[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]
PRIVATE SECURITY FIRMS STANDARDS, COOPERATION AND COORDINATION ON THE
BATTLEFIELD
=======================================================================
HEARING
before the
SUBCOMMITTEE ON NATIONAL SECURITY,
EMERGING THREATS, AND INTERNATIONAL
RELATIONS
of the
COMMITTEE ON
GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED NINTH CONGRESS
SECOND SESSION
__________
JUNE 13, 2006
__________
Serial No. 109-214
__________
Printed for the use of the Committee on Government Reform
Available via the World Wide Web: http://www.gpoaccess.gov/congress/
index.html
http://www.house.gov/reform
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33-252 PDF WASHINGTON : 2007
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COMMITTEE ON GOVERNMENT REFORM
TOM DAVIS, Virginia, Chairman
CHRISTOPHER SHAYS, Connecticut HENRY A. WAXMAN, California
DAN BURTON, Indiana TOM LANTOS, California
ILEANA ROS-LEHTINEN, Florida MAJOR R. OWENS, New York
JOHN M. McHUGH, New York EDOLPHUS TOWNS, New York
JOHN L. MICA, Florida PAUL E. KANJORSKI, Pennsylvania
GIL GUTKNECHT, Minnesota CAROLYN B. MALONEY, New York
MARK E. SOUDER, Indiana ELIJAH E. CUMMINGS, Maryland
STEVEN C. LaTOURETTE, Ohio DENNIS J. KUCINICH, Ohio
TODD RUSSELL PLATTS, Pennsylvania DANNY K. DAVIS, Illinois
CHRIS CANNON, Utah WM. LACY CLAY, Missouri
JOHN J. DUNCAN, Jr., Tennessee DIANE E. WATSON, California
CANDICE S. MILLER, Michigan STEPHEN F. LYNCH, Massachusetts
MICHAEL R. TURNER, Ohio CHRIS VAN HOLLEN, Maryland
DARRELL E. ISSA, California LINDA T. SANCHEZ, California
JON C. PORTER, Nevada C.A. DUTCH RUPPERSBERGER, Maryland
KENNY MARCHANT, Texas BRIAN HIGGINS, New York
LYNN A. WESTMORELAND, Georgia ELEANOR HOLMES NORTON, District of
PATRICK T. McHENRY, North Carolina Columbia
CHARLES W. DENT, Pennsylvania ------
VIRGINIA FOXX, North Carolina BERNARD SANDERS, Vermont
JEAN SCHMIDT, Ohio (Independent)
------ ------
David Marin, Staff Director
Lawrence Halloran, Deputy Staff Director
Teresa Austin, Chief Clerk
Phil Barnett, Minority Chief of Staff/Chief Counsel
Subcommittee on National Security, Emerging Threats, and International
Relations
CHRISTOPHER SHAYS, Connecticut, Chairman
KENNY MARCHANT, Texas DENNIS J. KUCINICH, Ohio
DAN BURTON, Indiana TOM LANTOS, California
ILEANA ROS-LEHTINEN, Florida BERNARD SANDERS, Vermont
JOHN M. McHUGH, New York CAROLYN B. MALONEY, New York
STEVEN C. LaTOURETTE, Ohio CHRIS VAN HOLLEN, Maryland
TODD RUSSELL PLATTS, Pennsylvania LINDA T. SANCHEZ, California
JOHN J. DUNCAN, Jr., Tennessee C.A. DUTCH RUPPERSBERGER, Maryland
MICHAEL R. TURNER, Ohio STEPHEN F. LYNCH, Massachusetts
JON C. PORTER, Nevada BRIAN HIGGINS, New York
CHARLES W. DENT, Pennsylvania
Ex Officio
TOM DAVIS, Virginia HENRY A. WAXMAN, California
R. Nicholas Palarino, Staff Director
Kristine Fiorentino, Professional Staff Member
Robert A. Briggs, Clerk
Andrew Su, Minority Professional Staff Member
C O N T E N T S
----------
Page
Hearing held on June 13, 2006.................................... 1
Statement of:
Solis, William M., Director, Defense Capabilities and
Management, Government Accountability Office; Shay Assad,
Director, Defense Procurement and Acquisition Policy,
Department of Defense; Greg Starr, Deputy Assistant
Secretary, Bureau of Diplomatic Security, Department of
State; and James Kunder, Assistant Administrator for the
Near East and Africa, U.S. Agency for International
Development................................................ 14
Assad, Shay.............................................. 35
Kunder, James............................................ 51
Solis, William M......................................... 14
Starr, Greg.............................................. 44
Taylor, Chris, vice president, Blackwater USA; Major General
Robert Rosenkranz, U.S. Army, retired, president,
International Technical Service, Dyncorp International;
Ignacio Balderas, former CEO and current Board of Directors
member, Triple Canopy; Doug Brooks, president International
Peace Operations Association; and Alan Chvotkin, senior
vice president and counsel, Professional Services Council.. 83
Balderas, Ignacio........................................ 135
Brooks, Doug............................................. 142
Chvotkin, Alan........................................... 156
Rosenkranz, Robert....................................... 94
Taylor, Chris............................................ 83
Letters, statements, etc., submitted for the record by:
Assad, Shay, Director, Defense Procurement and Acquisition
Policy, Department of Defense, prepared statement of....... 38
Balderas, Ignacio, former CEO and current Board of Directors
member, Triple Canopy, prepared statement of............... 137
Brooks, Doug, president International Peace Operations
Association, prepared statement of......................... 145
Chvotkin, Alan, senior vice president and counsel,
Professional Services Council, prepared statement of....... 159
Kunder, James, Assistant Administrator for the Near East and
Africa, U.S. Agency for International Development, prepared
statement of............................................... 53
Rosenkranz, Major General Robert, U.S. Army, retired,
president, International Technical Service, Dyncorp
International, prepared statement of....................... 97
Shays, Hon. Christopher, a Representative in Congress from
the State of Connecticut, prepared statement of............ 3
Solis, William M., Director, Defense Capabilities and
Management, Government Accountability Office, prepared
statement of............................................... 17
Starr, Greg, Deputy Assistant Secretary, Bureau of Diplomatic
Security, Department of State, prepared statement of....... 47
Taylor, Chris, vice president, Blackwater USA, prepared
statement of............................................... 85
PRIVATE SECURITY FIRMS STANDARDS, COOPERATION AND COORDINATION ON THE
BATTLEFIELD
----------
TUESDAY, JUNE 13, 2006
House of Representatives,
Subcommittee on National Security, Emerging
Threats, and International Relations,
Committee on Government Reform,
Washington, DC.
The subcommittee met, pursuant to notice, at 2:13 p.m., in
room 2247, Rayburn House Office Building, Hon. Christopher
Shays (chairman of the subcommittee) presiding.
Present: Representatives Shays, Marchant, Platts, Duncan,
Kucinich, Maloney, Van Hollen, and Lynch.
Also present: Representatives Waxman and Schakowsky.
Staff present: R. Nicholas Palarino, staff director;
Kristine Fiorentino, professional staff member; Robert A.
Briggs, analyst; Robert Kelley, chief counsel; Phil Hamilton,
intern; Jeff Baron, minority counsel; David Rapallo, minority
chief investigative counsel; Andrew Su, minority professional
staff member; and Earley Green, minority chief clerk.
Mr. Shays. A quorum being present, this Subcommittee on
National Security, Emerging Threats, and International
Relations hearing entitled, ``Private Security Firms:
Standards, Cooperation, and Coordination on the Battlefield,''
is called to order.
Last week, the leader of al-Qaeda in Iraq, Abu Musab al-
Zarqawi, was killed in an air strike. His death is significant.
This man beheaded people, he had thousands murdered, he blew up
both churches and mosques. His goal was to prevent Iraqi
democracy. We congratulate the Iraqi people, and especially our
military forces and all others who participated in bringing an
end to his reign on terror. Although Zarqawi is eliminated, the
difficult and necessary mission in Iraq continues.
Even with the appointments of the ministers of the defense
and interior, and increasing role of Iraqi security forces, we
can expect terrorists and insurgents to continue their efforts
to prevent establishment of a democratic government.
Iraq is a complex operational space. Military forces,
civilian U.S. Government agencies, international organizations,
contractors, nongovernmental organizations, and a diverse local
population all share a common geographical area amidst those
who would do them great harm. It is difficult to distinguish
friend from foe. Included in this complex arena are private
security firms.
The Government Accountability Office [GAO], estimates there
are over 60 private security firms operating in Iraq employing
approximately 25,000 personnel. Other estimates indicate there
may be as many as 180 firms employing close to 50,000 people.
These firms provide security for convoys, personnel, both
government and civilian, including visiting dignitaries, bases,
housing compounds, and reconstruction projects. The nature of
their job puts them in harm's way. The most publicized private
security firm casualties in Iraq came when four Blackwater
employees were killed in Fallujah and their bodies hung from a
bridge. But there are others. General Peter Pace, chairman of
the Joint Chiefs of Staff, said private security firms, ``are
doing a great job for what they have been hired to do.'' But if
they choose right now to not report, to not let people know
where they are going and they get into trouble, it is very
difficult to be able to respond to them.
Today we ask: What are the evolving roles and missions of
the private security firms operating in Iraq? What standards
and capabilities are private security firms required to have
before being hired by our government? And, to what extent do
private security firms coordinate with the U.S. military and
other government agencies operating in Iraq?
The mission in Iraq is far from complete. Only time will
tell the impact of al-Zarqawi's death. Iraqi ministers are in
place and Iraqi security forces are becoming more and more
effective. As these forces take control, private security firms
are presented with a new dimension, the coordination with not
only coalition forces, but with Iraqi forces as well.
We sincerely thank all the witnesses for taking the time to
appear before us today, and we thank them all for their efforts
to bring peace and stability to Iraq. At this time the Chair
would recognize the ranking member, my friend, Mr. Kucinich.
[The prepared statement of Hon. Christopher Shays follows:]
[GRAPHIC] [TIFF OMITTED] 33252.001
[GRAPHIC] [TIFF OMITTED] 33252.002
Mr. Kucinich. Thank you very much, Mr. Chairman.
Hussein is in jail, Zarqawi is dead. Now we should leave
Iraq. Zarqawi represented a small portion of the large and
growing anti-American insurgency in Iraq, a sliver of the non-
Ba'athist insurgency while Ba'athists make up a majority of
armed insurgents. So his killing is unlikely to end the
violence in Iraq. However, the administration is intending to
stay in Iraq for the long haul, which is why this hearing has
some relevancy.
The committee will get an opportunity to take a closer look
at the rapidly growing industry that hasn't gotten much
attention. The use of private security firms has grown
exponentially in recent years, and it is due to one reason: The
U.S. invasion, occupation, and reconstruction of Iraq. Rising
security costs is the primary excuse for delays in
reconstruction projects in the oil, water, electricity and
sanitation sectors, and why the administration continues to ask
Congress for tens of billions of dollars in additional funds
for Iraq.
There is a great need to protect key personnel and
contractors, to guard military bases, supply convoys, and
critical infrastructure, and to train the Iraqi security
forces. This is truly a gold rush era for the private security
firms. It is estimated that more than 25,000 personnel working
for some 150 private military firms in Iraq have essentially
become the second largest armed force there after the U.S.
military. But, of course, there are so many opportunities, so
much money at stake, and so few controls one inevitably finds
corruption, mismanagement, and war profiteering in this wild
west atmosphere. Millions of dollars worth of security-related
contracts are awarded overnight, many of them without
competition or cost controls. There simply needs to be greater
transparency and accountability over private military
contractors.
We all know about the tens of billions of dollars in
contract overruns that Halliburton's Kellogg Brown and Root
unit has deferred to the American taxpayer in Iraq, but few
know about the fly by-night startup firm Custer Battles that
somehow managed to win a $13 million contract to provide
security at Baghdad Airport despite having no security industry
experience at all.
This firm was so corrupt that, when contracted to buy
trucks for the military, Custer Battles scrounged up any and
every truck they could, even if most of them weren't operable.
One Army general called it the worst case of fraud he had seen
in 30 years. So it is little surprise to anyone here that
neither the Coalition Provisional Authority nor the Pentagon
nor the State Department nor the USAID, which all relied
heavily on these firms have any idea what these security firms
are actually doing in Iraq.
It seems that nobody in the administration has been keeping
track of who is in Iraq. There are few, if any, international
or Federal laws which regulate their actions, and few standards
for hiring and vetting these contract personnel. Almost anyone
could startup a security company in Iraq and start carrying
around weapons. And, unlike enlisted military personnel,
private security firms aren't held accountable for any crimes
they commit. There isn't any military chain of command, any
military justice, nor does there even have to be training and/
or respect for the Geneva Conventions. We all know about
Private Lynndie England and Specialist Charles Graner's role in
the abuse of detainees at Abu Ghraib prison, but many of the
interpreters and interrogators present during the abuses were
private contractors hired by the firms Titan and CACI. Many of
them have yet to be prosecuted or jailed like their military
counterparts. Instead, a few may have their security clearances
stripped away. That is it.
Finally, I would like to draw attention to a problem that
greatly concerns me, the detection and treatment of
psychological industries of private-military contractor
employees. Psychological injuries caused by the stresses of war
take many forms, including alcohol abuse, drug abuse, anxiety
disorders, social phobias, PTSD, and commission of violent
acts. The gold standard study on this question was mandated by
Congress a decade after the end of the Vietnam War. It was
called the National Vietnam Veterans Readjustment Study. One of
the most important findings of the study was the likelihood of
violent criminal behavior by veterans with a PTSD diagnosis and
who experienced wartime high stress. This study's investigator
surveyed veterans for a number of violent acts committed in the
last year. Nearly one fifth of the individuals with PTSD
suffered self-reported committing 13 or more violent acts in
the last year. The studies also found a very high incidence of
criminal behavior among veterans whose war experience was high
stress. The implication is that the diagnosis of PTSD does not
capture all the psychological injuries that can result in the
commission of violent acts. Violence on such a scale implies
criminal activity such as armed robbery, gang activity, and
assaults. It is not confined to domestic violence.
So, finally, the detection and treatment of psychological
injuries in both our uniformed personnel as well as the private
military contractor employees is an important public health
measure. We should care deeply about the health of the
employees of private military contractors, about the people of
Iraq that they work among, and the American society they return
to. Thank you, Mr. Chairman.
Mr. Shays. I thank the gentleman.
I would like to just take care of business and make a
motion of unanimous consent that Ms. Jan Schakowsky, a former
member of this subcommittee, a very active member of this
subcommittee who frankly has followed this issue, I think
particularly, closely be allowed to participate. She has made
the mistake of going on to Energy and Commerce, and wants to
come back to this committee at least for this hearing. We
welcome you. And, without objection, you are more than welcome
to participate.
At this time the Chair would recognize the vice chairman of
the committee, Mr. Marchant.
Mr. Marchant. Thank you, Mr. Chairman. I appreciate your
leadership and foresight in holding this hearing. The testimony
today will enable us to more thoroughly understand the critical
and constantly evolving nature of private security firms and
their role in the war on terror and, more specifically, in
Iraq, and how they coordinate with the U.S. Government and
nongovernmental organizations in providing security, security
planning, and intelligence.
I was very fortunate last July to participate in a trip to
Iraq and witnessed first-hand the private security firms action
on the ground.
To each of the witnesses today, I want to thank you for
being here and providing us with your respective testimony on
roles of the private security firms, their standards, their
capabilities, coordination, recommendations, and codes of
conduct as it relates to PSFs. I appreciate your being here to
shed light on all the private security firms and their
capability of accomplishment. I also appreciate your
determination to work in concert with our forces and
contractors on the ground. I believe each of us here today
wants to see the security intelligence concerns on the ground
in Iraq addressed in the most efficient, logical, and effective
way. Most importantly, I hope this hearing today will address
how to improve our capabilities and coordination on the ground.
Thank you, Mr. Chairman.
Mr. Shays. I thank the gentleman. I think the committee may
be aware, we are going to have three votes. If we can hear from
Mr. Waxman, the ranking member of the full committee, and then
we will come back and finish statements. And we will try to
give you all an idea of how long it will be. I apologize that
you have to go through this process.
Mr. Waxman, you have the floor.
Mr. Waxman. Thank you, Mr. Chairman. I appreciate your
calling this hearing on private security contractors in Iraq.
Most Americans would be amazed if they knew the role that
private security forces are playing in Iraq. Earlier this year,
the director of the Private Security Company Association of
Iraq estimated that approximately 181 private security
companies are working in Iraq with over 48,000 employees. That
is more than three Army divisions. These private security
guards protect Federal officials like former head of Coalition
Provisional Authority Paul Bremer, and our current Ambassador
to Iraq, Zalmay Khalilzad, and they guard U.S. companies doing
reconstruction work. They have become, in essence, an Army for
hire. They regularly engage in combat with insurgent forces.
And, like our brave troops, they, too, have lost their lives to
hostile forces.
There are many important questions Congress needs to ask
about these security contractors. One fundamental issue is
whether outsourcing what is essentially a military function,
protecting U.S. officials and citizens from hostile attacks, is
in our national interest.
Another question is what rules apply to these private
forces. When our troops commit crimes or atrocities as happened
in Abu Ghraib and appears to have happened at Haditha, there is
a well established body of law that governs their conduct and
provides for military tribunals, but nothing like this exists
when private contractors are hired as subcontractors to provide
security services. They appear to be immune from Iraqi law, and
they aren't subject to the Uniform Code of Military Justice.
And a third key issue is, what are the costs to the
taxpayers? In my remarks today and in my questioning, I will
focus on this last issue, the burdens being placed on the
taxpayers.
The cost of paying for an army of private security forces
operating in Iraq is enormous, and it is one reason the
reconstruction effort is failing. Rough estimates are that a
quarter to a third of all reconstruction funding now goes to
pay for security. When an Army sergeant provides a security
detail, the taxpayers pay about $104 per day to cover his
salary, housing, and subsistence. But when a private contractor
is hired to provide the same services, he can be paid up to
$1,000 a day, 10 times more. And due to tiering of security
contracts, the final cost to the taxpayers may be far higher
than $1,000 per day.
I wrote to General Jerome Johnson of the Army Field Support
Command about this issue on November 30, 2004. We are here on
June 2006. I raised the concern that, under some contracts,
there appeared to be as many as four layers of subcontractors
between the taxpayer and the individual actually providing the
security services. As I explained in my letter, it appears that
each contractor takes a cut of the profits, magnifying the cost
to the taxpayer, but not offering anything of value. According
to one account I cited, the final cost to the taxpayer could be
inflated by 150 percent or more.
I asked specifically for a cost accounting that showed how
much tier each tier of subcontractor was charging, but I also
asked for copies of all the contractor subcontracted documents
to find out why this was happening, but the Department would
not provide the information.
This is an intolerable situation. The Bush administration
is spending literally billions of dollars on private security
contracts in Iraq. Yet, when I ask a basic question about how
much these services cost and whether the taxpayer is getting
ripped off, I get stonewalled.
Because this hearing is about this issue, as a member of
the committee I am entitled to ask for a subpoena motion to get
this information, because I think we are entitled to get the
information. I have had a discussion with the chairman of the
subcommittee; he feels as I do, that the subcommittee and our
committee is entitled to this information. I could offer that
motion, but that is not my purpose. I want to engage the
chairman in a colloquy.
As I understand it, you agree that we should get this
information. You will join me in a request for the information,
and we will use the full powers of this committee should that
request not be granted in a reasonable period of time to insist
upon the information.
Mr. Shays. Well, my view is very clearly that, when a
committee requests information, even when the minority requests
it, there should be a response; there should be a clear
indication of what can be provided and what won't be. My view
is that this needs to be taken on by the full subcommittee. I
will gladly help you get this information and join with you to
get this information. And if we fail to get this information
through the proper requests in a very short period of time,
then we would have to use the powers that are available to us
to demand that information.
Mr. Waxman. And that you would support that, if necessary?
Mr. Shays. Absolutely.
Mr. Waxman. Well, I think that is an appropriate response,
and one that I very much welcome.
Mr. Shays. And I also want to express my disappointment
that it has taken so long for this information to be provided.
Mr. Waxman. Thank you. Well, we have learned that we need
to insist on accountability. And for that reason, I am very
pleased that you are calling this hearing today. I have other
points I was going to make in my opening statement, but I will
bring it in in the questions, because I think there is a better
path than the one we have been following.
Mr. Shays. I am very sorry, but probably not until about 10
of, at least 15 of or 10 of. So you have 15 minutes clearly to
be away from this committee and maybe a little more. Thank you.
We stand in recess.
[Recess.]
Mr. Shays. The subcommittee will come to order. I, again,
thank our witnesses and do apologize for the delay. This is
part of the process.
I think this is an extraordinarily important hearing, and I
think we are going to learn a lot of important information, so
we do look forward to hearing from our witnesses. I think it is
also important, though, that Members state where they are
coming from, and I hope the witnesses are listening so they can
incorporate comments they hear whether in their statement or in
answers to questions. So I do think it is an important process
both ways.
At this time, the Chair would recognize my very good
friend, Congressman Duncan.
Mr. Duncan. Thank you very much, Mr. Chairman, and thank
you once again for calling, as you said, what is a very
important hearing. I have people waiting in my office and I am
supposed to preside over the floor of the House shortly, so I
don't know how much I am going to be able to be here. But I did
want to at least make a brief statement. And I am having a
pollen or allergy attack, so I think it will be brief.
But I remember a year and a half or so ago when David
Walker, who was then the Inspector General of the Defense
Department, testified in front of this committee and said that
the Defense Department had misspent or had lost to waste,
fraud, and abuse $35 billion in Iraq, and that there was
another $9 billion on top of that that had just been totally
lost and couldn't be accounted for at all. And I think the
reason that more people weren't horrified by that is that $44
billion is almost a figure so large that people just almost
can't comprehend it.
Now what we have, it may shock some people, but there is
waste even in the Defense Department. And yet some
conservatives seem to think at this point that we can't
criticize that and that we have to give the Defense Department
every single thing that they ask for and we shouldn't ever
question any of the expenditures that they do. But some
conservatives are getting to the point where we are wondering
if this misadventure in Iraq is not more about money for
defense contractors and others than it is about security.
And I probably respect Chairman Shays more than anybody or
as much as anybody in this Congress, so I will state real
quickly I know he does not agree with me on this. But William
F. Buckley, the godfather of conservatism, he wrote in 2004
that if he had known in 2002 what he knew then in 2004, he
would have opposed the war. And then last year, he wrote this.
He said, a respect for the power of the United States is
engendered by our success in engagements in which we take part.
He said a point is reached when tenacity conveys not steadfast
and purpose, but misapplication of pride. And I think we have
reached that point. And when I read, as I read in the briefing
by the staff on this hearing today, currently according to the
Department of Defense there are 60 private security companies
operating in Iraq with approximately 25,000 personnel. However,
the Baghdad-based association believes there may be more than
150 security firms with as many as 50,000 personnel.
Well, I know that people down my way, and I come from a
very conservative, very patriotic, very pro-military district,
but they don't want to see money just wasted continuously. We
are getting to the point with an $8.3 trillion national debt
which is headed up very highly, we are not going to be able to
pay all of our military pensions and civil service pensions and
our Social Security and Medicare and so forth in not too many
years from now if we don't stop spending hundreds of billions
of dollars in other countries for things like this.
I heard a general at the Pentagon say that al-Qaeda was now
down to less than 3,000 troops and had no money; yet, we keep
spending just ungodly sums over there. And then we find out
that we don't even know exactly how many private security firms
are operating in Iraq. And then I think people down my way
would think that is kind of ridiculous that we don't know that.
I think they would find it ridiculous that we are having to
hire private firms to provide security for our troops, because
they are in the business--that is what their business is, is
security.
And then also, what they would find the most ridiculous of
all is that we hire a foreign firm, a British firm to provide
security for our own military. And in one of these briefings,
it says a British-owned security firm provides security for the
Army Corps of Engineers. And then this article that was in the
Washington Post 2 days ago, that they got $293 million, the
largest contract over there. But I am told also by staff that
we don't know exactly how much money we have spent on private
security contracts.
And I don't know if that is the case or not, but somebody
should be finding out. And so I am glad you called this
hearing, but there is a lot of frustration out there about this
whole deal. And yet, on our side, it seems that we can't say
anything about it. And the other side has constituency like, if
we said we were going to spend 10 times on public education
what we are, the other side would immediately attack us and say
that wasn't enough.
We need to get past these constituencies and do what is
right for the American taxpayers. Thank you, Mr. Chairman.
Mr. Shays. I thank the gentleman very much. And I would
just point out, when Members had left, Mr. Waxman had made a
request. And as I read this letter, it is not a credit to DOD
that they received the letter November 30, 2004 asking for
basically the same kind of information, Mr. Duncan, you would
want. And they received a letter back from Jerome Johnson who
it was sent to, the Commander of U.S. Army Field Support
Command, basically saying he has referred the letter--and this
is dated December 21, 2004. He had referred the letter to the
Office of Congressional Legislative Liaison.
I just think it is very important for this committee to
support that letter and that request for information, and so
this will be made part of the record, without objection, and
the Department will be very aware of what we are asking for. It
was in your letter, Mr. Waxman.
Mr. Waxman. Thank you, Mr. Chairman. I think you will get
more attention from them than obviously we did. And if we act
together, we will get the information the Congress is entitled
to.
Mr. Shays. Well, it is a matter of legislative
responsibility, and we do need to work together on that.
At this time, the Chair would recognize Mr. Van Hollen, who
has had the opportunity to visit my district and knows what a
wonderful place it is.
Mr. Van Hollen. Thank you, Mr. Chairman. And you have a
wonderful district, Mr. Chairman.
Let me just say, I think this is a very important hearing
for us to have. If you remember the lead-up to the Iraq war,
Lawrence Lindsey, who was then the President's chief economic
policy adviser, predicted that the war would cost between $100
billion and $200 billion. At that time, he was laughed at by
other members of the administration, including people at OMB.
They said that is way too high. We can recall also then Deputy
Secretary of Defense Paul Wolfowitz saying, well, Iraqi oil
revenues will easily be able to pay for the reconstruction
phase and quickly.
Well, we now know that both the Wolfowitz prediction was
wrong, that the Lawrence Lindsey prediction, for from being was
too low was too low, and the efforts in Iraq are costing
hundreds of billions of dollars to the taxpayer. So it is
important that we hold the people spending those moneys
accountable.
As we have heard from others, we have already heard of
millions of dollars that are wasted as a result of fraud,
abuse, and other forms of waste. And so it is important that we
have an opportunity now to look at one sector of spending,
which is on the private security contractors.
Now, in and of itself, there is nothing I don't think that
is intrinsically good or bad about having a private entity
involved. It depends on what they are involved in and the rules
under which they are operating. But it is clear that in Iraq
there have been failures and breakdowns in both those areas.
I just want to draw attention to one example that was
highlighted by GAO, the Government Accountability Office,
independent nonpartisan agency back in April 2005. They talked
about how the Army was looking for interrogators, people to
conduct interrogations. And rather than do that within the Army
or within the existing military force, they decided to contract
it out. Where did they go? To the Department of Interior. And
through some complicated contracting procedures they
essentially contracted out to a private vendor interrogation.
And the GAO found, and I am just quoting from their report
there, that: Because the officials in Interior and Army
responsible for the orders did not fully carry out their roles
and responsibilities, the contractor was allowed to play a role
in the procurement process normally performed by the
government. In other words, the Federal Government essentially
turned over the responsibilities, governmental responsibilities
to a private contractor.
That is wrong. That is an abuse of the responsibility of
the Federal Government. It leads to bad results. We need to
make sure we have procedures in place for proper oversight. If
you are contracting out to any private entity, you need to have
oversight so that the final decisionmaking authority is
somebody who is essentially responsible ultimately to the
public. That is one issue.
The other issue. There are some things in my view that are
intrinsically governmental functions, like interrogations, and
just should not be contracted out. We don't want to contract
out all our military operations. So there are a number of very
important issues on the table I hope we will get to the bottom
of. Mr. Waxman raised some issues about what rules apply to
contractors. There are two sides of that coin. For the
contractors' own protection, in some cases, you want to know
whether there are rules that make sure that, if something
happens to them, that they have recourse to a judicial process.
At the same time, if they do something wrong in Iraq, it is
important that the same rules apply so that the people who have
been wronged by them have recourse to judicial process. Two
sides to the coin. And right now, I think this is an area that
has been out of control, improper oversight. We have seen waste
of billions of dollars, I think hundreds of millions of dollars
in Iraq. And the lack of oversight over private contractors has
been a big part of the problem, and I think it is
characteristic of the overall lack of competence with which the
war in Iraq has been conducted. Thank you, Mr. Chairman.
Mr. Shays. I thank the gentleman. At this time, the Chair
would recognize Ms. Schakowsky. Welcome, and nice to have your
participation.
Ms. Schakowsky. Thank you, Mr. Chairman. I really do
appreciate your allowing me to participate, not just sit in but
participate in this hearing. I thank Ranking Member Kucinich
and the ranking member on the full committee, Mr. Waxman, as
well.
Over the past decade, private military contractors [PMCs]
have become a key factor in U.S. military operations. U.S.
military logistics, combat assistance, and security services
are increasingly outsourced to private entities. Civilians have
taken on many of the responsibilities and duties once performed
exclusively by uniformed personnel. As a result, today
advancement of key U.S. foreign policy goals relies far more on
private non-state actors than at any time in American history.
Regulating the responsibilities and accountability of
taxpayer-funded private actors on the international stage is
one of the most important policy challenges that the Congress
needs to address in regards to our foreign policy. Yet, while
the PMC trend is having a profound impact on the planning and
conduct of modern warfare, there has been almost no scrutiny
and less oversight in regulating the U.S. PMC relationship. In
fact, when I offered an amendment to the fiscal year 2007
defense authorization bill that would help provide better
congressional oversight on military contractors in Iraq and
Afghanistan, the Republican majority refused to allow me to
include language asking for: The number of contracts in
existence; the total cost of these contracts; the total number
of contractors in Iraq and Afghanistan; the number of dead and
wounded contractors; a report on the laws that might have been
broken by contractors; a list of disciplinary actions taken
against contractors; copy of contracts issued in excess of $100
million. None of those became part of the law.
That Chairman Shays and ranking member on the committee,
Mr. Waxman, have to estimate the number of contractors there
are serving right now in Iraq is absurd. These are taxpayer
dollars. We are funding those. And that we don't know how many
even that there is, I think, a dereliction of our duty.
The Bush administration support for the privatization of
government functions coupled with the wars in Afghanistan and
Iraq has accelerated the demands for private security services.
Contractors we know compose the second largest force in Iraq
after the U.S. military. And, to date, more military
contractors have been killed in Iraq than non-U.S. coalition
soldiers, we think. We can all acknowledge that military
contractors require the same stringent accountability and
oversight standards as the U.S. military. After all, private
contractors often serve side by side with our brave troops, and
these same U.S. troops are often tasked to protect our
contractors who are paid with billions of U.S. taxpayer
dollars.
Several high profile scandals have exposed the challenges
we face with PMCs. Contractors have been implicated in
financial, legal, and human rights abuses, including illicit
trade, drugs, prostitution rings, allegations of fraud, human
rights abuses, and, worst of all, unprovoked civilian deaths.
These events have highlighted the challenges that arise when
nonstate actors are employed in active war zones and are not
sufficiently regulated, or when enforcement of existing laws
remains weak. The private military contractor business is the
war business, and for-profit companies may not share the same
mission-based goals as the U.S. military. They are in business
for profit.
As the Iraq experience makes clear, a more transparent
framework for monitoring and regulation of contractors is
urgently needed.
I want to thank the Government Accountability Office for
the scrutiny that it has given. But you have asked more
questions than we have gotten answers for, and I hope this
hearing today will shed more light on the questions that you
have raised and the questions that I have been persistently
asking. So I thank you very much.
Mr. Shays. I thank the gentlelady very much, and we
appreciate having her expertise. That will help our committee
get the work done that we need to.
I am just going to make this point that what we asked the
witnesses to do today is to talk about PSF, private security
firms, basically body guard type work, what I would call Secret
Service type work. So we have not made the request from these
groups to focus on private military contractors which can be
beyond that. But Members are free to ask any question they
want, but in terms of the expertise that we have asked to be
presented today. And it is possible that we would broaden it to
go beyond the private security firms in our work.
Let me welcome our witnesses. First let me take care of
some business that we need to do. I ask unanimous consent that
all members of the subcommittee be permitted to place an
opening statement in the record, and that the record remain
open for 3 days for that purpose. And, without objection, so
ordered. I ask further unanimous consent that all witnesses be
permitted to include their written statements in the record.
And, without objection, so ordered.
At this time, the Chair would recognize our four panelists.
If there is anyone else that you may turn to to respond to a
question, we will ask you to ask them to stand up and be sworn
in so we don't have to do it more than once.
We have Mr. William M. Solis, director, Defense
Capabilities and Management, Government Accountability Office
[GAO].
We have Mr. Shay, without an s, Assad, director, Defense
Procurement and Acquisition Policy Department of Defense.
We have Mr. Greg Starr, Deputy Assistant Secretary, Bureau
of Diplomatic Security, Department of State.
We have Mr. James Kunder, Assistant Administrator for the
Near Far East and Africa, U.S. Agency for International
Development.
As you know, we do swear our witnesses in, and we would ask
you to stand at this time. Is there anyone that you would
suggest be sworn in as well?
[Witnesses sworn.]
Mr. Shays. Note for the record our witnesses have responded
in the affirmative.
What we do in this committee is we request that you be 5
minutes, but we let you roll over beyond that. So we would
prefer that your statement be what you want it to be, but
obviously not to be more than 10, but preferred closer to 5.
But whatever, we appreciate you being here, Mr. Solis.
STATEMENTS OF WILLIAM M. SOLIS, DIRECTOR, DEFENSE CAPABILITIES
AND MANAGEMENT, GOVERNMENT ACCOUNTABILITY OFFICE; SHAY ASSAD,
DIRECTOR, DEFENSE PROCUREMENT AND ACQUISITION POLICY,
DEPARTMENT OF DEFENSE; GREG STARR, DEPUTY ASSISTANT SECRETARY,
BUREAU OF DIPLOMATIC SECURITY, DEPARTMENT OF STATE; AND JAMES
KUNDER, ASSISTANT ADMINISTRATOR FOR THE NEAR EAST AND AFRICA,
U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT
STATEMENT OF WILLIAM SOLIS
Mr. Solis. Chairman Shays, Ranking Member Kucinich, and
members of the subcommittee, I am pleased to be here to discuss
the use of private security providers by U.S. Government
agencies and contractors that are helping to rebuild Iraq. It
is the first time that the United States has depended on
contractors to provide such extensive security in a hostile
environment, although it has previously contracted for more
limited security services in Afghanistan, Bosnia and elsewhere.
Today my testimony will followup on some of the issues we
raised in our 2005 report on private security providers as well
as our preliminary observations from an ongoing engagement on
the processes used to screen their employees. Specifically, I
will address three main points: The extent to which
coordination between the U.S. military and private security
providers has improved since our 2005 report; the ability of
private security providers and DOD to conduct comprehensive
background screenings of their employees; and the extent to
which United States or international standards exist for
establishing security provider and employee qualifications.
With regard to my first point, we reported in July 2005
that coordination between the U.S. military and private
security providers had improved since the establishment of the
Reconstruction Operation Center in October 2004. However,
military officials we recently met with in Iraq and those that
have recently returned from Iraq indicate that coordination is
still a problem. For example, private security providers are
still entering the battle space without coordinating with the
U.S. military, putting both the military and security providers
at a greater risk for injury. And, U.S. military units are
still not being trained on operating procedures of private
security providers in Iraq and the role of Reconstruction
Operation Center. In our 2005 report, we recommended that a
predeployment training program would help address the
coordination issue. DOD agreed with our recommendation but has
not issued any guidance or conducted any training with regard
to working with or coordinating with private security providers
on the battlefield.
Regarding my second point, our preliminary observation
suggest that private security providers and DOD have difficulty
conducting comprehensive background screening when data are
missing or unaccessible. When doing background checks of those
living in the United States, private security providers use
public information available at the county, State, or Federal
level.
They also search criminal information repositories and
commercial data bases, such as those that collect information
on incarcerations. None of these types of searches, however,
guarantees a comprehensive background check. Additionally,
screening host nation third country national employees can be
difficult because of inaccurate or unavailable records in some
of these countries. In addition, officials from some background
screening firms told us that foreign laws restrict access to
some criminal records.
Finally, DOD's biometric screening of most non-U.S.
contractors including employees of private security providers
accessing U.S. installation in Iraq is not as effective as it
could be, because the data bases used to screen contractor
employees include only limited international data.
My third and last point is that no U.S. or international
standards exist for establishing private security provider or
employee qualifications. As we reported in our 2005 report,
reconstruction contractors had difficulty hiring suitable
security providers. For example, we found that contractors
replaced their security providers on five of the eight
reconstruction contracts awarded in 2003 that we reviewed.
Contractor officials attributed this turnover to various
factors, including their lack of knowledge of the security
market and potential security providers, and the absence of
useful agency guidance.
Consequently, we recommended that agencies explore options
that would enable contractors to obtain such services quickly
and efficiently. Such options could include identifying minimum
standards for private security personnel qualifications,
identifying training requirements in the key performance
characteristics that these personnel should possess,
establishing qualified vendor lists, or establishing
contracting vehicles which contractors could be authorized to
use.
State Department disagreed with our recommendations, citing
concerns that government could be held liable for performance
failures. State determined that they could best assist
contractors by providing information on industry best practices
and other security related material. As we stated in our 2005
report, given the significance of contractors in achieving
reconstruction objectives and the mixed results they
encountered when selecting their security providers thoroughly,
exploring potential options to assist contractors in obtaining
these services quickly and efficiently would be prudent.
Mr. Chairman, this concludes my oral statement. I will be
happy to answer any questions you or the members of the
subcommittee may have.
Mr. Shays. Thank you, Mr. Solis.
[The prepared statement of Mr. Solis follows:]
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Mr. Shays. Mr. Assad.
STATEMENT OF SHAY ASSAD
Mr. Assad. Thank you, Mr. Chairman. Chairman Shays, members
of the committee, Madam Congresswoman, I am Shay Assad, and I
serve as the Director of Defense Procurement and Acquisition
Policy in the Office of the Undersecretary of Defense For
Acquisition Technology and Logistics. Prior to taking this
position in April, I was the Assistant Deputy Commandant for
Installation and Logistics in Contracting. I was the senior
contracting official in the U.S. Marine Corps.
To give you a little background, I spent 25 years in
industry serving in a number of operational and staff
capacities primarily with Raytheon Co. My experience includes
serving as a senior vice president of contracts. I was
president and chief operating officer of a major operating
division, and I was last an executive vice president, chairman,
and CEO of one of their major operating companies. I am a
graduate of the Naval Academy, and I started my career off as a
naval officer in serving two tours on Navy destroyers, and
last, as a Navy procurement officer at the Naval Sea Systems
Command.
Thank you for the opportunity to appear before you today to
participate in today's discussion on private security firms. I
would like to take a moment to thank the committee for its
support of our troops and all you have done to help with their
mission. I would also like to thank the men and women who serve
our great country. When I say men and women, I mean our
military, our government civilian, our coalition, and industry
partners. None of us could get the job done without the other.
I am continuously impressed with the cooperation among all
those contributing to the mission under very adverse conditions
in Iraq and Afghanistan as well as other operating locations
around the world, and I am committing to doing what I can to
assist them.
Mr. Chairman, our industry partners provide essential
support to the deployed military forces that enables our forces
to focus on their core mission. The Department of Defense
acquisition team strives to provide our war fighters the
support they need, consistent with responsible management and
stewardship to our taxpayers. We strive to effect timely
acquisition planning, contract execution, and responsible
contract management oversight in order to provide our war
fighters the contract support they need to accomplish their
mission. We are doing everything it takes to make our soldiers,
marines, airmen, and sailors and ensure that they are provided
with the safest, most dependable, and highest performing
equipment available within fiscal constraints together with the
logistics and material support necessary to ensure performance
whenever and wherever it is needed. We will continue to work
every day to improve the service that we provide our men and
women in the Armed Services.
I know your invitation letter had asked General Webster to
respond to specific questions based on his personal experience.
I cannot speak for General Webster, but I can tell you from an
acquisition and contracting point of view, my focus with regard
to activities in Iraq primarily rests with supporting Major
General Darrell Scott, U.S. Air Force, the commander of the
joint contracting command.
In addition, I support a number of other contracting
agencies, such as the Defense Contract Management Agency, the
U.S. Army Corps of Engineers, and the gulf region division.
These men and women are doing great work under some very trying
conditions.
You had asked about the roles and missions of private
security firms operating in Iraq. The activities of private
security firms include but are not limited to protective
security details for government employees and dignitaries, site
protection of buildings and other facilities, and operational
staff work that directly support reconstruction and relief
operations in a complex contingency.
You asked what policy directives apply to provide security
firms on the battlefield. The governing DOD policy is found in
DOD Instruction 3020.41 entitled Contractor Personnel
Authorized to Accompany the U.S. Armed Forces. This instruction
establishes and implements policy and guidance, assigns
responsibilities, and serves as a comprehensive road map of
policies and procedures concerning DOD contractor personnel
authorized to accompany our forces. Chapter 6 in particular
addresses armed contractors. There are also various other
service regulations that cover the use of armed contractors.
The Army has prepared a CONUS guide for supporting
contingencies within the United States and supporting overseas
contingencies from CONUS locations as well as a guide book for
all CONUS contingency contracting.
The committee has also asked what standards private
security firms are to meet before being employed by the
Department of Defense. First are the general standards of
responsibility that apply to all firms entering into a contract
with DOD. These are specified in the Federal and defense
acquisition regulations as well as specific agency regulations.
More specific to armed contractors, DOD instruction 3020.41
prescribes standards that apply to contractor employees to
include medical standards, background checks, contractor
direction and discipline, as well as country entry
requirements.
The committee has also asked what types of training
security firms provide their employees before being assigned to
the battlefield environment. I cannot speak for any particular
company with regard to the types of training that particular
company would provide. That would have to be answered by that
company. I believe, however, that specific training required of
such firms would depend upon the nature of the security
provided and upon the individual contract statement of work.
For example, training for a company that is hired to
provide protective security details to senior leaders would be
very different from a company hired to provide static security
such as gate guards.
Some standard training for all armed contractors is
described in chapter 6 of DOD 3020.41. Other standards for
training can be found in DOD handbook 2000.12, the protection
of DOD personnel and activities against acts of terrorism and
political turbulence. However, any requirement to train
according to these standards as well as any other mission
specific training should normally be included in the statement
of work for a particular contract.
In closing, Mr. Chairman, I thank you and the members of
the committee for your interest in our efforts, and I will be
happy to answer any questions that I can that you may have for
me. Thank you, sir.
Mr. Shays. Thank you Mr. Assad.
[The prepared statement of Mr. Assad follows:]
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Mr. Shays. Mr. Starr.
STATEMENT OF GREGG STARR
Mr. Starr. Thank you, Mr. Chairman, committee members.
Thank you for giving me the opportunity to present a short
opening statement on the subject of private security firms and
our ongoing operations in Iraq. Your letter to the Secretary
requesting our appearance also included six specific questions.
I will address the questions briefly in this presentation, and
we will provide you with a more complete written response for
the record by the end of this week.
The Department of State diplomatic mission in Iraq was
reestablished in July 2004. Diplomatic security crafted a
comprehensive set of security programs to meet the high level
of threat in this theater of operation. The programs were a
combination of physical and technical security upgrades at our
facilities, procedural security regulations, and close personal
protection operations for off compound requirements. Staffing
for security programs in Iraq includes nearly 50 diplomatic
security special agents, marine security guards, approximately
1,500 third country national local guards, hundreds of U.S.
coalition troops protecting the international zone and regional
embassy offices, and nearly 1,500 highly trained contract
personal security specialists.
The security specialists in this latter category referred
to in the GAO report as private security providers have been
critical to our efforts to create a safe environment for our
U.S. mission personnel. This effort has not been without great
cost and personal tragedy. We are all aware of the number of
U.S. military personnel who have lost their lives or who have
been seriously injured in this effort, and we honor their
memory.
In connection with programs conducted by U.S. agencies
under chief of mission operations, we have lost 119 civilians
including direct hire employees and contractors. Diplomatic
security has lost two special agents and 23 contract personnel
security specialists killed in action in Iraq since July 2004.
Six other contract personnel security specialists have lost
their lives in our service in Afghanistan and Gaza. These men
and women and their family have paid the highest price in
support of our efforts, so it is with the utmost respect that I
am here to brief you and answer your questions relating to
these companies who provide us with these fine Americans.
The Department of State primarily utilizes private security
firms in Iraq for two major functions. The first is static
guard services at our facilities. These contract security
operations are similar to local guard contract programs we
utilize at our embassies, consulates----
Mr. Shays. If you could suspend for 1 second. We are going
to have two recorded votes. If we only had one, I would send
one Member out now so we could just keep rolling, but we will
go for another 10 minutes and we will hear your statements.
Thank you, Mr. Starr. Keep going.
Mr. Starr. As I said, we used the private security firms
for two primary functions. One is the local guard programs, and
we utilized these typically at our embassies and consulates and
residences around the world. The second contracted functions
are private security companies providing personnel security
details and security escorts.
When the U.S. embassy was activated in July 2004, we found
a number of CPA contracts for personal security services in
place. As the GAO report pointed out, they varied in
capabilities, costs, and level of training. We worked to
immediately reduce the number of different contractors and
imposed uniform standards for operations. Individual contracts
were superceded by using our worldwide personal protective
security contract. This is a competitively bid contract for
personal security services with multiple awardees. These
contractors operate in very dangerous environments, and their
actions, equipment, and methods of operation are specified in
our contract requirements. Rules of engagement developed by the
embassy and approved by the chief of mission and diplomatic
security govern their use of deadly force. The companies also
operate under our contract guidelines, but since the
establishment of Iraqi sovereignty have also complied with
Iraqi legal requirements to register their companies with the
appropriate ministry.
Diplomatic security has carefully crafted the very high
standard these companies must meet in order to effectively
compete and win awards. The personnel of these companies must
provide, must also meet high standards and be capable of
obtaining a security clearance. Fitness, previous experience,
integrity, and the ability to meet security criteria add up to
a very selective personnel screening process.
High training standards are another important factor
demanded by our contract. We prescribe the course criteria, vet
the training facilities as well as the instructors, and monitor
our contractors to ensure that these security specialists are
trained to counter the dangers that they will face in these
high threat environments. Feedback from on-the-ground
operations is incorporated into training regiments and to
provide replacements with the most up-to-date information on
tactics and techniques.
Overall, because of the high standards we set, insistence
on high caliber training and close oversight and management of
the contract both on the ground in Iraq and in headquarters, we
have achieved a very high degree of capability in a short
period of time with few problems.
The services we provide are primarily for the protection of
U.S. Government employees and staff. We do not provide security
services for private companies, nongovernmental organizations,
or implementation partners. However, we are willing to share
our contract requirements with those organizations supporting
our effort through the Overseas Security Advisory Council
[OSAC], either domestically or in Iraq.
In closing, I would like to say that our ability to provide
protective operations on the scale required in this environment
would not have been possible without using private security
contractors. The number of personnel security specialists we
utilize in Iraq alone is more than all the diplomatic security
agents we have globally. We could not have trained and hired
new agents to meet this requirement as rapidly as the
contractors met the requirement even if we had the funding and
FTE available. Meeting this relatively short duration
requirement using competitively bid contractors along with
establishing high standards and requirements is the best
possible solution for these circumstances. Thank you.
Mr. Shays. Thank you very, Mr. Starr.
[The prepared statement of Mr. Starr follows:]
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Mr. Shays. We are going to finish with you, Mr. Kunder, and
then we are going to start with Mr. Marchant and ask questions
when we get back. But you will finish up before we adjourn.
STATEMENT OF JAMES KUNDER
Mr. Kunder. I will be very brief, Mr. Chairman.
Mr. Shays. Make your statement as you need to. Don't worry
about what I just said.
Mr. Kunder. Essentially, I'll summarize briefly what I said
in my statement. I will take this opportunity to provide a
little context on why we're using security personnel and the
various arrangements that actually take place in the field when
we're doing a reconstruction effort. If you would take a
situation where the U.S. foreign aid program is taking U.S.
taxpayer dollars to, say, build a health clinic somewhere where
we would immunize children, what we would normally expect to do
is send our personnel out ahead of time, make sure it's not a
swamp, talk to the local villagers, make sure it's a place
where they would want the health center, would it be useful to
them and to make sure the construction takes place
appropriately, any medical supplies are used appropriately, not
stolen effort so all that requires a lot of trips by U.S.
Government personnel or our partners, contractors or NGO
contractors to get out to the site. What I find in those
circumstances is that while we're talking about personal
security firms here, what we've tried to do is adapt a number
of techniques to make sure the U.S. taxpayer dollars are spent
wisely. In some cases, that means using our local employees.
For example, in Iraq, we have more than 100 Iraqi professionals
who often are able to blend in more effectively and get out and
take a look at these project sites. In the West Bank, in Gaza,
we're using television cameras to make sure construction is
done effectively and efficiently. In areas where we can't move,
we are sometimes using armored vehicles. We're trying to use a
range of cost-effective techniques. Hiring of security
personnel is not always the first option that we would take to
make sure taxpayer dollars are spent effectively. The second
point I try to make in my testimony has to do with a range of
relationships, a range of security relationships that take
place in the field because if you're going to get into
discussions of regulation and so forth, I think it's important
to understand the range--of the range of relationships that
we're dealing with.
While Iraq and Afghanistan are coalition environments, most
of the operations we've been engaged in reconstruction in over
the last several decades have tended to be peacekeeping
operations, whether it's Haiti, Bosnia, Somalia and so forth.
In those situations, we tend to rely more extensively on
military forces, peacekeeping forces. On the far extreme, some
of our NGO partners, even those operating in Iraq, do not use
foreign personnel at all. They hire either local security or
attempt to operate below the radar screen essentially so
they're not visible. They use either Iraqi-Americans or
Jordanians or other employees so there are a range of
relationships between service providers and--and security firms
that take place in the field. Very briefly since several
members have talked about cost, we are spending probably about
on average 22 percent of the money that we're spending on
programs for security purposes--am I breaking up?
Chairman Shays. No.
Mr. Kunder. And that money--frankly, we're not at all
apologetic at USAID about the expenditure of those moneys. If
I'm trying to immunize 4,000 children against measles at a
health center, and if medieval sadists are willing to blow up
the people immunizing the children and the children who are
lined up, I essentially have two choices. Either I can immunize
3,000 children and spend the other 25 percent for security
purposes, or I can give up and not immunize any children.
Clearly, I would prefer--and I'm sure the committee would
prefer and I think every U.S. taxpayer would prefer--that I
spend 100 percent of the money and immunize all 4,000 children,
but the reality of the circumstances in which we're dealing is
that we have to pay these security costs in order to deliver
the services that we're asked by the Congress to deliver under
the Foreign Assistance Act.
These are the kinds of contextual issues I tried to
summarize in my hearing--in my statement. I'm more than glad to
answer any questions the committee has. Thank you, sir.
[The prepared statement of Mr. Kunder follows:]
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Mr. Shays. I thank all four of you gentlemen. I think you
have put into play a good opportunity for the committee to ask
questions. I think we have a range of expertise at our panel,
and I thank you for that. And as someone who has been to Iraq
12 times, I just want to say I'm deeply impressed with the work
of so many of the folks who provide security. So I will be
interested in your responses to questions. I will first be
interested in the questions my colleagues ask and your response
to them.
Regretfully, we have two votes. I didn't estimate its time
very well last time, but we have two votes, not three. We'll be
here probably a little after 3 to 4 p.m. Sorry. Is that right?
Thank you. So we stand at recess, and we'll get right back
here. I hope all the Members can come back and participate.
[Recess.]
Mr. Shays. This hearing is called to order. Again,
apologies for having to recess for a little bit for votes.
We'll start with Mr. Waxman. And I'll have questions. I prefer
to ask mine toward the end. So Mr. Waxman, you have the floor.
I think we will do a 10-minute round. So you have the floor.
Mr. Waxman. Thank you, Mr. Chairman. Mr. Assad, as you
know, last year, GAO issued a report concluding that the
Defense Department could not adequately determine how much it
was spending on contractor security services. To address this
deficiency, GAO recommended that the Defense Department track
contractor security costs, and the Pentagon agreed to do this.
In order to gage the Pentagon's progress over the past year, I
want to focus today on just a single contract. The biggest
contract in Iraq, which is the LOGCAP, the Army's contract for
meals, housing and other logistical support for the troops.
Halliburton currently has this contract, which is now worth
about $15 billion in Iraq alone. I'd like to know--what I'd
like to know is this, how much of this $15 billion in LOGCAP
funding went to pay for private security contractors?
Mr. Assad. Mr. Congressman, unfortunately----
Mr. Waxman. I don't think your mic is on.
Mr. Assad. Mr. Congressman, unfortunately, I don't have
those details, but I would be happy to get that information for
you and take it as a question for the record, sir.
Mr. Waxman. The Pentagon letter concurring with the GAO
recommendations was signed by your office on July 19, 2005. And
your letter says, ``the Department of Defense will collect
readily available data on incurred security costs under
existing contracts.'' Those are the Department's words. This is
a year later. Is it--you don't know how much U.S. taxpayers are
spending for security under the biggest contract in Iraq? Or
you just don't have it with you today?
Mr. Assad. I just don't have that information with me
today, Mr. Congressman.
Mr. Waxman. And didn't you think this might be asked?
Mr. Assad. On the LOGCAP contract? No, I didn't, sir.
Mr. Waxman. I'd like to put up a chart if I might.
According to the investigative reports, security costs under
Halliburton's LOGCAP contract have spawned multiple players of
subcontractors all taking their cuts in successive rounds of
mark-up. Let me walk through this.
According to the contract documents cited, the individual
employee performing security services under this contract
earned $600 a day or $180,000 a year. Blackwater, U.S.A., the
company that employed this person then tacked on a 36 percent
mark-up.
In addition to this amount, Blackwater also separately
billed for all of its overhead and costs including insurance,
room, board, travel, weapons, vehicles, office space,
administrative support and taxes. But it didn't end here.
Blackwater was a subcontractor to a Kuwaiti company called
Regency Hotel, reportedly run by a retired U.S. Army officer.
Regency was apparently billing up to $1,500 a day for that same
single employee, but Regency was still not the top level.
Regency was a subcontractor to a German company named ESS. We
don't know how much ESS charged, but we do know ESS was a
subcontractor to Halliburton. And we also know that
Halliburton's contract with the Army guarantees that its costs
will be fully reimbursed. So they contract. As we can see, this
layering of contracts here guarantees Halliburton a fee of 1
percent of those costs along with an opportunity for an
additional 2 percent in award fees. So if this information is
correct, the bottom line is that the U.S. taxpayers are paying
hugely inflated prices for these services.
Mr. Assad, do you know whether this report is true? Are
there really five tiers of contractors?
Mr. Assad. I do not, sir. But I will find out.
Mr. Waxman. If we can cut to the bottom line, the biggest
unknown here is the total amount of mark-up. How much does
Halliburton charge the American people for this $600 a day
employee?
Mr. Assad. Mr. Congressman, I don't have that answer, but I
definitely will look into it.
Mr. Waxman. Well, I'm asking not for--not a new question. I
raise these in a letter to General Jerome Johnson of the Army
Field Support Command on November 30, 2004. He wrote back
saying that the Office of the Secretary of Defense would
provide a formal response. The Defense Department has now had
over a year and a half to answer these basic questions, and the
only conclusion I can draw is that there is a concerted effort
to keep Congress and the American public in the dark, and since
we're the people who pay the bills, that's simply not
acceptable. This goes to the questions that the chairman of the
subcommittee is joining with me in asking, and we would like
that information to be provided for us.
Mr. Shays. Would the gentleman just yield a second?
Mr. Waxman. Certainly.
Mr. Shays. Mr. Assad, in terms of looking into it, what we
would want is a response----
Mr. Assad. Yes, sir.
Mr. Shays [continuing]. In writing to these questions that
the chairman has asked.
Mr. Assad. Yes, sir, Mr. Chairman.
Mr. Shays. And that can be provided in the next 2 weeks?
Mr. Assad. I will make every attempt to do that, sir.
Mr. Shays. Thank you.
Mr. Assad. Yes, sir.
Mr. Waxman. Mr. Assad, I would like to ask why the Defense
Department has not provided private security contractors with
greater assistance and guidance. In testimony later this
afternoon, the subcommittee will hear from an official from the
Professional Services Council. This is the leading national
trade association for companies that provide professional and
technical services to the Federal Government, including
securities services.
In its testimony, the Professional Services Council says
that they recommended back in March 2003 that the Defense
Department take one of three actions. One, set standards for
private security firms operating in Iraq. Two, establish a
qualified list of firms. Or three, directly contract for
securities services and have reconstruction contractors
reimburse the government. But the Defense Department failed to
take action on any of these recommendations. Why was that the
case?
Mr. Assad. Sir, I can't answer to what you may have heard
from the Professional Services Council, but I can tell you that
in a number of our contracts now that are being issued joint
contracting command, there are several provisions which we're
including in those contracts that address the matters that
you're talking about. All our contracts include DOD instruction
3020.41, which lays out requirements for medical, lays out
training requirements, lays out firearm requirements, we
include DOD instruction 5525.11.
We now require DD Form 2760, which is an arms
qualifications form and training form that we require. We
require each employee to sign in writing that he or she is
complying with those training responsibilities and conditions
with regard to firearms. And while I know we can improve, and
there certainly is room for improvement, sir. I won't deny
that. We are making an attempt to make it clearer for our
contractors to understand what their requirements are, what
their qualification requirements are, what the training
requirements are, and we will continue to do that, sir.
Mr. Waxman. Let me ask, Mr. Solis, is this adequate? GAO
made the same recommendations in your report, and GAO
recommended that the Defense Department explore minimum
standards for private security companies, a qualified vendor
list, a bigger government contract for securities services that
could be reimbursed by construction contractors. I assume
that's right, and do you feel this is adequate enough to meet
the request?
Mr. Solis. It may. It may, but it's not clear to me when we
talk about the instruction that Mr. Assad's talking about,
that, I think refers to contractors that are accompanying the
force. I'm not sure that directive would necessarily apply or
be applicable to private security contractors. It does lay out
some aspects of the role of the military in respect to
contractors that deploy with the force, for example, like
contractors who repair vehicles and things of that nature, but
it's not clear to me whether that will satisfy the requirement
for private security.
Mr. Waxman. For private security. Couldn't the Pentagon's
lawyers have placed qualifications on the list to make clear
that they were not endorsing any specific company, and in that
way at least let the contractor who was looking for security
protection to hire one of the authorized private security
contractors?
Mr. Solis. Well, actually what we said in our
recommendation I believe was that they need to not only just
DOD, but the State and aid explore different options in terms
of setting these kinds of standards, and we laid out different
qualified vendor lists, different contracted vehicles, I
believe, and so that they could explore different options
without necessarily being prescriptive about what they should
do because of the environment that was out there.
Mr. Waxman. Mr. Solis, let me just conclude by asking, what
impact did the Department's lack of action on these
recommendations that you, at GAO, had made. In your report, you
discussed conversations you had with the contractors
themselves, and you find that the contractors believed that
they could have used the additional information, and the
additional guidance that you were recommending. How could the
Defense Department have helped private security contractors to
do their jobs better? And how would that, in turn, have helped
the government do its job better?
Mr. Solis. Well, I think there's some potential--and again,
we haven't looked at what they were currently doing, but until
that's corrected, there could still be some potential
vulnerabilities with the type of contractor and the
qualifications of those contractors, and until that's squared
away, there may be some issues there.
Mr. Waxman. Thank you. Thank you, Mr. Chairman.
Mr. Shays. At this time, the Chair would recognize Mr.
Duncan.
Mr. Duncan. Well, Mr. Chairman, I'll be brief, and I wasn't
able to be here because of other meetings for most of the
testimony, but I did refer earlier to this staff memo which
says that there are 60 private security companies operating in
Iraq with 25,000 employees, but that a Baghdad-based
association says there may be more than 150 private security
firms with as many as 50,000 personnel. Did we clear that up?
Can anybody help me on that? Do we know how many firms there
are and how many personnel we're talking about?
Mr. Starr. No, sir.
Mr. Shays. I'm sorry. We need nice loud answers just so the
recorder can record them. The question is, again----
Mr. Duncan. Well, the question was--it comes from the staff
briefing. I think everybody understood the question. And that
is, as I just would like to know if we know whether this is
right or wrong, the staff memo that says that some people say
there's 50 private firms with 25,000 employees and others say
there's 100, maybe more than 150 private security firms with as
many as 50,000 personnel. And I'm just asking, did anybody
clear that up in their testimony while I was away in my other
meetings? But apparently not because everybody's--I'll just
note for the record.
Mr. Kunder. Sir, Mr. Duncan, we did not answer that
question specifically. I just would like to make one
observation. One of the issues is not just a data collection
issue, but it's a definition issue because as the GAO report
says, security in Iraq means a whole bunch of things. It means
security for static positions. It means security for convoys.
It means private security details for individual senior
officials and so on and so forth. And that means that some of
our firms hire Iraqi subcontractors. Subcontractors from other
countries, and what you end up with is a broad array of
security firms across the country, some of whom are Iraqis
providing local security, some of whom are Nepalese or
Colombian firms, and so what you've got is a broad array of
firms, and my answer would be part of the definitional issue or
the reason some people are using different numbers is they're
defining the pool differently.
Mr. Shays. Could the gentleman yield?
Mr. Duncan. Yes, sure.
Mr. Shays. I think this is kind of like when I was doing my
statement and I said between this number and this number, I was
kind of embarrassed to have to make that statement, and so I
would like, on the gentleman's time, and I'll be happy to give
him my time too, I would like each of you to tell me, do you
know how many security guards we have in Iraq? From you, you,
Mr. Solis, to you, Mr. Assad, to you, Mr. Starr, and to you,
Mr. Kunder.
Mr. Kunder. I cannot give you an exact answer. There is
none that--there's only estimates from what we've been able to
get.
Mr. Assad. Sir, I can't give you an answer. I can tell you
that approximately through contracts we've awarded joint
contracting command 3,400 private security contractors that
we've contracted for through the joint contracting command. I
can't speak for the Department of State, and I can't speak
obviously for AID, and that does not include for contracts for
other work where contractors themselves would go off and
subcontract for private security contractors. That's just the
contractors that we would award to.
Mr. Kunder. Mr. Starr, would you just----
Mr. Starr. Mr. Chairman, I can tell you how many
contractors the Department of State has. I can tell you what
the companies are. And we can tell you how much it is and how
many there are, but like my colleague, Mr. Jim Kunder, has
said, I don't think we could give you an accurate number of how
many other contracts are out there in support of
nongovernmental organizations.
Mr. Shays. Mr. Kunder, is that your answer?
Mr. Kunder. Sir, if you want to define the term--I'm not
playing games. I'm quite serious. If we can say on a given date
because we're constantly changing what we're doing in Iraq in
response to the situation on the ground. But if we can specify
the date and a definition of what you mean by, you know,
international or local, I can tell you exactly how many firms
we had at any given time. Yes, sir.
Mr. Shays. I'm just going to thank the gentleman for
yielding to me. I happen to be a big supporter of private
security forces, but I am pretty surprised that we can't do it,
give the number because they're basically all paid by the
government, and it's just surprising to me that we can't have--
that there's not one person who says, this is what we're
spending. I thank the gentleman for yielding.
Mr. Duncan. Well, thank you, Mr. Chairman. Let me ask this.
This Washington Post story that came out 2 days ago said that
this British firm, Aegis Defense Services, got a $293 million
security contract. Is that the only contract that company got?
Can anybody tell me the answer to that? Does anybody know the
answer to that?
Mr. Assad. Sir, I don't know if that's the only contract
they got. No, sir.
Mr. Duncan. Does anyone know how much total--we've
determined we can't tell the number of employees, but can
anybody tell me or give me a rough guess as to if one contract
was for almost $300 million, can anybody tell me a rough guess
of if--how many billions I assume that we've spent on private
security contracts total from all the departments and agencies
of the government total in Iraq? Just out of curiosity.
Mr. Kunder. I can say, sir, we divide the way, we spend the
money appropriated by the Congress into operating expenses,
that is to say our own staff, putting them on the ground,
feeding them and so forth. We've spent approximately $309
million since the beginning of operations. This is staff
salary, staff housing and so forth. And about $105 million has
gone to security costs or about one-third of the total. If you
go to the other way we account for taxpayers' dollars which is
the program, that is to say building schools, building clinics,
building roads, building sewage treatment plants, we've spent
about 5.1 obligating about $5.1 billion of the earth funds, and
we estimate that 22 percent, or, say, a little bit under $1
billion has gone for security costs. I could get you the
precise numbers if you want.
Mr. Duncan. But you are speaking now just for the Agency
for National Development. Is that correct?
Mr. Kunder. Yes, sir.
Mr. Solis. Congressman, if I can just add one of the
recommendations we did make is, you know, for the agency to
track these costs better down to the subcontractor level, and I
think therein lies the problem in trying to get an answer to
your question. I think the State aid committed future contracts
to begin tracking those kinds of costs, and we had some initial
estimates when we did our report based on some of the contracts
that we had, but I think the problem that we ran into is that
you could not track these costs, particularly down to the
subcontractor level. But I believe State and aid are making
some adjustments and detract those costs from new contracts.
Mr. Duncan. Well, let me just say this. You know, one of
the most famous quotes of all time was in the President
Eisenhower's farewell speech when he said, when he warned us
against the military industrial complex, and I'm convinced he
would be shocked at how far we've gone down that path. And the
International Herald Tribune had an article back a couple of
years ago and they called it the revolving door at the
Pentagon. All the defense contractors hire all the admirals and
generals, and then they come back and they get from their
friends and their buddies these sweetheart deals, and you know,
and then we see things like this chart that Mr. Waxman came up
with, saying some former military officer, who I guess had a
friend in high places, $1,200 to $1,500 a day for a hotel.
These things would shock my constituents, and I don't know
how anybody can call themselves, legitimately call themselves a
fiscal conservative or a conservative Republican if they're not
just horrified by things like that are on this chart. It's just
getting ridiculous. Thank you, Mr. Chairman.
Mr. Shays. Thank you. I was wondering if the gentleman
would yield me the balance of his time.
Mr. Duncan. Yes.
Mr. Shays. Mr. Solis, tell me how we would sort this
equation out. I mean, each has their own responsibility. DOD is
funding its folks, and you have State Department funding its
folks. But walk me through, and you have the USAID funding its
folks. But walk me through what would be involved and why we
wouldn't want to be able to get this information fairly
quickly.
Mr. Solis. Well, again, I think when we went back and
started looking at----
Mr. Shays. Excuse me. Let me just interrupt. I'm just
taking the balance of his time, correct?
Mr. Solis. When we went back and started looking at
individual contracts, we could only go so far in looking at
what those contracts in terms of where the money was being
spent for security contracts.
Mr. Shays. Are most of these contracts cost plus?
Mr. Solis. I think it's cost plus and fixed from what I
understand.
Mr. Shays. I mean, in other words, when the private
contractor--and I have no problem with them making sure that
their folks are protected and making sure that they hire
security people to protect them, but what I'm asking is, it
seems a logical thing for us to know how much we're spending on
security and how much people are being paid, and so what I am
asking is, help us sort out how we would go about doing that or
how DOD, or is it the fact that we have two basic departments
involved in this that makes it more difficult? I mean, tell me.
Mr. Solis. I don't know that it's because--you've got two,
three or four whatever number of departments that are involved
here. Again, when we started looking at where security--what
the totality of the security costs were, for example, when
subcontractor might have a bill for whatever services they had,
there only might be an invoice for whatever they were doing say
for, you know, reconstruction, but it also had buried in there
somewhere security costs.
Mr. Shays. I don't like the word ``buried.''
Mr. Solis. It was part of the invoice, but we could not
determine or break down how much of that was for security
versus for other services. So what we're saying in working for
was a delineation of what those costs were when an invoice came
in.
Mr. Shays. Do we need legislation to make that happen? Or
can we request that it be done by the departments and that they
would then do it? Mr. Starr, can you answer that?
Mr. Starr. Sir, I believe it was Congressman Waxman that
sent in a separate question, but concurrent with the GAO report
or following the GAO report, State Department did meet with
USAID, and we have, in fact, issued something called a
procurement information bulletin which is specifically giving
guidance that the costs for security within contracts that are
awarded must be tracked. I have a copy of the procurement
bulletin that was issued. This is on the recommendation of----
Mr. Shays. When was that done?
Mr. Starr. This was very recently, sir.
Mr. Shays. Very recently is not helpful.
Mr. Starr. No. I understand that, sir.
Mr. Shays. Very recently could be 6 months ago.
Mr. Starr. I don't have--June 1, 2006, sir.
Mr. Shays. We should put that in the record. Tell me about
that DOD. Wouldn't it make sense for them to make the same
directive?
Mr. Assad. Yes, sir. And when I started looking into this,
frankly getting prepared for this hearing, I issued some
direction within my office. And I'm working with the Army as we
speak to develop some guidance for the joint contracting
command to ensure that takes place.
Mr. Shays. Well, maybe when you respond to the other
question Mr. Waxman has requested, you would tell us how you've
progressed. Hopefully you'll be ready to make that an agency-
wide directive. That's one of the reasons frankly why we have a
hearing like this, that gets us to focus on things, and I
realize there are a lot of things to focus on. So thank you for
doing that. At this time, the Chair would recognize the ranking
member of the committee, Mr. Kucinich.
Mr. Kucinich. Mr. Assad, when were the first private
contractors put into Iraq?
Mr. Assad. I don't know the answer to that, sir. I could
find out for you in terms of the first contractors that we
contracted for, but I don't know that.
Mr. Kucinich. When the Department began its contracting
process--in connection--did the Department ever issue any
guidelines or rules of conduct for the contracting companies?
Mr. Assad. Subsequent to the GAO report, Mr. Congressman--
--
Mr. Kucinich. No from the time that you started to----
Mr. Assad. No, sir. I think that it was the first--there
was individual contracting clauses that were included in some
of our contracts, but 3020.41, which was the true guidance that
we gave our folks was issued in November 2005.
Mr. Shays. Just for the record, could you let us know when
you began to take on this task?
Mr. Assad. Yes, sir. I took this position on April 3 of
this year.
Mr. Shays. OK.
Mr. Assad. 2006.
Mr. Shays. Thank you. That's helpful. Thank you.
Mr. Assad. You are welcome.
Mr. Kucinich. My colleague, Ms. Schakowsky, points out that
contractors started to come in before the war. Is that--and so
the men and women who serve our country in the uniformed armed
services, when they go into a foreign operation, are they given
rules of engagement?
Mr. Assad. Yes, sir. They have rules of engagement.
Mr. Kucinich. I wonder why it is if our troops would be
given rules of engagement in a hostile--under hostile
conditions, why the Department didn't have rules of engagement
for the conduct of private security people. Can you explain why
that wouldn't happen? Why it didn't happen?
Mr. Assad. I can't explain why it didn't. I can tell you
that the guidance that we've provided to the joint contracting
command now is that they include rules of engagement, rules
utilizing force, law of armed conflict and it has to be signed
by each employee of the company that we're doing business with,
that they've read the rules and that they understand them. I
can't answer, sir, why----
Mr. Kucinich. Do you know what the statute of limitation
for murder is in the United States?
Mr. Assad. No, I don't.
Mr. Kucinich. There isn't one. Now, if someone connected
with a private contracting company was involved in the murder
of a civilian, would the Department be ready to recommend their
prosecution?
Mr. Assad. Sir, I'm just not qualified to answer that
question.
Mr. Kucinich. Anybody here qualified to answer that? And if
they're not, why are you here? With all due respect. I mean,
this is, Mr. Chairman, as late as June 11th, 2 days ago, the
Washington Post filed a story that said that no security
contractor has been prosecuted for killing--indiscriminate
killing of civilians. It says, in part, because an agreement
forged soon after the U.S. invasion of 2003 that made it
impossible for the Iraqi government to prosecute contract
workers. I mean, I'd like to submit for the record the story
from the Washington Post, contractors cleared in videotape
attacks. It says the Army's criminal investigation division
cleared these individuals. The investigation's not being
released or publicly discussed. It said lack of probable cause
or belief that a crime was committed in what was an attack that
was allegedly videotaped. Further discussion of this story was
in this article on November 27, 2005.
Mr. Solis. Congressman, if I may try to answer your
question and I'm not an attorney to get into the particular
details of the process, my understanding is that individuals
could be prosecuted under War Crimes Act. There is also another
act, and I know the acronym, I don't know the exact words under
MEJA. But I don't believe at this point anybody's been brought
forward under those particular laws, but it is my understanding
that those would be applicable for private security
contractors, but I can't----
Mr. Kucinich. Back to the Department of Defense. Would the
Department of Defense be prepared to see prosecution preferred
against any private contractor who was demonstrated to have
unlawfully killed a civilian?
Mr. Assad. Sir, I can't answer that question. I would have
to take it back, and we will answer it for the record.
Mr. Kucinich. Wow. Think about what that means. If private
contractors can get away with murder, and in some cases, they
may have. It's not an adequate response really. And you know,
this is one of the problems here that these contractors do not
appear to be subject to any laws at all. And so therefore, they
have more of a license to be able to take the law into their
own hands. We've had a great discussion occur in this country
and around the world in the conduct of U.S. troops in certain
incidents but those troops will have to be accountable. There
doesn't seem to be any accountability with respect to private
contractors and it's--it really--since the administration is
more and more preferring in certain instances private
contractors, it would seem that notwithstanding your
protestations that subsequent to these reports you are trying
to get into a new level of standards, the basic question of
accountability is accountability before the law. And
accountability of someone is unlawfully taking another person's
life that has to be the ultimate accountability, and you know
we don't hear that it is unless you can enlighten me as to some
new development that I may not be aware of. Any of you.
Mr. Starr. Mr. Congressman, I believe that in our contract,
we're very specific about rules of engagement, use of deadly
force. I've also checked with our legal people and unlike the
Department of Defense, we do not have the legal recourse should
our contractors commit a crime that would be prosecutable back
in the United States. However, I would like to make it a matter
of the record that every shooting incident, every incident
that's gone on in Iraq in a very, very volatile and very
dangerous situation, essentially a war situation where we are
putting civilian contractors, we have looked at the situations
where they have, in fact, employed deadly force, and found that
there was----
Mr. Kucinich. How many of those incidents have there been?
How many shooting incidents have there been by private
contractors that you've had to look into?
Mr. Starr. The Department, sir, I can't comment on the
Department of Defense. The Department of State has--the
Department of State I can get you the number for, I don't have
it off hand.
Mr. Kucinich. Ten?
Mr. Starr. I think about a dozen, sir.
Mr. Kucinich. And Department of Defense, how many shooting
incidents do you investigate with respect to private
contractors killing innocent civilians?
Mr. Assad. Sir, I don't have it for you, but I will get it
for you and answer the question for the record.
Mr. Kucinich. So you don't have any idea at all?
Mr. Assad. No, I don't sir.
Mr. Kucinich. Have you ever canceled anyone's contract
because their workers engaged in indiscriminate killing of
civilians?
Mr. Assad. I have never had that situation occur to me but
I can tell you, Mr. Congressman, as Mr. Solis mentioned the
MEJA Act, that's the Military Extraterritorial Jurisdiction
Act, that is another law that we are including in our contracts
now as we place them through our joint contracting command. So
we're trying to address the issue that you are addressing, sir.
Mr. Shays. The gentleman's time has run out, but I would be
happy to just allow him and I to just pursue this issue just
for clarity, if we could. It's my understanding that if you are
a DOD contractor, you come under Defense Department rules. The
bottom line is, legal companies fulfilling contracts with DOD
are subject to the military chain of command, but not the
uniform code of military justice absent a congressional
declaration of war, and their personnel can be prosecuted by
the Department of Justice under the Federal law as a result of
Military Extra Territorial Jurisdiction. My understanding,
though, is State Department is not. Is that accurate?
Mr. Starr. That is my understanding, sir.
Mr. Shays. OK, so, if you would just clarify for Mr.
Kucinich and me both, what do your employees--your contractors
come under?
Mr. Starr. Sir, I do not believe that we have the
capability of prosecuting them back in the United States. This
is something that I would have to more closely check with our
legal section, but in discussion with our legal section prior
to this hearing, it was a question that was raised prior to the
hearing. It is something that we need to look at. But our
efforts are controlled by specific rules of engagement,
approved by the chief mission as they are at all U.S. Embassies
and missions around the world.
Mr. Kucinich. Refer back to the Chair, but I guess what it
amounts to defer is whether either the Department of Defense or
the State Department, when they hire these private contractors,
if any of them guided when it comes to civilians by the fourth
commandment thou shalt not kill. I mean it just seems there's
no rules here. It just seems that people can get away with
murder.
Mr. Starr. I don't agree with that, sir. My people do not
get away with murder. That's not why they're over there. I
think they're tightly controlled. I think it's a well-written
contract. I think that we have special agents on the ground
that look very closely at all the activities. Every shooting
incident is investigated and looked at. This is not a case of
getting away with murder, sir.
Mr. Kucinich. You know----
Mr. Starr. This is a case where we have a very difficult
situation in a war zone where people's lives are at risk.
Mr. Kucinich. When innocent civilians are killed, we have
to ask the question--you just told me both of you said that you
have incidents that you're going to forward information to this
committee about. I think it would be important for us to go
over each and every incident to see if anybody got away with
murder. Then we can go back to your testimony.
Mr. Shays. Mr. Starr, I think you've made a point that's
important to make, and I think it's been made. Thank you. At
this time, the Chair would recognize my colleague from
Maryland.
Mr. Van Hollen. Thank you, Mr. Chairman. And I want to
thank all the witnesses for their testimony here today. In my
opening statement, I pointed to the gross wrong predictions
early on with respect to estimates of the cost of the war,
again, when, Lindsay Lewis, the chief economic advisor to the
President, said it may cost $100 to $200 billion, he was sort
of dismissed by others. In fact, Mitch Daniels, who was then
the CEO director, put the number between $50 and $60 billion.
We now know it would be well over in the hundreds and hundreds
of billions of dollars, the cost, and the question is, how did
we get that so wrong? We know we got the weapons of mass
destruction issue wrong. We now know we got the costs wrong. We
apparently didn't listen to the advice of many military people
in the field with respect to the number of troops that would be
needed to maintain stability in a post-invasion environment. We
got that wrong. So I just want to go back a little bit with
respect to the cost issue because we're now focused on the
question of the cost to the taxpayer, of the contracts that
were led and the war effort in general. And I would like to ask
you, Mr. Solis, because I found in your report you concluded
that agency officials expected that the post-conflict
environment in Iraq would be relatively benign and would allow
for the almost immediate beginning of reconstruction efforts.
We now know that those predictions, those feelings were not
accurate, were not true. You go on to say during a discussion
with DOD, we were told that this expectation was based on
determinations made at the most senior levels of the executive
branch, and the contracting officials were bound to reflect
that expectation in their requests for proposals. How is it
that the administration bound the contracting officials to
exclude the costs of providing security in that post-invasion
environment?
Mr. Solis. As we were vetting our draft report for final
comment, we got many comments from many different people. And
as we were running it through the acquisition community, this
is something that they wanted to put in context in terms of an
understanding as to why things were done the way they were.
That's why we indicated that and wrote that in our report.
Mr. Van Hollen. So let me just make sure I understand. You
are saying the administration officials instructed people
putting together their cost estimates to assume that there
would be very few security needs. Is that correct?
Mr. Solis. No, I think what I am saying is in terms of the
context of the environment, the benign environment or
permissive environment, that's the context that they were going
to be operating under or assumed they would be operating in,
and in terms of when they did the different contracts, whether
it was private security contracts or for others, that's the
environment that they assumed we would be working in.
Mr. Van Hollen. Are you, or is any of the gentlemen here
aware of the fact--I mean, State Department officials had been
studying the post-war, potential post-war environment in Iraq
for many years. In fact, they put together quite an exhaustive
study, which was essentially thrown out the window by the
Defense Department when making its analysis. Did your review
come across that, did you ask questions to the administration
officials about that particular issue?
Mr. Solis. I don't believe we came across that particular
report.
Mr. Van Hollen. All right. I mean, I want to give you a
quotation, because I think it's instructive with respect to the
total failure of the administration to anticipate what should
have been something that anyone could anticipate. ``It is not
clear what kind of government you would put in. Is it going to
be a Shia regime, a Sunni regime or a Kurdish regime? Or is it
one that tilts toward the Ba'athists or one that tilts toward
the Islamic fundamentalists? How much credibility is that
government going to have if it is set up by the U.S. military?
How long does the U.S. military have to stay to protect people
that sign onto that government? And what happens to it when we
leave?''
That's a quote from Dick Cheney when he was Secretary of
Defense, explaining back in early 1991 why the Bush
administration decided not to go into Baghdad after the
invasion of Kuwait. It was an explanation that I think made
sense to lots of people, and it's one that came back to haunt
this administration and this government now because the
predictions he made in 1991--anyone who followed Iraq knew very
well that this is exactly the type of situation that could
develop in Iraq, and so I guess my question to you as someone
who went in as an independent individual talking to people in
the administration, how did they get it so wrong? You had an
opportunity to interview people. You have Dick Cheney, you
know, many years earlier predicting this kind of chaos
following an invasion of Iraq. How did they get it so wrong
with respect to the security costs and the real possibility of
an insurgency?
Mr. Solis. I can't tell you the specifics. I can only tell
you that the environment did change, assumptions going in did
not always pan out. And I think that then there shows the
increase or the reasons for the escalation particularly for
private security costs. It was assumed that it was going to go
into a particular environment. That environment did not occur,
and hence the need for security forces.
Mr. Van Hollen. I guess the key word--I mean, I'm not--you
weren't there obviously, you just had an opportunity to talk to
folks, but the fact that they assumed that is extraordinary,
given the fact that people who are experts in this area at the
State Department and others had looked at it and had come to
option conclusions, people at the CIA had come to option
conclusions with respect to the challenges we would face in a
post-invasion Iraq, and anybody who had followed Iraq,
including now, Vice President Cheney, when he was remarking on
this back in 1991, should have known full well the potential of
what would happen when you took the lid off of Pandora's box
and unleashed forces that have existed in Iraq for a long time
between the Shia, the Sunni and the Kurds. And I just find it
amazing, amazing case of gross negligence that people did not
take that into account in planning.
Let me just switch gears a little bit, if I could, and ask
Mr. Kunder a question with respect to Afghanistan. And getting
back to Afghanistan gets us back to where the original threat
to the United States came from. Of course, Osama bin Laden
planned the attacks of September 11th. They were executed by
him and al-Qaeda with the cooperation of the Taliban government
in place. We have now taken the appropriate action to go after
the al Qaeda and the Taliban, but we face a serious challenge
in Afghanistan in reconstruction. I know you testified back in
January, I believe, before the House International Relations
Committee, with respect to problems in southern Afghanistan
where you have a resurgence of Taliban, and since activity--and
since your testimony back then as, you know, it's gotten even
worse.
Can you just talk about the challenges we face with respect
to our reconstruction efforts in southern Afghanistan? Because
I think if we're not successful at reconstruction and
rebuilding and democracy efforts in Afghanistan, we do run the
danger of another failed state. We do run the danger of a
resurgence of the Taliban, and with that, the possibility that
al-Qaeda can, once again, feel free to operate in there. We
know Osama bin Laden's probably across the border in Pakistan,
but I think it's a very real worry. If you could just talk
about the challenges and what it's meant for our reconstruction
efforts and your efforts there.
Mr. Kunder. In general, sir, not specifically in terms of
private security firms.
Mr. Van Hollen. Well, in general, but I know I believe you
also have some private contractors operating in terms of
development.
Mr. Kunder. Yes, sir. Yes, sir. Sir, there's no question
that the number of security incidents has gone up in southern
Afghanistan since I testified earlier this year and
increasingly over the last year. I think the big question for
everyone working there is what combinations of factors has been
driving it. While in the media, it's generally been
characterized as a Taliban resurgence. My frank assessment is
it's a much more complex series of events.
I mean, there are very, very isolated areas in Kandahar,
Oruzgan Province. Some of the most isolated places on the face
of the earth. I don't want to slap a smiley face on everything,
but to some extent, what we're seeing is a push back because
some of the road construction projects and education projects
and so forth have actually taken place in very isolated areas.
We've had a spate of burning of school buildings where girls
have been asked to go to school. Well, if there weren't girls
schools built, there wouldn't have been any girls schools
burnt, so part of this is just a reaction by very xenophobic,
isolated people.
Part of it is clearly related to the increased pressure on
the drug trade. The eradication efforts. While the eradication
efforts have not been as successful as we had hoped, there are
aggressive eradication efforts. So you get some kind of
criminal element working with in this as well. And then you do
have some Taliban elements that are trying to reorganize in the
south as has been widely reported. So you've got a whole range
of effects going on in the south and the sum total, or the
bottom line, is that the working environment has become more
dangerous for reconstruction efforts in southern Afghanistan.
The U.S. Government's trying to respond to that both in terms
of more aggressive patrolling and use of private security firms
and all the other techniques that I referred to earlier, but
the bottom line is that it has become an increasingly dangerous
place to work in recent months.
Mr. Van Hollen. Well, let me just followup, if I could, Mr.
Chairman, General Maples, the head of Defense Intelligence
Agency, did testify in front of the Senate a few months ago
about the resurgence of Taliban activity, and I think if you
look at recent reports, it is a combination of factors but
clearly there is an upsurge in Taliban activity.
And I think that we should look at whether or not we really
want to reduce the total U.S. force presence in the southern
Afghanistan area, which is currently what we are planning to
do, but I guess my specific question is, what impact has it had
on our reconstruction development efforts there? Have we had to
withdraw--I mean, I thought your testimony a few months ago
suggested that we'd have to reduce our efforts there because of
a lack of security. I'm just curious as to whether or not we
have been able to get back in there or whether the situation
security's still too dangerous.
Mr. Kunder. Yes, that a very fair question. And it's very
relevant to the topic of this hearing because what we do in
these circumstances is both on an area basis and a time
specific basis, we will withdraw relief workers or
reconstruction workers, or put additional security in so for
individual areas, specific areas for specific periods of time
we have had to pull people out. But the honest answer overall
is that we've managed to maintain most of our efforts. The road
construction efforts that are going on in southern Afghanistan
have continued. We have lost a lot of local Afghan guards and
local Afghan construction workers along the way, in excess of
200 people working for USAID.
So there is a price that's paid by--I would say by brave
Afghans themselves who are trying to rebuild their country. The
alternative livelihood programs the alternative to poppy
production have been shut down in individual areas for certain
periods of time, but those folks have always gone back in. So
that what you are seeing is a slowing of the reconstruction
effort, but it is a continuation of the effort throughout
southern Afghanistan.
Mr. Van Hollen. Thank you. Thank you, Mr. Chairman.
Mr. Shays. I thank the gentleman and at this time the chair
would recognize Ms. Schakowsky.
Ms. Schakowsky. Again, thank you so much, Mr. Chairman,
because I have been trying to drill down on this issue of
private military contractors, security contractors for a long
time and have been stymied at every turn. I want to associate
myself with Mr. Duncan's remarks about how shocked the
constituents in his district would be. I represent a very
different district, and they would be and are shocked as well
by the astonishing lack of accountability for literally
billions of dollars that are being spent on private security
contractors about which we know so very little, even when
inquiries are made. Let me just say that right now--in the 3
hours of this hearing, about $33 million, has been spent in
Iraq.
It's about $11 million an hour, 24/7, day after day after
day in Iraq, and we need to--in Afghanistan, we need to get
some questions answered. And I don't know what you may have
thought that this hearing was going to be about. If we can't
answer questions about what are the number of security
contracts in existence, total cost of these security contracts,
maybe you can and maybe you will, the total number of
contractors in Iraq and Afghanistan. I'd like to know the
number of dead and wounded contractors because that's not part
of the calculation right now in deciding whether or not this
war is worth it, whether it's successful, we ought to not just
be counting the 2,500 or so of our Armed Forces, but also know
what is the loss of life for civilians, for Americans who are
working in this mission?
I want to know a list of the disciplinary actions taken
against contractors, if there have been laws that are broken,
it's hard to imagine with the numbers, whatever they may be, of
contractors that there haven't been any laws broken because I'm
unaware of any legal action that has been taken, and if there
are disciplinary actions, I would like to know as a Member of
Congress what those are, and in asking whether or not
Congress--Congress should be told at least of contracts over
$100 million. I'd like to know. Can I get, Mr. Assad, a copy of
the contracts with Blackwater? Can I see them?
Mr. Assad. Ma'am, Madame Congressman, we didn't do the
contracting with Blackwater. I think that was either the State
Department----
Mr. Starr. I don't believe there is a problem with that,
but I would check with our procurement people. I will get an
answer for you on that. It is a publicly bid contract,
competitively bid contract.
Ms. Schakowsky. I have had very little luck. Do you know
anything about that, Mr. Solis? I have had very little luck
being able to see the contracts. I was told that if the agency
doesn't release them, then the committee of jurisdiction has to
subpoena that information and that it is all--I can't take any
notes on it. I can go into a secret room and look at those
contracts. And it would seem to me, if these are taxpayer
dollars, I want to see those; I would like to see a contract.
Mr. Starr. I can tell you that our worldwide protective
services contract was a competitively bid open contract.
Ms. Schakowsky. No, I want to see it, though. Can I see it?
Mr. Starr. I would have to ask our procurement executive. I
personally wouldn't have any problem with that, but I really do
need to check with the procurement person to give you an
accurate answer on that.
Mr. Shays. If the gentlelady would suspend a second?
That is obviously an honest answer, and you will check it
out. You can't promise something until you know, and you have
people above you. But let's make sure that you communicate with
the committee with either, yes, of course you can, or, no, you
can't. And then please give us the reasons. Because I believe
my colleague is right in saying, you know, we need to do our
job, and we should be able to look at these documents.
Ms. Schakowsky. Has the GAO seen those contracts?
Mr. Solis. We have seen some, and we've had some access to
some of those contracts through our work.
Ms. Schakowsky. Have you been refused to be shown any of
the contracts?
Mr. Solis. I don't believe so.
Ms. Schakowsky. You know, I was looking at this, and also
then if you could provide me either now or later an answer to
those questions: the number of security contracts in existence,
the total cost of those contracts, the number--and
subcontracts--and the number of dead or wounded of the
contractors, laws broken, disciplinary actions and contracts in
excess of $100 million. Can I get those from each of you? Can
you answer me affirmatively?
Mr. Kunder. Yes.
Mr. Starr. Yes. In fact, I just didn't copy down all the
questions quite that fast.
Ms. Schakowsky. I will get that to you.
Mr. Assad. Yes, ma'am. We will respond. I will take the
question for the record.
Mr. Schakowsky. Also, Mr. Assad, I am looking at----
Mr. Shays. If the gentlelady will suspend, and she will
have time. I realize I am jumping in here. Just be clear as to
the questions you've asked again, if you would just ask it
again, because they were writing it down. I am sure staff
behind them was as well. What are the questions?
Ms. Schakowsky. I'll tell you what. Why don't I provide it
in writing?
Mr. Shays. But in the record, just read it one more time.
Ms. Schakowsky. The questions are: the number of security
contracts, the total cost of these security contracts; the
total number of security contractors and subcontractors in Iraq
and Afghanistan under those contracts; the number of dead and,
separately, the number of wounded contractors; a report on any
legal actions that have been taken against contractors or their
employees; a list of disciplinary actions that have been taken
against the contractors; and a breakout of the contracts issued
in excess of $100 million.
Mr. Shays. And how we will proceed? I realize again that it
was many questions. Provide us with that request in writing; we
will put a cover letter over so it is the committee's request,
and we will make sure that you get the answers to it.
Ms. Schakowsky. I appreciate that so much.
Mr. Kunder. May I ask one clarifying question? As we were
discussing earlier, there are contracts for the protection of
U.S. Government personnel, and then there are security
contracts that are part of--for example, we have a fully
competed contract with Bechtel to build power stations. As part
of that work, they hire their own security personnel to guard
their workers. I assume your question refers to the class of
direct U.S. Government contracts that have to do with the
protection of U.S. Government personnel. Because if you are
asking the latter, it's much more complex.
Ms. Schakowsky. Let me ask, Mr. Solis, you have a
definition here, static security personnel. You defined in your
GAO report what you meant by security. I am wondering if we can
just use that definition that was on page 5 of the GAO report?
Mr. Solis. It may be a starting point. That's what our
understanding is in terms of defining the types of security out
there. But it could be something that could be used by these
folks to try to delineate the kinds of security services that
are provided.
Ms. Schakowsky. So if that can be a working definition,
which would include static security, security for housing areas
and work sites, for example.
I wanted to ask, Mr. Starr, Mr. Solis' testimony talks
about how the State Department disagreed with our
recommendations. This was on exploring options that would
enable contractors to obtain services quickly and efficiently
and the various options for contractors. And it says that: The
State Department disagreed, citing concerns that the government
could be held liable for performance failures.
Now, if we are using our own military, clearly the
government is liable for performance failures. Are you saying
that with the billions of taxpayer dollars that are being spent
on these private security forces, that the United States of
America is not responsible? We want to put them at arm's
distance here and are not going to take responsibility for
performance failures? This is not our problem? Who's
responsible for performance failures if contractors with our
taxpayer dollars make mistakes? Shouldn't some liability fall
on the State Department if you contract with people who aren't
doing what they should be doing, aren't trained appropriately,
etc?
Mr. Starr. I think the answer--the formal question to the
answer--the formal question or the answer that the State
Department gave you was because we believe that there are so
many different types of operations in Iraq that for the State
Department to write one set of standards that could possibly
cover all of those things wouldn't be----
Ms. Schakowsky. I understand that part. But I want to tell
you that I am very concerned that we have operations going on
in Iraq, sensitive operations, and that, in fact, the U.S.
Government doesn't want to take responsibility for those, wants
to push them off on someone else. And I think this notion of
accountability and liability and responsibility falls directly
on government agencies, particularly given my suspicion that
not a single contractor has ever been prosecuted under any law.
I just want to raise that concern.
Mr. Kunder. Ma'am, I understand your question. But the
logic in general--when I sign something on behalf of the U.S.
Government, our contracting guidelines--and we are listening to
the Federal Acquisition Regulations which follow law passed by
the Congress--instructs me not to engage in selecting
subcontractors or getting too much into the relationship with
subcontractors for the very reason that I do want to protect
the taxpayers' interests.
If I contract with your firm to build a road, you are
responsible to the taxpayers, to me as a Federal officer, for
every element of that road, getting the right kind of concrete,
making sure the concrete is not cheap, making the sure the
foundation is right, etc., getting security for the road. If I
start getting into your business and telling you as the prime
contractor to the U.S. Government, now, I want you to get this
kind of concrete subcontractor and I want you to get this kind
of security firm and I want you to get this kind of matting for
the concrete, what I am doing is setting up the taxpayers for a
suit from you which says, well, I could have built the road
just fine----
Ms. Schakowsky. I hear you.
Mr. Shays. Hold on a second. The gentlelady's time had
ended, but I want her to be able to respond. So it is not like
we are just going to click here.
Ms. Schakowsky. And I understand what you are saying. But
one of the recommendations that they had was identifying
minimum standards for private security personnel
qualifications, training requirements and other key performance
characteristics.
Myself and, I believe, my constituents don't think it is
too much to ask for the Federal Government to say, we are going
to set some criteria for people who are carrying out sensitive
missions in Iraq and that for the response to be, well, we
don't want to do that because it may create some--the
government could be held liable for performance failures, to
me, is completely unsatisfactory.
I have a lot--as you can see, I have a lot of questions.
This is a whole area where the Congress has been completely
separated from oversight over thousands, tens of thousands of
people conducting important activities in Iraq. We just need to
open that up and shed light. And I am looking forward to your
answers.
And I thank you again, Mr. Chairman.
Mr. Shays. You are welcome. And you add value to this
hearing, and so we are grateful you are here.
Mr. Solis, I would want you to kind of maybe respond to
some of her points.
Mr. Solis. If I could. In our recommendation, we said to
thoroughly explore. We weren't necessarily trying to be
prescriptive. But, for example, when we said to come up with
vendor lists, there are some examples where, for example, I
believe it is TSA has developed vendor lists of what they
consider qualified baggage screeners for airports. It is a
list. It is not a list that says you absolutely have to use any
of the particular ones, but it is a list from which have been
screened and gone through. That is an example.
But I think the operative word was, we are in a new
environment. You need to explore some different alternatives
and different ways of potentially doing business----
Ms. Schakowsky. But the State Department said they didn't
want to explore that, is my understanding.
Mr. Solis. That's our understanding. But, again, we still
think our recommendation----
Mr. Shays. Let me, before having Mr. Marchant respond, I
just want to say--and I want to have this clarified if it is
not true--that, basically, those who work directly for DOD,
those who work directly for State, directly for AID, there are
standards. Where we kind of get into this question about
standards is when the private contractors that AID hires, when
they go out into the field and bring in their own security
folks. And I would like to know first, Mr. Solis, is that
accurate from your standpoint?
Mr. Solis. I believe State has fairly high standards, and I
believe--I have to think about AID a little bit. But it is not
clear to me that DOD has a set of standards, clear standards,
that would go across the board in terms of the types of
contractors in terms of qualifications and things of that
nature.
Mr. Shays. And Mr. Assad, I want to just make sure that I
am not giving you a pass here, but I want to be fair. You have
taken on this assignment as of April. Were you the No. 2 person
in this area and so you have great familiarity, or were you
brought in from a bit outside?
Mr. Assad. No, sir. I was with the Marine Corps prior to
this position.
Mr. Shays. So what I would hope you would gain from this is
that, if DOD has a little catching up to do, you are going to
be paying some keen attention to this.
Mr. Assad. Yes, sir. I can tell you, Mr. Chairman, that
with regard to our contracts that we are letting now out of our
Joint Contracting Command, we are flowing down these clauses to
their subcontractors. We are requiring our primes to flow these
clauses that I have talked to their subs. Now, unfortunately,
that may not have been the case a year ago or 18 months ago,
but as we speak, we are taking the actions to flow these
clauses down in our private security contractors contracts.
Mr. Shays. Not only will this committee be watching, but so
will GAO be watching as well, and we will be asking them to
monitor this. And you can be assured Ms. Schakowsky is going to
be watching as well.
I would like to just clarify as well before we get to Mr.
Marchant, in the area where you have the privates hiring, is it
being funded--are these folks that are working for DOD, State
and AID, for just one of you or all of you? Do you know what I
am asking, the question?
Mr. Starr. Sir, the WPPS contract that we have in place
covers all direct hire personnel under chief of mission
authority in Iraq. That includes USAID personnel and personnel
from the other Federal agencies that are in Iraq.
Mr. Shays. That's an important question to answer. I didn't
ask it well, so I am happy you answered that question. What I
am trying to ask is, when we hire directly by DOD, directly by
State, that is one issue. When we engage a contractor through
AID, who then hires? Is this problem going to be mostly seen in
AID? Is that where we are going to see a lot of the contractors
who are hiring on their own?
Mr. Kunder. In that case, sir, the way you asked the
question first is correct. We would each be contracting for
each of those sets of services. DOD would do some. State would
do some. USAID would do some.
Mr. Shays. But now you hire a company to build an electric
generating plant. They are the ones who go out and hire
somebody. That, we would not see in DOD. Right? We don't have
this same issue with DOD, or do we?
Mr. Assad. Yes, sir. Any prime contract that we have where
a contractor is performing in theater, if he is going out and
getting his own security force----
Mr. Shays. So in all departments. OK. I am asking a
question that basically--I am going to answer it myself. What I
am hearing you say is, with all our Departments, State and
Defense, we are hiring contractors who then are engaging in
their own hiring of security folks.
And I am seeing and the record would show that all are
responding affirmatively.
Mr. Marchant.
Mr. Marchant. Thank you, Mr. Chairman.
One of the most encouraging things that back in my district
we see is the fact that we are training more and more Iraqi
security forces. I don't think that our people in the United
States understand exactly the differences between the State
police, the city police, the regional police, and what would be
the highway patrol or whatever, all of the nuances of that. But
we see the increased number of people that are being trained.
And our eventual goal is to have enough soldiers trained,
enough security trained so that our withdrawal begins to take
place and the Iraqis step forward.
I am very interested in how, as this is happening--and it
is happening today, the private security firms who have been
interfacing with our military and our diplomats, how now you
are going to have Iraqi security forces there and how the
transition, how this interface is going to take place, how that
transition is taking place. How do you foresee it? Even when
our troop presence is significantly less, I see the
reconstruction will continue to take place. USAID will still be
there; we will still have a large private security force
presence. Has there been some kind of a transition plan put
together to see how these forces are going to deal with each
other? And I think, Mr. Assad and Mr. Starr, a question for
you.
Mr. Assad. Mr. Congressman, I am not aware of a transition
plan, but I will take that question for the record and respond,
sir.
Mr. Starr. Mr. Congressman, we don't have a formal
transition plan, but it has been something that we have been
discussing. As Iraqi sovereignty continues, as the military and
police forces are trained and continue to take over, we will do
as we do in many countries; where we see a return to a more
stable environment, we will slowly draw down on our security
efforts. We may lower the profile first, we may cut the
numbers. We may ultimately decide, and hopefully, that instead
of having either American forces on the ground or third country
national forces protecting us, that we could rely on the Iraqi
forces to protect us.
So as we see the situation improving, we will take stock of
the situation and make decisions in terms of lowering our
profile and lowering our presence.
Mr. Marchant. And do you find that the Iraqi security
forces--what level of respect do they have for the private
security firms? Is it at the same level that they have for our
Armed Forces? Have our Armed Forces and our military been able
to say with authority to them, these people have authority,
too, you need to respect them?
Mr. Starr. The authorities that the private security firms
have are the authorities that the U.S. Government and the Iraqi
government give them at the moment. Should the Iraqi government
decide that they are going to start withdrawing authorities, we
will of course be respectful of those things.
I think, to answer your question, the best example I can
give you is that one of our major contractors, Blackwater USA,
brought in a series of Iraqi speakers to speak with all of our
personnel security specialists and give them training in how to
deal with Iraqis and how to work closely with them. And some of
our forces have Iraqi translators with them; some of them are
relying on other Iraqi specialists as well. And I think the
level of respect that you earn is essentially what you get. I
think we take a great deal of time in trying to train our
security providers that they must be respectful of the Iraqis,
and I think that they get the encouragement and the cooperation
in return for what they give.
Mr. Solis. Congressman Marchant, if I could only add, and
again asking about the transition plan, and I am not aware of a
particular transition plan, but I think in terms of the things
that we have stated in terms of coordination and the training
that Iraqi forces would have to have in terms of interfacing
with private security contractors as U.S. forces draw down
would be similar, because I think those things are going to be
needed in terms of making sure that the issues that we have
raised with the U.S. military and private security contractors
don't occur with the Iraqi army and private security
contractors as that transition begins.
Mr. Marchant. On June 11th, there was a Washington Post
story on a military investigation of a shooting by a private
security firm in Iraq. It talked about several crimes that had
been reported. In the case of the Washington Post article, what
criminal laws were considered as applicable in the
investigation? And that would be for either Mr. Starr or Mr.
Assad.
Mr. Starr. I am sorry, sir, I am not familiar with exactly
what incident that is. I would have to know exactly which
incident, and then go back and pull the files for it.
Mr. Marchant. OK.
Mr. Shays. He's making reference to the Washington Post
story.
Mr. Starr. There were two incidents in that story, sir. One
was, I believe, in February or March of this year, and one was
in April of last year.
Mr. Marchant. This was talking about a DOD private security
contractor that was shooting at civilian vehicles driving on
the highway.
Mr. Starr. I can't answer that one, sir.
Mr. Assad. Sir, I don't have an answer for you, but again,
I will take it for the record, and we will respond.
Mr. Marchant. Thank you.
Mr. Shays. That makes me a little uncomfortable given that
it was something just very recently disclosed. It would have
been nice, frankly, if you had anticipated that question. And
maybe we should have let you know. I want to be clear, you do
not have any knowledge of this issue?
Mr. Assad. No, sir. The specifics of the investigation, I
do not. I don't have any knowledge of it, but I will find out.
Mr. Shays. Is the investigation ongoing?
Mr. Assad. I don't know the answer to that, sir. I don't
know whether CENTCOM or the combatant commander did the
investigation or whether it was done here in the States.
Mr. Shays. Thank you.
Mr. Marchant. Thank you, Mr. Chairman.
Mr. Shays. Thank you. I would like to--I first want to say,
I am one person on this committee who believes that our
involvement in Iraq is a noble effort, and every time I've been
there, I have been in awe of our troops. I've been in awe of
the security people that protect us and protect others. I've
been in awe of the Iraqis. I have met political figures there
that know they are a target every moment of their day, and they
go out of the green zone into the red zone. I've met a man like
Mr. Alalusi who went to Israel, and afterwards, the Iraqis
punished him by kicking him out of the government and taking
away his security guard, some in the former government--I don't
mean Saddam Hussein's government. I mean in this past
government. He lost his two sons. They tried to protect him and
died in front of him. And when he met with me here, I said,
``You can't go back.'' And he looked at me in amazement and he
said, ``I have to go back. My country needs me.'' And to learn
that he has been elected to their general assembly, it is
amazing to me, considering that we disbanded their army, their
police and their border patrol, left them with no security,
that we would hear people say that we need to get out and get
out right away and the Iraqis had better get their act
together.
These are folks that didn't attack us; we attacked them.
And in my judgment, until they have the ability to protect
themselves, we had better be there. And I am in awe of free
elections in just 11 months, absolutely in awe of that.
So, for me, I view that I am looking at a country that, not
unlike the United States years ago, got to have this
opportunity for freedom and liberty. So I have no problem
whatsoever with the fact that we have security guards. That is
not my issue. I want the Army to be the tip of the spear, and I
don't want them to be cooks when they don't have to be. I don't
want them to have to be standing guard at the front of bases. I
don't want them to have to be taking Members of Congress to
this place or that place.
But the security people who do that and the contractors who
do that are risking their lives. And I think the gentlelady
from Illinois is right; when they risk their lives, they should
be saluted and recognized. And when they lose their lives, we
should take note of that. And that is part of the cost of this
war. But when I ask these folks about why they are there, they
are there to be of service to our country and the cause.
Where I take issue with is the fact that we don't seem to
be able to have a handle on how many we have there. We don't
yet have a sense of the coordination between--in terms of the
private companies that then hire private security. They have a
choice on whether or not to register with the reconstruction
center.
And so I am going to ask you, does it not make sense for
the private security forces to coordinate with the
Reconstruction Operations Center? Should that not be mandatory?
And I would like to ask each of you that question.
Mr. Solis.
Mr. Solis. In our report last year, we had considered
making that recommendation. We held off because, at the time,
we reported that coordination appeared to be getting better,
but as I made note in our testimony, it appeared that the
coordination had not improved to the degree that we thought it
should. And so we believe it is worth considering making a
requirement that companies that are U.S. security firms that
are doing business in Iraq, that they be required to work with
Iraq or coordinate with Iraq.
Mr. Shays. And let me just set the stage here. Those that
work directly for State, Defense, AID, they do have to
register, and they do have to coordinate. Correct?
Mr. Solis. They have to--it is not--it is completely
voluntary. It is not a requirement. Unless it is potentially in
the contract, that's voluntary.
Mr. Shays. Well, let me put it differently. In most of the
contracts, when it is directly connected to DOD and State, is
it not mandatory, Mr. Starr?
Mr. Starr. Sir, per our contracts, we do not coordinate
directly with Iraq. Our contracts coordinate directly with the
TOC, the Technical Operations Center, which is our operations
center which coordinates directly with the military. All of our
moves are fully coordinated.
Mr. Shays. So they would be coordinated with the national
reconstruction center?
Mr. Starr. Yes.
Mr. Assad. Yes, sir. Our contractors, direct contractors we
have, they do coordinate with Iraq.
Mr. Shays. So we are going to call them direct and indirect
contractors, OK. Mr. Kunder, correct? The same policy, as Mr.
Starr is obviously under State?
Mr. Kunder. I'm sorry, sir?
Mr. Shays. The same policy that AID has----
Mr. Kunder. We follow the same. We have the same contractor
at this point. Yes, sir.
Mr. Shays. AID doesn't like to think of themselves as being
under State, so I try to be respectful here.
Mr. Kunder. We take full policy guidance from the Secretary
of State, sir.
Mr. Shays. Well said. Well said. OK. The question then is,
should the indirect contractors have to follow those same
rules? And Mr. Solis said they didn't make that recommendation,
but it seems that it is logical given what has happened. That
is what I am hearing you say.
Mr. Assad.
Mr. Assad. Sir, personally, my personal response is, yes, I
believe that they should be required. And I will take it back
to the Department in terms of the operational commanders and
give them my personal opinion. I do believe that should happen.
Mr. Shays. Mr. Starr.
Mr. Starr. Sir, I would qualify it by saying that I think
certain operations over a certain size should have to be
required to do that. But I think the size and scope of the
contracts that are out there, many of these may be very tiny;
many of them may be very remote and may not have the capability
to do that. So I think there is a bit of balancing on some of
these indirect contractors.
Mr. Shays. OK. Mr. Kunder.
Mr. Kunder. Sir, I've had the honor to testify before the
Congress many times. I know better than to make administration
policy while sitting here. As an individual, it makes sense for
me to get better coordination. The issue I would raise, sir, is
that, given the fact that in most of these post-conflict
situations--I was reading, in preparation for the hearing, the
European Community Humanitarian Office Security Guidance--you
have U.N. agencies involved. You have the international NGO's
involved. You've got the international community, the Red
Cross. The question would be whether you want national law or
some sort of international treaty or guidance like that. And
one of their quick answers, sir--I worked in Somalia. We had a
major problem. When you create some sort of humanitarian
operations center, then you get an awful lot of people walking
around with guns in there, and you wonder who some of the
organizations are. So I just think it is an area in which we
need to move very thoughtfully.
Mr. Shays. I hear what you are saying, and I appreciate
your thoughtful response. I would just say it strikes me,
though, that if we think it's logical for the people we
directly hire, it is probably even more logical for the people
that are indirectly hired, especially given that now 42 percent
of the Iraqi populous is under now, thank God, the control of
the Iraqi government and its own security forces.
Let me ask, is there anything that you would like to put on
the record that we haven't put on the record? Anything that you
stayed up last night thinking about and prepared to answer and
thought you might be eloquent enough to impress us that we
didn't give you that opportunity? I am being a little
facetious, but let me say, sometimes the best point of the
whole hearing is the point that we didn't make that you need to
put on the record. So let me just say, you don't have to be
eloquent. Is there anything that we need to put on the record
that is not on the record? We will start with you, Mr. Kunder.
Mr. Kunder. Sir, the point I was making with Ms.
Schakowsky, just that there is a balance between the
indisputable notion of guidelines on how to coordinate with an
ROC, for example, on the one hand, and these contractual
relationships under the Federal Acquisition Regulations. There
is a tradeoff there in terms of making law for subcontractors
of government primary contractors. It is just something that I
would respectfully request that we look at closely.
Mr. Shays. I hear you. I am going to respectfully say that
the bottom line is, though, I think we have gotten ourselves in
pretty much a feeling of suspicion and so on, because we don't
have enough information. And Ms. Schakowsky is right that we
need more information, and that all of us, and you in
particular, would have more credibility.
Mr. Starr.
Mr. Starr. Simply, sir, that contract security, which is
essentially what this is, is subject to the same vagaries of
every kind of contract. If it is a well written contract, a
well managed contract, a competitively bid contract managed on
the ground effectively with effective oversight, I think you
get the services that you want. And I think that is a critical
point of what we have to say when we are looking at private
security providers overseas. We have to be very specific and
very careful.
Mr. Shays. Thank you.
Mr. Assad.
Mr. Assad. Mr. Chairman, I would like to say that we
recognize within the Department of Defense that we need
improvement with regard to many of the things that we have
talked about today. But we are focused on this, and I
personally am focused on ensuring that we take the actions to
get the coordination that is necessary, get the insight that is
necessary and be able to be more responsive to you and your
staff.
Mr. Shays. I am just going to say, whether you end up with
a Republican Congress or a Democratic Congress next year, we
are going to have this same kind of oversight. And so it would
be wonderful to be able to have you come in and say, you know,
this is what I have done since I took office in April, and we
can all pat you on the back. So that is kind of what we would
like to do.
Mr. Solis.
Mr. Solis. The only thing I would offer, we still made
several recommendations which are still in various phases of
implementation or are still open with some of the agencies. And
we believe they still have merit and are worth considering as
they go along in developing policy.
Mr. Shays. I would request that you continue to engage all
the Departments in these recommendations and give us a sense of
whether you are getting pushback or whether you are getting a
sense that there is buy-in. That would be helpful. We would
like to empower you to do that, or encourage you to do that.
Gentlemen, this has been a very interesting hearing. We
appreciate you coming here today, we appreciate your patience
with our votes. And we do believe that you all recognize that
you are doing important work and want to do it well, and we
thank you for that very much. Thank you.
We are going to enjoy inviting our next panel up. Our panel
comprises five individuals: Mr. Chris Taylor, VP for Strategic
Initiatives, Blackwater, USA; Major General Robert Rosenkranz,
U.S. Army, retired, president, International Technical Service,
DynCorp International; and my colleague to my left says I
should say Mr. Iggy Balderas, but it is Ignacio, I think,
former CEO and current member of the board of directors, Triple
Canopy; Mr. Doug Brooks, president, International Peace
Operations Association; and, Mr. Alan Chvotkin, senior vice
president and Counsel, Professional Services Council, and also,
I believe, a constituent of Mr. Van Hollen. So you will
probably get the best introduction you have ever gotten.
We swear our witnesses in. This is an investigative
hearing. Obviously, we would expect you to tell the truth no
matter what, but this makes it a little more official.
[Witnesses sworn.]
Mr. Shays. Note for the record, all of our witnesses have
responded in the affirmative. They are all sworn in. And I am
going to welcome you here, and Mr. Van Hollen will welcome all
of you but one in particular.
Mr. Van Hollen. Thank you, Mr. Chairman. I would just like
to introduce as well again a constituent of mine, Alan
Chvotkin, who is the senior vice president and counsel of
Professional Services Council and has worked on the issues that
we have been discussing for many, many years. He has a long
history with respect to private contracting as well as the
government. He worked back in the 1980's for the U.S. Senate as
a staff member. We will forgive you on the House side for that.
But I want to welcome you here, welcome everybody, but it
is great to have you here. And thank you for your advice and
input to members of this committee on these issues over many
years.
Mr. Shays. I thank the gentleman.
The bottom line is we are grateful you are here. We all
know that you bring tremendous credibility and knowledge to
this issue. And if the questions seem somewhat aggressive, it
is only that we want to know what the heck is going on. But I
think we all admire what you folks do.
So we will start with you, Mr. Taylor. With five of you, we
would prefer that you be closer to 5 minutes than longer. And
we will make sure that everything you need is on the record. I
will stay as long as we have to make sure that is true. So
don't feel that you have to get everything in your opening
statement. Your opening statement will be there for the record.
So I am going to not hold you to 5 minutes but encourage you to
be as close to that as possible.
Mr. Taylor.
STATEMENTS OF CHRIS TAYLOR, VICE PRESIDENT, BLACKWATER USA;
MAJOR GENERAL ROBERT ROSENKRANZ, U.S. ARMY, RETIRED, PRESIDENT,
INTERNATIONAL TECHNICAL SERVICE, DYNCORP INTERNATIONAL; IGNACIO
BALDERAS, FORMER CEO AND CURRENT BOARD OF DIRECTORS MEMBER,
TRIPLE CANOPY; DOUG BROOKS, PRESIDENT INTERNATIONAL PEACE
OPERATIONS ASSOCIATION; AND ALAN CHVOTKIN, SENIOR VICE
PRESIDENT AND COUNSEL, PROFESSIONAL SERVICES COUNCIL
STATEMENT OF CHRIS TAYLOR
Mr. Taylor. Thank you, Chairman Shays, Congressman
Kucinich, and other committee members, for this opportunity to
discuss private security firms, our role and how we perform our
duties each day.
Since the American Revolution, private security firms have
played an integral role in the successful development and
defense of our Nation. The role of the private security firm
has not changed that much over time. Providing specialized
capabilities and search capacity to the U.S. Government in
flexible, cost-effective packages and building capacity for
friendly foreign governments continue to be core competencies
of our industry.
National and global security challenges demand innovative
and flexible solutions to be successful in the global war on
terror. As stated in the 2006 Quadrennial Defense Review,
private security firms are members of the total force.
Contractors benefit the government by augmenting existing
capabilities, improving response times, and freeing scarce
military logistical resources.
Blackwater is fortunate to have many who have already spent
a career in public service, some in the military, some in law
enforcement, and some in other government service, but all of
whom are committed to the same objectives that guided them
during their public service. Many of these professionals in
previous careers earned Bronze Stars, Silver Stars, Purple
Hearts and even a Navy Cross. These honorable men and women,
though no longer serving in an Active Duty uniform, are as
dedicated and committed to the mission today as when they
served on Active Duty. In fact, they reaffirm their commitment
to the oath they took to support and defend the Constitution of
the United States. These same professionals now daily put
themselves in harm's way in support of U.S. and coalition
missions and fully support national security and U.S. foreign
policy.
Today private security firms perform a number of roles from
executive protection and static security to training partner
nations to providing both ground and aviation logistics
support, all in dangerous environments. In the future, private
security firms will likely be called upon to support stability
operations and peacekeeping efforts.
The majority of international legal controls are embodied
in the Hague and Geneva Conventions, the applicable additional
protocols and the Universal Declaration of Human Rights. This
also includes SOFAs, Status of Forces Agreements, that may be
in place.
Blackwater has consulted human rights groups to assist in
program development for human rights training and policy
development. Each Blackwater professional receives blocks of
instruction in leadership, ethics and international
humanitarian law.
Because of the Federal nature of the battlefield, our
services support primarily Federal entities. Private security
firms, therefore, are accountable to many domestic Federal
statutes, regulations and common law, which include the
Military Extraterritorial Jurisdiction Act, the War Crimes Act
of 1996, the Victims of Trafficking and Violence Protection Act
of 2000, the Anti-Torture Statute, the Defense Trade Controls
Act, the Gun Control Act, Arms Export Control Act, Export
Administration Regulations, International Traffic and Arms
Regulations, the Defense Base Act, Federal Aviation
Regulations, the Defense Federal Acquisition Regulations, the
Foreign Corrupt Practices Act, and the general orders of
Central Command, the Multi-National Corps of Iraqi forces, and
the Combined Joint Task Force 76.
We seek to exceed the expectations of our clients. I am
pleased that Doug Brooks and the IPOA are here today.
Blackwater is a member of the International Peace Operations
Association, and I currently serve as its chairman. The IPOA
standards committee is working diligently to develop industry
standards. We are committed to defining the standards by which
our independent contractors are credentialed as qualified to
work in the industry, improving the Federal contracting and
oversight process, providing increased transparency in business
operations, and encouraging discussion of our industry so that
it can become more fully integrated into the process of finding
solutions to difficult challenges.
At Blackwater, recruiting and vetting begins with the self-
selection application process and a thorough criminal
background and credit check. For those with private government
service, discharge and release documents are reviewed and
verified. When a contract requires private security
professionals to have a security clearance, the government then
conducts an even more thorough background check. Third country
nationals and host nationals also have background checks
performed.
Blackwater USA provides both contractually mandated and
additional training to all of our security professionals.
Again, the additional training includes leadership, core
values, ethics and human rights courses. In any case, we ensure
that each of our professionals conducts and passes all required
training commensurate with the environment in which they will
be working.
Private security firms provide efficient, flexible and
innovative solutions to complex challenges and can positively
effect a strategic balance in favor of peace and security and
freedom and democracy everywhere. We should look together for
ways to leverage the experience and commitment of these
professional men and women toward that end.
I hope my brief comments have helped to provide the
committee some increased understanding of private security
firms, and I look forward to answering any questions that you
may have. Thank you.
[The prepared statement of Mr. Taylor follows:]
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Mr. Shays. Thank you very much, Mr. Taylor.
General Rosenkranz, thank you, sir.
STATEMENT OF MAJOR GENERAL ROBERT ROSENKRANZ
General Rosenkranz. Mr. Chairman, distinguished members of
the committee, my name is Bob Rosenkranz.
I am a vice president of DynCorp International, and the
president of DynCorp International's Technical Services
Division. In that capacity, I am responsible for managing the
company's law enforcement services, counternarcotics support,
contingency and logistics support, facility operations,
infrastructure development, and security services, including
related DynCorp International operations in Iraq and
Afghanistan. In addition to my experience with the private
sector, I served with the U.S. Army for 34 years, and I retired
at the rank of major general.
DynCorp International is pleased to provide this committee
with respect to standards--cooperation and coordination of
information with respect to standards, cooperation and
coordination of contractors working with the U.S. Government in
battlefield environments.
Before I respond to the specific issues that the committee
addressed, permit me to clarify the role DynCorp International
plays in Iraq and Afghanistan, because I think it is important
to this discussion.
Providing security services is one of our areas of
expertise. Indeed, we have extensive international security
experience. We believe we are among the best of the companies
who provide such services anywhere in the world. However,
DynCorp International while providing comprehensive security
services in battlefield environments is also involved in many
other government services. In Iraq and Afghanistan, we serve as
peacekeepers and provide advisers. We train and deploy civilian
police forces after the cessation of conflict. We secure State
Department personnel and assets. We provide logistics and give
industry support, and we assist in recovery and rebuilding
efforts. In Afghanistan, we provide services to eradicate
illicit narcotic crops; we are engaged in the removal and
destruction of land mines and like weapons.
We have a long history of supporting the U.S. Government in
battlefield environments. We supported every major U.S.
military campaign since Korea. We support State Department
initiatives, produce stabilization and the rule of law in post-
conflict societies.
Ensuring basic security in society is the fundamental
element in establishing an environment where conflict is
minimized and trust and confidence are restored. Providing
security in high-threat environments is a critically important
activity in support of the successful completion of the
missions of the State Department, Defense Department and U.S.
Government. And with that understanding, I will briefly address
the issues raised in the letter of invitation.
Roles and responsibilities of DynCorp International and
security work are largely mandated by specific contract
requirements. Generally, those responsibilities are dictated by
the individual customer with whom we are doing business. In all
cases, the security we provide is fundamentally protective or
defensive in nature.
The international legal controls that govern private
security services are varied and fact-dependent. DynCorp
International engages its corporate legal resources and human
resource managers to clearly identify applicable regulations
and maintains compliance with these requirements throughout the
life of the contract. U.S. regulations and statutes are
generally included as contract clause requirements but may also
be promulgated by U.S. military commanders and the designated
chief of mission in the area of operations. Due to the nature
of the security business, these are generally related to the
use of force and standards of conduct.
In addition to U.S. and international regulations and
statutes, DynCorp International adheres to strict performance
standards and imposes established professional standards of
conduct which govern employees in all assignments.
As a result of DynCorp International's and other security
related services since 1994, we have a mature vetting procedure
for evaluating and selecting candidates for the provision of
these security services. Our process includes extensive
investigations, medical screening, psychological assessments
and a variety of other screenings described in detail in our
formal submission. As with our vetting procedures, we have the
benefit of 12 years of active experience developing and
refining our training procedures for security assignments.
Programs of instruction and course curricula are designed and
developed to apply to the specific field assignment, taking
into consideration the prevailing security environment.
Our experience with the U.S. military, the Department of
State and USAID organizations has been very productive. Almost
without exception, coordination with these agencies has been
very productive.
Despite the struggles we all face with respect to startup
activities, we have developed effective working relationships
with government counterparts that produce favorable results and
a truly collaborative work environment.
In conclusion, providing security services in any
environment presents a degree of risk to the individual
employee and his employer. These risks increase dramatically in
battlefield areas like Iraq and Afghanistan. As indicated in
our submission, DynCorp International has lost over two dozen
employees to hostile activity in the fight for freedom in Iraq
and Afghanistan. Each death on the battlefield represents a
loss to family, friends and society.
Private contractors provide the Federal Government and
other agencies and organizations a critically important service
that may otherwise not be available in support of
reconstruction, stability and the establishment of the rule of
law. We are confident that continued partnership between the
U.S. Government and private companies will further refine the
expertise and infrastructure that permit us to effectively
operate as a team in this environment. As these relationships
evolve and mature, greater success and enhanced capacity to
respond to critical requirements on current and future
battlefields will be the result.
Thank you, Mr. Chairman. I appreciate each member of the
committee for providing us the opportunity to share our
experiences and to participate in this important process.
[The prepared statement of General Rosenkranz follows:]
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Mr. Shays. Let me ask you very quickly, General. Were your
folks the individuals that were killed in Gaza in that bomb
incident a few years ago?
General Rosenkranz. In where, sir?
Mr. Shays. In Gaza.
General Rosenkranz. I don't know. I just joined the
company.
Mr. Shays. Well, they were protecting me. Those were the
same folks that just previously when I went into Gaza protected
me, and they were just top notch. And it just is instructive to
me and others. You were part of that?
Mr. Balderas. We took over the contract from DynCorp. It
was actually Triple Canopy people, Mr. Shays.
Mr. Shays. OK. Thank you. You are on. How did you get the
name Iggy?
Mr. Balderas. That goes way back when I first joined the
unit over 18 years ago, that they have a tradition of giving
you a call sign and that was the one that was given to me. I
think it was a little easier for them to say my name that way.
Mr. Shays. Well, you are well known in the industry. And
welcome to this committee. And I think we are probably screwing
you up a bit, because I think you are not making the plane you
hoped you would make.
STATEMENT OF IGNACIO BALDERAS
Mr. Balderas. Well, thank you anyway, Mr. Chairman and
members, for the opportunity to testify before the
subcommittee. I was Triple Canopy's CEO until December 2005 and
now serve on the company's board of directors.
Before joining Triple Canopy, I was a command major of the
U.S. Army First Operational Detachment Delta.
I will tell you a little bit about Triple Canopy, our
culture and our experience in providing protective services in
Iraq. Finally I will share my perspective on government
regulation of private security contractors who serve on the
battlefield.
Triple Canopy, was founded in 2003 by U.S. Army Special
Forces veterans to provide integrated security solutions to the
U.S. Government and private corporations. Our services include
personal security details, fixed site security, threat
assessments and counterterrorism training. We provide
protective services in extremely hostile environments
throughout Iraq. We also provide security services worldwide
and have employees in Africa, Asia, the Middle East and the
United States.
Triple Canopy has the ``Do the Right Thing'' culture. We
are dedicated to legal, moral and ethical behavior and business
practices. We firmly believe that honesty and integrity in all
we do serves our clients, employees and society. We are
committed to setting the standard for ethical conduct within
the industry and strive to be a good neighbor to the United
States and abroad.
In all of our contracts, Triple Canopy works hard to
provide the best possible service at a fair and reasonable
price. While placing emphasis on the quality of service, we
still continually strive for cost reductions that can be passed
on to our customer as the form of a lower price.
It is important to note that all of Triple Canopy's U.S.
Government contracts are and all have been firm fixed price
agreements that were all competitively awarded. Under firm
fixed price contracts, Triple Canopy assumes all risk for
unforecasted increases and company costs and wartime losses.
Triple Canopy's record of success stems from our commitment
to safety, recruiting, training and retention. Since the
commencement of our operations, Triple Canopy has achieved the
fewest reported incidents, injuries and casualties of any
security company that provides protective services on a
comparable scale in Iraq. We firmly believe that hiring only
highly experienced and professional personnel, providing them
with thorough and relevant training prior to deployment, and
holding them accountable to high standards once deployed is
critical not only to operational success but also to employee
satisfaction and retention.
Triple Canopy's recruiting and screening standards are
among the industry's most stringent and are explained in detail
in my written testimony. Our training produces highly capable
operators who are prepared to perform demanding tasks in
challenging high-risk environments. We fully realize the grave
responsibility incurred when filling protective details and
will not compromise the safety of our clients by fielding
anything but the most qualified personnel. Maintaining rigorous
hiring and training standards is the only way to reduce
performance problems in the field.
Triple Canopy strongly endorses the establishment of U.S.
regulations, setting standards for the hiring and training of
protective security specialists who support critical government
missions on the battlefield. We are all for establishing
standards and holding people to them. Substandard recruitment
and training creates an environment of poor quality security
and potentially increases the threat level on the battlefield.
Regulations need to be strong enough to readily identify
substandard performers.
And, finally, private contractors should never provide
offensive combat operations. Triple Canopy supports the FAR
regulations which prohibit the government from contracting with
organizations that offer quasi-military armed forces for hire.
Thank you for your time and the opportunity to testify this
afternoon. I look forward to answering your questions.
[The prepared statement of Mr. Balderas follows:]
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Mr. Shays. Thank you for your time.
Mr. Brooks.
STATEMENT OF DOUG BROOKS
Mr. Brooks. Thank you very much. Mr. Chairman, members of
the subcommittee, I would like to thank you for inviting IPOA's
testimony. It is an honor to appear before you today.
As president of the International Peace Operations
Association [IPOA], I represent firms from all over the world
that provide essential services, including logistics, training
and security in support of international peace and stability
operations in conflict and post-conflict regions. IPOA predates
September 11th, and our focus has always been to ensure that
the private sectors' enormous capabilities are utilized to
support peace operations with professionalism and high ethical
standards. IPOA member companies are operating in every peace
and stability operation in the world, including Afghanistan,
the Democratic Republic of Congo, Haiti, Iraq and Sudan.
Indeed, international peace operations simply would not
happen without the critical services of the private sector
which brings enormous efficiencies, capabilities and cost
savings. Ultimately, the more effective our support of
international peace and stability operations, the more lives
that will be saved in the long run.
Our IPOA code of conduct was originally written by human
rights lawyers and nongovernmental organizations, and has
subsequently been embraced by all IPOA member companies. IPOA
and its members work continuously to improve upon the code and
to enhance IPOA's enforcement mechanisms.
Coincidentally, at the same time as this hearing, or
actually previously when the hearing first started, our
standards committee was meeting at George Mason University
working with humanitarian experts and academics to test our
accountability mechanisms related to our code of conduct.
We believe that the IPOA code of conduct is a valuable tool
for ensuring ethical behavior. Clients, be they states, NGO's
or international organizations, would be well advised to
include adherence to the standards set by the IPOA code in
their request for proposals.
I also want to recognize two partner industry organizations
that have been instrumental in advancing industry standards,
codes and accountability: The British Association of Private
Security Companies in the United Kingdom, and especially the
Private Security Company Association of Iraq that works closely
with Iraqi authorities to ensure proper laws, regulations and
accountability.
I should note that IPOA represents a broader industry, not
just private security companies. The vast majority of private
sector employees providing valuable services in complex
contingency operations are actually involved in logistics,
support and training operations. Some 90 percent of the
personnel and contract value is actually in logistics and
support and training.
In general, companies in complex contingency operations can
be divided into three general categories: Logistics and support
companies, the private security companies and the sector
company reform companies.
The first category, the logistic and support companies,
that is 90 percent of the industry in value, personnel and
everything. That is where the big money is.
The second category, the professional security companies,
are the ones that protect nouns, as we say, people, places or
things, during a complex contingency operation. They defend
things, either armed or unarmed, but they provide the security
for them.
And the third category of the security sector reform
companies are the ones that create a more stable environment in
the long run so that you can end the peace or stability
operation in the long run.
Outsourcing services to the private sector has been hugely
successful in terms of efficiencies, quality, speed and
results. It is safe to say that the U.S. military in Iraq is
the best supported, best supplied military force in history.
However, it also makes sense to ensure that the government
oversight capabilities are available and capable of ensuring
the best results. This can be accomplished through an expansion
of contract officer numbers and resources.
From a contractor perspective, we strongly support
professional and effective oversight that is also standardized
between government departments, which has been a problem in the
past. Effective oversight simplifies our jobs enormously and
allows better competition, reduction in cost and improvements
in quality.
Another concern that the industry has faced has been the
blue on white issue, the so-called friendly fire incidents
where PSCs are accidentally fired upon by military units. This
has been brought up in previous reports. The nature of complex
contingency operations means that mistaken identity will always
be a hazard, but there are ways to minimize a problem. This can
be done through awareness training in the military,
standardized recognition signals and better coordination of
civilian and military movements in the field, all of which are
being done to much greater extent since 2003. At IPOA, we
worked with our partners to develop wallet cards that can be
distributed to deploying GIs that will give them an idea of
what PSCs are doing and what they look like in the field. A
draft version of those cards is available here today on the
table.
One recurring issue that we face is licensing. Member
services, training operations and equipment exports require
licenses from the Department of Defense and the Department of
State, which is entirely appropriate. However, despite special
efforts, the scale of operations in Afghanistan and Iraq have
made this requirement a real bottleneck. We believe these
offices could be better resourced and the process safely
streamlined without compromising appropriate controls over
exports of services and equipment.
One of the more critical issues that we face or the complex
issues in Iraq is regarding the access badges that contractors
use. Contractors require these badges to be able to fulfill
their contracts. International personnel used to be able to
obtain the badges in 2 to 3 days; now the process can take 10
to 90 days. This dangerous and frustrating bureaucratic
bottleneck has been enormously wasteful in time and resources,
and is having a seriously adverse impact on the larger mission.
This is a problem that could be largely solved by allowing
electronic applications or giving international sites outside
of Iraq necessary authority.
Mr. Shays. Let me ask you, how much longer do you have?
General Rosenkranz. One short paragraph.
This industry is highly responsive. My own field research
in Iraq and elsewhere has amply revealed that companies in this
highly competitive market are eager to ensure that their
clients are satisfied with the quality of work. IPOA includes
the most professional forward-thinking and ethical companies in
the industry, and our members are all publicly committed to our
code of conduct. While operations and chaotic conflict in post-
conflict regions necessarily require a high degree of
flexibility, we should not resign ourselves to compromise on
quality. Thanks very much. I look forward to the questions.
[The prepared statement of Mr. Brooks follows:]
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Mr. Shays. Now, I have to get advice from a Croatian.
It's Chvotkin?
Mr. Chvotkin. Yes, sir.
Mr. Shays. OK.
STATEMENT OF ALAN CHVOTKIN
Mr. Chvotkin. Mr. Chairman, Congressman Van Hollen, members
of the subcommittee, thank you for the invitation to testify
today.
Professional Services Council is the leading trade
association representing hundreds of companies. Several of our
member companies provide security services, including two who
are on the panel today. Some also have contracts directly with
the U.S. Government, and as such, we know their concerns as
service providers and have been working with them on a myriad
of issues. In addition, many of our member companies are
operating in Iraq pursuant to contracts awarded by the U.S.
Government. These terms are consumers of these security
services. We have worked with them to highlight and address
their concerns as well.
Over the past several years, the Professional Services
Council has had extensive interactions with the Department of
Defense. In 2004, we conducted an extensive lessons learned
project with the Army Materiel Command. We've worked closely
with the Department of State, USAID and other agencies on their
Iraq initiatives and their policies and practices affecting our
member companies.
Finally, we have partnered with the Special Inspector
General for Iraq Reconstruction on his comprehensive activities
including his three-part lessons learned project. In Iraq,
there were three types of operations taking place concurrently,
often in the same geographic space: The military action, the
reconstruction activities across the 10 critical sectors, and
developmental assistance.
Hiring private security support is common for many of our
member companies who are routinely engaged in reconstruction
and developmental assistance overseas. So Iraq is not new in
that regard. However, it is obvious that Iraq has been and
continues to be a very dangerous place to live and work,
particularly for those individuals and organizations in any way
associated with the U.S. Government. Thus, work in Iraq
continues to present special challenges and issues. Because of
the number of projects the U.S. Government has contracted for
and that are underway simultaneously, the number of
contractors, contractor employees and facilities that
simultaneously require private security support and the
evolving and often deteriorating security situation where the
work is to be performed, private contractors are playing a
critical role in each of these concurrent operations. In fact,
it would be impossible for the U.S. Government to execute the
number and scope of projects without the contractor support,
and as such, private security firms are an essential adjunct to
the U.S. companies executing contracts.
The private security firms provide personal security firm
employees, housing locations and work sites. They coordinate
and provide security for the transportation of key company
personnel and resources and coordinate with government
officials when their clients require interaction for official
government business. To the extent possible, these private
security firms also routinely seek to coordinate with the U.S.
military in Iraq on the overall security threat environment.
Only recently has the U.S. Government established the
reconstruction operation centers in various regions in Iraq to
provide a formal channel for such coordination, even on a
voluntary basis. In fact, one of the key lessons learned from
our Army Materiel Command effort was the fact that contractor
force protection requirements were not integrated into the
military planning process. We found too many examples where
even the planning required by the Defense Department for
contractors accompanying the force were not followed and that
the rules, numbers and life support needs of those contractors
were not fully addressed.
In light of these experiences, the Professional Services
Council worked with members of the House Armed Services
Committee last year on what became known as the Contractors on
the Battlefield Regulatory Act, Title XVI of the House passed
fiscal year 2006 National Defense Authorization bill. While
that title did not become law, the conference report
accompanying the law directs the Defense Department to review
all policies and guidance and instructions to address security
issues raised by both contractors accompanying the force, those
directly supporting the military, and those contractors not
accompanying the force, and specifically addressed five
enumerated issues in that report. I mention those in my
statement, my lengthy statement.
And today, we are not aware of any formal steps the Defense
Department has taken to address those matters. The number,
scope of the projects in Iraq, the need to retract, retain and
employ personnel who are essentially on their own for force
protection and the highly variable security environment force
contractors to put a premium on hiring skilled, trained and
well-managed security services. Thus, almost from the outset of
the Iraq conflict, PSC has strongly recommended that the U.S.
Government generally and particularly the Defense Department
adopt a nontraditional role with respect to private security
firms.
As Mr. Waxman noted in his opening questions in March 2003,
the Professional Services Council recommended to DOD that it
consider taking at least one of three initiatives: first, set
standards for private security firms; or better yet, establish
a qualified list of firms from which the private sector could
contract directly for security services that were needed; or
even better still, that DOD directly contract for and supervise
those firms that the contracting firms would reimburse. The
essence of these requirements was included in the GAO report
from July 2005. In fact, the most vocal supporters for these
standards are the industry leaders themselves, as you have
heard at this table this afternoon. The U.S. Government has
valid reasons why they did not concur. I think there was a
missed opportunity for the government to address what we feared
would become a significant growing challenge.
Our lessons-learned efforts with both the Army Materiel
Command and the Special Inspector General for Iraq
Reconstruction highlighted the lack of advanced planning for
the security needs of those government organizations. The most
significant portion of the State Department's December 2004
revision to their acquisition regulations proposed new coverage
requiring State Department contracting officers to address the
administrative logistics and security support for contractors
performing overseas in high-risk activities. The rule was
explicit that, unless stated otherwise, the contractor's
responsible for all of their support.
In-country coordination and communications is essential. It
must be a two-way effort, and there's every reason for the
government to take advantage of the information that the
companies have about the security situation in various parts of
the country. Over time, despite the lack of formal methodology
or doctrine, many firms have nonetheless created those informal
mechanisms.
Mr. Shays. Would you give me a sense of how much longer you
have?
Mr. Chvotkin. Thirty seconds. In conclusion, hiring private
security is common in overseas operations. Iraq is not new in
that regard. However, the magnitude and the work and the
concurrent operations taking place in the almost unprecedented
security environment create unique challenges, but solutions
must be approached carefully and with full consultation to
address real issues without creating new problems. We would
love for the opportunity to work with the subcommittee and
others on these important policy matters. Thank you for the
opportunity to appear.
[The prepared statement of Mr. Chvotkin follows:]
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Mr. Shays. Thank you.
I think what we'll do is do 5-minute rounds the first time
so we can get through and come back for a second round.
Mr. Marchant.
Mr. Marchant. Thank you, Mr. Chairman.
As we heard in the first panel's testimony, coordination
with reconstruction operation centers is voluntary. I would
like to know each of your opinions as to whether that ought to
be mandatory or if you think it ought to be voluntary, and I'd
like to know whether your company is coordinating with the
regional operation centers.
Mr. Shays. Excuse me. We're going to do 10-minute rounds if
this is the Members we have. So you have 10 minutes.
Mr. Taylor. Blackwater does indeed participate in the
regional operation centers. We do coordinate through them.
Mr. Marchant. Do you think it ought to be mandatory?
Mr. Taylor. I think that to the extent that it can be--that
it affects area commanders, visibility of the battle space,
absolutely.
Mr. Marchant. Thank you.
Mr. Rosenkranz. Mr. Congressman, we are participants in the
ROC. The type of work we do with the State Department already
has the operation centers, so for us it's sort of a redundancy.
I think it's useful, and it's certainly very important for
those who do not have direct contracts with the government.
Mr. Marchant. Thank you.
Mr. Balderas. Yes, we do. Triple Canopy does. I think we
were talking a little earlier about when Aegis, which runs that
contract, came in, came and helped us set it up, they asked us
to help them set it up, the issue of everyone reporting; it's
just commonsense. You have to do that in order to get support
from the military. If you have an accident or incident on the
road, they're the ones they call, and ROC is the one that
coordinates that. So definitely, in my opinion, everyone needs
to do that. It should be mandatory.
Mr. Marchant. Thank you.
Mr. Brooks.
Mr. Brooks. Well, of course, we're a trade association, but
I think, during my visit in December, January, I was quite
impressed with the system. I think it's quite useful. Both for
the contractors and for the military. So I would say it would
probably be a good idea to put it in contracts if it's a
requirement.
Mr. Chvotkin. I would generally agree. I would just echo
Mr. Kunder's earlier comments. Many of the companies are
providing support to the U.S. Government agencies well outside
of those areas, and so the nature of the coordination is such
that they may not need as much. So there has to be some
tempering, but by and large, I agree that coordination at least
from the contractor end not to be mandatory. We've suggested
that two-way communication because the military knows a lot
that could help in the planning on our side, and there are some
concerns about how much information can actually be shared out,
but by and large, I think that communication is an important
one.
Mr. Marchant. Is the risk of a clash with the military
decreased the more coordination you have with the regional
operation centers? And do you know of any instances where
specifically there was no coordination and it resulted in a
very tragic consequence?
Mr. Taylor. Mr. Marchant, I can't offhand recall a specific
incident, but obviously, more coordination should result in
decreased incidence.
Mr. Marchant. Each of you, would you mind saying--General
Rosenkranz stated how many casualties, deaths you've
experienced in your operations in Iraq.
Mr. Taylor. Blackwater has experienced--we have had 22
deaths in Iraq.
Mr. Marchant. And this is mostly stateside civilians?
Mr. Taylor. In that 22, I believe 4 were third-country
nationals.
Mr. Marchant. Thank you.
Thank you.
Mr. Rosenkranz. As I mentioned, we had 26 killed in Iraq.
There were a few TCNs in that number. I didn't bring with me
the exact number of wounded, but it's a fairly large number.
Mr. Shays. Would the gentleman just yield a second?
Mr. Marchant. Yes.
Mr. Shays. When they're wounded, do they go right to the
military complex or do they go through the private sector?
Mr. Rosenkranz. They're given the same kind of medical
support as the soldiers are.
Mr. Shays. Good.
Mr. Rosenkranz. They get very good support. Even on the
KIA, the evacuation procedures, it's really quite good.
Mr. Shays. Thank the gentleman for yielding.
Mr. Marchant. Mr. Balderas.
Mr. Balderas. Yes. Triple Canopy suffered four casualties
since September 2005, and the military does a great job in
assisting private contractors. What the military does, they
move them to Ramstein, Germany, where if they're wounded, then
the private company picks up and moves them to wherever they
need to in the United States, so all four of Triple Canopy's
personnel were expats.
Mr. Marchant. Thank you.
Mr. Brooks, I know your chair association.
Mr. Chvotkin. I don't have anything from the association,
but I would call your attention to a report that the Defense
Department submitted to the Congress last year in response to
Section 1206 of the National Defense Authorization Act, and in
that, for the period May 2001 through October 28, 2004--I'm
sorry--May 2003 through October 28, 2004: Total casualties,
1,171; total fatalities, 166; of which, 175 casualties were
United States, and 64 fatalities were United States. That's a
period May 2003 through October 2004. Have not looked at the
Defense Base Act or Department of Labor report for any more
current information.
Mr. Marchant. I can say as a Congressman that went to Iraq
and Afghanistan in the same trip, I was very thankful for the
Blackwater people that were there with me. I was not as aware
of the danger, I don't think, as they were, and on the trip, I
was, it was--the security was so integrated with the military
that it was very difficult for a civilian to know in whose
hands you were at any given time. And to me, that seems to be
the best possible situation.
I just have a couple of more questions. What would you say
the biggest threat today to your forces that are there, your
security forces that are there? Is it the new IEDs? Is it
ambushes? Is it people that are communicating to the insurgent
forces? What would you identify as the biggest threat?
Mr. Rosenkranz. I don't think there's any doubt that the
IED and DBIEDs are lethal, and they're getting better, and
they're more prevalent, particularly in Afghanistan. We've
noticed an uptick, considerable uptick in the last few months.
I would say IEDs and variations on IEDs.
Mr. Taylor. I would agree. IEDs, DBIEDs are the most
dangerous threat we face right now.
Mr. Marchant. Have you experienced that in other places in
the world if you have personnel? Or is it just, just Iraq and
Afghanistan that----
Mr. Taylor. I can't say that it's just Iraq, but it's
certainly most intense in Iraq.
Mr. Marchant. Mr. Balderas.
Mr. Balderas. Yes. I agree with Chris on that. Afghanistan,
Iraq and to some extent also Israel, because it seems that area
there has a preponderance for the items that were mentioned,
IEDs and the DBIEDs.
Mr. Marchant. OK.
Mr. Chairman, thank you for allowing my questions.
Mr. Shays. Thank the gentleman.
Mr. Kucinich.
Mr. Kucinich. To Mr. Taylor from Blackwater, what's the
approximate annual gross revenue from your company's security
work in Iraq?
Mr. Taylor. I don't have that figure with me, Mr. Kucinich.
I just don't from--I don't have it.
Mr. Kucinich. Would you make it available to the committee?
Mr. Taylor. I can certainly--yes, I will go back with that
request to make it available.
Mr. Kucinich. Do you know what the trend in your revenue is
over the past 3 years?
Mr. Taylor. In revenue, with regard to--are we talking
about Federal contracts?
Mr. Kucinich. In your revenue generally.
Mr. Taylor. Well, clearly, there's been growth in our
industry, and we have experienced growth in the industry.
Mr. Kucinich. What about Iraq?
Mr. Taylor. We have experienced growth in Iraq as well. The
demand for our services has been--is much--is greater.
Mr. Kucinich. And could I ask, Mr. Chairman, if the chair
would request--if the committee would request the approximate
annual gross revenue from all the companies represented here
today?
Mr. Shays. I would be happy to request their gross
revenues, yes.
Mr. Kucinich. I'd like to ask the gentleman from Blackwater
some questions about contracting. Has Blackwater participated
in contracts with Regency Hotel and Hospital Company at all?
Mr. Taylor. We were contract--as your exhibit--or I'm
sorry, Mr. Waxman's exhibit denotes, we did participate in that
contract.
Mr. Kucinich. And Environmental Support Services [ESS]----
Mr. Taylor. That's correct.
Mr. Kucinich. And in those contracts, is it true that you
were paying your men $600 a day but billing Regency $815 a day?
Mr. Taylor. Per the presentation, Mr. Kucinich, $815 a day
is the right figure, but it's a fully burdened figure. That
includes travel, training, gear, housing, food, the works. That
is a fully burdened number. So $815 is the correct number, but
it includes everything.
Mr. Kucinich. Were you involved personally in any of those
discussions at all between Blackwater and Regency?
Mr. Taylor. I was not.
Mr. Kucinich. Are you familiar with a person who works for
Blackwater by the name of John Potter?
Mr. Taylor. I know who John Potter is.
Mr. Kucinich. OK. John Potter is currently in your employ.
Is that correct?
Mr. Taylor. I don't believe John Potter is in our employ
right now, Mr. Kucinich. But I will have to go back and check,
but I don't believe he is right now.
Mr. Kucinich. Would you be willing to provide for this
committee correspondence or internal memoranda relative to the
hiring, departure and rehiring of Mr. Potter by Blackwater in
connection with his work under this contract with the
government?
Mr. Taylor. Mr. Kucinich, I can certainly take that request
back to legal counsel for Blackwater.
Mr. Kucinich. Mr. Taylor, is it your understanding that
Blackwater cannot be sued for workers' debts or injuries and
that all liability lies with the government?
Mr. Taylor. Mr. Kucinich, I am not an attorney. I'm
certainly not an expert at all in that area. However, again, I
could certainly take that question back to our legal counsel.
Mr. Kucinich. And does Blackwater urge the families who
have lost loved ones who have been in your employ to apply for
benefits under the Defense Base Act?
Mr. Taylor. Under numerous--under different contracts, the
Defense Base Act benefits are provided. They are actually
mandated by the programs--the program insurance for contracting
entities. So that is at the family's--we don't urge anybody,
but the benefit is made available to our independent
contractors.
Mr. Kucinich. Do you advertise the Defense Base Act as a
way for Blackwater to service the war, to avoid being sued?
Mr. Taylor. Again, Mr. Kucinich, it is a--the Defense Base
Act insurance is provided as a passthrough cost to the
government and is generally mandated to us.
Mr. Kucinich. Does Blackwater currently provide security
for Ambassador Khalilzad in Baghdad?
Mr. Taylor. Yes, we do.
Mr. Kucinich. How much does the government pay Blackwater
for these services?
Mr. Taylor. Mr. Kucinich, I don't have those numbers in
front of me.
Mr. Kucinich. Could you provide that information?
Mr. Taylor. Mr. Starr mentioned in the earlier panel that
was an open and competitively bid contract, and I'm sure that
it can be made available to the committee.
Mr. Kucinich. Can you provide the information to the
committee?
Mr. Taylor. If I cannot, sir, I'm sure the Department of
State can.
Mr. Kucinich. What other government contracts does
Blackwater have in Iraq? How many contracts do you have in
Iraq?
Mr. Taylor. Government contracts?
Mr. Kucinich. Right.
Mr. Taylor. The majority of our work is with the Department
of State. We have other contracts in Iraq that are not--that
don't fall under USG.
Mr. Kucinich. Can you provide this committee with
information about how much the government pays Blackwater for
their services?
Mr. Taylor. Again, our contracts are open and competitively
bid. And one--I'm sure that they can be made available to the
committee. They are public knowledge.
Mr. Kucinich. Can you provide us with that information?
Mr. Taylor. I would have to go back and talk to legal
counsel about our specifically providing it, Mr. Kucinich, but
I'm sure that the committee can get the information.
Mr. Kucinich. In Iraq, what is Blackwater's policy for the
type of armor vehicle, weapons and personnel required for
security escort missions?
Mr. Taylor. That is actually mandated to us by our--by our
client, the Department of State.
Mr. Kucinich. And does the Department of State set the
terms of your contracts?
Mr. Taylor. Yes, they do.
Mr. Kucinich. And does the Department of State in some
cases require that you provide armor?
Mr. Taylor. We have actually a contract through the
Department of State for armored vehicles that is mandated by
the Department of State to us.
Mr. Kucinich. Have you ever had an instance where you were
required by the Department of State to provide armor and you
did not?
Mr. Taylor. I cannot--I don't believe so. I don't believe
so.
Mr. Kucinich. Does the Department of State require you to
have a certain number of personnel on carriers?
Mr. Taylor. The Department of State has very strict
procedures for--for movements, personal security detail
movements, and we follow those to the T.
Mr. Kucinich. And has there ever been a time where you
didn't follow these requirements of the Department of State and
in order to save money?
Mr. Taylor. Again, Mr. Kucinich, these are mandated
movements and processes by the Department of State.
Mr. Kucinich. I know they're mandated. I'm asking you if
you can recall a time.
Mr. Taylor. I cannot, sir.
Mr. Kucinich. You have no knowledge of any time----
Mr. Taylor. I have no knowledge of any time that we did not
fulfill our Department of State mandate.
Mr. Kucinich. All right. Could you talk about Blackwater's
expansion into the Philippines?
Mr. Taylor. It is a proposed--we have great demand for our
training services, and one of the places that we have been
looking into, into offering those training services was in the
Philippines.
Mr. Kucinich. And are you building a training center in the
Philippines?
Mr. Taylor. We are in negotiations, in exploration in
trying to find out if that's possible.
Mr. Kucinich. And who are you negotiating with, the State
Department or the Philippine Government?
Mr. Taylor. This would be the--this would be Metropolitan
Authority, who I believe has control over--control over that,
but I would have to go back and check particularly because I am
not working that particular project, Mr. Kucinich.
Mr. Kucinich. Are you planning to go into Darfur for work?
Mr. Taylor. We're not planning--of course, we have had
discussions on how the resources that Blackwater has could be
useful in situations such as the Darfur genocide.
Mr. Kucinich. And have you hired Chilean troops that have
been trained under Mr. Pinochet? Is that true?
Mr. Taylor. I don't know. We have indeed used Chilean
third-country nationals before. I have no knowledge of whether
or not they served under Pinochet or not.
Mr. Kucinich. Are you putting together new training
facilities in California?
Mr. Taylor. Again, we're exploring opportunities to expand
our training operations in many places.
Mr. Kucinich. Does Blackwater engage in offensive
operations?
Mr. Taylor. Absolutely not, Mr. Kucinich.
Mr. Kucinich. On behalf of the U.S. Government?
Mr. Taylor. Absolutely not.
Mr. Kucinich. On behalf of foreign governments?
Mr. Taylor. Absolutely not.
Mr. Kucinich. Or private entities in Iraq?
Mr. Taylor. Absolutely not.
Mr. Kucinich. In Afghanistan, anywhere in the world?
Mr. Taylor. We do not engage in offensive operations, Mr.
Kucinich.
Mr. Shays. I just want to say that you answered quickly. I
just want to make sure you were comfortable with all those
answers because he hadn't even finished his questions. I'm not
trying to change the answer. I just want to make sure that
you've thought about his questions because you are under oath,
and I just want to make sure.
Mr. Taylor. Chairman Shays, it is a common question for the
industry, and we do not execute offensive operations.
Mr. Shays. OK. Thank you.
Mr. Kucinich. I thank the Chair.
Mr. Shays. I thank the gentleman.
We'll go to my colleague from Maryland. He has the floor.
Mr. Van Hollen. Well, thank you. Thank you, Mr. Chairman,
and thank all of you gentlemen for your testimony as well.
As I said in my opening statement, I think clearly there's
an appropriate role for private security contractors in places
like Iraq and elsewhere. The issue is exactly what functions
and roles are being played and what kind of oversight there is.
And it's my view that the U.S. Government, the Federal
Government has a responsibility in making sure that the
taxpayer is getting a fair treatment. It is the responsibility
of the contractor to make sure you provide the quality services
under the contract, that you don't gouge the taxpayer. But the
oversight from the Federal Government is important, and the
Federal Government, seems to me, should have a system set up to
assure that the taxpayer gets the best deal. And in that
context, I would like to ask you, Mr. Taylor, just a couple of
questions because I think the chart we've got here today
actually illustrates some of the problems with the overall
system, from my perspective in the cost-plus with a percentage
at the top.
Let me ask you first, are you familiar with the article
that appeared in the News Observer several years ago that
talked about the pricing structure for your company, for
Blackwater U.S.A.? It was a couple years ago. It was after the
four individuals who were members of your company had been
killed in Fallujah, and the newspaper wrote a story about that.
They also obtained information about the payments you received
from those four individuals. Are you familiar with that?
Mr. Taylor. I am not, actually. If there was an article--
understand, I read many things that are printed about our
industry.
Mr. Van Hollen. I understand. That's the basis for a number
of the charts--the numbers on the charts Mr. Waxman presented.
My understanding is a number of the family members of the
people who got killed were upset about the fact that despite
the amount of money being charged to the Federal Government and
the taxpayers for these services, not enough was provided for
security, and that's the basis of the information.
So the information drawn on these charts is based on
documents that were obtained by this newspaper about those
particular individuals. I just want to make sure I understood
your response to a question by Mr. Kucinich regarding the $815
a day charge. As I understand, you said that was fully loaded;
is that correct?
Mr. Taylor. That's correct, sir.
Mr. Van Hollen. Because that article--and this is an
opportunity to correct the article if you want--it said that
the Blackwater charges to Regency for Zovko's work, he was one
of the individual contractors involved in that terrible
incident, were $815 a day. A mark-up of $215 then goes on to--
say, in addition, Blackwater billed Regency separately for all
its overhead and costs in Iraq insurance, room and board,
travel, weapons, ammunition, vehicles, office space. In other
words, they say that you billed separately for that overhead,
and you're saying--I just want to make it clear, you are saying
that overhead was part of the $815 a day charge.
Mr. Taylor. I am told that the $815 was a fully burdened
charge, sir.
Mr. Van Hollen. OK. If you could--I don't know if you have
documents, just because the article was based on documents that
were obtained through some people who worked for Blackwater,
and they reached a different conclusion. If you could provide
the committee with those documents, it would be helpful.
Mr. Taylor. Again, I can certainly take that request back
to legal counsel.
Mr. Shays. Let me just tell you this part though, because
you are on record, and I feel like I'm a friendly participant
in this dialog. You are on record as saying that basically
constitutes the full force. So you do need to document that.
This $800 is the full cost of all the things that involve the
training, the housing and so on. It's not--and so we just want
documentation that shows that to be correct.
Mr. Taylor. Again, Congressman Shays, I will certainly go
back to legal counsel.
Mr. Shays. I'm trying to say it differently. I know you are
going to go back. I need to make sure that you provide us that
information. Now, whether it's you that provides it or someone
else, I just want to say this, it is not an issue of, you know,
you have the option to not provide that information. Please
tell your superiors that you have testified--and I believe you,
so you don't have a problem with me--that you testified that
this constitutes the full cost. If it, in fact, doesn't, you
need to set the record straight that it doesn't with
documentation, and if it does, you need to just provide us the
documentation that shows it's true. It's a common request, and
one to which I know you would--you can't commit what your
company does, I understand it. You're not the man in charge,
but you're close to it. So that's all.
Mr. Taylor. I understand the request. Yes, sir.
Mr. Shays. OK, good. And we understand what you're saying
to us. Just as long as that gets conveyed to them.
Mr. Taylor. Absolutely.
Mr. Van Hollen. Thank you, Mr. Chairman.
Now, under the contract structure you had, as I understand,
if you could look at that chart, Halliburton had the umbrella
contract; is that correct?
Mr. Taylor. I am not personally aware of that, sir.
Mr. Van Hollen. OK. You did not know that at the top of the
subcontracting pyramid was Halliburton?
Mr. Taylor. I'm not personally aware of that, sir.
Mr. Van Hollen. OK. Let me just ask you and maybe some of
the others just a general question. There's a quote from a
fellow by the name of Henry Bunting. He is a former Halliburton
purchasing officer, and he said a common refrain in 2003 in
Kuwait for managers of KBR--that's Kellogg Brown & Root, a
division of Halliburton--was, don't worry about price. It's a
cost-plus. And he goes on to say, there's no question the
taxpayers are getting screwed. This is a fellow who was an Army
staff sergeant in Vietnam. There's no incentive for KBR or
their subs to try to reduce costs; no matter what it costs, KBR
gets 100 percent back plus overhead plus profit. That is right.
Right? In other words, that is the structure. It's a cost-plus
structure, and assuming you have a number of subs, from
Halliburton's perspective or whoever's at the top of the
pyramid, the more subs and the more costs, the better off in
terms of the return for the person at the top. Is that right?
Mr. Taylor. Mr. Van Hollen, for Blackwater, we only engage
in firm fixed-price contracts. We don't have cost-plus
contracts. We don't propose cost-plus contracts. We have only
firm fixed-price.
Mr. Van Hollen. OK. But at least in this particular
instance, you're at the--you know, near the bottom. The
individual employee who is your employee is the only other
person you are paying out. So now my question to you--and this
is maybe a general question. If we could keep our answers as
short as possible because we have limited time. But under this
design, the design for a cost-plus contract, is it not true
that there's no incentive for the person at the top of the
pyramid if they're getting cost plus a percentage fee to keep
their costs at a minimum? Is there any incentive? Can you tell
me how--if there's any incentive there for the person at the
top of the pyramid to keep their overall costs low?
Mr. Chvotkin. The incentive is in the award fee because
the--in your hypothetical, and I don't know enough about the
specific contract, but in the hypothetical, if the award fee is
tied to cost, then the lower the cost, the higher the award
fee. And so there is an incentive through the award fee. And
that's what the 2 percent was explained earlier with respect
to--if I understand this portion of the contract, how it would
apply.
Mr. Van Hollen. My understanding is this was a cost-plus. I
don't know if there was any award fee for coming under cost. I
mean, if anyone knows about this, I'm talking about this
particular----
Mr. Brooks. I'm going to stick my neck out a little bit.
KBR is not a member company. When there is a task that has been
given to KBR or another company on a cost-plus basis, the
company sits down with the contract officers or with the
procurement people, and they decide on how much the maximum
cost will be, and then the company has to go and stay under
that cost. So there is a process that comes up with a cap of
how much it's going to cost, say $10 million for a base in the
desert or something like that. So that's where you get the
controls.
Now, the value of the cost-plus is that it gives you the
flexibility you need in a complex contingency operation where
you don't know what the final cost will be, and you can come up
with a--some sort of accurate estimate.
Mr. Van Hollen. My understanding is, in the LOGCAP
contracts, that did not happen, what you were just talking
about. We can go back and take a look at that. But let me ask
you, because we talk about the fact that private contracting
for security services can provide a return to the taxpayer.
Now, I think under certain circumstances, that's true. I just
want to pursue this idea a little bit with respect to Iraq
because in the particular case that we're talking about here
with respect to the $600 a day for the security officer which
comes out to, as I understand it, it's approximately $180,000 a
year; if you were to take somebody of Mr. Zovko's experience
and rank--he'd been a sergeant--and you took that sergeant in
the active duty military, the equivalent in terms of the salary
would be about $38,000 a year. So my question to you is, this,
I mean, isn't it the case that the administration is
essentially relying on private contractors in many cases not to
provide cost savings but because to add 48,000 additional
troops--and 48,000, according to the GAO report, is the number
of private security people in Iraq right now--would not be
politically palatable because at least in this case, maybe, Mr.
Taylor, you can correct the figures if I'm wrong, $180,000 a
year for the employee you are paying versus $38,000 a year plus
maybe health benefits and others for a sergeant in the regular
Army, that does not seem to be a benefit to the taxpayer. If
you could explain.
Mr. Shays. And I'm going to just say that the gentleman's
time has concluded, but this is--this is a very important
question that I'd like all of you to answer. And this is,
frankly, an opportunity. Make your case. Why you guys instead
of the military? And I'll be happy to let the gentleman
followup.
Mr. Van Hollen. Thank you, Mr. Chairman.
Mr. Shays. So just make your case.
Why don't you start? We've had Mr. Taylor ask and answer a
lot of questions. Let's give him a rest.
Mr. Rosenkranz. First of all, we have to compete for the
contracts. Even the ones----
Mr. Shays. Can you make sure your mic is on?
Mr. Rosenkranz. Perhaps I'm not close enough. You have to
compete for your contracts. They're not indefinite. And so if
you're not competitive, if you don't deliver the value, then
you won't return, and certainly all of us have had that
experience.
Mr. Shays. Let me just interrupt by saying, you've lost
contracts; someone else got the contract instead of you?
Mr. Rosenkranz. Absolutely, yes. And you lose because of a
variety of reasons. It's up to the customer, but certainly one
of the facets of that is the cost you have to the customer. I
think that we tried to bring people into Iraq at the most
competitive price that we can get to, and as it gets--and
certain conditions in Iraq, depending on the scarcity of the
population, of, say, police, to recruit police, that changes
the amount of money you have to pay to get them to go.
But the number that you end up with does not necessarily
reflect what you normally would call salary because of the
uplifts, because of the tax break and other factors that are
entered into that total number. And that's why people choose to
go there, but they go there for 1 year, and they make enough
money, and they go back to wherever they came from, and they go
back to $40,000 a year. I think we're competitive; our company
is competitive. I think you won't find a large variation on
what we have to pay to get certain skills and particularly if
it's a management skill.
But the number that you're using there I think is a little
bit deceptive in the fact of what that actual salary is, and
that's not including the other pieces that get added to it.
Mr. Shays. Let's keep going.
Mr. Balderas. Yes, one of the things on the--that was
already talked about is salary, is that we don't set the salary
rates. The contracting office does. It's market rates. We
propose labor rates, and whether the bid is successful or not
is dependent on the contracting officer and the entire
proposal, and they usually go with the lowest cost. So that's
how you lose a competitive bid. So, again, we don't set the
rates. We just suggest what they could be and what labor we
could get.
Now, as far as the total costs, again, you have to look at
the total picture, what it buys, what the individual contractor
has to do. There is no retirement plan for him. He has to get
his own health insurance. His family, where an individual has
always been mentioned, a military person already has that.
We're not talking long-term costs either. Looking at the
military, it is that an individual has a retirement plan, you
know. I encourage people that--in the military, to stay there
at least 20 years so you get the retirement benefit, you get
healthcare. One of the issues under the TRICARE is that it's a
great program, but only if you complete your 20 years. So I
advise guys to stay there and get that, because out on the
civilian market, health costs are climbing twice, twice, almost
double every year. It's gone from 8 to 10 to 16 to 20 percent.
So corporations have to deal with that as well for employees.
An individual working contracts, spending the short time over
there, trying to get a high paycheck, has to support his family
off of that, as I said, before healthcare; there is no long-
term plan for a guy doing this type of work. It's high risk,
and it's an individual choice to go over there.
Anyway, in my opinion, it is cost effective because of the
fact of long-term care. If you look at the military, you can
see the military is not married. They have personnel that are
married. When I came in the Army over 25 years ago, most of the
military personnel in the service were not married. Now we have
schools. We have additional building construction for housing
units on posts. We have healthcare issues for the family their
entire career service members' time, and after, when he
retires, that support's still there for that service member. So
that's a long-term care plan that military and DOD has to deal
with where a contractor, DOD contractor, or any contracting
officer can end that contract tomorrow, and that person's out
of work.
Mr. Brooks. I think this is a really great question and
really gets to the heart of the whole issue of using
contractors for services in a lot of areas of conflict. It
really comes down to a case of capability versus cost
effectiveness. When you have a soldier, a second lieutenant in
Iraq, theoretically at least, they can call in a B-52 strike.
They can call in tanks. They have all this sort of enormous
capability behind them to do this sort of thing. You don't
necessarily need that capability to guard a fence, you know, or
to guard the gate. Maybe you need somebody with a different
kind of capability or less capability. The way the military--
I've talked to people at the Pentagon about this, the way they
calculated. It's costing them $15,000 per soldier per month in
Iraq, which is pretty expensive. Now, obviously, that's not
salary. That's all sorts of other things that have been
mentioned already. That's just for the guys in Iraq. And of
course, the other issue you have to remember is that the
military rotates these people out. So you have a two or three
to one ratio of people outside Iraq that are leaving Iraq, that
are getting ready to come back to Iraq, that are training or
whatever else. So there's all this other money that's sort of
going on behind the scenes that's involved in keeping the
military there.
You need the military there. It has its own reasons for
being there, its own capabilities. What our companies do is
support that military option. I also want to point out that
when they kick around these numbers of contractors in Iraq, we
need to be clear whether we're talking about security
contractors or nonsecurity contractors and whether they're
Iraqi or not. Many of our member companies have ratios or have
percentages of Iraqi employees of upwards of 70 or 80 percent.
And this is normal. Most companies when they work in areas in
Balkans or in Sierra Leone or in Liberia, they hire as many
locals as they can, which is a good thing for the economy. It's
a good thing from an ethical perspective. It's a good thing
from a legal perspective. So when you get your open number of
48,000, you're probably talking an awful lot of Iraqis, 50, 60
percent at least, probably higher.
I think the other thing I wanted to point out, even in the
United States, we have three times as many private security as
we do police. So it's not unusual that Iraq would have a large
number of private security people.
Mr. Chvotkin. I would just add to that, first of all, is
the size of the available work force to meet the number of
projects that are underway. Simply insufficient military. Even
if all of the military, even if number of available was not the
issue or the policy was not the issue, I don't think there's
enough to provide the force protection that's necessary.
Mr. Van Hollen, I think you are familiar with many of the
developmental assistance programs around the globe and in some
cases, even in Iraq and Afghanistan, where the companies prefer
to have distance between themselves and the U.S. military in
order to carry out their work, and so in many cases, there's a
preference both on the government side as well as on the
company's side to avoid that force protection.
Finally, benefit, this is a sheddable work force. If the
project ends, the work force goes away and not so on the
military. You've got to task them. You've got to continue to
train them. And so another benefit to having the--using
contractors, the other panelists have said there's a cost
effectiveness; there's a resource capability. There's a
resource availability. All have to come into play.
Mr. Van Hollen. If I could just very quickly----
Mr. Shays. Sure. Sure. Just respond.
Mr. Van Hollen. Thank you, Mr. Chairman.
Mr. Shays. Just remember that the last gentleman who spoke
was the individual that you introduced. He's first among equals
in this group. You had to have been persuaded by his comments.
Mr. Van Hollen. I understand.
Mr. Shays. It's the quid pro quo.
Mr. Van Hollen. He did a very good job. But let me just ask
a couple questions here because, again, as I said in my opening
statement, and again----
Mr. Shays. Don't get carried away. Your time ended a long
time ago. You want to make a comment; I want some time.
Mr. Van Hollen. Let me make two comments, a couple
comments. First of all, Mr. Taylor, just for the record, the
contract with Regency and Blackwater specifically makes it
clear that Regency is a subcontractor of Kellogg, Brown & Root.
So it's in the contract that your company signed with Regency,
at the top of the pyramid was KBR, and so just to--which is
consistent with this chart that we're showing.
Second, again, the question is not whether there are
certain circumstances under which it's good to have private
security contractors. I just want to go back to the cost
because, you know, what was the figure you gave, Mr. Brooks,
for the military?
Mr. Brooks. $15,000 per month, and that's an average.
Mr. Van Hollen. That includes the whole overhead.
Mr. Brooks. Oh, absolutely.
Mr. Van Hollen. OK. But we're talking in this case an
individual employee with the rank of and the experience of a
sergeant, $600 a day, which does calculate out to $180,000 a
year, and--well, anyway, I'm just quoting from the Regency.
They did the math. The newspaper did the math. And so the
question is, what is the--is the taxpayer getting the best for
the tax dollar that we're paying? I must say that we've been
trying to get to the bottom of a lot of these questions. The
subcommittee--and I will end with this, Mr. Chairman.
Mr. Waxman long ago wrote to Brigadier General Jerome
Johnson with the Army Field Support Command asking for
questions, any Defense Department reports comparing the costs
of paying contractors to provide security services or
logistical support under the LOGCAP contract with the cost to
the Army of providing the services or support itself. That's
the question that we've been asking here.
We've received no response back to this letter. It's dated
November 30, 2004.
Thank you, Mr. Chairman.
Mr. Shays. Thank the gentleman.
I want to thank all of you for being here. I think that the
men and women who serve with you are true heroes, and they are
risking their lives every day. Bottom line.
I do want to clarify, because I may not have been as clear
as I want, and I want to be clear about this, when my staff
director and I went to the West Bank for a week, DynCorp was
protecting us because that was 2003. We were there during the
Easter recess, and when we went into Gaza City for the day, we
went with three cars plus an additional car behind us, and that
additional car, we didn't know who was in it. It was all black.
They went in. They never got out of that car, but when we got
out of the gate, they walked out. And they were covered from
head to toe with everything you could imagine. And I said, what
would happen if your services were required? And they
explained, you wouldn't want to be anywhere around us. Now,
those individuals, two of those individuals I think died a
week--about a month later because they were blown up by an IED
on the way in or out of Gaza City, and I'm forgetting which.
And I just want to say, having looked in their eyes, knowing
that they were there to protect us and to know they lost their
lives, this is not child's play. I'm not suggesting anyone is
suggesting that, but I want to put it on the record. They are
doing extraordinarily dangerous work.
And I do think the question that was asked about cost and
benefit, I do buy in totally, completely, to the fact that the
military has three shifts, and you have one--one training, you
have one kind of in the back, and you have one in the action.
And in this case, you are totally right. We only pay for when
they're there. And when we want to dump them, we can just get
rid of them. There is a cost effective aspect to this. And if
there were earlier contracts that did cost-plus, even then the
government has to be looking at this and saying, you know, we
don't like your cost-plus. We're going to look at someone else
to come in. But a cost-plus is not, in my judgment, the way we
would want to design contracts as a general rule.
I want to ask you all, and I'm going to say to you, Mr.
Balderas, I notice that the colonel on my staff seemed to be
more impressed with you as the Delta Force, and I said, what
the heck's going on here? And he said, you know, he used to fly
you guys into Laos and some other places when he was in
Vietnam, manning the helicopter. And I said, so you mean
they're as good as the SEALs? An he said, no, better. Now, that
was his perspective. So as the top enlistee in the Delta Force,
you just kind of won him over. So he made me very impressed
with what you do, and I appreciate your expertise and your
service to our country.
But there is this definite conflict and bias that my staff
director has.
I'd like to ask all three companies. Do you all share the
same armor, the same vehicles, the same IED jammers? Give me a
sense, do you sometimes compare notes? I mean, you're
competitors, but I would like to think you all want the best,
and if you got the best, you're not just going to keep it to
yourselves, and you all have training. Tell me where you
interface and where you don't, and if you don't interface, tell
me that, too.
Mr. Taylor, have you had a rest from answering questions?
Are you ready to go again?
Mr. Taylor. I'm fine, Mr. Chairman.
Mr. Shays. OK. At the operator level, at the level who are
actually doing the heavy lifting, there is absolutely work
between and among--even though we're competitors--among the
companies. Because necessarily during our operations, we
overlap, we could overlap, and in that case, we understand the
value, particularly as former enlisted guys, of very direct
communication to ensure that we're not getting in each other's
way, that we're not getting in anybody else's way, and that
we're able to fulfill whatever mission it is that we have. With
regard to gear and everything else that is generally
contractually mandated and is provided for in an RFP or request
for proposal, that is identified in that request for proposal.
Mr. Shays. Thank you.
I'd like to just go down the line.
Mr. Rosenkranz. Well, we certainly are close to each other.
We share a camp in Baghdad. And sometimes you can be too close,
I guess, but I think there's a lot of interaction among the
companies. Government disperses us in different parts of the
countries where we serve, but I think, not only do we interact,
but we rate each other's populations, you know, for new hires,
and so I think there's a lot of interaction among the
companies.
As far as equipment, in the State Department contract for
the WPPS, there's a great commonality on the civilian police
side. When we submit a proposal, we can suggest the type of
equipment that we think's appropriate, and then the INL folks
in the State Department decide, you know, whether they can
afford it. That includes airplanes. That includes the types of
vehicles and other types of equipment. And I was asked by
counsel at one point, you know, what we knew about this core
equipment for detecting IEDs or rather for preventing the
detonation of IEDs, we did do some experimental work with that,
at least we supported the experiment in Iraq. I don't know what
the outcome was on that. They just gave us some copies. This is
the type of jammer that--it will stop both the transmitted--
transmitted signal and jam it or it will do something to the
signal that's already preset with the other kind of explosive
device. So we get involved in that tangentially, really, but as
far as equipment on the one program, I think it's a pretty
common type of equipment on the police side. There's no
experimentation. And we have changed over the last 2 years as
to what kind of vehicles we use, what kind of equipment we use.
Mr. Shays. Thank you.
Mr. Balderas.
Mr. Balderas. Yes, it depends on the contract, Congressman.
For example, all three companies here are on the worldwide
contract for the Department of State, and most of that
equipment is GFE, government furnished equipment. So there is a
commonality because sometimes we do interchange. So all that is
the same.
As far as working together, it is absolutely true. The guys
on the ground do work together, and it's force common sense to
do so. In fact, when we had our incident in September of last
year, it was DynCorp Security that stopped and made it for our
guys on the ground. So yes, the guys on the ground do work
together and share and pass info. In fact, some of the guys
actually have probably worked for all three companies at one
time or another. So they all stay on the ground and stay in
contact.
Mr. Shays. Thank you. Let me ask the three of you, and I'm
not trying to be cute here, but when you are competing, you're
competing based on service and cost. Is there the possibility
that the low bidder uses inferior protective gear?
Mr. Balderas. Again, depending on the contract, some
contracts, you are asked to provide your own, but for most of
the DOD and DOS contracts, they're strictly requirements on the
contract, what you have to meet the requirement. So again,
the----
Mr. Shays. Let me ask you a question that had been answered
before I asked it. The bottom line is, most of the equipment is
provided.
Mr. Rosenkranz. Government furnished or in the contract,
requires----
Mr. Shays. Let me ask you, you each have your own training
procedures. Which one of you is responsible for training Iraqi
police in Jordan?
Mr. Rosenkranz. That would be DynCorp.
Mr. Shays. DynCorp, right. So you are basically training
the police, at least those police that are trained in the
Jordan training----
Mr. Rosenkranz. We support the Jordan Training Center or we
provide the logistic or we did up until----
Mr. Shays. You are not doing the teaching. You are just
trying to do the protective--I mean, are you training these
police officers?
Mr. Rosenkranz. Logistics on the school in Jordan or we
did. We do our mentoring and advising onsite in the regions of
the two countries. We have 1,000 police advisors in the two
countries who conduct the training. For instance, in
Afghanistan, there are regional training centers. We conduct
the training there, CTC in Afghanistan. We do the training, and
in Iraq, we do training for the police--with the police. It's a
direct training with the Iraqis and Afghans.
Mr. Shays. Before I ask you if there's anything anyone
wants to put on the record, I would invite Mr. Kucinich to
followup on a question with our colleague or vice chairman or--
--
Mr. Kucinich. Just a couple questions.
Mr. Shays. Yes, just a couple, and let's do it.
Mr. Kucinich. Mr. Chairman, I'm concerned about the
suffering caused by war-induced psychological injury for the
individual and for his immediate family, society, working for
the private security companies here. As you no doubt know, the
gold standard study on this question was mandated by Congress a
decade ago or actually a decade after the end of the Vietnam
War. It was called the National Vietnam Veterans Readjustment
Study, and one of the important findings of the study was the
likelihood of violent criminal behavior by veterans with Post-
Traumatic Stress Disorder. The study investigators surveyed
veterans for the number of violent acts they had committed in
the last year. Nearly one-fifth of individuals in the study
with PTSD self-reported committing 13 or more violent acts in
that year. Violence on such a scale implies sometimes criminal
activity, such as armed robbery, gang activity and assault, not
confined to domestic violence, but the study also found a very
high incidence of criminal behavior among veterans whose war
experience was high stress, 14.4 percent. The implication of
that is that the diagnosis of PTSD does not capture all the
psychological injuries that can result in the commission of
violent acts because we all know that the stress of theater, of
war can cause psychological injuries, and we care deeply about
the health of the employees and private military contractors,
about the people of Iraq they work with and about the American
society they return to.
I just want to ask a couple questions about the measures
that the owners and management of private military contractors
are taking in this area. First I'd like to know----
Mr. Shays. For the gentleman, I told Mr. Balderas he
couldn't take an earlier flight so please make sure he's asked
a question so I don't feel guilty.
Mr. Kucinich. Well, Mr. Balderas, I would like to know--
thank you, Mr. Chairman--about the environment in which your
employees work. Which percentage your employees in Iraq do you
believe are in danger from roadside bombs kidnapping or ambush?
Mr. Balderas. As far as all the employees who work in Iraq,
unfortunately, they're all under that same risk.
Mr. Kucinich. What happens to, attempts to monitor your
employees in Iraq before, during and after their return, for
key signs of psychological injury, such as alcohol abuse, drug
abuse, anxiety disorders, PTSD, violent acts? You know, do you
have any monitoring at all?
Mr. Balderas. Yes, we do. We do a psychological profile as
part of our assessment in recruiting and hiring practice. One
of the things I did----
Mr. Kucinich. Exit interviews?
Mr. Balderas. Yes, and one of the things we actually did
when we got heavily involved in 2004 was, I went ahead and
started a program that was based on a casualty assistance
program in the military, and we went in and contracted with a
doctor that also works for Fort Bragg and as part of the mental
health program, and he is on call. He served us well when we
had our incident with the four personnel we lost. He was able
to call mental health specialists in each of those areas,
counsel the family, and he personally met the plane at Dover.
And he recently just came back from Iraq to go over and talk to
people that are over there right now just to give them a sense.
Because one of the things I learned in the military that's true
now, that an individual that is under a lot of stress sometimes
doesn't want to let you know because it carries a stigmatism,
and they are in fear of their jobs. So we have a program where
they can call him, and we wanted to make sure they knew that
they could call them offline.
Mr. Kucinich. So you do have provisions or your employees
in Iraq get treatment for any psychological injuries?
Mr. Balderas. Yes, and that is also one of the programs of
the companies. So it is--has some type of shielding for the
employee.
Mr. Kucinich. And is that true of Blackwater, Mr. Taylor?
Mr. Taylor. Yes, Mr. Kucinich.
Mr. Kucinich. That's true of DynCorp?
Mr. Rosenkranz. Yes, it is. We take psychologists over
there.
Mr. Kucinich. And can you tell me, do you also pride
yourself in situations where your employees file Workers Comp
claims against the company because they feel that they were
injured on the job and therefore deserve some kind of
compensation?
Mr. Balderas.
Mr. Balderas. No. We have never had--part of the issue
under the Defense Base Act, if someone is injured, they are
covered under Workers Comp, but not as far as they not being
dealt with fairly. The company does try to go above and beyond
to treat everyone the same.
Mr. Kucinich. So you don't have any Workers Comp issues; is
that what you are saying?
Mr. Balderas. No.
Mr. Kucinich. Major General.
Mr. Rosenkranz. No.
Mr. Kucinich. Mr. Taylor, do you have any type of Workers
Comp issues?
Mr. Taylor. I don't know of any.
Mr. Kucinich. You don't know of any?
Mr. Taylor. I don't know of any.
Mr. Kucinich. Will you check with your legal advisors and
let them know?
Mr. Taylor. Of course I will. Mr. Kucinich, if I could
point out, one of the things we also do is we have a full-time
chaplain who is a full-time chaplain of the Marine Corps in our
employment at Blackwater.
Mr. Kucinich. Is he a trained psychologist?
Mr. Taylor. He has a career's worth of dealing with people
who have served in combat and have come back.
Mr. Kucinich. Clinical background?
Mr. Taylor. I would be glad to forward to you Father
Pittarelli's background.
Mr. Kucinich. Just one last question to Mr. Balderas, how
many of your employees in Iraq, who have returned from Iraq,
are dealing with alcohol abuse? Do you have any idea of
quantifying it?
Mr. Balderas. No. I don't have that information. I know of
no issues.
Mr. Kucinich. Anxiety disorders?
Mr. Balderas. I could check with Dr. Martin and find out in
that manner, but----
Mr. Kucinich. PTSD? I mean, do you----
Mr. Balderas. As far as psychological issues, I'd have to
talk to him offline.
Mr. Kucinich. I thank you.
Mr. Chairman, I mean, obviously, this is something that is
important as a health issue for the employees of private
contractors as well as for the American society when people
come back, to make sure that if you're doing--if you're
identifying people who have difficulties, you're providing them
with assistance and treatment, you do have followup. Each of
you said that. That's important for this committee to hear
that. Thank you.
I thank you, Mr. Chairman.
Mr. Shays. Thank the gentleman.
Chris, do you have a question that you want to----
Mr. Van Hollen. Just one. Thank you, Mr. Chairman.
I just have a question based on your testimony, Mr.
Chvotkin, where you stated in the written testimony----
Mr. Shays. Is this a coincidence you are finally going to
your constituent?
Mr. Van Hollen. No.
Mr. Chvotkin. He's trying to protect me from rush hour over
on 270.
Mr. Van Hollen. Another 20 minutes, it will loosen up a
little bit. He got it right.
Way back in March 2003, at the very outset of hostilities
in Iraq, your organization, PSC, Professional Services Council,
recommended to senior acquisition leadership of the Department
of Defense that DOD consider taking, as you say, one of three
initiatives: One, setting standards for private security firms
who wanted to operate in Iraq; or, two, better yet, establish a
qualified list of firms from which the private sector would
contract directly for services; or, even better still, that DOD
directly contract for and supervise these private security
firms and the contracting firms that they would reimburse.
Those recommendations were picked up, Mr. Chairman, as you
may recall, in a 2005 GAO report. My understanding is that,
however, as of today, they have not been adopted by the Defense
Department. And my question to you is why do you think these
recommendations are important? And why have they not been
adopted, to the best of your knowledge, by the Defense
Department or other contracting agencies?
Mr. Shays. And I would like to add, if the gentleman would
allow me, I would like the others of you to say whether you
think that these recommendations were important.
Mr. Chvotkin. Mr. Van Hollen, we saw the situation in Iraq
as it was just emerging. We had a concern of a long-term set of
issues for the use of contractors accompanying the force as
well as the reconstruction and USAID activities which were just
beginning. Many of our companies, while they are familiar with
buying security services, we saw the fear the magnitude would
be such that knowledge would far outstrip both capability as
well as availability. And that is why we went down the
suggestion that the government at large and the Defense
Department, which was in charge of the security operations in
all of Iraq at the time, take those steps to facilitate those
coordination and communications among the companies, the
security forces, and to assist those companies that had to
provide security on their own to find the most capable, most
qualified, the most effective kind of security support.
I think those recommendations remain valid. I have read
through some of the commentary and the GAO report as to why the
agencies didn't believe that they were appropriate. Some of
them are fair, legal interpretations of the government's role
and still remain valid today. I still hope that, as a result of
this hearing, the Defense Department or the U.S. Government
would adopt those recommendations.
Mr. Van Hollen. So your view is those recommendations
should still be adopted?
Mr. Chvotkin. My recommendation is those recommendations
are still valid today.
Mr. Shays. I would like you to just quickly respond to
whether you think these recommendations make sense.
Mr. Brooks. I think largely they are OK. I think we have to
remember we need to keep the flexibility in any sort of
conflict, postconflict environment; you need to have some
flexibility that allows you to adapt to the situation. As we
say, you don't need James Bond to guard a gate, you need
somebody who is capable and professional. So the standards have
to be very carefully set so that it allows scaling depending on
the level of threat and the need.
Mr. Balderas. Yes, I support those recommendations.
Mr. Rosenkranz. I think Department of State has set a good
standard. In the two programs that we're a major player in,
they set high standards, and they get good results. And it's
sort of ironic. I mean, a lot of what our companies are doing
as a result of the fact that Defense cannot do it, they are
overcommitted, or they are underresourced. I think everyone
agrees to that. So it is somewhat ironic that they are not
engaged, because the buck stops over there, and they could take
the lead from State on how to do it and should do it.
Mr. Taylor. Yes, we would generally support those
recommendations.
Mr. Shays. Mr. Kucinich just has one.
Mr. Kucinich. I thank the Chair for his indulgence.
I have heard that one general or it may have been Mr.
Brooks said that 60 percent of the people in Iraq who are
employed by private security are Iraqis. Did you say that?
Mr. Brooks. Roughly.
Mr. Kucinich. Roughly.
The costs that are on this sheet of $600 a day, that is not
what the employees get, is it? It's just what you charge for
the employees, for individual employees?
Mr. Brooks. Is that this chart?
Mr. Kucinich. That's this chart.
Mr. Brooks. That would be, though, dependent on the quality
of employee that you hire.
Mr. Kucinich. That's with all the costs that are involved.
Mr. Brooks. You would have to ask these guys what they
charge.
Mr. Kucinich. Here's my question. For people who are doing
similar work, do you pay Iraqis the same that you pay non-
Iraqis? Does the industry? Do Iraqis get the same pay for the
same work?
Mr. Taylor. They don't do the same work, Mr. Kucinich.
Mr. Kucinich. In no case?
Mr. Taylor. From Blackwater's perspective, they are not
doing high-threat protection.
Mr. Kucinich. So Iraqis are the lowest-paid then?
Mr. Taylor. I have no idea, Mr. Kucinich.
Mr. Kucinich. Could you get the information from your legal
counsel and provide it to us?
Mr. Taylor. Absolutely.
Mr. Shays. Just be clear about your testimony here. You are
basically saying they are not doing that kind of work. You are
not asking them to do that kind of work; therefore, they are
not going to get paid those kind of dollars.
Mr. Kucinich. But for similar work.
Mr. Taylor. We would have to define similar. High-threat
protection of a U.S. Ambassador is not performed by local
Iraqis. That requires a different skill set.
Mr. Brooks. If I could weigh in on that. I think what you
are getting to is, yes, an American who goes to work in Iraq,
whether driving a truck or mechanic, can expert to earn, say,
double what they would in the United States. If they are from
Nepal or if they are from the Philippines or something, then
even driving a truck or something, it is 10 times what their
salary would have been back at home. Is it as much as an
American? Probably not. But it is still a lot more than they
would get at home. So the employees of third country nationals
and the Iraqis that I talk to when I was in Iraq were quite
happy with their salaries.
Mr. Kucinich. Mr. Chairman, I think it would be interesting
for this committee to have the gentlemen who are here and the
industry provide us with a chart which shows how much an
American there gets paid, how much a Nepalese gets paid, how
much an Iraqi gets paid for similar work. I mean, I think it
would be very interesting for us to have that information.
Mr. Shays. Let me just say, if the gentleman would like it,
I would be happy to request it. From my own perspective, I
would be outraged if someone who left their own country at a
certain salary structure was ultimately getting what someone
would get who came from a country where their reimbursement
would have been much higher. So I am not on the same
wavelength, but I would be happy if that could be provided to
the committee what the different pay scale. I will just ask the
two folks that do the association work to provide that for us.
Just give us a sense of what folks would get. I mean, Mr.
Brooks, it is your response really, but I think what you are
saying is that in some cases they might get 10 times more than
they would get in their own country. And then you could take
that information and conclude with it as you like.
Mr. Kucinich. I appreciate the gentleman's indulgence to
let me ask that question, and I think that no matter what
country we are in, there is always questions of equity that
need to be looked at.
Mr. Rosenkranz. But usually you hire the men required to do
the job, and if it is the type of job where you can hire
somebody and get them at a lower salary, that's the type of
person----
Mr. Kucinich. I understand. I am looking at this chart,
just before we started this hearing. If the government is being
charged $600 a day for an employee, and that employee happens
to be Iraqi, he's getting, say, $10 a day, we'd be interested.
Mr. Rosenkranz. It doesn't work that way. I mean, if you
have a person who has to do a sharp-team or do a PSD that
requires a clearance, you have no choice on who you are going
to hire. And if it is somebody that is going to provide local
security, and it can be an Iraqi, then you hire an Iraqi. You
would never bring somebody over.
Mr. Brooks. If I could back that up. I think one of the
really interesting things for me, when you look at this
industry, it is truly a global industry. And companies that
work in the Balkans that are now working in Iraq have actually
brought some of their employees who have been working their way
up the corporate ladder to work in Iraq. And in Darfur you have
companies that worked in Sierra Leone that have brought Sierra
Leone and are now part of management structure. That is quite
normal. And for the companies who are competitive, it's cheaper
to use a Sierra Leonean and give them a very good wage by
Sierra Leonean standards than it is to hire an American to do
the same thing. So it is a global industry, and they try to be
as cost-effective as possible.
Mr. Shays. Let me say, I have found--this is your life's
work right now, so for you this is old hat stuff. But for me,
this was a very informative hearing. You have been an excellent
panel. Mr. Balderas, if you had left to take your plane, it
wouldn't have been as good a panel.
Mr. Balderas. Thank you, Mr. Chairman.
Mr. Shays. So if your wife wanted to leave earlier, I thank
her for understanding that you were a valued part of this. All
of you were.
This was a very interesting hearing, both panels, and I
thank you very much. Is there any closing comments that you
would like to make that won't get Mr. Kucinich or Mr. Van
Hollen to ask a followup question?
Mr. Taylor. No, thank you, Mr. Chairman.
Mr. Shays. But anything we need to put on the record?
Mr. Rosenkranz. These folks, these women and men--and, by
the way, we have a number of women in our police program. They
are doing a magnificent job. Everything who gets protected by
them, the people who watch our police program in action are so
impressed. These are just marvelous people.
Mr. Shays. Thank you.
Mr. Balderas.
Mr. Balderas. Mr. Chairman, just Triple Canopy would just
like to thank you for having the opportunity to talk here
today. And also, on behalf of all the veterans there at Triple
Canopy, we would just like the opportunity to continue to serve
our country. Thank you very much.
Mr. Shays. Thank you very much.
Mr. Brooks.
Mr. Brooks. Very quick. We do have public companies, I just
want to say, right off the bat that are publicly known. So
their incomes and their contracts are quite open. Armor Group,
MPRI are two member companies that are public companies. Good
oversight makes for good companies, and if you look in our
presentation, we are happy for good oversight. We look to
support oversight from the government side.
A code of conduct is useful for making good companies. I
mean, we have a code of conduct. I think all companies should.
I think they all have similar codes of conduct, but it is
useful to have that public so everybody knows what the rule is.
And finally, I would just like to say it has been an honor
to be on the panel with these folks here. I mean, they are
amazing.
Mr. Shays. And, constituent of Mr. Van Hollen, would you
like to get the last word?
Mr. Chvotkin. These are complicated issues, Mr. Chairman.
They require good thought. I appreciate the attention that the
subcommittee has paid, and would look forward to a continued
dialog with you on it.
Mr. Shays. Well, again, a very interesting hearing. Thank
you so much for your cooperation. Any question that you said
you would followup on, it is important that there be that
followup and communicate with our committee. And if there's not
the ability to get exactly what we wanted, we will need just a
reason why, and we will walk through it.
But thank you, gentlemen, for your service to our country.
We appreciate it a lot. With that, this hearing is adjourned.
[Whereupon, at 7:23 p.m., the subcommittee was adjourned.]
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