[Senate Hearing 112-502]
[From the U.S. Government Printing Office]
S. Hrg. 112-502
AFGHANISTAN RECONSTRUCTION CONTRACTS: LESSONS LEARNED AND ONGOING
PROBLEMS
=======================================================================
HEARING
before the
AD HOC SUBCOMMITTEE ON CONTRACTING OVERSIGHT
of the
COMMITTEE ON
HOMELAND SECURITY AND
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
ONE HUNDRED TWELFTH CONGRESS
FIRST SESSION
__________
JUNE 30, 2011
__________
Available via http://www.fdsys.gov
Printed for the use of the Committee on Homeland Security
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 SCOTT P. BROWN, Massachusetts
MARK L. PRYOR, Arkansas JOHN McCAIN, Arizona
MARY L. LANDRIEU, Louisiana RON JOHNSON, Wisconsin
CLAIRE McCASKILL, Missouri ROB PORTMAN, Ohio
JON TESTER, Montana RAND PAUL, Kentucky
MARK BEGICH, Alaska JERRY MORAN, Kansas
Michael L. Alexander, Staff Director
Nicholas A. Rossi, Minority Staff Director and Chief Counsel
Trina Driessnack Tyrer, Chief Clerk
Joyce Ward, Publications Clerk and GPO Detailee
AD HOC SUBCOMMITTEE ON CONTRACTING OVERSIGHT
CLAIRE McCASKILL, Chairman
THOMAS R. CARPER, Delaware ROB PORTMAN, Ohio
MARK L. PRYOR, Arkansas SUSAN M. COLLINS, Maine
JON TESTER, Montana JOHN McCAIN, Arizona
MARK BEGICH, Alaska JERRY MORAN, Kansas
Margaret Daum, Staff Director
Brian Callanan, 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 Portman.............................................. 4
WITNESSES
Thursday, June 30, 2011
Larry D. Walker, President, The Louis Berger Group, Inc.......... 7
Wahid Hakki, Chief Executive Officer, Contrack International,
Inc............................................................ 9
William M. Solis, Director, Defense Capabilities and Management,
U.S. Government Accountability Office.......................... 25
David S. Sedney, Deputy Assistant Secretary of Defense for
Afghanistan, Pakistan and Central Asia, U.S. Department of
Defense........................................................ 27
Kim D. Denver, Deputy Assistant Secretary of the Army for
Procurement, U.S. Army......................................... 29
J. Alexander Thier, Assistant to the Administrator and Director,
Office of Afghanistan and Pakistan Affairs, U.S. Agency for
International Development...................................... 30
Alphabetical List of Witnesses
Denver, Kim D.:
Testimony.................................................... 29
Prepared statement........................................... 93
Hakki, Wahid:
Testimony.................................................... 9
Prepared statement........................................... 59
Sedney, David S.:
Testimony.................................................... 27
Prepared statement........................................... 90
Solis, William M.:
Testimony.................................................... 25
Prepared statement........................................... 67
Thier, J. Alexander:
Testimony.................................................... 30
Prepared statement........................................... 103
Walker, Larry D.:
Testimony.................................................... 7
Prepared statement........................................... 53
APPENDIX
Picture referenced by Mr. Walker................................. 58
Additional statement from Mr. Walker............................. 109
Certificate referenced by Mr. Hakki.............................. 151
Questions and responses for the Record from:
Mr. Walker with attachment................................... 152
Mr. Hakki.................................................... 155
Mr. Solis.................................................... 158
Mr. Denver................................................... 165
Mr. Sedney................................................... 188
Mr. Thier.................................................... 209
Report referenced by Mr. Sedney.................................. 234
AFGHANISTAN RECONSTRUCTION
CONTRACTS: LESSONS LEARNED AND ONGOING PROBLEMS
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THURSDAY, JUNE 30, 2011
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 10:01 a.m., in
Room SD-342, Dirksen Senate Office Building, Hon. Claire
McCaskill, Chairman of the Subcommittee, presiding.
Present: Senators McCaskill and Portman.
Senator McCaskill. I am going to go ahead and call the
hearing to order and begin my opening remarks. I know that
Senator Portman is on his way and when he gets here, assuming
he gets here before I finish, he will have a chance for his
opening statement, and if the witnesses have begun, I will ask
your indulgence to interrupt you long enough to give him a
chance to make an opening statement.
OPENING STATEMENT OF SENATOR MCCASKILL
Senator McCaskill. I have a formal opening statement that
has been prepared, but I have decided to not give a formal
opening statement and just express the reason for this hearing.
This is not the first hearing we have had in this Subcommittee
on contracting in our contingency operations, and I began
working on this problem almost the day I arrived in the Senate.
I traveled to Iraq to do nothing but look at contracting
oversight because I could not figure out how in the world
things have gotten so out of control in terms of contracting in
Iraq. I went over to Iraq and I realized why they had gotten
out of control. Contracting representatives in each unit were
just the low man on the totem pole that had been handed a
clipboard.
There was no training. There was not sufficient effort made
on sustainability. There were decisions made that, frankly,
were made with an almost myopic look at the mission and not a
realistic look at security and sustainability and competency in
terms of available personnel to continue whatever money we were
spending on reconstruction.
I always point out the Logistics Civil Augmentation Program
(LOGCAP) contract is probably, if you look up an example, the
initial LOGCAP contract, and look up everything wrong with
contracting, that would be the poster child. People may not
remember that the estimates for that contract for the first
year were supposed to be under a billion dollars. In the first
year, that contract cost our country $20 billion. It is just
one example.
I want to try to focus today on reconstruction contracting,
and the sad thing about this hearing is, I had been hopeful
back in 2007 that by this year, we would have done a lot to
overcome some of the problems in reconstruction contracting in
theater. This hearing does not make me feel good about the
progress we have made. There has been some progress, but the
American people cannot afford this anymore.
In next year's budget, the President has requested $17.3
billion for reconstruction contracting in Afghanistan. Now,
that is a big number if the United States of America was
humming along. That is a big number if our roads were not
crumbling because we do not have the money to fix them. That is
a big number if we are not looking at cutting many programs
that are essential to the health and welfare of this Nation.
But in light of the fact that we are facing the fiscal
problems we are in this country, that is an enormous number
that is going to go into the country of Afghanistan to build
roads, to build public structures, whether they are schools or
other public structures, and I think it has now become an
urgent matter for this Congress to look seriously at whether or
not that kind of reconstruction money is absolutely essential
to our mission in Afghanistan.
I think if you look at the lessons that we have learned in
the past in Afghanistan and Iraq, that the government has been
very slow to apply those lessons, and I am not sure that the
implementation of Afghan First is leading to the kind of
outcomes that would make any American proud.
I am not sure that the government and contractors have
taken the steps necessary to provide the transparency and
accountability that we have to demand in light of the
incredibly difficult decisions that we are faced with in the
U.S. Congress in terms of our fiscal picture in this country.
This is the tenth year and we have spent over $61 billion
total already on reconstruction, and the vast majority of the
spending has been through contractors. The Defense Department
(DOD) and the U.S. Agency for International Development (USAID)
are primarily responsible for this and part of our problem that
we will talk about today is that no one is totally responsible.
There is no one that I can really find that wants to say, I am
responsible.
In fact, I will be surprised if I do not hear testimony
today from people that say, I am not really responsible. It is
time that somebody is responsible for money that is spent on
roads that will not ever be sustained and for buildings and
electrical power facilities that are built that no one there
even knows how to use, much less access the power that
supposedly we are going to provide.
It is time for someone to step forward and say, I am
responsible, I am the one that is planning these projects, I am
the one that is certifying sustainability. The Department of
Defense is not even certifying sustainability, and we all know
that the Commander Emergency Response Program (CERP) funds
which originally--I remember at the beginning we talked about
CERP and here is what CERP was supposed to be.
It was supposed to be almost like walking around with
money. It was supposed to be money that was used by various
units that were on the ground in Iraq to--the example I was
given, I will never forget, in one of my very first Armed
Services hearings. Well, Senator, this is if one of our
sergeants is on the ground in a community and he knows there is
a really good guy who is stabilizing the neighborhood and the
window of his store is broken, and we need that sergeant to be
able to say to that store owner, I have the money right here to
fix your window.
That provides goodwill, it provides stability, it is the
kind of thing that wins the hearts and minds, it gives people a
sense of community. We have gone from broken store windows to
hundreds of millions of dollars of construction projects in
CERP.
And meanwhile, no one has really taken ownership of what is
the difference between the responsibilities of AID, which
traditionally has done big construction, and the
responsibilities of the Department of Defense that is now
engaged in seriously large projects for construction.
Sustainability is going to be the key issue that we are
going to talk about today, and it is going to be something that
I think is very important that we get our arms around.
Inadequate contracting and program management practices, once
again, we are going to cover that ground. Contractors
overseeing contractors, and obviously transparency, and
insufficient contract personnel, which is another key problem
that we have not yet dealt with.
Are the contracting officer representatives (CORs) within
the units getting better training now? Yes, they are, and I
congratulate General Caldwell and others that have worked on
doing better training. But we are still not where we need to
be. Poor coordination of interagency efforts. I do not think
anybody in this room is going to have a strong argument that
the coordination has not been what it should be.
Continual personnel turnover. We are getting a 1-year
turnover on AID right now, and I know that is probably because
it is very difficult to get folks that want to go to
Afghanistan for 2 to 4 years. But when we embrace a constant
turnover like we have in theater, we are going to have bad
things happen. We are going to have problems that are going to
occur because the beginning of the project is not going to have
any idea what the end of the project looks like and vice versa.
Security challenges obviously remain a big problem. And I
think that we are going to have to try to dig through all those
problems today. And I will tell you that if we do not get some
strong substantive answers that every dime that is being spent
in Afghanistan on reconstruction is being spent wisely and
being spent with the kind of oversight that we would expect if
we were building a highway down the road in the United States
of America, then I think it is time that we focus on the
mission where we are training security forces and we are
working to provide stability against the Taliban and the kind
of structure that we need to support going after al-Qaeda on
the border of Pakistan and Afghanistan.
Perhaps it is time to shut down $17 billion worth of money
going for reconstruction projects when our track record really
stinks when it comes to reconstruction projects.
Now, I hope that you all are going to convince me that I
have become cynical and angry and frustrated about the way we
are spending money in theater, and I want to tell you, I am
looking for good news and I hope we hear some today. But I
think it is really time for a gut check because I have too many
people in Missouri saying, why can't we fix this road?
And then I look at the projects that we are building in
Afghanistan and it is very hard to explain to them why we
cannot fix that road, because we cannot afford it. But yet, we
can throw money away in Afghanistan on projects that are
clearly not sustainable, and if anybody would have spent any
time thinking about it in the first place, they would have
realized that. And that kind of planning has to begin happening
and that kind of accountability has to be present.
I am pleased that we have a number of witnesses today that
are going to testify to contracting in theater. Senator Portman
is here. I will give him time to get settled. We will continue
to do these hearings and continue to provide oversight in this
arena. I think that it is a place we need to draw the country's
attention.
I think we need to draw Congress's attention. I think we
need to certainly bring the attention of the Department of
Defense and the Department of State to these problems and we
need to begin to do one of two things. Do it right or stop
doing it. I will turn it over to Senator Portman for his
opening statement.
OPENING STATEMENT OF SENATOR PORTMAN
Senator Portman. Thank you, Madam Chairman. I appreciate
your holding the hearing today. It is an incredibly important
topic given the resources that we are devoting to Afghanistan.
I was there about a month or so ago and had the opportunity to
meet not just with some of our brave soldiers and Marines, but
also with some of the Federal Government agencies that are
onsite and some of the contractors.
I know this Subcommittee, under your leadership, has done
some of the most diligent and searching oversight of Afghan
reconstruction and development over the last several years, and
again, it is critical work and I am pleased to now join you as
your Ranking Member.
The hearing is especially timely as it comes on the heels
of a major announcement last week concerning the U.S. mission
in Afghanistan. The President announced, as you all know, his
intention to withdraw the full complement of the 30,000 so-
called surge troops by September 2012, with the first 10,000
coming out by the end of this year.
I have noted my concerns about the lack of clarity
regarding some of the strategic objectives in Afghanistan, but
what is clear is that we are now in a critical planning window
with respect to our military and our civilian mission in
Afghanistan. Today we have over 154,000 private contractors
working for the Defense Department, State Department, AID in
Afghanistan.
The issue of effective and efficient use of those
contractors assumes a new urgency as we near both the surge
drawdown that I have talked about, and also the planned 2014
transition to Afghan-led security. It is also, of course, a
timely discussion given our fiscal problems and the fiscal
crisis at our doorstep.
Over the past 9\1/2\ years, our military service men and
women have done everything they have been asked to do and more
in Afghanistan. They have performed remarkably well, and again,
with bravery and extraordinary skill under some very tough
conditions.
Given our reconstruction efforts in Afghanistan, which are
incredibly important to the sustainability of this effort, we
need to be sure that what we are doing is right, be sure that
we are consolidating some of the hard-earned gains that we have
achieved.
The counterinsurgency strategy that was outlined by
President Obama has been to clear, hold, and build, and
ultimately transfer. And as we have reached the transfer stage
in many areas of the country, the objective, I think, has to be
leave behind a more functioning society and economy, more
resilient local governing structure, and a stable, more
constitutional and stable government in Afghanistan, one that
is capable of withstanding the radical Taliban and other
elements.
So one of my questions, Madam Chairman, in this hearing
today is going to be talking about that and the sustainability
of some of the efforts. We have invested heavily, as Americans,
to achieve this goal of building up Afghan institutions and
fostering economic development and job creation since 2002.
Congress has appropriated over $60 billion for relief and
reconstruction in Afghanistan, the great majority of which has
been channeled through private contractors. Now we know from
experience in Bosnia in the 1990's and more recently in Iraq
that a reduction in troop levels does not mean a drop in
contractor activity.
In fact, sometimes it has been an increase. In fact, there
has been an increased reliance on contractors to fill some of
the support and logistical roles once performed by the military
in those two instances.
Eventually, however, the contractor presence will also
decrease as we move our support from large scale off-budget
spending to more direct on-budget aid to the Afghan government
directly. And this is why, again, our reconstruction strategy
must focus now more than ever on ensuring that Afghans are
prepared to sustain what we have helped to build.
This means we must consider not only, for example, how many
additional schools and health clinics we construct, but also
whether Afghanistan will have teachers and medical
professionals to sustain those institutions. It means we have
to consider not only the megawatt output of a new power plant,
but whether Afghans have the resources and expertise to manage
the long-term operation and maintenance of those power plants.
On a related note, as we encourage more contracting with
local Afghan firms under the Afghan First Policy, we must
consider seriously revamping the process for vetting
contractors to ensure that they do not pose security risks.
Reconstruction is a critical component of our counterinsurgency
strategy and reconstruction dollars must never be diverted to
support terrorists or insurgent elements, and that is one of
the concerns that I have as we go through this Afghan First
Policy.
We should have no illusions that Afghanistan will
immediately be prepared to stand alone, unsupported by friends
and allies when the large scale U.S. military does conclude.
According to a World Bank estimate, as much as 97 percent of
Afghanistan's gross domestic product (GDP) is currently derived
from spending related to international military and donor
community presence.
Think about that. Ninety-seven percent of their GDP. That
reliance will not simply disappear with the drawdown of troops.
But our reconstruction efforts must be directed to empowering
Afghans to regain responsibility and control over their own
future. So we have plenty of challenges and I look forward to
the hearing today, and specifically, the discussion, Madam
Chairman, about reconstruction contracts, lessons we have
learned and some ongoing problems. Thank you.
Senator McCaskill. Thank you, Senator Portman.
Let me introduce--if we could have both of our witnesses,
Mr. Hakki.
Mr. Hakki. Hakki.
Senator McCaskill. Hakki. Yes. Would you mind taking a
seat? We are ready to begin. Did I pronounce it correctly? Is
it Hakki?
Mr. Hakki. Hakki.
Senator McCaskill. Hakki. That will be easy for me to
remember. Hakki.
Let me introduce the two witnesses. Larry Walker is the
President of the Louis Berger Group, an international
consulting company which holds large contracts with USAID in
Afghanistan. In that capacity, Mr. Walker is responsible for
providing strategic direction for the firm and ensuring the
company has adequate resources and support for the successful
completion of its programs.
He also oversees the development of strategic operating
plans for each business unit, and oversees the implementation
of company-wide initiatives. Thank you very much for being
here, Mr. Walker.
Mr. Hakki is currently the Chief Executive Officer (CEO) of
Contrack International, Inc., which holds millions of dollars
of contracts with the Defense Department in Afghanistan. Since
joining Contrack in 1994, Mr. Hakki has been responsible for
overseeing operations at the U.S. headquarters office.
His responsibilities include oversight of U.S. material
procurement, engineering review and quality control, shipping
logistics and monitoring the staff of engineers and
administrative personnel. Mr. Hakki holds a Master's in
structural engineering from Penn State and has been in the
construction business for nearly 30 years.
I look forward to both of you coming today. I am glad you
are both here and I look forward to your testimony. It is the
custom of the Subcommittee to swear in all witnesses that
appear before us, so if you do not mind, I would like you to
stand and raise your right hands.
Do you swear 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. Walker. I do.
Mr. Hakki. I do.
Senator McCaskill. Thank you both. Mr. Walker.
TESTIMONY OF LARRY D. WALKER,\1\ PRESIDENT, THE LOUIS BERGER
GROUP, INC.
Mr. Walker. Chairman McCaskill, Ranking Member Portman,
Members of the Subcommittee, I am Larry Walker, President of
the Louis Berger Group (LBG). I appreciate the opportunity to
provide our firm's perspectives on the Gardez-Khost Highway
project and our observations regarding reconstruction projects
in Afghanistan.
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\1\ The prepared statement of Mr. Walker appears in the appendix on
page 53.
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The Louis Berger Group is an international consulting firm
of approximately 3,000 employees worldwide. We provide diverse,
multi-disciplinary expertise including engineering, program and
construction management, and economic development services.
Many of our projects are carried out in some of the most
fragile and challenging regions of the world.
LBG first began working in Afghanistan in the 1970's, and
in December 2001, the company was the first engineering firm to
enter Afghanistan after the September 11th attacks. Our work in
Afghanistan has consisted mainly of reconstructing and
rehabilitating Afghanistan's physical infrastructure.
We have successfully reconstructed more than 2,000
kilometers of paved roads, provided nearly 40,000 jobs to
Afghans, and trained thousands more. LBG's USAID-funded
projects have irrigated more than 90,000 acres of land and
constructed more than 90 schools and clinics to seismic 4
standards.
The improved road network has dramatically decreased
transit times, which has spurred economic development along the
road corridors and improved access to education and health
care. I have traveled these roads myself and I can truly say
that the work has improved the quality of life in Afghanistan.
The Gardez-Khost Highway is a critical commercial link
between Pakistan and Afghanistan. The road provides a reliable
transportation route from the border province of Khost to the
capital city of Kabul providing improved access to government,
trade, health care, and education.
I want to say a few words about the circumstances
surrounding the reconstruction of this road. As the picture\2\
accompanying my written statement shows, the topographical and
geological features of this area where our reconstruction work
has occurred is some of the most challenging we have faced in
Afghanistan.
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\2\ The picture referenced by Mr. Walker appears in the appendix on
page 58.
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The degraded security environment has made this the most
dangerous project our company has attempted. On this project
alone, we have suffered 21 killed, 51 injured, and 4 missing.
Security as a percentage of the overall project cost is around
30 percent. To compare, in other parts of Afghanistan, security
costs average oftentimes 8 to 10 percent of overall project
cost.
On the Gardez-Khost road alone, our project has experienced
147 direct attacks, 108 IEDs, and 40 mine and other ordnance
explosions. My point is that the traditional metrics by which
the government measures the efficacy of projects and contract
performance do not paint the full picture. The lack of existing
infrastructure or technical capacity, the inexperience of
Afghan companies, the need for capacity building, and the
defacto war zone all work against measuring success just
against scope, schedule, and budget.
Sustainability is critical to ensuring the long-term
benefits of construction projects for the Afghan people and to
protecting the significant investment made by the American
taxpayer and other donors. Even before the Afghan-First policy
existed, the Louis Berger Group made a significant effort to
hire locally and incorporate sustainability concerns into the
training we provide our subcontractors and their employees and
we continue to do so.
This approach has been at the heart of LBG's work in the
developing world for more than 40 years. In the long run, the
ultimate sustainability of many projects in Afghanistan will
turn on the ability of the Afghan economy to generate enough
revenue to provide the workers and materials that will be
needed in order to maintain and sustain projects we and other
companies have completed.
The security environment increases the importance of
communications between the contractor and the government. We at
LBG have worked hard to communicate with the contracting
officers, technical staff, as well as the U.S. military to
properly address security-related issues as they arise.
The Louis Berger Group is honored to support USAID and
other clients in the critical efforts to improve Afghanistan's
physical, social, and economic infrastructure. We have met with
the Commission on Wartime Contracting on four occasions to
discuss reconstruction, and most recently, to discuss the
recommendations found in their recent report.
We support several of the Commission's recommendations
including integrating contract support into operational plans,
expanding and improving the qualifications and experience level
of government acquisition personnel, expanding competition
requirements, and requiring improved contract administration
and oversight of contingency contracts.
LBG believes these would all be constructive improvements
in the contracting process. We applaud the efforts of the
Commission and the Subcommittee to improve the manner in which
the U.S. awards and oversees its contracts in overseas conflict
environments, and its emphasis on sustainability of our
reconstruction programs.
At the Louis Berger Group we strive to deliver quality
construction in a timely fashion and within the funding
parameters for each project. The company and our employees do
this work because we have seen the tangible improvements in the
lives of the Afghan people that result from our work.
Thank you.
Senator McCaskill. Thank you, Mr. Walker. Mr. Hakki.
TESTIMONY OF WAHID HAKKI,\1\ CHIEF EXECUTIVE OFFICER, CONTRACK
INTERNATIONAL, INC.
Mr. Hakki. Chairman McCaskill----
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\1\ The prepared statement of Mr. Hakki appears in the appendix on
page 59.
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Mr. Hakki. OK. Chairman McCaskill, Ranking Member Portman,
distinguished Members of this Subcommittee. On behalf of
Contrack International, I thank the Subcommittee for the
invitation to share some of our experiences and lessons learned
as part of the reconstruction efforts in Afghanistan over the
past 9 years.
We share your interest in examining how the government can
bring greater efficiency, transparency, and accountability to
the construction contracting process. We believe these goals
can help everyone deliver projects that are on schedule, within
budget, and sustainable.
Since 1985, Contrack has operated as a privately owned U.S.
corporation headquartered in McLean, Virginia. I joined the
company in 1994 as Executive Vice President and was appointed
CEO in December 2010.
Contrack has offices in Egypt, Qatar, Bahrain, and
Afghanistan. We provide engineering, procurement and
construction services, as well as facilities operations and
maintenance (O&M). Our focus primarily is on military,
institutional, and infrastructure projects throughout Northern
Africa, the Middle East, and Central Asia.
Over the past 9 years, Contrack has completed more than
$1.5 billion worth of fast track design-build projects in
Afghanistan for the U.S. Army Corps of Engineers (USACE) and
the Air Force Center for Engineering and the Environment
(AFCEE). Working as a prime contractor, we have constructed ANA
Brigade camps, airfields, entry control points, ammunition
supply points, bulk fuel storage and supply systems, forward
operating bases, and other facilities.
We were also awarded a contract for the permanent
operations and maintenance services required to perform O&M
work in numerous ANA and ANP sites throughout Afghanistan.
Contrack's business model in Afghanistan is somewhat different
than most contractors in that we self-perform the majority of
our work, rather than acting purely as a construction manager
of major subcontractors.
Contrack has been a vital partner with the Corps of
Engineers (COE) in accomplishing the AED's mission statement to
provide sustainable development projects for the Afghan people
that employ the populace, build skilled human capital, and
promote the future stability of Afghanistan.
In order to utilize the local labor force, the majority of
Afghans must be trained in a skill. To accomplish this task
Contrack set up a training center to train and educate the
Afghans on a variety of construction trades. To date, we have
graduated more than 3,000 students, most of whom are still
employed by Contrack.
As a prime contractor, we also try to foster relationships
with local firms so they can succeed. This requires ongoing
training and guidance concerning U.S. technical and contractual
requirements and obligations. Under the challenges that we are
still facing over there, we have here the contracting with
foreign contractors.
Afghan and international contractors often receive
contracts which are more than they can handle. Many of them are
also not familiar with U.S. contract requirements.
Unfortunately, we share the perception in the international
community that there is an uneven playing field and that
foreign contractors typically are not subjected to the same
standards as U.S. contractors.
These include safety, ethics, bonding, and cost accounting
requirements that are established both to protect workers and
interests of the U.S. Government. We believe that the Corps of
Engineers has begun recognizing the risks in awarding projects
to foreign firms based on low price only.
For example, the government recently awarded a MATOC
contract to 14 firms, all of which are American firms. Future
task orders will be competed among these 14 firms only. This
promotes full and open competition with qualified construction
contractors to deliver the best value for taxpayers' dollars
invested in Afghanistan.
We appreciate the difficulties faced by the government and
commend the professional manner in which so many contracting
personnel perform their work in a hostile region. However, the
frequent rotation of COE field staff has created a cascade of
challenges to the contractor and the government.
For example, delays in resolving contract modifications due
to government contracting officers and related personnel causes
delays in payment to the contractors. Similarly, high turnover
of government personnel in the field causes delays in
submission of the final CCASS evaluations.
Quality at the job site is overseen by the USACE's quality
assurance (QA) representatives. COE QA representatives are
experienced in other trades, but lack sufficient training to
understand and enforce the technical requirements of the
contract they are assigned to. Lack of partnering between the
contractor and the COE is another unfortunate result of the
personnel turnover.
Contrack has participated in numerous partnering sessions
with the COE in other regions such as Qatar, Bahrain, and
Egypt. We believe these sessions vitally contributed to the
success of the projects in those regions. However, in 9 years
in Afghanistan, and after completing over 50 projects, we have
had only one partnering session with the COE.
High turnover of government personnel exacerbates lack of
coordination between different government agencies in charge of
the projects and their respective end users. This often causes
delays to the project and cost overruns. Sometimes the end
users' requirements are not fully understood by the Corps.
For example, on design-build projects, early partnering
sessions involving the contracting agency, the contractor, and
the facilities end user would really help parties to achieve
the end users' design goals.
Transportation and logistics. The high volume of cargo
creates delays at the base entry control points. Material and
equipment convoys are at the mercy of the transporter.
Meanwhile, border politics that can block or delay shipments of
material to the project sites make matters even worse.
Working with the Afghan ministries is a challenge. The
Afghan ministries change procedures on a regular basis.
Requirements for tax exemption documentation, approval of
visas, et cetera, lack of stability is further compounded by a
thin staff that lack the cross-training.
New and constantly changing Presidential Decrees further
increase the uncertain risk environment. For example, the
latest ban on private security firms will cause disruptions,
delays, and safety problems.
We believe that the foundation of a good project is a well-
coordinated design. Such design must meet the general
guidelines by the COE and address the end users' needs. On a
project in Bagram Air Base, we were tasked to design and build
the main entry control points.
We had our designers onsite for a meeting with the COE and
the Force Protection staff to agree on a design that satisfied
everyone's requirements. This eliminated a lengthy review
process and clarified the objectives of the project. All of
these partnering efforts resulted in a successful project
completed on time and on budget.
I appreciate this opportunity to share our experience in
Afghanistan and would be pleased to answer any of your
questions.
Senator McCaskill. Thank you both very much.
Mr. Walker, I want to talk a little bit about the road. I
understand where the road is located. I understand the
strategic planning that went into this particular road, but I
am trying to figure out whether or not someone along the way
should have pulled the plug. Let us talk about the initial
price tag of the road, and we are talking about now the
highway, the Gardez-Khost Highway that goes down through rough
territory and significant elevations and covered in snow in the
winter and, frankly, a very challenging highway project under
the best of circumstances.
Clearly, very difficult under the circumstances, especially
considering you are going through some significant Taliban real
estate. The initial price was $69 million. We are now up to
$176 million for 64 miles of highway. What went wrong in terms
of the initial price tag for this highway? Why are we barreling
toward three times as expensive as it originally was intended,
and of that price tag, $43.5 million of that is security.
So what we are seeing is that a third of the cost of
building this is, in fact, security. Did no one have any idea
that was going to be the case before it began?
Mr. Walker. When we started with the project, the incidents
of violence were not nearly as high as they were as we got into
the project. The original estimate of security cost as a
percent of the contract was around the 12 percent level, as I
recall.
The challenge was, as we got into it and probably a year
into it, the attacks really began to increase and the security
situation really began to significantly deteriorate. At the
time--and we have worked on roads throughout Afghanistan for
many years.
At the time that the project was initiated, there was no
reason to assume that the security conditions would deteriorate
the way they did, recognizing that the possibility always
existed, we have all been working over there and it is a very
fluid and volatile situation. But no one anticipated the level
of violence and the level of attacks that the project was going
to sustain.
Senator McCaskill. And who made the decision as to what the
level of attacks would be? I mean, was that the military that
decided the attacks--because it would be hard not to guess that
this is going to be significantly different than many of the
other highway projects just by sheer--the fact of where it is
located.
Everyone knows. Frankly, the reason they wanted the road in
the first place is they wanted to clear out the hornet's nest
of Taliban in the area. So I am trying to figure out who I can
talk to that misjudged the security environment by so much.
Mr. Walker. I am not sure it is a question of misjudgment.
I can appreciate that perspective that it certainly might
appear that way. The security in the country in general really
began to deteriorate. At the same time, when looking at
security in Afghanistan, it is not one single footprint.
Clearly, the north and the west is a different security profile
than what we have in the east and the south.
When we began work on one road in the south, for example,
working in the same type of conditions, other roads that we
have worked in that area--as a matter of fact, the Kabul-Gardez
road, which is the other extension of Gardez-Khost, we did that
road. We did not have nearly the security situation that
developed later into the program.
So our historic experience was certainly at a serious level
of security, but not to the extent of what we are experiencing
now.
Senator McCaskill. Is it typical that you would have as
many subcontractors as you have on this project? Is this
typical?
Mr. Walker. Yes.
Senator McCaskill. So you would typically have 24 first
tier subs and 147 second tier subs on projects that you would
work?
Mr. Walker. The 24 first tier subs, most of those subs
would be very small subcontracts.
Senator McCaskill. Give me an example. I am trying to
figure out, for 64 miles, you have 167 different subcontractors
for 64 miles. What in the world are all those subcontractors
for?
Mr. Walker. You could have a small Afghan subcontractor
whose job would be clearing ditches of debris. Another Afghan
subcontractor who would build--makes new walls on the approach
to a bridge. You would have another subcontractor who could
work on the culverts with the primary and first tier
construction firm.
There are many small aspects to a construction project. One
of the things that we wanted to encourage was the use of
Afghans as much as possible, the use of Afghan firms.
Senator McCaskill. How many of these subcontractors are
Afghan companies?
Mr. Walker. Without looking at the list I cannot say, but I
would guess it is the majority of them.
Senator McCaskill. Well, we would love to get the exact
number.
Mr. Walker. We can get you that for the record.
Senator McCaskill. That would be very helpful. I am most
concerned about the money that was paid on security to folks
that there is every indication that they are the bad guys. Is
this a reality that America has to accept, that in order for us
to do things for the Afghan people, that we have to pay the
people that are killing us?
Mr. Walker. I do not believe that is the case. Certainly on
this road, with the security firm that we have providing
security on the road, all of the local Afghan security
providers are placed into the military's biometric data system
to check against the bad guy list.
If someone were to turn up, the military, through USAID,
would get back to us and say, We have a problem here.
Senator McCaskill. Have there been any you have had to
remove because of that?
Mr. Walker. I am not aware of any.
Senator McCaskill. Mr. Arafat.
Mr. Walker. Mr. Arafat, his information, as I have been
informed, was put into the biometric database and there was no
indication that he was a person of interest. As a matter of
fact, Task Force 2010 specifically told us that he was not on
their list.
Senator McCaskill. But he was fired?
Mr. Walker. Pardon me?
Senator McCaskill. He was fired?
Mr. Walker. Consent to use him on the project was
withdrawn, so his employment was terminated.
Senator McCaskill. And he was getting a million a year?
Mr. Walker. No, ma'am. He was responsible for providing
drivers and vehicles. He did not provide security, as I
understand it. His responsibility was to provide drivers and
vehicles, which he did. The cost of those vehicles and drivers
and fuel was $40 a day per vehicle. We compared that against
similar charges for running vehicles and that was consistent.
The charge of those vehicles was a little bit over a million
dollars.
Senator McCaskill. OK. I have additional questions that I
will ask in the next round, but I will now turn it over to
Senator Portman.
Senator Portman. Thank you, Madam Chairman, and again, I
thank the witnesses for being here today.
Mr. Walker, I think this hearing should be forward looking,
but I think there are some questions that should be asked and
some assurances, I hope, can be given with regard to steps you
have taken, not so much with regard to the road--I do have some
questions about that following on the Chair's questions, but
with regard to some of the over-billing practices and what kind
of internal audits or other controls have been put in place.
In November of last year, my understanding is that your
firm received the largest fine ever imposed on a contractor
working in a war zone of $18.7 million in criminal penalties
and $50.6 million in civil penalties for over-billing.
And as part of that deferred prosecution agreement, your
company admitted that from 1999 to 2007, former executives
submitted false, fictitious, and fraudulent overhead rates for
indirect costs and correspondingly resulted in overpayments by
the government in excess of $10 million. Federal prosecutors
charged in addition to that between 15 and 20.
But what I want to ask today, and give you a chance to
respond to is, what assurances can you give the Committee that
these kinds of abuses will not occur in the future with
taxpayer dollars? Have you improved internal audit controls?
How frequently do you plan to have your billing practices
reviewed by outside accounting firms? What safeguards have you
put in place?
Mr. Walker. In 2006, we noticed a problem in our overhead
and we initiated an internal review, and in June 2007, we
initiated a refund to the U.S. Government of $4.3 million. In
August 2007, the Justice Department (DOJ) let us know that we
were under investigation and intervened with us at that point.
Being that we had already seen that there were some
problems in the overhead structure, we, of course, immediately
pledged our full cooperation. We brought in an outside
accounting firm to do a forensic analysis of what was going on
in the overhead structure. We shared that completely with the
Department of Justice.
And what was determined was costs that were associated with
one overhead pool were inappropriately moved to another
overhead pool. That overhead pool was the overhead pool for
U.S. Government overseas work. That was absolutely wrong.
In looking at that situation and recognizing that we had
that problem, we worked with the Department of Justice to,
again, identify what the damages were to the U.S. Government
and certainly volunteered our cooperation to initiate the
refunds.
The individuals who were associated with that improper
practice are no longer with the firm. We initiated a complete
restructuring. I took over the presidency of the firm about
2\1/2\ years ago and initiated a complete restructuring of the
controls and policies and procedures in the company.
I created a much more robust Compliance and Ethics
Department in the company. We put the entire company through
training, the Accounting Department, through many, many types
of training. We put in place scores of new controls. We brought
in yet another outside accounting firm to test those controls.
It is one thing to have policies and procedures; it is
another thing to make sure that they work. So I brought in
another independent accounting firm to test us to see how we
are doing because we need to make sure that not only does the
policy and the control exist on paper, but that it exists in
the culture of the company. And so, we have been in that
process.
As part of the DPA, as you are aware, we are under a
monitor and we share everything, of course, with that monitor,
all the training programs, all the testing to provide assurance
that the controls that we put in place to protect the U.S.
taxpayer.
We have shared this from day one with the Justice
Department, with USAID, many presentations, and we have just
laid everything open bare to make sure that we are as
transparent as we can possibly be in this situation.
Senator Portman. Well, thank you. I am glad to have given
you the opportunity to respond. Obviously what this Committee
is concerned about is that there are ongoing efforts to have
both internal and external reviews, and through the monitor and
other safeguards, we want to be sure that, as I said earlier,
this incredible expenditure of taxpayer funds is being properly
spent. Given where we are in Afghanistan, it is all the more
important.
Let us go to the specific project, if we could, that you
discussed with the Chair and that is the 64-mile highway that
has now cost about $121 million. Final price tag, I am told, is
expected to reach $176 million, or about $2.8 million per mile.
Cost overruns, as I look at this, have now exceeded 100
percent. I do not know if that is accurate or not, but that is
the way I read the numbers.
In your testimony, you attribute this to the security
environment. You have responded to the Chair's questions about
the security environment. I guess I would ask you a question,
in addition to the security issue, can you tell us what is the
cost overrun excluding, security costs?
Mr. Walker. When Senator McCaskill had mentioned $69
million, I would like to clarify it a little bit. That was our
estimate of what we thought at the time it would cost to build
that road, the construction cost. The bids that came in and the
firm that won the contract, who was the low bidder, came in at,
I believe it was $85 or $86 million.
That was really the starting point for us for the
construction of the road, not counting security or the
construction management over the contractor. So from our
perspective, the construction starting point is about $85 or
$86 million. And the total cost at that starting point, when
you include security and the construction management, was about
$107 million.
The $85 or $86 million that was bid by the construction
firm, the job will come in basically at that price. The
construction costs are not experiencing large overruns. The
primary driver of these costs are security. It has exceeded 30
percent. It has grown throughout the process. And it grew to
such a point that--we are not in the security business and we
saw that the security costs continued to grow as a result of
the security situation.
So last year in one of the modifications to the contract,
without prodding by USAID, but on our own volition, we told
USAID that we were going to forego profit on security moving
forward from last year. And so, we were entitled to it, but we
voluntarily chose to forego $1.4 million in profit on security
because we are not interested in making profit because of that
type of a situation, so we voluntarily decided not to.
Senator Portman. My time is running out here.
Mr. Walker. Yes.
Senator Portman. We will have a chance for further
questions in a moment, but if you could provide the
Subcommittee with the cost overrun data, that would be helpful.
You just said the primary driver of these costs are security-
related. What we would be interested in knowing is which of
those costs are not security-related, understanding what you
said about security and the fact that there is a change in the
security environment in the country as a whole. But if you
could give us the data on cost overruns that are not security-
related? If there are none, we want to hear that. If there are
some, we want to hear what they are and why.
Mr. Walker. Be happy to, Senator.
Senator Portman. And there is, as I understand it, because
of the basis of the contract being on a cost-plus basis, I
assume there would be a profit involved. So we want to hear
what those cost overruns are. Thank you, sir.
Senator McCaskill. Let us just get an overview here.
Approximately how many different contracts does your company
have in Afghanistan, Mr. Walker?
Mr. Walker. The largest one is the IRP IQC contract that we
hold in joint venture with Black & Vetch.
Senator McCaskill. Which is for all the highways, all the
roads?
Mr. Walker. Not all the roads. The roads are being executed
under different contract mechanisms, but our responsibility has
been roads. So under the IRP contract, road task orders, I
believe we have done four roads, if I am not mistaken.
Senator McCaskill. OK. And are there other types of
projects that your companies are doing besides roads in
Afghanistan?
Mr. Walker. We have some small contracts where we are a
subcontractor to some other firms on non-infrastructure. We
also have some--we have had a couple of small projects under
the AFCAP contract, but they are--I do not think we have any
current and we have had just a handful of those.
Senator McCaskill. Mr. Hakki, you indicated most of the
work you have done has been under the aegis of work with the
Army Corps for the military as it relates to structures either
supporting the Afghan police, the Afghan national army, or the
U.S. military.
Mr. Hakki. Correct, ma'am.
Senator McCaskill. Have you done any projects that would be
considered civilian infrastructure projects, electrical plants,
health centers, schools, anything of that nature?
Mr. Hakki. No, we have not, ma'am.
Senator McCaskill. OK. Let us talk about oversight. I was
shocked in your testimony, Mr. Hakki, when you said in 9 years
you had one meeting with the Corps of Engineers. For both of
you, how often do you see USAID officials, Mr. Walker, at the
Gardez-Khost project? How often are they there?
Mr. Hakki. I am sorry, Senator. The meeting I was talking
about was a partnering meeting, not normal regular meetings. We
have regular meetings with the Corps in country on----
Senator McCaskill. Partnering like the planning meeting?
Mr. Hakki. Partnering planning meetings where we have top
executives from both agencies, along with the end user, and
they meet for a whole day or perhaps 2 days in a remote
location and they discuss the strategy and the partnering for
the whole project.
Senator McCaskill. And sustainability, I assume?
Mr. Hakki. And sustainability. For that, we have only had
really one in Afghanistan, but as far as regular meetings with
the clients, we have had those on a regular basis.
Senator McCaskill. I understand. What about oversight on
your end, Mr. Walker? How often does USAID show up onsite?
Mr. Walker. In the projects that we have around the
country, they definitely come in. One of the restrictions that
USAID works under is the restriction for being able to move in
the country. And I have known quite a number of USAID personnel
who want to get out more than they are allowed to.
They do come to the case of Gardez-Khost, USAID does come
out to the road. They are forced to travel under very
restrictive security restrictions such as movements in MRAPs,
for example, but they do get out. They do get out to the road.
Senator McCaskill. What about the contracting officers, the
CORs? Do you all have very much contact with CORs, either one
of you?
Mr. Hakki. Yes, we do.
Senator McCaskill. You do?
Mr. Hakki. We do, but I have to emphasize that our projects
are a lot different than the Louis Berger projects because our
projects are all inside the wire.
Senator McCaskill. Right.
Mr. Hakki. They are all inside the perimeter of the base
where most of the times, the COR's officers are there.
Senator McCaskill. Right.
Mr. Hakki. So it would be a lot easier for us to meet than
they do.
Senator McCaskill. Do you think the CORs are doing a better
job in terms of contract oversight than 4 or 5 years ago?
Mr. Hakki. They have definitely improved over the past 9
years. We have definitely seen a lot of improvement in all
aspects----
Senator McCaskill. That is good.
Mr. Hakki [continuing]. Including the government turnover
of personnel that you just mentioned. Most of them are now on
one year rotations, when initially in 2003, we used to see
people on 60 day, 90 day rotations. Now they are getting into
one year. I think there is still room for improvement there. I
think they can still increase that, but there is definitely an
improvement.
Senator McCaskill. And let us talk about bribes. I mean, I
spent some time in Afghanistan and I am hopeful that neither
one of you will test us here and not acknowledge that bribes
have been an essential part of us doing business in
Afghanistan, regardless of what we are doing.
What can you tell the Committee about bribes and the bribes
that have been paid at various places and levels, whether it is
under the aegis of security or other services that are needed
by local folks that are used to getting their piece of the pie?
Mr. Hakki. No, I can tell you, ma'am, we do not have any
part of that whatsoever. We have a very strict company policy
against bribes and we just do not participate in that. And on
several occasions, it cost us delays and we had to suffer
because we did not agree to play that game. But we really do
not.
Senator McCaskill. Mr. Walker.
Mr. Walker. We have seen no evidence of our security
personnel providing bribes. I mean, I think the casualties that
we are taking would indicate that is not something that we
sponsor or that our security provider sponsors.
Senator McCaskill. Well, I assume when the security costs
went way up, the casualties began to go down.
Mr. Walker. No, ma'am.
Senator McCaskill. The casualties have remained at the same
level even though security has increased by a dramatic fashion?
Mr. Walker. We have had, for example, 2 weeks ago, two of
our security personnel were kidnapped and taken to a local
village. They brought the villagers out and they executed them.
Whether that happened 2 weeks ago or whether it might happen 30
days from now we still have to maintain a level of security.
In ramping up the security, it is one of those unknowns. We
do not know what we may have prevented by having more security,
better security. But what we do with our security profile is to
create a security bubble and to make that as airtight as
possible so that the work can occur.
But when you move on from that bubble, you still have
infiltration to plant IEDs, to plant mines. When workers go
home, in the case of the gentlemen 2 weeks ago who were
kidnapped, they were on their way home after they had left duty
when they were kidnapped and then executed. We have to maintain
a level to allow us to get our work done.
Around 3 to 4 weeks ago, you all are probably aware of the
attack that occurred north of the road in which 36 construction
workers were killed. I believe it was a PRT road. They were
trying to use a lower level of security, as I understand it,
and the result was they could not withstand a serious assault.
So how much is our security footprint a deterrent from a
serious assault like that? I do not know if we can answer that
question.
Senator McCaskill. Right. You cannot prove what you can
prevent.
Mr. Walker. Yes.
Senator McCaskill. Well, I do not think either one of you
would say that bribing is not a serious issue in Afghanistan,
right? I mean, you are not going to tell me that?
Mr. Hakki. No, it is definitely a serious issue.
Senator McCaskill. OK.
Mr. Hakki. And it happens on a daily basis.
Senator McCaskill. Right, everywhere.
Mr. Hakki. We get threatened and we get calls to give the
bribe and if we do not, we face the consequences. Like I said,
we have been forced to suck it up and delay material delivery,
delay in normal procedures with the government simply because
we are not playing the game. We are refusing to succumb to
that.
Senator McCaskill. Right. Do you think we should have built
this road, Mr. Walker?
Mr. Walker. A couple of years ago, a reporter for the Wall
Street Journal asked me if we should have built the Kabul-
Kandahar Highway, which we had constructed. It has been under
attack. All the bridges have been damaged. And he said, it is
under such attack, was it worth building the Kabul-Kandahar
Highway in the first place?
And I said to him that they are attacking it because it is
important and if it is important, it is worth building. I think
the question is not should we have built it or not built it,
but is there a different way of building it that would get it
done quicker or lower the casualty count or lower the security
profile?
Again, when we started the road, we were at one level and
then it advanced. We built a road a few years back up to Tarin
Kowt, which is in Uruzgan Province, under the REFS contract
which was the first contract that we had, and we knew that was
going to be bad from day one. And so, we got together with the
military, I think it was the 864th Combat Engineer Battalion,
and we embedded ourselves with them.
So we had a battalion around us. They actually did the
groundwork--did the earthwork. They had their 'dozers out there
and they blazed it, and we came behind doing the asphalt work.
And we were surrounded by a battalion. There were no casualties
on that road, and Uruzgan Province was Taliban territory from
day one that the United States came into Afghanistan. That was
never----
Senator McCaskill. So why don't you do the same on this
road?
Mr. Walker. Because when we started, no one recognized that
it was equivalent to a Tarin-Kowt, and our experience working
on roads in the area indicated that it was not like a Tarin-
Kowt.
Senator McCaskill. But once you figured out it was, why did
you not go back to the drawing board and do what you had done
in the previous incident?
Mr. Walker. Senator, I think that is a great question and
my understanding with this hearing is getting to the lessons
learned, and going back to my opening statement where I said we
cannot just look at the typical metrics of scope, schedule,
budget, there comes a time when we probably should have stepped
back and said, We have to change the scope because we need to
get the road done, but maybe there is a different way of
getting that road done.
What ended up happening is we all--we went into a reactive
mode. So we have a security situation, we have to increase the
security footprint to prevent that particular situation from
happening again where we have another incident.
So I think from the lessons learned, that we have to
recognize how the security environment can change relatively
quickly in a contingency environment like Afghanistan.
Senator McCaskill. Well, it is sad to me that we are just
now talking about that lesson learned because that lesson was
learned many times in Iraq where the security environment
changes and billions of dollars worth of investment was blown
to smithereens because the security environment changed.
And I guess what I would say is that it seems this is a
long time that we have had lessons learned, and it is so
frustrating that--let me ask this last question because my time
is up. Who is the person that you would see, Mr. Walker, that
could have, in this whole enterprise of building this highway,
who is the person that should be held accountable for not
changing the way the highway was being built in light of the
security environment changing?
Not within your company, but within the government part of
this, the military or the State Department. Who is the person
that should have said, We have to go back and do this
differently?
Mr. Walker. I do not know if there is any one person, but I
do know that it is really important that we make sure that our
communication between the military, between our client, with
ourselves, is always at its best.
Senator McCaskill. Who can I blame?
Mr. Walker. Who can you blame?
Senator McCaskill. Yes. Who can I blame that we did not
change the way we were doing it sooner? Who could the American
people look to hold accountable that we have poured tens upon
millions of dollars into security not really sure where all
that money has ended up? Who is it that I should ask to come in
front of this Committee to talk to about it?
Mr. Walker. I am reasonably confident that we have
maintained controls over the money that is going to security.
Senator McCaskill. OK. I should not have added that. I am
wanting to know, who is the person--and if there is not a
person, that is the problem. Who is the person that I should
ask to come in front of this Committee and explain that they
were monitoring this expenditure of American tax dollars, that
they saw it getting out of control, and they said, ``Stop, we
need to have a meeting, we need to figure out a different way
to do this, we are going to put way too much money into this
project? '' Who is that person?
Mr. Walker. And I guess I would have to say there is not
one person who could be held to that standard. I think it is
incumbent on all of us to sit down and look, is there a
different way?
Senator McCaskill. You know what happens with all of us?
That means none of us because we do not know who we can hold
accountable and we have to figure that part out. Somebody has
to be held accountable. There has to be somebody in the whole
organization that has primary responsibility and accountability
for these projects if they are not sustained and they ended up
costing way more than they should have cost and not achieving
the objectives of the original project. Thank you very much.
Senator Portman.
Senator Portman. Thank you, Madam Chairman. Three quick
questions and I would appreciate it if we could try to go
through these quickly because there is another panel right
behind you, I know, that is already here with us.
Again to Mr. Walker, giving you chance to respond, you
talked about the highway that is under discussion here today,
the Gardez-Khost Highway, and we have talked about the security
situation and the cost overruns.
But let me give you a chance to respond to a report. This
comes from the New York Times back in May. It is a quote,
Despite the expense, a stretch of the highway completed just 6
months ago is already falling apart and remains treacherous,
end quote.
One, do you agree that parts of the highway that you have
already constructed is deteriorating, and if so, is your firm
paying for the repairs to that stretch of road, or is USAID and
the taxpayer picking up the tab?
Mr. Walker. First, I would absolutely disagree with that
reporter's assessment. The reporter was referring to one
particular crack that was on the road. If you have the
photograph that I included with the opening statement--and if
you do not have it with you, you could look at it later--on the
right-hand side of that photograph, you will see where that
crack is.
You will also see a fault line that runs down the mountain
and the crack was a result not of workmanship. It was the
result of a fault. It is there, the road goes over that fault,
and whether it is Colorado where I used to live, whether it is
West Virginia, whether it is Afghanistan, mountains move.
It was not a quality issue. It was not an issue of
workmanship. It was an issue of that fault moving. I have
spoken--we have had a senior geotechnical engineer who has been
out there taking a look at it. It goes over a fault.
Senator Portman. Who is going to pay for the repair?
Mr. Walker. In the case of it going over a fault, that is a
maintenance repair. Where there have been issues of quality, as
there is also some issue of quality, we have had the contractor
pay for that when it is their responsibility. But when a
mountain moves, it is not the responsibility of the contractor.
It is a maintenance function.
Senator Portman. To both Mr. Walker--and Mr. Hakki, we are
not going to leave you out totally here. After all, you got
your engineering degree from Ohio University.
Mr. Hakki. Yes. I was hoping you would mention that,
Senator.
Senator Portman. Yes. We are proud of that. Let us talk
briefly about Afghan First. As I said in my opening statement,
this is a policy now of the Administration I supported. Hire
Afghans first, buy Afghan products, build Afghan capacity. You
addressed this a little bit in your opening statement with
regard to the 3,000 students you say have graduated from a
training course, and you said you have local firms engaged in
some retraining efforts.
I would ask you both, how do we get Afghans engaged in the
sustainability I talked about in my opening statement? This
road, the next time there is a crack and you all are gone and
we begin our withdrawal, who is going to fix it? Can they
afford it? Do they have the technological capacity to do it?
I just would like to hear from, first, Mr. Hakki quickly.
What are you doing exactly to ensure that there will be this
ongoing support by retraining, by developing this expertise?
What are the challenges you see by this stated policy, the
Afghan First Policy, and do you see any unintended consequences
of it? And I think Mr. Walker alluded to some of those earlier.
But if you could respond to that, Mr. Hakki?
Mr. Hakki. Yes, Senator Portman. The Afghan First program
is really not something that we are very familiar with. That is
very limited to Afghan companies. We know it is there, we know
it has been fairly successful, but I really cannot comment on
that because we have not really participated in that.
Senator Portman. But the policy is to have contractors like
you hire Afghans.
Mr. Hakki. I think the Afghan First program is limited to
Afghan companies, if I am not mistaken. But that does not mean
that we are excluding the Afghans from our projects. Like I
said, we hire a lot of Afghans on our projects, we train them.
We also engage with the local Afghan subcontractors.
Senator Portman. But you do it just because you think it is
a good idea, not because there is any direction in terms of a
policy related to your contracts?
Mr. Hakki. Correct. There is a requirement in our contract
that encourages the engagement of the local labor and local
companies, but it is really not a requirement. We have taken
that way over.
Senator Portman. You would not have to do any hiring of
Afghan subs.
Mr. Hakki. Contractually speaking, no.
Senator Portman. Interesting.
Mr. Hakki. But we do that.
Senator Portman. In terms of policy----
Mr. Hakki. But we do that and it has been very successful,
and the training center that we established really was
completely out of pocket. There was no government funding
associated with the training center that we developed. It was
completely out of pocket and we thought it was a great idea
because it really addresses Senator McCaskill's concern with
sustainability. The best way to sustain these projects after we
all leave Afghanistan would be the training and the education.
The way we really did it is very simple. We hired these
students, believe it or not. We had to pay them like a daily
allowance. We had to transport them and we had to give them
actually like food while they are there.
But it is really peanuts. I mean, the cost of all that was
very little compared to the overall reconstruction process. And
in 2 to 3 weeks, we would graduate them with a simple--maybe I
can introduce this as part of the record if it is possible.
But it is a simple certificate,\1\ really, that states that
this individual has been trained for about 2 to 3 weeks on a
specific skill, and it really does not cost much, but it means
the world to this individual because it provides him with the
security and a skill and with a job that he can use long after
we leave. So that is why it has been really successful, this
whole program for us.
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\1\ The certificate mentioned by Mr. Hakki appears in the appendix
on page 151.
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Senator Portman. I look forward to talking to the
government panel afterwards. There must be some disconnect here
between the work you have done, which it sounds like successful
in terms of moving toward not just using Afghan subcontractors
and labor, but also training them for the future, and what my
understanding was, which is that should not be something that
is discretionary, but rather, part of a policy. So we will talk
more to the government panel about that.
Mr. Walker, other thoughts?
Mr. Walker. Yes. Under USAID's auspices, we have a major
and significant program of sustainability underway for roads.
Currently, we have basically an Afghan-led program where 1,500
kilometers of road under active maintenance, we have been
developing the capability of the Afghan firms, the Afghan
employees for a number of years now. And again, it is 1,500
kilometers under maintenance.
Our employees, our Afghan employees, we have moved up the
ranks so that the deputy task order manager is a local Afghan
engineer, Engineer Wali. He could take that program over
probably in another 6 months, maybe a year.
The important point about that is sustainability also means
funding, and we have worked with the Afghan Government, with
the Ministry of Public Works and the Ministry of Finance, to
establish the framework for a road authority, as well as a road
fund. The Minister of Finance has indicated that he feels it is
very important in that roads can be funded, maintenance of
roads can be funded through a fuel tax or something along those
lines.
This initiative is now on President Karzai's desk on the
decision on whether or not the authority goes under Public
Works or whether it is an independent authority. But I think it
is an example of planning for things, as we have discussed here
earlier, having some foresight into, will these roads be able
to be maintained? And I believe the answer is yes.
The crack that we talked about from the fault is being
repaired by Afghans under that maintenance task order. So I
think it is a real example of success in looking at
sustainability and protecting the investment that the United
States has made for roads.
Senator Portman. OK. Madam Chairman, if I could ask one
more quick question?
Senator McCaskill. Sure.
Senator Portman. And this is one that I think is important
to get on the record. It has to do with, in a sense, what the
Chair asked earlier about which was these multiple
subcontractors, and GAO has raised concerns about this, what
they call the excessive use of multiple tiers of
subcontractors. They talk about concerns over project
management, over vetting, over cost control.
I am going to focus on one area and that is what kind of
contract. It seems to me we are creating the wrong economic
incentives when some of these multi-million dollar contracts
are structured as cost-plus contracts. And in that case, prime
contractors actually earn more when their subcontractors spend
more. So you all would be earning more as they spend more,
rather than creating an incentive for efficiency.
Rather than encouraging subcontractors who, for example,
economize on the material cost or delivery cost, prime
contractors would actually profit from that waste at any level.
So my question to you is, do you think we ought to change it?
Do you think we ought to use fixed-cost contracts more widely,
and why would that not be feasible in some of these
reconstruction efforts? And if so, what kind of projects would
those work best on? And if you think that we should not move to
fixed-cost contracts, why not?
Mr. Hakki. Senator Portman, 99 percent of our contracts are
fixed price and we really have little subcontractors on them,
because like I said, we always tend to self-perform the
majority of the work. And I think out of 50 projects we have
done in Afghanistan, only one has been cost-plus. All the
others have been fixed price competitively bid with very little
amount of subcontractors.
Senator Portman. Fixed price for your subcontracts----
Mr. Hakki. No, fixed price for us.
Senator Portman [continuing]. Or for your contracts?
Mr. Hakki. It is a fixed price for us.
Senator Portman. And outside the wire, is that true,
outside the compounds?
Mr. Walker. Working outside the wire, it is extraordinarily
difficult to do a fixed-price contract. There are just so many
unknowns when you are dealing with mine fields on either side
of a road that you are working on.
What we have done is we have tried to blend pieces of
fixed-price in with cost-plus, and to that end what we have
done is we have created a contract modality where we have fixed
unit prices so that the only thing that would vary would be the
quantities. An example would be on the Gardez-Khost road, it
cost $4.40 a cubic meter for dirt for excavation. That holds,
and if it costs more than that, that unit price does not
change.
What changes are the quantities and the quantities are
monitored every day, every dump truck to make sure that however
many cubic meters are pulled out of a particular section are,
in fact, accounted for. So we have tried as best we can to
blend both aspects of fixed-price as well as cost-plus.
Senator Portman. So is there more opportunity for fixed-
price contracting at the subcontractor level?
Mr. Walker. If it is a smaller contract that is defined--
and that is really the key--if you can define what the work is,
then it is certainly possible.
Senator Portman. Thank you, Madam Chairman. One final thing
I want to say and that is, just as we are concerned about the
safety and security of our troops, we are for your employees
and your subcontractors and we wish them well.
Mr. Walker. Thank you.
Senator Portman. Thank you.
Mr. Hakki. Thank you.
Senator McCaskill. Thank you both for being here. We really
appreciate it and we will followup if we have any additional
questions.
Mr. Walker. Thank you.
Mr. Hakki. Thank you, Senator.
Senator McCaskill. And I want to second Senator Portman.
While our job is to oversee the way money has been spent on all
of these various contracting initiatives in Afghanistan and
Iraq, make no mistake about it. The people who have worked on
many of these projects are in as much danger as many of our
military, and we certainly wish them well and certainly mourn
the loss of people who work on reconstruction projects for our
government, as much as we mourn the loss of our soldiers who
lose life and limb in theater. So we wanted to pass that along
to both of you. Thank you for being here.
Mr. Walker. Thank you.
Mr. Hakki. Thank you, Senator.
Senator McCaskill. I will go ahead and introduce our next
panel. Our first witness will be William Solis who is the
Director, Defense Capabilities and Management Team at GAO. In
that capacity, Mr. Solis is responsible for a wide range of
program audits and evaluations, focusing on Army, Navy, Air
Force, Marine Corps, and Defense Logistic Agency programs.
His portfolio of work covers issues including operational
contract support, operational energy, urgent needs, force
protection for ground forces, in-theater supply chain
management, maintenance, transportation, sustainment, and
equipment reset. I understand that the schedule change for this
hearing was very difficult for you and I want to thank you
especially for joining us today.
David Sedney has served as Deputy Assistant Secretary of
Defense for Afghanistan, Pakistan, and Central Asia since 2009.
From 2007 to 2009, Mr. Sedney was the Deputy Assistant
Secretary of Defense for East Asia.
Prior to joining the Defense Department, Mr. Sedney was a
career diplomat with the State Department where he held a
position on the National Security Council and was the Deputy
Chief of Mission in Afghanistan as well as several other
countries. Mr. Sedney previously testified before the
Subcommittee at the April 2010 hearing on the Afghan National
Police Training.
Kim Denver is the newly appointed Deputy Assistant
Secretary of the Army for Procurement. In that capacity, Mr.
Denver manages the Army's procurement mission, including the
development and dissemination of policies, processes, and
contracting business systems. He directs the evaluation
measurement and continuous improvement actions for over 270
Army contracting offices worldwide.
As the functional career representative for contracting,
Mr. Denver oversees the recruitment, training, certification,
and professional development of the Army's contracting
workforce. He was previously the Director of Contracting for
the U.S. Army Corps of Engineers National Contracting
Organization.
J. Alexander Thier has been the Assistant of the
Administrator and Director of the Office of Afghanistan and
Pakistan Affairs for the U.S. Agency for International
Development since June 2010. Prior to joining USAID, Mr. Thier
served as Director for Afghanistan and Pakistan at the U.S.
Institute of Peace, and Chair of the Institute's Afghanistan
and Pakistan working groups.
Once again, as is the custom of the Committee, if you would
stand so I can administer an oath?
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. Solis. I do.
Mr. Sedney. I do.
Mr. Denver. I do.
Mr. Thier. I do.
Senator McCaskill. Thank you all for being here and we will
begin with Mr. Solis.
TESTIMONY OF WILLIAM M. SOLIS,\1\ DIRECTOR, DEFENSE
CAPABILITIES AND MANAGEMENT, U.S. GOVERNMENT ACCOUNTABILITY
OFFICE
Mr. Solis. Good morning, Madam Chairman, Ranking Member
Portman. I appreciate the opportunity to be here to discuss DOD
contract oversight in Afghanistan and the vetting of non-U.S.
vendors by DOD, AID, and State. Collectively, DOD, AID, and
State have obligated billions of dollars for contractor-
provided services and goods in Afghanistan.
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\1\ The prepared statement of Mr. Solis appears in the appendix on
page 67.
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Given the magnitude of these obligations, the importance of
contract oversight cannot be overstated. To this end, we have
made numerous recommendations aimed at improving contract
management and oversight. My statement today will focus on two
areas. First, the extent that DOD's contracting officer
representatives are prepared to conduct their oversight and
management responsibilities in Afghanistan, and the extent that
DOD, AID, and State vet non-U.S. vendors in Afghanistan for
ties to terrorist or criminal activities.
With regard to contractor officer representatives they act
as the eyes and ears of the contractor officer and thus serve a
critical role in providing contract oversight. To its credit,
DOD has taken actions to better prepare CORs to conduct
contract oversight and management in Afghanistan. However, CORs
are not fully prepared for their roles to provide adequate
oversight there.
To improve the capability of CORs to provide contract
management and oversight contingencies, DOD has developed a new
contingency focus COR training course, issued new guidance, and
developed a COR certification program. Nonetheless, gaps in
training and technical capabilities exist.
For example, according to the DOD personnel in Afghanistan,
the required training does not provide CORs with enough
specificity about contracting in Afghanistan such as
information about Afghan First program, which encourages the
increase in local goods and services or working with private
security contractors.
Also, whether a COR has relevant technical expertise is not
always considered prior to assigning an individual to oversee a
contract, even though CORs have a significant role in
determining if products or services provided by the contractor
fulfill the contract's technical requirements.
According to officials, some CORs appointed to oversee
construction contracts have lacked the necessary engineering or
construction experience, in some cases resulting in newly
constructed buildings that were to be used by U.S. or Afghan
troops having to be repaired or rebuilt.
According to CORs and commanders in Afghanistan, poor
performance on construction contracts has resulted in money
being wasted, substandard facilities, and an increased risk to
bases. For example, contracting officials from a regional
contracting center stated that construction of guard towers at
a particular forward operating base was so poor that they were
unsafe to occupy.
In addition to oversight concerns related to CORs, we
recently reported on the extent that DOD, State, and AID have
processes in place for vetting non-U.S. firms in Afghanistan
for ties to terrorists or criminal activity. We reported that
while DOD began to vet non-U.S. firms in August 2010, there are
several gaps in its process.
For example, vendors with contracts below $100,000 are not
routinely vetted. In fiscal year (FY) 2010, around three-
quarters of those contracts with non-U.S. vendors were below
the $100,000 level. Subcontractors are also not routinely
vetted. Command officials stated that the central command
(CENTCOM) uses other risk factors to prioritize vendors to vet
such as contracts performed in Taliban strongholds, but these
factors have not been documented.
While officials stated that the vetting cell was created to
vet vendors prior to award, CENTCOM is largely vetting vendors
with existing contracts, which means it is likely there are a
large number of new vendors that have not been vetted prior to
award and may not be vetted in the future.
Also, the vetting effort now includes some Army Corps of
Engineer vendors. However, the vetting cell has not been
staffed to accommodate this workload. So it is uncertain how
existing resources will be able to vet vendors in a timely
manner.
In January 2011, AID created a process intended to vet non-
U.S. implementing partners in Afghanistan. However, this
process may face similar limitations as CENTCOM's. According to
AID officials, this decision was based on urgent need to
mitigate the risk of AID funding being diverted to insurgent
groups.
While AID's process is in the early stages, it proposes to
vet non-U.S. implementing partners in at least the first tier
subcontractors with contracts valued at $150,000 or more. AID
officials said they are considering changing the dollar
threshold or vetting of other potential assistance recipients
based on risk. However, the available documentation does not
include other risk factors.
As of March 2011, State had not developed a process to vet
contractor firms in Afghanistan. Since 2008, State has required
a terrorist financing risk assessment to be completed of any
new program or activity prior to a request or obligation of
funding. However, it does not use the same information that
CENTCOM or AID use in their vetting cells. Additionally, its
use of Afghan vendors may increase under Afghan First Policy.
In closing, the Secretary of Defense has recently called
for a change in the Department's culture related to operational
contract support and directed the Joint Staff to identify
resources and changes in doctrine and policy necessary to
improve it.
We echo his call and believe that these changes should
include an examination of how DOD manages and provides
oversight of contracts and contractors in deployed locations.
This concludes my statement. I will be happy to answer any
questions.
Senator McCaskill. Thank you, Mr. Solis. Mr. Sedney.
TESTIMONY OF DAVID S. SEDNEY,\1\ DEPUTY ASSISTANT SECRETARY OF
DEFENSE FOR AFGHANISTAN, PAKISTAN, AND CENTRAL ASIA, U.S.
DEPARTMENT OF DEFENSE
Mr. Sedney. Thank you, Senator. Thank you for inviting me
here to testify today. My office falls under the Under
Secretary of Defense for Policy, so I would like to comment on
the overall larger strategy background for the contracting
activity that is being executed in Afghanistan.
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\1\ The prepared statement of Mr. Sedney appears in the appendix on
page 90.
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I will begin by reiterating the U.S. objectives in
Afghanistan: To deny safe havens to al-Qaeda, and to deny the
Taliban the ability to overthrow the Afghan Government. To
support these objectives, U.S. and Coalition forces are working
to continue to degrade the Taliban-led insurgency in order to
provide time and space to increase the capacity of the Afghan
National Security Forces and the Afghan Government, so that
they can assume the lead for Afghanistan's security by the end
of 2014.
As you know, based on the success of our strategy,
President Obama recently announced that United States would
begin a deliberate responsible drawdown of our surge forces. An
initial drawdown of 10,000 troops will occur over the course of
this year, with a further drawdown of the remainder of the
surge by the end of the summer of 2012.
Our strategy in Afghanistan is working. The momentum has
shifted to the Coalition and the Afghan security forces, and
together we have degraded the Taliban's capability and achieved
significant security gains, especially in the Taliban's
heartland in the south.
As we look ahead, the key to our success is the presence
and the capability of the Afghan National Security Forces and
those forces are making progress in both size and capability.
By the end of the summer of 2012 when the last of our surge
forces are out, there will actually be more Afghan and
Coalition forces in the fight than there are today.
That is because we will have increased Afghan security
forces to 352,000 by October 2012, in addition to the 68,000
forces that we will have and an--and that is also augmented
with forces by a number of our partner allies in NATO and
elsewhere.
These security gains are enabling key political initiatives
to make progress. We have begun a transition process that will
ultimately put Afghans in the lead for security nationwide by
the end of 2014. We are beginning to see reintegration and
reconciliation processes gain traction and are discussing a
strategic partnership with the Afghans to signal our enduring
commitment to regional peace and stability.
I want to emphasize that while our progress in Afghanistan
is substantial and our strategy is on track, significant
challenges remain. The Taliban will make some strong and
sometimes spectacular efforts, as they did the other day in
Kabul on the attack on the InterContinental Hotel, in order to
try and regain the momentum. However, just as that attack was
defeated, those attempts will also be countered.
At the same time, we find that the enemy is increasingly
facing an Afghan population that, through experiencing the
benefits of stability and self-governance and seeing those
become clear to them, they are becoming part of the transition
process. Afghan communities are providing useful lessons in
security and governance, as well as a potential model for other
parts of the country as we move forward in our strategy.
I want to emphasize how important the role of our Coalition
partners is in Afghanistan, 48 countries with over 47,000
troops today. These partner nations have made significant
contributions and significant sacrifices.
Madam Chairman, Senator Portman, I want to close by
thanking you and your colleagues in the U.S. Senate for your
support for our men and women in uniform. Thank you again for
allowing me to appear before you today.
Senator McCaskill. Mr. Denver.
TESTIMONY OF KIM D. DENVER,\1\ DEPUTY ASSISTANT SECRETARY OF
THE ARMY FOR PROCUREMENT, U.S. ARMY
Mr. Denver. Madam Chairman, Ranking Member Portman, and
distinguished Members of the Subcommittee on Contracting
Oversight, thank you for the invitation to appear today to
discuss the lessons the U.S. Army has learned and the ongoing
challenges in management and oversight of contracting in
Afghanistan. I will provide brief opening remarks and request
that my full written statement be submitted for the record.
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\1\ The prepared statement of Mr. Denver appears in the appendix on
page 93.
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The U.S. Army has had boots on the ground in Afghanistan
for nearly a decade. As we know from past military engagements,
when our Army deploys, they depend on civilian support from
contractors. Currently, more than 90,000 contractors are
supporting our troops in Afghanistan, a ratio of just under one
contractor for each soldier.
The contracting force supporting our troops in Afghanistan
is the largest contract oversight mission the United States has
ever managed. We still face challenges, but the Army has made
significant progress in improving contract management and
contract oversight.
I would like to share with you what the Army has done to
change the contingency contracting environment, how we award
and manage contracts, our oversight, and the training our non-
acquisition personnel receive before deployment and when they
arrive in theater.
Most of the contracts issued by the CENTCOM Contracting
Command are awarded competitively ensuring the best possible
price for the U.S. Government. We accomplish this by
transitioning from cost contracts to fixed-price contracts. In
a fixed-price contract, the contractor is paid only the amount
that was agreed upon at the time of award.
Contracting officers must ensure the U.S. Government
obtains the best value. An important element is the use of past
performance information. The availability of data has been
especially problematic with host nation companies as we strive
to give preference and make awards to Afghan firms under the
terms of the Afghan First program.
The Contractor Performance Assessment Reporting System
(CPARS) is effective with U.S. vendors, but we have learned it
has limitations in theater. In Afghanistan, we also use the
Joint Contingency Contracting System (JCCS) to alleviate a
number of problems in resident and theater contracting from
solicitation postings to currency conversions and tracking
performance. It has proven to be an invaluable tool for
contracting in Iraq and Afghanistan.
Oversight of subcontractors has been a significant concern
of Congress, the audit agencies and the contracting community.
The Federal Funding Accountability and Transparency Act of
2006, requires prime contractors to provide extensive insight
into subcontractor information. The CENTCOM Contracting Command
has implemented 11 clauses dealing with subcontractor
information to capture not just the data required by law, but
additional information that will aid in vetting of contractors
and subcontractors prior to award.
Vetting host nation contractors is a key element in
ensuring the security of the workplace for U.S. Warfighters,
civilians, and contractors, as well as the security of our
reconstruction efforts in Afghanistan.
In August 2010, a vetting cell was established at CENTCOM
headquarters in Tampa, Florida, to vet prospective non-U.S.
contractor firms in Afghanistan. Non-U.S. vendor information on
contract awards and options is tracked in the Joint Contingency
Contracting System, along with past performance.
After a contract award, the key to our contract oversight
resides with the contracting officer's representatives who are
the front lines as responsible stewards of American taxpayers'
dollars. The Army strengthened our COR management and training
in December 2009 with the issuance of an Army Executive Order
mandating that deploying brigades have as many as 80 soldiers
designated as trained CORs.
As a result, in the past 2 years, the Army Logistics
University trained more than 8,500 CORs, and 2,317 soldiers
since October 2010, the Expeditionary Contracting Command
provided augmentation training to more than 2,300 soldiers as
CORs.
The Army recognizes that success in contingency contracting
results when deployed CORs are trained and technically
qualified for their assignments. To ensure that technically
qualified personnel are involved in the oversight of
construction contracts in Afghanistan, the Senior Contracting
Official in Afghanistan (SCO-A) recently provided guidance on
the appointment of Construction Inspectors (CIs) to assist the
technical expertise for our construction CORs.
Endemic corruption in Afghanistan remains a challenge to
our contracting personnel. The U.S. Government has stood up
several anti-corruption task forces in Afghanistan which have
played a significant role in improving the contracting
environment by reducing the impact of corruption on government
contracting.
Madam Chairman, Army Contracting continues to identify more
effective ways to ensure excellence in all contracting
activities, to provide the most value of our contracting
dollars, and the most effective support to our war fighters.
Thank you for your continued support and I look forward to
answering your questions.
Senator McCaskill. Thank you, Mr. Denver. Mr. Thier.
TESTIMONY OF J. ALEXANDER THIER,\1\ ASSISTANT TO THE
ADMINISTRATOR AND DIRECTOR, OFFICE OF AFGHANISTAN AND PAKISTAN
AFFAIRS, U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT
Mr. Thier. Chairman McCaskill and Ranking Member Portman,
my name is Alex Thier. I am the Assistant Administrator for
Afghanistan and Pakistan at USAID. I began working in
Afghanistan in 1993 and since the fall of the Taliban, I have
been intensively engaged in implementing and assessing the U.S.
effort to stabilize Afghanistan.
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\1\ The prepared statement of Mr. Thier appears in the appendix on
page 103.
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I have repeatedly raised concerns about the corrosive
effects of corruption and waste in Afghanistan post-2001.
Indeed, these are not only issues of fiscal importance, but of
national security itself. One of the reasons I took this job,
in fact, was to improve our performance and our accountability.
We owe this both to the American and to the Afghan people.
If the stable transition in Afghanistan will be achieved,
we must ensure that our efforts are sustainable, durable, and
realistic. With the support of the American people and strong
bipartisan support in Congress, we have made some dramatic
development achievements in Afghanistan over the last decade.
For example, we have worked with the health ministry to
significantly expand access to health services from 9 to 64
percent of the population, literally saving tens of thousands
of lives. Our efforts to build schools and train teachers have
allowed more than 7 million children to enroll in school, 35
percent of whom are girls, up from no girls in 2001 and fewer
than 1 million boys under the Taliban.
Economic growth has exceeded 10 percent growth per year on
average, and GDP per capita has doubled since 2002, with 5
million people lifted from a state of dire poverty. Together,
we are proud of our contribution to helping reverse Taliban
momentum and achieving development progress under the toughest
conditions.
As we embark on the path of transition, the process by
which our Afghan partners will truly stand on their own feet,
sustainability is of paramount concern to us. We have worked
with Afghan and international partners to identify a set of
core foundational investments that will develop Afghan
capacity, promote economic growth, and increase government
revenue generation to support a sustainable and durable
transition in Afghanistan.
Those investments include things such as agriculture,
extractive industries, human capacity development, and energy.
For example, in energy, analyses shows that power availability
and consumption are directly correlated with economic
viability. Because sustainability of our investments is
essential, a key component of our work is building Afghan
capacity in the power sector and supporting power sector
reform.
In 2009, the United States helped to launch a Da
Afghanistan Breshna Sherkat (DABS), a new commercialized Afghan
electric utility. Collections have increased 30 percent in the
last year alone, boosting revenues of that utility to $175
million. Kabul has gone from averaging 2 hours of electricity
in 2002 to 24-hour availability today paid for by a
commercially viable system.
Yet, I cannot overemphasize the challenges involved in
undertaking these efforts as the Afghans, the U.S., and other
international partners combat a vicious insurgency and
terrorist threat. Security concerns on our projects are
paramount. In 2010, attacks on civilian efforts rose sevenfold.
To succeed in this environment, we have made oversight and
accountability a top priority in Afghanistan. Just weeks into
this job, Administrator Shah and I concluded that we needed to
do more to safeguard our investments. To ensure that proper
procedures are in place, to help protect assistance dollars
from waste, fraud, or otherwise being diverted from their
development purpose, we developed the Accountable Assistance
for Afghanistan Initiative, or A Cubed.
As a result, we are enhancing the safeguards on our
development assistance by improving our award mechanisms,
increasing vetting, increasing financial controls, and project
oversight, and these efforts are already yielding concrete
results.
In addition, over the last 2 years, we have tripled our
staffing in Afghanistan, 60 percent of whom are located outside
of Kabul, allowing us more USAID eyes on the ground. I am also
proud to say that we have gone from three oversight staff in
country in 2009 to 71 today. Many of them are staying now for
multiple year tours.
We are under no illusions about the challenges we face in
Afghanistan. Every day our staff and partners are under threat.
Insecurity increases our costs and other threats require us to
expend significant effort to safeguard taxpayer funds. When I
left Kabul in 1996 after 4 years working during the civil war
there, watching the country enveloped in chaos, the capital was
a heavily mined rubble heap, the Taliban were taking over, and
Bin Laden was moving in.
Despite the turmoil today, our efforts have resulted in
critical gains. These results will enable the President to
carefully draw down U.S. resources in Afghanistan. USAID's
entire budget in Afghanistan since 2002 is equivalent to the
cost of just 6 weeks of our war effort. This progress that we
helped to contribute to the effort in Afghanistan will help
bring American troops home more quickly and ensure that they do
not have to return.
Civilian assistance has been central to these gains and
will only increase in importance as Afghans take the lead in
forging their own future. Thank you.
Senator McCaskill. Thank you all very much for being here.
Let us start, Mr. Sedney, with you. I was confused by your
opening statement because it did not have anything to do with
contracting and we are here on contracting. Obviously, you came
to discuss contracting as it related to the Afghan National
Police. And so, I guess my first question to you is, who is in
charge at the Defense Department in terms of making the
contracting decisions as it relates to infrastructure that is
being built under the authority of the Defense Department and
money coming from the Defense Department?
Mr. Sedney. In terms of contracting, I would defer to----
Senator McCaskill. I need you to turn your microphone on.
We cannot hear you.
Mr. Sedney. I am sorry. In terms of actual responsibility
for contracting processes within the Department of Defense, I
may have to call on Mr. Denver who is more expert in the
contracting area than I am. In terms of our contracting in
Afghanistan, that contracting is done by C-STCA, which is the
U.S. element that is in Afghanistan that does contracting for
U.S. forces. They report to CENTCOM, which is then overseen
eventually by the Under Secretary of Defense for Acquisition
Technology and Logistics.
Senator McCaskill. I am looking for who is in charge of
planning. Is that the Commander of CENTCOM? So when you all
decide that we are going to spend $500 million on $400
million--I guess that is a related question. How much of the
$17 billion in the fiscal year request, how much of that is
going to come through Defense and how much of it is going to
come through State?
Mr. Thier. I can speak for USAID. We will get you the exact
number, but I believe the request for USAID civilian assistance
is around the $3 billion level.
Senator McCaskill. Well, the President has asked for $17
billion in fiscal year for reconstruction projects and
infrastructure projects in Afghanistan. Does anybody here know
how much of that is going to be under the control of the
Defense Department, how much is going to be under the control
of the State Department?
Mr. Thier. Again, I can say that about $3 billion of that--
--
Senator McCaskill. $3 billion.
Mr. Thier [continuing]. For USAID and possibly an
additional billion under the State Department for operations,
civilian operations that are not under USAID, but I cannot
speak to the rest.
Senator McCaskill. So is the rest of that Defense
Department, Mr. Sedney?
Mr. Sedney. I am not familiar with the $17 billion figure
that you mentioned, Senator, in terms of reconstruction
projects. The Department of Defense budget, as I am familiar
with it, has funding for operations in Afghanistan which
include funding for the Afghan Security Forces fund which we
are asking for about, I believe, $12.4 billion--I can get you
the exact figure--for Afghan Security Forces funding.
information for the record
The President's budget request for fiscal year 2012 for the
Afghanistan Security Forces Fund is $12.8B.
But in terms of funding for reconstruction, I am not
familiar with the $17 billion figure you mentioned.
Senator McCaskill. What do you think it is? What do you
think we are going to spend next year on building projects for
the Afghan people?
Mr. Sedney. In terms of building projects for the Afghan
people, that would the realm of the AID and the Department of
State.
Senator McCaskill. What about CERP? How much is CERP going
to spend building projects for the Afghan people?
Mr. Sedney. CERP funding for this year will be--CERP
funding for this year will be somewhere in the neighborhood of
$300 to $400 million. The appropriations for the last several
years have not been fully spent. CERP, however, is not
reconstruction money.
CERP funding is Commander Emergency Response Programs.
These are programs designed to assist commanders in the field
to build the foundations for stability. It is not meant to
replace--to be in the place of the long-term reconstruction
funding, which is done by the State Department and USAID.
Senator McCaskill. But it is true that CERP has morphed
into a program where we are now doing projects like building
roads and building buildings and doing things other than small-
scale projects which was the original use of CERP funds,
especially in Iraq, were for small-scale projects and now in
Afghanistan, we have the Defense Department actually managing
projects that are construction projects with CERP fund,
correct?
Mr. Sedney. We do have, over a number of years,
particularly in the area of roads, CERP began to be used for
roads. In the most recent appropriations bill, the Congress
gave us authority to establish the Afghan Infrastructure Fund
(AIF). The purpose for that is to divide out those projects
which would be looked at as infrastructure projects and then
enable CERP to maintain its original focus on those small-scale
projects.
We are in the process of putting together guidance for the
implementation of the Afghan Infrastructure Fund and the
division of the CERP funds and oversight for that. I
participated yesterday in a first meeting of a Department of
Defense oversight panel which will be giving guidance in those
areas.
Senator McCaskill. Does the Defense Department have a
certification process for sustainability before we spend any
American money in Afghanistan?
Mr. Sedney. Senator, I am not familiar with the details of
contracting processes or certifications, but I will pass that
question on to my colleagues who do that responsibility in that
area.
Senator McCaskill. Who would you pass it to?
Mr. Sedney. I would first send it to the Under Secretary of
Defense for Acquisition Technology and Logistics (AT&L), which
supervises policy regarding contracting----
Senator McCaskill. Is this Ash Carter?
Mr. Sedney. That would be his office I would be passing
your request to.
information for the record
Sustainability is critical to the success of the
Commander's Emergency Response Program and Afghan
Infrastructure Fund infrastructure projects. Recognizing this,
the Department of Defense continues to develop and implement a
number of processes to ensure that the infrastructure it builds
will be sustained by the Afghan Government. For example, a
variety of stakeholders--including the Government of
Afghanistan, the U.S. Department of State, the U.S. Agency for
International Development, international donors, and regional
and local government officials and citizens--review electrical,
water, and other AIF projects for sustainability. All AIF
projects must have sustainability plans that identify Afghan
responsibilities, any non-U.S. funding sources, and maintenance
and operation requirements.
The infrastructure projects funded by CERP also address
sustainability. For those projects requiring sustainment--such
as irrigation canals and wells--the Department of Defense
coordinates with the host government and interagency partners
to develop sustainment agreements and plans, as well as to
identify sustainment funding. Specifically, for CERP projects
costing more than $50,000 that require sustainment--like the
Hezar Joft Beltway project in Helmand Province--a responsible
Afghan Government official must sign a Memorandum of Agreement
(MOA) with U.S. forces to acknowledge sustainment
responsibility to budget and execute project operations and
maintenance. In addition, U.S. and international stakeholders
review CERP infrastructure projects, with the additional
requirements that all projects costing more than $1M are
reviewed by the Office of the Secretary of Defense (OSD) CERP
Management Cell; projects costing more than $1M up to $5M
require Commander, U.S. Central Command approval; and all
projects costing $5M up to $20M require Commander, U.S. Central
Command endorsement and Deputy Secretary of Defense approval.
In addition, the congressional defense committees are notified
of any CERP project with a total anticipated cost of $5M or
more at least 15 days before funds are obligated.
Senator McCaskill. OK.
Mr. Sedney. But any request that you have regarding
contracting, I will pass to them.
Senator McCaskill. OK. I am trying to figure out who is
charge. I am trying to figure out how much money we are
spending and who is in charge. It is ironically difficult to
figure out how much we are spending and who is in charge. I
particularly need to figure out who is in charge in terms of
who is making the decision to go forward with projects when
they turn out not to be sustainable. And that has been more
difficult than it should be.
Let us get to where the money is going, and I will try to
do this very briefly, and then turn it over to Senator Portman.
The Special Inspector General for Afghan Reconstruction, the
previous Special Inspector General--I want to caution that this
is not the current Special Inspector General.
The previous issued a report that indicated that four
contractors, Contrack, Kabuljan, United Infrastructure
Projects, and Red Sea Construction Company received over $1.8
billion in contracts in a 2-year period between 2007 and 2009.
That report, which SIGAR stated was based on a review of
information provided by the Defense Department, has since been
identified by both SIGAR and the Defense Department as
containing inaccurate information.
In fact, that report was so inaccurate it was off by
hundreds of millions of dollars. OK? Then USA Spending, another
database that reports information from Federal Procurement Data
Systems (FPDS), the government's main database for tracking
contract information, lists $454 million in spending over the
same period of time.
So one report says we have spent $1.8 million on just
contractors in 2 years. Another report says we spent $454
million over the same period for just two of these companies.
Does not even have information on the other companies. I know,
Mr. Denver, that your office--and I know that you are new and I
am sorry that you are the one that has to sit there today.
Your office is the executive agent for contracting in
Afghanistan, which gives you oversight and authority for
contracting which is now called Triple C, CENTCOM Triple C,
which is the contracting command.
That office provided the inaccurate information to SIGAR
and in preparation for this hearing, your office provided the
Subcommittee with information that shows that one of those
contractors listed by SIGAR as having $691 million in contracts
actually only had $5 million in contracts.
CCC was provided an original copy of the SIGAR report, but
yet said nothing about these wild inaccuracies that were
contained. I think you all can see where I am going. I do not
think the public can have any confidence that we are accurately
reporting what we are spending where on contracting in
Afghanistan. And I would like to know how you can explain this
wildly inaccurate information that was provided to the Special
Inspector General for Afghanistan.
Mr. Denver. Thank you, Madam Chairman. We are currently
coordinating with SIGAR to determine where those issues arose.
It is true that inaccurate information was provided. What we
are working with them on is a process in the future where this
information that is gathered directly from the CENTCOM
Contracting Command would be forwarded to my office so that we
can also, in addition, pull reports to validate the
information.
What we are seeing is that we do not want to impact their
ability to connect directly with the CENTCOM Contracting
Command, but we want to make sure that what we do in the
future, that we are able to double-check the information that
is being provided. But right now, even SIGAR has indicated that
they may need to audit to determine why and what was the source
of the inaccurate information.
Senator McCaskill. Senator Portman.
Senator Portman. Thank you, Madam Chairman. I think it
might be helpful just to put what we are talking about in
perspective.
If you could correct me if I am wrong, Mr. Sedney, but
current troop levels in Afghanistan is just over 100,000?
Mr. Sedney. Yes, Senator.
Senator Portman. And number of contractors, DOD, State,
USAID contractors in Afghanistan about 154,000?
Mr. Sedney. I am not--I cannot certify the total, but I
would say for the Department of Defense, the average figure is
about .85 contractors for each deployed troop. I think that is
the ratio that we are operating under. So with 100,000 troops,
we would expect about 85,000.
Senator Portman. Earlier in testimony someone said it is
more than one contractor per troop. Mr. Solis, what are your
numbers?
Mr. Solis. I do not have the exact number, but it is about
one to one or a little over one to one.
Senator Portman. So let us say roughly 100,000 troops,
150,000 contractors. So this hearing is about the contractors.
As I said earlier, the experience in Bosnia and Iraq is that as
we begin a drawdown of troops, we do not begin a drawdown of
contractors initially. Is that accurate, Mr. Solis?
Mr. Solis. That is what we saw in some of our prior
reviews, I think.
Senator Portman. So this is incredibly important that we
get this contracting right, and one of the big concerns,
obviously, that has been raised today is about sustainability.
So as we continue to spend more and more taxpayer money, even
relative to the military commitment, going forward on
contracting, we are really creating something of value that is
going to last and be able to be successful in moving
Afghanistan to a stable government that meets the objectives
that Mr. Sedney laid out earlier.
So unsustainability. Let us talk about it for a second.
There is a June report by the Commission on Wartime Contracting
that was pretty pessimistic. It said, There is no indication
that DOD, the Department of State, or AID are making adequate
plans to ensure that host nations would be able to operate and
maintain U.S.-funded projects on their own, nor are they
effectively taking sustainability risks into account when
devising new projects or programs.
That is particularly concerning if that is accurate because
having learned the lessons, you would think that we, on the new
projects, would be looking at sustainability. The report goes
on to say, In Afghanistan, the United States has contracted for
schools and clinics that lack adequate personnel, supplies, and
security; a large power plant that the host country cannot
maintain or operate; roads that will need substantial
continuing maintenance; security force training and support
whose costs exceed Afghan funding capabilities.
So I guess I would ask first, and maybe, Mr. Thier, you are
the right person to talk about this from an AID perspective,
but I would also like to hear from Mr. Sedney and Mr. Denver
from a DOD perspective. What are your agencies' approaches to
evaluating at least these ongoing development and
reconstruction projects to ensure that they are sustainable?
Are you redesigning or terminating programs that are not
viewed as sustainable? Are you ensuring that any new commitment
of U.S. taxpayer dollars is for an undertaking that the Afghans
can carry on after we are gone? And how has that process been
formalized?
Mr. Thier. Thank you, Senator. USAID is intensively focused
on this question of sustainability and it really goes in two
different directions. One is, are the actual investments that
we are making sustainable? In other words, will power projects
that are being built, will they be maintained? Will schools be
used? That is one aspect of sustainability.
The second aspect of sustainability is the broader question
of how does Afghanistan itself manage to sustain these
investments over the longer term in terms of developing their
economic growth?
On the first part, we certify that any program that we are
doing that has a capital investment must have a sustainability
plan. In fact, we have intensified this just in the last few
months by creating what we call a sustainability guidance,
where we are assessing every single program that USAID is
implementing to determine if it is going to be sustainable in
both of these senses.
Will the actual physical investment be maintained? And more
broadly, is this contributing to the Afghans' ability to
sustain these investments in the long term? So it is something
that we take very seriously.
Senator Portman. Let us focus in for a second on AID and
projects. Let us talk about the Kabul power plant. I know you
are familiar with it. The American taxpayers have paid $300
million for this power plant. It is a dual fuel plant. It is
now rarely used, is my understanding, and the cost to operate
it is prohibitively expensive for the Afghan government.
There is an audit by your Inspector General recently at AID
who found that the project is not sustainable because the
Afghans cannot afford to purchase the diesel fuel necessary to
power the plant and they cannot sustain the complex maintenance
and technical expertise required to operate it. Instead,
actually, the Afghans are negotiating with neighbors, including
Uzbekistan, to get their power for a fraction of the cost that
they would from your dual source, dual fuel source plant that
cost 300 million bucks.
So how did AID get that wrong, is one question that I want
to hear from you on, but then let us talk about the next one.
There is a 2011 AID contract to build a diesel-fueled power
plant in Kandahar. And so, you say that you now certify that
any program we are doing has a sustainability plan.
The Commission has stated there, and you may disagree with
the Commission, but this plant faces similar sustainability
challenges. The financing plans have not been made for the
transmission or distribution grid that would make this plant a
useful source of energy. Are we doing it again? One, how did
AID get the first one wrong, and second, are we once again
stepping into a situation where we are putting hard-earned
taxpayer dollars against a project that is simply not
sustainable?
Mr. Thier. Let me address the second one first. The
decision to invest in power in Kandahar was a decision that the
U.S. Government, the military, the State Department, USAID made
collectively in the summer given the critical nature of our
campaign in Kandahar and our desire to shift the momentum away
from the Taliban.
So we made two decisions with regard to the investment into
Kandahar power. The first decision was that a long-term source
of power for Kandahar was not going to come online quickly
enough in order to achieve that objective. So there was a joint
decision with the International Security Assistance Force
(ISAF) and USAID to invest in some short-term power generation,
diesel fuel, which you are absolutely right is not a long-term
sustainable effort, to turn the lights on in Kandahar.
And we are adding 50,000 connections in Kandahar so that
the people of Kandahar, as well as the people of Helmand, are
going to see the positive results of this effort.
There is, however, important sustainability components in
that program. The first is that we are working to increase the
power supply to that region in a sustainable fashion, both by
building line down from the north of Afghanistan that will
provide long-term sustainable power, as well as increasing the
power supply from the Kajaki Dam into that area.
So those two things together are a longer-term
sustainability plan, together with the fact that the Afghan
utility, DABS, that I mentioned before, is collecting money for
the power it distributes now, and that means that over the long
term, they will be responsible for actually sustaining the
investment.
That is also related to the question about Tarakhil. Today
that plant is being run as a peaking power plant. Kabul, the
capital of Afghanistan, was known until recently as the dark
capital of Asia. It had the least amount of power of any
capital in the world.
Twenty percent of the Afghan population lives in Kabul.
When the decision to build that plant was made, there was no
assurance that this line coming down from Uzbekistan would, in
fact, be available. And even once the plant was built, a
landslide, for example, cut out that power line allowing the
only reliable source of power, which is the Tarakhil plant, to
function and to----
Senator Portman. So was that plant constructed as a back-up
power plant? That is what you are saying it is?
Mr. Thier. It was constructed as a peaking power plant.
Senator Portman. It was originally intended for 300 million
bucks to be a peaking back-up power plant?
Mr. Thier. It was with the caveat that people were
uncertain of whether the alternative plan, which is to bring a
line down from Uzbekistan which has its own reliability
problems as well as the terrain that was to traverse----
Senator Portman. So that was the design here? Because that
is not my understanding.
Mr. Thier. That was, in fact, the design, but we made sure
that the sustainability of that plant is a very high priority
in three ways. One, that we are intensively engaged with DABS
to make sure that they are, in fact, able to maintain the
plant.
Senator Portman. Could you provide us, the Committee, some
data to back up the assertion that this was built as a back-up
power plant for peaking only? And with regard to the
sustainability, we would love to see more information on that.
Mr. Thier. Sure.
Senator Portman. I am over my time. I guess just quickly,
not to leave DOD out of this, with regard to the Afghan
National Security Forces in terms of sustainability, again, the
studies we have seen, including from the Commission, and you
may disagree with the Commission. I would like to hear if you
do disagree. They think that the investment in training and
preparing the Afghan National Security Forces risk being wasted
in the long run due to the same sorts of sustainability
problems.
In 2002 until now, we have appropriated almost $35 billion
of taxpayer money to establish the security forces, and another
$13 billion, as was talked about earlier, is being added to the
2012 budget. The Commission concluded, The prospects for the
Afghan government's ability to sustain these forces are meager,
particularly considering that the national government's entire
domestic revenues are about $2 billion a year.
So I would ask DOD, have we evaluated the sustainability of
the support here, and if so, what has our evaluation shown? And
if not, how can we do that? How can we improve its long-term
effectiveness? Just as background again, we have committed
$11.5 billion since 2005 to construct facilities, facilities
alone, including bases, police stations, outposts and so on.
What are the long-term maintenance costs of these facilities,
and do you believe that the Afghan government has the financial
resources ever to be able to maintain those facilities?
Mr. Sedney. Senator, those are important questions and let
me take them in two parts. First, however, I would like to
correct the record. In fact, I do have the numbers. The exact
numbers of Department of Defense contractors in Afghanistan is
90,800. The Department of Defense is required to submit a
report, which it does, to the Armed Services Committee and to
the Appropriations Committee. This report was dated June 21 and
we will make sure you get copies of that report.
information for the record
A copy of the report\1\ to Congress on contractors,
pursuant to Section 9013 of the Department of Defense and Full-
Year Continuing Appropriations Act, 2011 (P.L. 112-10), dated
June 21, 2011 is attached.
---------------------------------------------------------------------------
\1\ A copy of the report appears in the appendix on page 234.
Senator Portman. Great.
Mr. Sedney. On the issues of sustainability, as I said, I
will divide them in two. The first is a question of financial
sustainability, the ability of the Afghan government to fund
the security forces that it currently has and that it may need
in the future. Currently, Afghanistan does not have the ability
to fund the security forces and the U.S. Government and, to a
certain extent, our international partners are funding those
forces.
Currently, the cost of those forces, we are asking for
fiscal year 12--not fiscal year 12-FY11, we have $12.4 billion,
I believe, for that. A certain percentage of that is for
infrastructure; another is for training; and for the
sustainment of the forces themselves. As you point out, this is
well beyond the capacity of the Afghan government to provide
for.
However, let me go back to our national interests in
Afghanistan, which is to ensure that Afghanistan is no longer
able to be a base from which terrorists can mount attacks
against the United States.
Our solution for that is to drive down the insurgency
through our military efforts and to buildup the Afghan security
force to be able to do that. Since Afghanistan does not have
the resources to do that, we, you, the American taxpayer, the
American Congress are funding those security forces, again with
some help from our allies.
The size of the security forces that will be needed in the
future to contain the Taliban is yet to be determined because
we do not know the level to which we will be able to drive down
the insurgency. We are currently building the Afghan security
forces to a level of 352,000 for October 2012. That is based
upon the level of insurgency that we see now and the level of
forces that the United States and our allies will have there at
that time.
What we are aiming for is to continue to drive down the
insurgency enabling us to continue to withdraw our forces and
have the Afghans continuing to improve that. What that
equilibrium level will be we do not know yet.
Senator Portman. Mr. Sedney, I am well over my time.
Mr. Sedney. I am sorry.
Senator Portman. I apologize. I need to yield back to the
Chair. Let me just conclude by saying, I understand the mission
and, in many respects, what AID is doing on the ground and what
DOD is doing on the ground, even outside of the military
involvement with contractors, is carrying out policies that you
are asked to do.
It is under very difficult circumstances. I have been
there, had an opportunity to visit with some of your AID
colleagues, and it is tough work. The question is whether this
policy makes sense, whether it is a sustainable policy, because
so much of what we are doing and building may not be able to be
maintained subsequent to our departure.
These numbers are indicating that there is a huge risk. And
so, what we are asking here is for a realistic assessment of
what those risks are and the very important reassessment of how
we look at these projects. If they are not going to be
sustainable, why are we doing them? If we are building a back-
up power plant for 300 million bucks that the Afghans are not
using except for peak periods, because they cannot afford the
fuel, how does that make sense?
So that is what we are asking here today and whatever
information you can provide the Committee going forward would
be helpful. With that, again, I thank you for your service and
I give it back to the Chair. Sorry for taking so much time.
Senator McCaskill. Not a problem. Thank you, Senator
Portman.
I am trying to figure out where the decisions are being
made as to the Afghan Infrastructure program at the Department
of Defense and the Afghan Infrastructure Fund. Now, it is my
understanding in fiscal year 2011, the Afghan Infrastructure
Fund, which is all DOD money, is $400 million. Is that correct,
Mr. Sedney?
Mr. Sedney. I believe that is correct.
Senator McCaskill. OK. And I am looking at a document here
and this is projects that are going to be built with that
money. This is DOD money. Now, the first one is the power
generation in Kandahar City, Kandahar Province. Fuel operations
maintenance for all DOD and USAID procured generators in
Kandahar. That is $40 million. And the implementing agency is
DOD, not USAID.
The next one is power transmission, Kandahar to Lashkar and
then power transmission, Chimtala to Ghazni and that is $231
million and that says--Department of State, USAID, one of them
says DOD on it also, and the next one just says Department of
State USAID.
The next one says power transmission Chimtala to Gardez.
That is $86 million. And that is just DOD. The next one is a
road in Helmand Province. That is $23 million, which does not
sound like CERP to me, and that is DOD. The last one is
Government Infrastructure Provincial Justice Centers. That is
$20 million and that is DOD.
OK. So who is deciding what Department of Defense builds
and what USAID is building? Who is making that decision? Is
that CENTCOM Command that is making that decision? Is that the
Secretary of State? Where is that decision being made and on
what basis is it being made?
Mr. Sedney. First of all, on the--for the purpose of the
Afghan Infrastructure Fund and the reason it is funded out of
Department of Defense funds, as my colleague, Mr. Thier said,
the commander on the ground has made the determination that our
success on the battlefield requires both the reality and
prospect for certain economic inputs. The largest of those is
electricity.
Helmand Province and Kandahar Province, particularly, were
the center of gravity for our ongoing campaign. That is where
the majority of our surge forces have--were put into place.
First General McChrystal and then, after he took over, General
Petraeus made very clear that increasing and making sustainable
an electricity supply for the city of Kandahar was an essential
part of our campaign plan, and in order to defeat the Taliban,
we needed to do it both militarily and with the population
itself.
So the first step, as Mr. Thier said, was the provision of
these temporary power plants that will be fueled by diesel
fuel. As Senator Portman pointed out, that is very expensive,
and as Mr. Thier said, that is not sustainable.
Senator McCaskill. Mr. Sedney, I hate to interrupt you. I
understand that all of these projects someone thinks are
important to the success of our mission. I think what I am
trying to do is pull some thread here on accountability.
I cannot figure out why in the world is Department of
Defense building provincial justice centers. Why is that not
USAID? Why is DOD in the construction of provincial justice
centers right now? I do not understand that. And how is that
decision being made and where is it being made?
Mr. Sedney. The recommendations, Senator, come from the
field through the chain of command. On the provincial justice
centers, there are some areas where the provision of provincial
justice centers, we believe, are so important to the success of
the campaign that if it is not possible for AID to be funding
those at this time, they are included in the Afghan
Infrastructure Fund.
Senator McCaskill. Well, who is it that is in the room that
is deciding which pot of money you are taking this out of? It
makes it very difficult to hold anybody accountable because
what happens, I feel like I am boxing ghosts. I cannot decide
is it USAID that is responsible for the sustainability
assessment, which clearly in some instances, I think, has been
lacking?
I look at the sustainability language for these projects.
It does not appear to me that it has been taken seriously in
terms of the sustainability. It looks like to me that somebody
in the field has said, We need to do this, and so we are just
trying to find the money somewhere in the budget to do it and
DOD is going with it and that is not the way that you carefully
craft this expenditure of Federal tax dollars.
I mean, do you see where my frustration is about--I cannot
figure out who to call.
Mr. Sedney. Well, I apologize for any confusion that has
been caused, but I would say that the process has been much
more rigorous and ordered than has been described so far.
In terms of the Afghan Infrastructure Fund projects, those
projects were vetted first out in the field. They were based on
requirements that the commanders in the field outlined and
discussed intensively. This is a combined civil/military
effort. Discussed extensively with our colleagues at the U.S.
embassy and USAID.
There are some areas where USAID was already working where
a number of--a large amount of the funds, almost, I think, 80
percent of the funds that USAID spends are now in the south and
the west. But there were some projects which USAID did not have
the money and which the commander in the field identified as an
urgent requirement.
After discussion out in the field over which agency would
be the most appropriate implementing partner, then those
requests were sent back for approval of projects under the
Afghan Infrastructure Fund. Those projects are recommended to
the Department and then the decisions, the final approval
decisions, are made in the Department of Defense.
Each one of those projects, which I understand were briefed
by some of my colleagues last week, do have a sustainability
assessment in them.
Senator McCaskill. Have you looked at the sustainability
assessments?
Mr. Sedney. I have not reviewed the sustainability
assessments myself.
Senator McCaskill. I would recommend them to you and I
would love your input after you have looked at them, because I
will tell you, I have looked at them and I do not think that
this is what we are looking for. It looks to me like somebody
says, We need to do this, and then people are checking boxes,
and it looks like to me that the military is deciding what
projects need to be done, and if AID does not have the money,
we just find the money in our budget. How long has the Afghan
Infrastructure Fund been around?
Mr. Sedney. This is the first year, ma'am.
Senator McCaskill. OK. And would you say this is an
outgrowth of CERP? This is CERP on steroids?
Mr. Sedney. I would not say that this is CERP on steroids.
I would say that over the last several years, as we encountered
this complex civil/military environment, there were a number of
areas where commanders in the field saw a need for projects
that would have immediate impact. A number of those projects
under CERP were put forward as CERP projects.
Senator McCaskill. We have never before--honestly, sir,
this is really historic in some ways, because what we have done
here for the first time that I am aware of, we have decided
that in a military operation, we are going to do things like
build justice centers in the Department of Defense.
Now, we did some of this. There was obviously some cross-
pollination in Iraq, some that happened in a way that was
helpful and, frankly, a lot of money was wasted. Tens upon
billions of dollars went up in smoke in Iraq because what the
military commanders thought they needed that moment turned out
we were not going to be able to sustain it. Health care centers
that were never built, power plants that were blown up, roads
and bridges that were destroyed.
And so, I am trying to--do you believe that this is the new
normal, that in contingency operations in the United States,
the Department of Defense will have its own construction fund
that will be commanded by the military leaders to determine
what roads should be built, what power lines should be built,
and what justice centers should be built?
Mr. Sedney. First of all, Senator, I would say it is not
the Department of Defense that determines which ones will be
built. The commanders in the field do make recommendations,
they do consult intensively with----
Senator McCaskill. But it is your money. What do you mean
you are not deciding it is going to be built? This is money we
appropriated to the Department of Defense.
Mr. Sedney. Right.
Senator McCaskill. Surely you are not telling me somebody
else is deciding how to spend your money.
Mr. Sedney. No. What I am saying is, we are not deciding on
the whole complex of things that need to be done in
Afghanistan. We are deciding which ones are of urgent military
necessity, and yes, this is a new area. The Afghan
Infrastructure Fund is a brand new concept.
It does come out of the issues that we saw with CERP where
CERP was tending toward things that were more than just the
quick impact projects that it was originally designed for.
There was intensive consultation with Congress on putting the
Afghan Infrastructure Fund in place. We created a new office in
the Office of the Secretary of Defense to work on overseeing
this, and the----
Senator McCaskill. And who is that person?
Mr. Sedney. Pardon?
Senator McCaskill. Who is in charge of that office?
Mr. Sedney. One of my colleagues in our Office of Stability
Operations. I can get you his name.
information for the record
The CERP Management Cell (CMC) is led by an executive level
director, Mr. Robert Doheny, a member of the Senior Executive
Services (SES). He leads the activities of the CMC and chairs
the CERP Working Group, with responsibilities for review and
oversight of assigned programs, including the review,
assignment, tracking, and reporting of OSD/Joint Staff/Military
Department/Combatant Command-level and interagency CERP
activities, as well as Afghan Infrastructure Fund issues and
tasks. In addition, the Department has recently established the
Afghanistan Resources Oversight Council (AROC) that is co-
chaired by three Under Secretaries of Defense: Comptroller;
Acquisition, Technology, and Logistics; and Policy. The AROC is
charged with providing senior management review and oversight
of DOD programs and funds related to Afghanistan, including the
Afghanistan Security Forces Fund (ASFF), AIF, and CERP in
Afghanistan.
Senator McCaskill. I think this is the kind of stuff that
we would have liked to see covered in your opening statement,
Mr. Sedney. We have a lot of projects that are being built, and
I know that this is really a difficult environment. There are
all kinds of challenges, and our men and women have performed
heroically, and our military leaders are doing an amazing job.
But I do think that we have played fast and loose, and
sometimes sloppy, with the way we have spent this money, and if
this is the priority for the military command, then why is that
not transferring to make it the priority of the State
Department? Why are we not using the funds that have
traditionally been always appropriated in this country for
reconstruction projects.
The expertise has always been at the State Department. And
after the military pulls out of there, guess where it is going
to be back to? It is all going to be back to the State
Department.
And what has happened is, with this morphing of CERP into
something even bigger, I understand it allows you to short-
circuit some of the processes that traditionally are in place,
and it allows you to jump the line in terms of budget
priorities, but in the long run, it makes accountability and
oversight very, very difficult, because you are going to go
out--how many power projects do you have in USAID right now in
Afghanistan?
Mr. Thier. I would have to get you the exact number of
individual projects.
Senator McCaskill. But more than a couple?
Mr. Thier. Not too many at the moment, but we have several.
Senator McCaskill. Let me change the subject now and go to
the Kabul Bank. I know this is difficult and, in some ways,
delicate. But while we are pouring billions of dollars into the
infrastructure of Afghanistan, because they have a GDP that is,
I do not know, I think it is higher than $2 billion. What do
you think it is, Mr. Thier? Without us, what is their GDP?
Mr. Thier. I think overall GDP is about $18 billion. I do
want to say that I think that this 97 percent figure has been
somewhat mis-cited.
Senator McCaskill. That is the highest I have ever heard
their GDP. When I was in Afghanistan, I was told by the people
on the ground in Afghanistan, including, I believe, the
Ambassador, that the GDP was somewhere around $10 to $12
billion in Afghanistan.
Mr. Thier. I think it has gone up steadily. I may be
slightly overstating----
Senator McCaskill. Optimistic.
Mr. Thier [continuing]. But that was my understanding----
Senator McCaskill. Right.
Mr. Thier [continuing]. It has been growing every year.
Senator McCaskill. I guess what I am trying to figure out
here is, we have a $900 million fraud that has occurred at the
Kabul Bank and that is where we put international assistance
for Afghanistan. And clearly, we have technical assistance on
the ground that is supposed to be overseeing the financial
sector through USAID.
Can you explain how they were able to do insider lending to
the tune of hundreds of millions of dollars that is now gone,
and why we are not being more aggressive in terms of requiring
the kinds of audits that the other bank that now is in
question, that may have the same kinds of problems, the Azizi
Bank, why we are not requiring independent forensic audits and
results of those audits before we put any more money in either
one of those banks that has any connection to the U.S.
taxpayers?
Mr. Thier. So let me clarify two things. No U.S. taxpayer
dollars have ever gone to Kabul Bank.
Senator McCaskill. It is just IMF money?
Mr. Thier. I am not familiar with any IMF funds ever having
gone, but I cannot, obviously, speak to that.
Senator McCaskill. Well, you say no U.S. funds have gone to
the bank, but if we are paying Afghan contractors and if we
have blown their GDP up way above what it will ever, ever be
after we are gone, that money is going into some bank. So you
say it is not United States' money, but I would hasten to add
that a lot of the money that has gone in every Afghanistan bank
for the last 3 years has been American money. Would that not be
a fair assessment?
Mr. Thier. Well, there is no program that has existed in
the past that provides any type of support to Kabul Bank. The
only way--what we have done as a government is to support the
Afghan government's ability to develop its financial system.
That has primarily been involved in, for instance, building the
Afghan Central Bank from nothing into an entity.
Part of that assistance has been to build their capacity.
But I hasten to add that at no point has the U.S. Government or
U.S. Government officials or contractors been responsible for
the oversight of Afghanistan's banking system. That is a
sovereign function of the government of Afghanistan. We have
attempted to build their capacity.
I think critically on the other point about Azizi Bank and
the forensic audit, not only do we support that idea, but we
have been demanding it.
Part of the IMF conditions for a new IMF program that have
been designed around the Afghans rectifying the problems in
Kabul Bank has been precisely that a forensic audit of the
Azizi Bank needs to be conducted, and that the IMF program,
which these conditions we support strongly, require that audit
to be conducted prior to a new IMF program being put into
place.
So I do want to emphasize that we agree with you strongly,
that an audit needs to be done, as well as a number of other
steps, conditions that have been endorsed by the U.S.
Government, before any IMF program goes forward.
Senator McCaskill. OK. Thank you for that and we will have
some followup questions on that.
Finally, a couple of things I want to do. One is CERP. I
have had many conversations in the Armed Services Committee
with General Petraeus and others about CERP, Ash Carter and
others about CERP. Do you all have, in the Department of
Defense, an analysis of where CERP money has been spent in
relationship to where there have been challenges in terms of
our military mission and what kind of success the CERP funds
have, in fact, brought about? Is there data?
Mr. Sedney. Senator McCaskill, I do not know of any study
yet that has been done on the connection of CERP funding to
military success. While we have repeated statements and
validation from commanders in the field, as far as I know, and
I will check and see to make sure, there has been no study
trying to validate any statistically valid correlation between
CERP spending and military success.
In Afghanistan, since we are still in the process of
developing or achieving that success, my own view would be that
it would be too soon to be able to make such an evaluation
because we are still in the process of carrying out the war.
Senator McCaskill. Well, we have done CERP now for as long
as I have been in the Senate, and so we have lots of CERP money
that has been spent in Iraq and Afghanistan. And this is my
specific question and I would ask you to take it for the
record, because I want you to be sure before you answer this
question.
Does the Department of Defense, does the American military
have data that would lay over where CERP money has been spent
versus hot spots to determine whether or not the CERP money is
actually being spent in areas where there are hot spots as it
relates to our military mission? And if so, is there any data
available about the success of that CERP money in terms of
helping directly with the military mission other than
anecdotal?
Mr. Sedney. In terms of the first part of your question,
yes, we do have data which shows where CERP money is being
spent and where there is insurgent activity, and that is
something that we can provide to you.
On the second part, as I said, on the evaluation of the
success in Afghanistan, which is the area that I am responsible
for, I do not think we yet have the data to be able to evaluate
the success because we are still in the process of carrying out
the fight.
But certainly on the first part of the data that you
requested, we will be able to provide that to you. On the
second part, I will consult with my colleagues and see if doing
a study on success of CERP in Afghanistan is something that
would be something we would want to try and do now or do it
more retrospectively as we are further along in the campaign.
information for the record
Yes. The Department of Defense does have a map overlaying
CERP expenditures with areas of Afghanistan that are a priority
in the military campaign. Attached is the ``For Official Use
Only'' chart that overlays CERP project locations relative to
the map of Afghanistan.
Senator McCaskill. Mr. Solis, do you have any----
Mr. Solis. Senator, if I could, and I did not do this
particular study on CERP, but I do know that we did make a
recommendation along the lines that you mentioned about trying
to measure success against some set of standards and metrics,
and that was in a recent report. The Department did concur with
that.
So there is a recommendation out there to do that and the
Department has concurred.
Senator McCaskill. To do that kind of study----
Mr. Solis. Yes.
Senator McCaskill [continuing]. So we could get some kind
of sense of the efficacy, because essentially, we have now
moved beyond CERP into much bigger projects based on AIF, and
it worries me that we have done that without really checking to
see if CERP was a success in terms of the mission and whether
or not the Afghan people need power, I understand that it would
be nice to have the lights on, but I need to make sure that
spending hundreds and hundreds of millions of dollars on the
power grid and the power system in Afghanistan is, in fact,
going to translate into defeating the Taliban.
It is nice that we turn on the lights for them, but it
would also be nice if we got more broadband in Missouri. And
those are the kinds of decisions we have to make, and I worry
that the blinders get on and we lose perspective about whether
or not these projects are essential to the mission of defeating
the Taliban and providing stability.
I am not quarreling that we have to train the army. I am
not quarreling we have to train the police. But I just think it
is time for us to really button down whether or not building
the roads, the schools, and building the justice centers that
we are building, and sometimes USAID is building them,
sometimes the Department of Defense is building them. Is the
Army Corps taking the lead on all these projects, the AIF
projects?
Mr. Sedney. I know they are taking the lead in at least one
of them, but I can get back to you with who is on the lead.
information for the record
The U.S. Army Corps of Engineers is the lead for four of
the FY 2011 Afghan Infrastructure Fund projects--three power
projects and one transportation project. Other components
within the Department of Defense will implement the Provincial
Justice Centers project, and the Rule of the Law Field Force-
Afghanistan--a subordinate command of U.S. Forces-Afghanistan--
will oversee them. USAID will implement one of the power
transmission projects that will be executed in concert with the
Afghanistan power company--Da Afghanistan Breshna Skerkat
(DABS).
Senator McCaskill. And I assume all of these are being
contracted out?
Mr. Sedney. We are in the process of doing that, but yes,
they will be--they will be contracted, although I think--I will
have to take that question, ma'am.
information for the record
Yes, all six fiscal year 2011 Afghanistan Infrastructure
Fund projects will be contracted out, in accordance with the
``Afghan First'' policy. As delineated in DOD's AIF
notification to Congress, the Department of State/USAID will
implement one of the projects, and the Department of Defense
will implement the other five projects.
Senator McCaskill. OK. I have a number of other questions
in here. You all have stayed long and this hearing was supposed
to be over at noon. Sorry. I have to ask about counter-
narcotics before we go.
The Committee released a report, Mr. Denver, on the
counter-narcotics contracts in Afghanistan. Frankly, it dealt
with all the counter-narcotics moneys that we have spent and
the problems there. First, for Mr. Denver, what have you done
to improve the management of the counter-narcotics contracts in
Afghanistan, and if this is something you are not prepared to
answer today, we are happy to take it for the record.
Mr. Denver. Thank you, Madam Chairman. I will need to take
this for the record. I do know that the Space and Missile
Defense Command is the Army organization that oversees the
counter-narcotics contracts so I will need to take it for the
record and coordinate with them and get back to you.
information for the record
The Army appreciates the opportunity to share the progress
made in the management of counternarcotics contracts in
Afghanistan. The U.S. Army Space and Missile Defense Command/
Army Forces Strategic Command (USASMDC/ARSTRAT) Contracting and
Acquisition Management Office (CAMO) is the primary Army
contracting office awarding and managing contracts in support
of counternarcoterrorism and the Department of Defense Counter
Narcoterrorism Technology Program Office (CNTPO). USASMDC/
ARSTRAT CAMO has implemented many improvements since the 2009
Department of Defense Inspector General Report was published
(D-2009-109, Contracts Supporting the DOD Counter
Narcoterrorism Technology Program Office).
Personnel improvements include growing the contracting team
from two to nine and the project management team has grown from
8 to 21 government personnel. Recruiting actions have targeted
particular skills that closely match the functional expertise
of the missions supported, training has been tailored to
reflect the unique aspects of the types of missions supported,
and continuous learning is embraced as a mandate to ensure
training is sufficiently robust to meet missions support
requirements.
Process improvements have been made to ensure the
comprehensiveness of files. Templates and desk guides have been
developed to aid in the training of new personnel and ensure
consistency and continuity of work products.
A quality assurance hierarchy had been implemented that
provides a team approach to quality assurance. Of importance is
the location and approach to QA. Given the complexity and
nature of the acquisitions supported in Afghanistan, CNTPO has
stationed a forward deployed QA cell, from which skilled QA
evaluators deploy to specific performance locations throughout
the theater of operations and local geographic area.
Although substantial progress has been made to remedy
concerns voiced in the 2009 Defense Inspector General Report
(D-2009-109, Contracts Supporting the DOD Counter
Narcoterrorism Technology Program Office), USASMDC/ARSTRAT CAMO
still faces many challenges. A program of this nature requires
uniquely skilled professionals, dedicated to keeping pace with
evolving requirements. Like many organizations, staffing
authorized must appreciate not only the level of resource
required, but must also understand that it takes a complement
of skills to ensure all aspects of the acquisition are properly
and effectively executed. These actions are directly improving
the execution and oversight of these critical activities;
however, the challenges of the operational environment, changes
in requirements, funding priorities and the experience level of
new personnel remain.
Senator McCaskill. OK. USAID, Mr. Thier, since 2002, has
awarded $1.4 billion for agricultural programs as a means to
encourage farmers to engage in something other than opium
farming. There is concern that these programs are distorting
the Afghan economy or creating false economies that are
unsustainable. Do you have any real measure of the impact of
these programs, and will any of these impacts be sustainable in
terms of the alternative agricultural programs?
Mr. Thier. I would be happy to get you more on the
measures, but to fundamentally answer your question, yes. I
think that this investment in agriculture, which has really
been about finding alternatives for people who are growing
opium poppy, has been dramatically successful in two regards.
First of all, a large number of provinces, and I can also get
you the number, have gone opium-free, and that has been very
important to our strategy of trying to reduce and eliminate
opium production in Afghanistan.
The other is that there really is no silver bullet to
replace opium in Afghanistan, but what we are trying to do is
to create an agricultural mix and market for those agricultural
products that will allow Afghan farmers to be able to make a
decent living so that the choice to plant opium will be far
less attractive, vis-a-vis, other efforts.
And we have reached literally tens of thousands of farmers
with these programs that have increased crop yields
dramatically, and I think we are quite proud of that
investment, and I do think it is a long-term investment because
they are able to generate seed from those, they have opened up
new markets, we are increasing trade across the borders as
well, and it is really a critical part of our ultimate
sustainability strategy for Afghanistan to increase
agricultural income.
Senator McCaskill. I think it is a terrific program. I know
that we have a Missouri National Guard unit that is over an
agricultural program and has done great work. In fact, we lost
one of ours over there that was there on that program.
Let us talk about now not the agricultural program, but for
both DOD and for USAID. We have now spent $2 billion in
counter-narcotics contracts in Afghanistan. Can either of you
speak to any specific milestones that have been reached in
terms of having a negative impact on the narcotics trafficking
in Afghanistan and exporting out of Afghanistan after we have
spent $2 billion?
Mr. Thier. Our work again really focuses on the crop
replacement side. Other aspects of the State Department are
responsible for the elements of interdiction and law
enforcement. Our efforts focusing on agriculture have really
been, as I said, to find replacement crops.
I think one of the most significant factors that I noted is
that a large number of provinces that were planting opium just
a few years ago have gone poppy-free.
Senator McCaskill. Have we actually measured the amount of
opium being produced in Afghanistan and do we have milestones
in each year as to where we are in that metric?
Mr. Thier. We do not do that, but there are very intensive
measurements that are done on a year-by-year basis of the opium
crop, of its price, of the number of hectares. There was a
dramatic decline last year that was in part due to blight, but
also, I think, due to other programs as well.
Senator McCaskill. Maybe we need to figure out that blight,
work the blight. Maybe it will be less expensive than $2
billion. I would like to get that information, if I could, from
your colleagues at either DOD or at State, what milestones we
can point to that this investment of $2 billion has been a wise
investment.
I think the alternative crops, obviously, if we can show--I
mean, one is going to prove the other. But I guess the question
is, and you are not the right person. We will try to pose
questions to the right people if you will help us find them.
And it may be, Mr. Sedney--I was hard on you today--you may
not have been the right person to be at this hearing. But we
struggle when we do these hearings and that is part of our
problem, and I will close with this. It would be great if I
could get the right people in front of this hearing that
actually I can hold accountable on contracting in Afghanistan
for infrastructure.
But it is harder than it looks to find the right people
because it is not clear who really is making the decisions at
the front end as to where the money is going to go, the
decisions in the middle as to the contracting process, and the
decisions at the end as to whether or not we have done an
adequate job assessing sustainability.
I certainly will look forward to the input from DOD after
you look at the sustainability rationale that has been laid out
for the projects in the AIF, and I think you are going to
continue to hear more and more questions in this area as we try
with all of our might to find every taxpayer dollar we can in
terms of spending less.
I am not here to say I do not support the mission in
Afghanistan, I do, but I question whether all of the money we
have spent on contracting in the effort against
counterinsurgency, whether or not we have any value for it. And
this has been a giant experiment, what we have done in Iraq and
Afghanistan, and so far, from where I sit, in terms of doing
contracting oversight, I think the grade is not a good grade in
terms of the amount of money we have spent and what we have for
it in the long run.
So, I thank all of you. We will have questions for the
record and I really appreciate your time this morning.
Mr. Solis. Senator, if I could add just one thing----
Senator McCaskill. Yes, Mr. Solis.
Mr. Solis [continuing]. About sustainability very quickly?
While our work focused mostly on the oversight of contractors
at DOD, as we looked at it, some of the outcomes that you could
have is poor construction. And as we talk about sustainment,
you cannot assume that what we have out there is already ready
to go in terms of people just going in and using it and then be
able to sustain it.
I think what you have also got to look at is, what is it
going to take to possibly rebuild or reconstruct----
Senator McCaskill. Right.
Mr. Solis [continuing]. Facilities that are already there.
And some of our work has shown that a lot of these buildings
that are out there, particularly on some of these bases, are
not ready to be moved into. And so, I think as you think about
sustainment, you are going to also have to think about, are we
ready to move folks in, what is it going to cost to rebuild or
reconstruct those buildings.
Senator McCaskill. You are right at the back end. I mean,
we have the front end deciding where the money is going to go,
we have the middle portion which is actually letting the
contracts in a cost-effective way and overseeing the contracts,
and then at the back end, who do we hold accountable if the
structures are substandard, if they are not to spec, if they
are not going to work for the purposes they were intended.
That is what we saw so frequently in Iraq, frankly, and
some of it dealt with the safety and security of our troops in
terms of the construction that had been done. Other was
construction. The health centers are a famous example of the
health centers that somebody got paid for and the ones that
were built were not capable of being used, and the ones that
were not built, we never got the money back.
So there is a disconnect between what the commanders in the
field want to have happen and what actually happens, and the
money that is spent from that point to that point is where I
think we can save billions and billions of dollars if we really
work at getting this right.
It is better, the CORs are better, they certainly are
better. The CORs are now being trained. When I first started
down this path, when the idea for the War Contracting
Commission was just an idea that I came up with because I am a
student of history and what Harry Truman did after World War
II, and I thought it was time that we did that after what I
learned in Iraq, and Jim Webb and I worked hard to get that
contracting commission established.
But we are a long way from where we need to be, and I want
the Department of Defense to take this really seriously and I
want AID to take it really seriously because what is going to
happen is the American people are going to turn off the spigot
if we do not do this right, and they have a right to turn off
the spigot if we do not do this right, and there is so much
work to be done.
If all of you would just study the work that GAO has done,
we could make huge progress. But somehow that just does not
ever happen. It is painful how long it is taking to get the
accountability we need and to even get the accurate
information.
So I will continue to followup with the new Secretary of
Defense on this. He and I have discussed it. I have had many
conversations with commanders on this subject matter and
everyone nods their head and says they get it, but it is not
getting done right and it needs to improve.
Thank you all very much for being here today.
[Whereupon, at 12:40 p.m., the hearing was adjourned.]
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