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CONTRACTING IN COMBAT ZONES: WHO ARE

OUR CONTRACTORS?

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 29, 2010

Serial No. 111–142

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 29, 2010 ............................................................................... 1

Statement of:

Solis, William, Director, Defense Capabilities and Management, Government Accountability Office; Mary Ugone, Deputy Inspector General

for Auditing, Department of Defense Inspector General; Stuart Bowen,

Jr., Special Inspector General for Iraq Reconstruction; and Richard

Fontaine, senior fellow, Center for a New American Security .................. 5

Bowen, Stuart, Jr., .................................................................................... 48

Fontaine, Richard ...................................................................................... 65

Solis, William ............................................................................................. 5

Ugone, Mary .............................................................................................. 33

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

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

prepared statement of ................................................................................... 50

Fontaine, Richard, senior fellow, Center for a New American Security,

prepared statement of ................................................................................... 67

Solis, William, Director, Defense Capabilities and Management, Government Accountability Office, prepared statement of .................................... 7

Ugone, Mary, Deputy Inspector General for Auditing, Department of

Defense Inspector General, prepared statement of .................................... 35

(1)

CONTRACTING IN COMBAT ZONES: WHO ARE

OUR CONTRACTORS?

TUESDAY, JUNE 29, 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 10:05 a.m., in room

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

Present: Representatives Tierney, Lynch, Van Hollen, Welch,

Quigley, Chu, Flake, Duncan, and Luetkemeyer.

Staff present: Andy Wright, staff director; Talia Dubovi and Scott

Lindsay, counsels; LaToya King, GAO detailee; Boris Maguire,

clerk; Aaron Blacksberg, professional staff member; Brendon Olson

and Alexandra Mahler-Haug, interns; John Cuaderes, minority

deputy staff director; 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; Ashley Callen, minority counsel; and Christopher Bright, minority senior professional staff member.

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

in Combat Zones: Who Are Our Subcontractors?’’ will come to

order.

I ask unanimous consent that only the chairman and the ranking

member of the subcommittee be allowed the make opening statements.

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 may

be allowed to submit a written statement for the record.

Without objection, so ordered.

Good morning. And my apologies for being a bit late. I have to

say, it is seldom that Mr. Flake is here before I am. So we know

that it certainly was not intended, but I appreciate Jeff for being

here and all of you for showing up today and giving us your considerable expertise.

I sadly report that I understand we are going to have votes at

about 10:30, so that there will be an interruption. And we will try

to make it as brief a one as possible and get back here.

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Today, we are continuing our oversight on the U.S. Government

contracting in our conflicts overseas. We are going to ask the important questions: Who is getting U.S. taxpayer money? And how

are they using those funds once they get it?

Last week, this subcommittee held a hearing that examined the

results of a 6-month examination into the Host Nation Trucking

contract in Afghanistan. That investigation uncovered distressing

details of how U.S. taxpayer money is funding warlordism and corruption in Afghanistan and how the contractors are undermining

U.S. counterinsurgency strategy.

Equally troubling is the finding that the U.S. officials charged

with overseeing this contract had no visibility into the actual operations of the contractors and subcontractors. In most cases, officials

did not know who the subcontractors were, let alone who they employed, how they functioned, and where they spent their money.

To give one example, seven of the eight prime contractors in the

Host Nation Trucking contract employ, either directly or indirectly,

a man by the name of Commander Ruhullah. And he provides security for the supply convoys. Commander Ruhullah claims to

spend $11⁄2 million per month on ammunition and has reportedly

attacked convoys that do not use his security services. Still, no U.S.

military officials have ever met with Commander Ruhullah. And,

despite the fact that he receives millions of dollars of taxpayer

money, there have been no attempts to enforce the U.S. laws that

govern his U.S.-funded contractual relationship. With $2.16 billion

of taxpayer funds at stake, it is unconscionable that the military

does not have tighter control over Host Nation Trucking subcontractors.

But the Host Nation Trucking contract is not the only problem.

This week’s Economist reports that 570 NATO contracts worth millions of dollars were issued in southern Afghanistan but nobody is

quite sure to whom. In January, the Special Inspector General for

Iraq Reconstruction, one of our witnesses here today, issued a report about a State Department contract with DynCorp which noted

that, ‘‘Over $2.5 billion in U.S. funds were vulnerable to waste and

fraud.’’

In May, the Inspector General for the U.S. Agency for International Development issued an audit of its private security contractors in Afghanistan which highlighted significant problems

with USAID contracts. It found that USAID does not have, ‘‘reasonable assurance that private security contractors are reporting

all serious security incidents, are suitably qualified, and are authorized to operate in Afghanistan.’’

Audits from the Department of State, USAID, and others have

found problems with subcontractor management in areas as diverse

as embassy construction, fuel delivery, and educational outreach

programs. The Government Accountability Office, another of our

witnesses here today, has reported that the agencies are not even

able to accurately report the number of contractor and subcontractor personnel working on U.S. contracts.

And just yesterday, the Wall Street Journal reported that over

$3 billion in cash has been flown out of Afghanistan in the last 3

years. That is $3 billion of cash on a plane flying out Afghanistan.

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Officials believe that at least some of that money has been

skimmed from U.S. contracts and aid projects.

The conflicts in Iraq and Afghanistan have dramatically changed

the way the U.S. wages war. With more contractors than combat

troops currently in both countries, the role that these civilians play

has become increasingly important. The changing role of contractors have challenged the agencies that employ them. Thus far, the

agencies have not risen to meet those challenges.

Over the last several years, Congress has tried to impose greater

control over contingency contractors and subcontractors, including

private security companies. The last three Defense Authorization

Acts included provisions aimed to strengthen oversight mechanisms and mandate more stringent controls over all of the contractors and subcontractors working on U.S. contracts. These new regulations apparently have not been sufficient.

We are here today, however, not to criticize what has or has not

been done so far. We want to work in the spirit of constructive

oversight. So today we are asking what can be done to keep from

these significant problems from reoccurring.

We have invited a panel of witnesses with considerable expertise

and experience in the area of contingency contracting. It is my

hope that today we can discuss what more Congress, the agencies,

and others can do to increase visibility, oversight, and accountability over the contractors and subcontractors who are now crucial to

the success of our missions in Iraq and Afghanistan.

As we learned from the Host Nation Trucking investigation, the

actions of the subcontractors on that contract may be undermining

our entire strategy in the region. With so much at stake, it is time

to dig in and find solutions. I look forward to continuing that conversation today.

And, with that, I would like to recognize Mr. Flake for his opening statement.

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

thank the witnesses for coming.

As the chairman said, given the report that was issued just a

couple of weeks ago and the hearing held last week, this is a very

important hearing. There is enough water under the bridge, we

have enough time with Iraq and Afghanistan, with these contracts

in place, to have some kind of history that we can look to and to

see what we are doing wrong and what we can do better.

So I look forward to the testimony.

Mr. TIERNEY. Well, thank you.

And, with that, we will introduce the witnesses for today’s hearing. And I will introduce each of you here now, and then we will

start again with Mr. Solis at the end of the introductions.

Mr. William Solis is Director of the Defense Capabilities and

Management Team at the U.S. Government Accountability Office,

where he is responsible for a wide range of program audits and

evaluations in the area of defense logistics and warfighter support.

Throughout his career at GAO, Mr. Solis’s audit engagements have

included work on military readiness and training, weapons system

effectiveness, housing, and military doctrine. He has received numerous GAO awards, including the GAO Distinguished Service

Award in 2008.

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Ms. Mary Ugone is the Deputy Inspector General for Auditing in

the Department of Defense Office of the Inspector General. Ms.

Ugone is a certified public accountant with more than 29 years of

accounting experience, the last 26 of which have been with the Inspector General. Ms. Ugone was also chair of the Federal Audit Executive Council from 2007 to 2009 and publicly was recognized by

the President of the United States as the 2007 recipient of the

Prestigious Meritorious Executive Presidential Rank Award. This

award is one of the highest in the Federal Government service. She

is also a recipient of the Inspector General Distinguished Service

Award and the Secretary of Defense Exceptional Civilian Service

Award and a member of the Association of Government Accountants and a graduate of the Federal Executive Institute.

And now that I have said your name three times, have I said it

properly?

Ms. UGONE. Yes.

Mr. TIERNEY. Thank you. Appreciate that.

Mr. Stuart Bowen, Jr., is the Special Inspector General for Iraq

Reconstruction. He previously served as the Inspector General for

the Coalition Provisional Authority. Mr. Bowen’s mission includes

ensuring effective oversight of the $52 billion appropriated for the

reconstruction of Iraq. Under the previous administration, Mr.

Bowen served as the Deputy Assistant to the President, the Deputy

Staff Secretary, and the Special Assistant to the President and Associate Counsel. Prior to his White House tenure, Mr. Bowen was

a partner at the law firm of Patton Boggs LLP. He also spent 4

years on active duty as an intelligence officer in the U.S. Air Force,

achieving the rank of Captain. He holds a BA from the University

of the South and received a JD from St. Mary’s Law School.

We welcome you back, sir. You have been with us before.

Mr. Richard Fontaine is a senior fellow at the Center for a New

American Security. He previously served as foreign policy advisor

to Senator John McCain for more than 5 years. During his tenure

with Senator McCain, Mr. Fontaine worked on numerous pieces of

important foreign policy legislation, such as the 9/11 Commission

Report Implementation Act. He also served as Associate Director

for Near Eastern Affairs at the National Security Council from

2003 to 2004 and as a policy analyst in that same council’s Asian

Affairs Directorate. Prior to that, Mr. Fontaine worked in the office

of former Deputy Secretary of State Richard Armitage and in the

State Department’s South Asia Bureau. Mr. Fontaine holds a BA

from Tulane University and an MA in international affairs from

the Johns Hopkins School of Advanced International Studies.

I want to thank all of you for being our witnesses here today and

for taking time out of your schedules.

It looks like I will swear you in and we will go down and vote.

Maybe we will get one or two statements in before we head off, if

we could.

But it is the practice of this committee to swear our witnesses

in, so if you would please rise and raise your right hands.

[Witnesses sworn.]

Mr. TIERNEY. The record will please reflect that all of the witnesses answered in the affirmative.

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As Mr. Bowen knows and I think the others also probably know,

your full statement is going to be entered into the record, by consent of the committee members. So we ask that you try to synopsize your remarks down to about 5 minutes so that we will have

some time for questions and answers after that.

So, Mr. Solis, please, if you would.

STATEMENTS OF WILLIAM SOLIS, DIRECTOR, DEFENSE CAPABILITIES AND MANAGEMENT, GOVERNMENT ACCOUNTABILITY OFFICE; MARY UGONE, DEPUTY INSPECTOR GENERAL

FOR AUDITING, DEPARTMENT OF DEFENSE INSPECTOR

GENERAL; STUART BOWEN, JR., SPECIAL INSPECTOR GENERAL FOR IRAQ RECONSTRUCTION; AND RICHARD

FONTAINE, SENIOR FELLOW, CENTER FOR A NEW AMERICAN SECURITY

STATEMENT OF WILLIAM SOLIS

Mr. SOLIS. Chairman Tierney, Ranking Member Flake, members

of the subcommittee, I appreciate the opportunity to be here to discuss a number of issues related to DOD’s use of contractors to support U.S. forces and contingency operations.

The report the subcommittee issued and the hearing held last

week focused on a number of oversight challenges related to the

Host Nation Trucking contract, an important logistics contract providing support to U.S. forces. The oversight issues associated with

this contract highlight many of the longstanding challenges that

our reports have addressed in the past.

My statement today will focus on some of the challenges the Department continues to face when it uses contractors in contingencies like Afghanistan. I will also discuss two steps the Department needs to take to address these challenges in future operations, to include the need for DOD to systematically evaluate its

reliance on contractors and institutionally plan for their use.

As you know, DOD relies greatly on contractors to support its

current operations. Currently, there are about 95,000 contractors in

Iraq supporting about 90,000 troops and over 112,000 contract personnel in Afghanistan supporting 94,000 troops. In addition, GAO

reported that DOD had more than 30,000 contracts in place during

fiscal year 2008 and for the first 6 months of 2009 to support operations in Afghanistan. DOD officials have stated that the Department is likely to continue to rely on contractors to support future

contingencies.

Based on our ongoing audit work in Iraq and Afghanistan, DOD

continues to face a number of challenges to fully integrate operational contract support within the Department, to include: finalizing joint guidance for operational contract support, as required by

Congress; identifying and planning for the use of contractors in

support of ongoing operations and in DOD’s plans for future contingencies; providing an adequate number of personnel to conduct

oversight and management of contractors; training of non-acquisition personnel, such as unit commanders and contracting officer

representatives, on how to work effectively with contractors in contingency operations; and, last, ensuring that local and host-country

nationals have been properly screened and badged.

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Since the mid-’90’s, we have made numerous recommendations

aimed at addressing each of these challenges. While DOD has

taken some actions in response to our recommendations, it has

been slow to implement others. For example, DOD continues to

face challenges in identifying a plan for operations for contract support for ongoing operations.

Recently, officials from several battalions who had just returned

from Afghanistan told us that, when they arrived at their locations

that were intended to be their combat outpost, that they lacked

housing, heating, laundry facilities, showers, and food services. Additionally, because these units were unaware that they would have

the responsibility for obtaining these prior to deploying, they did

not plan for and allocate adequate personnel to handle the extensive contract management and oversight duties associated with

building and maintaining their combat outpost. As a result, these

units had to assign military personnel away from their primary

missions in order to handle these contract management duties.

Failure to identify and plan for contractor support goes well beyond Iraq and Afghanistan. As we reported earlier this year, the

Department has also made limited progress in including the roles

of contractors in operational plans for future contingencies. For example, DOD guidance calls for the inclusion of operational contract

support annex in some operation plans. However, of the 89 plans

that required such annexes, we found only four plans where these

annexes had been approved, and the annexes had been drafted for

an additional 30 plans.

As a result, DOD continues to risk, one, not understanding the

extent to which the Department will rely on contractors to support

combat operations and, two, being unprepared to provide management and oversight of these contractor personnel because they have

not been included in the planning process.

Let me just say quickly, DOD has taken some steps to institutionalize contract support, such as establishing a focal point. And,

in addition, they have issued a variety of contractor guidance.

Let me just close and say that, in looking toward the future,

what is needed is a cultural change across DOD that emphasizes

the importance of operational contract support throughout all aspects of the Department, including planning, training, and personnel requirements. Only when DOD has established its future vision

for the use and role of contractors supporting deployed forces and

fully institutionalizes the concepts of operational contract support

can it effectively address its long-term capability to oversee and

manage those contractors.

It is important that this change occur quickly while current operations keep a significant amount of attention focused on the use

and role of contractors and the political will exists to effect such

a change within DOD. A failure to do so will likely result in the

Department continuing to confront the challenges it faces today in

future contingencies.

This concludes my statement. I will be happy to answer any

questions.

[The prepared statement of Mr. Solis follows:]

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Mr. TIERNEY. Thank you, Mr. Solis. We appreciate it.

Ms. Ugone.

STATEMENT OF MARY UGONE

Ms. UGONE. Chairman Tierney, Ranking Member Flake, and distinguished members of this subcommittee, thank you for the opportunity to appear on behalf of the Inspector General of the Department of Defense to discuss contracting in combat zones. Specifically, I will highlight a few key deficiencies in contingency contracting and discuss related ongoing actions to help prevent waste,

fraud, and abuse.

Since the early 1990’s, we have identified contract management

as a major challenge for the Department to overcome, and the Government Accountability Office has continued to identify this area

as high-risk. The need for expediency in contingency operations,

such as in Iraq and Afghanistan, can further increase risks.

In May 2010, we issued our report, ‘‘Contingency Contracting: A

Framework for Reform.’’ The intent of the report was to provide a

useful tool for commanders and contract managers in their efforts

to improve contingency contracting practices.

One of the most important areas in contingency contracting is requirements definition, because the pace of contingency operations

should compel us to get it right in the beginning. In particular,

user requirements need to be appropriately translated into contractor performance expectations and measures.

In February 2010, we and our colleagues at the Department of

State Inspector General Office jointly reported that two task orders, valued at $1 billion, did not meet defense needs in developing

the Afghan National Police because the contract did not allow for

rapid changes to the requirements as the security situation in Afghanistan changed.

Another important area is adequate administration of the contract. Fundamental steps include having a quality assurance plan

and assigning qualified contracting officer representatives. For example, a Special Operations Forces support activity contracting officer did not assign a contracting officer representative to 44 service task orders valued at $514 million. Only after a test caused

damage to a C–130 aircraft did command officials discover that the

contractor improperly installed a part that later cost $219,000 to

fix.

Sufficient controls of the payment process to ensure that payments are proper is another important area in contingency contracting. For example, Marine Corps officials did not properly authorize over 9,500 payments, totaling about $310 million. We found

that Marine Corps officials made 32 duplicate payments, totaling

$21⁄2 million. One vendor was paid over $200,000 when the Marine

Corps paid the same invoice three times.

Although the examples I provided today involve the relationship

between the Department and prime contractors, the need for effective contract management and oversight also exists when the Department, through its prime contractors, relies on subcontractors.

Subcontracting guidance applies to the phases of the contracting

process. For example, during source selection, when required by the

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contracting officer, offers must demonstrate the responsibility of

their proposed subcontractors.

The contracting officer may also require consent to subcontract

to adequately protect the government because of the type of subcontract, its complexity or value, or because special surveillance is

needed. Additionally, the Federal Acquisition Regulation emphasizes that government quality assurance on subcontracted supplies

or services should only be performed when it is in the government’s

interest.

Ultimately, however, the prime contractor is responsible for delivering supplies or services that conform to the contract requirements. Therefore, it is the prime contractor’s responsibility to ensure that a proposed subcontract is appropriate for the risks involved and is consistent with sound business judgment.

There remains continuing concern about whether a prime contractor provides value to the contract when a subcontractor is performing most or all of the tasks under the contract. In response to

section 852 of the National Defense Authorization Act for fiscal

year 2007, the Department of Defense has implemented contract

clauses providing the contracting officer with the authority to recover excessive past-due charges for contracts where the prime contractor or a subcontractor adds no or negligible value in accomplishing the work performed under the contract.

The effectiveness of contractor support to expand U.S. operations

in Afghanistan and other contingency operations can be improved

by applying lessons learned from contingency contracts already executed. Among the steps that can be taken to improve contingency

contracting are: define what is needed and how it can be measured;

have both program and contracting personnel involved in implementing a well-documented oversight plan; and have required documentary evidence, such as a receipt of goods and services, to support proper payments.

In closing, I would like to add that the top priority of the Office

of the Inspector General, Department of Defense, is to provide effective and meaningful oversight in Southwest Asia. We will continue to coordinate and integrate our efforts within the oversight

community. And I look forward to answering any questions you

may have. Thank you.

[The prepared statement of Ms. Ugone follows:]

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Mr. TIERNEY. Thank you very much, Ms. Ugone.

Mr. Bowen.

STATEMENT OF STUART BOWEN, JR.

Mr. BOWEN. Good morning, Chairman Tierney, Ranking Member

Flake, distinguished members. Thank you for inviting me again to

appear before the committee to address the challenges of contracting in combat zones, and specifically to address the issue of ‘‘who

are our subcontractors.’’

Permit me to provide three premises that frame my remarks at

the outset. First, the Iraq experience underscores the truism that

contracting in a war zone is uniquely challenging and vulnerable

to fraud, waste, and abuse. Second, fraud, waste, and abuse will

metastasize unless a well-managed oversight regime is implemented that balances the principle of effective financial stewardship with the goal of mission accomplishment. Third, a weakly

resourced contracting corps, such as we have seen in Iraq and Afghanistan, will vitiate oversight severely and, as you pointed out,

Chairman Tierney, potentially undermine mission accomplishment.

Since we have been studying the problems arising from Iraq contracting for the last 6 years, we have issued 230 reports, chiefly

looking at primes, because that is what the FAR tells us about. But

we have gotten into some of the subcontracting issues, and, in

those cases, we have seen that the primes frequently don’t know

who their subcontractors are either. I think part of the reason that

Chairman Towns sent his letter to Secretary Gates last November

was to get at this issue, to find out what knowledge the Defense

Department had about their primes, about the subcontractors, and,

thus, this hearing.

Two paramount lessons learned arise from our reporting that I

think still need to be addressed to grapple with this issue. One, as

we pointed out 4 years ago in our contracting lessons learned report, the U.S. Government should develop and implement contingency Federal acquisition regulations, that are specifically shaped

and defined for contingency operations.

Two, as part of an overall reform and a recognition that there is

a lack of unity of command and, thus, a lack of unity of effort in

Iraq and Afghanistan, a new institution should be established, a

U.S. Office for Contingency Operations, that grasps contracting,

personnel, IT, all the elements essential to success. And that new

institution should be given responsibility.

Right now, we have a contingency contracting corps in GSA, but

it is not really functioning. The Coordinator for Reconstruction and

Stabilization at State has the personnel responsibilities—not really

engaged in Iraq at all, very limited in Afghanistan. And DOD,

meanwhile, is pushing forward with its significant stabilization entities, but they are not effectively integrated. That reform, that

challenge, that problem stands before the Congress and the country

to fix.

Finding out and understanding who our subcontractors are and

who our contractors are in Iraq and Afghanistan should be studied

through three lenses: policy, transparency, and accountability.

In Iraq, two policies shaped the overall contracting effort: the

heavy use of contractors to begin with, unprecedented in the hisVerDate 11-MAY-2000 15:03 Jun 09, 2011 Jkt 000000 PO 00000 Frm 00052 Fmt 6633 Sfmt 6633 C:\KATIES\DOCS\65554.TXT KATIE PsN: KATIE
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tory of contingency operations, in 2008 reaching upwards of

190,000 contractors in-country, with the contracting corps simply

not sufficient, not capable of keeping track of them. Thus, you get

waste, the real issue in Iraq, and I think the real issue in Afghanistan. Severe waste ensued, billions of dollars wasted needlessly, because of poor quality assurance programs, which are intended to

ensure there are quality control programs, which primes are supposed to implement to cover subcontractors. Didn’t get done

enough. And, as a result, this serious waste occurred.

Second, the movement toward using local contractors, understandably from a policy perspective to build capital, to improve employment. But, in Iraq, we don’t know who those contractors are.

We don’t have a data base. It’s difficult to track. And, thus, there

certainly was waste and corruption that ensued.

On the transparency front, I think that if the Congress wants to

know who our subcontractors are, amending the FAR is a good way

to do it. Right now, the only way that the contracts that Chairman

Towns requested from DOD will reveal who the subcontractors are

is if the terms of the contract required it. However, if you so chose,

you could amend the law to require a minimal disclosure of subcontracting. I think that’s a step in the right direction toward

transparency.

And on the accountability front, rebuilding the contracting corps

is an essential element to ensuring not just the oversight of primes,

but also the oversight of subcontractors.

So, in summary, I think there are four recommendations that we

put forward for the committee and for the Congress to consider.

First, implement the Contingency Federal Acquisition Regulation

and develop the U.S. Office for Contingency Operations to manage

these methods, this new way forward for protecting our national

security interests abroad.

Second, reexamine the heavy use of contractors in contingencies

and explore whether some inherently governmental functions are,

in fact, being incorrectly outsourced.

Third, rebuild the contracting corps. It’s ongoing at DOD, but I

think it’s a governmentwide issue. And, certainly, with respect to

contingencies, when you have 190,000 contractors in-country, you

have to have a contracting corps that is capable. We don’t have it

today.

And, finally, amend the FAR as you see fit to give you the transparency, the information you need and want about who our subcontractors are.

And, with that, Mr. Chairman and Members, I look forward to

your questions. Thank you.

[The prepared statement of Mr. Bowen follows:]

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Mr. TIERNEY. Thank you very much.

Mr. Fontaine.

STATEMENT OF RICHARD FONTAINE

Mr. FONTAINE. Mr. Chairman, Ranking Member Flake, and

members of the subcommittee, thank you very much for granting

me the opportunity to testify today, and I’m honored to take part

in this hearing.

My testimony today is based on a report entitled, ‘‘Contracting

in Conflicts: The Path to Reform,’’ released by the Center for a New

American Security earlier this month.

In this report, my CNAS colleague John Nagl and I discuss possible solutions to many of the problems that have plagued the expeditionary contracting process. The entire report is available for

download on the CNAS Web site.

Our report proceeds from the realization that, when our Nation

goes to war, contractors go with it. The 2001 invasion of Afghanistan, together with the March 2003 invasion of Iraq, saw an increase in the size and scope of contracted support on the battlefield

that is unprecedented in U.S. history.

Yet the system within which this contracting takes place has not

caught up with the new reality. As America’s dependence on expeditionary contractors in conflicts or stabilization or reconstruction

efforts is likely to continue, the need for reform is pressing.

My written testimony details the many recommendations we

have made to move down the path of reform. I would like to highlight just a few that we believe are particularly important.

First, expand the work force. As the volume and scale of contracts has exploded in recent years, the number of government

workers qualified to oversee them has remained stable or even fallen. It’s critical to grow the work force, both in Washington and

overseas. Only by expanding the quantity and quality of the government’s human infrastructure will the majority of other necessary reforms be possible.

Second, increase transparency and scrutiny. The post-invasion

reconstruction environments in Iraq and Afghanistan represent the

largest-ever markets for private contracting firms, which has led to

opacity and inconsistent data. DOD, State, and USAID should establish uniform standards across agencies and contract type for

consistency and consolidation of data. They should improve the

transparency of subcontractors and establish a permanent Inspector General and include clauses in contracts that require firms to

enforce rules governing behavior that impacts the overall U.S. mission.

Third, establish a coordination mechanism within the executive

branch. The approach to contingency contracting remains fragmented and ad hoc. We propose establishing a formal but relatively

simple interagency coordination mechanism in which State, DOD,

and USAID would designate one individual and bureau to focus on

contingency contracting and then ensure that these individuals

meet on a regular basis with OMB and the NSC in order to harmonize policies and standards.

Fourth, deal better with the military implications. The unprecedented number of private contractors on the battlefield and the

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vast scope of their activities pose special dilemmas in command coordination and discipline for the U.S. military. The Department of

Defense needs to give much more strategic thought to the role that

private contractors play. They should consult with contractors during the military’s mission planning process, include the expected

roles of contractors in operational plans and predeployment training, and incorporate contracting issues in professional military education courses.

Fifth, clarify laws and regulations. The legal framework governing expeditionary contractors in wartime is complicated, it features

overlapping jurisdictions, and it’s somewhat ambiguous. The Department of Defense, together with Department of Justice, should

clarify how the various laws that potentially apply to contractors

in-theater interact to create obligations for, or jurisdiction over, private contractors. We believe that Congress should amend the Military Exterritorial Jurisdiction Act to unambiguously cover all expeditionary contractors and streamline acquisition regulations that

govern U.S. service contracting in hostile environments.

Sixth, and finally, resolve the inherently governmental conundrum. U.S. law has long aimed to protect the core functions of government by prohibiting anyone other than Federal employees from

performing such tasks, yet today there is little consensus about

what those functions are. The government should define as ‘‘inherently governmental’’ those areas in which there is some consensus

and move toward a core-competencies approach in areas where

there is not. Such an approach would focus on the functions the

U.S. Government should possess and maintain, rather than debate

internally over which are inherently governmental.

To close, I would note that the U.S. Government and its contract

employees have been thrust together as partners in a shared endeavor, the scale, cost, and duration of which have taken nearly all

observers by surprise. The reality is that America’s reliance on private contractors is not likely to fade, and it’s time for the United

States to adapt.

As a result, the government, the military, the contracting community, and, ultimately, the American people will benefit from

sweeping reform of the contracting system, reform that ensures the

private sector’s role in American engagements aligns firmly with

our Nation’s interests and values.

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

[The prepared statement of Mr. Fontaine follows:]

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Mr. TIERNEY. Thank you, Mr. Fontaine.

Thank all of you.

And now, for the continuation of that bad news I spoke about.

I think it’s probably more prudent if we just break now and go and

vote. There’s only a few minutes left on the vote.

There are only two votes, so hopefully we will be back relatively

soon, I would say certainly by about 5 minutes of 11 or 11 a.m. So

if you want to get yourself a cup of coffee or relax a little bit. My

apologies, and we will be back. So we will be adjourned until 11.

[Recess.]

Mr. TIERNEY. Thank you for your patience. We had one more

vote than had been anticipated, and so it took a little bit longer.

But we are happy that you are all back with us, and ready to start

asking some questions, which I will kick off for 5 minutes, because

I want to ask something about the basic premise of this whole operation here.

Everybody seems to be testifying on the notion that we have accepted the premise that private contracting and subcontracting is

here to stay on contingency operations. Yet, every one of you cites

numerous problems with oversight, with management and personnel, integration of the planning, the command structure, legal

issues, liability, responsibility, control over individuals for whom

we are going to get the blame, whatever they do, even though they

may not be technically be in our Department of Defense or our

State Department or at USAID.

So, given all of those difficulties—and separating out the State

and USAID part of it right now, but start with Department of Defense—why aren’t we giving more consideration to the notion of not

having contractors and subcontractors in our military operations

where we already have established clear lines of responsibility for

those in the military, clear lines of management, clear lines of accountability, and all of that?

I mean, it seems to me that if we just define military operations

as inherently governmental because the military operations are

under the name of the United States and under our flag overseas,

that would remedy a lot of these problems.

Mr. Solis.

Mr. SOLIS. I will take a first stab at it.

I think what we have tried to say is that we are not saying that

contractors should be used one way or the other. I think what we

try to say is that, from what we understand from the Department

and military operations, that it’s likely that they are going to be

part of it. So we are not saying that they are.

That being said, going back to what I mentioned in our statement, is that there needs to be a fundamental look at the requirements for contracting, if, in fact, you want to do contracting. I don’t

think we’re trying to say that you will use contracting, but if that

is what you are going to do in terms of your military operations,

you have to plan that up front.

You have to look and say, are we going to contract for certain

things—not just on the logistical side, that we are using contractors on the intel side and network operations and a number of

other things. We are using them as linguists. Everywhere I go, you

know, military members say, ‘‘I think we have gone too far.’’

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But I think there needs to be this fundamental look-see at the

beginning to say whether or not we are going to use them. And if

we are going to use them, then we need to put the proper oversight

and controls in place.

Mr. TIERNEY. I certainly would agree with you there.

I’ll tell you something. You know, when I look at all of you talking about being on top of this issue since the 1990’s and advising

everybody to start looking at these contracts and moving forward

and, basically, there’s a large part just being blown off.

I mean, here we are 20 years later, and you have a little bit of

compliance with some of the recommendations and a whole lot of

noncompliance and sometimes inattention to them.

Ms. Ugone.

Ms. UGONE. Yeah, I think the whole issue, and I think my colleagues here have raised it, is the inherently governmental function issue, which is—I believe OMB has proposed policy definitions

of that.

The issue is, how closely related is it to the inherently governmental function, and should these critical capabilities be insourced? I believe there was legislation passed in the last couple

years that requires the military departments to take a look at their

contracted-out capabilities to see whether or not any of them

should actually be in-sourced, which is brought back in-house.

And that is one way in which the Department can analyze that

particular situation. I think there is already legislation out there

that allows——

Mr. TIERNEY. The legislation is there; the compliance isn’t. And

that is the problem.

And, again, the question goes back to, when did war ever become

something that wasn’t inherently governmental, in all the things

that go with it?

When I see recommendations here, you know, trying to incorporate in and integrate into the command chain contractors so that

they are more involved in the planning and the operation and stuff

like that, well, if you’re going to do that, you might as well have

them be on your payroll.

Mr. Bowen.

Mr. BOWEN. Mr. Chairman, you say, when did that happen? I

think the time is the late 1980’s, when LOGCAP I was created and,

essentially, the support—fuel, food, billeting—of troops in the field

was outsourced. And we have spent now on LOGCAP in Iraq in excess of $35 billion in those three areas.

It has been incremental increases since the late 1980’s. ‘‘What

can be covered,’’ is a continuing question in every conflict, and the

answer is always, ‘‘a little bit more.’’

Mr. TIERNEY. Has anybody ever looked at, you know, what is it

that we did in World War II, what is it that we did in the Korean

conflict?

Mr. Fontaine, what a segue, huh?

Mr. FONTAINE. Yeah, exactly. In our report, actually, we have a

historical section that looks back, actually, all the way to George

Washington. And contractors in some way, shape, or form have

played a role in all of our conflicts going back that far. There were,

you know, thousands of contractors working in Vietnam and Korea.

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The big change, though, has been what they’ve done and the dependence that the United States has had upon what they’ve done.

So in Vietnam, for example, you had a large number of contractors

working on construction projects in Vietnam. And that, obviously,

is less controversial, in terms of what contractors do. You know,

now, in the current wars, we’ve had contractors doing interrogation, private security operations, weapons maintenance, according

to reports even maintaining drone operations, those sort of things,

which are much more controversial.

So I think that is the big change that has happened over the

years, is the scope of activities that contractors have begun to carry

out. And because we have, you know, upwards of 200,000 contractors now in Iraq and Afghanistan, if you pulled those out of the operation or tried to Federalize them all, it would be very difficult to

do so.

Mr. TIERNEY. And I wonder how easy it would be to keep voting

to be over there involved in these conflicts if it was 200,000 people,

U.S. citizens in combat, as opposed to 90,000 in one place, with

110,000 contractors, sort of, off the books. It’s a political consideration.

Mr. FONTAINE. Right. I mean, I think this is another aspect of

it, is the political cost goes down to the degree that contracting

support goes up. Because, you know, we always mourn the losses

of American service people who are killed; they are on the ‘‘faces

of the fallen’’ tributes and everything else. But contractors die and

are hurt, and they barely register. So there’s a reduction in the political costs of these operations.

But I think, at the same time, unless the United States has a

very significant reduction in its international commitments—which,

personally, I think is relatively unlikely, at least in the near to

mid-term—then we will probably continue to rely with our current

force structure on contractors to do the work that our military is

not big enough to carry out on its own.

Mr. TIERNEY. Thank you.

Mr. Flake.

Mr. FLAKE. Let me just follow on that theme, if I could. And Mr.

Bowen and Mr. Fontaine first.

The report that was issued, ‘‘Warlord, Inc.,’’ this is one—and it

was mentioned before by Mr. Solis that you take into account both

efficiency and whether or not it aids our policy, our overall policy

goals. This is one where, when you have local contractors with the

trucking contract, it’s, I think, undoubtedly the most efficient way

to move goods between military bases in Afghanistan.

But when we find out that a significant portion of the money

that is used to pay those contracts is going for protection money

to some very unsavory characters, some of whom are very tight

with the Taliban or are contracting with the Taliban for this protection, that certainly runs counter to our policy, our

counterinsurgency policy, which calls for one source of authority—

that being the Afghan Government, and no parallel authority structures there—that we’re, in this case, not only tolerating, we’re

building up these militias and warlords.

How do we reconcile that? It goes back to what the chairman was

talking about, you know, the political cost. Certainly, if we did

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what the Soviets did, used their force structure to guard the supply

lines—according to this report, it was 75 percent of their force

structure—that would require, you know, a doubling of our number

of troops. And it wouldn’t be very efficient, and we would have, certainly, more casualties. But it may be the only way to run an effective counterinsurgency policy as we have defined it.

How do we reconcile that? Or can we reconcile that?

Mr. Bowen, do you want to give it a shot?

Mr. BOWEN. Well, the policy issue, I guess, is using financial resources to pacify a region. And it was certainly expedient, an expedient process, ad hoc, with respect to keeping the trucking routes

safe.

In Iraq, it was much more complicated, a much more thoughtthrough process. The ‘‘Anbar Awakening,’’ the Sons of Iraq program, spent in excess of $450 million of Commander’s Emergency

Response Program money to pacify Anbar province and similar regions. Similar policy issues, different approaches to how wellthought-out, how well-structured the execution of the two programs

was.

In Afghanistan, the policy execution was essentially expedient

and almost outsourced, as you point out. In Iraq, it was carefully

thought through, as was the transition of the maintenance of that

pacification program, now borne financially by the Iraqi Government.

Mr. FLAKE. Mr. Fontaine, do you have any thoughts on that?

From that 35,000-foot level, how does this look in terms of the use

of contractors in this trucking contract?

Mr. FONTAINE. Well, obviously, in any war, funneling money to

your enemy is not a good idea. So I think you should start from

that premise.

I do think that, at some point, there may need to be a fundamental choice made whether to proceed—whether the effects are mitigated through more oversight and that kind of thing, to proceed in

a fashion where we are willing to trade money in order to have a

pacified area through which our supply lines can travel, knowing

that some of that money will go to our enemy, or whether we are

willing to tolerate the potential of more casualties and more disruption of our supply lines. I think that is probably a fundamental

choice.

But when it comes to counterinsurgency, I think that not only do

they have all the problems that you just described when it comes

to aiding our enemies, reducing government legitimacy, giving

them more opportunity to attack rather than to not attack, but I

also think there is a strategic communications issue to this. We are

supposed to be on the side of the good guys. And so, as word gets

out that we are, sort of, willingly or knowingly providing money

that ends up in the hands of the Taliban, I wonder if that promotes

a sense that the United States is not in this, sort of, for the long

term, in order to actually see the government succeed, rather than

trying to go with short-term expediency.

Mr. FLAKE. Thank you.

Ms. Ugone, I have just a moment left. You mentioned that there

are provisions; if there is no value added from having the prime

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contractor or the subcontractors, that we have the authority to pull

back some of the funds used for that. How often is that utilized?

Ms. UGONE. We haven’t done work in the area, on the passthrough. That was legislation that was enacted, I think, in fiscal

year 2007.

But one of the things that it focuses on is the subcontractor level.

We do plan to do some work based on the contingency contracting

framework for reform. We have identified where primes have had

problems, where we plan to take a look at the primes that are primarily IDIQ contracts. And we are going to do down to the sublevel to see if there are issues related to passthrough, as well as

other issues related to subcontractor responsibility as well.

Mr. FLAKE. OK. Let me just ask it another way quickly. You’re

not aware of any instance where we have actually pulled back

funds?

Ms. UGONE. No. I’m not aware of any instances about recovering

excess costs.

Mr. FLAKE. OK. Thanks.

Mr. TIERNEY. Thank you.

Ms. Chu, you’re recognized for 5 minutes.

Ms. CHU. Thank you, Mr. Chair.

Well, last week, we found out that, in the course of investigating

the Host Nation Trucking contract, that military logisticians were

relying on reports from prime contractors to gain visibility into the

subcontractors that were actually driving the trucks and providing

security for the convoys. And there was strong evidence that these

subcontractors were paying off the Taliban. This is a very distressing situation.

And what I would like to ask the panelists is, in general, what

areas of oversight are appropriate for DOD to leave up to the prime

contractor, and what areas should DOD take a more direct role in

overseeing? And, in doing so, how can we prevent this corruption

from occurring?

Ms. UGONE. You know, I think one of the things—in preparing

for this hearing, it became quite apparent that the Federal Acquisition Regulation has not kept up with subcontract management. We

just took one contract out of here, an IDIQ contract with I believe

it was five prime contractors, and there were 200 subcontractors

under that prime.

If you take a look at the Federal Acquisition Regulation, there

are provisions, but as far as subcontract management, I don’t think

it’s kept up with the level of subcontractor performance that is required under these primes. So I think there needs to be a look at

the Federal Acquisition Regulation with respect to subcontract

management.

Ms. CHU. Are there not guidelines for this?

Ms. UGONE. There are. And there is—and I talked about it a little bit in my opening statement—there is the consent to subcontract, which is, if the contracting officer requires a prime to provide information on their subs in order for the contracting officer

to consent to subcontract, then there is some insight into subcontractor responsibility. But if the contracting officer does not require that, then you’re not going to have the insight.

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And the provisions in the current FAR allow a lot of leeway to

the contracting officer.

Ms. CHU. And what would change it so that you could have this

more stringent oversight of the subcontractor?

Ms. UGONE. Excuse me? I didn’t quite hear the question.

Ms. CHU. What would it take to change it so that you could

have——

Ms. UGONE. Well, one of the things is, I think the provisions—

let me just take the situation with the warlord situation. The contracting officer can, under the current provisions of the FAR, designate subcontracts in that situation. If something requires special

surveillance or special oversight, it does allow, in the FAR, to do

that. For example, you could say to the prime, ‘‘I need to be able

to consent to you subcontracting with these primes. I need to get

insight into your subcontractors.’’ I can also establish, perhaps, a

special surveillance program for those particular subcontractors.

So there are some provisions, but it’s up to the contracting officer

to determine whether or not those provisions are invoked.

And there are some other additional requirements that have to

do with the contractor purchasing system, and it gets a little bit

more detailed, as to when you have to get a consent to subcontract

from a contracting officer.

Ms. CHU. I want to ask another question about the culture at the

Department of Defense.

And, Mr. Solis, you talked about the fact that the contracting reform at DOD is hampered by the Department’s inability to institutionalize operational contract support by accepting contractors as

an integral part of the total force. But I also note that you had had

several recommendations but the DOD has been slow to implement

many of the recommendations.

What could change this culture?

Mr. SOLIS. I think one of the things, again—and I think the Joint

Staff—and I think this was alluded to at the hearing last week.

There was a Joint Staff study to look at the reliance on contractors

in Iraq. And I think that, again, begins the process of looking at

how reliant the DOD is, not only for Iraq but for future operations,

in terms of the reliance.

I think, also, as I mentioned in the testimony here, when you

look for future operations, there are requirements to look for—

there are requirements to produce what was called an ‘‘Annex W,’’

which looks at contractor requirements for new operations or future operations. That has to be done. That has to be done very rigorously and on time. And I think, unless the Department does that

kind of thing, we are going to be in this same situation, talking

about another contract, the next time.

I think the only other thing I would offer is that I know in the

current version of the defense authorization bill that the Senate

just passed that they made some changes to the requirements for

looking at contractor requirements in the defense bill. And that is

going to be part of the QDR, at least as envisioned now. So it’s

going to bring that strategic look up to it at that point.

I still think there are some basic problems in terms of, again, as

I mentioned, lessons learned, you know, background screenings. I

think those things—we’re on record with some of the recommendaVerDate 11-MAY-2000 15:03 Jun 09, 2011 Jkt 000000 PO 00000 Frm 00163 Fmt 6633 Sfmt 6633 C:\KATIES\DOCS\65554.TXT KATIE PsN: KATIE
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tions to make changes to that. For whatever reason, the Department has not acted upon all those in a timely manner. We are still

trying to pursue some of those. But, again, I think the fundamental

piece is that you have to look at your reliance on contractors before

you start making other adjustments.

Ms. CHU. Thank you. I yield back.

Mr. TIERNEY. Mr. Duncan, you’re recognized for 5 minutes.

Mr. DUNCAN. Well, thank you. Thank you very much, Mr. Chairman, and thank you for holding another hearing and trying to call

attention to all the problems, all the waste, fraud, and abuse, the

one scandal after another that has gone on through these many

years that we have been in Iraq and Afghanistan.

Throughout all this time, we have had more contractors and subcontractors than we’ve had soldiers in these areas. I heard Mr.

Fontaine say a moment ago that the use of contractors by the military has gone on since the founding of the country. But I can tell

you there’s never been the ridiculous markups, the excessive, almost obscene profiteering, there’s never been the rip-offs of the taxpayers that have gone on to the extent that they have gone on in

Iraq and Afghanistan. And these wars have always been more

about—far more about money than they have been about any real

threat to this Nation.

It’s really shameful, and it’s very, very sad, what has gone on.

And there is really no real way to correct it. When you have private

companies dealing with each other, things are done at a fourth or

a third or half of the cost that you have when you have the Federal

Government involved dealing with contractors. And the Department of Defense, because of the lobbying influence of the retired

admirals and generals, has been the worst and the most expensive

of any of the Federal contracting that has gone on by our government.

But that is really all I have to say. I thank you very much for

giving me this time.

Mr. TIERNEY. Thank you, Mr. Duncan.

Mr. Lynch, you are recognized for 5 minutes.

Mr. LYNCH. Thank you, Mr. Chairman. And I want to thank you

for holding this hearing.

Mr. Bowen, it’s good to see you again.

Mr. Bowen, you and I have had a pretty long history over the

Iraq reconstruction model. I have been to Iraq 12 times, working

with you to try to tighten up the situation there. We started at a

very low basis, and I think there were a lot of lessons learned.

What troubles me is that now, when I more often visit Afghanistan, I don’t see that the lessons learned in Iraq are being used in

Afghanistan. And it distresses me greatly.

I have been involved with the chairman on this Host Nation

Trucking issue. I went down and tried to meet with a couple of the

warlords down there on the Afghan-Pakistani border. They ended

up shutting down the pass there at Spin Boldak and shut off the

trucking because they didn’t want me down in that area asking

questions.

I just have come to question whether or not even the modest and

painful gains that were achieved in Iraq are possible in Afghanistan. And I’m wondering, Mr. Bowen, because, you know, you’re

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the Inspector General for Iraq Reconstruction, you’re the one who

was the point person for us, can you point—now, I know you’ve

helped the Inspector General—the SIGAR, right? Special Inspector

General for Afghan Reconstruction?

Mr. BOWEN. Yes, sir, that’s right.

Mr. LYNCH. I know you’ve helped them file some reports. The reports, at least the ones that I have seen and asked for, they are,

well, very poor, I would say, in my estimation. Going into Afghanistan and asking for a progress report on where we were, just a status report, even if there is no progress to report, just tell us where

we were—that information has been very poor, not very informative.

When I compare it to the information I get from you and your

office in Iraq—and I know you have been helping them generate

some reports, but, look, I have low confidence in the Special Inspector General for Afghan Reconstruction. It may be because of the environment there; it may not be his office. It may be it’s just a different environment and my expectations are too high.

But I wonder if you could share, you know, just some of the lessons learned in Iraq and maybe some things going on in Afghanistan that you think could be done better.

Mr. BOWEN. First, Mr. Lynch, I think almost exactly 2 years ago,

we had a colloquy in this room about subcontractors, and that was

regarding the DynCorp contract. And you identified in our then-recently released audit, our first one on DynCorp, that a subcontractor who apparently didn’t do much work but pocketed $8 million,

Cogen Corp and then Corporate Bank, you remember for the police

training camp that never got completed? I point that out simply to

say that this is a continuing and enduring problem, that is, ensuring that taxpayer interests are protected while mission goals are

achieved. One doesn’t trump the other.

Reform is still needed, and the reason for that shortfall then and

the shortfalls that you saw in Afghanistan and the shortfalls that

are experienced today in both countries is the lack of transparency,

no required reporting, as we have heard today regarding subcontractors, the lack of effective accountability, and insufficient

oversight presence in country. You went outside the wire. We have

been outside the wire a lot in Iraq.

We have been together, you and I, sometimes when our inspectors have visited sites. Frequently we are the first Americans that

they have seen in a long time. So the quality assurance programs

being done outside the wire are not sufficient to protect those taxpayers’ interests, notwithstanding the importance of the mission

goals.

What lessons should be applied? Two are in my statement. One,

the contingency Federal Acquisition Regulation that we have

talked about before, recommended 4 years ago in our lessons

learned report, I think these settings, as you point out, are uniquely difficult and uniquely susceptible, I believe to fraud, waste and

abuse; and, therefore, specially focused contracting regulations

should be used for all agencies to use in theater.

What I think most don’t realize is that there are multiple versions of the FAR at work in both Iraq and Afghanistan because

each agency can amend and apply the FAR as it sees fit to conVerDate 11-MAY-2000 15:03 Jun 09, 2011 Jkt 000000 PO 00000 Frm 00165 Fmt 6633 Sfmt 6633 C:\KATIES\DOCS\65554.TXT KATIE PsN: KATIE
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tracting overseas. That creates problems for contractors; it creates

problems for contract management, and causes waste, which is ultimately where the taxpayers’ interests are shortchanged.

I think also that we have talked about the need for unity of effort

in contingency operations and we don’t have that in Afghanistan,

and we haven’t seen it sufficiently in Iraq. It shouldn’t be dependent on personality; it ought to be driven by structure, and that

structure ought to be something like the U.S. Office for Contingency Operations that would bring contracting, bring IT, bring personnel, bring planning, bring oversight, and bring execution under

one roof. Right now all of those elements are diffused across the

agencies in a disordered fashion; and the results, unfortunately,

are occasionally revealed in oversight reporting.

Mr. LYNCH. Thank you, Mr. Chairman. I yield back the balance

of my time.

Mr. TIERNEY. Let me continue on that line.

Mr. Solis, your testimony recalled a December 2009 trip to Afghanistan that you took, and you were told by members of the Defense Contract Management Agency that they required at least 47

more subject matter experts for contract oversight. And since government personnel were unavailable, they planned to staff those

positions with contractors. How are we doing? Obviously, I think

I know what your answer is going to be. I mean, is this wise strategy? You are going to hire out contractors to oversee contractors?

Mr. SOLIS. It is being done. I am not saying that is the way it

should be done. I think it is through the lack of planning for the

use of contractors. I think, again, you have to look at what your

requirements are going to be. And if we are going to be doing more

contracting and if we are going to require people who have to have

technical backgrounds, particularly in the construction trades and

the engineering trades, is this where we want to be? I think ultimately, this is what they may have had to do because they had no

other choice.

Mr. TIERNEY. The choice has been since the late 1980’s. As Mr.

Bowen said, they have had this issue since the late 1980’s. You

have pointed it out to them over and over again. It seems to me

to be total nonresponsiveness, or certainly very insufficient responsiveness.

Following along that line, you talked about the risk-based approach for contract officer representatives. They are going to assign

contract officer representatives to oversee only those contracted

services related to health and safety, such as food service and

power generation, leaving other services with no contractor officer

representative and only quarterly oversight. How smart is that?

Mr. SOLIS. Well, we haven’t looked at it in detail, but my understanding is that they were categorizing high and medium risk, and

it is not that they weren’t going to have oversight, it is that they

were going to have less oversight. They were not going to review

those contracts as often. I think it was maybe once a quarter or

longer periods of time. It does create risk. And certainly, just by

looking at some of these contracts and things, I think you’ve got

to continue to look at is this going to increase my risk. I think

there has to be a continual review. You cannot just say I am not

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going to do this ever again because I think you are going to set

yourself up for problems.

Mr. TIERNEY. Ms. Ugone, they talked about the deployable cadre

of experts. There was testimony to that regard. Do you have any

information on how the Department of Defense is progressing with

regard to identifying a so-called deployable cadre of contracting experts?

Ms. UGONE. As far as a deployable cadre of contracting experts,

I don’t have a macro view. I have a much more selected view, depending on the contract. For example, the INLE contract, the International Narcotics Law Enforcement contract we looked at, that

was a billion dollars, running, equipping and training the Afghan

National Police, we were told by the command that they stood up

a contracting officer representative oversight structure just for that

one contract.

But we do have concerns about contingency contracting in Afghanistan, particularly using our framework for reform.

The area that is problematic is getting the requirements right

and translated into the contract correctly and then monitoring and

paying. We have concerns about those same issues again in Afghanistan. And that’s one of the things that we want to watch as

the money flows in to equip and train the Afghan National Police

and the security forces.

Mr. TIERNEY. Thank you. I think you have made that point quite

well. Unfortunately, this cuts across a number of government agencies, and it cuts across a number of functions. And we look at it

in the procurement aspect as well. Too little oversight, and too few

people who are professionalized in managing the contracts, and all

that pertains to that, so we had people in one case, we contracted

out the people to oversee the contractor, only they were from the

same company. That is how absurd it gets.

Ms. UGONE. Yes. I think the key is you are going to get it wrong

at the end if you don’t get it right at the beginning. If you don’t

translate those requirements correctly and you don’t plan the acquisitions and you don’t have a strategy for how you are going to

spend the money, then you are going to have a problem definitely.

Mr. TIERNEY. I am beginning to think that we can’t rely on the

Department of Defense and maybe the State Department to do this

any longer. It has been since the late 1980’s. We are going to have

to maybe put a swat team together and just get these things in

place and just shove it on them. We will see about that.

I will yield to Mr. Flake.

Mr. FLAKE. Mr. Solis, obviously the contracting DOD does dwarf

everything, any other agency of the U.S. Government does; but

what best practices can we look at from some of the other agencies

that could be done here? What are some of the others agencies

doing, or is it applicable at all given the scale that we are dealing

with here at DOD?

Mr. SOLIS. Congressman, my work has been focused on the DOD

side, so I can’t really answer your question in terms of best practices.

Obviously, I think the Department knows things that it has to

do. Again, it just hasn’t always translated into doing those best

practices. Again, doing lessons learned, as Stuart mentioned, I

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think translating that over from Iraq to Afghanistan, whether it is

reconstruction or military operations on the use of contractors, so

I think the Department is aware of the kinds of things that it

needs to do in terms of those best practices. And so I think it is

a matter of implementation at this point. And they do a lot of contracting. I can’t really speak for State or AID as to what I would

deem is best practices for DOD. But I think DOD is aware of the

things that it needs to do, and I think it is a matter of implementation at this point.

Mr. FLAKE. Matter of implementation, so is it incumbent on us,

we can rewrite the regs, but nothing has seemed to work to prompt

them other than simply withholding funds, and then you get into

policy issues that are bigger than all of this.

Mr. SOLIS. There is obviously a lot of guidance out there already.

As I mentioned, I think there is another attempt in the current

version of the NDA to try to raise this at a more strategic level in

terms of planning for the overall use of contractors and operations

and military missions. I think that is one of the first things that

needs to be done.

I think holding folks accountable and feet to the fire in terms of

implementing these regulations is probably the next step; but I

think there is an awful lot of guidance.

The other thing I would mention, we talk about this in a contracting sense. I think the other entity within DOD that has to

step up to the plate is Personnel and Readiness because I think it

is a force structure issue.

Again, how we look at Iraq or Afghanistan, we have nearly a couple hundred thousand personnel, both contractors and military

members, doing the mission. Is that where we want to be? Is that

how we want to do these things? Are the kinds of things contractors doing today the kinds of things that we want to do for future

operations? That is where I think it is not just the contracting side.

I agree with everything that my colleagues have said about things

like requirements and planning, but I also think it has to be a force

structure issue. It has to look and see where we want to be with

personnel, both contractors and military members.

Mr. FLAKE. Thank you, Mr. Chairman.

Mr. TIERNEY. Mr. Bowen, we talked at one point in time about

the idea of having an Inspector General for Contingency Operations. What are your current thoughts on that and how would

that improve our ability to oversee any progress or lack of progress

from these various agencies in this area?

Mr. BOWEN. Having a standing Inspector General for Contingency Operations would simply ensure that the oversight was well

prepared in advance of any operation beginning. In both Iraq and

Afghanistan, adequate oversight was not created until well after

those operations were underway. In Afghanistan’s case, it was 7

years after it was underway. The dam had broken. The disaster

was unfolding. It is difficult to make a significant difference as I

think we were able to make in Iraq through lessons learned reporting that helped the course corrections get implemented.

Thus, I think it makes perfect sense and fits within the gist of

this hearing of the need for greater accountability together with

more transparency.

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Mr. TIERNEY. Mr. Fontaine, can you compare for us the competencies involved when the military oversees its own personnel,

versus how well they do in overseeing the conduct of contractors?

Mr. FONTAINE. This is an ongoing problem related to the laws,

regulations, and internal command structures that the military has

versus what the contractors have. The contractors, at the end of

the day, are responsible to the terms of their contract. Nonfulfillment of the contract has certain penalties, but not the same penalties that military personnel have if they don’t obey an order

where they can be court-martialed.

So the discipline and the command and control procedures are

much clearer and crisper on the military side rather than the contracting side. On the contracting side, there has been increasingly

an attempt to write into the contracts themselves some of these.

So, for example, contractors before were not subject to the Uniform

Code of Military Justice; they are now subject to some provisions

of the UCMJ. Contractors, in some cases before, were not subject

to fragmentary orders and other orders given by commanders in

the field. Now many contractors are subject to those.

So there has been a move in the right direction; but I think you

fundamentally will have a disjunction between the way military

personnel operate and contractors doing the same function simply

because of who they are responsible to at the end of the day.

Mr. TIERNEY. I didn’t see Mr. Welch was back, and I don’t want

to usurp his time.

Mr. Welch, I recognize you for 5 minutes.

Mr. WELCH. Thank you very much, Mr. Chairman. I thank the

witnesses for the good work they are doing.

One of the contradictions, of course, is the more we spend on contracting, the more we undercut the chain of command in the military. I want to just ask your opinions on things because you are

not the ones who make the decisions.

Mr. Solis, I understand it has been recently reported that there is a $100 million contract to Blackwater, now known as Xe to provide security to CIA bases. As you know, Blackwater has an incredible history. The Nisour Square incident, they fatally shot 17

Iraqis. It looks very much like it was a hair-trigger kind of response.

In December 2007, Blackwater officials allegedly authorized a secret payment of $1 million to Iraqi officials to buy their support for

allowing the company to continue in business. The company is

under continuing investigation with the Foreign Corrupt Practices

Act. In 2009, Blackwater lost its State Department contract to provide diplomatic security for U.S. officials in Iraq because of the

Nisour Square incident. And in April 2010, Federal prosecutors

charged five former senior Blackwater officials with weapons violations and making false statements. Why in the world would we

enter into any new contract with a company like that? Can you explain that to me?

Mr. SOLIS. I’m not sure I can answer the question, Congressman,

in detail, but I think it is obvious that when the folks who were

making the decision on that contract, they obviously have to look

at past performance, how those folks have worked in the past. Obviously the things you have raised would raise concern, I would

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imagine. But not being in the decision chain, I don’t know exactly

how that decision would have been made by the folks who are making it.

Mr. WELCH. Ms. Ugone.

Ms. UGONE. Well, there are a couple of things. Definitely as Bill

said, past performance, and we did an audit a few years ago, and

frankly, the population of past performance information, we are not

doing a very good job of populating that. That actually would be

quite helpful in having primes register that kind of information.

They also have a section in the past performance information

blocks for also providing information on subcontractors.

At the same time, there also should be a look at whether or not

any of these subs are on the excluded parties list or have been suspended or debarred. There are numerous checks that the contracting officer can use.

Mr. WELCH. Let me just develop on this because obviously you

can have a list where the history of the subcontracts is made available to the people who are going to be signing a contract. But obviously, in the case of Blackwater, it is well known what their record

is. So that wasn’t a mystery to the CIA. One of the dilemmas that

we have, and maybe Mr. Bowen, I will ask you to comment on this,

is that the urgent requirements of providing security in this case

to our CIA officers in forward-operating bases, which obviously has

to be a compelling concern for Mr. Panetta, outweigh considerations about criminal allegations, reckless use of violence by a company because they can, ‘‘more or less get the job done.’’ So that internal contradiction means that we waive decency in some respects

and go back to Blackwater, despite their sorry record. Do you have

any comment on that?

Mr. BOWEN. I think it is almost a rhetorical question. We can’t

waive our core principles of stewardship of the taxpayer dollars.

Mission accomplishment has to be balanced with the core principles

of oversight and execution in country. Mission accomplishment does

not trump those principles.

I think, though, regarding the subcontracting issue, we have

talked about it today, so much of it is discretionary. What kind of

information can you as an oversight body get access to to find out

what is going on below that surface so that you and, frankly, departments can make better judgments? That calls for some, I think,

amendment of the Federal Acquisition Regulation that will give

you data, information, about subcontractors so that from here, from

this dais, you can make judgments about how the primes are doing.

Mr. WELCH. I commend you for the good work you have been

doing over the years.

Mr. Chairman, I yield back.

Mr. TIERNEY. Mr. Lynch, any further questions?

Mr. LYNCH. Mr. Chairman, thank you.

Mr. Fontaine, right now it seems since the beginning of the war

in Iraq and up to the present, there has been a trend to subcontract out, to contract out core government services. The argument initially made by the Bush administration was that this

would allow us to save some money here. There were efficiencies

gained here. But after all of our experience, I just don’t see that.

Is there cause to revisit that assumption that contracting out,

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while it does allow us to tap into some expertise that is not available or wasn’t available at the time, is there cause here for us to

review that decision to contract out government services rather

than to build internally our government capacity to actually do this

with government employees?

Mr. FONTAINE. Yes, I think I would divide that into two separate

points. First is on the cost and providing comprehensive cost comparisons between contractors and government personnel carrying

out the same function. I think our GAO colleague may be able to

say more on this, but it has proven to be exceedingly difficult for

a variety of reasons. One of the last GAO reports required data

from the Department of Defense in order to make this comparison,

and the Department of Defense was unable to provide the data.

But there seems to be a difference in cost as you move up the

skills chain. So if you are going to hire locals or third-party nationals to do things like construction or laundry or mail service, then

you are much more likely to save money than to do things at the

top of the skills chain, private security, more engineering functions,

where if you hire Americans, you may be paying on a per-day basis

more than you would pay to an American official to do the same

things. The benefits seem to be less on the cost side often and more

on the quick deployability of such contractors into a war zone.

On the inherently governmental side, there is certainly reason to

try to revisit this whole issue. Our recommendation has been to try

to move away from trying to divide every single activity into inherently governmental and then against the law to ever contract out,

or not inherently governmental, which doesn’t mean that it is a

good idea to contract out, it just means it is not against the law,

and instead move to something you were suggesting which is to try

to determine the universe of activity which it is a good idea for the

U.S. Government to have an in-house capacity to carry out rather

than to contract out and then move toward that.

And then only in extremes, if we need to contract it out, we may

be allowed the flexibility to do that as a surge capacity, but that

should not be the run-of-the-mill way we do our operations.

Mr. LYNCH. In our recent experience, we have found that our

Federal pension rules, we have some very, very highly skilled, experienced personnel who we could really use in Afghanistan and

Iraq. The problem is that if we brought them back in as government employees, and this goes for Treasury, DOD, the whole nine

yards, they would have to—well, they would basically violate their

pension rules and they would be penalized for coming back. Recently in the subcommittee that I chair on Federal employees, we

have actually entertained creating some flexibility there to allow

folks to come back for a year, to come back into government employment without violating their pension rules and without being

penalized to come back onto the payroll and provide that service

for a year or 18 months and then go back into retirement. Is that

the type of flexibility that might help us in some of those upper

tranche responsibilities that you refer to?

Mr. FONTAINE. Yes, the double dipping problem you refer to is

a real issue. I think that definitely makes sense in the upper

tranche, but I would also say that it makes sense on the contract

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ed out correctly that we do not have enough contract officers in the

U.S. Government to oversee these contracts. That has led to fraud,

waste and abuse problems and all sorts of other problems. You cannot mint a qualified government contracting officer in 5 days,

maybe not even in a year.

And you also often can’t just pluck one who has never done government contracting from the private sector. What you may be able

to do is get folks who were contract officers in the government before, but who have left the government and have pensions, don’t

have an incentive to come back in because they would have to give

that up, be able to come back in for a year or 2 years or something

like that to serve their country and put their expertise to use. I

think that makes perfect sense.

Mr. LYNCH. I yield back the balance of my time.

Mr. TIERNEY. Thank you.

Mr. Solis, you talk in your report about contracting reform and

the Department of Defense being hampered by the Department’s

inability to institutionalize operational contract support by accepting contractors as an integral part of the total force. Part of my reaction to that was if you are going to do that, you might as well

make them part of the total force. Assuming that what I think is

common sense doesn’t prevail, what are the major obstacles that

you think are preventing the Department of Defense from actually

doing that, from accepting contractors as an integral part of their

force?

Mr. SOLIS. Again, I think that was reiterated going back to what

the Department said in its 2006 QDR. And I think it has always

been out there, just to reframe in terms of what the reliance on

contractors would be. They have said that their total force includes

military members, DA civilians and contractors.

I think in terms of trying to get to that point about institutionalization, and again, I keep hammering this thing about planning,

planning, planning, and I think it is something that while they do

a lot of on the military side, military force structure piece, it is left

out in gaps for the contractor side. I think the Army, for example,

does a total Army analysis. There was talk before I came to this

hearing about the fact that there is a piece in there about doing

something for contractors. To my knowledge, that has never been

done. I think what has to happen is you have to look at what you

are going to need for your military force structure; and if I have

gaps, then you have to make a policy decision, do I want to fill that

with military members? Do I want to fill that with civilians, or do

I want to fill that with contractors?

If I want to fill it with any of those, particularly contractors, then

what are the risks involved with those? What are the requirements? What am I going to need to absorb that contractor force

into that force structure.

I think again, it has to be something that the military makes as

a stop priority. I know that the Secretary has talked about this and

Admiral Mullen has talked about this, but I think the time is now,

and we have to do it at the highest level.

Mr. TIERNEY. We have heard the talk as well. Do you know of

any effort that has gone from talk to action?

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Mr. SOLIS. Again, it has been ad hoc. I think there have been efforts, as I mentioned the joint staff study was to look at reliance

on contractors in Iraq. I think there are efforts to put planners out

at the different combatant commands to help them prepare and do

the Nnnex W’s. But again, it has been slow. So I think there needs

to be a more forceful effort at the highest levels to implement and

do the things that are already on the books. There is a lot of guidance. There is work force planning guidance out there that includes

not only just contractors but again military, the whole force structure of what you need to conduct your military operations.

Mr. TIERNEY. The slowness of activity borders on insubordination, almost. The failure to respond and actually do some of these

things, it is frustrating from the policy aspect. I think the legislation is pretty much in place. I think the regulation is pretty much

in place, it is just the actual execution that we keep waiting on and

waiting on and waiting on. We have to think of some strategy from

our end and from the White House’s end, frankly, to get this thing

in gear.

I want to just wrap things up if nobody else has any questions.

We didn’t talk a lot about background screening, badging and

tracking of local personnel, which did come up during our last

hearing on a trucking situation. It was an important factor. In fact,

the witnesses came up afterwards to reiterate how important it

was for them to be able to identify the subcontractors out there. In

Iraq, Mr. Bowen, we seem to do it one way sort of theater-wide;

and in Afghanistan, it appears they are doing it on an ad hoc installation-type basis, making sure there is some aspect on that.

If there is a Department of Defense wide screening policy that

is absent on that, do we know whether or not your agency, Mr.

Solis, or Ms. Ugone, have you done any work in this area or made

any recommendations?

Ms. UGONE. Actually, we do have some ongoing work right now

on the issue of contractors occupying sensitive positions who don’t

have proof of clearances.

There is existing regulation in the Department that needs to be

complied with, and the issue is a compliance issue. That report

that we are working on right now, we are expecting it to go final

in the next month or two. But we have issues in that regard as

well.

Mr. TIERNEY. The Department of Defense, are they moving forward on this as well?

Ms. UGONE. It depends on their response to our report. We

haven’t received it yet as to where—we are predicting they will

agree with us, that there is an issue and we need to solve it.

Mr. TIERNEY. We are going to track that. We are going to ask

the staff to make sure that we followup on that and move it on.

One obstacle cited in the GAO report on department-wide screening policy was a disagreement apparently between the Under Secretary of Defense for Intelligence and the Under Secretary for Acquisition, Technology and Logistics over the level of detail required

in screening local personnel. It seems sort of fantastic that would

bring things to a grinding halt and they wouldn’t find some way

to resolve that. Mr. Solis, have they resolved that particular dispute or found someone that can referee it?

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Mr. SOLIS. My understanding is that has been turned over to

AT&L to resolve this issue in terms of trying to figure out what

the background screening requirements are going to be.

Mr. TIERNEY. You believe that will happen, that is the right

place to boot it to and get it resolved?

Mr. SOLIS. Our recommendation was that there be somebody, a

sort of referee, between USDI and AT&L because I don’t know that

it clearly falls in either spot. But there needed to be some way of

coming up with a plan that would incorporate what USDI would

be looking for, as well as AT&L. But my understanding is that it

has been turned over to AT&L, and that is about as far as what

I know at this point and they have not responded in terms of the

specific things that they are going to do. We will continue to followup on that. Obviously, it is a very important issue in terms of background screening, and that is something we will look into.

Mr. TIERNEY. Ms. Ugone, you mentioned that your report didn’t

really get into an examination of subcontractors on that. Do you

think most of your recommendations with respect to contractors

would also apply to subcontractors?

Ms. UGONE. Yes. The process itself is absolutely critical, particularly when it comes to the requirements of translating it into a

statement of work and the actual contract administration. Those

two areas we think are absolutely critical. If you don’t get it right

in the beginning, you are going to have problems at the end. And

also, contract administration has the payment function in it. That

is a recurring problem in the contract administration, not having

the invoices and receipts of goods and services reconciled is a key

issue.

Mr. TIERNEY. Thank you. I suspect we could go on for quite a bit

of time because your written testimony, together with your oral testimony was very provocative and very in depth and informing. I’m

going to stop at this point, but I’m going to give you each an opportunity to mention if there is one thing that we didn’t cover thoroughly enough or didn’t mention at all.

Mr. Solis.

Mr. SOLIS. I think we have covered a lot, and I appreciate the

fact that the subcommittee has had this hearing. I think there are

a lot of things that have gone on with operational contract support

that need to be looked into. Obviously, we have talked about a lot

of things that they haven’t done. I think there areopportunities for

the Department to move out and grasp these things. And I think

again, as Mr. Flake mentioned, asked about best practices, I think

they are aware of what they need to do. It is a matter of execution

at this point.

So I would just offer again, the only other thing, I think there

needs to be more planning for the use of contractors in contingencies. I think by doing that, that will eliminate, or mitigate a

number of the issues to include things like the Host the Nation

Trucking contract problems.

Mr. TIERNEY. Thank you. Ms. Ugone.

Ms. UGONE. I think as money flows into equipping and training

the Afghan National Security Forces, the Department needs to

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tices, particularly paying attention to planning for the acquisition

up front as billions of dollars are flowed in to do the mission.

Mr. TIERNEY. Thank you. Mr. Bowen.

Mr. BOWEN. Mr. Chairman, you were exploring the causes of

these problems and when did they begin. And we were talking

about LOGCAP. I was thinking, contemporaneous with the expansion of LOGCAP in the late 1980’s or early 1990’s was the decision,

perhaps as part of a cold war dividend, to drastically reduce the

contracting corps. So just as outsourcing was expanding, the capacity to oversee and contract manage that outsourcing was contracting; and the consequences therefrom, I think, are with us today.

Mr. TIERNEY. Mr. Fontaine.

Mr. FONTAINE. Just one final point, and it gets to training. If

contractors are going to be part of the total force which the 2010

QDR says that they are, then those military individuals or civilians

who go over to theaters who don’t do contract management will

need to know something about contractors, what they do, how to

find out what they do, what the regulations are, whether they can

order them to do something or not.

Currently, if you go out to one of the training places before the

predeployment training, they are actually run by contractors, but

there is almost no one playing contractors. And then when these

guys get over to Afghanistan or Iraq, they will actually find more

of them than they will find of the military. The same is true of war

gaming. The role of contractors is rarely incorporated.

In the 2008 National Defense Authorization Act, there was a requirement that DOD issue a joint directive to bring together war

gaming and predeployment training, the role of contractors and integrate that, and they have not issued that document yet, even

though it was required in 2008. And I think moving down that

path would be a real step forward.

Mr. TIERNEY. Thank you.

So my final panel question, would each of you tell me what you

think is the place or person at the Department of Defense, the

State Department, and USAID where this committee should go to

inquire on progress in the area of contracting and put pressure on

them and make sure that results occur?

Mr. SOLIS. Again, I will say for DOD, because I am not as familiar with State Department or AID, it is combined between Dr.

Carter and the Under Secretary for Personnel and Readiness. I

think it falls between those two because as I mentioned, it is not

only a contracting and contract issue, it is a force structure and

personnel issue.

Mr. TIERNEY. Thank you. Ms. Ugone.

Ms. UGONE. Yes, two offices, NATO training mission, combined

security transition command Afghanistan; and the Under Secretary

of Defense Comptroller.

Mr. TIERNEY. Thank you. Mr. Bowen.

Mr. BOWEN. The only one I would add is Pat Kennedy, the Under

Secretary for Management at the State Department.

Mr. TIERNEY. Thank you. Mr. Fontaine.

Mr. FONTAINE. Since we are adding people as we go along the

table here, at AID it is actually somewhat split. But I think that

there are two areas both at AID, the bureau that handles conflict

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and humanitarian reconstruction would be the place to go. If you

don’t go above that, to say is there one locus at USAID that handles these sorts of issues; and if not, why isn’t there?

Mr. TIERNEY. Well, thank you all very much once again for both

your written testimony and oral testimony here today. I think we

have benefited greatly from it. Thank you for your service.

We are adjourned.

[Whereupon, at 12:22 p.m., the subcommittee was adjourned.]

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