National Defense Authorization Act for Fiscal Year 2005

CONGRESSIONAL RECORD
SENATE
NATIONAL DEFENSE AUTHORIZATION ACT FOR FISCAL YEAR 2005

Mr. WYDEN. Mr. President, for a number of months I have been working with colleagues on both sides of the aisle-Senator Collins from Maine, Senator Stevens, Senator Warner-to try to get more oversight over the billions of dollars worth of contracts that have been and are being let to rebuild Iraq. I come to the floor today to offer an amendment with my colleague and friend, Senator Dorgan of North Dakota. We have discussed this amendment with Senator Levin and Senator Warner.

What Senator Dorgan and I have found is a shocking system of so-called oversight with respect to the use of taxpayers' dollars. With the nation facing rising deficits and scarce federal dollars for our many problems here at home, it is imperative that there be strong oversight over the use of taxpayers' money. What our amendment deals with is literally the outsourcing of the oversight of the billions of dollars worth of contracts to rebuild Iraq. It sounds incredible, but the heart of the problem is, instead of having Federal employees oversee these billions of dollars worth of contracts to rebuild Iraq, the Department of Defense has outsourced the oversight of these huge contracts to private companies. These companies are "overseeing" the work of other private companies. If many of these companies didn't already have joint ventures elsewhere or interlocking financial interests or boards of directors, I guess one could plausibly say this would be acceptable. But that has not been the case. Putting these companies in charge of oversight of one another strikes Senator Dorgan and me as simply an invitation to flagrant fraud, waste and abuse of taxpayer money.

Senator Dorgan is here as well, and I want to give him ample time to discuss this, but I would like to give a brief example of the kind of problem we seek to address in our legislation. The Parsons Company won two separate Defense Department oversight contracts that totaled nearly $72 million. Under each of those contracts, it overseas the Fluor Company in Iraq. At the same time, Fluor and Parsons have a $2.6 billion joint venture ongoing in Kazakhstan.

The question is, with such a significant shared financial interest, how in the world is anybody in a situation like that going to have a real incentive to take out a sharp pencil and protect the taxpayers.

We are talking about vast sums of money. $18 billion has been allocated by the Congress for reconstruction, and thus far 17 contracts have been let: 10 for reconstruction and 7 for overseeing the reconstruction. I thank the distinguished Senator from Virginia for his cooperation on this amendment. As I discussed with him, this amendment builds on the work that I was able to do in cooperation with Senator Dorgan and Senator Collins on the issue of no-bid contracts in Iraq. This amendment establishes that oversight and the protection of the taxpayers' interests in these billions of dollars of contracts, is a Government function. It is not something that can be outsourced. This amendment will prohibit companies with interlocking financial interests from "overseeing" one another.

We talk often about giving the fox the opportunity to oversee the henhouse. This is a textbook case of just such a situation.

I mentioned to the distinguished chairman of the committee, the Senator from Virginia, and the ranking member of the committee, the Senator from Michigan, that this boils down to a simple issue of commonsense. This is not a Democrat or Republican issue. Senator Dorgan and I are pursuing this as a commonsense issue-oversight should not be outsourced, particularly when the projects to be reviewed involve billions of taxpayer dollars. What's worse-these are cost-plus-plus contracts. The contractors here get any unforeseen costs, plus they are eligible for a bonus. Essentially, these contractors are rewarded if the folks they oversee perform well. But who evaluates how well those folks perform? The oversight contractors. Clearly, there are some perverse incentives at work in these oversight contracts.

We are talking about cost-plus-plus contracts that involve billions of taxpayers' dollars. It seems to me we have to get the oversight back where it belongs, and that is in the hands of the Department of Defense and not in the hands of the private contractors. Oversight is inherently a governmental function because accountability must be first and foremost to taxpayers.

I see my friend and colleague from North Dakota here. I want to yield time to him. But in wrapping up this portion of my remarks, I would like to express my appreciation to the Senator from Michigan, Mr. Levin, and to the chairman of the committee, Senator Warner. This amendment, in fact, builds on some of the earlier work we have tried to do in a bipartisan fashion. It essentially comes about because, as Senator Dorgan and I have gone forward to try to make sure taxpayers' interests are protected, we found a massive loophole, a loophole that we think nobody in the Senate confronted in the past, that allows for private companies to oversee other private companies, even when they have what strikes us as very serious potential conflicts of interest.

So we are looking forward, with Chairman Warner and Ranking Member Levin's cooperation, to have this amendment accepted. I believe it warrants bipartisan support.

I yield the floor.