If we were wildly successful and in 10 years doubled that, they would still be poorer than

today’s Chad. Chad is not a functioning state. I don’t see in 10

years making Afghanistan a functioning state based on a doubling

of the economy of the country.

Mr. TIERNEY. And that is even with say Dr. Starr’s program

being successful, it would still be a problem you think?

Colonel HAMMES. Sir, I think the ability to double the economy

of a country is a pretty significant accomplishment. You have to go

to 17 percent. With the reduction in drug trade, you have to go to

about 10 percent to sustain it for 10 years to get to poorer than

today’s Chad, sir.

Mr. TIERNEY. Dr. Starr.

Mr. STARR. If I may say, Korea at a certain point was almost at

the level of Afghanistan today. We persisted. We pursued prudent

market-based economic policies, and look what happened, not only

in the economy but in the governmental structures.

I think the possibilities are well beyond anything suggested here.

Those aren’t my conclusions. They are the conclusions of the Asian

Development Bank. They are the conclusions of a half-dozen serious studies that have been done by national governments before

they have invested in these critical infrastructure issues.

Mr. TIERNEY. Thank you.

Mr. Flake.

Mr. FLAKE. Thank you.

Mr. Schwartz, given the current structure that we have for these

contracts, is it possible for the Department of Defense to manage

or supervise these contracts the way that the law requires them to

do?

Mr. SCHWARTZ. Thank you for that question. A lot of people have

actually done a lot of good in-depth analysis into that, including

the Government Accountability Office, the Special Inspector General, as well as the Commission on Wartime Contracting. And

while they have all expressed that DOD has made progress, they

have also generally expressed that there is a lot to be done. A number of them have come up with specific options and recommendations that they believe can definitely have an impact, and a lot of

them are out there.

I will just mention a couple that have been thrown out by various people. One is as a result of Nisous Square, that event with

Blackwater about 3 years ago in Iraq, the Kennedy Commission,

which was published by the State Department, required, based on

the recommendation from the Kennedy report, to have U.S. Government personnel go along with every convoy of the State Department. Some analysts have recommended that would be useful for

the Department of Defense, to make sure that every time there is

a large convoy, to go out. That is one option that has been mentioned there.

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Another option that has been mentioned is to do an in-depth

analysis of who is being hired. So the general view of many of the

people who have looked in depth at this is that progress can be

made.

Mr. FLAKE. Mr. Forsberg, I tried to get from the last panel, and

I understand I wasn’t going to get much of a policy response from

them, but at what point does it become counterproductive to a

COIN strategy to have the kind of activity that has been found in

this report? And what level is acceptable to still have an effective

counterinsurgency strategy, to have a parallel structure of authority outside of the Afghan government?

Mr. FORSBERG. Thank you, Congressman.

As I said, this is a very serious problem. And I think the goal

needs to be to reduce it as much as possible. The issue, of course,

is that while we avoid the costs of the system, we also have to

weigh the benefits and say, that would require looking at how hard

it would be to move the logistics without the current system, but

it is clear the current system is counterproductive. And even

though in the short term we may have to continue to tolerate the

reliance on these militia commanders, I think it is imperative, because this is such a fundamental driver of the insurgency, that we

have a long-term strategy to shift away from the current model because the current model is a key factor undermining the Afghan

government’s legitimacy.

Mr. FLAKE. Colonel Hammes, how likely is it that we can move

away from this model? These warlords and the militias that they

control are likely making as much money as they would as part of

the Afghan security forces, either the police or the military. How

likely is it, in your view, that we can make this shift?

Colonel HAMMES. Sir, I think it would be very unlikely. The people who gain power from this are not going to voluntarily give it

up, so it would have to be integrated into some kind of a negotiated

deal.

In the mid-1980’s when insurgents were good guys, I was

segunded to the agency and was helping with the Afghan task

force. The Soviets needed to push a 4,000 truck convoy to

Kandahar or they were going to lose Kandahar. They attempted to

fight their way through with multiple regiments of armored troops

and could not. They struck a deal with the tribes and rented an

opening of the road for a certain period of time. Money was paid,

convoy through, then the road was closed behind them. So it is still

a matter of Afghan negotiation plus contacts plus the willingness

to fight. It is not a military solvable problem without a very large

force structure.

Mr. FLAKE. Well, some on this panel have suggested that we

have leverage to make this happen. Do we have that leverage, in

your view, sufficient leverage to—I mean, we control the contracts?

Colonel HAMMES. I am not an expert on relationships with the

various groups, but there is a huge problem here in terms of the

internal dynamics that we would have to understand at the Afghan

level to make the negotiations appropriate on the various road sections and then we would have to dismantle the current military organizations that have been built to do this, unless we can co-opt

them by bringing them onsite. And of course, to break them up and

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put them in the armed forces, they don’t view that as co-option but

rather as loss.

Mr. FLAKE. Dr. Starr, you talk about the importance of trade

routes and having the necessary infrastructure to enable that. If

we play a greater role in creating that infrastructure, don’t we still

have the same problem protecting it?

Mr. STARR. No. Because what we have now is, first, U.S. Government state trade, basically our moving our goods around. You don’t

have the kind of serious private trade that I am speaking of. And

when you do have the beginnings of it, it is highly localized, which

feeds exactly the situation we have been talking about, local

bosses.

Once you have longer strings of trade connecting remote people

to secondary markets, and secondary to primary markets, you have

people way down this line exerting pressure to keep this particular

problematic section open. You don’t have that today.

We have a conflictual model. It is basically the United States

versus all kinds of good and bad, some very bad, private interest

there.

This is an alternative model in which we actually are opening up

channels for trade in which you actually create an entirely different incentive structure, not just for the traders, as I have emphasized, but also for the public, which becomes actively engaged

in keeping the roads open as, indeed, in a few cases they have been

actively engaged in keeping schools open.

Now, this isn’t utopian. Let me just say, this is the policy of the

Afghan government right now. They would love to see us engage

in this. This has been presented to General Petraeus’s staff and the

people at CENTCOM in the last 2 weeks. They were very, very

positive about the ideas, as indicated in the published report. I

think this is fast gaining traction as essential.

And, by the way, it is very relevant, just as we get involved with

this project in Kandahar, if you look on the map over here, what

isn’t shown is the new Pakistani port at Gwardar. Now, Gwardar

is a clear shot from Kandahar. But never in our 8, 9 years in Afghanistan have we made a priority of linking that immediate port

with the ring road via Kandahar.

Now, this does two things. Were we, in arriving in Kandahar, to

say, within the next 3 weeks, you are going to be able to get a

truck from here to Karachi port—I am sorry, Gwardar port, with

no more than 6 or 8 hours at the border crossing, if we were to do

that, we would so juggle the incentives, not just in Kandahar, but

in the Taliban stronghold of Quetta. We would transform the economic situation. The incentives would be different. You would have

new actors. You would have old actors taking up new roles and so

on. Now, this is ours for the taking. I mean, we are there. We are

in the catbird seat right now. We can make this happen. If we

choose not to, it will eventually happen without us. But, unfortunately, not to the benefit of our mission.

Mr. FLAKE. Thank you.

Mr. TIERNEY. That is interesting.

Colonel Hammes, let me ask you again. You were a former military commander, you have done just about everything there is to

do from the ground on up, so I put this question to you. If you were

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still a military commander in this theater, how would you feel

about knowing that a convoy of pick-up trucks and SUVs with

mounted DShK anti-aircraft machine guns mounted on them were

rolling through your battle space accompanied by a guide force of

400 men with AK–47s and RPGs firing at villages in an attempt

to intimidate potential attackers?

Colonel HAMMES. Sir, obviously, this is a contradiction of the

COIN approach, but I think currently it is rooted in necessity. If

you don’t let them, you have no supplies. And I think that is the

problem we built for ourselves.

Most of these figures indicate about 15,000 armed contractors

doing this job. That would require more than a division of additional U.S. troops, which of course means you need more convoys.

So you would consume your entire plus-up for Afghanistan in providing supplies to get through.

When you choose to fight a battle where your lines of communication run through territories that have been challenged since Alexander fought his way out of Afghanistan, it is hard to envision

a way to resupply other than making deals with the locals.

Mr. TIERNEY. Well, Mr. Forsberg talks about transitioning out of

that model to a different and better model. Can you foresee an example of that?

Colonel HAMMES. It would be very difficult and take a long time,

sir.

Mr. TIERNEY. And how do you envision, Mr. Forsberg, to what do

we transition, or how do we get there, do you think?

Mr. FORSBERG. I think, Congressman, the first step is to gain

oversight of what is happening. There are some things we can do

simply by reforming contracting practices to ensure that we are not

creating monopolies in the hands of certain commanders, to ensure

that we are restraining their behaviors. And that is the sort of preliminarily step.

But in terms of transitioning, there is also the capacity to rely

on Afghan force structures eventually. I think once you start—if

you take action to break down these militias, that I think will at

some point help recruitment in the ANA and ANP. Right now there

is a competition between some of these private security companies

and ANA for recruitment.

Mr. TIERNEY. But other than taking them on militarily, how are

you going to do it?

Mr. FORSBERG. Eventually we want the Afghan army and the Afghan police to be strong enough to provide security on these routes.

And this, of course, will take some time. The U.S.’ commitment to

generating the Afghan army is a long-term one, and I think we

have only seen the industrial strength mentoring and partnership

efforts start in the last 6 months. And I think we can hope that

the pace at which we develop the Afghan army will accelerate past

what we have seen in the past.

Mr. TIERNEY. I mean, this is sort of perplexing, you know, which

comes first?

Go ahead, Dr. Starr.

Mr. STARR. I think there is some naivety here about, well, can

the Afghan army take over this function or not, or should it be put

in the hands of the U.S. forces and so on? The fact is that if it is

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put in the hands of the U.S. forces, you have made every one of

the people now doing it active opponents. You have doubled the opposition, and they are effective because they know it from the inside.

If you try to turn it over to the Afghan army, this is a very slow

and long-term project. It will have much the same effect.

It seems to me you have to look fundamentally at the incentive

structures. We have announced that we are leaving. It is not, in

my judgment, even if we are, it is not a prudent thing to publicize

the way we have, because every one in the region, not just Afghanistan, set its watch. And you have a lot of people now who are involved in the security and transport businesses in Afghanistan

making hay while the sun shines in any way they can. They don’t

see a future. We leave, this system collapses. They better have

plenty of money in Dubai by then or they have lost their chance.

What I am suggesting is that we become the sponsors, well-wishers of normal trade and transport. And some of these guys will

transition into it.

How do you do that? It is partly rhetorical. It is announcing it,

saying publicly that is our goal.

But beyond that, it is saying, yes, we are going to extend security

to private trade where the same——

Mr. TIERNEY. When you say extend security, Doctor, extend U.S.

force security or contractor security?

Mr. STARR. That I will leave to the conclusion of the discussion.

I think, however, that is something that the Afghan National Army

could undertake tomorrow.

Mr. TIERNEY. The protection of the road system? You think that

they are prepared to——

Mr. STARR. For private local trade, yes. Because that would not

involve foreign forces or even foreign money directly.

My point is simply that if we are unable to offer anything in the

way of a serious economic incentive to the local population to keep

roads open, we will fail. And the only kind of solution that I can

conceive that will meet that criterion is that we become the sponsor

of the open road.

Mr. TIERNEY. We are going to wind this up because we really appreciate the time that you have spent with us here this afternoon.

And I do want to give any of you or all of you an opportunity

for one last word if you feel compelled.

Mr. Schwartz.

Pass.

Mr. Forsberg.

Pass.

Colonel.

Pass.

Dr. Starr.

Mr. STARR. I would like to return to what Mr. Flake said three

times, and which I think, Mr. Chairman, you said several times.

This is a problem fundamentally not of tactics but of strategy. If

we try to solve today’s question on a mere tactical level, it won’t

work. It must be addressed on a strategic level. If you can come

up with a better alternative economic strategy than I proposed

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here, I think you should rush to embrace it. But we need one. We

don’t have one.

Mr. TIERNEY. Thank you. Thank you all very, very much. It is

great food for thought, and we appreciate the time and thoughtfulness that you put into your testimony. The hearing is adjourned.

[Whereupon, at 5:14 p.m., the subcommittee was adjourned.]

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