[Senate Hearing 111-747]
[From the U.S. Government Printing Office]
S. Hrg. 111-747
ACCOUNTABILITY FOR FOREIGN CONTRACTORS:
LIEUTENANT COLONEL DOMINIC ``ROCKY''
BARAGONA JUSTICE FOR AMERICAN HEROES
HARMED BY CONTRACTORS ACT
=======================================================================
HEARING
before the
AD HOC SUBCOMMITTEE ON CONTRACTING OVERSIGHT
of the
COMMITTEE ON
HOMELAND SECURITY AND
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
ONE HUNDRED ELEVENTH CONGRESS
FIRST SESSION
__________
NOVEMBER 18, 2009
__________
Available via http://www.gpoaccess.gov/congress/index.html
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and Governmental Affairs
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COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
JOSEPH I. LIEBERMAN, Connecticut, Chairman
CARL LEVIN, Michigan SUSAN M. COLLINS, Maine
DANIEL K. AKAKA, Hawaii TOM COBURN, Oklahoma
THOMAS R. CARPER, Delaware JOHN McCAIN, Arizona
MARK L. PRYOR, Arkansas GEORGE V. VOINOVICH, Ohio
MARY L. LANDRIEU, Louisiana JOHN ENSIGN, Nevada
CLAIRE McCASKILL, Missouri LINDSEY GRAHAM, South Carolina
JON TESTER, Montana ROBERT F. BENNETT, Utah
ROLAND W. BURRIS, Illinois
PAUL G. KIRK, JR., Massachusetts
Michael L. Alexander, Staff Director
Brandon L. Milhorn, Minority Staff Director and Chief Counsel
Trina Driessnack Tyrer, Chief Clerk
AD HOC SUBCOMMITTEE ON CONTRACTING OVERSIGHT
CLAIRE McCASKILL, Chairman
CARL LEVIN, Michigan ROBERT F. BENNETT, Utah
THOMAS R. CARPER, Delaware SUSAN M. COLLINS, Maine
MARK L. PRYOR, Arkansas TOM COBURN, Oklahoma
JON TESTER, Montana JOHN McCAIN, Arizona
PAUL G. KIRK, JR., Massachusetts LINDSEY GRAHAM, South Carolina
Margaret Daum, Staff Director
Molly Wilkinson, Minority Staff Director
Kelsey Stroud, Chief Clerk
C O N T E N T S
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Opening statements:
Page
Senator McCaskill............................................ 1
Senator Bennett.............................................. 3
Senator Tester............................................... 16
Prepared statements:
Senator McCaskill............................................ 33
Senator Bennett.............................................. 38
WITNESSES
Wednesday, November 18, 2009
Hon. Tim Ryan, a Representative in Congress from the State of
Ohio........................................................... 6
Dominic Baragona, Father of Lieutenant Colonel Dominic ``Rocky''
Baragona....................................................... 8
Scott Horton, Professor, Lecturer-in-Law, Columbia Law School.... 11
Ralph G. Steinhardt, Professor of Law and International Affairs,
The George Washington University Law School.................... 12
Tony West, Assistant Attorney General, Civil Division, U.S.
Department of Justice.......................................... 19
Richard T. Ginman, Deputy Director for Program Acquisition and
Contingency Contracting, Defense Procurement and Acquisition
Policy (DPAP), Office of the Under Secretary of Defense for
Acquisition, Technology, and Logistics, U.S. Department of
Defense........................................................ 20
Uldric I. Fiore, Jr., Suspension and Debarment Official, and
Director, Soldier and Family Legal Services, Office of the
Judge Advocate General, Department of the Army................. 22
Alphabetical List of Witnesses
Baragona, Dominic:
Testimony.................................................... 8
Prepared statement with attachments.......................... 40
Fiore, Uldric I. Jr.:
Testimony.................................................... 22
Prepared statement........................................... 96
Ginman, Richard T.:
Testimony.................................................... 20
Prepared statement........................................... 89
Horton, Scott:
Testimony.................................................... 11
Prepared statement........................................... 60
Ryan, Hon. Tim:
Testimony.................................................... 6
Steinhardt, Ralph G.:
Testimony.................................................... 12
Prepared statement........................................... 66
West, Tony:
Testimony.................................................... 19
Prepared statement........................................... 81
APPENDIX
``Agencies Fail to Suspend or Debar Companies,'' Fact Sheet,
submitted by Senator McCaskill................................. 36
Responses to questions for the Record from:
Mr. Horton................................................... 103
Mr. Steinhardt............................................... 108
Mr. West..................................................... 115
Mr. Ginman................................................... 121
Mr. Fiore.................................................... 126
Brian A. Persico, Attorney, Procurement Fraud Branch, Department
of the Army, letter dated November 24, 2009.................... 128
ACCOUNTABILITY FOR FOREIGN
CONTRACTORS: LIEUTENANT COLONEL
DOMINIC ``ROCKY'' BARAGONA JUSTICE
FOR AMERICAN HEROES HARMED BY
CONTRACTORS ACT
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WEDNESDAY, NOVEMBER 18, 2009
U.S. Senate,
Ad Hoc Subcommittee on Contracting Oversight,
of the Committee on Homeland Security
and Governmental Affairs,
Washington, DC.
The Subcommittee met, pursuant to notice, at 2:34 p.m., in
room SD-342, Dirksen Senate Office Building, Hon. Claire
McCaskill, Chairman of the Subcommittee, presiding.
Present: Senators McCaskill, Tester, and Bennett.
OPENING STATEMENT OF SENATOR MCCASKILL
Senator McCaskill. Good afternoon. The Subcommittee on
Contracting Oversight today is going to be looking at testimony
and potential legislation surrounding accountability for
foreign contractors. I want to thank everyone for being here
today. Senator Bennett will be joining us. He is running a
little late. I am going to go ahead and get started. With the
permission of the witnesses, when he arrives I may interrupt
you if you are in your testimony and give him an opportunity to
make his opening statement on this important subject matter.
Since the beginning of the wars in Iraq and Afghanistan,
more than 5,000 American service members have been killed and
more than 35,000 have been wounded. One of these brave
Americans was Lieutenant Colonel Dominic ``Rocky'' Baragona.
Lieutenant Colonel Baragona was killed in Iraq in 2003 when
his vehicle was struck by a truck being driven by an employee
of Kuwait and Gulf Link Transport Company (KGL). An Army
investigation found the accident was caused by the KGL's
driver.
For 2 years, the Baragona family went to the Army, the
Defense Department, and the White House to obtain information
about their son's death and whether these officials intended to
seek accountability. And for 2 years, the government did
nothing.
So in 2005, the Baragona family acted on its own and
brought a lawsuit against KGL. The company refused to appear in
the matter until after the court had entered a $4.9 million
judgment against them. Only then did KGL enter the case,
arguing that the court had no jurisdiction over the Kuwaiti
company and that the lawsuit must be dismissed.
In September 2006, 17 months after the Baragona family's
suit began, and more than 3 years after the accident, the Army
sent KGL the first of three letters asking for information
about KGL's tactics in the litigation and other concerns. Each
time, the relevant information was supplied to the Army by the
Baragona family or their lawyers. KGL responded to each letter,
and the Army took KGL's response at face value every time.
This February, Uldric Fiore, the Army's suspension and
debarment official, decided based on a review of ``the
information available'' that he would not initiate any
suspension or debarment proceedings against KGL. This May, 4
years after the Baragona family brought their lawsuit, the
court vacated its $4.9 million default judgment and dismissed
the Baragona family's case for lack of jurisdiction over KGL.
Today, more than 6 years after Rocky's death, the Baragona
family is still waiting for justice. KGL has never admitted
that their employee caused the accident. They have never paid a
dime of compensation even though they were required as a
contractor to the American Government to carry liability
insurance. They have never even expressed condolences to the
Baragona family for the loss of their son.
Meanwhile, KGL has received millions of taxpayer dollars in
subcontracts from major defense contractors like KBR, CSA, and
IAP. According to information produced to the Subcommittee, KGL
has received more than $200 million in new subcontracts since
Lieutenant Colonel Baragona was killed.
That is why I introduced the Lieutenant Colonel Dominic
``Rocky'' Baragona Justice for American Heroes Harmed by
Contractors Act in March of this year. Yesterday, the Ranking
Member on the Subcommittee, Senator Bennett, the former acting
Ranking Member, Senator Collins, and Senators Brown, Casey,
LeMieux, Bill Nelson, and I reintroduced this legislation. This
bill provides needed tools to ordinary Americans and the U.S.
Government to hold foreign contractors accountable.
First, the bill requires foreign entities who choose to
enter--and I want to emphasize that--who ``choose'' to enter
into contracts with the United States, it requires them to
consent to personal jurisdiction in cases involving serious
bodily injury, sexual assault, rape, and death.
The bill also provides explicit authority under the Federal
Acquisition Regulation for agencies to suspend or debar those
companies who attempt to frustrate the legal process in these
cases by failing to accept service or appear in court.
The legislation that my fellow Senators and I reintroduced
yesterday is a good first step, but the need for Congress to
act with this legislation has raised serious questions for me
about the systemic failures that have allowed companies like
KGL to escape accountability for their actions.
In April, the Subcommittee began an investigation of the
suspension and debarment process. The Subcommittee's findings
are summarized in a fact sheet that I am releasing today, and I
ask unanimous consent that it be made part of the record.\1\
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\1\ The Fact Sheet submitted by Senator McCaskill appears in the
Appendix on page 36.
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The Subcommittee has found that Federal agencies have only
rarely used the suspension and debarment process to protect the
government's interests. In fact, agencies have consistently
failed to suspend or debar even those companies who have been
convicted through the work of their own Inspectors General.
For example, from 2004 through March 2009, the Defense
Department Office of Inspector General reported 2,768
convictions. The Defense Department suspended or debarred only
708 individuals and companies.
The State Department is the second largest Department
responsible for contracting in Iraq and Afghanistan behind the
Department of Defense (DOD), and in 2008, the State Department
did not suspend or debar a single company.
From 2005 to 2008, the Department of Homeland Security
(DHS) awarded 325,000 contracts to 67,696 different contractors
and debarred just four companies.
In 2006, amidst widespread reports of waste, fraud, and
abuse following Hurricane Katrina, DHS did not suspend or debar
a single company.
At today's hearing, we will hear from Lieutenant Colonel
Baragona's father, Dominic Baragona, about his family's
struggle to hold KGL accountable and how legislation like this
could have helped him.
We will also hear from two distinguished legal scholars
about the gaps in the legal framework that this bill will help
address.
We will also hear from the Justice Department about its
efforts to pursue accountability for foreign contractors and
ask whether they have the tools they need to protect the U.S.
Government and the men and women who bravely serve us in
uniform.
We will also ask our witnesses from the Defense Department
and the Army tough questions about their suspension and
debarment practices. And we will ask our witnesses what we need
to ensure that Federal agencies aggressively protect the
government and its citizens from irresponsible contractors.
I thank our witnesses for being here today and look forward
to their testimony, and I recognize the Ranking Member of this
Subcommittee, Senator Bennett, for his statement.
OPENING STATEMENT OF SENATOR BENNETT
Senator Bennett. Thank you very much, Madam Chairman. Thank
you for calling this hearing. It is interesting, perhaps
poignant, that we are doing this in the month of November. We
are about to reflect on Veterans Day when we talk about our
veterans and the sacrifice they make for our country,
particularly this November with the tragedy at Fort Hood, where
a single act of brutality against our troops demonstrates once
again that merely wearing the uniform of the United States puts
one at risk.
The life and service of Lieutenant Colonel ``Rocky''
Baragona stands as an example of those who are willing to take
this risk and that the danger that comes from serving can come
in places other than the battlefield itself.
Now, following his commissioning at West Point, Colonel
Baragona dedicated his life to being an officer in the U.S.
Army. And in the early days of the war in Iraq, he commanded a
maintenance battalion that ensured our soldiers had essential
equipment and supplies necessary to fulfill their mission. And
it was while he was fulfilling that duty, a very genuine duty
even though it was not in combat, on a remote highway in Iraq
that he was the victim of a negligent driver.
Now, Colonel Baragona's father, Dominic Baragona, is here
today with us as a witness to testify. I want to take this
opportunity to offer my condolences to you, sir, and to your
family on the loss of your son. I apologize.
We were able to meet the last time you were here in town
and talk about him as a person. I wish I had had the
opportunity to meet him, but I got to know a little bit about
him through your stories and your description. Again, my
deepest sympathies.
When our troops make this ultimate sacrifice, we as a
Nation inherit their legacy of selflessness and of service and,
most of all, of freedom. And as their beneficiaries, we owe the
fallen and their families our best efforts to ensure that their
sacrifice was not in vain and that fairness in contracting must
be applied in all instances. And in some particularly egregious
instances, justice should be served.
Justice is owed to the Baragona family. It has not been
found because the company that is liable for Rocky's death has
refused to answer in any forum for the actions of its negligent
driver. I do not hold them responsible for having a negligent
driver because every organization runs that risk. But I do hold
them responsible for not owning up to the consequences of what
happened as a result of the actions of one of their employees.
There are many facets to this case that go beyond just the
Baragona experience, however, and, therefore, it justifies
legislation of the kind that you have introduced.
The company, Kuwait Gulf Link, has performed contracts for
the Army and seeks to do it again. This is not a closed issue
entirely in terms of the past. KGL, in avoiding answering for
its negligence, has not only avoided the judgment of the
Federal courts, but has managed to avoid the suspension and
debarment process that would disqualify it from being a future
contractor to the U.S. Government if the facts were fully
aired, in my opinion. So to the outside observer, the outcome
of the case and lack of consequences from the case are almost
as abhorrent as the accident itself and demonstrate remedies
that must be made to the system to see that it does not occur
again.
So this, which I cosponsor, is not in any sense anti-
contractor. I have said here in this Subcommittee and will
continue to say that I believe that the decision on the part of
the Defense Department to move to contractors in those areas
that do not require the skills of a warfighter is a wise
decision. But contractors, U.S. owned and operated--as well as
foreign owned and operated--regardless of their location or
ownership, must be held accountable for their actions and at
the same standard. Foreign-owned contractors must be at the
same standard as U.S.-owned contractors.
This point is even more important in the hazardous areas
because there the contractors are an extension of U.S. forces.
And as such, the contractors in these cases must submit to the
command, control, and communications of the U.S. military and,
as they are working in concert with the U.S. military, they
must be expected to answer for their actions to the United
States, whether it be a military or civilian forum. They take
on that obligation when they enter into an agreement with the
U.S. Government.
So, again, as a general principle, I am against any
legislation or regulation that becomes a barrier for well-
intended contractors. Many well-intended regulations actually
do that, and they result in worse contracting behavior, as they
keep some of the good ones out.
But this bill, therefore, is not a barrier to entry; it
addresses future contracting behavior for a variety of reasons.
It is strictly voluntary and does not impose excessive cost on
either party. It is just an agreement up front as to what the
rules will be if something goes wrong.
The central remedy of the bill will ensure a consistent
forum for civil cases in the most dire of circumstances, and
the act of contracting parties voluntarily submitting to a
designated forum is one that is well established in common law.
So today's hearing, for which I thank you, Madam Chairman,
convenes to examine some esoteric aspects of government
contracting, civil law, and justice. And I am unburdened with a
legal education, so I am here to be instructed by those who
have that background. But we will examine legislation that
seeks to remedy a gap that seems to exist in the command,
control, and accountability of contractors that work for our
military overseas. It is appropriate that the legislation bears
the name of Lieutenant Colonel Rocky Baragona because of the
sacrifice he made 6 years ago. And I hope that under the banner
of his name we can move to see to it that justice will be
available to any others who are unfortunate enough to have the
same sort of circumstance occur to them.
Thank you.
Senator McCaskill. Thank you, Senator Bennett.
I will introduce the witnesses now. I am going to skip
Dominic, not because I do not want to tell about you and your
wonderful family, but we are fortunate to have Representative
Tim Ryan from Ohio, with us today, who has been by your
family's side from the beginning of this ordeal, trying to be
of assistance. And so I am not going to tell about you, and
when it is time for you to testify, we will defer to
Representative Ryan to do your introduction.
Ralph Steinhardt is the Arthur Selwyn Miller Research
Professor of Law and International Relations at The George
Washington University Law School here in Washington. He is co-
founder and director of the program in international human
rights law at New College, Oxford University. For 25 years,
Professor Steinhardt has been active in the domestic litigation
of international human rights norms, having represented pro
bono various human rights organizations as well as individual
human rights victims before all levels of the Federal
judiciary, including the U.S. Supreme Court. He has also served
as an expert witness in several cases testing the civil
liability of multinational corporations for their complicity in
human rights violations. He currently serves on the
International Commission of Jurists' Expert Legal Panel on
Corporate Complicity in International Crimes. He is also the
founding Chairman of the Board of Directors of the Center for
Justice and Accountability, an anti-impunity organization that
specializes in litigation under the Alien Tort Statute.
Scott Horton is an adjunct professor at Columbia Law School
where he teaches law of armed conflict and international
commercial law courses. He has served as chair of a number of
committees at the Association of the Bar of the City of New
York, including the Committee on International Law, and the
Committee on International Human Rights. He currently serves on
the association's task force on national security law issues.
In 2007 and 2008, he managed the Project on Accountability of
Private Military Contractors, a Human Rights First Project,
leading to the publication of ``Private Security Contractors at
War,'' a comprehensive study of legal accountability issues
surrounding government contractors. He has also served as a
legal affairs commentator for a number of network and cable
news broadcasters and is a contributing editor covering legal
and national security affairs for Harper's Magazine.
It is the custom of the Subcommittee that we swear in all
witnesses that appear before us, so if you do not mind, I would
like the three of you to stand, and raise your right hand.
Do you swear that the testimony you will give before the
Subcommittee will be the truth, the whole truth, and nothing
but the truth, so help you, God?
Mr. Baragona. I do.
Mr. Horton. I do.
Mr. Steinhardt. I do.
Senator McCaskill. I want to thank all of the witnesses for
being here today. We will use a timing system. We will ask you
to try to hold your testimony to about 5 minutes, and your
written testimony will be printed in the record in its
entirety. And, with that, I will now turn to Representative Tim
Ryan for the wonderful opportunity to represent and introduce
Dominic Baragona and his family.
TESTIMONY OF HON. TIM RYAN, A REPRESENTATIVE IN CONGRESS FROM
THE STATE OF OHIO
Mr. Ryan. Thank you, Senator McCaskill and Senator Bennett,
for the opportunity. On a personal note, I just want to thank
you for how much it has meant to the Baragona family. This has
really been an American story with a cause by the parents and
the sister to come up here and literally work Capitol Hill
until they get a hearing in the U.S. Senate and legislation
introduced, and it is a real testament to them and the fact
that our system does work. And I want to thank you for that.
It is my distinct pleasure to introduce to you Dominic
Baragona, who will deliver a personal story regarding his son,
Lieutenant Colonel ``Rocky'' Baragona of the U.S. Army, and the
injustice surrounding the negligence of a company that
continues to avoid responsibility.
As you know, in 2003, Rocky Baragona was killed while
serving our country in Iraq when his Humvee was struck by a
supply truck driven by a Kuwaiti contractor. At the time, the
company was under contract with the DOD to deliver supplies
into Iraq. Near the end of his tour, as he was preparing to
return home, Rocky was struck and killed.
As the law now stands, U.S. citizens who have family
members killed or harmed by foreign contractors working with
the U.S. Government may not be able to bring those foreign
contractors into a U.S. court to win justice for a wrongful
death. This barrier to justice for American families is
particularly worrisome for many reasons, among them the fact
that these contractors are funded by us, the U.S. taxpayer.
In light of this injustice and the perilous position in
which it places the families of armed service members and other
Americans pursuing our national interests, I draw to your
attention Senator McCaskill's bill as well as our bill that we
have introduced, that I have introduced in the House, H.R.
2349, your bill's companion in the House.
This legislation requires that all foreign and domestic
contractors operating pursuant to a Federal contract consent to
U.S. Federal court jurisdiction over disputes arising out of
such contracts, including suits involving injury to American
armed service members, government employees, and American
citizen contract employees.
Under the bill, for existing cases brought on or after
September 11, 2001, contractors must consent to Federal
jurisdiction as a condition of either entering into future
contracts or receiving payments under current contracts. The
legislation also provides for suspension and debarment of
contractors for evading services of process and failure to
answer for suits in U.S. Federal courts brought in relation to
the performance of a Federal contract.
Unfortunately, the Baragona case is by no means an isolated
situation where a contractor headquartered abroad has acted in
an egregious, fraudulent, or negligent manner. While few
stories are as tragic as the Baragona case, there are many
instances of impropriety. Such behavior is beyond egregious and
must end. It is imperative that our legal system has unfettered
reach in order to adjudicate such cases in our courts rather
than allowing these companies to escape liability simply
because they are headquartered abroad.
My distinguished colleagues, this is about accountability.
Foreign companies seeking American contracts paid by our tax
dollars should be subject to the jurisdiction of our courts. If
these companies seek our business, they can agree to appear in
our courts, and it is that simple.
Finally, the Baragona family will never completely recover
from their tragic loss over 6 years ago. The family may,
however, find solace in the knowledge that other families
enduring similar circumstances will not face the particularly
injustices they have been forced to endure since 2003. And,
again, this family has taken the burdens of many other families
here to Capitol Hill to have their voice heard, and it is just
a wonderful, well-respected family back in Ohio, and Florida as
well, and I want to thank you again and would like to introduce
a hero in and of himself, along with his wife, Vilma, and their
daughter, Pam, speaking on behalf of their son, Rocky, as well,
Dominic Baragona.
Mr. Baragona. Thank you.
Senator McCaskill. Go ahead.
TESTIMONY OF DOMINIC BARAGONA,\1\ FATHER OF LIEUTENANT COLONEL
DOMINIC ``ROCKY'' BARAGONA
Mr. Baragona. Good afternoon, Senator McCaskill, Ranking
Minority Member Senator Bennett, and Subcommittee Members. I
ask that my full written statement be entered into the record.
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\1\ The prepared statement of Mr. Baragona with attachments appears
in the Appendix on page 40.
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Behind me is my wife, Vilma, and our daughter, Pam.
I want you to know I am scared to death. [Laughter.]
Senator McCaskill. You have absolutely nothing to be
worried about. You really don't. [Laughter.]
Mr. Baragona. I hear this.
Senator McCaskill, you said it all in your statement. I
could just turn this in and not even have to go any further.
Senator McCaskill. No. We want to hear from you.
Mr. Baragona. There you go. Our son, Lieutenant Colonel
Rocky Baragona, battalion commander of the 19th Maintenance
Battalion, was killed in Iraq on May 19, 2003, when a tractor-
trailer truck owned and driven by Kuwait Gulf Link Transport
careened across three lanes and crushed his Humvee.
I am here to build a legacy in Rocky's life through the
passage of this bill. If it becomes law, foreign contractors
who do harm to any of our soldiers will be held responsible in
the U.S. courts.
Second, I want a real criminal investigation into my son's
death, holding KGL responsible.
I am kind of lucky, if you can say that. Just hours before
Rocky got killed, I talked to him on a satellite phone. He
said, ``Dad, I am on my way home, and I will be in Kuwait in a
couple of hours.'' And I said to him, ``Hey, Rock, is there
anything I got to worry about?'' He said, ``Not unless
something stupid happens, Dad.''
Well, the next morning two soldiers are standing in my back
yard. I realized something stupid had happened. We were shocked
to learn that Rocky had been killed in a civilian accident.
A civilian accident? It was just beyond us. We had a
million questions, but the casualty officer told us, ``Don't
worry, Dominic.'' He said, ``The Army will answer all your
questions. In fact, they will answer questions you have not
even heard of.''
So the next few weeks are like a blur to us, between
memorials in our home town, Fort Sill, and finally, Rocky's
burial at Arlington National Cemetery.
By December, the report is delivered, 2 days before
Christmas, what would be our first Christmas without the Rock.
Our family felt the report, which had been approved by General
Sanchez, was terrible. For one thing, it had no information
about the driver or the name of the company. It gave a false
impression of how Rock had died. The pictures they give us are
just grainy xeroxed copies. You couldn't see nothing. Key
personnel were missing. Direct statements were omitted. As a
result, we demanded a second investigation with a written
statement of questions from my family to be answered.
The colonel, Rocky's commanding officer, gave us a little
hint on who the company was by saying, ``Dominic, I saw the
original pictures, and they got `KGL' written, and the color of
the truck is orange.'' Well, with the wonderful Internet we
have today, we hold our own investigation and learned that the
name of the company responsible for Rocky's death was Kuwait
Gulf Link Transport, a multi-million-dollar DOD contractor.
We couldn't get nothing done. We decided we needed to
contact Ohio Senator DeWine to help us with the Army report and
contacting KGL.
Senator DeWine said, ``Dominic, let me handle this.'' He
said, ``You know what? This company wouldn't be in existence
today if we had not gone to the Gulf War and saved that
company. They will do the right thing. I am going to write a
letter to the Kuwaiti Ambassador, and they will straighten this
company right out.'' Well, needless to say, he got rebuffed.
He met with the Kuwaiti Prime Minister who tells him, ``The
Baragona family has to go to Iraq. That is where the accident
happened, and they have got great courts there. They will solve
the whole thing. Don't worry about it.''
I couldn't help but think--but here we are, we liberated
this country, and this company is going to get away with this?
Anyhow, by the summer of 2004, Kuwait Gulf Link gained national
attention by paying ransom money to terrorists for the release
of their employees kidnapped in Iraq. CNN videos of the
drivers--shows drivers complaining about KGL forcing them to
work for U.S. forces by taking away their passports.
We also learned that KGL was banned in India for the
recruitment scams and forced labor--the point being they were
known human traffickers with human rights violations.
In January 2005, the second report was finally delivered to
Senator DeWine's office by Brigadier General Wright. The first
thing the general says to us is, ``This company has no
contracts with the Army. Not only that,'' he says, ``they have
immunity.'' And I was trying to figure out whose side the
general was on. I said we just could not fathom that. In fact,
not to embarrass them, our lawyers whispered their name in
their ear saying, ``Hey, this company has got millions of
dollars worth of contracts with DOD.''
This report was also flawed, but the new pictures showed
the truck has no license plates, and the driver's passport with
no commercial driver's license. And yet we couldn't figure
out--the Army wouldn't do no criminal investigation with just
that evidence alone. And Rock was a battalion commander.
Well, you won't believe this next story. In February 2005,
our daughter has a chance meeting with President Bush and asked
him for his help. The first thing the President said is, ``How
are your parents doing?'' President Bush literally initiates a
debarment inquiry and the DOD issued a show cause letter to KGL
citing bad behavior. KGL responded to the President's request
by hiring retired Brigadier General Richard Bednar, an ex-DOD
debarment chief, who held off-the-record conversations with DOD
officials, and the case come to a stop, the show cause letter.
I couldn't believe this so I had Brian Persico, who was in
charge of the Army's suspension and debarment office. I had his
number. I give him a call. I said, ``I want to know how this
show cause letter just came to an end like this. My God, we got
the President behind us. How high do we have to go?''
Let me tell you what he tells me. Well, I asked him about
General Bednar and his conversation. He said, ``If he moved the
debarment forward, his career would come to an end.'' I went,
``Wow.'' I said, ``Is it possible that a KGL lawyer can trump
the President and kill the debarment inquiry?'' It was scary.
So we pursued justice through the court since we had no
admission by KGL and its negligence and no criminal
investigation. KGL responds to the lawsuit by ignoring the
court, not even bothering to show up. Well, it kind of made it
a little bit easier for us to win if it was just one-sided. So
the judge awards us $5 million. Well, 30 seconds later, the KGL
attorneys ask the court to vacate the judgment for lack of
jurisdiction.
Well, we always felt there was a weak case there. Judge
Duffey ultimately rules in their favor, but he blasted KGL on
their bad behavior.
We spent the worst days since the funeral watching KGL
executives and lawyers giving high-fives after the judge's
ruling. Since then, we have appealed the ruling.
Our personal investigation found KGL continues forced labor
practices and, in February 2008, was responsible for killing
another soldier. This is a company that is supposed to have
insurance with DOD for just such instances, but somehow manages
never to pay when found guilty of negligence.
It has really greatly disappointed our family that the Army
did not take care of the Rock and investigate anything unless
we pushed them to do it. You know what? We love the Army. We
have two sons who graduated from West Point. We have a grandson
nominated by Senator McCain to the Naval Academy. He goes to
Iraq next month. I am a Korean War veteran. Our hearts bleed
for the survivors of the Fort Hood families. We know how they
felt during the final roll call. We were there.
Today, we are grateful for Senator McCaskill's bill, though
it may not necessarily help our case. We just want to make sure
that it does not happen again to other families. Just level the
playing field between U.S. and foreign contractors. After this
bill passes, the Wild West of contracting for foreigners will
be over.
Senator McCaskill and Senator Bennett sent a bipartisan
letter to Secretary Robert Gates showing concerns that a
company under investigation by the Senate Subcommittee could be
awarded a multi-million-dollar food contract. And then we also
appreciate letters from Representative Ryan and Representative
Driehaus, who wrote a letter to the Department of Justice
demanding a real investigation into KGL's misconduct.
Vilma, Pam, and I, we cannot thank everybody enough for
trying to help us. For 6 years, we have walked these halls with
our brownies and our hot peppers, and are exhausted. We have
worked with three branches of the government for justice, and
here we are today. Only in America.
Thank you.
Senator McCaskill. Thank you so much, Mr. Baragona. And
please convey to the rest of your children that we send our
condolence for the loss of their brother because I know that
you and your wife had seven children, including Rocky. So a big
family, worked hard, the American dream, and I know that
Senator Bennett and I are going to work as hard as we know how
to get this law passed in your son's name.
Mr. Baragona. Thank you.
Senator McCaskill. We will now turn to the testimony of
Professor Scott Horton.
TESTIMONY OF SCOTT HORTON,\1\ PROFESSOR, LECTURER-IN-LAW,
COLUMBIA LAW SCHOOL
Mr. Horton. Chairman McCaskill and Ranking Minority Member
Bennett, I am really moved by the testimony we have just heard
from Mr. Baragona about this case. It is a clear miscarriage of
justice, and I, therefore, feel honored to be able to offer
some remarks in support of this legislation.
---------------------------------------------------------------------------
\1\ The prepared statement of Mr. Horton appears in the Appendix on
page 60.
---------------------------------------------------------------------------
I think it is a significant piece of legislation that will
close an important jurisdictional gap that exists for Federal
courts and allow them to adjudicate claims that arise from
serious misconduct involving U.S. Government contractors, which
now appears to be beyond their jurisdiction.
I want to say at the outset that talking about
accountability and accountability measures for contractors is
not intended to be criticism or disparagement of contractors.
In fact, it would be impossible for us to perform the
contingency missions we have overseas without those
contractors. They play key roles in protecting American
soldiers overseas, and frequently they put their own lives at
risk. But, nevertheless, it is inappropriate for them to
operate without accountability. Accountability is necessary for
safety, and it is essential to upholding basic norms of the
rule of law.
One of the questions that Congress has to look at is
whether or not it has created the correct framework for this
accountability to occur. Well, I want to suggest that there has
been a change in the way the United States has approached this
issue over the last couple of decades that justifies these
changes.
The United States has relied much more heavily on
contractors in connection with these contingency operations,
and taking this change into account, the United States has also
adopted a much more aggressive posture on the negotiation of
Status of Forces Agreements around the world, seeking higher
levels of immunity from the law of host governments.
Well, whenever it does so and it takes away the
jurisdiction of the U.S. Government, which, in fact, is what
happened in the case where you talked about the Kuwaiti
Ambassador who told you, ``Bring it to the courts of Iraq.''
Actually, you could not bring this matter in the courts of Iraq
because of Order No. 17, which we had issued--it was issued by
Paul Bremer in July 2004--that exempted exactly this sort of
issue from the jurisdiction of Iraqi courts.
Now, when that happens, it is very important that the
United States step in and expand its own jurisdiction so that
there is no vacuum. In fact, I think that is something
axiomatic. If the United States says the host country does not
have jurisdiction, the United States has to supply its own
jurisdiction. And, moreover, this is an area where the United
States clearly has both the right and the responsibility to do
that.
Well, one obvious question that arises from this litigation
is whether or not it is constitutional to do so, because, of
course, the district court judge here applying the
International Shoe Doctrine concluded that there was a lack of
sufficient minimum contacts with the jurisdiction to warrant
that. And my answer to that question is clearly yes. The
legislation approaches this on the basis of consent. Consent
provides a completely adequate basis for the exercise of this
jurisdiction, notwithstanding the Fourteenth Amendment's
limitations that apply minimum contacts.
But even beyond that, there is an entirely separate area
here which Senator Bennett alluded to in his remarks, and that
is, the U.S. law of armed conflict jurisdiction. When
contractors are brought in in connection with a contingency
operation beyond the territory of the United States, the United
States has the power to expand the jurisdiction of its courts
to address those situations. That is something that has been
recognized since the Constitution. It is implicit in the power
that is given to Congress to define the law of nations. And, in
fact, as that phrase was originally used at the time of the
enactment of the Constitution, that comprehended little beyond
this law of armed conflict norm.
I would like to just note as well that the contracts, in
order to implement this properly, probably need to address a
couple of other things not dealt with in specificity in the
legislation, but probably would be appropriate for the
contracting officer to deal with. That is the venue of the
court that would handle the case, and also a provision in the
contract that would provide that third-party beneficiaries
would be able to use it and, finally, more detailed notice
provisions. Thank you.
Senator McCaskill. Thank you, Professor Horton, for being
here, and we will look forward to some questions.
Professor Steinhardt.
TESTIMONY OF RALPH G. STEINHARDT,\1\ PROFESSOR OF LAW AND
INTERNATIONAL AFFAIRS, THE GEORGE WASHINGTON UNIVERSITY LAW
SCHOOL
Mr. Steinhardt. Madam Chairman McCaskill, Ranking Minority
Member Bennett, and Members of the Subcommittee, I am extremely
grateful for the opportunity to testify today and to pay
tribute to the Baragona family. I would like to emphasize just
a few points from my written testimony and then respond to any
questions.
---------------------------------------------------------------------------
\1\ The prepared statement of Mr. Steinhardt appears in the
Appendix on page 66.
---------------------------------------------------------------------------
It is safe to say that this legislation is a welcome
bipartisan response to an injustice. It is a response to a
particular case, but as Senator Bennett suggested in his
statement, the importance of this legislation goes well beyond
that one lawsuit.
The problem of government contractors' accountability takes
many forms, including not only the kinds of torts that are at
the heart of the Baragona case, but also in some rare but high-
profile cases, human rights abuses that undermine the
credibility of the United States, that contradict its values,
and potentially empower our enemies.
This proposed legislation, it seems to me, is one step
towards assuring a measure of accountability whenever foreign
businesses enter into contracts with the U.S. Government and,
most importantly, levels the playing field between U.S.
corporations and foreign corporations.
In my written testimony, I describe the likely trajectory
of lawsuits under this legislation with particular emphasis on
the constitutional and international law issues that may arise
and that supporters of the legislation need to anticipate. I
also offer some modest suggestions for improving the reach and
the reliability of the legislation. In the interest of making
the legislation as strong as possible, let me just anticipate
what some of those issues are likely to be.
Specifically, and in a nutshell, the legislation offers a
statutory solution to a constitutional problem, and it offers a
domestic solution to an international problem. It also
addresses issues that arise at the beginning of the
litigation--notably, jurisdiction and service--but it does not
address the range of obstacles that can derail transnational
litigation at a later stage.
One of the occupational hazards of being a law professor,
other than faculty meetings and paper cuts, is that sometimes
we get lost in the doctrine and the theory, so let me be plain.
A constitutional concern. There is no question that
Congress has constitutional authority over government
contracts. That is easy. There is no question that you could
require a bond of government contractors to assure that there
is a compensation fund for future plaintiffs in Mr. Baragona's
circumstances. The harder case is that under the Supreme
Court's decision in International Shoe that Professor Horton
mentioned, the courts will have to determine in every case,
case by case, whether the particular defendant has certain
minimum contacts with the forum or not.
Congress cannot legislate a one-size-fits-all legislative
answer to that constitutional question. Requiring a waiver of
personal jurisdiction objections as a precondition for doing
business with the government is an attractive approach, but it
will be challenged as an unconstitutional condition. That is,
there are many government privileges like contracting or
driver's licenses that cannot be subject to advance waivers of
certain due process or fairness rights. I think that there are
arguments that we should anticipate for getting around the
unconstitutional conditions doctrine, but they have to be
acknowledged and not ignored. The same is true with respect to
service.
Second, and turning briefly from the constitutional to the
international issues, the proposed legislation addresses an
international problem, and international law, including the
treaties of the United States, will not be irrelevant. The most
significant international issue arises under the Hague Service
Convention, as the Baragonas discovered, to their dismay. I,
too, have come up against the constraints of the treaty in
practice. I have criticized the treaty in print and in
testimony before the House of Representatives. I am fully
familiar with the logistical obstacles that the Hague Service
Convention represents, but, again, this may not be an area in
which we can simply legislate our way out of the box. Every one
of this Nation's major trading partners is a party to the Hague
Service Convention, including Canada, China, Japan, Korea,
Mexico, the United Kingdom, and almost every member of the
European Union. They are unlikely to go away quietly if this
legislation is construed as an effort to render that Hague
Service Convention irrelevant.
Let me just also briefly mention that there are certain
practical considerations that have to be taken into account
here. Defendants from countries that are parties to the Hague
Service Convention will almost certainly insist on compliance
with the treaty to the letter, and that is significant because
when the judgments are taken from an American court to where
the assets are likely to be--namely, one of the reasons that
the courts in foreign countries resist U.S. judgments is that
service has not been done in accordance with the treaty.
There are other issues, of course: Choice of law, forum non
conveniens, and enforcement of judgments. In my written
testimony, I also describe the Alien Tort Statute. But, again,
let me express my gratitude for the opportunity to testify
today.
Senator McCaskill. Thank you, and we welcome Senator Tester
to the Subcommittee.
I have to be honest with the professors on the panel. I am
burdened with a legal education, and there for a minute I
started thinking I should start taking notes---- [Laughter.]
That I might have to write on this subject matter. And it
is complicated, and we do want your help, and that is why we
have asked you to come here today.
Let me ask you, Professor Steinhardt, as it relates to the
waiver of personal jurisdiction objections as a precondition of
contracting with the Federal Government. Can you address the
court's decision in Insurance Corporation of Ireland v.--I
think it is--I do not know how to say this in French. I am not
French. I am going to say it like we would say it in the
Midwest--Compagnie des Bauxites de Guinee, that personal
jurisdiction is an individual constitutional right, like other
rights, may be waived.
Is there anything else we need to do in this legislation to
assure that we could fall under the aegis of that Supreme Court
decision, that is, a waiver in advance to submit to the
jurisdiction of the court and, therefore, avoid the
constitutional problems that you delineated?
Mr. Steinhardt. Absolutely right, Senator McCaskill. There
is that dictum in the insurance company case. The difficulty is
whether the waiver of due process rights is voluntary or
statutorily directed, and that is what is going to trigger the
unconstitutional conditions doctrine.
I am not saying that those who challenge this legislation
will necessarily win on the unconstitutional conditions
doctrine, but if the government confers a benefit with
conditions, and in particular the condition that parties
relinquish a constitutional right, that triggers the
unconstitutional conditions doctrine. The next step is to ask:
Is there a substantial relationship, what the courts have
called an essential nexus, between the benefit conferred and
the condition that is imposed?
I think that if the Senate and the House of Representatives
found as a matter of fact that there was a connection between
the performance of the contract and the submission to liability
litigation in the United States, then that is likely to satisfy
this essential nexus test. But we should not oversimplify it or
think that it is just going to go away.
So the general principle that you can waive these rights is
absolutely correct. But if you are forced to do so in a way
that triggers the unconstitutional conditions doctrine, there
will be difficulty.
Senator McCaskill. Well, I certainly understand the point
you are making. I just have to think that if we pass this law,
the nexus of a company wanting to do business with our country,
especially within the context of the military in a contingency
operation, that level playing field that everyone referenced in
their testimonies, I would think that there would be some
compelling--as I think I remember from law school, the weighing
tests. I think that on that weighing test you are going to get
a thumb on the scale on the side of accountability as it
relates to these foreign contractors. Am I off base on that?
Mr. Steinhardt. I do not think you are off base. I just do
not think we can necessarily predict that the courts will
automatically do the right thing in that regard, and that is
why the sense of Congress, the finding by the Senate that
liability is an essential part of the actual performance of the
contract or the leveling of the playing field I think goes a
long way towards assuring that the unconstitutional conditions
doctrine will not be an obstacle.
Senator McCaskill. Let us talk about the Hague Service
Convention. What is your suggestion on service of process? The
two of you with your knowledge of legal actions on an
international platform, if you were writing this legislation,
what suggestions would you give us to strengthen the process
piece of this? I certainly get when it comes time, it does
not--frankly, even if this company had not been such a coward
and refused to ever step up and even speak to you about their
negligence, Mr. Baragona, enforcing the judgment at a bank, as
you referenced, could get really tricky if the lawyers start
talking about the validity of process.
What advice can you give us of any tweaking we can do to
the language in this legislation that would strengthen the
process part as it relates to the Hague Service Convention?
Professor Horton.
Mr. Horton. Well, I know that the notice provisions are
particularly important for this purpose, and in the
sophisticated commercial contract that is an international
contract, it is quite conventional not only to have
specification of the law and the forum for the resolution of
disputes, but also to have a designation of an agent for
service of process. And if you want to anchor that to a
jurisdiction in the United States, have an agent for the
service of process designated at the jurisdiction that you have
also specified for litigation, I think that really makes it
much easier, and it shows within the four corners of the
contract that this issue has been given thorough consideration
and extraordinary steps have been taken by the contract
counterparty to do this.
I agree with the general analysis that Professor Steinhardt
has laid out. I think generally when we are talking about
government procurement contracts, where it is a free and open
process and a company participating has made the election to
participate, to qualify, and bid, that these choices will be
made in the context of the contractors, nothing coerced about
it. That would be respected, I think, by a Federal court.
There are other situations, particularly in wartime,
certainly we saw circumstances in the 19th Century when
military forces would commandeer--they would require or levy
services from a local agent in terms of provisioning, yes, that
would produce some problem in this regard. But not the sort of
procurement that we are talking about here in connection with
the war on terror.
Senator McCaskill. Right. We are begging them--they are
begging us to hire them.
Mr. Horton. Exactly right.
Senator McCaskill. I do not know how in that context we are
going to fall under a huge problem of coercion. Nobody is
putting a gun to their head. They are working very hard to get
our business, and I think as a piece of that, they should be
responsible for their actions, and especially as it relates to
our men and women in uniform.
Senator Bennett.
Senator Bennett. I am sufficiently impressed with your
legal background that I will pass. [Laughter.]
Senator McCaskill. All right. Senator Tester.
Senator Tester. I can ask some questions, but it has no
reflection on your legal background. [Laughter.]
Senator McCaskill. That is a good thing.
OPENING STATEMENT OF SENATOR TESTER
Senator Tester. Mr. Baragona, I want to thank you for
testifying here today. I apologize for not getting here earlier
for the entire panel, but I do understand that you did a fine
job, and I certainly want to express my condolences to you and
your family on your tragic loss.
This is a question for any one of the three who can answer
it. How pervasive is the problem of foreign contractors killing
or injuring American service members or American civilians?
Does anybody know the answer to that?
It would be good to have the numbers on that. One is too
many, but it would be good to have the numbers.
A question for the legal team. Do the contractors in
Afghanistan have the same kind of immunity that they did in
Iraq?
Mr. Steinhardt. That is a completely opaque issue right now
because the immunity was created--and there is a diplomatic
note, which we have reproduced here, between the U.S. Embassy
and the Afghan government that talks about levels of immunity
that the United States is proposing. The United States also has
proposed a Status of Forces Agreement which would give immunity
to contractors. The Afghan government has essentially not
agreed to this, so we are at something of a standoff on this
immunity issue, and we do not have something like Order No. 17
which, clearly, effectively codifies the immunity.
Senator Tester. So the question is what you just said, that
there is immunity for contractors that injure or kill American
servicemen or civilians? Is that what they are advocating for?
Mr. Steinhardt. Immunity.
Mr. Horton. I think it is a consequence of positions that
the United States has taken, but let me go back and say Order
No. 17 said effectively they are immune from process under
local law. That means that in Iraq no one can bring a
contractor into a court other than Iraqi contractors--they were
fair game--but not a Kuwaiti contractor, for instance, on
account of wrongful death, rape, even murder, I mean, even an
intentional crime they were immune. That is right. Of course,
there was a major question as to how far the United States had
gone in filling that void with assertion of U.S. jurisdiction.
We have the Military Extraterritorial Jurisdiction Act and a
couple of other pieces of legislation. The Uniform Code of
Military Justice also was revised in December 2006 to create
some basis of jurisdiction. We had no actual practice of
enforcing that by the Department of Justice during that period.
We had one single prosecution of a contractor coming out of
Afghanistan up until the end of 2007. So it is only quite
recently that our Justice Department has begun to step in and
deal with these cases.
Mr. Steinhardt. Could I just add to that? Even if immunity
were overcome by legislation or otherwise, there would still be
a significant legal issue with the state secrets privilege.
Many of these government contractors would be able successfully
to invoke the state secrets privilege in circumstances that I
suspect many Members of Congress would disapprove of.
Senator Tester. So let me get this straight, if I might,
and please do correct me if I am wrong, because I hope I am.
We have a situation in Afghanistan right now where, if a
contractor is negligent, kills or injures somebody, there is no
recourse.
Mr. Horton. Well, I was talking about immunity from the
local courts. Then we have the question of whether there is
immunity, whether there is a basis to go after that contractor
in the United States, and on that we have a lot of very
contentious litigation going on right now with contractors
successfully asserting immunity under different doctrines in
some cases, but also being held accountable in other cases. So
it is a very complex picture.
Generally they will attempt to argue that they are under
the authority of the command there, and, therefore, they should
have the same immunity that the military has, and they have
gotten split verdicts on that question so far.
Mr. Steinhardt. Usually under the Alien Tort Statute.
Senator Tester. All right. And the contractors, of course,
the ones we are talking about, are paid for by the American
taxpayer.
Mr. Steinhardt. Correct.
Senator Tester. OK. Thank you very much.
Senator McCaskill. Definitely we have work to do.
I want to thank all three of you for your appearance today.
Particularly I want to thank the Baragona family.
The staff of this Subcommittee has done great work for this
hearing, and when legislation gets passed, there is a moment on
the floor where the sponsoring Senators thank the staffs of
various committees. But many times the work that staff does day
in and day out is taking the time to sit, to listen, to
understand, and I have a man on my staff, Stephen Hedger, who
is a West Point graduate, who decided after he met the Baragona
family that he was not going to let me rest until I did
something about Rocky Baragona's death. As a fellow West Point
graduate--and he is now the Legislative Director in my office,
so he has some elbows to throw around about what the priorities
are. And I want to thank Mr. Hedger for his dedication to your
family and to Rocky's memory. Thank you all for being here
today.
[Applause.]
Senator McCaskill. And he loves your brownies. [Laughter.]
If the second panel of witnesses will come forward, please.
Thank you for being here today.
First, Tony West was nominated by President Barack Obama to
be the Assistant Attorney General for the Justice Department's
Civil Division on January 22, 2009. He was confirmed by the
Senate on April 20, 2009. From 1993 to 1994, he has served as a
special assistant in the Justice Department. From 1994 to 1999,
he served as Assistant U.S. Attorney for the Northern District
of California. He later served as Special Assistant Attorney
General, an appointee of California Attorney General Bill
Lockyer. Prior to his return to the Justice Department, Mr.
West was a litigation partner at Morrison and Foerster in San
Francisco.
Richard Ginman assumed the position of Deputy Director for
Program Acquisition and Contingency Contracting, Defense
Procurement and Acquisition Policy, in May 2007. In February
2008, he assumed the position of Principal Deputy to the
Director of DPAP. In that capacity he is the principal adviser
to the Director for all contracting and procurement policy
areas. Mr. Ginman has more than 37 years of experience in
government and commercial business in the fields of
contracting, acquisition management, logistics, and financial
management. Mr. Ginman was commissioned an ensign in the Supply
Corps of the U.S. Navy in 1970 and retired as a rear admiral in
2000.
Uldric Fiore was selected as the Army's suspension and
debarment official in October 2008. He has also served as the
Director of Soldier and Family Legal Services for the Army
Office of Judge Advocate General since July 2008. He formerly
served as General Counsel for the Department of Defense Office
of Inspector General from May 2005 until July 2008. He retired
at the rank of colonel following 30 years of service, including
25 years in the Judge Advocate General Corps.
It is the custom of this Subcommittee to swear all
witnesses that appear before us, so if you do not mind, I would
ask you to stand and raise your right hand.
Do you swear that the testimony that you will give to the
Subcommittee will be the truth, the whole truth, and nothing
but the truth, so help you, God?
Mr. West. I do.
Mr. Ginman. I do.
Mr. Fiore. I do.
Senator McCaskill. Thank you so much. We would ask you to
try to keep your testimony to 5 minutes, and we will be happy
to put your entire statements in the record as part of today's
hearing.
We will turn first to Tony West from the Department of
Justice.
TESTIMONY OF TONY WEST,\1\ ASSISTANT ATTORNEY GENERAL, CIVIL
DIVISION, U.S. DEPARTMENT OF JUSTICE
Mr. West. Thank you, Madam Chairman, Ranking Minority
Member Bennett, and distinguished Members of the Committee. I
appreciate the opportunity to appear before you today.
---------------------------------------------------------------------------
\1\ The prepared statement of Mr. West appears in the Appendix on
page 81.
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Let me say at the outset that we, at the Department of
Justice, greatly appreciate this Subcommittee's attention to
this issue, and we support your efforts to ensure that our
servicemen and servicewomen and their families have recourse to
our Federal courts.
Let me also express the Department's condolences to the
Baragona family and express our gratitude to them both for the
brave and honorable service of their son and for their
perseverance to help turn the tragedy of his death into a
legislative legacy that will ease the pain of other military
families who may find themselves faced with the same road
blocks.
Now, as has been noted, S. 526, named for Lieutenant
Colonel ``Rocky'' Baragona, was introduced to address the
challenges faced by them in trying to establish personal
jurisdiction in a U.S. court for the wrongful death of their
son. Lieutenant Colonel Baragona's family pursued justice by
suing the foreign contractor whose employee was involved in
that accident, but that lawsuit was dismissed when the court
held that it had no personal jurisdiction over the contractor.
S. 526 would change that. For certain contracts, it would
require contractors to consent to personal jurisdiction,
thereby allowing U.S. courts to hear civil suits alleging rape,
sexual assault, or serious bodily injury to members of the U.S.
armed forces, U.S. civilian employees, or U.S. citizens
employed by contractors working under government contracts
performed abroad. And, importantly, S. 526 would also require
contractors to consent to personal jurisdiction in matters
brought by the United States alleging wrongdoing in the
performance of a government contract performed abroad.
Madam Chairman, addressing procurement fraud is among our
highest priorities at the Department of Justice. We have
pursued and we will continue to aggressively pursue all
contractors, foreign or domestic, who seek to defraud the
government in the procurement process. Since 1986, we have
recovered in excess of $4.4 billion in procurement fraud
matters involving the Defense Department in cases that range
from ensuring that the American taxpayer is not overcharged for
vital services to our men and women in uniform, to enforcing
the laws against bribery and other corruption.
In fraud suits against foreign entities, we have been
largely successful in asserting personal jurisdiction in U.S.
courts. We have just announced the filing of two war-related
cases against defendants that include foreign entities.
The Department announced 2 days ago that it had intervened
in a qui tam action against Public Warehousing Company (PWC)
and others alleging that the defendants knowingly overcharged
the United States for food supplies for our service members in
Kuwait, Iraq, and Jordan. A criminal indictment has also been
filed against PWC in connection with that alleged fraud.
Now, in these cases we anticipate that our authority under
the False Claims Act will enable us to establish personal
jurisdiction over the foreign entity defendants, just as we
have had that success in the past.
With respect to S. 526, we believe that the requirements it
imposes should facilitate the establishment of personal
jurisdiction over foreign contractors, particularly where it
does not currently exist. We have a number of technical
suggestions to the legislation that we have discussed with
Subcommittee staff, and we are happy to further discuss with
Subcommittee staff, and I discuss those in more detail in my
written testimony.
In conclusion, the Department of Justice supports
protecting the rights of individuals and their families to
recover appropriate damages for injuries caused by the
negligent acts of foreign contractors. We are also dedicated to
pursuing contractors that commit fraud against the government
and drain the Treasury of funds so vital to our military and
procurement systems. We appreciate the Subcommittee's efforts
to help us fulfill that important mission, and I am happy to
answer any questions you have.
Senator McCaskill. Thank you, Mr. West, for being here. Mr.
Ginman.
TESTIMONY OF RICHARD T. GINMAN,\1\ DEPUTY DIRECTOR FOR PROGRAM
ACQUISITION AND CONTINGENCY CONTRACTING, DEFENSE PROCUREMENT
AND ACQUISITION POLICY (DPAP), OFFICE OF THE UNDER SECRETARY OF
DEFENSE FOR ACQUISITION, TECHNOLOGY, AND LOGISTICS, U.S.
DEPARTMENT OF DEFENSE
Mr. Ginman. Madam Chairman, Senator Bennett, and
distinguished Members of the Subcommittee, thank you for the
opportunity to appear before you today on behalf of the Hon.
Robert Gates, Secretary of Defense, to discuss the
accountability of foreign contractors.
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\1\ The prepared statement of Mr. Ginsman appears in the Appendix
on page 89.
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Before I begin, I would like to convey my condolences to
the Baragona family. You have my heartfelt sympathy for the
loss of your son in service to his country.
You asked me to address several aspects of S. 526 cited as
the Lieutenant Colonel Dominic ``Rocky'' Baragona Justice for
American Heroes Harmed by Contractors Act.
The legislation is designed to ensure foreign contractors
with U.S. contracts who perform contracts abroad are held
accountable for their actions that result in serious bodily
injuries of members of the armed forces, civilian employees of
the U.S. Government, and the U.S. citizen employees of
government contractor companies. While I support the overall
substance of the legislation, I believe there are portions that
could be improved.
First, I believe liability should be limited to actions
that are linked to the performance required under the
government contract and not be broadly applied to any action by
a government contractor, subcontractor, independent contractor,
or their respective employee.
Second, applying this provision to contractors at all tiers
is problematic. Changing the definition of ``contractor'' and
limiting the applicability of this legislation to the prime
contractor would allow us to more effectively implement and
enforce it. It is likely, in order to protect themselves, that
prime contractors would require all subcontractors, at all
tiers, to certify compliance with this provision. This will
undoubtedly impact the issuance of contracts in a combat
environment and impact the ability to get our troops what they
need in the required time that they need it.
Third, the legislation could affect competition to some
degree. Because the statute would apply to ``any contract''
regardless of dollar value, many smaller local vendors overseas
would either refuse to do business with U.S. forces, or they
would need to increase prices to cover the additional insurance
for handling possible U.S. litigation, particularly for
injuries unrelated to their business with the U.S. Government.
Fourth, there should be a threshold used to apply the
consent provision to contracts.
Fifth, the prospective applicability under contracts and
the retroactive application as a condition of receiving
payments under current contracts would fall outside the changes
clause and require bilateral modifications. It would eliminate
the Department's ability to unilaterally exercise valuable
options and require bilateral modifications which allow the
contractor to ask for consideration, or force termination of
the contracts.
We do not know for certain the extent that this new law
will have on our ability to contract overseas and obtain
mission-critical supplies and services. If foreign contractors
opt not to bid on U.S. contracts as a result of the
legislation, there would be negative impacts on the
Department's mission. In Iraq and Afghanistan, for example, our
men and women rely on the delivery of food, fuel, and supplies
from local and foreign contractors. If these contractors refuse
to accept contracts from the U.S. Government to perform these
services, a disruption of the logistical and supply system
would impact operations while trying to find another contractor
who will mobilize to perform these critical functions.
And, finally, it would make sense to include a provision to
allow the commander in the field to authorize an exception and
that the contracting officer properly document that decision in
the file.
The Department agrees that we contract only entities that
are responsible for fulfilling their contractual obligations.
The Federal Acquisition Regulations (FAR) prescribes policies,
standards, and procedures for determining whether prospective
contractors are responsible. By statute, the U.S. Government
may contract only with responsible contractors.
To summarize, I believe the goals of the proposed
legislation are sound. The U.S. Government should not do
business with companies that are not accountable for their
actions. However, as discussed, we believe we can achieve the
intended end state and also limit any adverse impact or
unintended consequences by addressing the concerns that I have
shared with you.
I ask that my full statement be entered into the record. I
understand the latest draft of the bill has addressed several
of my concerns, and, again, thank you for this opportunity to
appear before you today, and I am ready to answer your
questions.
Senator McCaskill. Thank you, Mr. Ginman. Mr. Fiore.
TESTIMONY OF ULDRIC I. FIORE, JR.,\1\ SUSPENSION AND DEBARMENT
OFFICIAL, AND DIRECTOR, SOLDIER AND FAMILY LEGAL SERVICES,
OFFICE OF THE JUDGE ADVOCATE GENERAL, DEPARTMENT OF THE ARMY
Mr. Fiore. Thank you, Chairman McCaskill, Ranking Minority
Member Bennett, and distinguished Members of the Subcommittee.
Thank you for the opportunity to appear before you today on the
important issue of government contractor accountability.
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\1\ The prepared statement of Mr. Fiore appears in the Appendix on
page 96.
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As Chairman McCaskill described, I serve in the dual
capacity as Director of Soldier and Family Legal Services for
the Army and also, since October 2008, as the Suspension and
Debarment Official. I succeeded Robert Kittel who served as the
Army Suspension and Debarment Official from September 2003 to
September 2008.
The Army follows the suspension and debarment regulatory
process set forth in Subpart 9.4 of the Federal Acquisition
Regulation. A government contractor can be debarred when there
is a criminal conviction or civil judgment for fraud or a
similar offense, or when there is a preponderance of the
evidence that a contractor willfully failed to perform, has a
history of unsatisfactory performance, or has engaged in
conduct that affects the contractor's present responsibility.
Suspension and debarment are discretionary actions taken to
ensure agencies contract only with responsible contractors, and
the FAR specifies that these actions are ``not for the purposes
of punishment.''
For several years, the Army has led DOD in the number of
suspensions and debarments with over 300 actions annually,
including 390 actions during fiscal year 2009 and almost 300
actions since 2005 against contractors and individuals in cases
arising in Iraq and Afghanistan. I am not aware of any legal or
regulatory barriers to the Army's exercise of suspension and
debarment authority.
I understand that this Subcommittee is very concerned about
the Army's decisions not to debar the contractor involved in
the accident that resulted in the tragic death of Lieutenant
Colonel Dominic Baragona. I would like to express my
condolences to the family of Lieutenant Colonel Baragona for
their loss, and while I cannot comment on potential future
proceedings, I can address the background and rationale for the
Army decisions to date.
In August 2006, the Army received information from Senator
DeWine that in May 2003 a negligent driver for KGL had caused
the death of Lieutenant Colonel Baragona in a collision between
a commercial vehicle and his military vehicle in which he was a
passenger, and that KGL had failed to appear in a related
wrongful death civil lawsuit filed in Federal court in Georgia.
The following month, the Army formally advised KGL that it was
considering suspending or debarring it.
In October 2006, KGL replied that while it did not accept
the initial service of process because it was served
improperly, in July 2006, it had accepted a properly served
complaint. Based on this information, the Army suspension and
debarment official decided against initiating a suspension or
debarment action at that time.
In November 2007, the Baragona family attorney notified the
Army of the $5 million default judgment against KGL. Responding
to the Army's Request for Information, KGL advised PFB that in
February 2008 it had sought to vacate that judgment. And, in
fact, in May 2009, the Federal court did vacate that judgment
and dismissed the lawsuit for lack of personal jurisdiction.
In June 2008, Lieutenant Colonel Baragona's father wrote to
the Army seeking to have KGL debarred based on an Army accident
investigation that concluded that the truck driver's negligence
was the cause of the accident. Mr. Baragona also alleged that
KGL was involved in illegal ``human trafficking.'' Separately,
the Baragona family attorney alleged that KGL lacked adequate
automobile insurance at the time of the incident.
In July 2009, KGL responded to a second Army Request for
Information with proof of insurance, and further Army inquiry
discovered insufficient evidence of human trafficking. After
carefully reviewing that information, I determined that the
allegations of human trafficking and lack of insurance were not
substantiated and did not warrant a debarment proceeding.
The Army's decisions to date do not preclude future Army
suspension or debarment action if it is determined that KGL has
acted, or intends to act, in a manner demonstrating a lack of
present responsibility. Under present authorities, contractors'
failures to respond to properly served process of a U.S. court
or administrative tribunal would be an indication of a lack of
present responsibility and could be the basis for a suspension
and debarment proceeding.
I have recently declined to lift a foreign contractor's
suspension in a case involving an indictment on just that
specific basis. Although I certainly do not approve of the
tactics employed by KGL in the lawsuit, KGL acted within its
legal rights, and a suspension and debarment action was not
warranted on that issue.
Thank you again for this opportunity to appear before you
today and for the support Congress and the Members of the
Subcommittee have provided to our soldiers, sailors, airmen,
and marines, and their families.
I am happy to answer any questions you may have.
Senator McCaskill. Thank you, Mr. Fiore.
Let us start with a timeline here. I think you have just
testified that the first involvement was in August 2006 of the
suspension and debarment folks, and that was some 3 years after
this accident occurred. Is that correct?
Mr. Fiore. Based on the records available to me, that is
correct.
Senator McCaskill. And you have access to all the record,
correct?
Mr. Fiore. I have access to the records in the Procurement
Fraud Branch, which is the branch that processes these cases,
yes.
Senator McCaskill. OK. And you have reviewed all those
records?
Mr. Fiore. I have.
Senator McCaskill. And so in August 2006, as a result of
the Baragona family, not as a result of anybody else--I want to
make sure the record is clear on that--that this initial
inquiry of suspension and debarment looking at the actions of
this company occurred as a result of the Baragona family
contacting their Member of Congress, and that Member of
Congress making an inquiry to the Suspension and Debarment
Office. Is that correct?
Mr. Fiore. That is my understanding. I was not in this
capacity at the time.
Senator McCaskill. I understand that. And it was, in fact,
after that point in time that the Baragona family began to try
to seek justice on their own because of their frustration that
the military had not done anything, that General Bednar got
involved. Is that correct?
Mr. Fiore. I have not had any involvement with General
Bednar.
Senator McCaskill. And there is nothing in the records
about General Bednar contacting the office?
Mr. Fiore. I would have to go back and check that and
respond to the Subcommittee on that, Senator.
Senator McCaskill. I think that would be important. When
you were reviewing the records, wouldn't it jump out at you
that a former general was representing the Kuwaiti company that
killed a member of the military? Wouldn't that be something
that would stick in your mind?
Mr. Fiore. General Bednar represents many contractors in
his capacity as a private attorney. He has been retired for
almost 30 years at this point, but he has been very active in
the private bar in Washington.
Senator McCaskill. But when he worked in the military, he
worked in the Suspension and Debarment Office. Is that correct?
Mr. Fiore. For a brief period of time, he was a suspension
and debarment official in his last position as the Assistant
Judge Advocate General for Civil Law.
Senator McCaskill. OK. I just would find it startling, if
you have reviewed all the records, that you would not have
noticed that General Bednar would have been involved. But you
are saying you did not see his name when you were reviewing the
records, or you are just not sure?
Mr. Fiore. I am not sure because, as I said, he is involved
in a number of different cases in this field, and seeing his
name in a suspension and debarment file would not be unusual.
Senator McCaskill. I do not know whether that is good news
or bad news, but I would certainly appreciate you looking at
the records and letting us know specifically where his name
appears, if at all, in the records of this case and in what
context, and we would like copies of any of those records.
Mr. Fiore. We will do so.
Senator McCaskill. OK. Now, in your testimony you correctly
refer to the various ways that suspension and debarment can
occur, and one of them that you quote in your testimony is that
a company ``has engaged in conduct of so serious and compelling
a nature that it affects that contractor's present
responsibility as a government contractor.'' And I think we
would call that in the legal business a catch-all. Would you
characterize it that way?
Mr. Fiore. Yes, Senator.
Senator McCaskill. And it provides for discretion on the
part of the Suspension and Debarment Office because clearly
this is in many ways a subjective decision that the office
would have to make. Is that correct?
Mr. Fiore. It is a decision that is made based on the
evidence of record. There are times when it has some
subjectivity to it, but we try and use objective evidence.
Senator McCaskill. Well, serious and compelling, I think
that is one of those things that juries figure out, and it is
one of those things that finders of fact figure out. It is not
a matter of law. That is a factual determination, interpreting
the facts to determine whether or not it is serious and
compelling.
Mr. Fiore. Yes, that is correct.
Senator McCaskill. I am going to read you what the judge
said at the point in time that the judge reluctantly had to let
any hope of justice on the civil front in the courts of this
great country go out the door for the Baragona family.
``KGL derived substantial revenue from its contracts with
the United States Army. For KGL to then turn a blind eye to the
death caused by a KGL employee of a United States service
member, who was on duty protecting the region at the time of
the incident, is an affront to the solemn sacrifices service
members such as Lieutenant Colonel Baragona honorably provided.
KGL took this callousness even further by causing plaintiffs to
expend nearly 4 years and significant expense in merely getting
the question of jurisdiction before the court. This court
abides by its charge to seek just and constitutional results,
in spite of KGL's irresponsible participation in this
process.''
Those were the words of the judge.
Now, what about that is not serious or compelling?
Mr. Fiore. Senator, there is an argument that can be made
that is serious and compelling. However, the judge also pointed
out that KGL was within its legal rights to do so, however
abhorrent. Therefore, it is hard for me to conclude that was
misconduct, however serious and compelling or important it
might have been.
Senator McCaskill. Well, the phrase does not say
``misconduct,'' sir. It says ``serious and compelling.'' And I
guess what I am trying to get at, if a contractor kills one of
our soldiers through their negligence and then sits silently
and plays a game of ``You can't touch me'' and watches this
family suffer the way they have for years on end and go to
great expense trying to find justice, and if the court itself
cries out at the time they must follow the law and turn this
family away, what would be serious and compelling? Is it two
people being killed? What if they killed three people? What if
there were seven soldiers killed that day in the accident? At
what point in time does their conduct become serious and
compelling?
Is it that your office takes the view that it must be a
crime or that the courts must find something wrong first?
Mr. Fiore. No, Senator, that is not the case.
Senator McCaskill. Well, I am at a loss at what the
Suspension and Debarment Office would consider serious and
compelling if this is not, and somebody in the military needs
to explain that to me. I am, frankly, flabbergasted that most,
if not all, of the effort in this case came from the Baragona
family and not internally in our military after a member of our
military is killed, that the only way that we are sitting here
today is because of this brave and tenacious family doing this
on behalf of their loved one. And I guess I am confused that
there is not more remorse about the way this was handled.
Do either of you have any testimony you would like to give
about how you think this has been mishandled? None?
Mr. Ginman. I do not.
Senator McCaskill. You do not. OK.
In your testimony, Mr. Ginman, let me ask you about the
exception that you testified about that you think that people
should be able in the field, commanders in the field should be
able to give an exception to personal jurisdiction to a
contractor. Could you give me an example of when you think that
exception would be appropriate?
Mr. Ginman. It is difficult to determine when that would
be. If I am the battle group commander, I am on the scene, the
only contractor that has the product that I need is, in fact,
debarred or has been suspended, do I think I might need an
exception to be able to get to that person? Yes. Do I think it
would be an exception that I would expect to take? No. I think
I should always expect to find contractors that are responsible
to deliver.
Senator McCaskill. Well, if there is a hypothetical that
you could come up with that would be specific that a commander
in the field would want to do an exception, I would be very
interested in understanding what the parameters of that
situation would be where an exception for a foreign
contractor--by the way, if you hire an American company, they
do not get to write an exception in the field for them. Why
would we need to write an exception in the field for a foreign
contractor?
I am trying to understand why there is this distinct
difference between the Army's view or the military's view of
contractors from the United States of America and foreign
contractors? And believe me, I understand the need for foreign
contractors. I have spent a lot of time on military contracting
in the time I have been here. I understand that. But I think I
need a more specific example why we would want to write into
the law the ability to ignore the law. If you could work on
that and get back to us, I would really appreciate it.
Why don't I go ahead and let Senator Bennett ask questions,
and I will do that on my second round. Thank you. Senator
Bennett.
Senator Bennett. Thank you, Madam Chairman. I appreciate
that, and I appreciate, again, your holding the hearing, and
these witnesses. I apologize that I am going to have to leave
after my round because I have another assignment, but this has
been a very useful experience.
Mr. Fiore, you made the point, which I think is an
important point to make, that you do not use suspension and
debarment as a punishment, and as I say, I think that is an
appropriate point to make.
However, as the Chairman has pointed out, you do have
discretion, and she has done her best to make a case that feels
to me that says that in this circumstance the discretion can be
appropriately used, not as punishment.
Is KGL still a viable candidate for Army contracts?
Mr. Fiore. At this point they are. They are not on the
excluded parties list. And I would just point out that my
discretion is not unfettered. The decisions I make are subject
to review in Federal courts under the Administrative Procedures
Act, and so that is the standard by which I have to make
decisions on the records that I have before me.
Senator Bennett. So you feel that the record before you, if
you were to say KGL should not be considered for future
contracts, you feel if you made that decision it would be
overturned?
Mr. Fiore. Based on the record I had before me, I did not
feel that it would be sustainable in Federal court.
Senator Bennett. All right. Let us talk about that record.
As I understand it, as you went through it, the reactions--and
when I say ``you,'' I understand that many of these decisions
were not necessarily made by you personally, but by the office
that you now hold. The decisions were made on the basis of the
responses from KGL. Did you take their word for it on every
point of fact or conduct any kind of independent investigation
to see if they were leveling with you?
Mr. Fiore. The record includes the submissions by the
Baragona family and their attorney, the courts records that we
obtained, the information that KGL provided, and other
information that the people in the Procurement Fraud Office
gathered on those issues. We did not take the information from
either side at face value.
Senator Bennett. But you did not conduct any kind of
investigation of your own? You just said, OK, here we are, and
everybody who wants to comment, comment, and then you made the
decision on the basis of----
Mr. Fiore. I did not personally conduct an investigation.
The Procurement Fraud Branch attorney in charge of the case
conducted an investigation, to the extent he had the ability to
do so, of various sources that had relevant information. It is
not done to the same level as you would conduct a criminal
investigation.
Senator Bennett. OK. Let us talk about that level. I
continue to be troubled here. How do you investigate evidence
in these cases? Whether it is accusatory or exculpatory, you
are getting information--one family is saying to you this is
what happened, somebody else says, no, and we are within our
rights to stonewall. What kind of follow-up do you do?
Mr. Fiore. Those items that are in agreement, we do no
follow-up on. Where there is a dispute, then additional
information is gathered if it is available, and ultimately it
is brought to me, and I have to make the determinations of fact
based on what is in the record. I am not an investigator. I am
an adjudicator at that point.
Senator Bennett. OK. Additional information is gathered and
submitted to you. Gathered by whom?
Mr. Fiore. It would be gathered by the attorneys in the
Army's Procurement Fraud Branch.
Senator Bennett. Would it be useful, Madam Chairman, if we
got a look at what that information was?
Senator McCaskill. I think it would be great.
Senator Bennett. Could you supply that for us, Mr. Fiore?
Mr. Fiore. We certainly can. I believe most of it has
already been provided to staff in prior meetings, but we can
certainly make sure that it has been made available.
Senator Bennett. I think that would be helpful because--
well, all right. I will leave that.
Now, you entered into a discussion with the Chairman about
General Bednar. Do you know General Bednar?
Mr. Fiore. I know him professionally.
Senator Bennett. For how long have you known him?
Mr. Fiore. I first met him somewhere around 1980 briefly
when he was still on active duty and I was a mere captain.
Senator Bennett. There is always a relationship between a
general and a mere captain that is somewhat different than the
normal----
Mr. Fiore. It is somewhat attenuated, Senator.
Senator Bennett. Yes, I understand that.
Mr. Fiore. Until I assumed this position, I may have seen
him three times in 30 years. Since I have assumed this
position, I have probably seen him twice. Once was at a meeting
of the ABA's Committee on Suspension and Debarment, of which he
is a member.
Senator Bennett. But you do not recall any conversations
with him or any contact with him about this case?
Mr. Fiore. No, I do not. Certainly since I have been the
suspension and debarment official, I do not believe I have had
any contact with him on this case.
Senator Bennett. And you are going to review the record for
the Chairman about any contact he may have had with your
predecessor?
Mr. Fiore. Or with the Procurement Fraud Branch office,
yes.
Senator Bennett. All right. Well, again, the fact that I am
not a lawyer enters into this, but having been an executive who
had hired lawyers, I have paid a lot of legal bills, although I
am not a lawyer. I would like to know a little bit more about
the whole process because it does strike an outsider that this
particular case has been decided on very technical grounds all
the way through without any exercise of judgment along the way.
And maybe that is the way it should be done, but I think the
Chairman is appropriate in calling this hearing to pursue that
question because it is a question that a non-lawyer would ask
looking at the facts that we have before us.
Thank you, Madam Chairman.
Senator McCaskill. Thank you very much, Senator Bennett.
I certainly understand that you have to make a decision. As
you indicated, you are an adjudicator in the position you hold.
You are not an investigator. You are an adjudicator. I
understand that you have to have a record in front of you that
will justify your decision. But I am curious since debarment,
relative to the number of contractors that are out there in our
government, is a fairly rare occurrence. Suspension is a little
less rare, but, nonetheless, there is a whole lot of bad
activity going on in contracting where there is never a
suspension or a debarment. I mean, you can look at some of the
things that happened with KBR, and you have to scratch your
head as to why--maybe we are into the too big to fail category
in defense contracting like we have been in other areas of
government.
But I am curious. Is there a large body of case law where
suspensions and debarments have been overturned?
Mr. Fiore. It is not a large body, Senator, but there was
one within the past month.
Senator McCaskill. Where one was overturned?
Mr. Fiore. Yes, Senator.
Senator McCaskill. Well, I think it is incumbent on our
Subcommittee, if we want to be responsible, that we take a look
at that, and we will, to look at the case law in the area of
suspension and debarment--maybe it is the former prosecutor in
me, but it feels like there are some laydowns here that are
occurring that people are not erring on the side of being
aggressive in terms of cleaning up contracting procedures and
practices. And I do not think that characterization is unfair,
but we will take a look at the cases and see on what basis--
and, generally speaking, in the case law how many cases would
you say are out there that are informative of the legal
standards you face on suspension and debarment where you have
been challenged and the military has been overturned on their
suspension and debarment activities?
Mr. Fiore. I have not personally been challenged. I know in
the Army it happens once every few years. The other services
occasionally get challenged as well. Non-DOD agencies are not
as aggressive in suspension and debarment as DOD agencies are,
so there will be fewer of them.
Senator McCaskill. Yes. And, generally, the basis is
insufficient record?
Mr. Fiore. The standard for the Administrative Procedures
Act is arbitrary, capricious, or contrary to law. So a
reasonable basis was a preponderance of the evidence type----
Senator McCaskill. So it is preponderance standard and it
is arbitrary and capricious?
Mr. Fiore. Yes, Senator.
Senator McCaskill. OK. Well, I will admit I did not
practice extensively in administrative law, but this does not
feel like it would have been arbitrary or capricious, and it
certainly feels like there was a preponderance of the evidence
that there was some compelling activity here.
Let me ask you about liability insurance. It is my
understanding these contractors have to have liability
insurance, correct?
Mr. Ginman. Yes, ma'am.
Senator McCaskill. What for?
Mr. Ginman. They have third-party workers' compensation,
particularly in the case of transportation, there is a
responsibility to have--I will get it exactly.
Senator McCaskill. Well, I think--it has been a long time
since I have been to law school, but I think if transportation
contractors, which KGL was, are required to have liability
insurance, I think it is because they are supposed to use that
insurance if they are negligent and kill someone.
Mr. Ginman. Yes, ma'am.
Senator McCaskill. Why are we requiring them to have
liability insurance if we cannot ever sue them? That seems kind
of dumb to me.
Mr. Ginman. They are required to have vehicular and general
public liability insurance.
Senator McCaskill. Yes.
Mr. Ginman. And at thresholds specified in the contract.
Senator McCaskill. Yes, so that is what is really curious
about this case, that we would require them to have insurance
for just this occurrence, but yet the military would put no
pressure on them to utilize the insurance that we require them
to obtain for just this kind of occurrence. It is really
curious to me. Frankly, I would think that they would not carry
that insurance. That is an expense they do not need, because we
cannot get them, we cannot reach them. And so it seems to me
that we ought to take that out as a contract requirement and
then maybe we can get the contracts for less money if we are
not going to require them to make that insurance available to
the victims of their negligence.
Mr. West, let me talk about procurement litigation, and I
did notice the cases that occurred a few days ago, and I think
it is terrific. But it brings up the thorny subject of qui
tam's and why there are so many that are sitting at the
Department of Justice. It seems these are money makers, right?
Mr. West. Our record of intervention has been good, Madam
Chairman. In terms of the cases that the government intervenes
in, they tend to be successful, and they do tend to bring money
back to the Federal Treasury.
Senator McCaskill. So this is one of those things--this is
the speech I always make about more auditors. Auditors save
money.
Mr. West. Right.
Senator McCaskill. We need to hire more of them. This would
be where I would want to make the speech: Why are we not
putting more resources into these qui tam's. Why are so many of
them sitting--I mean, you seal them so we are not really sure
how many there are. I do not suppose you would tell us today,
would you?
Mr. West. Well, actually, I will tell you, because this is
something that has come up before, and when I began in this job
in late April, it was something I was curious about, too. And
what I have learned in my conversations with the attorneys who
do these cases is that I would say there are roughly 1,000
cases which are currently under seal, qui tam's. And at first
glance, it might look like that is a backlog, that they are
sitting there. But, in fact, what those 1,000 cases represent
are active investigations which are going on, not only in Main
Justice but in every one of the 94 U.S. Attorney's Offices
around the country. And so that 1,000 actually represents every
single qui tam that the United States is currently actively
investigating.
There are two other dynamics which also affect that number.
One is that if you were to take a snapshot of the 1,000 or so
cases that were under seal a year ago and you were to take a
snapshot of those same 1,000 cases today, you would notice that
the pool is actually different. There are cases which are
always moving in and cases which are always being unsealed,
moving out. And so they are actually not the same cases.
And then the last thing I would note is that oftentimes
what you will see is when a case is unsealed, it is not simply
an announcement of the allegations. What you often see is an
announcement not only of the allegations, but also a settlement
agreement at the same time, because what is actually happening
when these cases are under seal is we are working with
defendants, we are working with relators, to actually resolve
the case so that we can announce both an allegation, a
complaint, as well as a resolution at the same time. We think
that serves everyone's interests best.
Senator McCaskill. Well, I think it would behoove this
Administration to make this a priority. It is of great
frustration to many people who have brought I think meritorious
action under this law that it appears to go into a big black
hole, not to be heard from for a while. And I do not know what
your resources are over there, but maybe this is a subject
matter that we can take up outside the purview of this hearing.
But the lack of transparency--I understand the public policy
reason behind the sealing. It is abhorrent to me in government
that we have to seal anything. But the lack of transparency
provides a really fallow ground for cynicism about how
aggressive the government is being in going after these
actions, especially in the field of contracting right now and
the whistleblowing that we have had as a result of contingency
contracting in Iraq and now carrying forward into Afghanistan.
I think it is really important that we continue to work those
cases very hard.
Let me finish up. I want to make sure I understand who
everybody works for. I know you work for Attorney General
Holder.
Mr. West. That is correct.
Senator McCaskill. Mr. Ginman, what is your line of
command?
Mr. Ginman. My immediate supervisor is Shay Assad, who is
Director of Defense Procurement.
Senator McCaskill. OK. I know Mr. Assad well.
Mr. Ginman. Who works for Under Secretary Carter for
Acquisition, Technology, and Logistics, who in turn works for
Secretary Lynn and Secretary Gates.
Senator McCaskill. OK. And, Mr. Fiore, what is your
command?
Mr. Fiore. My supervisor is the Judge Advocate General,
Lieutenant General Dana Chipman, and I operate under a
delegation from the Secretary through him to me.
Senator McCaskill. And who is the person who is responsible
for actually--who fills your position? The JAG? Is that who
fills your position?
Mr. Fiore. The Judge Advocate General appoints the
suspension and debarment official under authority delegated by
the Secretary.
Senator McCaskill. OK. I wanted to make sure I was clear on
that.
I think requiring these contractors to get liability
insurance is great, and I think that we do it for a reason. And
I think the notion that the Baragona family had to sit in a
courtroom and watch lawyers high-five because they never even
had to contact their insurance coverage is a gut punch for
justice in this country. And I think we need to remedy that gut
punch, and we are going to work really hard on this
legislation. And I ask for your help and support to make this
legislation. I know we have changed it already, Mr. Ginman,
because of some of the concerns of your office. I would
certainly ask for your guidance, Mr. Fiore, if there are more
tools you need to use the discretion as a determinator of the
facts, as you make a determination of the facts, I would
certainly hope you would speak up now, because something is
terribly wrong with this story, and I think it is incumbent on
all of us to get it fixed before there is another Rocky
Baragona laying on a highway somewhere in Afghanistan with a
foreign contractor that has an insurance policy but 6 years
later high-fives a lawyer in a courtroom somewhere in America
and says, ``Catch me if you can. You cannot touch me.'' I think
that is a very bad result for our American military.
I want to thank all of you for being here today, and the
record will stay open for a week for any additional information
you want to add. Thank you.
[Whereupon, at 4:18 p.m., the Subcommittee was adjourned.]
A P P E N D I X
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