Ayotte Opening Statement for Subcommittee Hearing Investigating Pentagon Mismanagement and Wasteful Spending in Afghanistan

Statement

Today, U.S. Senator Kelly Ayotte (R-NH) will chair a hearing of the Senate Armed Services Readiness and Management Support Subcommittee regarding Department of Defense (DoD) mismanagement and wasteful spending in Afghanistan. Following is the text of Senator Ayotte's opening statement, as prepared for delivery:

Good afternoon. This hearing of the Subcommittee on Readiness and Management Support will come to order.

I want to thank the Ranking Member, Senator Kaine, for joining me in leading this subcommittee and for your hard work on behalf of our service members and their families. I look forward to working with you again this year.

We begin the subcommittee's first hearing of the year to receive testimony on the Task Force for Business and Stability Operations' (TFBSO) projects in Afghanistan.

We are joined this afternoon by Brian P. McKeon, the Principal Deputy Under Secretary of Defense for Policy, as well as Mr. John F. Sopko, the Special Inspector General for Afghanistan Reconstruction. I want to thank each of you for your willingness to testify today and for your dedicated service to our country.

TFBSO was a Department of Defense task force created to address economic revitalization efforts in Iraq. In early 2010, TFBSO began operations in Afghanistan.

The goals of TFBSO in Afghanistan were to "reduce violence, enhance stability, and support economic normalcy." The task force sought to 1) restore productive economic capacity; 2) stimulate economic growth; and 3) serve as a catalyst for international investment in Afghanistan.

In order to support these goals, according to SIGAR, more than $820 million has been appropriated since FY 2009 for TFBSO programs and operations in Afghanistan-with about $759 million of that being obligated, and $638 million disbursed.

The real purpose of today's hearing is to determine whether these resources were spent wisely and properly, and whether measurable results were achieved.

SIGAR has published the following reports and inquiries on the task force:

* In July 2014, SIGAR released an inspection report about a Cold and Dry Storage Facility which cost TFBSO nearly $3 million for this facility to store local produce, provide a location for sorting and packaging of produce, and serve as a transit point for trucks. According to the report, it has never been used and is not being maintained.

* In April 2015, SIGAR released the first report about TFBSO and USAID extractives projects. This report identified a lack of a clear and cohesive development strategy by TFBSO and that TFBSO had not improved interagency coordination after GAO identified this as a weakness in 2011.

* In October 2015, SIGAR released a special projects report about TFBSO's Compressed Natural Gas Filling Station project, which TFBSO paid $43 million in costs associated with the construction of the filling station-according to a number provided by DoD, not disputed by DoD when it received the draft report, and confirmed last month by DoD. A somewhat similar facility in Pakistan SIGAR said would only cost $200,000 to $500,000.

* In November 2015, SIGAR sent an inquiry letter to DOD questioning the expenditure of $150 million dollars, nearly 20% of its total budget, for "villas' and associated armed security. SIGAR found that TFBSO could have saved tens of millions of taxpayer dollars if TFBSO members had lived at DOD facilities.

* In January 2016, SIGAR released an Audit Report on TFBSO's and USAID's efforts to assist Afghanistan's Oil, Gas, and Minerals Industries. The report found 8 of the 11 TFBSO extractives projects-worth $175 of the total $215 million disbursed-either had "little to no' or "partial' project achievement. Further, not a single project was transitioned to the Department of State or USAID when the TFBSO ceased operations.

The totality of these reports and some of the conclusions reached in a RAND report commissioned by TFBSO itself raise very serious questions about how this money was spent and whether it was wasted.

SIGAR concluded the TFBSO generally has not delivered on its stated goals. SIGAR has received more complaints of waste, fraud, and abuse relating to TFBSO activities than for any other organization operating in Afghanistan.

These questions have been exacerbated by the failure of the Department of Defense to respond to SIGAR's legitimate questions.

TFBSO ended its programs in Afghanistan in December 2014 and the task force ceased operations in March 2015.

One of the most troubling aspects of this task force and DoD's oversight is that on multiple occasions, SIGAR asked DoD to answer questions about this task force, including about the Compressed Natural Gas Station, as early as May 2015, yet DoD repeatedly failed to provide documents - claiming the department no longer possessed the personnel expertise to address these questions.

These assertions were made repeatedly despite the fact that members of TFBSO were still working for DoD and the former Acting Director of TFBSO worked in the Office of the Secretary of Defense beginning in June. In fact, a hard drive (of over 100GB) of documents was made available to SIGAR only last week.

In Secretary McKeon's testimony today, DoD disputes SIGAR's numbers on what the compressed natural gas station cost. According to SIGAR, DoD gave Vestige this $43 million figure (which in turn provided it to SIGAR) and DoD did not dispute the figure after reviewing the draft CNG report in September. In short, according to SIGAR, DOD provided the number, did not refute the number when it received the draft report, and then confirmed the number last month.

An important question regardless is: what happened to the money? And regardless of cost, was there ever a feasibility study conducted?

There are other troubling issues raised:

* Why did we spend $150 million on villas and security for no more than 5 to 10 TFBSO staff a majority of the time when they could have stayed on base?

* Why did we spend $55 million to facilitate an oil lender process that resulted in a Chinese company winning a contract to exploit an estimated $1 trillion worth of Afghanistan mineral resources?

* What did DOD spend - and should DOD have spent money - to develop carpet, jewelry, and ice cream businesses in Afghanistan?

* Why is it that after operating for years and spending millions of dollars, most TFBSO's extractive projects failed to fully meet project objectives?

* Finally, why weren't any of TFBSO's projects transferred to State or USAID?

Every dollar the Pentagon wastes is a dollar that we don't have to restore military readiness and provide our troops what they need to protect themselves and our country.

At a time of growing threats and constrained defense budgets, this kind of mismanagement and waste is simply unacceptable. I look forward to questioning the witnesses, scrutinizing TFBSO operations and projects in Afghanistan, and ensuring the Pentagon is taking the necessary steps to prevent waste and mismanagement in the future.

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