COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM EDOLPHUS TOWNS, New York, Chairman PAUL E. KANJORSKI, Pennsylvania CAROLYN B. MALONEY, New York ELIJAH E. CUMMINGS, Maryland DENNIS J. KUCINICH, Ohio JOHN F. TIERNEY, Massachusetts WM. LACY CLAY, Missouri DIANE E. WATSON, California STEPHEN F. LYNCH, Massachusetts JIM COOPER, Tennessee GERALD E. CONNOLLY, Virginia MIKE QUIGLEY, Illinois MARCY KAPTUR, Ohio ELEANOR HOLMES NORTON, District of Columbia PATRICK J. KENNEDY, Rhode Island DANNY K. DAVIS, Illinois CHRIS WAN HOLLEN, Maryland HENRY CUELLAR, Texas PAUL W. HODES, New Hampshire CHRISTOPHER S. MURPHY, Connecticut PETER WELCH, Vermont BILL FOSTER, Illinois JACKIE SPEIER, California STEVE DRIEHAUS, Ohio JUDY CHU, California DARRELL. E. ISSA, California DAN BURTON, Indiana JOHN L. MICA, Florida JOHN J. DUNCAN, JR., Tennessee MICHAEL R. TURNER, Ohio LYNN A. WESTMORELAND, Georgia PATRICK T. McHENRY, North Carolina BRIAN P. BILBRAY, California JIM JORDAN, Ohio JEFF FLAKE, Arizona JEFF FORTENBERRY, Nebraska JASON CHAFFETZ, Utah AARON SCHOCK, Illinois BLAINE LUETKEMEYER, Missouri ANH “JOSEPH" CAO, Louisiana BILL SHUSTER, Pennsylvania RON STROMAN, Staff Director Michael McCARTHY, Deputy Staff Director CARLA HULTBERG, Chief Clerk LARRY BRADY, Minority Staff Director (II) TRANSITION IN IRAQ: IS THE STATE DEPART- MENT PREPARED TO TAKE THE LEAD? THURSDAY, SEPTEMBER 23, 2010 HOUSE OF REPRESENTATIVES, COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM, Washington, DC. The committee met, pursuant to notice, at 10:07 a.m. in room 210, House Visitor Center, Hon. Edolphus Towns (chairman of the committee) presiding. Present: Representatives Towns, Maloney, Cummings, Kucinich, Tierney, Clay, Watson, Connolly, Quigley, Norton, Cuellar, Speier, Driehaus, Issa, Duncan, McHenry, and Luetkemeyer. Staff present: John Arlington, chief counsel—investigations; Kwame Canty, senior advisor; Craig Fischer, professional staff member; Linda Good, deputy chief clerk; Katherine Graham, inves- tigator; Carla Hultberg, chief clerk; Marc Johnson and Ophelia Rivas, assistant clerks; James Latoff, counsel; Amy Miller and Gerri Willis, special assistants; Brian Quinn, investigative counsel; Jenny Rosenberg, director of communications; Leneal Scott, IT spe- cialist; Ron Stroman, staff director; Larry Brady, minority staff di- rector; John Cuaderes, minority deputy staff director; Rob Borden, minority general counsel; Adam Fromm, minority chief clerk and Member liaison; Moly Boyl and Mark Marin, minority professional staff members; Justin Lorranco, minority press assistant and clerk; Ryan Little, minority legislative assistant; Ashely Callen, minority counsel; Tom Alexander, minority senior counsel; Jon Skladary, mi- nority chief counsel; and Jennifer Safavian, minority chief counsel for oversight and investigations. Chairman TOWNS. The committee will come to order. Good morning and thank you all for being here. For the past 7 years, the military has led the charge in Iraq. In addition to providing security, the military has trained and equipped Iraq's security forces and has overseen billions of dollars of reconstruction projects. The military has also provided vital Sup- port to the other U.S. agencies operating in Iraq: food, housing, transportation, and medical evaluation services have all been man- aged or carried out by the Defense Department. All that is about to change. Under President Bush's agreements with the government of Iraq, U.S. military forces are to complete their exit from Iraq by December 31, 2011. As a result, we have reached a new phase in Iraq, a phase that places less reliance on our troops and more on our civilian agencies. This new phase has been called, “Operation New Dawn,” but from where I am sitting it should have been called, “Operation New Challenges.” (1) P- 2 As we reduce the number of troops in Iraq, many duties now per- formed by the military will be transferred to the State Department. The size and complexity of State's new role in Iraq is unprece- dented. Numerous important issues appear to be unresolved. The State Department will take over many functions that are inher- ently military, for which State has little or no expertise. This raises important practical questions. Who will provide secu- rity for State Department employees? Who will recover personnel who are wounded or killed? Who will provide convoy security? Who will provide counter-fire in rocket artillery and other mortar at- tacks? Who will recover damaged vehicles and downed aircraft? Who will provide explosives disposal? Even basic questions of what military equipment will be transferred to the State Department and who will apply rules for the use of force have still not been set- tled. Without the State Department having the expertise or the staff to carry out these functions, State will be forced to turn to contrac- tors to fill this gap. For example, the Wartime Contracting Com- mission estimates that State will need more than double the num- ber of security contractors it currently has in Iraq, to as many as 7,000. The State Department must also grapple with how it intends to provide basic life support services. Despite poor past performance by KBR, the Army recently made the highly controversial decision to extend KBR's sole source contract under LOGCAP 3 instead of competing it under LOGCAP 4. The implications of this Army deci- sion are unclear. With the huge increase in the number of contractors and con- tracting costs, the State Department will need to closely monitor these contracts. Unfortunately, providing effective contract over- sight has not been the State Department's strongest suit. The State Department Inspector General, the Special Inspector General of Iraq Reconstruction, and GAO have all found significant weaknesses in the State Department's contract management in Iraq. Even the State Department's Assistant Secretary of Manage- ment has acknowledged a lack of contract experience and expertise within the agency. Six months ago Ambassador Patrick Kennedy wrote to the De- fense Department outlining these issues and requesting help. De- fense has still not fully responded. This apparent lack of coopera- tion is unacceptable. These issues cannot be ignored. We cannot sit on the sidelines and hope these problems take care of themselves. The risks are too high to botch the transition and we cannot turn a blind eye to reck- less contractors. We cannot afford to lose the gains our service men and women have fought so hard for over these years. I look forward to hearing testimony from the Commission on Wartime Contracting, as well as the Special Inspector General for Iraq Reconstruction. Both the Commission and the IG have com- pleted important work in these areas and continue to be an impor- tant asset to the Congress. |The prepared statement of Chairman Edolphus Towns follows: 3 HOUSE COMMITTEE ON OVERSIGHT & GOVERNMENT REFORM OPENING STATEMENT OF CHAIRMAN EDOLPHUS TOWNS “TRANSITION IN IRAQ: IS THE STATE DEPARTMENT PREPARED TO TAKE THE LEAD?” September 23, 2010 Good morning and thank you for being here today. For the past 7 years, the U.S. military has led the charge in Iraq. In addition to providing security, the military has trained and equipped Iraq’s security forces and has overseen billions of dollars of reconstruction projects. The military has also provided vital support to other U.S. agencies operating in Iraq–food, housing, transportation, and medical evacuation services have all been managed or carried out by the Defense Department. All that is about to change. Under President Bush's agreement with the Government of Iraq, U.S. military forces are to complete their exit from Iraq by December 31, 2011. As a result, we have reached a new phase in Iraq–a phase that places less reliance on our troops and more on our civilian agencies. This new phase has been called “Operation New Dawn.” But from where I am sitting, it should have been called “Operation New Challenges.” As we reduce the number of troops in Iraq, many duties now performed by the military will be transferred to the State Department. The size and complexity of State's new role in Iraq is unprecedented. Numerous important issues appear to be unresolved. - 2 - The State Department will take over many functions that are inherently military and for which State has little or no expertise. This raises important, practical questions. Who will provide security for State Department employees? Who will recover personnel who are wounded or killed? Who will provide convoy security? Who will provide counter-fire in rocket, artillery, and mortar attacks? Who will recover damaged vehicles and downed aircraft? Who will provide explosives disposal? Even basic questions of what military equipment will be transferred to the State Department and who will apply rules for the use-of-force have still not been settled. Without the State Department having the expertise or the staff to carry out these functions, State will be forced to turn to contractors to fill this gap. For example, the Wartime Contracting Commission estimates that State will need more than double the number of security contractors it currently has in Iraq, to as many as 7,000. The State Department must also grapple with how it intends to provide basic life-support services. Despite poor past performance by KBR, the Army recently made the highly controversial decision to extend KBR's sole-source contract under LOGCAP 3 instead of competing it under LOGCAP 4. The implications of this Army decision are unclear. With the huge increase in the number of contractors and contracting costs, the State Department will need to closely monitor these contracts. Unfortunately, providing effective contract oversight has not been the State Department’s strong suit. The State Department Inspector General, the Special Inspector General for Iraq Reconstruction, and GAO have all found significant weaknesses in the State Department's contract management in Iraq. Even the State Department's Assistant Secretary for Management has acknowledged a lack of contract experience and expertise within the agency. gº- 6 Chairman TOWNS. At this point I would like to yield 5 minutes to the ranking member of the committee and say to him that these digs over here are just temporary. We will be moving back to our regular quarters after the completion. Mr. ISSA. Mr. Chairman, on so many things we find common ground. We find the ability to come together and to agree. Today's hearing is an example, leaving these digs is not. [Laughter.] Mr. Chairman, today's hearing is important and it is bipartisan. Now, we use the words bipartisan, nonpartisan, all these other things, pretty often around here. It is pretty clear that the Iraq and Afghanistan wars, although supported for the troops, have not al- ways been equally supported on both sides. But as we are nearly 2 years into a new administration and America's vital national interests have fully transitioned from one President and one administration to another, and persistent prob- lems remain, as the Commission on Wartime Contracting issues its report, the Special Inspector General's reports have been keenly looked at by this committee, it is pretty clear that 7, 8 years of one President in war and 2 years of another President at war look a lot the same. We are going to hear today about a number of needs in the tran- sition. These are not new needs. Certainly, this committee has staked out a great deal of jurisdiction over the question of outsourcing of inherently governmental activities. In fact, no com- mittee owns more of the responsibility to get it right in the future than this. The Diplomatic Security Service is woefully understaffed. Now, 9 years ago when that was the case, nobody was surprised. First one and then another war in which diplomats in great numbers were deployed while we were still at war and/or in an occupation created a unique need. We never intended our diplomatic services to need attack helicopters, overhead eye in the sky, predator drones, and the like, but they did. Now, nearly a decade later and two Presidents into two wars, we realize that there is an ongoing elevated need for a level of security to be provided for our diplomats that is not appropriate to provide by uniformed services. It is not that the U.S. Army, Navy, Air Force haven't done a great job. They have. But they are not, in fact, the appropriate people to stand by a diplomat as he goes in saying, this is about peace. Our Marines, and I represent Camp Pendleton, have for virtually our entire time as a country guarded embassies. But as the dip- lomats go out, they need to go out in civilian clothes with, to the greatest extent possible, a peacetime look. This is not currently possible through Government employees. And the contracting sys- tem has been controversial. One, because it costs a great deal to employ somebody in these areas, and because it has been viewed as temporary, and as a result the high cost and the lack of a sys- tematic approach for what the rules of engagement will be have caused us diplomatic problems time and time again. This commit- tee has held hearings on many of those diplomatic problems. Although this committee often looks at waste, fraud, and abuse through the eyes of dollars, and the projected costs and overruns that we will discuss today are huge and need to be addressed, I Statement of Rep. Darrell Issa, Ranking Member Page 2 Thank you, Mr. Chairman. I look forward to a vigorous discussion with today's witnesses, and I yield back the balance of my time. ### 11 sioner Shays is, as you mentioned, bipartisan and absolutely in synch with our efforts today. Chairman TOWNS. We were looking forward to seeing him be- cause he served on this committee for a number of years. I am happy to know that he didn’t feel it was a conflict of interest. Mr. ISSA. We had a few questions for him from his time here that we are still hoping to ask. Mr. THIBAULT. Thank you. Chairman TOWNS. And we wanted to show him our new digs. Mr. THIBAULT. The future of the new Iraq is unsettled. This past Sunday, as the Washington Post reported, six car bombings in Baghdad and a suicide bombing in Fallujah killed 37 people and wounded more than 100. Iraq remains a dangerous place. The com- bination of a military withdrawal, a persistent security threat, and a return to customary intra-governmental relations brings us to our concerns for this hearing. The U.S. Embassy will remain after U.S. troops withdraw from Iraq. These circumstances combine to create what may be a unique situation in American history: a diplomatic presence re-established and expanding in a country that appears unable to provide normal º country security and services, while the U.S. military with- I’a WS. The scheduled withdrawal of the U.S. military forces leaves State very little time to arrange for the alternative provision of functions. One example best highlights the many challenges facing the State Department. When insurgents attack U.S. bases, they often include rocket and other indirect fire as part of that attack. Presently, the U.S. Army has a sophisticated and highly effective system to provide immediate warning for these rocket attacks. This system is called the counter-rocket and mortar system. Within sec- onds of an enemy rocket or mortar launch, there is a warning for all base occupants. This system has saved countless lives. Also included is a counter-battery system where military indirect fire experts locate and return fire onto enemy insurgents. This counter-battery effort takes 6 to 8 seconds and is critical. As a re- sult, enemy insurgents seldom fire more than one rocket, as they know they will be targeted. The State Department recently received an unsolicited contractor proposal and now has identified a commercial variant to replace the current system. They are presently evaluating how this system can be acquired. Even more troubling in this example, State Department execu- tives informed us this week that the counter-battery effort will be terminated. Enemy insurgents will be delighted when they learn and experience that they will not be immediately targeted and brought under fire by the military. Where our enemies work very hard to launch a single rocket, there will be little reason to not launch entire batteries of rockets. There will be no military con- sequences for them. Commission concerns were recently validated by a June 21, 2010 Capitol Hill hearing. Among the troubling testimony we heard that day was what you have previously mentioned, Mr. Chairman, the Department of State estimates that without U.S. military support 12 it will need to raise its private security force from 2,700 to almost 7,000. Under Secretary of State Patrick Kennedy wrote to the Depart- ment of Defense almost 6 months ago to request a substantial amount of military information plus continued access to the Army's LOGCAP logistics contract and continued food and fuel supply through the Defense Logistics Agency, and we found that DOD's joint staff at that time had not forwarded that request with a rec- ommendation to the Office of the Secretary. We have been informed informally that they have, but we attempted to reach confirmation on that and we were unable. In summary, State Department program leaders have been dealt a hand that includes unknown contract and program support from the Department of Defense, funding limitations likely to impact their mission capability, and the need to contract for and perform functions that have never been done by their Department. We be- lieve that the State Department has been placed in an unfair posi- tion as they work to deliver on critical mission requirements in the continuing effort to stabilize and reconstruct Iraq. That concludes our joint statement, Mr. Chairman and Ranking Member Issa. We thank the committee for its attention and wel- come your questions. [The prepared statement of Mr. Thibault and Mr. Green follows: 19 formal request for assistance to the Department of Defense. When we checked earlier this week, no decision had yet been communicated. Specifically, State Department leadership informed us two days ago that their request for DoD support remained outstanding and that they have been compelled to pursue two separate contracting strategies simultaneously—one that assumes the requested. DoD support, while the other develops a separate and greatly expanded contractor workforce to replace functions previously performed by DoD. The need to develop two separate plans is simply the result of the Department of Defense's reluctance to articulate where and how they can best support the Defense-to-State transition in Iraq. Senior level leadership, at the State and DoD Secretarial level, needs to engage and provide direction on this process. It is simply too important to do otherwise, Compounding the challenge of transitioning this work is the need for the State Department to build-out and support at least five, and more likely nine, other separately located sites for the Department of Defense’s Organization for Security Cooperation, which will manage foreign military sales activities in Iraq. This transition limbo has other deep implications. It raises the serious risk that State will be required to undertake a very large, hurried, expensive, and unprecedented exercise in contracting unless some change is negotiated in the 25 that you are going to probably double or even maybe triple the amount that is in there now. Mr. THIBAULT. Right. Mr. Chairman, the management of security contractors for the Department of Defense and the Department of State has been a challenge. There have been numerous instances that we have reported where they are not providing the kinds of quality and background investigation that many of the security of— ficials or contractors should have. In the case of the State Department, they are going to be chal- lenged with potentially tripling the size of their security force. It is unprecedented. They acknowledge it is unprecedented. The other item I think that is important that Commissioner Green brought up is many of these inherently governmental items that are being transitioned to State from the military represent items where this Commission feels that the U.S. military is the su- perior performer, and many of them relate to security. With no dis- respect for contractors, those items that are inherently govern- mental, where professional military best performs it, should and could remain with the military. Chairman TOWNS. Let me be very basic. What can we do to make this transition work? Mr. GREEN. I think two things come to mind, and that is the in- creased, expanded, and continuing dialog and coordination between the State Department and the Defense Department. As Chairman Thibault mentioned in his opening remarks, there has been a dia- log. It has mostly been at the middle management level. They have certainly progressed from the time that I was in-country the end of May and spent a week with the State Department talking about the transition. U.S. forces Iraq has been very forthcoming in pro- viding liaison people and advisors to the Embassy, but that has to continue. Where I see a void is, and I go back to my time in the State De- partment when I was responsible on the State side for the transi- tion from the Coalition Provisional Authority, Ambassador Bremmer, to the new embassy. I had a counterpart from the De- fense Department, a retired Army lieutenant general that worked directly for the Secretary. He was that “belly button,” and he came over there with a gaggle of colonels and helped us through that process. That process was nothing compared to what we are facing today. Where I see a hole is that we don’t have or I don’t know of a per- son, we don’t have a single person from the Defense Department that can run interference and make things happen. We mentioned the LOGCAP contract and the request for equip- ment and support for LOGCAP DLA that went to the Defense De- partment in April. As far as we know, it is still sitting there. We need somebody that can walk into the Deputy's office or even the Secretary's office and say, sir, we have to move this. We have to make a decision. If it is yes, great. If it is no, let's make a decision. Because much of the planning that State has to do today in-country cannot be done until they know the status of LOGCAP, as an ex- ample. Chairman TOWNS. OK. My time is up. 29 The Washington Post, same Washington Post article, also tells of a real struggle inside the administration where President Obama kept asking for an exit plan to go along with any further troop com- mitment and is growing increasingly frustrated with the military hierarchy for not providing one. So I think what is going on here, based on what this testimony is, is that the Department of Defense isn’t getting its way. The top military commanders like Petraeus want to stay in Iraq, and so it is OK with them if the State Department's mission collapses, be- cause then that opens the door for them to come in and to stay. This is so clear to see, and this testimony has to be put in the con- text of a desire of certain top military commanders to thwart, frus- trate, delay, and otherwise impede an exit strategy from Iraq. I mean, this Woodward book is an important book that is coming out, but you have to look at the struggle that has been going on within the administration to try to end the war. They might be good soldiers, they might be fine individuals, but they should not be making the policy for the United States of America. That is up to the President of the United States. We see this report. It is a very disturbing report and Woodward's book. And when you hear this testimony today and you put it to- gether with this emerging view of what is going on, there is just no question that the Department of Defense will do anything it can at this point to thwart the mission of the State Department to try to achieve a peaceful transition. Very clear that is what is really going on here. It is just so clear I am amazed, but you can't say it, Mr. Thibault, but you have said it in so many words or less. I have numerous questions to ask you, but after I read your report and I am think- ing about what I read yesterday, Mr. Chairman, what we really ought to be doing is calling the Secretary of Defense in front of this committee and General Petraeus and get them to explain why they are not cooperating with the State Department. That is what we really need to do. The State Department has been given a mission impossible, given the fact that the Department of Defense is not co- operating. And we know why: they don’t want to leave. Why don’t they want to leave? That is a subject for another hearing. I don’t have anything more to say. Chairman TOWNS. I thank the gentleman for his statement. I now yield 5 minutes to the gentleman from Missouri, Mr. Luetkemeyer. Mr. LUETKEMEYER. Thank you, Mr. Chairman. The title of the hearing today is Transition in Iraq: is the State Department prepared to take the lead? And in your summary, Mr. Thibault, you list a list of concerns here: unknown contract and program support from DOD, funding limitations likely to impact mission capability, need to contract for and perform functions that have never been done by the Department, and feel the Department has been placed in an unfair position to be able to deliver on their mission. I guess my question is: you sort of prefaced in your summary here the reason for failure of the State Department to be able to lead and/or its concerns about leading, and I wish you would elabo- 30 rate on that because I would like to know, is the State Department prepared to lead on this? Mr. THIBAULT. Our assessment, my assessment, is they are pre- pared to lead if they must. Their preference is to do as has been discussed here earlier, which is those organizations that can best provide support would provide them the support. That is the re- quest. And the point is the request has been out there almost 6 months, and so they are going with a dual approach of planning, which doesn't make a lot of sense to us. Their approach is: if the Department of Defense gives us support, here is what we can do, but if they don't give us support—and they have begun solicitation planning to use contractors for the many items introduced in our statement and in our prior report simply because they may not have a choice. And the points that have been made here, what we are trying to force out is a decision and then a debate on that decision, and the decision just is not forthcoming. Mr. LUETKEMEYER. OK. So you delineated the concerns and the problems, and obviously there is some give and take here on what is going on. Let me back up a little bit to a couple things. During your testimony you raised some questions. One of the things you talked about is the MRAPS are going to be allowed to be used by the contractors. How much equipment are we going to be leaving behind or reassigning to the contractors? Do we give up ownership of this as the United States, or is it going to be ours and going to be utilized by the contractors? How does that work? Mr. THIBAULT. Right. This would be still be government-owned equipment. The State Department provided a page-long, very de- tailed request for various equipment items, to include MRAPS and aviation transport and other types of critical equipment. That is also part of the request that is out there that hasn't been forthcom- ing. But the government would own it. But I think the example of Commissioner Green, MRAPS go where there are security issues. Mr. LUETKEMEYER. Right. Mr. THIBAULT. Everyone here knows that there is a gunner on top of an MRAP, and the gunner's job is to provide safety. And we can say it is defensive, but it is really offensive. It is to take down insurgents. That is the great example of government-owned equip- ment that is going to be operated by contractors unless this coordi- nation process evolves into something more meaningful. Mr. LUETKEMEYER. What do you believe the mission to be for the transition here over to the State Department? Do you believe it to be a military operation yet, or is it turned completely into a politi- cal operation, or is it a combination of both? Mr. THIBAULT. Well, I would say their mission that they would see is a diplomatic mission in an environment that is absolutely not secure. So by default, if they are providing all services, it has to be a combination of both. Mr. LUETKEMEYER. OK. Well, during your testimony you also made a comment, something about the military was unable to re- spond to an attack under the new guidelines here, or did I mis- understand that? Mr. THIBAULT. No, sir. 34 Mr. GREEN. I would concur. I think the difficulty here—and we haven't talked much about this—is we are really in a box. We have until December 2011 to get all troops out of country, and there really is no alternative, if that is the way we are going. There is no alternative to contractors, whether they are doing inherently governmental things or they are running a mess hall. Until when and if that decision is modified, we are going to do it with contrac- tors. Mr. CONNOLLY. Let me ask on contracting, one estimate of the number of security folks we are going to need, the State Depart- ment is going to need in taking over new responsibilities is they probably need somewhere in the vicinity of 6,000 or 7,000 contrac- tors. Mr. THIBAULT. Correct. Mr. GREEN. Correct. Mr. CONNOLLY. You would agree with that number? Mr. GREEN. Yes. Mr. THIBAULT. Yes, sir. Mr. CONNOLLY. And how are they coming along in securing con- tracts to secure 6,000 to 7,000 private contractors for security? Mr. GREEN. I don't know. Mr. THIBAULT. I think I can assist with that. They have several solicitations that are in the works because of the growth, and the solicitations generally go toward existent companies with a proven record, contractors, because they have confidence in working with them, and in a very short turn-around you tend to go with those organizations. They try to utilize competition, but it is not as broad a base as might be desirable simply because of the expedient na- ture of the mission. Mr. CONNOLLY. Are we confident that there won't be any holes in the security apparatus because of contracting mechanisms, or delays in the signing of contracts and the execution thereof.” Mr. THIBAULT. Well, the execution is interesting, because the way they are aligning is right now, using Iraq, it could fit Afghani- stan I guess, but there are about 50 military bases, forward bases and military bases. That will go to maybe 14 or 15, counting those º: are there for the Department of Defense for foreign military SaleS. By necessity, what they have done is cut back their diplomatic capability to travel throughout the country, so one of the implica- tions and outcomes— Mr. CONNOLLY. They being our State Department? Mr. THIBAULT. State Department. Mr. CONNOLLY. Yes. Mr. THIBAULT. They will not do the diplomatic mission to the ex- tent they would like to because, even with 7,000, they have cut back dramatically. For example, the number of what they call PRTs, or the provincial teams that build diplomacy and build rela- tionships and provide assistance, that has been totally pulled back to their four existing bases because of security. That is with 7,000 additional security individuals. If they tried to keep it the way that they had it, I have no idea what that number would be, but it would be substantially more, maybe double. 36 Mr. THIBAULT. And I might add that, as part of your question, I think it is reflective today of the environment related to security as we pull out, which is in some cases increased, given the fact that we are at fewer locations. There is no indication that is going to cease when we turn simply to a diplomatic approach in 2011. We would all like that. I think everyone would like that, but there is no indication; therefore, the State Department, as a good steward of safety, con- tracting, and the like. If you look at the numbers now on their four permanent locations they are building out right now, and they are building it out somewhere between two-thirds and 75 percent of each one of those locations are security people. The number of dip- lomats in two of them, because they had to cut them in half be- cause of budget, you can't cut the security, are 20. So you have at embassy branch offices or consulates 20 people doing what State Department would like to do, and several hundred individuals doing security. That is, I think, reflective of your concern. Mr. QUIGLEY. I agree. Thank you. I yield back. Chairman TOWNS. Thank you very much. I now recognize the gentlewoman from California, Congress- woman Speier. Ms. SPEIER. Thank you, Mr. Chairman. Thank you, gentlemen, for your service. I am somewhat dumb- founded by what you have presented to us today. In some respects, we are just rearranging deck chairs, it would appear, and sub- stituting a group of contractors to do what our military has been doing, and the contractors will be overseen by a State Department that doesn't have the oversight authority or capacity to do the job. Is that a fair analysis? Mr. THIBAULT. Well, I think the State Department would say they are working very hard to try to build that capability, but I think that would be a concern that they have that, because histori- cally, to call it just like it is, they have been slow to provide the kinds of contract oversight. They have been very responsive, but it has been a situation where their staff limitations have created challenges, and to pry out four or five additional contracting officer representatives to do the kind of work they do, which is to make sure a security company is satisfying their contract requirements, has been a challenge. So it will continue to be a challenge. Ms. SPEIER. Has the State Department ever had similar respon- sibilities in any other country? Mr. GREEN. No. Not like this. I mentioned early on that I partici- pated in the transition from the Coalition Provisional Authority to the new embassy in 2004. And obviously when the Soviet Union went down and the State Department created a number of new em- bassies, those were big jobs, but they have never in my estimation, and I think others would support this, they have never faced this kind of a task in such a hostile or I will say non-benign environ- ment. So you are in a high-threat area. We do not know what is going to happen in December 2011 with the insurgency. What are they going to do? We have already seen periodic upticks in threats. In fact, the embassy compound took Some rockets not long ago, and I was told that one of them clipped 47 end of next year. It means that the security environment is fun- damentally changing. The backdrop that DOD provided in move- ment across the country is disappearing, and as a result the State Department is requesting hundreds of millions, in fact, billions of dollars to fund continuing security. Without that security, doing the job of foreign assistance, foreign support, foreign aid will be- come virtually impossible. And the third evolution is the changing nature of U.S. aid in the country. As was mentioned in the earlier panels, the Provincial Re- construction Teams are going away, enduring presence posts will replace them, from 15 PRTs down to 4 enduring presence posts. The nature of our effort is also moving rapidly away from hard re- construction. But we still continue to spend significant sums in the training of police and the training of Iraq's military. This work raises several concerns about the readiness question regarding the State Department's operations in Iraq. We have con- ducted four audits of their police training program, the largest con- tract in State Department history, $1.2 billion, managed by INL, not managed well. As our audits have shown, the need for strengthening oversight for better contract management for actual increased personnel, ensuring that the program goals are met, is essential to accomplish that critical task, bringing security to Iraq through its re-energized police forces. Second, our audits have raised concerns about grants and con- tracts that the State Department manages, identifying specifically that the contracting practices are weak, the grants management practices have been weak. This year we have issued two audits, the third one coming out shortly, on the management of grants by NDI and IRI through DRL, Democracy Human Rights Office in the State Department, and we found excessive costs and inefficient management or oversight of the goals that were sought to be achieved through that program. The other piece that is a huge part of the pending supplemental and the pending funding is providing life support and security. The supplement has already provided #. million for security, and Secretary Lute said that is only a quarter of the needs, so signifi- cant additional funding necessary for security. Finally, the State Department is going to need to address an issue that our office has repeatedly highlighted, and that is the oversight of asset transfer, the transfer of projects completed by the United States and transferred to Iraq, and the sustainment of those projects. Real waste, in fact, may continue to occur in Iraq if those assets aren't effectively managed through a coordinated asset transfer program, and if they are not sustained. The truth is that over the last couple of years hundreds and hun- dreds of projects that the United States has funded and built have been transferred unilaterally to the government of Iraq. That is no way to run a rebuilding program. Ultimately I think that the considerations that we recommend in our report, which echo those that I sent in a letter a year ago to the Ambassador and the commanding general in Iraq, need to be applied to the continuing State Department program; namely, strengthening contract, program, and grant management controls, 48 and continuing to invest or resource the State Department's capac- ity to carry out those missions. It is a fact that their overall contract effort has been identified as weak by the State Department IG, by the GAO, and by our re- ports. I think it is time for reform in that area, but there is a larg- er reform. Let me close with that point that I think was expressed by the first panel and I think is evident as a lesson learned, the hardest lesson learned from Iraq and, frankly, from Afghanistan, and that is the lack of an integrated system for managing contin- gency relief and reconstruction operations overseas. This is not a new issue. We experienced it in the Balkans, Pan- ama, Somalia, but Afghanistan and Iraq are the biggest ever in history, of course. Combined, over $100 billion spent. Combined, tens of billions wasted. That is not acceptable, notwithstanding the security challenges in both countries. And the path to reform, one of the mandates of this committee, Oversight and Government Re- form, is reforming the U.S. approach to structuring, executing, and being held accountable for contingency relief and reconstruction op- erations. Mr. Chairman, thank you for the opportunity to appear. I look forward to your questions. [The prepared statement of Mr. Bowen follows: 50 My office's previous reporting on State's management practices in large Iraq programs raises concerns about whether State will be able to effectively manage both the very significant life support and security tasks (many of which have been provided by the Department of Defense (Defense)) and the diverse ongoing assistance programs, without risking the loss of taxpayer dollars to waste. I do not have in mind simply the potential losses that could arise from weak program, contract, or grant management, which SIGIR audits previously uncovered. It may prove wasteful to keep civilian employees in Iraq and fund assistance programs simply because, if security conditions prevent civilian travel, then oversight of assistance programs could become impossible. We recognize that State is relatively new to large-scale program, contract, and grant management. The projects it has undertaken in Iraq – and the projects it will inherit from other agencies, as they leave – are many times greater than those it has traditionally managed. It takes time to nurture an organizational culture that respects the need for planning and to develop a workforce with appropriate skills. State needs to promptly address this issue. It does seem clear that a relatively modest adjustment of State's budget priorities could make an enormous difference in the quality of State's project, contract, and grant administration. That is, spend more on oversight. State Needs to More Effectively Manage Programs, Contracts and Grants SIGIR has looked at a variety of State's management of programs, contracts, and grants in Iraq and found weaknesses in several areas. Program Management. It is important to recognize that State historically was a relatively limited player in the direct management of U.S. civilian foreign assistance programs. The U.S. Agency for International Development-structurally part of State, of course – has been the principal conduit for most forms of development assistance, while Defense has administered military assistance programs under the aegis of State. In recent years, State's direct management role increased, particularly regarding democracy development issues such as anticorruption, development of political parties, police training, and counternarcotics matters. State's responsibilities in these areas became significant in Iraq. Unfortunately, the support made available to manage these programs effectively did not increase correspondingly. As a result, some programs lacked sufficient oversight, were poorly coordinated with other agencies, and failed to receive the management attention necessary to best ensure that goals were met in the most efficient and effective manner. SIGIR reporting revealed instances wherein contracts and grants did not receive the required oversight necessary to ensure that funds were not vulnerable to waste or abuse or that costs were appropriately charged. These problems could become more pronounced as State assumes the key management responsibility for all foreign assistance efforts in Iraq. 53 State Needs to Determine How It Will Provide Life Support and Security for Its Employees and Contractors As discussed by the Commission in its report, the U.S. Embassy in Iraq has been relying on the Defense Logistics Civil Augmentation Program (LOGCAP) contract to provide its employees necessary life support. The contract is a U.S. Department of the Army (Army) program that preplans for the use of private resources in support of worldwide contingency operations. In the event that U.S. forces deploy, contractor support is available to commanders on a cost-plus- award-fee basis. As SIGIR reported in October 2007, LOGCAP is a contingency contract and thus is considered “a contract of last resort” for customers (because of the potential additional costs arising from its noncompetitive aspects). We noted that contingency contracts are primarily designed for areas where emerging requirements are the norm, rapid response is required, and/or conditions are such that normal sustainment contracts are not competitively available. We noted that, once conditions stabilize and a reasonable determination can be made as to the quantity and type of contract work that will be required to support a mission, customers should transition from contingency contracts to a more normal, cost-effective contract. We recommended that, when security conditions in Iraq allow, the Department should consider transitioning from the Army’s LOGCAP contract for life support of the U.S. Embassy-Iraq mission to a State-managed life support contract. Such a change would allow for more competitive contracting in the longer term and may be desirable from the standpoint of cost effectiveness. We believe that when security conditions permit, State should take the step we recommended. However, at this time, for the reasons that the Commission recommends, State and Defense should continue to employ the LOGCAP contract to support State in Iraq; if Congressional action is needed to facilitate this eventuality, it should be taken. We have not analyzed the question of how State would acquire the range of security services the Commission believes may be necessary for Iraq, but our review of other aspects of State's business practices raises concerns about capacity. In broad terms, State's contract administration and enforcement efforts need strengthening. State should plan to expand its efforts by employing the most qualified contracting professionals in government for help on these acquisition projects, at least in the near term. State Will Need to Address Project Transfer and Sustainment Issues State Department officials have reiterated that the U.S. must maintain its focus on Iraq to ensure that the billions of reconstruction dollars spent in Iraq are not wasted. To that end, the Embassy is currently conducting a review of ongoing projects to determine if any are no longer needed and should be terminated. It is also determining what more should be done to ensure that the GOI is sustaining completed reconstruction efforts. Both are positive efforts aimed at avoiding waste which we strongly support. 58 past has been no. The Director of INL in-country assured me that there would be. I think it is a fair question for you to ask is there. Chairman Towns. I yield to the gentleman from California for 5 minutes. Mr. ISSA. Thank you, Mr. Chairman. Mr. Bowen, I want to thank you for your service, for your many trips to a very dangerous place in the world, and for your diligence in bringing one after another failures to our attention. I also want to thank you for the many times you have brought some potential sanity and solutions to the process. I would like to dwell into sort of mixing that first panel and the problems that we focused on, mostly the transition and the absence of certain expertise at State, and your concerns today. Some years ago, before my time. Goldwater Nichols was passed, but I was a soldier before and I have seen the military after. The military today plays better in the sandbox. They have officers who have gone to each other's war colleges and senior staff officers. They have had assignments in each other's back yards whenever possible. As a result, my observation has been if we have to do joint activities we have people who have comfort and experience in doing that. Would you say, from your time of watching State and DOD and the various people contracted to do various functions in Iraq, that we need to look at exactly that? We need to look at building up an interoperable culture between different agencies and in situations like Iraq and Afghanistan have to work together? Mr. BOWEN. Absolutely. As a matter of fact, the reform proposal that I have discussed we termed “Beyond Goldwater Nichols.” This is a civilian version of it. It is a rough analogy, but it seeks the same outcome, jointness, because integration, not coordination— there are coordinative meetings all the time in Iraq, but coordina- tion lasts usually as long as the meeting does. You go out, you go down the hall, you go out into the field, it is difficult to operate on agreements. You need to have it trained. You need to have it authorized. You need to have it appropriated and overseen—in other words, driven by this Congress shaping an ad- ministration structure that can achieve our national security goals. This is about protecting our national security interests in a very unique setting, something new that is not Defense, not develop- ment, not diplomacy. The Fourth D is what we call it. Mr. ISSA. Earlier on in the first panel—and the chairwoman here brought it up as a former Ambassador—we sort of begged those questions of do we need a new entity with direct authority, do we need direct funding, do we need to make sure that what is asked for is then delegated or assigned to the most efficient source, not simply each one trying to get the money but not spend it to do the job because that is inherent when you have other issues. Would you comment on how you view us doing that, recognized Iraq is, to a certain extent, yesterday's story, but Afghanistan is still today's story, and likely tomorrow's. Mr. BOWEN. You began to address that with Mr. Green about the joint funding mechanism that Secretary Clinton and Secretary Gates are coming to agreement upon. Secretary Gates proposed it last December. It is a dual key approval process, and it is a step 65 ‘Lost Functionalities' the #36 part;teats ºf £efense aid State have jisted #39;s that: },{}{#t38ks arid functions that must be addressed a the £333-tº-State transition is iraq. They range from real-estate management and portable toilets, tº fire prevention and environmentat clean-up, ſo complicate the transition further, host ºf the functions rely on long-standing poſſ relationships with the Government of fraq that currentiy have few paralists at State. of special concern is State's "iest functionality" tist-presented in a briefing to the Cºrnission-ºf #4 security-related tasks #ew performed by Étºi) that State ſtatist prºvide as the tºilitary drawºwº is iraq prºceeds: 3. Recovering käed and wounded personnel 3. Recovering daitaged vehicles 3. Recºvering downed aircraft * Clearing trave; rotites * {}perations-center rººflitoring of private sectºrity cºttractºrs #$$. inspection and accºuntabłłity services % 3. £ºvºy Security 3. #xplºsive-ºdºgace disposal 3. £ºſter rocket, artifiery, and ºortat ºtificatiº, $ Counter-battery set:traizatiº tespotise * £ółłątºicatiºns sººt #’; % ‘īācticaä operations cetter dispatch of armed respºnse tºaſt;3 3. £oticing Baghdad's internatioſai Zone # Maintaining electrºſtic cºnter-rºcastices, threat itsteigetice. and techäology capabišities ××:::f & xx::::::::::::::$ty §::, 3:3, fix: State addressed gºtte iºtizatio:33 of the kºst-tūtīºtiºity issue #: Árabassador Keanedy's April 7, 2éâ, etter tº #39;3. After the departure ºf {{S. Fºrces from ragi, we will continue to have a criticai deed fºr higistical and āść support of a gags:#83& and scale of cºpiexity that is a sprecedented its the history of the pepartasetti of State. ... And tº keep air peºple secure, Điphºatic Security requires certain items of equipment that are only available from the miſſitary, £ºphasis added.} State's #itial request ºf equipment #:#aded 24 #3.6% helicopters, fºr refueling trucks and trailers, 50 Mine-Resistant Ambush-frºtected (MRAP) x --- 73 Civilians to Take U.S. Lead as Military Leaves Iraq - NYTimes.com Page 4 of 5 consulates in Basra and Erbil is about $1 billion. It will cost another $500 million or so to make the two consulates permanent. And getting the police training program under way will cost about $800 million. Among the trickiest missions for the civilians will be dealing with lingering Kurdish and Arab tensions. To tamp down potential conflicts in disputed areas, Gen. Ray Odierno, the senior American commander in Iraq, established a series of checkpoints made up of American soldiers, Iraqi Army troops and pesh merga fighters. But those checkpoints may be phased out when the American troops leave. Instead, the United States is counting on the new embassy branch offices in Mosul and Kirkuk. Administration officials had planned to have another embassy branch office in Baquba, but dropped that idea because of spending constraints. “They will be eyes and ears on the ground to see if progress is being made or problems are developing,” Mr. Blinken said, But Daniel P. Serwer, a vice president of the United States Institute of Peace, a Congressionally financed research center, questioned whether this would be sufficient. “There is a risk it will open the door to real problems. Our soldiers have been out there in the field with the Kurds and Arabs. Now they are talking about two embassy branch offices, and the officials there may need to stay around the quad if it is not safe enough to be outside." Another area that has prompted concern is police training, which the civilians are to take over by October 2011. That will primarily be done by contractors with State Department oversight and is to be carried out at three main hubs with visits to other sites. Administration officials say the program has been set up with Iraqi input and will help Iraqi police officers develop the skills to move from counterinsurgency operations to crime solving. The aim is to “focus on the higher-end skill set,” Colin Kahl, a deputy assistant secretary of defense, told reporters this week. But James M. Dubik, a retired Army three-star general who oversaw the training of Iraqi security forces in 2007 and 2008, questioned whether the State Department was fully up to the mission. “The task is much more than just developing skills," he said. “It is developing the Ministry of Interior and law enforcement systems at the national to local levels, and the State http://www.nytimes.com/2010/08/19/world/middleeast/19withdrawal.html?_r=1&pagewan... 9/22/2010