Transcript of testimony by Commissioner Robert Henke on the Commission on Wartime Contracting’s final report
Transcript of the testimony by Robert Henke at the House Committee Oversight and Government Reform hearing on “Where is the peace dividend? Examining the final report of the Commission on Wartime Contracting” held on Oct. 4, 2011:
“Chairman Issa, Ranking Member Cummings, members of the committee, good morning and thank you for inviting us here today.
“I am Robert Henke, a member of the Commission on Wartime Contracting in Iraq and Afghanistan, which completed its official work last Friday. Previously, I served as the executive secretary for management at the Department of Veterans Affairs and the deputy comptroller at the DOD. I’m presenting this statement on behalf of commission co-chairs Christopher Shays and Michael Thibault and my fellow commissioners Clark Kent Ervin, Katherine Schinasi, Charles Tiefer and Dov Zakheim, who are here, and Grant Green, who could not be here with us today.
“I respectfully request that our full written statement be part of the record as well as a copy of our report “Transforming Wartime Contracting.”
“We very much appreciate the opportunity to appear before this committee, the Committee on Oversight and Government Reform. Our eight reports to Congress are a direct match with this committee’s central mandate: the need for vigorous oversight and fundamental reforms.
“The commissioners would emphasize that we have operated not only as a bipartisan body but truly as a non-partisan body. Our reports have no dissenting views. We are unanimous both in our findings and in our recommendations. We unanimously conclude that the need for change, whether through laws, policies, practices, and ultimately organizational culture, is urgent for five reasons.
“First, reforms can still save money in Iraq and Afghanistan, avoid unintended consequences, and improve our foreign policy outcomes there.
“Second, the dollars wasted and the dollars still at risk are significant. The commission estimates that at least $31 billion and possibly as much as $60 billion of the $206 billion spent on contracts and grants in Iraq and Afghanistan has been lost to waste and fraud. We have also warned that many billions more, possibly even exceeding the billions already lost, may turn into waste if the host governments cannot or will not sustain U.S.-funded programs and projects.
“Third, although U.S. policy has for more than 20 years considered contractors to be part of the total force, we went into Afghanistan and Iraq unprepared to manage and oversee the thousands of contracts and contractors used there. Think about that for a minute. We went into Iraq and Afghanistan – we went into war – unprepared. Some improvements have been made, yes, but after a decade of war, the government remains unable to ensure that taxpayers and war funders and diplomats are getting good value for contract dollars spent.
“Fourth, new contingencies, whatever form they take, will occur. Strikingly, federal agencies have acknowledged that they cannot perform large operations without contractor support. They’re very candid in that regard.
“Fifth and finally, reform is urgent because failure to enact powerful reforms will guarantee that new cycles of waste and fraud will accompany the response to that next contingency.
“Our work in Iraq and Afghanistan found problems similar or even identical to those in peacetime contracting, including poor planning, limited or no competition, weak management of performance, and insufficient recovery of over-billings and unsupported costs.
“Of course, the wartime environment brings tremendous additional complications. The dollar volumes swell dramatically and the urgency of dynamic operations and hostile threats directly impact contracting decisions, execution, and oversight.
“Now despite those tremendous challenges, we are clear as a commission that contracting and contractors have provided vital and, for the most part, highly effective support for U.S. contingency operations. However, the bottom line is this: We rely on contractors too heavily; we manage them too loosely; and we pay too much for what we get.
“The wasteful contract outcomes in Iraq and Afghanistan demonstrate that federal agencies’ dependence on contractors, while acknowledged, is not thought to be important enough to warrant the thorough planning and superb execution that a contingency that wartime demands.
“The commission has concluded that the problems need to be attacked on several levels. The first is holding contractors accountable. Federal statutes and regulations provide ways to protect the government against bad contractors and to impose accountability on them. Unfortunately, we found that these mechanism are often not vigorously applied and enforced. Incentives to constrain waste are often not in place.
“The commission’s research has shown, for example, that some contractors have been billing the government for years using inadequate accounting systems that won’t pass muster. Recommendations for system debarment go unimplemented with little documentation of that decision. Past performance data on how a contractor performs is very often unrecorded and even less likely to be used for the next contract award. Staffing shortages have led to a Defense Contract Audit Agency backlog of nearly $600 billion in unaudited work, delaying recovery of possible over-payments.
“The government has also been remiss in promoting one of the most effective of all disciplines: competition. We recommend better application of existing tools to ensure accountability and strengthening those tools. Our report contains recommendations to bolster competition, improve the recording and use of past performance data, expanding U.S. civil jurisdiction as part of contract awards, and requiring official approval of significant subcontracting overseas.
“The second level is holding the government itself more accountable for the decision to use contractors and the subsequent results. Taking a harder look at what projects and programs to undertake with contractors must also include thinking more carefully about whether to use contractors in foreign policy situations. Our report recommends careful consideration of the risks created by contracting and phasing out the use of private security contractors for some functions.
“Another part of the government’s problem is resources. As this committee knows well, both the military force structure and the federal acquisition workforce were downsized during the 1990s. This ensured that if a large and prolonged contingency should develop, the military would greatly increased its reliance on contractors while at the very same time its ability to manage and oversee them – to manage and oversee those contractors – had been significantly reduced.
“Now, even when the government has good policies in place, effective practices, which are often different, ranging from planning and requirements definition to providing adequate oversight of performance and coordinating inter-agency activities ,are lacking. We have recommended steps that would improve the government’s handling of contingency contracting. They include developing deployable acquisition cadres and professionals, elevating the position of agency’s senior acquisition officers and the importance of acquisition as a core competency, and creating a J-10 a contingency contracting director at the Pentagon’s joint staff, where a broad range of contracting activities is still treated as a minor subset of logistics.
“Considering this committee’s broad and cross-agency mandate, I will also call special attention to two recommendations with a whole of government approach.
“The first is to establish a dual-hatted position for an official who would serve both at the Office of Management and Budget and simultaneously on the National Security Council. Such a dual-hatted person would promote better visibility, coordination, budget guidance, and strategic direction. They would link foreign policy goals with budget resources.
“The second is to create a permanent IG organization for use during contingencies. The special IGs for Iraq and Afghanistan reconstruction have performed valuable service, but they will go away, leading the need to re-invent them and suffer the delays in deploying IG staff when the next contingency does emerge. The work of SIGIR and SIGAR have shown the drawbacks of creating organizations that are limited in functional authority, geographical location, and time. A permanent contingency IG with a small but deployable and expandable staff trained in the unique circumstances of a contingency operation can provide cross-agency oversight from day one of a contingency. More details on these recommendations appear in our final report, a 240-page, “Transforming Wartime Contracting.”
“Now in compliance with its authorizing statute, our commission has closed its doors. But the problems we have diagnosed remain very much alive. Corrective actions, in some cases requiring limited financial investments, are essential on both the government and the contractors’ side of the equation to reform contingency contracting. Your sustained attention during and after the reform process will be essential to ensure that reforms are institutionalized and that ultimately cultures are changed.
“In summary, Mr. Chairman, Ranking Member Cummings, wartime contracting reform is an essential – not a luxury – good. Whatever form it takes, there will be a next contingency and the responses to that contingency will all but certainly require contractor support. The government would be foolish to ignore the lessons of the past decade and refuse to prepare for better use of contracting resources.
“Once the wars in Afghanistan and Iraq fade into the past, it will be all too easy to put off taking action. Your committee is in a superb position to prevent exactly that from happening. Mr. Chairman, members of the committee, this concludes our formal statement. We very much appreciate this opportunity to be here with you today in a dialogue.”
- House Committee on Oversight and Government Reform: Where is the Peace Dividend? Examining the Final Report to Congress of the Commission on Wartime Contracting
- House Committee on Oversight and Government Reform: Joint statement of the Commission on Wartime Contracting in Iraq and Afghanistan – Oct. 4, 2011 (PDF)
- Commission on Wartime Contracting
- Commission on Wartime Contracting: Transforming wartime contracting: controlling costs, reducing risks – 19-page executive summary (PDF)
- Commission on Wartime Contracting: Transforming wartime contracting: controlling costs, reducing risks – full 248-page report (PDF)
- WhatTheFolly.com: U.S. wasted billions in wartime contracts
- WhatTheFolly.com: New report on wasteful wartime contracts in Iraq and Afghanistan
- WhatTheFolly.com: Iraq & Afghanistan wars proved profitable for a small circle of private contractors
- WhatTheFolly.com: U.S. wasted billions on unsustainable wartime contracts in Iraq & Afghanistan