Testimony Before the Commission on Wartime Contracting in Iraq and Afghanistan

Publisher Name: 
Center for American Progress
Chairmen Thibault and Shays, distinguished members of the Commission
on Wartime Contracting, thank you for this opportunity to speak to you.
My name is Pratap Chatterjee and I am a Visiting Fellow at the Center
for American Progress where I focus on federal procurement reform. I
work on the Doing What Works project where we believe an efficient
allocation of scarce resources in government will achieve greater
results for all. My work focuses on improving transparency and auditing
as a basis for smarter decision making to make sure waste, fraud, and
abuse do not take place.

I believe the contracting process-whether in the war zone or here in
the United States-will benefit if we have a much more robust data system
to evaluate the contractors we plan to hire and to track their work. We
need accurate data on everything from the workers we use to the goods
and services we purchase. We need good databases that allow us to
evaluate one contractor over the other, and qualified and experienced
contracting officers to pick the best bidder. The absence of data-or
worse yet, the wrong data-can cost not just money but lives. We also
need to do a much better job of tracking the goods we buy and the people
we hire. We need to evaluate their performance in the field and audit
the money we give them to make sure we are getting the best value for
taxpayer dollars.

First, I'll give you a sense of my background. I have traveled to the
Middle East and Central Asia more than a dozen times since September
11, 2001, spending more than 16 months on the ground in the region. I
have visited Afghanistan and Iraq four times each, starting in January
2002. I traveled to both those countries as a journalist and spent
almost all my time in the so-called red zones accompanied generally only
by a fixer or translator. In addition, I have also embedded with the
U.S. military and visited bases in Afghanistan and Iraq as well as in
Kosovo and Kuwait to research military logistics and police training
contracts with KBR and DynCorp, respectively. I have written two books
on this subject-Halliburton's Army and Iraq, Inc.-as well as numerous
articles and reports such as "Outsourcing Intelligence in Iraq," which
was produced in collaboration with Amnesty International. In my role as
managing editor of CorpWatch, a website tracking corporate malfeasance,
I also commissioned and edited a number of other investigative reports
such as "Afghanistan, Inc." on reconstruction in that country. I would
be happy to make copies of any of these materials available to
commissioners should you be interested.

In my remarks I will touch on the lack of inventory tracking of
weapons and ammunition that were supplied by contractors, and the theft
and misuse of the weapons by security forces. I will describe the
weapons and security startups like AEY and USPI that defrauded us. And I
will tell you about the unqualified translators we hired through
L-3/Titan, the inexperienced police officers through DynCorp, and the
payments that Third Country Nationals have to make to labor brokers to
get jobs on bases.

Security contractors and weapons supplies

Let me start with the issue of security. The United States has
supplied tens of thousands of weapons and millions of rounds of
ammunition to both Afghanistan and Iraq for the use of the local
security forces. We did so by paying a number of companies like AEY in
Florida, Taos in Alabama, and Wolf in California. These companies
bought large quantities of materiel from Eastern Europe and even from
China to send to both countries. In February 2009 a GAO report
suggested that neither the government nor the contractors recorded the
serial numbers for a large quantity of these weapons shipped to
Afghanistan. Spot checks also indicated that many could no longer be
found. On two subsequent trips in 2009, I visited police training
centers and stations in Afghanistan and looked into the tracking system
for these weapons and ammunition. In one meeting my translator overheard
the Afghan police officials discussing in Dari how to answer my
question because they did not have proper systems to track the guns, let
alone the ammunition. The biggest problem they faced was the fact that
most police officers are illiterate-at least 70 percent by the most
optimistic estimate I heard and as much as 95 percent-and are unable to
fill out forms to track the weapons. The second problem was that some
company officials shortchanged the Afghans-such as Efraim Diveroli of
AEY, who was sentenced to jail in March for supplying 50-year-old
ammunition.

I have been given anecdotal information about some of those weapons
being sold off by unscrupulous police officers. I was even offered the
opportunity to purchase a police gun. I recommend the work of Chris
Chivers at The New York Times who has documented a number of cases of
these weapons falling into the hands of the Taliban in the At War blog
and in his new book, The Gun. Nor are guns the only items that are
traded; it was common knowledge that one could buy Afghan police officer
uniforms and boots at the Kohan Froshi market in downtown Kabul.

Weeks after my last trip to Afghanistan, news emerged of the case of
Paravant, a subsidiary of Blackwater, whose employees were hired to
train the Afghan security forces in the use of weapons. You are
undoubtedly aware of the incidents in which Paravant employees allegedly
raided Bunker 22, the Afghan police armory, and took a number of AK-47s
for their personal use, as described in the Senate Armed Services
Committee hearing last February. In addition, diplomatic and
intelligence personnel I met with in Kabul told me it was not just the
weapons that have gone missing but also large quantities of 7.62
ammunition that can be used in the ubiquitous AK-47.

One does not even have to look into the actions of the Taliban to
understand the implications of a failure to track ammunition and weapons
transfers to Afghanistan. Justin Cannon and Christopher Drotleff, two
Paravant employees, left their military base in May 2009 without
authorization and opened fire into the back of a civilian car after a
traffic accident. The driver of the car and a civilian bystander were
killed. Drotleff and Cannon were convicted of manslaughter by a jury in
Virginia in March. The two Paravant employees were found to have
records of misconduct and violent behavior as well as terminations for
alcohol and drug use. At least one Paravant employee, Sebastian
Kucharski, a Paravant assistant team leader, had even been blacklisted
from being hired by the company itself for his work in Iraq, yet he was
given a job in Afghanistan.

Anywhere one goes in Kabul, one can see armed private security guards
in front of businesses and major buildings, most of whom are Afghan.
Occasionally, I have stopped to chat with them to ask them about where
they come from. At least one group I met was comprised entirely of young
men from the same village Vice President Fahim is from. They worked for
his brother who has multimillion-dollar contracts supplying fuel to the
Kabul Power Plant, which this committee has examined. Everybody I
talked to referred to the vice president's brother's security company as
a militia.

This company is not unusual. Back in 2006 I commissioned and edited a
report that revealed that a company called United States Protection and
Investigations, or USPI, was hiring local thugs to protect U.S.
construction contractors in Afghanistan working for USAID, thereby
supplying money and weapons to some of the worst elements of society.
Since then, Del and Barbara Spier, co-owners of USPI, pleaded guilty to
defrauding the government, billing for nonexistent expenses from
fictitious companies, and inflating the number of Afghan guards on their
payroll.

You are also no doubt aware of the findings of the staff of the
Senate Subcommittee on National Security and Foreign Affairs, which
released a report entitled "Warlord, Inc." about the actions of several
trucking firms that made payments to private security firms controlled
by local warlords to ensure safe passage of goods destined for U.S.
bases.

These examples suggest that if we plan to finance private security
companies and provide large quantities of ammunition and weapons to
local security forces, it behooves us to make sure we know the records
of the companies we award work to, whom they hire, and what happens to
the lethal products we provide them. Otherwise, we are likely to be
funding our own enemies and people who commit human rights abuses.

I do not want to suggest that the majority of the individuals we have
hired are bad people. To the contrary. In the course of my work over
the last 10 years, I have met several hundred contract workers in the
war zone. Some of them were U.S. truck drivers from places like El Paso,
TX; others were cooks from Pampanga in the Philippines; yet others were
Arabic-speaking immigrants from Yemen. Almost all of them were honest
people trying to pay their bills and support families; very few fit the
media image of crooked gunslingers.

Hiring workers

That brings me to a different but related issue: how these contract
workers are hired in the war zone. I am of South Asian descent and I
have a working knowledge of a couple of languages of the region so I am
able to converse with some of the security guards, as well as with many
of the kitchen and janitorial workers who come from Bangladesh, India,
Sri Lanka, and Nepal.

Here is a statistic I was confronted with almost every single day
that I traveled with the military: By my own unscientific reckoning, the
average third country national pays $2,000 to a labor broker to get a
job. This is true for the Bangladeshi janitors I met in Kuwait and the
Philippino cooks I met in Kabul. Some of the workers were paid as little
as $90 a month; others made as much as $300 to $500. From this meager
salary, they were expected to pay back the debt they incurred when they
were hired and support families back home. Some of them went years
before they saved up enough money to visit their families-one woman who
worked as a checkout clerk at an Army and Air Force Exchange Service, or
AAFES, store in Kuwait told me she saw her children once every five
years. I spent days with a group of Fijian truck drivers who had been
fired or allegedly cheated out of their wages by Agility of Kuwait who
did not have enough money to get back home to the South Pacific.

The tens of thousands of truck drivers, janitors, and cooks we have
hired via Agility and KBR have paid out what I estimate at $100 million
in labor broker fees in the course of the Global War on Terror alone. I
should note that the system of paying a labor broker to get a job in the
Middle East is an old one and is not confined to U.S. military bases
but to most menial jobs in the oil-rich Gulf states.

But what this tells us is that when we, as taxpayers, demand that our
money is spent well on hiring the best security, the best cook, or even
the best janitor, the contract officers we pay to pick the best
contractor have almost no role in determining who we get. The actual
decision is made by a third party-a labor broker collecting the fees-who
almost certainly does not show up on any government contract.

Let me give you yet another example of how little we know about the
people we hire. I spent several nights in a tent in a base in Iraq some
years ago with a group of Arabic translators working for L-3/Titan. One
night we heard the usual loudspeaker announcing an attack with the words
"incoming mortar." I asked one of the translators, who was an American,
how to say "incoming mortar" in Arabic. The American who had just
finished undergraduate Arabic in Southern California had no idea so he
asked a nearby Yemeni translator. Unfortunately, since the Yemeni
translator spoke almost no English, he had no way to understand the
American. Eventually a third translator, who was Lebanese, helped
interpret between the first two translators.

I use that example to demonstrate how unqualified the translators
were. Any soldier who spent time in Afghanistan will surely testify to
the bravery of these translators but many will tell you their
interpretation skills left much to be desired. The contract stipulated
that the translators meet Interagency Language Roundtable, or ILR,
Translation and Interpretation Skill Level Standards. The Defense
Contract Audit Agency, or DCAA-which is charged with making sure
taxpayer money is spent properly in the military-checked to see if the
company had met the contract requirements of hiring qualified
translators. Yet an initial survey showed there was little documentation
to support this. Unfortunately, the audit on this subject was shelved.

Another example: I met with DynCorp police trainers in Kabul-good men
who were perfectly qualified back in America. Yet one man from Texas
told me that the first time he saw a mortar attack, he thought it was a
fireworks display.

What connects these disparate incidents-the security guards in Kabul,
the Bangladeshi janitors in Kuwait, the Fijian truck drivers in Iraq,
and the Arabic translators who cannot translate-is the fact that we do
not know who we are hiring. We don't know if they are qualified, we
don't know if they paid bribes to get their jobs, we don't know what
they do with their weapons, and we have no way to find out. If we did,
maybe we could have prevented AEY and USPI from defrauding the
government. We should have audited L-3. We should not be tolerating
bribery by labor brokers.

I want to close with one example of an agency that did something
right. You are probably familiar with the name Robert Stein, a former
felon from North Carolina, who was paid to oversee reconstruction in
northern Iraq after the invasion. Stein awarded millions of dollars'
worth of contracts to his friends in Romania but was caught, pleaded
guilty to fraud in November 2005, and was sentenced to nine years in
prison and ordered to pay $3.6 million in fines.

Most of the corruption Stein was involved in was stealing from the
Development Fund for Iraq, which had no checks and balances. He used the
money to buy weapons, a plane, jewelry, and even prostitutes. But what
is most astonishing is not any of his sins. It's that when he got a
contract from the U.S. Agency for International Development to repair a
police station in Al Hillah, which required him to turn in proof of work
to get paid, this former felon actually did a reasonable job, according
to a Special Inspector General Report for Iraq.

How does the U.S. government make sure contractors do a good job? The
answer is simply good recordkeeping to make sure contractors are
evaluated before they get paid in full. Just as Stein did a good job
when he had to prove he had completed repairs to get paid, we need to
make sure that the translators we pay are qualified and doing a good
job, that the guns that we pay for are good quality, properly tracked,
and kept safe.

Recommendations from the Center for American Progress

The Center for American Progress recommends the commission support the following actions:

First, we need a much better system of evaluating the companies to
which we award contracts. Notably, we will need to screen for criminal
records and police new startups to make sure their billing systems are
adequate. Second, we need experienced government contracting officers
who can make sure there is sufficient competition to make sure the
taxpayer gets a good deal, as recommended in the Gansler Commission
report. Some jobs may not be able to be done by contractors. Finally,
the government has to do a good job of oversight in the field and
prosecute those who break the law.

The federal government has launched a new database called the Federal
Awardee Performance and Integrity Information System, which would allow
contracting officers to examine a bidder's prior record. The public
version of this database is not great so far but the idea is a good one.
Had we also checked to see if individual contractors had any prior
convictions, Robert Stein's criminal record would have come to light.
So, too, might have the record of the Paravant employees.

Should the contracting officers deny work to those with prior
convictions? Not at all, but when we hire former felons like Robert
Stein or startup companies like AEY and USPI, we need to pay close
attention. We owe it to taxpayers-and to those contractors who do a
competent and honest job-not to reward fraud or failure.

This will mean more oversight, which needs to be done by government
employees, and that's not a bad thing. John Isgrigg, deputy director of
contracting from the U.S. Army Intelligence and Security Command,
testified before this very commission that none of his contracting
officer representatives overseeing a multibillion-dollar contract that
employed more than 9,000 translators in Iraq and a similar number in
Afghanistan spoke Arabic or Pashto. So how could they possibly even
know whether or not L-3/Titan was doing a good job? Those of us who have
spent even a couple of days in the field know that even if the workers
are willing and brave, they are not always the right people for the job.

While oversight is clearly inherently governmental, other jobs come
very close. Robert Perito of the United States Institute of Peace, and a
police-training expert, has concluded that the United States needs to
develop a cadre of qualified people to work in police training in
postconflict countries. This approach may not be needed for simple tasks
like cooking and cleaning military bases. But in specialized fields
like police training, I believe that will go a long way to improving the
security sector. There's no way even a 20-year veteran can do a good
job in a war zone and a culture he or she does not even begin to
understand.

Next, the government can and should manage and police the playing
field for contractors. The Army Materiel Command learned that awarding
the Logistics Civilian Augmentation Program, or LOGCAP, contract over to
KBR did not work because that single company effectively had a 10-year
monopoly, stifling competition. The new LOGCAP contract is set up to
ensure three companies compete on every task order in order to make sure
the government gets the best price and the best services. As Jim
Loehrl, director of the Acquisition Center at the Army Sustainment
Command in Rock Island, Illinois, told The Washington Post: "Awarding it
to three allows us to mitigate our risk by not having to rely on only
one source, and at the same time allows us further competition."

Similarly, the Coalition Provisional Authority's attempt to rebuild
Iraq was an unmitigated disaster when it hired big U.S. companies like
Bechtel and Parsons that it assumed were qualified. The Gulf Regional
Division of the Army Corps of Engineers realized it needed to hire
smaller local Iraqi companies who knew the terrain and the community.
Perhaps the main difference was that the Army Corps of Engineers
conducted much closer oversight in the field than the Coalition
Provisional Authority.

Finally, when we do discover that the individuals have broken the
law, we need to prosecute them and send a message to make sure it does
not occur again. In your report "At What Risk," your recommendation #27
calls for Congress to "clarify U.S. criminal jurisdiction over
civilian-agency contractors operating overseas." In that regard, I
strongly support the Civilian Extraterritorial Jurisdiction Act of 2010,
which will provide for criminal jurisdiction over U.S. contractors
working overseas for other federal agencies, such as the Department of
State.

Thank you again for your invitation to speak at this forum and for your leadership in this matter. I welcome your questions.

PDF version with footnotes available for download here (pdf)

Pratap Chatterjee is a Visiting Fellow at American Progress.

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