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OVERSIGHT IN IRAQ AND AFGHANISTAN:

CHALLENGES AND SOLUTIONS

HEARING

BEFORE THE

SUBCOMMITTEE ON NATIONAL SECURITY,

HOMELAND DEFENSE AND FOREIGN OPERATIONS

OF THE

COMMITTEE ON OVERSIGHT

AND GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

FIRST SESSION

DECEMBER 7, 2011

Serial No. 112–101

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

DARRELL E. ISSA, California, Chairman

DAN BURTON, Indiana

JOHN L. MICA, Florida

TODD RUSSELL PLATTS, Pennsylvania

MICHAEL R. TURNER, Ohio

PATRICK T. MCHENRY, North Carolina

JIM JORDAN, Ohio

JASON CHAFFETZ, Utah

CONNIE MACK, Florida

TIM WALBERG, Michigan

JAMES LANKFORD, Oklahoma

JUSTIN AMASH, Michigan

ANN MARIE BUERKLE, New York

PAUL A. GOSAR, Arizona

RAU ́ L R. LABRADOR, Idaho

PATRICK MEEHAN, Pennsylvania

SCOTT DESJARLAIS, Tennessee

JOE WALSH, Illinois

TREY GOWDY, South Carolina

DENNIS A. ROSS, Florida

FRANK C. GUINTA, New Hampshire

BLAKE FARENTHOLD, Texas

MIKE KELLY, Pennsylvania

ELIJAH E. CUMMINGS, Maryland, Ranking

Minority Member

EDOLPHUS TOWNS, New York

CAROLYN B. MALONEY, New York

ELEANOR HOLMES NORTON, District of

Columbia

DENNIS J. KUCINICH, Ohio

JOHN F. TIERNEY, Massachusetts

WM. LACY CLAY, Missouri

STEPHEN F. LYNCH, Massachusetts

JIM COOPER, Tennessee

GERALD E. CONNOLLY, Virginia

MIKE QUIGLEY, Illinois

DANNY K. DAVIS, Illinois

BRUCE L. BRALEY, Iowa

PETER WELCH, Vermont

JOHN A. YARMUTH, Kentucky

CHRISTOPHER S. MURPHY, Connecticut

JACKIE SPEIER, California

LAWRENCE J. BRADY, Staff Director

JOHN D. CUADERES, Deputy Staff Director

ROBERT BORDEN, General Counsel

LINDA A. GOOD, Chief Clerk

DAVID RAPALLO, Minority Staff Director

SUBCOMMITTEE ON NATIONAL SECURITY, HOMELAND DEFENSE AND FOREIGN

OPERATIONS

JASON CHAFFETZ, Utah, Chairman

RAU ́ L R. LABRADOR, Idaho, Vice Chairman

DAN BURTON, Indiana

JOHN L. MICA, Florida

TODD RUSSELL PLATTS, Pennsylvania

MICHAEL R. TURNER, Ohio

PAUL A. GOSAR, Arizona

BLAKE FARENTHOLD, Texas

JOHN F. TIERNEY, Massachusetts, Ranking

Minority Member

BRUCE L. BRALEY, Iowa

PETER WELCH, Vermont

JOHN A. YARMUTH, Kentucky

STEPHEN F. LYNCH, Massachusetts

MIKE QUIGLEY, Illinois
(III)

C O N T E N T S

Page

Hearing held on December 7, 2011 ........................................................................ 1

Statement of:

Heddell, Gordon S., Inspector General, U.S. Department of Defense; Harold W. Geisel, Deputy Inspector General, U.S. Department of State;

Michael G. Carroll, Acting Inspector General, U.S. Agency for International Development; Stuart W. Bowen, Inspector General, Special

Inspector General for Iraq Reconstruction; and Steven J. Trent, Acting

Inspector General, Special Inspector General for Afghanistan Reconstruction ......................................................................................................... 7

Bowen, Stuart W. ...................................................................................... 51

Carroll, Michael G. .................................................................................... 35

Geisel, Harold W. ...................................................................................... 25

Heddell, Gordon S. .................................................................................... 7

Trent, Steven J. ......................................................................................... 61

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

Bowen, Stuart W., Inspector General, Special Inspector General for Iraq

Reconstruction, prepared statement of ....................................................... 53

Carroll, Michael G., Acting Inspector General, U.S. Agency for International Development, prepared statement of ........................................... 37

Chaffetz, Hon. Jason, a Representative in Congress from the State of

Utah, letter dated May 17, 2011 ................................................................. 3

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

prepared statement of ................................................................................... 27

Heddell, Gordon S., Inspector General, U.S. Department of Defense, prepared statement of ........................................................................................ 9

Trent, Steven J., Acting Inspector General, Special Inspector General

for Afghanistan Reconstruction, prepared statement of ............................ 63

(1)

OVERSIGHT IN IRAQ AND AFGHANISTAN:

CHALLENGES AND SOLUTIONS

WEDNESDAY, DECEMBER 7, 2011

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON NATIONAL SECURITY, HOMELAND

DEFENSE AND FOREIGN OPERATIONS, COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM, Washington, DC.

The subcommittee met, pursuant to notice, at 9:35 a.m., in room

2154, Rayburn House Office Building, Hon. Jason Chaffetz (chairman of the subcommittee) presiding.

Present: Representatives Chaffetz, Labrador, Tierney, Welch, and

Yarmuth.

Staff present: Thomas A. Alexander and Richard A. Beutel, senior counsels; Brien A. Beattie, professional staff member; Nadia Z.

Zahran, staff assistant; Paul Kincaid, minority press secretary;

Adam Koshkin, minority staff assistant; and Scott Lindsay and

Carlos Uriarte, minority counsels.

Mr. CHAFFETZ. The committee will come to order and a little bit

early, but we are well represented here. Appreciate it.

I would like to begin this hearing by stating the Oversight Committee mission statement. We exist to secure two fundamental

principles: first, Americans have the right to know that money

Washington takes from them is well spent and, second, Americans

deserve an efficient, effective Government that works for them. Our

duty on the Oversight and Government Reform Committee is to

protect these rights.

Our solemn responsibility is to hold Government accountable to

taxpayers, because taxpayers have a right to know what they get

from their Government. We will work tirelessly in partnership with

citizen watchdogs to deliver the facts to the American people and

bring genuine reform to the Federal bureaucracy. This is the mission of the Oversight and Government Reform Committee.

Good morning and welcome to today’s hearing, Oversight in Iraq

and Afghanistan: Challenges and Solutions. I would like to welcome Ranking Member Tierney and members of the subcommittee

and members of the audience and certainly our panel for being

here today. This is the sixth hearing addressing the accountability

of taxpayer dollars in war zones.

During this session, this subcommittee has examined a number

of issues, including whether the State Department is prepared to

oversee the surge and private contracting in Iraq; whether the

State Department will be able to protect Government employees

and contractors in Iraq after the military withdraws; whether
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USAID and the State Department can accurately track reconstruction projects and account for their expenditures; whether those

projects can and will be sustained by the host nations; whether the

billions handed to the Karzai government under the direct assist

program can and will be properly overseen; and whether the Defense Department is working to ensure that taxpayer money isn’t

extorted along Afghanistan’s supply chain.

In October, the full committee heard testimony from the Commission on Wartime Contracting about its final report. The commissioners alleged that between $30 and $60 billion had been lost

in Iraq and Afghanistan due to waste, fraud, and abuse in the contracting process. According to the Commission, this was due to illconceived projects, poor planning and oversight, poor performance

by contractors, criminal behavior, and blatant corruption.

This is unacceptable. While some may agree or disagree with our

engagements in Iraq and Afghanistan, it is universally unacceptable to waste taxpayer money. In each of our hearings, witnesses

have described the success and challenges, and oversight is a completed environment. Without a doubt, the task is difficult; however,

it is critical that we get it right.

Today, the inspectors general community will share its perspective together on one panel. The IG community plays a pivotal role

in the oversight of Federal programs. Their mission is to promote

economy, efficiency, and effectiveness in the administration of Federal programs, and to prevent and detect fraud and abuse. Its duties also include informing Congress of any corrective action that

needs to be taken.

In addition to Defense, State, and USAID, the Special Inspectors

General were established to focus specifically on efforts in Iraq and

Afghanistan. Each of these offices is present here today. While they

have produced noteworthy results, significant challenges remain.

We will hear about those today. We will also examine potential solutions.

Ranking Member Tierney has introduced H.R. 2880, which seeks

to disband SIGIR and SIGAR, and establish a special inspector

general for overseas contingency operations. I understand that Mr.

Bowen and the Commission on Wartime Contracting support this

idea. I would like to hear the panel’s view on that legislation and

how such an office would interface with the standing IGs. The

ranking member’s legislation is a good beginning. I look forward to

working with him and the agencies and the IG community to structure an effective solution.

Before recognizing Ranking Member Tierney, I would like to note

that the Defense Department and State Department, USAID, and

SIGAR will not have IGs in January. In May of this year I wrote

the President, asking him to move without delay to appoint replacements. That letter was signed by Senators Lieberman, Collins,

McCaskill, and Portman, as well as Chairman Issa, Ranking Member Cummings, and Ranking Member Tierney. I would like to place

a copy of this letter into the record. Without objection, so ordered.

[The information referred to follows:]
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Mr. CHAFFETZ. To my knowledge, the President has yet to nominate any of these replacements. Nor has he responded to this letter. I find that totally unacceptable. This is a massive, massive effort. It is going to take some leadership and some help from the

White House. These jobs cannot and will not be done if the President fails to make these appointments.

Upon taking office, President Obama promised that his administration would be ‘‘the most open and transparent in history.’’ You

cannot achieve transparency without inspectors general. Again, I

urge President Obama and the Senate to nominate and confirm inspectors general to fill these vacancies, and without delay.

I would now like to recognize the distinguished ranking member,

the gentleman from Massachusetts, Mr. Tierney, for his opening

statement.

Mr. TIERNEY. Well, thank you, Chairman Chaffetz, and thank

you all for being witnesses here today and helping us with our job.

This hearing, obviously, is a culmination of a series of hearings

that the subcommittee and the full committee have had with regard to Iraq and Afghanistan. We have heard from the Department

of Defense, the Department of State on the transition to civilianled mission in Iraq, and we have heard from the Commission on

Wartime Contracting and suggested reforms to reduce waste and

fraud in contingency operations, and we followed up with the Department of Defense to discuss the investigation that we started

earlier on corruption in the Afghan trucking industry.

These hearings continue to highlight the challenge of protecting

the taxpayer funds from waste and fraud in our operations in Iraq

and Afghanistan. In fact, the Commission on Wartime Contracting

found that billions of dollars had been wasted by agencies that

have little capacity to manage their contractors or to hold them accountable. Even worse, billions of dollars more have been dedicated

to projects that were poorly conceived and are unsustainable by

host governments. These findings are consistent with this committee’s oversight of Defense contractors in Iraq and Afghanistan. Last year, I led a 6-month subcommittee investigation of a $2 billion Department of Defense trucking contract in Afghanistan. This

investigation found that the trucking contract had spawned a vast

protection racket in which warlords, criminals, and insurgents extorted contractors for protection payments to obtain safe passage.

A followup hearing held by this subcommittee in September

showed that the Department has made little progress in rooting

out bad actors who undermined our anti-insurgency efforts in Afghanistan. We know now that many of these bad actors continue

to serve as U.S. Government contractors.

In response to these findings of billions of dollars of waste, fraud,

and abuse, the Commission on Wartime Contracting made a number of important recommendations for Congress to consider. One

key recommendation in their report was the creation of a permanent special inspector general for contingency operations. As the

Commission stated, no entity exists with sufficient resources, experience, and audit and investigative capabilities to transcend departmental and functional stovepipes.

Taking up this recommendation, I have introduced legislation

that the chairman mentioned that would establish a special inspec-
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tor general for overseas contingency operations. These efforts of the

Commission, along with the special inspector general for Iraq reconstruction and the special inspector general for Afghanistan reconstruction, have shown the critical importance of realtime oversight in our overseas operations. We need to preserve the unique

capabilities of these entities in a single, permanent inspector general with a flexible, deployable cadre of oversight specialists. I urge

my colleagues to join me in this legislation.

While that legislation is designed to address future contingency

operations, this hearing is about oversight in Iraq and Afghanistan

now. To that end, I would like to address recent findings by the Department of Defense Inspector General that shed light on some of

the problems with one of our largest contractors in Afghanistan.

That report reveals that the Supreme Group, the prime contractor

on the multibillion dollar Defense Department’s subsistence contract in Afghanistan is under investigation for hundreds of millions

of dollar in over-billing. I understand that there is now a criminal

inquiry of the Supreme Group’s over-billing.

These allegations raise significant concerns about the Defense

Logistics Agency and their ability to properly manage those largescale contracts and to protect taxpayer dollars from waste and

fraud. They also raise concerns about the use of no-bid cost plus

contracts that are so common in contingency operations. As we

speak, the Defense Logistics Agency is preparing to award a new

$10 billion to $30 billion contract to provide food and supplies for

our troops in Afghanistan for 5 years.

So I would like to hear from our inspectors general today about

what more can be done to ensure that our Federal agencies are

doing their job and properly managing the billions of dollars that

are being spent in those two countries. I would also like to hear

from you regarding what tools you have to ensure the companies

who are caught over-billing the Federal Government for hundreds

of millions of dollars do not have the opportunity to take even more

taxpayer funds in the future.

So I want to thank you all again for being witnesses and thank

you, Mr. Chairman, for having this hearing.

Mr. CHAFFETZ. Thank you.

Members will have an additional 7 days to submit opening statements for the record.

I would now like to recognize our panel. The Honorable Gordon

Heddell is the Department of Defense Inspector General; Ambassador Geisel is the Department of State Deputy Inspector General;

Mr. Michael Carroll is the USAID Acting Inspector General; the

Honorable Stuart Bowen is the Special Inspector General for Iraq

Reconstruction; and Mr. Steven Trent is the Acting Special Inspector General for Afghan Reconstruction.

Pursuant to committee rules, all witnesses will be sworn in before they testify. Please rise and raise your right hands.

[Witnesses sworn.]

Mr. CHAFFETZ. Thank you. You may be seated.

Let the record reflect that the witnesses answered in the affirmative.
7

In order to allow proper time for discussion, we are going to ask

that each member of our panel limit their verbal comments to 5

minutes. Your entire statement will be inserted into the record.

I will now recognize the Honorable Mr. Heddell for 5 minutes.

STATEMENTS OF GORDON S. HEDDELL, INSPECTOR GENERAL,

U.S. DEPARTMENT OF DEFENSE; HAROLD W. GEISEL, DEPUTY INSPECTOR GENERAL, U.S. DEPARTMENT OF STATE; MICHAEL G. CARROLL, ACTING INSPECTOR GENERAL, U.S.

AGENCY FOR INTERNATIONAL DEVELOPMENT; STUART W.

BOWEN, INSPECTOR GENERAL, SPECIAL INSPECTOR GENERAL FOR IRAQ RECONSTRUCTION; AND STEVEN J. TRENT,

ACTING INSPECTOR GENERAL, SPECIAL INSPECTOR GENERAL FOR AFGHANISTAN RECONSTRUCTION

STATEMENT OF GORDON S. HEDDELL

Mr. HEDDELL. Thank you, Mr. Chairman. Good morning, and

good morning, Ranking Member Tierney and distinguished members of the subcommittee. Thank you for the opportunity to appear

before you to discuss oversight efforts in Southwest Asia.

As many of you may be aware, this will likely be my final testimony before Congress as the inspector general. Effective December

24th, I will step down as the DOD IG.

In my first month alone at the DOD IG, I testified three times

before Congress. Two of the three hearings dealt with critically important issues of oversight contingency operations in Southwest

Asia. Noting that our Nation was engaged in two wars and that we

had a pressing need to strengthen oversight to protect our war

fighters and the American taxpayer, I immediately determined to

make oversight of contingency operations in Southwest Asia a

number one priority. As a result, I instituted a number of organizational changes to the structure and focus of DOD IG efforts and to

increase our in-theater presence, which is regularly augmented by

our expeditionary teams.

I believe strongly that an in-theater presence is absolutely essential to conducting oversight of operations and engaging with military and civilian leadership in theater to ensure that our oversight

is meaningful and effective.

In our audit division, I created the Joint and Southwest Asia Operations Directorate and the Afghan Security Forces Fund Group.

Our audits in theater provide timely and relevant oversight, and

our auditors now have extensive experience in conducting complex

joint audits with other Federal agencies.

In our investigations division, the Defense Criminal Investigative

Service, DCIS, expanded its presence in Southwest Asia and today

DCIS plays a major criminal investigative role in Southwest Asia

by participating in key task forces that tackle complex fraud cases.

The DCIS is already deployed worldwide and has the capability to

immediately provide investigative resources to contingency operations anywhere in the world.

Another division of the DOD IG, the Office of Special Plans and

Operations [SPO], as we call it, has been a key contributor to providing oversight. SPO has significantly enhanced our capability to

provide expeditionary teams to Southwest Asia to conduct timely
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evaluations and assessments, and to provide thorough outbriefs to

field commanders enabling them to take immediate corrective actions.

I also appointed a special deputy inspector general for Southwest

Asia to coordinate and deconflict oversight efforts. My special deputy has worked extensively with all of the IG offices represented

with me this morning. Today we are an agile, flexible, no-nonsense

and aggressive oversight organization with the capacity to deploy

rapidly anywhere in the world on short notice, and the DOD IG is

prepared to respond effectively and aggressively in coordination

with other Federal agencies and internal DOD oversight offices to

address any future overseas contingency operation that arises.

I would like to thank the subcommittee for the opportunity to

discuss the work of the DOD IG, and I look forward to answering

any questions that you may have. Thank you.

[The prepared statement of Mr. Heddell follows:]
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Mr. CHAFFETZ. Thank you. And thank you again for your service,

on your long career in the Secret Service and your work in the Defense Department. We appreciate your service and wish you nothing but the best.

Mr. HEDDELL. Thank you.

Mr. CHAFFETZ. We will now recognize the Honorable Mr. Geisel.

STATEMENT OF HAROLD W. GEISEL

Mr. GEISEL. Thank you, Chairman Chaffetz, Ranking Member

Tierney, and members of the subcommittee for the opportunity to

testify today about oversight of Department programs in Iraq and

Afghanistan.

Since standing up its overseas offices in 2008, the Office of Inspector General, OIG, has conducted 31 investigations and issued

27 reports related to Iraq, conducted 14 investigations and issued

22 reports related to Afghanistan, and issued 11 reports of activities affecting Department program and transition issues in Iraq

and Afghanistan. Our efforts during fiscal year 2011 resulted in

more than $200 million in questioned costs and funds put to better

use, $16.6 million in investigative recoveries, and 20 contractor

suspensions.

These results demonstrate the impact that OIG has achieved

since establishing a presence in Baghdad and Kabul. As a result

of congressional support, OIG has fulfilled its commitment to vigorously oversee the Department’s transition and soon will be one of

the few remaining oversight entities in Iraq.

The challenges the Department faces in the transition to a civilian-led presence in Iraq are significant. DOD’s planned withdrawals of its troops by the end of this month requires that the Department of State provide security, life support, transportation, and

other logistical support that DOD presently provides in Iraq. Our

Office of Inspections has issued two reports, a July 2009 inspection

of Embassy Baghdad and an October 2010 compliance followup review which addresses the embassy’s transition planning efforts.

In response to our CFR, the Department appointed a Washington-based Ambassador in February 2011 to manage the Iraq

transition process. We also issued reviews in August 2009 and May

2011 of the Department’s efforts to transition to a civilian-led presence in Iraq. Both reviews found that the transition was taking

place in an operating environment that remains violent and unpredictable.

Our October 2009 report on the Department’s transition planning

efforts recommended that Embassy Baghdad develop a unified

transition plan and assign a senior transition coordinator in Iraq,

establish a work force plan to ensure timely completion of large infrastructure projects managed by the Embassy, determine what

LOGCAP services and contract management personnel would be

required, and verify resources needed to meet increased support requirements following DOD’s departure. All of these recommendations have been closed.

Our May 2011 report noted that Embassy Baghdad and the Department had established planning and management mechanisms

to effectively transition to a civilian-led presence. It also mentioned

that while the Department had made progress, several key deci-
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sions were pending, some transition planning could not be finalized, and progress was slipping in some areas.

We remain concerned that some reconstruction projects were still

experiencing delays and were not expected to be completed until

mid-2012, and that establishing a viable diplomatic mission without DOD support and funding would require considerable resources, making it difficult to develop firm or detailed budget estimates.

The Department generally agreed with and was responsive to the

intent of the recommendations.

Looking forward, we have 15 investigations related to Iraq and

9 related to Afghanistan. Our 2012 Iraq and Afghanistan oversight

plans include 6 audits plus a proposed joint audit with DOD OIG

of programs in Baghdad and Kabul. In Baghdad, we will look at

the Worldwide Protective Services’, WPS, contract for Embassy

Baghdad, medical operations in Iraq, and the Department’s oversight of the WPS task order for Kirkuk and Mosul. We have also

proposed at DOD OIG that we undertake a joint audit of transition

execution in Iraq, including implementation of the Baghdad Master

Plan.

In Kabul, we plan to audit the WPS task order for the Kabul

Embassy Security Force, contracts to build prisons, and the WPS

task order for Herat and Mazur-E-Sharif.

For 2012, our Office of Inspections has planned inspections of the

Office of the Coordinator for Counterterrorism and the Office to

Monitor and Combat Trafficking in Persons. The Office of Audits

is following up on its work in the region regarding treatment by

contractors of third-country nationals and our Office of Investigations also is actively engaged on this issue.

We will continue to provide the Department and Congress with

a comprehensive spectrum of audits, inspections, and investigations

of post-transition activity in Iraq and preparations for transition

planning in operations in Afghanistan.

Mr. Chairman, Mr. Tierney, and members of the subcommittee,

thank you once again for the opportunity to appear today, and I am

ready to answer your questions.

[The prepared statement of Mr. Geisel follows:]
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Mr. CHAFFETZ. Thank you.

We will now recognize Mr. Carroll, the Acting Inspector General

at USAID.

STATEMENT OF MICHAEL G. CARROLL

Mr. CARROLL. Thank you, Chairman Chaffetz, Ranking Member

Tierney, distinguished members of the subcommittee. I appreciate

the opportunity to appear before you today to describe our work

generally and specifically in Iraq and Afghanistan. If I could, I

would like to begin by explaining how we are structured, uniquely

structured, I would think, to provide oversight of AID’s programs

around the world.

Like the agency, the OIG is a Foreign Affairs Foreign Service organization, and more than two-thirds of our auditors and investigators are career foreign service officers permanently assigned to

USAID OIG. So that worldwide availability gives us a great deal

of flexibility to put people where they need to be when they need

to be. In addition to that, even though we participate in the NSD

38 process, by statute, we are exempt from country staffing level

ceilings.

So while this has never been an issue, and I don’t think it ever

will be, we can put people where we need to put people, regardless

of what the situation is on the ground with staffing ceilings in the

different embassies. And, again, that gives us a great deal of flexibility, and over the past 8 years a couple of examples are opening

country offices in Iraq, Afghanistan, and Pakistan; doubling the

size of our staff in Pretoria, South Africa to oversee the Hilantos

money for AIDS and infectious diseases in Sub-Saharan Africa; and

then opening a satellite office, a smaller satellite in Port-au-Prince,

Haiti to help the regional office in El Salvador oversee the humanitarian assistance and reconstruction of post-earthquake Haiti.

So I think that regardless of whether it is a contingency operation or just a standard agency USAID operation, I think we are

uniquely situated to do that work, to do the oversight work.

In Iraq we started our oversight in 2003 with long-term TDYs,

and then when the embassy got up and running and the AID mission got up and running, we established an office of seven auditors

and two investigators. So we have been there pretty much with

SIGAR right from the beginning and will continue to be there. As

the trajectory on the Agency’s programs in Iraq are sort of leveling

off to a traditional country office mission operation at about $270

million for 13, we are going to reduce the size of the staff to two

auditors, two investigators, move the additional people over to

Egypt, where our regional office is, and then provide oversight of

Iraq from Egypt and from Iraq.

In Afghanistan, we developed a little bit differently. Clearly, the

infrastructure wasn’t available early on, so we were doing most of

our work from the Philippines. We created a virtual country office

in the Philippines and we were literally on the ground full-time in

Afghanistan with auditors and investigators doing the work. But as

the program increased in scope and complexity, we worked out

with the embassy to put an office there and now we have seven

auditors, U.S. direct-hire auditors, four Foreign Service national

auditors, we have four American U.S. direct-hire investigators, one
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foreign national investigator, and we are probably going to put on

one more foreign national investigator.

So we are committed both to Iraq and to Afghanistan in providing audit oversight and investigative oversight of AID’s programs in Afghanistan.

So, with that, thank you for the opportunity to appear before you

and I would welcome any questions you might have about our oversight activity and the opportunities to improve that going forward.

[The prepared statement of Mr. Carroll follows:]
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Mr. CHAFFETZ. Thank you.

We will now recognize the Honorable Stuart Bowen, who is the

Special Inspector General for Iraq Reconstruction.

STATEMENT OF STUART W. BOWEN

Mr. BOWEN. Thank you, Chairman Chaffetz, Ranking Member

Tierney, members of the committee for the opportunity to appear

before you again and address our oversight work in Iraq, and also

to take up the issue of improving oversight in contingency operations.

I just returned 2 weeks ago from my 31st trip to Iraq over the

last 8 years; met with my 10 auditors and investigators while I was

there and we are busy still addressing significant issues regarding

the substantial U.S. funds being expended in Iraq. It is true, the

military is departing the end of this month. Our footprint is shrinking, but billions of dollars in taxpayer money is still being spent,

and that money requires firm and effective oversight for the coming

year and the years thereafter.

On Monday we appeared before the House Committee on Foreign

Affairs to address the largest expenditure planned for next year by

the State Department, and that is the billion dollars for the Police

Development Program. Real questions were raised about the preparation for that. Much work remains to be done to ensure that it can

succeed.

While I was in Iraq, I met with Ambassador Jeffrey, our Ambassador to Iraq, and Ambassador Sison, who is in charge of the Police

Development Program, and they concurred with our findings and

are taking action vigorously to implement them.

However, I remain concerned about a couple of matters that occurred over the last month regarding our presence there, and one

is a review process that the State Department has implemented to

require us to vet the information that we normally get for our

quarterly reports back through offices here in Washington, which

will impede our responsiveness. You have come to rely on our quarterly reports for a quick truth on what is going on in Iraq, and we

want to maintain that capacity. We hope that we can overcome

that limitation.

There has also been an investigation problem that I identify in

my statement that is relative to our capacity to get information and

carry out investigations. These raise continuing concerns about our

capacity to execute effective oversight in Iraq.

But I also want to address the Government’s capacity to execute

effective oversight in contingency operations. The Wartime Commission, in its final report a few months ago, rightly recognized

that the United States can improve its ability to oversee contingency operations, recommending the creation of a special inspector

general’s office. In other words, permanizing what we have been

doing, what my colleague, Mr. Trent, and his staff are doing in Afghanistan.

And I concur with their recommendation because it will provide

funds, savings of money in Iraq. That is the bottom line. In Iraq,

Afghanistan, and all overseas contingencies going forward, the special inspector general for overseas contingencies would save tax-
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payer dollars. We have done that in Iraq, it is being done in Afghanistan; it would be done in future contingency operations.

Let me take, very quickly, there are three objections to it that

have been raised. One, it would be a layer of additional oversight.

The opposite is true. The experience of SIGIR in Iraq has been that

we have coalesced in focused oversight of the Iraq reconstruction

mission and, as a result, have generated more effective work, more

output, work that would have been more difficult to accomplish if

there had been three, four, five inspector generals offices operating.

Also, we created the Iraq Inspector General Council and, as Mr.

Carroll pointed out, we worked very closely with AID from the beginning, and with State and with DOD over time, through that

process to generate better work. It has been an effective catalyst

to synergize oversight efforts in-country, not a layer.

Second, the special inspector general for overseas contingencies

would not sit fallow, as some have said, or waiting a contingency

to happen. First of all, all you need to know is we have been in

one of some form of another every year but two since 1980. The

last 10 years we have been in the two largest in our history, in Afghanistan and Iraq. There is no doubt that the use of this office

would be regular and necessary and, again, would generate savings

of funds.

And, finally, and this is the most important thing, would the expenses or the costs of this special inspector general be more or less

than the current system that is used? And the answer is less. We

have submitted a budget. It could operate on an effective, very limited amount for the time necessary until contingencies occurred

and then would be directed by the Congress, at the Congress’ call,

to provide oversight in contingencies as they arise. It would be a

tool for the Congress, a boon to the taxpayers, and save money in

these times of $15 trillion debt.

Thank you, Mr. Chairman.

[The prepared statement of Mr. Bowen follows:]
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Mr. CHAFFETZ. Thank you, Mr. Bowen. I know we will have some

more lively discussion about this proposal as well.

We will now recognize Mr. Trent, who is the Acting Inspector

General for Afghanistan reconstruction. Mr. Trent, you are recognized for 5 minutes.

STATEMENT OF STEVEN J. TRENT

Mr. TRENT. Thank you, Mr. Chairman, Ranking Member

Tierney, and members of the committee. I am pleased to be here

with my colleagues today to discuss ways to strength oversight of

reconstruction in Afghanistan.

As you know, the President has requested more than $18 billion

in the fiscal year 2012 budget to assist Afghanistan. If approved,

this will bring total appropriations to $90 billion, which is the largest rebuilding effort since the Marshall Plan.

Congress created SIGAR in 2008 to provide oversight for this significant investment. Since then, our auditors and investigators

have had a positive impact on the reconstruction effort. We have

issued 49 audit reports and made 149 recommendations that have

led to great accountability and improvements in contracting and

program management. Just this year, our auditors have identified

nearly $70 million in funds that should be returned to the U.S.

Government.

SIGAR investigators have played an important role in both detecting and deterring fraud. The work has resulted in the recent

successful prosecution of the largest bribery case to date from Afghanistan. This year, they produced $51 million in fines, penalties,

forfeitures, seizures, and savings.

However, I believe SIGAR can and must do more to strengthen

oversight during this critical transition period in Afghanistan, so

we are taking aggressive steps to focus our audit and investigative

work on the most critical areas of the reconstruction effort. We

have developed a fiscal year 2012 audit plan that identifies five

critical areas to successful Afghanistan reconstruction. They are

private security contractors, Afghan governance capacity and sustainability, contracting, program results and evaluations, fraud detection and mitigation.

We have also added inspections to provide timely assessments of

infrastructure projects. These rapid reviews will verify if the work

was performed correctly and achieved intended outcomes. Most importantly, this work can help determine if projects are sustainable.

We are also adding a series of audits to examine contract expenditures. These audits will allow us to more accurately assess whether

the U.S. Government has been billed properly.

Along with our sister oversight agencies, we consistently coordinate to avoid duplicating each other’s work. However, we know

that we need a more comprehensive and targeted approach. Therefore, along with our colleagues, we are developing a strategic

framework to guide the IG community’s work in Afghanistan reconstruction. We intend to identify the issues most important to lawmakers and policymakers, and use these issues to drive the results

of the IG community’s work. SIGAR hosted the first meeting of this

effort last week.
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Finally, SIGAR is taking a leadership role in holding contractors

accountable in Afghanistan. We are expanding our investigative

presence in Afghanistan to build criminal cases. We have 111 ongoing criminal investigations, 68 of which involve contract and procurement fraud. Criminal and civil legal proceedings, however, can

take substantial periods of time, so SIGAR has also enhanced its

suspension and debarment program to address the need for more

timely and targeted actions. SIGAR is currently on track to make

approximately 80 suspension and debarment referrals by the end

of this year.

SIGAR is taking important steps to enhance oversight; however,

the implementing agencies also have a responsibility to strengthen

oversight of their own operations. During my recent trip to Afghanistan, I met with high level U.S. civilian and military officials to

discuss what steps they are taking to improve contract and program management. I will continue to engage in these important

discussions, which also help to better target SIGAR’s work.

Let me conclude by saying that we have listened closely to this

committee’s thoughtful questions about oversight and we are heeding your concerns. The Congress has provided enormous resources

for Afghanistan reconstruction in a difficult budgetary environment. At SIGAR we are committed to ensuring that our oversight

not only protects this historic investment, but helps U.S. implementing agencies produce better results.

Thank you, Mr. Chairman, for giving SIGAR the opportunity to

appear this morning.

[The prepared statement of Mr. Trent follows:]
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Mr. CHAFFETZ. Thank you, and thank you all for your service

and your commitment.

I would now like to recognize myself for 5 minutes.

Mr. Heddell, I am going to start with you. The Defense Contracting Auditing Agency I know is a little bit outside of your lane,

but I would appreciate it if you would offer a perspective. The Commission on Wartime Contracting had indicated that there were

some 56,000, 56,000 contracts behind in terms of auditing these

contracts. Why is that? How can that be? How is it that DOD can

be so far behind in this?

Mr. HEDDELL. Mr. Chairman, my office has actually done a lot

of work with respect to DCAA. I would just say generally, first off,

that I think they probably are under-resourced and need help in

that respect, but historically DCAA has been a very challenged organization. They do a tremendous amount of work for a lot of agencies, not just inside the Department of Defense, but outside the Department of Defense. In the last 3 to 4 years, the DCAA has undergone some sweeping changes as a result of some fairly significant

criticisms of their leadership, of their processes, and not meeting

expectations.

As a result of that, it has new leadership today with Pat Fitzgerald, who was the Director of Army Audit, and Pat has taken on

a gigantic job, and with the work that my office has done to try

to help them identify vulnerabilities in their management, in their

processes, and how to be an effective organization. For the last 2

years, their focus has been, and this is Gordon Heddell talking,

more internal than external.

So while under ideal circumstances they would have been focusing outward, doing great work, doing lots of audits with very experienced and good leadership, they have had to focus inward to correct management deficiencies and vulnerabilities. I think that is

partially a result of this backlog in audits, but not entirely.

Mr. CHAFFETZ. My understanding, we have been participating a

lot of hours and spending a lot of money and a lot of resources, as

that expenditure has gone up. Help me understand what is happening with the actual auditors themselves, because you have been

appropriated more money.

Mr. HEDDELL. Absolutely. In fact, I have been a very fortunate

organization. In the last 3 or 4 years, the DOD Office of Inspector

General has been plussed up some $87 million, Mr. Chairman. I

doubt that any other IG can say that. So I am very fortunate. The

Congress has been very supportive of me, and, for that matter, so

has the Department of Defense.

Mr. CHAFFETZ. But have you been spending that money?

Mr. HEDDELL. No. The problem there is that the budget, the $87

million in plus-ups that I have received, have not been annualized.

And what that means is that although I am very fortunate to get

these plus-ups, I am not able to use that money to hire permanent

staff. So I can hire contractors, I can do other things with that

money, but because it is not being annualized by the Department,

I cannot run the risk of hiring people and then having to RIF them

the following year for fear that I don’t have enough money in my

budget to pay them. It is a problem.
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Mr. CHAFFETZ. Of that $87 million that you have gotten, how

much did you actually spend?

Mr. HEDDELL. Well, we have spent almost all of it.

Mr. CHAFFETZ. But you are hiring outside contractors to do the

work?

Mr. HEDDELL. Yes, sir. We are hiring outside contractors. We are

creatively doing work that is positive and meets the needs of both

the Congress and the Department and the American people, but,

for instance, in the early 2000’s there were two things that happened that have come to haunt us today. One is that while we sent

our military forces into Southwest Asia to fight two wars, there

was a mistaken belief by many of the civilian agencies that they

could fight those two wars in the continental United States, my

own organization being one of those. And it wasn’t until 3 or 4

years ago that we came to the realization you cannot do that; you

must be present and you have to have the people in place, you have

to have the footprint.

The second thing that happened is that the Department of De- fense’s budget doubled to about $650 billion, and at the same time

the contract acquisition and contract management work force, in

fact, was reduced in size, meaning that we lacked thousands and

thousands of needed contracting specialists that are not there to

oversight these contracts; that are not there to raise their hand

and say stop the assembly line, we are spending money that we are

not watching, we are not surveiling it. So those are two major

issues.

Mr. CHAFFETZ. Well, thank you. I appreciate it. I think this highlights a multibillion dollar challenge and problem that we certainly

need to address and fix because I think there is a definite need

that is pervasive in the Congress, both the House and the Senate,

to make sure that these types of functions are in place. But the

way that the money is appropriate is obviously falling short and

failing.

I have overstayed my time. I will now recognize the ranking

member, Mr. Tierney, from Massachusetts, for 5 minutes.

Mr. TIERNEY. Thank you, Mr. Chairman.

Mr. Heddell, I think you hit one major problem right on the head

in the last part; I think we have seriously hollowed out a lot of our

agencies in terms of keeping at least the personnel on board to

oversee and to manage contracts. We find that repeatedly every

time we have a hearing on that respect. If we are going to contract

out, which is not always a good idea, but if we are going to do it,

then at least we have to keep on board enough people to sort of

manage these things well for everybody’s benefit.

In your report, Mr. Heddell, on the subsistence prime vendor contract for Afghanistan, you found that while Supreme Group provided the products that were required by the contract, the Defense

Logistics Agency failed to provide sufficient oversight of contract

cost and performance. Specifically, you found that the agency overpaid the vendor nearly $100 million in transportation costs, paid

the vendor $455 million to airlift fresh fruits and vegetables without properly incorporating those requirements into the contract,

and allowed Supreme to bill the Army over $50 million in costs for

the wrong appropriation year.
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What recourse do you have as Inspector General when the agency fails to properly manage a contract and that failure leads to

hundreds of millions of dollars in losses to the taxpayer?

Mr. HEDDELL. Well, thank you, Congressman Tierney. Appreciate

the question. Obviously, this is an example of just about how bad

it can get, and clearly this happened. This contract was created

back in 2005; it wasn’t a well designed, well thought out contract,

probably like many contracts during that period. Consequently, we spent some $3 billion on this contract and, as you said, we overpaid the prime vendor $98 million in transportation costs, we overpaid them $25.9 million in tri-wall costs, the

boxing, corrugated boxes and so on, and, as you indicated, $455

million in services to airlift fruit and vegetables from the United

Arab Emirates into Afghanistan, without even including that in the

contract. All of that is a result of not planning properly and designing a contract that was not in the best interest of the American

people.

Now, we have gone, my organization, to the Defense Logistics

Agency and we have told them we want that money back, and the

Defense Logistics Agency agrees with us. Beginning in October

2011, they began to make efforts to determine, first of all, what are

the fair and reasonable prices that should have been charged.

Imagine that. A contract created in 2005 and now, in December

2011, we are just now determining what should have been the reasonable and fair prices to pay.

Okay, but they have agreed, Mr. Ranking Member, to do that

and they are currently in face-to-face negotiations with Supreme,

and the time line projection for a resolution on this—and I would

never hold my breath and think we will get it all back—but a resolution for this is actually scheduled for December 9th, this week.

So I am hopeful that when we talk again that I can say to you we

have been able to recover a great deal of those funds.

Mr. TIERNEY. Mr. Trent, you will recall that from the contracts

that we looked at in the trucking situation in Afghanistan. The

lack of vision or ability to look into the contracts, the subcontracts,

and the finer detail of those were just never written into the contracts to begin with.

So, Mr. Bowen, tell me, would a special inspector general for contingency operations help alleviate this problem of sending people

in, getting part way down the road before you realize all these mistakes are happening?

Mr. BOWEN. There is no doubt about that for three reasons. One,

there will be focus and preparation in place at the time a contingency begins for a special inspector general to deploy. Two, there

will be a commitment to deployment. As my friend, Mr. Heddell,

pointed out, there was a challenge, I think, at DOD, but also with

the other IGs, in moving forward, in being there to do the oversight. One of the lessons from SIGIR is that you have to be there

to do the work. A special inspector general’s office would be hiring

people who know that when they sign on, they are going to go and

deploy and carry out oversight in the conflict zone.

Finally, and this is a good example of how a SIGOCO could make

a difference, cross-agency jurisdiction, something unique to a special IG that the institutional IGs don’t have. That means I can dig
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in to problems like this and find out if it is DOD money being wasted or State money or AID money; however that money may be

going away, we can get to it and get to it faster and, thus, save

it.

Mr. TIERNEY. Thank you.

Thank you, Mr. Chairman.

Mr. LABRADOR [presiding]. I will recognize myself now for 5 minutes.

Mr. Trent, the Obama administration has increased its direct assistance to the Afghan government from approximately $665 million in fiscal year 2009 to roughly $2 billion in fiscal year 2010.

This program is designed to provide U.S. taxpayer money directly

to the Karzai government for the purpose of carrying out reconstruction projects. Is it logical to assume that one of the most corrupt governments in the world will actually have proper stewardship of U.S. taxpayer money?

Mr. TRENT. It is a very good question, Congressman. SIGAR has

conducted a number of audits and has a number of audits planned

in the capacity development areas of the various ministries, MOD,

MOI, in the coming year ARTF in the past, looking at, among other

things, the capacity of the Afghan government to administer Afghan direct funds. We have a significant and serious challenge, as

you point out, with corruption in the Karzai government in Afghanistan. The efforts with corruption in Afghanistan are almost insurmountable. Clearly, we need more of a concerted will by the government there and we need a much stronger and robust criminal

justice system, which they simply don’t have.

So we are doing what we can to monitor those funds and we will

continue to do that. I can’t say if I am optimistic or not with regard

to the corruption and the control of those funds.

Mr. LABRADOR. Well, what should we be doing? I mean, if you

are not confident, I am not confident either. What should we be

doing? Because you said something about how we need a more robust criminal system. Well, they don’t have one. They don’t have

the proper procedures; they don’t have the proper oversight people.

So what should we be doing?

Mr. TRENT. Well, I believe we are doing about all we can. I mean,

we need to continue with our rule of law efforts there. We can’t

give up on that, notwithstanding the corruption walls that we have

encountered with that. We have to continue to bring pressure

wherever possible on the government itself to show a concerted effort in the area of corruption and prosecute some of their own ministers. We have to continue to conduct the audits and continue to

work on the investigative side with the Afghan authorities that we

can work with to pursue Afghan violators.

Mr. TRENT. Okay. Thank you very much.

Mr. Bowen, right now the Police Development Program is the administration’s largest foreign aid program for Iraq going forward,

and there is some evidence that the Iraqis don’t even want this

program. Have you or your staff asked the Iraqi police forces if

they need the $500 million a year program that the Obama administration is planning to spend on the Police Development Program?

Mr. BOWEN. Yes, Mr. Labrador, we have, and we reported on

that in our last quarterly, noting that the senior official at the Min-
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istry of Interior, Senior Deputy Minister Al Asady, said, ‘‘he didn’t

see any real benefit from the Police Development Program.’’ I addressed that with him when I was in Iraq a couple weeks ago and

I asked him, did you need what you said? And his response was,

well, we welcome any support that the American Government will

provide us; however, my statements, as quoted in your recent quarterly, are still posted on my Web site.

Mr. LABRADOR. So why is the administration still spending $500

million a year to provide this program?

Mr. BOWEN. There is a belief that security continues to be a challenging issue in Iraq, a well founded belief, I might add, given the

events of this week, killings of pilgrims again on the way to Najaf

on the eve of Ashra. The focus, though, on trying to address those

problems has been a widely scattered, high level training program

involving about 150 police trainers who, as we have seen again this

week, are going to have a very difficult time moving about the

country.

Mr. LABRADOR. So what other problems have you found with the

Police Development Program, if any?

Mr. BOWEN. Several. Mr. Labrador, we pointed out in our audit

that one Iraqi buy-in, something the Congress requires from Iraq

by law, that is, a contribution of 50 percent to such programs, has

not been secured in writing or, in fact, by any other means. That

is of great concern, especially for a ministry that has a budget of

over $6 billion, a government that just approved notionally a $100

billion budget for next year. It is not Afghanistan; this is a country

that has significant wealth, should be able to contribute, but has

not been forced to do so in a program as crucial as this.

Mr. LABRADOR. I know I have run out of time, but, Mr. Geisel,

do you have some comments on this?

Mr. GEISEL. Well, of course, first of all, I am not going to secondguess my friend and colleague on what his people found and, of

course, the people you need to bring up here are the people from

the State Department to comment on what he found. I saw that the

Department published a document, a 21-page document that includes goals and measures of performance for the Police Development Program, but it is my friend’s baby, not mine.

Mr. LABRADOR. Thank you very much.

I will give 5 minutes now to Mr. Welch from Vermont.

Mr. WELCH. Thank you very much, Mr. Labrador.

I want to thank each and every one of you for the terrific work

that you are doing. A lot of the situations that you are uncovering

just reflect the impossible expectations oftentimes that Congress

has, and if it were as easy as writing a check and having the police

force in Iraq and Afghanistan be established, it would be no problem, and against, I think, our better judgments sometimes we

spend this money and then, surprise, surprise, you tell us a lot of

it is being wasted. But I really do applaud the work that you are

doing.

I am going to be introducing legislation that does trigger debarment proceedings for contractors that are convicted of violating the

bribery provisions of the Foreign Corrupt Practices Act, and there

is some debate between my office and the attorney general’s office

as to how strict that should be. That is a very critical tool for you.
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My view is that that debarment authority hasn’t been adequately

exercised in our war zones.

Let me ask you, Inspector General Trent, I know that SIGIR

does have robust suspension and debarment programs, but do you

believe that DOD, USAID, and State are adequately and appropriately using the authority in Iraq and Afghanistan? And, if not,

what are the barriers to its use and how can we work through

them to ensure that taxpayer dollars are not getting ripped off?

Mr. TRENT. Well, Congressman, yes, we do have, I believe, an aggressive and somewhat effective suspension and debarment program in SIGAR, and I am somewhat aware of your pending legislation on the FCPA issue. With regard to my colleagues’ use of suspension and debarments, I think suspension and debarments has

been a tool available to contracting authorities, acquisition authorities, and inspector generals as far as their proposals for some time.

In my experiences in the last several years in Southwest Asia, I

have felt that we could increase that use, and when I came to

SIGAR I took steps to do that.

Mr. WELCH. So it is an effective tool and should be used?

Mr. TRENT. Congressman, I believe it is a very effective tool, and

I believe, in the Afghanistan case, it is a tool both in terms of corruption and in contract management and implementation.

Mr. WELCH. Okay. Let me ask you one more question because I

don’t have too much time. I just got back from Afghanistan and one

of the people that we met from was from the attorney general’s office and he was in the anti-corruption unit, and they were there

training Afghan civil servants about how to detect corruption, and

when I asked the attorney general how is it going, he said, well,

we had to end the program. And I said, why is that? And he said,

because when we were teaching them how to detect it, they were

using the information to do it. So that is a real challenge that we

face.

But when we visited the commanders in Helmand and

Kandahar, one of the things they were promoting was the development of the Kajaki Hydroelectric Dam, which cost about $475 million, and the benefits of it are obvious if it could be implemented;

it would provide hydroelectric power, electricity, maybe some irrigation. But that is not coming out of their budget, it would be a

supplemental expenditure. So it is not like the military would be

taking that out of their ability to do their job, it would come from

somewhere else. So I was a little bit skeptical because it is easy

to promote the expenditure of somebody else’s money.

But, bottom line, that is a conflict zone and significant questions

about whether this could be done, and my question to you is does

it make sense at this point to ask the taxpayers to spend $475 million on a hydroelectric project that would have extensive transmission lines, all of which would be easily attackable by insurgents? Or does it make sense to put that on hold?

Mr. TRENT. Congressman, SIGAR has not looked specifically at

the Kajaki Dam or conducted an audit on that. I believe my colleague at USAID has done some work in that area. We have looked

at Kabul Power Plant and the energy sector with auditors, but specifically on Kajaki Dam we haven’t, so I would punt that to my colleague at USAID I believe who has done some work in that area.
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Mr. WELCH. Yes, sir. I am running on the edge of time here, but

with the indulgence of the chairman.

Mr. CARROLL. Well, Mr. Welch, I think initially as to a political

or administration question about the utility of going forward with

the program, would you consider the difficult environment in which

it would be implemented. We have done a couple of audits and, in

fact, in talking to Ambassador Crocker this week, it seems to be

a priority of the embassy and the government to move forward with

that.

It looks like, according to Ambassador Crocker, the Army Corps

of Engineers is going to undertake a major part of the program and

AID would also be responsible for doing some work at the Kajaki

Dam. So primarily the problem up there has been security, and

now it is getting very difficult to get contractors to even bid on the

work when you consider the security situation up there. So overall

is the power sector an important sector? Absolutely. But it is a very

difficult environment to work in up there.

Mr. LABRADOR. I will now give 5 minutes to Mr. Yarmuth.

Mr. YARMUTH. Thank you, Mr. Chairman.

I thank all of you for your testimony and appreciate the work

you do also. We now face, because of the debt ceiling deal that we

did a possible sequester of funds and a large amount of that sequester of funds beginning in 2013 would come from the Defense

Department. Secretary Panetta has said that such a cut as projected under the sequester process would be devastating to the Defense Department and our security, and yet we listen to these stories and we have talked about essentially the inability to get a handle on these contracts in real-time.

How are we going to know, Mr. Heddell, if the sequester is really

going to have an impact on defense when we don’t really have a

grasp on the hundreds of millions and billions of dollars we are

spending now?

Mr. HEDDELL. Although I can’t comment on the sequester, Congressman Yarmuth, I can tell you that in the last 3 or 4 years I

have seen significant progress in the inspector general community

in terms of its oversight, and I have also seen progress with respect

to the way the commanders. In fact, I just got back from Afghanistan myself and I have seen progress in terms of the approach that

we are taking.

For instance, this year one of the things that we started doing

was assisting the MOD and the MOI, Ministers of Defense and Interior, with respect to core capabilities, meaning their ability to

manage government, something we had not done before, so that we

have a way of teaching them how to do it and then going back and

making sure that they are accountable. So we are creating systems

and processes. I can’t assure you that that is going to work, but it

is something we should have done before.

The other thing, the inspector general community itself, which is

a significant tool in overcoming so many of the challenges, 4 years

ago, the statement that if you have seen one IG, you have seen one

IG was really true. Today it is not true. Once the amendment to

the Inspector General Act was passed a few years ago, what has

happened is similar to what has happened in law enforcement; all

of the big things now are done in task forces, they are done in
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teams. We have IGs now getting together to solve a common problem. You have law enforcement agencies working on task forces to

address corruption.

And, by the way, you mentioned or it was mentioned earlier the

use of tools such as debarment. Well, that is a great tool, but you

have to realize that what happens is when we debar a company in

Afghanistan, what happens is they just go back and change their

name and reapply and get a new contract. That happens over and

over again.

So the answer isn’t simply debarment. And obviously we have

had almost no success in prosecuting, using the prosecuting attorney in Afghanistan, so we have to find ways to influence the leadership to do the right things, and I think with the oversight community we have done that.

Again, I can’t comment on what the sequestering of funds might

amount to. I know this Department is working only to

accomplish——

Mr. YARMUTH. I am more interested in the overall process. Obviously, this is broader than just Iraq and Afghanistan, but one of

the things that has occurred to me recently is we have a world that

is moving at 80 miles an hour and we have a government that is

structured to run at 20 miles an hour, and it has taken us this long

in Iraq and Afghanistan to even begin to get a handle on this. I

mean, it seems to me we have a fundamental structural problem

that we don’t know how to keep up with the situations we find ourselves in.

Mr. HEDDELL. We are habitually late, and I said that earlier in

my testimony. When we had four military services fighting in

Southwest Asia in 2001 and then in 2003, the civilian agencies

were ‘‘fighting that war’’ back here in the continental United

States. It took us until 2007 or 2008 to realize you cannot successfully fight a war unless everyone is involved, civilian agencies, and

that we are ahead. It has taken us now 3 or 4 years to get there,

but I think, sir, I think we are getting much closer to getting to

where we need to be.

Mr. YARMUTH. Thank you. I don’t have an answer to the problem. Thank you very much.

Thanks, Mr. Chairman.

Mr. LABRADOR. Thank you.

I am going to give myself 5 minutes and I am going to follow up

actually on those questions. One of the things that is most frustrating to me as a freshman here in Congress is that there are

some things that both sides agree on that we need to be working

on and, yet, we are not doing them. I look at the Oversight Committee. I don’t think there is a lot of difference. There might be

some small differences between the two sides, but it seems like we

can identify things like the $500 billion that we are going to spend

in Iraq police force that they don’t even want. We should be finding

things in common that we could be saving on.

If we could put a transparency here on President Obama. And

I am not saying this, I am not using this to embarrass anybody,

but President Obama has said on his Web site that he is committed

to making his administration the most open and transparent in

history. He wants a window for all Americans into the business of
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the Government, and that is something that I want. I actually

agree with him on this issue.

But yet this panel is representing the IG offices principally responsible for overseeing taxpayer money in Iraq and Afghanistan,

and as of January 4th of next year four of the five offices will not

have an IG. I am concerned about that.

Now, I want everybody to comment. Do you know whether the

President has nominated anyone to fill these vacancies? If so, who

has been nominated? Have you made any recommendations and do

you think the absence of permanent IGs will actually harm our efforts in oversight? And anyone can take this question.

Mr. HEDDELL. I certainly would like to comment. Number one, I

don’t know the names, Congressman Labrador, of anyone that

might have been nominated or who is being considered to be nominated. Number two, I can tell you that the nomination and confirmation process that we have is cumbersome and slow, and it has

an adverse impact on the leadership of these organizations.

Number three, when I took over as the Acting Inspector General

in July 2008, the DOD IG at the very top had been vacant for so

many years, over the past 10, 12 years, you can’t imagine. So to

run an organization using an Acting Inspector General as the leader is foolhardy. You can do it for a few months, but you cannot succeed over years and decades, and that is what has happened.

Mr. LABRADOR. Does anybody know why that has happened? Is

there any reason why? It seems like both sides would agree that

we need a robust IG in all of these agencies. Does anybody have

any comments on that? Mr. Carroll.

Mr. CARROLL. I can’t comment on what the White House is doing,

but I just want to assure you, on behalf of the USAID OIG, that

one of the great things about working for Don Gambatista was it

was truly a partnership between him and I. So as I moved into the

acting role, other than the fact that it is a bit of a workload issue

for me, the work goes on and the leadership philosophy continues.

So I just want to assure the subcommittee that there will be no

degradation in our effectiveness or what our work is going to be for

as long as it takes for the President to make a decision on the AID

job.

Mr. LABRADOR. Okay. Now, I know that Mr. Bowen has been a

staunch advocate of the SIGOCO. Is that something that the rest

of the panel agrees is necessary? Do you think it is not necessary?

If you don’t think it is necessary, why? Mr. Geisel.

Mr. GEISEL. Well, I didn’t volunteer, but I will still be happy to

tell you what I think.

[Laughter.]

Mr. LABRADOR. You looked so willing to answer this question.

Mr. GEISEL. Well, I think in his testimony, the written testimony

especially, my colleague made some very good points, and one of

the key points is that the concept of SIGOCO and, for that matter,

his own office, has had a wonderful advantage, and that is that

they have hiring authorities and they had generous funding that

the statutory IGs didn’t have. SIGOCO is one way to approach it.

Another way to approach that issue is to give us, the statutory IGs,

those same authorities and robust funding.
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Now, I can’t complain about funding because, since I came to the

Department in 2008, Congress has plussed us up marvelously. But

those hiring authorities, it would make a real difference. And I

agree with what he said, those authorities are crucial to doing the

kind of job that you would like us to do.

Mr. LABRADOR. What concerns me about the idea is that it is

something that we do here in Washington all the time, something

isn’t working and what we end up doing is creating a whole new

agency or whole new department, instead of giving the authority

to the people that are already in charge of doing it, giving them

the responsibility. It seems like we do this in all of our agencies

and then what we create is just another layer of administration

and responsibility.

So I just wish we could find a way to actually use the existing

people that we have right now, the existing authorities, instead of

trying to create new agencies. But I do understand his concern and

I think we all share the concern that we should be saving taxpayer

money for the American people. There are ways that we can agree

to do it and we just need to get it done.

Anyway, I will now recognize the ranking member, Mr. Tierney.

Mr. TIERNEY. Timing is perfect on that.

Let’s explore this a little. I think it is a healthy debate and I appreciate everybody’s position on that. The SIGOCO concept, the

Special Inspector General for Contingency Operations would not be

duplicative if it is carried out in the way that the legislation is

drafted and the way it is intended. Currently, there is nobody responsible for contingency operations unless they are specially appointed. They are appointed on a case-by-case situation as and

when it arises and the Congress decides to implement, and all of

the existing inspectors generals have a handful doing what they

are doing within their respective agencies.

If you are Mr. Heddell, he has never had a moment when he

hasn’t had enough to do. The same goes for Mr. Geisel; same goes

for Mr. Trent, Mr. Carroll. Their hands are full doing things within

the area of their lane on that, and I suspect they could be busy for

as long as they wanted to keep the position.

So, Mr. Bowen, let’s allow you to do some testifying here on that.

The SIGOCO concept would be different in what ways? Would be

non-duplicative in what ways? And what is the problem to get over

Mr. Labrador’s problem? You mentioned in your first testimony—

I don’t think Mr. Labrador was here, so let’s reiterate it because

I think it is healthy to know this, I think it is instructive.

Mr. BOWEN. Yes, Mr. Tierney. First and foremost, SIGOCO

would be cross-jurisdictional. As hard as the Congress might try,

as much as my friends and fellow IGs would like, they have to stay

within their stovepipe to do their oversight, which means each of

them have to be present, as my friend Gordon Heddell noted, incountry, carrying out oversight.

But frequently, as we have learned in Iraq, as we see in Afghanistan, programs merge money, and when they merge money you are

going to ultimately have different IGs attacking it or perhaps no

one addressing it because of that merger. SIGOCO would allow

that, that cross-jurisdictional power.
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Second, it would be the primary mission of SIGOCO to carry out

this oversight. We know that had SIGOCO existed in 2003, we

would have averted the waste of billions of dollars. We know that

had SIGAR existed in 2002 we would have averted the waste of billions of dollars because of the aggressive presence of investigation

and audit on the ground that would have been there.

Third, you would have a staff that, when they sign up, they sign

up to go to a conflict zone. That is not something that my friends

and colleagues can require of their staff now. They can’t say, hey,

you are going to be going to a war zone to do oversight. And that

was a problem, frankly, in 2005, 2006, 2007, getting people to volunteer to go to Iraq, which was a very dangerous place, still is; Afghanistan is today.

And, finally, as I said in my testimony, this would save money.

That is the watchword for this era. This is the Oversight and Government Reform Committee. The latter rubric should be applied

when it can be applied in a money saving way. SIGOCO would be

one of those ways.

Mr. TIERNEY. Thank you.

I just remind my colleague that all of these different agencies, inspectors general for their respective agencies and departments, are

busy all the time. So when you have a contingency operation, all

of a sudden, now you have to somehow ramp up and try to do all

the things you are doing that are consuming all of your time and

go over to this other area. So rather than being duplicative, you are

actually focusing another inspector general on a much needed area

to do that work and to be constantly available in order to achieve

it and to get it done. And I think that is an instructive part of that.

There are other issues that you raised, but I think Mr. Bowen

has sort of hit them on the head on that, so if can move from that

a little bit on to the sustainability of projects that my colleagues

raised earlier.

The whole Wartime Contracting Commission, which, incidentally,

we had to do legislation on to get over it because of the issues in

contingency contracting, we had to get people in there and start

looking at why things weren’t being dredged out in the very beginning, their final chapter sums up the whole issue on project sustainability by saying that the Commission sees no indication that

Defense, State, and USAID are making adequate plans to ensure

that host nations will be able to operate and maintain U.S. funded

projects on their own, nor are they taking sustainability risks into

account when devising new projects or programs.

Just for the panel, do we find that still to be the case or are there

things being done to have them include sustainability risks in their

projects as they move forward, particularly in Iraq as we move out

of that area, but in Afghanistan and elsewhere as well? Whoever

might want to volunteer on that.

Mr. CARROLL. As far as oversight of that question, in every one

of our performance audits in Iraq and Afghanistan we have an

audit objective for sustainability, and, to be honest, what we have

found to date is that it is sort of a mixed bag.

And I wouldn’t say it is a very successful picture historically or

even moving forward, but I think, realistically, to answer the question, yes, the agency is building in sustainability in the design of
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their projects, but you are dealing with the Afghan government,

particularly going forward here, and that is going to be problematic, and we have been finding problems with sustainability in

AID’s programs in Afghanistan.

Mr. TIERNEY. Would you consider for 30 seconds? Thank you.

So the problem that we have with the Kabul power plant, where they decided to spend some $300 million of our taxpayer money

and then decided, after it was all done, that they could get electricity cheaper from Uzbekistan on that basis, do we know why

that happened or what we missed on that, and have we corrected

that?

Mr. CARROLL. Well, I am not sure exactly why the embassy and

AID decided to build that project and build it the way they did with

diesel fuel that could or could not be shipped in, and then decided

to move in a different direction. The way it has been described now

is that the Kabul power plant is a fallback and a surge capacity

to the larger infrastructure that they are putting forward. So I

would say that from a sustainability point of view that maybe

wasn’t well thought out, but I think they have learned since that

time.

Mr. TIERNEY. Well, I think that is instructive. Do you know what

the era was and have you done something to put in place that it

won’t be happening again? I think that is my charge to you, if you

would on that. I guess you are not prepared to answer it today, but

you can go back and find out just what happened. And this business about now it is a backup plan or something like that, that is

just an excuse. You and I both know that and I think everybody

on the panel knows that. They messed up, they got something that

they didn’t bargain for, and now they are going to try to find some

reason for its existence on that. But we need to ask you to go back

and find out what went wrong and put in place a plan to make

sure it doesn’t happen again and then, if you would, report to us

what you have done. I would appreciate that.

Mr. CARROLL. I will do that, Congressman.

Mr. TIERNEY. Thank you.

Mr. LABRADOR. Thank you.

I will now recognize Mr. Welch.

Mr. WELCH. Thank you very much.

Two of the recurring questions about the expenditure of these

moneys is whether, A, we have a reliable partner and, B, whether

the security on the ground is adequate so that the work can actually be done, and both of those are huge impediments. And it comes

into conflict to some extent with policy objectives where, let’s say

in Afghanistan, there is a desire to build a civil society.

Mr. Carroll, I will ask you because your department bears so

much of the responsibility for the implementation of some of these

projects. It is a predicate question that should be asked and answered by some appropriate authority, whether a project has a reliable partner such that there can be a reasonable degree of confidence that it will be implemented.

And I am thinking very much about the Iraqi police training that

Mr. Labrador was asking about. Or is there a sufficient security

situation so that the work can be done? That might be relevant to

something like the dam project. And if you lack either or both of
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those, does it make any sense under any circumstances to do a Hail

Mary pass on a major expenditure, hoping that it will happen just

because we would like it to happen?

Mr. CARROLL. Well, AID, you are right, their meat and potatoes

is civil society, is democracy and governments, it is health, it is

education, it is all those programs. They do do reconstruction and

they have done reconstruction in Iraq and they have done it to an

extent in Afghanistan. And I think it wouldn’t be news if I were

to say that it is difficult to do development in the middle of a war,

in the middle of a hostility, so it has been problematic, particularly

on the reconstruction side, the infrastructure side. You know, Mr.

Bowen and Mr. Trent have found that throughout Iraq and Afghanistan.

You talk about reliable partners. You ask about reliable partners. AID historically has implemented their programs through

non-governmental organizations, primarily, and a lot of those are

U.S.-based, some international multinationals like the United Nation agencies and that sort of thing. So they are reliable partners.

AID is now moving in a direction toward funding more development assistance through Afghan ministries and they have a process in place to do some capacity assessment of the systems in place

and the ministries’ ability to do the work, and as they convince

themselves or as the data presents itself, they move forward or not

on their program.

So I would say that for the traditional AID programs, civil society, democracy and governments, health, education, that sort of

thing, I think there re liable partners. I think there is a willingness

on the behalf of the Afghan people to make these things happen.

Mr. WELCH. Let me interrupt you right there. See, that is a

meaningless statement, the Afghan people. Who are they? Do you

know what I mean? In a general sense the Afghan people are as

desirous to have good things happen as we are, but there is not a

structure, there is not a political implementation program, there is

not sufficient security. I have met contractors who are confined to

basically the embassy compound. And how do you manage a program? It would be like Mr. Bowen trying to have auditing all done

about Iraq and Afghanistan, Mr. Trent in Afghanistan, from Capitol Hill. It just doesn’t work.

This is enormous frustration for you, but I think there is an illusion that Congress is the one that is primarily responsible because

we have the money go out under circumstances where there is no

practical possibility that it will be well used, and then we will get

angry at you when you report to us that, hey, a lot of money went

missing. So there is a predicate question here. We probably should

be asking it, but I am wondering whether some organization like

AID might have to certify that for this project we have a reliable

governmental partner or we have sufficient security that it can be

done.
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Mr. CARROLL. They do that.

Mr. WELCH. All right, I yield back. Thank you very much.

Mr. LABRADOR. Thank you.

I want to thank the panelists for being here, for taking your

time, for the work you are doing. Have a great day. Thank you.

[Whereupon, at 11:16 a.m., the subcommittee was adjourned.]

[Additional information submitted for the hearing record follows:]
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