Hearing Of The National Security And Foreign Affairs Subcommittee Of The House Oversight Committee - Commission On Wartime Contracting: Interim Findings And A Path Forward

Statement

Chaired By; Rep. John Tierney

Witnesses: Michael Thibault, Co-Chair, Commission On Wartime Contracting; Former Rep. Christopher Shays, Co-Chair, Commission On Wartime Contracting Charles Tiefer, Commissioner, Commission On Wartime Contracting, Grant Greem Commissioner, Commission On Wartime Contracting

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REP. TIERNEY: A quorum being present, the Subcommittee on National Security and Foreign Affairs hearing entitled "Commission on Wartime Contracting: Interim Findings and a Path Forward" will come to order.

I ask unanimous consent that only the chairman and ranking member of the subcommittee be allowed to make opening statements. Without objection, so ordered. I ask unanimous consent that the hearing record be kept open for five business days so that all members of the subcommittee will be allowed to submit a written statement for the record. Without objection, so ordered.

Good morning. I want to thank all of you for being with us here today. As I promised you, you're there and I'm here, but I did have to restrain Mr. Shays from trying to get into the big chair automatically. (Laughter.)

So today the Subcommittee on National Security and Foreign Affairs is going to continue its oversight of defense spending issues with a hearing to discuss what has become an all-too-familiar issue in recent years: Waste, fraud, abuse and lack of accountability in wartime contracting in both Iraq and Afghanistan.

With hundreds of billions of dollars of United States taxpayer dollars invested in these two theaters since 2001, and more to come, it is critical that we continue to strengthen our oversight of contracting in these areas.

Before I begin my substantive remarks, I just want to address a procedural issue for the benefit of our subcommittee members and the public. We did have an arrangement with the commission earlier on that we would have the report released to us and not by the press until the evening of this hearing (or on ?) the hearing. That didn't occur, which I apologize to the other members on that.

We're about to find out why it is that that didn't occur on that basis. We wanted to give the members an opportunity to be prepared to ask questions of the committee and to work on that. So we're going to find out what happened there and do that. I still suspect that members have had an opportunity to prepare themselves, notwithstanding.

The United States reliance on contractors has reached unprecedented levels over the last eight years, reaching upwards of a quarter of a million contractors on the ground in Iraq and Afghanistan from the Department of Defense alone. That doesn't even include those that are working for the Department of State and the United States Agency for International Development or other agencies. It's an extraordinary number by all accounts of civilian contractors in a combat environment.

Unfortunately, while numbers of contracted personnel and related expenditures has ballooned, the opposite trend occurred with respect to oversight. The United States national security departments allowed their program oversight staff and expertise to dwindle to the point that, in many circumstances, contractors have been hired to oversee other contractors' work.

Report after report have identified the acute need to rebuild executive branch oversight capacity, but as yet we've seen little to show for it. We need to fix our broken contracting and oversight function in the executive branch and add to it a proper mix of oversight from independent sources and from Congress.

In that light, the creation of the Commission on Wartime Contracting in 2008 was the product of efforts by several of us in Congress dating back to 2005. At that time it became clear to us that we needed an entity that could provide sustained oversight of wartime contracts similar to the efforts of the Truman committee during the 1940s.

Waste, fraud and abuse in wartime contracts transcends politics. Oversight should not be the luxury of a divided government and languish when congressional majorities and a president share a common political party. We saw the disastrous result of that approach as we initiated and prosecuted action in Iraq.

I have high expectations for what the Commission on Wartime Contracting can accomplish, and we're here this morning to assess its progress to date. The commission's interim report highlights a number of issues related to management and accountability, logistics, security and reconstruction efforts in Iraq and Afghanistan.

One interesting case described in the report shows the costly construction of a duplicative dining facility at the cost of $30 million. That's certainly representative of such issues.

It's also important that the commission break new ground. There's no sense in creating an oversight entity that merely duplicates the work that is going on by inspectors general or the Government Accountability Office. We already received those reports, although we do expect that you'll review those and synthesize them and use them to inform your work.

I look forward to hearing what the commission is finding out that we don't already know about. In short, I expect that our witnesses this morning will ensure us that the investment in their activities was a worthwhile decision.

We in Congress, as the sponsors of the commission, need to hear about any challenges or hindrances the commission faces in conducting its work. For example, I'm concerned that the commission will not be able to fulfill its mandate without a semi-permanent presence in theater. And perhaps we'll hear a little bit about that today. I would note that, according to the report, the commission has only taken two trips to date to Iraq and Afghanistan. I'm also concerned that the current one-year mandate of the commission might allow responsible government officials and culpable contractors to sort of wait it out.

The commission's charge is too important to suffer defeat at the hands of obstruction or delay. And I don't want to see a lack of subpoena power deter the commission from going after recalcitrant parties if that is a problem. This subcommittee stands ready to assist the commission in regard to whatever is appropriate in conducting their official duties.

The dynamic in Iraq and Afghanistan is changing significantly, specifically as we're moving to draw down activities in Iraq, while at the same time increasing resources in Afghanistan. Within this framework, we must look at the mistakes of our hurried decision-making with respect to contracts in Iraq and avoid a repeat of those mistakes in Afghanistan.

As we've said before, lessons learned must be lessons followed. We'll need every bit of experience, judgment and resolve at our disposal to get this right. As such, it's imperative that the commission has every opportunity and capacity to perform its work without hindrance.

So I want to take this opportunity to thank the commissioners, the four that are here and the rest of your members, if you'd be good enough to exchange that with them, and the staff for undertaking this critical public service assignment. Over a month ago, when I appeared before the commission at its first hearing hosted by the House of Representatives, we noted that we'd be looking forward to this date when we'd switch seats and have the opportunity to hear from you on your progress.

Done right, your help will safeguard the lives of our civilian and military personnel in Iraq and Afghanistan. Done right, your work will help rebuild the trust of the United States taxpayers to put in their government to wisely spend their dollars under difficult circumstances.

Those twin goals -- benefiting our people in harm's way and rebuilding the trust of those here at home -- represent the bedrock intention behind the creation of the commission. So thank you for being here.

At this point I defer to Mr. Flake for his opening remarks.

REP. JEFF FLAKE (R-AZ): I thank the chairman.

I'm pleased to be here, pleased to hear the testimony, particularly former Congressman Shays. I know that he traveled to Iraq and Afghanistan a couple of times, right? (Laughs.) More than a few. And I just am pleased that we're doing more oversight here. Obviously there's never too much oversight that can be done, and in particular in this area.

The U.S. military base budget for the current fiscal year is more than $500 billion. Congress has appropriated roughly $830 billion for the wars in Afghanistan and Iraq. I can commiserate with the commission on how tough it has to be to get access to information that you need to do your work. I've been waiting for more than two months for competitive bidding information just on a small subset of 2008 defense contracts.

Details appear to be shrouded in mystery here. In fact, I look forward to the possibility of having someone who is knowledgeable about the Pentagon's process or contracting process appear under oath so we can get answers to some of these questions that we've wanted answers to for a long time on the competitive bidding process.

And to that end, I look forward to the witnesses' testimony, and thank the chairman again for holding this hearing.

REP. TIERNEY: Thank you, Mr. Flake.

So now the subcommittee will receive testimony from the witnesses on our first panel. And I'd first like to introduce you, if I may, Mr. Shays. Do you want to -- okay, let me introduce the panel, if I could. I understand you're going to deliver the remarks. Is that what you're signaling?

MR. SHAYS: (Off mike.)

REP. TIERNEY: I will. I definitely will. (Laughs.) It never goes away, does it, Chris? (Laughter.)

When Chris was in here, he used to sit here. He would always be buzzing over -- (inaudible). (Laughter.)

Mr. Michael J. Thibault serves as the commission's co-chair and was appointed by House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid.

From 2007 to 2008, Mr. Thibault worked as the director of Navigant Consulting, and prior to that he was the chief compliance officer at Unisys Federal Systems. Mr. Thibault also previously served as the deputy director of the Defense Contract Audit Agency, where he worked from 1973 to 2005. Mr. Thibault holds a B.A. from Southern Oregon University and a master's of art from Central Michigan University.

Thank you, sir.

The honorable Christopher H. Shays also serves as co-chair of the Commission on Wartime Contracting. He was appointed by House Minority Leader John Boehner. From 1987 to 2009, Mr. Shays served in the United States House of Representatives, where he represented the 4th district in Connecticut.

During his time in Congress, Mr. Shays served as ranking member of the Subcommittee on National Security and Foreign Affairs, as well as chairman of its predecessor committee. Mr. Shays holds a Bachelor of Arts from Principia College, as well as an MBA and an MPA from New York University.

Mr. Charles Tiefer serves as a member of the Commission on Wartime Contracting and was appointed by Senate Majority Leader Harry Reid. He's a professor at the University of Baltimore School of Law, where he specializes in government contracts and contract legislation.

From 1993 to 1994, Mr. Tiefer served as acting general counsel in the House of Representatives. From 1984 to 1995, he was the solicitor and deputy general counsel in the United States Senate. Mr. Tiefer holds a Bachelor of Arts from Columbia University and a J.D. from Harvard Law School.

Colonel Grant S. Green is a member of the Commission on Wartime Contracting and was appointed by President George W. Bush. He currently serves as the chairman of Global Marketing and Developmental Solutions, Inc. -- and Development Solutions, Inc. He has held a number of senior positions in the government, including undersecretary of State for Management, assistant secretary of Defense and executive secretary for the National Security Council.

Colonel Green is retired from the United States Army and previously served on the committee as an acting co-chair. He holds a Bachelor of Arts from the University of Arkansas and an M.S. from George Washington University.

So thank you all for making yourselves available to testify here today and for the work that you're doing on the commission, as well as your substantial expertise.

And now it's the policy of this subcommittee to swear in the witnesses, so if you'd kindly stand and raise your right hands. If there are any persons that are going to be sharing with us today, you might ask them to stand as well.

Do you solemnly swear to tell the truth, the whole truth, and nothing but the truth?

ALL: (Off mike.)

REP. TIERNEY: Thank you.

The record will please reflect that all of the witnesses answered in the affirmative.

As all of you know already, your written testimony will be placed on the record and accepted by the committee. At this time we would like to give you the opportunity to make remarks, opening remarks, for a five-minute period. It will be followed by questions and answers.

So Mr. Thibault, if you'd care to start.

MR. THIBAULT: Thank you. Thank you, Mr. Chairman, ranking member, and members of the subcommittee. Thank you for inviting us to speak to you today about our interim report. We will keep our opening statements brief to allow maximum time for discussions and questions.

The commission has four other members. They are Clark Ervin, Linda Gustitus, Robert Henke, Dov Zakheim.

The precipitating event for Chairman Tierney's inviting us here today is the official release of the interim report to Congress entitled "At What Cost? Contingency Contracting in Iraq and Afghanistan."

Our report identifies many longstanding issues for awarding, managing and auditing the vital contracts that support logistics, security and reconstruction missions. These include shortages in the federal acquisition workforce, poorly defined and executed contracts, inadequate planning, weak provisions for accountability, unnecessary work and costly rework, problems that are undermining attainment of national objectives and wasting billions of taxpayer dollars. We will describe some of our preliminary observations.

As Congress intended, the interim report is preliminary and tentative. "At What Cost?" provides an interim statement on key focus areas and results, which are listed in the report.

Since 2001, Congress has appropriated, as was stated here, over $830 billion to fund U.S. operations in Iraq and Afghanistan. Over that period, America's reliance on contractors has grown to unprecedented proportions to support logistics security and reconstruction efforts. More than 240,000 contractor employees, about 80 percent of which are foreign nationals, now work in Iraq and Afghanistan supporting Department of Defense. Additional contractor employees support Department of State and U.S. Agency for International Development.

These 240,000-plus contractor employees actually outnumber U.S. military personnel in the two theaters. They provide critical support. And, like our military personnel, many have paid a personal price. As of May 27th, 2009, 4,973 men and women of America's military and at least 13 civilian employees of the Department of Defense have died in Iraq and Afghanistan. It is less well-known that more than 1,360 contractor employees have also died.

Criticisms of the contingency contracting system and suggestions for reform in no way diminish the sacrifice of the military and those contractors that gave their lives.

In discussing the major subject areas of "At What Cost?" we'll specifically address several issues of immediate concern. Such issues matter now, right now. They are so important that the commission is urging corrective action well ahead of our final report.

First, management and accountability. The report's first chapter on management and accountability addresses a number of cost-cutting themes. The linchpin of contingency contracting is human capital. Acquisition, especially in contingencies, depends on its government workforce.

The contracting officers' representatives, or what's referred to as CORs, serve a critical role. They are the individuals on the front line of contractor performance. They're in charge of making sure that the contractor does what it's supposed to do. They monitor, for instance, whether a construction contractor worked soundly or defectively.

"At What Cost?" identifies the process for designating and training corps as an issue of immediate concern. There are too few corps. They are inadequately trained. War-fighters often learn of their added duty of contractor supervision only after arriving in theater. On one of our field trips we were briefed by the 10th Mountain Division technical oversight, and they arrived in January to fight a war, and at the same time they were named to this corollary duty and simply were not trained at all in support of that.

As to the subject of financial accountability, the commission has found a large number of ineffective contractor business systems, including management of subcontractors with a large number of unresolved audit findings. The commission analyzed $43 billion in awards to 15 of the largest contractors in Iraq and Afghanistan.

Fifty percent of the contractor billing system -- the basis for requesting payment from the work -- for billing the government, and 42 percent of estimating systems used in the pre-award for contract proposals, contained significant deficiencies.

Since the interim report was prepared for printing a month ago, DCAA, Defense Contract Audit Agency, has further identified three more business systems at DynCorp International as inadequate -- to include the labor and billing systems that are absolutely essential to document and review costs.

The commission's May, 2009 hearing heard that, through fiscal year 2008, the DCAA has taken exception to over $13 billion in questioned and supported costs. In short, the environment in Iraq and Afghanistan has been and continues to be susceptible to waste, fraud and abuse.

Additionally, there's an immediate need for greater accountability in the use of subcontractors. Subcontractors account for about 70 percent of contract work, but the government has very little visibility into their operations. The commission has surveyed all the reports by the inspectors general and other oversight entities. It's interesting that there are 11 such organizations that have issued reports since the outset of those two wars.

We've looked at a total of 537, and cross-referenced those reports, and derived 1,287 different recommendations over that period. Many of these recommendations have not been fully implemented, and a major focus of our near-term activity will be to try to understand why they haven't been implemented; and those organizations that said they would take action, why they have not taken action.

The U.S. government uses as its key logistic program in-theatre what's referred to as "LOGCAP," the Army Logistics Civil Augmentation Program. This is a multi-billion-dollar contract -- over $30 billion to date, that covers a myriad of services, from vehicle maintenance to dining hall operation.

The third iteration of this contract, LOGCAP III, was awarded to KBR as a sole vendor. The LOGCAP IV contract, awarded in 2008, requires task-order competition -- competition among three vendors, KBR, Fluor and DynCorp International. But, at the present, LOGCAP III still predominates and dwarfs, in terms of contract value.

DCAA director, April Stephenson, stated at the commission's May, 2009 hearing, "I don't think we're aware of another program contract or contractor that has had the significant number of suspensions or referrals." In its recent response to that DCAA testimony, the LOGCAP III contractor, KBR, implied that most referrals for possible fraud called suspected irregular conduct by DCAA have been resolved by contracting officers.

However, DCAA has advised us that, as of our May 4th hearing date, none of its referrals for possible fraud had been resolved. A total of 32 were still open, and that resolution of suspected irregular conduct referrals would be performed by Department of Defense Criminal Investigative Service, or by the Department of Justice, not by contracting officers.

Both the Iraq draw-down and the Afghanistan build-up raise serious questions about logistics contracting issues. For example, the commission has learned that American bases, during this draw-down, hold more than 600,000 line items of property, trucks, generators, spare parts, clothing, tools and much more. Because of the poor documentation in the early days of Iraq operations and the shortage of property management officers, base commanders often do not know what property is on the base.

And, as a point of reference, (for) those 600,000 line items, there are three certified and trained property managers that have that responsibility; and another 12, that are part of the property management process, that have not been fully trained and vetted to look at 600,000 line items as we draw-down in Iraq. Billions of dollars must be moved elsewhere in the region, returned for state-side use, handed over to the government of Iraq, sold or scrapped, but the lack of information, resources and planning have set the stage for massive confusion and loss.

As an issue of immediate concern, the draw-down of U.S. forces in Iraq risks incurring enormous waste. The commission identified more than $2 billion in new projects in Iraq that are now being analyzed by us. A number of the projects in the pipeline may be unnecessary.

For example, during an April, 2009 visit to Camp Delta in Iraq, the commission identified a $30 million construction contract to build a new dining facility -- being built next, near a recently expanded and upgraded facility. The new facility is due to be completed in December, 2009, somewhere between a year and two years where U.S. troops are required to be out of Iraq. Prompt review of such projects in the pipeline could save taxpayers many billions of dollars in unnecessary spending.

Chapter three of ("At What Cost" ?) addresses the subject of private security contractors, one of the major subjects set forth specifically in the commission's statutory mandate. The report traces the significant events that shape the subject, from the beginning of outsourcing of security in the 1980s and 1990s, to the incident of the killing of Iraqi citizens by Blackwater employees in Nisoor Square.

After that incident, the secretaries of Defense and State, as well as Congress -- through their continuous oversight, implemented significant reforms. I think it's important to note that the reforms appear to have worked in this case. The State Department reported 11 deadly-force "discharge of weapons" incidents in the month of July, 2007 alone. There were another nine deadly-force incidents in the month of September of 2007.

For the full year ending -- due to the increased controls, visibility over security -- for the full year ending in May, 2009 there have been only two for that year, incidents of use of force. So, with proper attention, improvements can be made. And our point is that there's an awful lot that's not getting proper attention.

The commission identified a number of specific concerns related to private security contractors as a result of our visit to Afghanistan. In Afghanistan, the Armed Contractor Oversight Division, or what's referred to "ACOD," is the office that oversees private security contractors, licenses them, vets them, makes sure they're complaint with contract terms and conditions, and such. And it's a very large role.

At the present there is such a large role for a contractor -- a security contractor to support that, that raises issues about conflicts of interest. The post of "deputy director" -- the number two person, the person that briefed us when we were there, is occupied by a senior Aegis private security contractor official. The "director" position -- an 06 military-level equivalent to a colonel, while it's been approved, to date it has not been filled, identified and authorized.

And so even in contract terms, for example, sir, if there's a "use of force" incident -- and there's mandatory coordination with the government of Afghanistan, it's identified that the contractor, Aegis, will do that, representative for the United States government. That's the current process.

The commission's trip to Afghanistan in 2009 underlined already- acute contracting problems in reconstruction, another area where we're going to be focused intensely during the next year. Serious shortages of U.S. government civilians are all too likely to trigger heavy reliance on contractors, for example, the vital Provincial Reconstruction Teams.

MR. SHAYS: Thank you, Mr. Chairman --

REP. TIERNEY: I can't image that -- so, you must have one minute and 30 seconds for Mr. Tiefer and Mr. Green. (Laughs.)

Go ahead -- (inaudible) --

MR. THIBAULT: Actually, it's just the two of us, sir.

REP. TIERNEY: Oh, is it really?

MR. THIBAULT: Yes, sir. We have joint statements, and we split it up.

REP. TIERNEY: All right. -- (inaudible) --

MR. THIBAULT: They're our experts, that are going to answer your questions.

REP. TIERNEY: You're going to make them answer the tough questions. You're going to -- (inaudible) --

MR. SHAYS: They're here for the tough questions.

REP. TIERNEY: Just like being back in the service, right?

Mr. Shays, go ahead.

MR. SHAYS: Just continuing on chapter five, entitled on the agenda, provides a summary of activities the commission has in progress, so it's slated for study in the near future.

There are over 30 bullet items, including a number of complex and far-reaching studies. The commission encourages the examination of the full list on pages 92 to 94. And I'd like to just highlight -- we'd like to just highlight a few:

Assess methods of remedying understaffing of contract oversight and audit functions, and assess the effectiveness of current efforts to estimate the optimum numbers and types of acquisition personnel;

Assess what shortcomings in government knowledge and information systems undermine the accomplishment of the Iraq draw-down and the build-up in Afghanistan;

Consider what processes and controls should be in place to manage decisions and assess risks with outsourcing logistic and security support services that may be considered inherently governmental functions;

Consider how best to improve the accountability in contingency contractor performance, including affirmative consideration of performance (and ?) source selection, award fee determinations and contractor performance evaluation.

That was under management.

Under Logistics:

Assess potential alternatives to current logistics contractor support, including the possible establishment of an "installations management command" to manage facilities once the contingency operation stabilizes;

Identify reasons for the slow transition from LOGCAP III to IV;

Under security, examine the sufficiency of current recruitment processes, background checks and training to ensure the employment of possible PSC personnel, the private security personnel;

Examine the potential use of civilian employees of the departments of Defense and State in lieu of contract personnel in security roles, including the use of temporary appointments and reserve components.

Under reconstruction, evaluate the effectiveness of capacity building reconstruction projects and determine the extent to which stakeholder collaboration is an integral part of acquisition planning, contract performance and project sustainability; assess the feasibility of establishing an interdepartmental entity for planning the coordination reconstruction projects and contingency operations.

And let me just end by talking about a few activities. A full description of the commission's milestones is in the report's appendix B. In brief, the commission members were named by July 2008. The commission selected a professional administration approaching 40 by January 2009.

During September and October of 2008, commissioners received briefings from more than 25 key organizations and programs. They also met with leading scholars and writers on contracting issues and with contractors.

On February 2nd, 2009, the commission had its first public hearing. The hearing featured testimony from the inspector general for Iraq Reconstruction -- SIGIR -- including SIGIR's two-year book- length study released the day -- that day, "Hard Lessons: The Iraq Reconstruction Experience.

On May 4th, 2009, the commission's second hearing focused on the multi-billion dollar LOGCAP contract for logistic support services.

Commissioners and staff have made two trips to Iraq and Afghanistan to inspect work sites, review documents, conduct interviews and receive briefings from officials on the ground. The first trip took place in early December '08 with an itinerary that included agencies briefings in Baghdad and Kabul, as well as reviews of construction of the Baghdad Police College and task orders for reconstruction -- excuse me -- for construction and repair of the Bagram Airbase in Afghanistan.

A 10-day investigative study in early April 2009 comprised a 15- person group of commissioners and staff that broke into three teams. One team worked in Iraq, the other two in Afghanistan. They conducted more than 125 meetings with employees of the Departments of Defense and State, USAID, the military and employees of contractors working on a range of projects.

The commission continues to develop a task for research and investigation to extend and deepen its knowledge and to cope with new or changing issues. Our plans include many more trips to theaters of operation, additional hearings involving government agencies, nongovernmental organizations, academics and members of the contracting community and continued liaison with Congress.

Before we conclude, we'd like to say a few words about the commission staff. Virtually all of the commission's staff are federal employees. Some are detailed from agencies and services, including the Army, the Air Force, the Departments of State and Defense, the U.S. Agency for International Development, the Defense Contract Management Agency, the Defense Contract Audit Agency and the U.S. Army Corps of Engineers.

Some have served one or more tours in duty in theater, including working for the special inspector general for Iraq reconstruction; or as senior contracting officers supporting the joint contracting command in Afghanistan. Others have served on congressional staff; worked in GAO, State and Defense; and held important positions in the commercial industries, which are the focus of our study. They bring hundreds of years of combined experience and education in many fields to bear on our mission and have performed valuable work for their country.

In conclusion, the commission and staff of the Commission on Wartime Contracting in Iraq and Afghanistan, take very seriously the tasks that Congress has assigned to us. We appreciate how important these tasks are to improve support for our warfighters and our diplomatic employees.

We sincerely thank you for the opportunity to describe our work to you today and pledge our best efforts to provide information -- recommendations that will help you make good decisions on contingency operations.

Mr. Chairman, we thank you for your support of this commission, but also as well, your critical review. We know that this committee -- as will the Senate -- be looking at everything we do to help us do a better job and to make sure we do a good job.

REP. TIERNEY: Thank you.

I thank you both of you and the other witnesses as well.

You're right, Mr. Shays. I mean, this is all about working together. It's about criticism. Obviously, you've been at this only a few months and you've developed your staff, got your office space, tried to get your plan together and I think that you've done a remarkable job in many respects and appreciate the interim report.

I have a number of questions. I'm going to start out with some procedural things. As we go around a couple of rounds here, we'll get to some of the other issues on that.

But one comment Mr. Thibault made was that there was a significant number of reports and recommendations coming from those reports -- many of which have not been implemented. Now, that should disturb us all.

And you also said later on, however, that there were a lot of issues outstanding that weren't getting enough attention. And you indicated that in the context of oversight was working with some respects with the security incidents being significantly down.

So in the context of your plan, are you planning on reporting to Congress at some point how we might best utilize those investigative sources that are out there -- the Government Accountability Office, the inspectors general for the various departments, your work -- how that ought to best be coordinated so that all of the issues are covered?

And then I know you already said on the second part of that -- you do intend to investigate why some of these suggestions are not being implemented -- the recommendations. That would be important for us to know whether it's an executive inaction, legislative inaction -- that we're just not have enough hearing, tuned in enough on that -- or whether it's all departmental and they just (dropped ?) the process there.

MR. THIBAULT: Yes, sir.

You know, we intend to take those 1,200-plus recommendations out of those 537 reports. And we intend to trace each one to find out the status.

We're aware that there are significant issues now on key recommendations. There is a direct tie-in to correcting problems that we also have observed and others have reported in the past.

It's interesting to note -- one thing I might share, and it's something that we're going to talk about and try to evaluate -- when we are out in the field at forward bases and Camp Victory in Afghanistan and, you know, Joint Task Force 101, universally they were supportive. But universally, they said if there's anything this commission can do, relative to the fact that we have so many -- I've cited 11 organizations -- so that it can be coordinated better, because it seems like we're collecting information and then turning around and collecting the same information two months later -- it's just two months updated -- for a different organization.

Each of these oversight organizations has a vital job to do. But contingency environment is unique from an oversight because it's so distance oriented and you have to place some people on site and people going back and forth. But that's a worthy area to look at.

REP. TIERNEY: Okay. And I'll ask some questions later on about we go about doing that. And the personnel shortages -- I think some of the capacity issues are serious.

But does the commission feel that it has enough in-country presence over in the theaters that you're investigating?

MR. SHAYS: The commission is debating right now whether we should have permanent representation in Afghanistan and Iraq. And then obviously, our commissioners and our staff will be going repeatedly. And so that's something that we'll be able to get back to you very quickly on.

But we know that we need to be there in both countries.

REP. TIERNEY: Thank you.

Mr. Flake.

REP. JEFF FLAKE (R-AZ): Thank you, Mr. Chairman.

I have some of the same concerns. If you have so many recommendations --

REP. TIERNEY: Is your mike on?

REP. FLAKE: Sorry. My voice is a little hoarse.

You've had 1,200 recommendations, you said, that have been put forward. Is that from your group?

MR. THIBAULT: No, sir. We went through all 537. We sorted them. We cross-referenced them, because we were tasked to build upon that work, not to recreate that work.

REP. FLAKE: Right -- so some of these 1,200 come from the other investigative bodies that have put forward recommendations.

MR. THIBAULT: All of the 1,200 that I referenced, sir, come from those recommendations.

REP. FLAKE: And what remedy is there if these aren't implemented? What are we to do or what are other bodies to do if they aren't implemented?

MR. THIBAULT: I think that point is spot on in terms of the emphasis and it fits this subject of accountability.

You know, if someone says they're going to correct a major problem and they're going to correct it within a certain time period and they don't, one of the things we run into, for example, because of the turnover of staff (and the aging ?) -- well, I didn't really understand that. You know, I've just picked up that responsibility.

But there's an absence of, first of all, recording what is being done with that. Some organizations -- some of the IG organizations do a good follow up. But the actions just aren't getting accomplished to the extent that organizations -- government organizations have agreed to do.

REP. FLAKE: We've -- in talking with a lot of the agencies on some other issues, we are often told we have a process by which we can't offer sole-source contracts. We have to bid every contract out. Yet, you hear mentioned KBR here had a sole-source contract for certain activities there.

Could that contract have been bid out? Isn't there a process that the Department of Defense has to go through if they don't bid a contract out? There's the J&A that has to be issued or something. Why are they able to still have these contracts sole source?

Mr. Tiefer, do you want to take that one?

MR. TIEFER: Mr. Flake, that's an excellent question.

It has been some years that the Department of Defense has tried to have a later contract in which there'd be three -- later version, later iteration of LOGCAP in which there would be three competitors. And they -- I think the talk about that goes back at least two years.

They are now slowly phasing in that successor arrangement that would have competition among three companies. And that's an activity we're going to be following in theater, but it's still not been activated in Iraq. That is, each task order under the LOGCAP contract still has only one vendor, KBR. And there has been some concern voiced that that phasing in of a competitive arrangement is going too slowly.

REP. FLAKE: Well, I can tell you -- I know your jurisdiction covers just wartime, you know, in theater, but it seems that that problem goes beyond. As I mentioned, I've been trying for months to get access to some of the J&As to justify why some of these contracts aren't bid out, and I haven't been able to get them yet.

So I think -- are some of these problems that you see in theater, do you think that they go beyond that, or it just because of the circumstances inherent in wartime?

MR. GREEN: I'm not at all surprised that you're seeing similar problems back in the United States and in the domestic context. There are not special exceptions in the Competition Contracting Act for wartime sole-sourcing, and the same exceptions that have been used in the past and used to date, in Iraq have been used in the domestic United States. So you would run into the same problems.

REP. FLAKE: Are you, as part of your activities, asking for these J&As to see what justification was given for sole-source?

MR. GREEN: We do look not just at the justification and authority, the J&A, for these contracts, but at the subsequent documentation, and we have been going through, following up. The J&A is often very superficial, just, well, it's the exception for exigent circumstances, or it's the exception for this is the only available contractor. And we have followed those up to see whether it really has to be done without competition.

MR. THIBAULT: I might, sir, add a point that this was a very unique contract, in the sense -- and you could maybe think about whether it was dysfunctional in terms of the way it was established, but there was competition, but it's a 10-year contract, cost type, dollar for dollar, 10-year contract. Once a year it can be rolled over.

So you're talking about a contract in action with a sole supplier that dates back to the 2003, I believe, timeframe, and it's still in place because 10 years haven't passed. So there is no competition anymore, and that's why we're encouraged by the action to go to LOGCAP 4 where there is at least three vendors that will bid on every task order who are discouraged by the pace at which that's being implemented.

There are tremendous opportunities. We saw an example where the same type of work that was bid in Kuwait using LOGCAP 3 had priced out at $120 million. It was $55 million less after competition came in.

So competition is a good thing in the environment and there's nothing unique about a wartime zone where you can't usually employ competition.

REP. FLAKE: Thank you.

MR. TIEFER: If I could, Mr. Flake -- excuse me, Grant.

MR. GREEN: Go ahead.

MR. TIEFER: If I might add to what Commissioner Thibault said earlier and some of your concerns about the 1,200 recommendations that have come from other oversight organizations, to which we will certainly add a number of our own observations and recommendations.

Where we have a challenge, I believe, and that is when we go away, have we come up with procedures to permit -- which will encourage follow up? All of you have seen dozens and dozens and dozens of studies, as I have, with some very valid recommendations that collect dust.

So one of the challenges we have, and a challenge that you may have, is how do we force some of these actionable recommendations forward as we, you know, turn out the lights? And that's the problem that we face, or a challenge that we face, which is not much different than every other commission and oversight organizations faces.

REP. TIERNEY: Well, I think you've hit right on something that the three of us now -- if I look at the panel collectively, you've honed right in on this. So we're going to really rely on the commission to give us some direction at least for that as to what you think ought to be done. Whose responsibility would it be to follow up? Would it be the executive, would it be the department, would it be Congress or whatever?

And then it's going to be incumbent on us to work with you to try to put that in legislation, if necessary. And if it's not legislation, then set up some series of hearings where we put the spotlight on whoever is responsible and keep moving on that to get it done, because it is ridiculous.

MR. TIEFER: Precisely.

REP. TIERNEY: You keep having all of these hearings go out there and stuff. Thank you.

Mr. Foster, you're recognized for five minutes.

REPRESENTATIVE BILL FOSTER (D-IL): I was interested in whether you think that we'll be in a position to make some sort of retrospective analysis of the sort of make-versus-buy decision, the decision to contract stuff out, the decision to sole-source or multi- source the contracts, whether that really -- you know, at the end of this, will people step back and then set up the general principles that will tell us whether it's a good idea to contract out a class of work or not?

MR. SHAYS: I'd love to just make a comment that when we talk about LOGCAP 3, that was a contract that was given to KBR before we went into Iraq. No one anticipated that we would be spending incredible -- over $30 billion to one contractor.

When we went to LOGCAP 4, which we bid out -- three contractors have it, and then they will bid internally among the three, none of them getting more than, I believe, $5 billion a year. So we're talking over 10 years, 150 billion (dollars) potentially.

So we have introduced -- the government has introduced a form of competition there. But when we went into Iraq, there was one person who had, in a sense -- one company that had, in a sense, won the contract.

In terms of the whole -- the number of recommendations that have been made and the 500 reports and so on, our task is to categorize every one of them to be able to come back and tell you which ones have been implemented, which ones haven't, why we think they've been implemented, why they haven't, and our recommendations of what could and should be done.

So when you see us looking at those past reports, it's not to rework them; it's just to know what's done and to make sure you know what's been done and hasn't been done.

MR. THIBAULT: And, sir, to your point about are we going to look at the contracting mechanisms, there's an absolute obligation to look at it, and the type of contracts, whether competition has been used and make sense.

I'll make a couple of observations in fairness to the record. There are significant efforts to use competition in certain parts of contracting by the military and by State, but one of the areas we highlighted that we're really going to focus on in terms of the type of contracts is subcontracting.

For example, on the LOGCAP program, it's cost-type contract. It's dollar for dollar. All the subcontracts are fixed price. So the prime gets dollar for dollar on the fixed price and all of their labor, but it's fixed price. So it kind of begs the question, how good of a job is being done with that? There are foreign firms that are involved with that. What kind of data analysis and records are going to be evaluated?

That's the frustration you see in the report, and that's the obligation of the prime contractor, but we're going to be looking at the prime contractor's system to be sure that they're fulfilling their contractual requirements.

REP. FOSTER: Will that sort of analysis also look at the in- house versus contractor approach? Once upon a time there were mess sergeants, right, and so the question is whether ultimately that would actually have been a better deal for the taxpayer to go the traditional route, turn up the soldiers' salaries if necessary.

And, similarly, are there rules of thumb evolving or maybe already existing in terms of the amount of contracting oversight per dollar spent? You know, that as a rule of thumb do you want one person on the ground overseeing every $20 million of money spent, or something like that?

MR. THIBAULT: Well, what I saw in Afghanistan personally is the Defense Contract Management Agency went through and identified several thousands of tasks that needed to be done and drew it down to 537 individuals, theater-wide, that needed to go out and look at that work being done.

The unfortunate part was -- the number was either 160-something or 180-something, but it was only 36 percent of those positions were filled. So about two out of three positions, there's nobody looking at the contractor. So they'd done a good analysis; they just hadn't done the work.

REP. FOSTER: Yeah. So what's the nature of the training that's missing?

MR. THIBAULT: That's also a very good question because Defense Acquisition University has developed a couple of courses. But I would tell you, my example of 10th Mountain Division, when we brought these individuals in, these military -- these great Americans and said, so, what about training? They'd had none.

So there's a course at Fort Belvoir. And then they told them, they said, well, we've got this online, eight-hour, 16-hour course, and one of them looked at me and said, right. And he said, because of connectivity problems I spent 30 days trying to take this eight-hour course off and on, off and on, because I kept getting cut off. And I finally said, the heck with it; I can't finish this course so I'm going to do the best job I can.

They're out there trying to do the best job they can but they're not equipped with the training. So there's training that's been developed, but if they don't get it before they go --

MR. TIEFER: Another point is, as Chairman Thibault mentioned, in addition to the shortage of oversight personnel, whether it's 160 or 180, many of them are miscast. And we referenced the few examples in the report where you've got a combat medic overseeing the security operations at a forward-operating base.

We've got other instances where one contract officer representative is overseeing 15 different contracts in addition to performing their principal duties, which is unrelated to any of the contracts that person is overseeing.

So there's a shortage, there's a training problem, and there is a casting problem of applying the right kind of skills to the contract oversight. And in many cases we don't have those skills within the Army.

MR. SHAYS: And if I could just add one other quick point. A number of these, say, the contracting officer representatives, these CORs, they may come in and leave and the contractor is still there. So, you know, they don't have the institutional knowledge and they don't stay long enough. So that's another part of the problem.

REP. FOSTER: Thank you.

REP. TIERNEY: Thank you, Mr. Foster. Mr. Duncan, you're recognized for five minutes.

REPREENTATIVE JOHN DUNCAN (R-TN): Well, thank you very much, Mr. Chairman, and let me first of all say that I think the work you're doing is very, very important, and I hope that it doesn't just gather dust. And I'm very pleased that our former colleague, Congressman Shays, is on the panel because I always thought that Chairman Shays was one of the finest members that this committee ever had.

REP. TIERNEY: John, can you pull that microphone a little closer, please? Thank you.

REP. DUNCAN: I have been tremendously concerned about the horrendous waste that's been going on in the Defense Department and especially so after a year, year and a half ago, when the GAO came out with a report that said that we had $295 billion in cost overruns in just our 72 largest weapons systems.

And it seems to me that anybody who considers himself or herself to be fiscally conservative should have been extremely upset or horrified by that, yet it didn't seem that that many people were.

And it looks as though both parties are trying to prove how patriotic they are, or are concerned that somebody might feel that they're not patriotic because they don't just give the Defense Department every penny that they want and then some. And now we're ramping up in Afghanistan and spending unbelievable amounts of money there.

And then I read in your testimony, Mr. Thibault, that -- you're talking about massive confusion and loss, enormous waste. You say billions of dollars in wasteful spending has occurred and may still be occurring.

And it looks to me like, you know, it really would be unpatriotic if we didn't question these things and do everything possible to stop all this waste, yet very few people are willing to vote against anything the Defense Department wants, so apparently nothing is being done. And I sometimes wonder if there are any fiscal conservatives at the Pentagon.

According to the Congressional Research Service, we're now spending -- when we add in the regular budget, the supplemental bills, and we're getting ready to vote on another supplemental bill here within either this week or a few days from now, and you add in the emergency appropriations and then all the money that they throw into the omnibus -- according the CRS we're spending more on defense than all the other nations in the world combined.

And it seems to me that, you know, a lot of it is generated because the defense contractors hire all the retired admirals and generals and then they -- they call it the revolving door at the Pentagon. But somebody is going to have to -- I don't think that we can just keep on wasting and blowing money in the way that we're doing.

The only question I have -- you say -- Mr. Thibault, at one point in your testimony you say that there are a number of new projects in the pipeline, and you mention this $30 million dining facility. How many -- rough guess -- how many other new projects are going on that we're talking about?

MR. THIBAULT: I can't answer that question because that's our immediate action on our next -- we're doing the analysis. We know it's $2 billion. What we want to do is go out and touch those projects to look at them to see if they make sense. That's where you need people in theater.

It just happened that this was shared with us when we happened to visit that base. And, you know, there are a couple hundred bases in Iraq; we visited three or four of them. And there is obviously a need to, one, do the analysis, and then, two, go out and look at the high- dollar items and ask those questions: Does this make sense with the drawdown of Iraq?

REP. DUNCAN: So, do you mean by saying that that you've only visited three or four and there are hundreds of bases, so is the 2 billion (dollars) just a tip-of-the-iceberg estimate, or is that --

MR. THIBAULT: No, that's what's in the pipeline that's approved construction projects. And it's kind of interesting, this project, this example of the dining facility, right next to it -- and they needed to feed 4,000 individuals. They upgraded it because they had a lot of problems with it, the existing one. They spent $3.6 million.

Well, that had just occurred, and what happened is the paperwork that showed all the problems that led to this upgrading the cafeteria and being sure it could serve the proper number never made it over into the planning document for the new construction. So they still thought they had this dilapidated dining facility.

And the only thing I can think of, and it's the importance of the chairman, you have to go out and look at it. You have to spend the time in the country, because if we hadn't, none of that would have come forward. You can't just do an analysis of paperwork because it would have said, dilapidated facility, need to build it. The paperwork would say, makes sense. Well, it had just been renovated, so we're going to have two great dining facilities.

REP. DUNCAN: Well, and then, it was also done at a time before the agreement between Iraq and the U.S. when we would depart. So as it turns out, we'll have this new wonderful dining facility for about two years.

REP. TIERNEY: Is it the same contractor doing both the repair work and the new facility?

MR. THIBAULT: Yes, sir, in this case.

REP. TIERNEY: And so they never spoke up, of course, and said, what are we doing here?

Mr. Lynch?

REPRESENTATIVE STEPHEN LYNCH (D-MA): Thank you, Mr. Chairman.

Mr. Shays, I want to welcome you back before the committee.

MR. SHAYS: Thank you.

REP. LYNCH: Great to see you. And I thank you all for your great work. I haven't been over to Iraq as many times as Mr. Shays has, but I'm up around a dozen now.

One of my jobs before I came to Congress, I spent a lot of time on construction sites. I have a construction engineering degree, and I am surprised that we get as much work done in Iraq and Afghanistan, given the contract arrangements that we have.

I have seen just horror shows. I visit a lot of construction sites in Iraq and Afghanistan and I frankly think that Stuart Bowen, the former Special Inspector General for Iraq Reconstruction, did a fantastic job, but from my visits to Afghanistan I think that the situation there and the inspector general in Afghanistan is far less able.

He's newer, his team is newer, but far less able to police the contracting situation there. So I am very apprehensive about our ability to lose money in Afghanistan and to waste it just through incompetence as well as through fraud.

One of the earliest hearings we had in here back in 2003, 2004 on Iraq, I asked the director for the DCAA, the Defense Contracting Audit Agency, I said, how many contractors -- excuse me, how many auditors do you have in Iraq? And he said, we don't have any. And at this point we were spending billions of dollars there -- billions.

And I said, well, how does that work then? And he said, well, we are auditing our work and our contracts in Iraq from Alexandria, Virginia, which explained why -- you know, it's reflected in your own report but explains why we're having such a problem here.

And now I read, again from the committee's memo, that we've got four folks -- four individuals in Afghanistan, in the whole country. We're spending billions of dollars there. We've got two at Bagram Air Force Base and we've got two down in Kandahar, and that is it. And if we don't get a handle on that with boots on the ground, people competent enough to review these contracts, this is criminal. It's criminal.

You know, there's nobody who would operate like this on a -- in a private basis. If we were spending, you know, private corporate dollars, this wouldn't be happening. I think it's happening only because we're spending taxpayer dollars and people feel that it doesn't have to be audited to that great degree. We're terribly sloppy in Iraq and Afghanistan. We've got to tighten up our act.

What do you see is the greatest need in terms of getting some accountability on the ground? We can't continue to operate this way in terms of the contracts going out without tight enough accountability standards or recognizable standards.

You know, I go on to jobs in Iraq where, you know, just from walking on to the job site you can see substandard materials. I try to talk to the workers there. I had an Iraqi interpreter with me. It turns out they're all from India.

Now, you've got 60 percent unemployment in Iraq; you know, why the heck are we bringing in foreign workers?

SEN. FEINGOLD: I understand the United Nations, a draft resolution has been agreed to that would expand and toughen multilateral sanctions toward North Korea. And I recognize you're probably able to share very little of that because it's an ongoing discussion. But I'm interested to hear what specific mechanisms existing or otherwise will be used to enforce both new and existing sanctions. And I'm raising this concern because the U.N. Security Council Resolution 1718, which passed in 2006, appeared to be a strong multilateral tool and that it banned atomic explosions and long range missile launches by North Korea, and imposed limited financial sanctions as well and a partial trade and arms embargo Pyongyang.

However, as you well know, the measures have been widely ignored and unenforced, and thereby basically rendering the multilateral effort rather toothless. Ambassador, what steps are we taking to ensure that this new resolution, if it does pass, does not have essentially the same fate?

MR. BOSWORTH: One of the things that would be provided by this new resolution, assuming it is adopted, is that the DPRK Sanctions Committee will have an enhanced mandate to focus on compliance, investigations and outreach and also a panel of experts would be established as under other sanction regimes to support the committee's effort to monitor and improve implementation. And I think it is obvious that for the U.S., for our government, a position of urging all U.N. members to comply fully with this new resolution will be a very important part of our response to what North Korea is doing.

Sanctions resolutions are useful and important, largely to the extent to which they are implemented. And I very much believe that we will push to ensure that other countries implement these resolutions as fully as we do.

SEN. FEINGOLD: Thank you, Ambassador.

Thank you, Mr. Chairman.

SEN. KERRY: Thank you, Senator Feingold.

Senator Wicker.

SEN. ROGER WICKER (R-MS): Thank you, Mr. Chairman.

Thank you, Mr. Ambassador for being here. You certainly have your work cut out for you.

In your testimony you mentioned your findings on your recent trip include that China shares a deep concern about North Korea's recent actions and a strong commitment to achieve denuclearization. There is a widely held view, Mr. Ambassador, that if China really had the resolve to squeeze their North Korean neighbor on the issue of denuclearization they could accomplish this in a way that really no other country on the globe can do.

Did you find their concern to be deeper and their commitment to be stronger than before the missile test and the nuclear test? And would you speak to this widely held view that I mentioned, that China really could accomplish this if they were of a mind to?

MR. BOSWORTH: I think first it's very fair to say that we found China very concerned, acutely concerned about what North Korea has done and is doing both in the nuclear field and in the area of missile technology. They recognize perhaps more than anyone else that these moves by North Korea can have a very deleterious effect on security arrangements throughout Northeast Asia and specifically on the Korean Peninsula. And they realize that this is not in their interest.

I can't speak for the government of China, obviously -- only to say that our impression as we came away from these very intensive consultations in Beijing is that North Korea sees the current situation and the evolution of that situation in very much the same way that we do.

Now as to what China is or is not prepared to do and what its potential for action might be, I'm very reluctant to comment in a public forum about that. I think that's largely up to China, and I would say we'll have to judge China on the basis of what it does over the next several months.

But China is also a country which has grave concerns about instability in the region. And I think we'll continue to work with them very closely, and to try to ensure that we continue as we have to date to operate very much on a common front, and indeed with our other partners in the region.

SEN. WICKER: Apart from multilateral approaches to China, can you tell us specifically, are you able to tell us specifically at this open hearing what bilateral actions China has already taken before these tests to resolve this situation with regard to the nuclear weapons, nuclearization?

MR. BOSWORTH: I really am reluctant to get into that because it has to do with what China's doing as a sovereign country in its own interest. But I would say that we are satisfied that China is moving in all of its connections within the region and specifically in its connections with North Korea to give focus and reality to this effort that this isn't a subject on which there are bilateral communications. But beyond saying that in a general sense, I really don't want to become too specific.

SEN. WICKER: Okay. Do you reject the assertion by some that in some respects North Korea serves as a counter-balance for China and that it's not all negative with regard to China?

MR. BOSWORTH: Again, I can only comment on the basis of what we learn when we talk to the Chinese. And in that sense I think I am convinced that they are acutely concerned about what North Korea is doing and see no advantage to them or anyone else from what North Korea is doing.

SEN. WICKER: It's clear to me that you're quite satisfied at this point with the response of the Chinese government in response to these two tests.

MR. BOSWORTH: We are very committed to continuing our close consultation with the Chinese as we move forward. And I think we each are of the belief that that kind of consultation and coordinated action is essential if we are going to bring about the kind of solution to this problem that we think is desirable and needed.

SEN. WICKER: The third option we have as the United States is enhancing our military capacity. What are our options for doing that? Can you discuss those publicly?

MR. BOSWORTH: Well, we already have a very strong defense posture in the Western Pacific.

SEN. WICKER: How will we enhance that?

MR. BOSWORTH: Well, again, I don't mean to be evasive but I'm not going to get into the business of my colleagues in the Defense Department, and of course the president's business ultimately to decide how we might do that if it's so desired.

SEN. WICKER: Mr. Ambassador, are we making, are we taking any small steps? Have we taken any small steps over time that has improved the U.S., North Korean relationship in any respect? And I ask you about employment across the border. In my home state of Mississippi we've entertained medical doctors from North Korea, and I don't know if that accomplishes much except for an exchange of ideas. It would seem that those are two small steps that we're taking. Is there any reason for us to be encouraged at all by some other things that are going on?

MR. BOSWORTH: I think, Senator, that one of our strengths as a nation is our willingness to engage in humanitarian activities aside from political considerations. So I would applaud the efforts of any American entity to try to bring about some improvement in the very desperate condition of the North Korean people. That's the basis on which the U.S. government has provided food aid over the last several years. It's the basis on which a number of private, non-governmental organizations have operated within North Korea. And we have never, and I don't believe we'll ever in the future, try to use these activities as leverage for political ends.

We deal with North Korea on an official government-to-government basis, but I personally think this is, I can speak for everyone in the administration and indeed in the U.S. bureaucracy: this willingness to engage in humanitarian activities is one of the hallmarks of our country and one that gives me great pride.

SEN. WICKER: If I might, Mr. Chairman, we would no doubt engage in humanitarian efforts for the sheer good that it does. Do you have any information that you can share with the committee about who gets the credit among the North Korean people?

MR. BOSWORTH: I mean, I have no specific information. It's mostly anecdotal. I have reason to believe through my conversations with some of the U.S. organizations that have been doing this over the years that by and large the North Korean people understand from where this assistance is coming. And in some cases I think in recent years the food that we've provided even comes with an American flag on the bag, which is still there when it's distributed to the people of North Korea.

So I think that the North Korean people probably understand better than we may expect the humanitarian impulses of the United States and its people.

SEN. KERRY: Thank you, Senator.

Senator Cardin.

SEN. BENJAMIN CARDIN (D-MD): Thank you, Mr. Chairman.

Mr. Ambassador, thank you very much for you being here.

I just want to underscore the point that Senator Wicker made at the beginning of this hearing about the two journalists. And I understand the limitations of this hearing. I must tell you, I think most of believe it's just another example of the gross human rights violation by North Korea in taking human pawns to use in some way as they see it for negotiations with the United States or with in regards to their other issues.

And it's something that we just need to continue to raise and point out that how outrageous that type of action is.

Now, with Korea's human rights records, it's deplorable generally. The State Department's 2008 Human Rights Report documents a laundry list of the regime's oppressive practices. I have the opportunity to chair the Helsinki Commission, and we deal on a regular basis on human rights. And one of our points is how we can use those reports in a more effective way to try to help the people of these repressive regimes.

And I just want you to perhaps share with us what we can do to try to advance human rights in North Korea. I know we have a long list, but I hope part of it is to try to improve the government's functioning as it relates to basic rights of the people of North Korea.

MR. BOSWORTH: I think I can assure you, Senator, that human rights concerns remain very much on the agenda of our prospective relationship with North Korea. And in the case of the detained journalists, we are exploring all possible ways to bring about their release on humanitarian grounds. Beyond that, as I indicated in my prepared remarks, I really am not able to go, given Privacy Act considerations, in other things.

SEN. CARDIN: And my question was more general than just the two journalists.

MR. BOSWORTH: Yes.

SEN. CARDIN: I certainly want you to do everything you can to secure their releases, and we've all expressed, I think most of us have expressed our views on it. But it goes beyond just these two journalists. I mean, the human rights records of North Korea is just outrageous, one of the worst countries in the world.

MR. BOSWORTH: Without question. And we are moving under legislation that was I believe passed last year. We're moving ahead to designate a new special envoy for North Korean human rights. And I would expect and hope that that could be done in the next several weeks.

SEN. CARDIN: Let me raise one more issue in my time, and that is obviously the risk of North Korea becoming more sophisticated in nuclear weapons is obvious, and they are testing to try to deliver that type of a nuclear weapon is a major concern. But it's also the transfer of that technology or weapons to terrorist organizations or to non-state actors that have to be a major concern.

I heard you in response to Senator Kerry's question talk about potential sanctions that would block the export of weapons. I just really want to get a sense from you as to how effective we can be to make sure that that type of technology is not exported to terrorist organizations or non-state actors.

MR. BOSWORTH: Well, we will do everything possible to monitor that situation, and if we believe that there is evidence or that there is an indication of proliferating activities, we will respond in a very strong fashion.

I would note that this is a very difficult thing to do, obviously. And it is one of the major reasons, not the only reason, but one of the reasons why for the Obama administration the ultimate goal remains verifiable denuclearization because if the Korean Peninsula is denuclearized, then there is really no risk of proliferation.

But we are not prepared and never will be prepared to settle for a policy which only concentrates on proliferation and ignores the root cause which is the nuclearization of North Korea.

SEC: Well, I certainly agree with that. If they have the capacity, the proliferation issue is going to be there. We know that. The best way to deal with that is the stated policy of the Peninsula being without nuclear weapons. So I fully agree with you. I just wanted to underscore the point, it's not only the direct threat of North Korea having nuclear weapons capacity, but what it could be as a supplier to other regions and other organizations, including terrorist groups.

We know that there's already been some smoking guns here, and we just need to understand the risk factors and need to take appropriate actions. And I think proceeding through the United Nations Security Council makes a great deal of sense and working with our partners and trying to get a more effective help from the major countries in the region including China is our best chance to secure an effective policy to accomplish our goals of removing this threat.

MR. BOSWORTH: I agree with that.

SEN. CARDIN: Thank you, Mr. Chairman.

SEN. KERRY: Thank you very much, Senator Cardin.

Senator Casey.

SEN. ROBERT CASEY, JR. (D-PA): Thank you, Mr. Chairman.

And Mr. Ambassador, we're grateful for your service and grateful for your testimony today.

I wanted to raise primarily two issues, maybe three, but the first one centers on China. I was noting in your statement in pertinent part you said that China has an important role to play in influencing the path that North Korea follows. You spoke of your trip and that China shared a, quote, "deep concern about North Korea's recent actions," unquote. Our challenge now is to work with China to turn its commitment into effective implementation of Security Council resolutions.

I was going to ask you about Resolution 1718 passed in October 2006 and the enforcement thereof. Since that was passed, as you know and we can easily track this, China's aid, its trade, its investment in North Korea has expanded. How can the Obama administration and your playing a central role in this encourage China to enforce U.N. sanctions and take a more assertive posture towards North Korea? Any thoughts on that?

MR. BOSWORTH: Well, I think what happened with regard to 1718, and this is no excuse but what happened was that soon after that was passed we found ourselves back in multilateral negotiations with the DPRK. Now I think as we go forward, in fact as has already been the case over the last two months, the subject of implementation of U.N. Security Council resolutions, both the existing one 1718 and now of course prospectively the new one, is very much a subject of active consideration in our relationship not only with the Chinese but with all other countries of the region.

So I think you can expect that as we move forward we are going to continue to be very concerned about implementation, and I would expect that other countries will be as well.

SEN. CASEY: Anything that you would recommend? I know you're not in this business of recommending what Congress should do, but any suggestions about how Congress can be helpful on that narrow question of the enforcement of that resolution?

MR. BOSWORTH: Well, I think, I'm never hesitant to recommend what Congress should do. But I do think --

SEN. CASEY: That's okay. (audience laughter) For today.

MR. BOSWORTH: I do think that Congress has a role in this and that as the Congress expresses its views, those can hopefully be reinforcing of the positions that we're taking in bilateral government-to-government relationships with our partners.

SEN. CASEY: And also on that issue, well may I move on. I wanted to move to the question of the six-party talks. What's your sense of the likelihood of the six-party talks being reengaged in the near term, A, and, B, if you'd comment on, I know in the statement you talked about, and it was helpful for us I think to have set forth a four-pronged strategy, one of them, the fourth one being if North Korea shows a serious willingness for diplomatic engagement. How do you see that playing out, or I guess optimally how would you like it to play out in terms of the role that any further or near-term six- party talk reengagement as well as any kind of bilateral strategy?

MR. BOSWORTH: Optimally I would like to see the North Koreans signal strongly that they are prepared to return to a negotiating mode.

SEN. CASEY: Right.

MR. BOSWORTH: The other members of the six-party process, including very importantly the United States, are all prepared to go back to the six-party process. I think it has proven to be an effective mechanism. Now it's not perfect, and anyone who has been engaged in multilateral diplomatic efforts will tell you that as you expand beyond two, the process becomes ever more complicated by a quantum factor.

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