[Senate Hearing 110-1016]
[From the U.S. Government Printing Office]

                                                       S. Hrg. 110-1016

                      ON PRIVATE SECURITY FIRMS IN
                          OVERSEAS OPERATIONS



                               before the

                              COMMITTEE ON
                          UNITED STATES SENATE

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION


                           FEBRUARY 27, 2008


        Available via http://www.access.gpo.gov/congress/senate

                       Printed for the use of the
        Committee on Homeland Security and Governmental Affairs

41-453PDF                 WASHINGTON : 2010
For sale by the Superintendent of Documents, U.S. Government Printing 
Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC 
area (202) 512-1800 Fax: (202) 512-2104  Mail: Stop IDCC, Washington, DC 


               JOSEPH I. LIEBERMAN, Connecticut, Chairman
CARL LEVIN, Michigan                 SUSAN M. COLLINS, Maine
DANIEL K. AKAKA, Hawaii              TED STEVENS, Alaska
THOMAS R. CARPER, Delaware           GEORGE V. VOINOVICH, Ohio
MARK L. PRYOR, Arkansas              NORM COLEMAN, Minnesota
MARY L. LANDRIEU, Louisiana          TOM COBURN, Oklahoma
BARACK OBAMA, Illinois               PETE V. DOMENICI, New Mexico
CLAIRE McCASKILL, Missouri           JOHN WARNER, Virginia
JON TESTER, Montana                  JOHN E. SUNUNU, New Hampshire

                  Michael L. Alexander, Staff Director
                         Troy H. Cribb, Counsel
     Brandon L. Milhorn, Minority Staff Director and Chief Counsel
         Richard A. Beutel, Minority Professional Staff Member
                  Trina Driessnack Tyrer, Chief Clerk
         Patricia R. Hogan, Publications Clerk and GPO Detailee
                    Laura W. Kilbride, Hearing Clerk

                            C O N T E N T S

Opening statements:
    Senator Lieberman............................................     1
    Senator Collins..............................................     3
    Senator Tester...............................................    23
    Senator McCaskill............................................    25
    Senator Akaka................................................    27

                      Wednesday, February 27, 2008

Hon. Patrick F. Kennedy, Under Secretary for Management, Bureau 
  of Management, U.S. Department of State........................     5
Hon. P. Jackson Bell, Deputy Under Secretary of Defense, 
  Logistics and Materiel Readiness, U.S. Department of Defense...     9
James D. Schmitt, Senior Vice President, ArmorGroup North 
  America, Inc...................................................    12
Laura A. Dickinson, Professor, University of Connecticut School 
  of Law.........................................................    16

                     Alphabetical List of Witnesses

Bell, P. Jackson:
    Testimony....................................................     9
    Prepared statement...........................................    45
Dickinson, Laura A.:
    Testimony....................................................    16
    Prepared statement...........................................    60
Kennedy, Patrick F.:
    Testimony....................................................     5
    Prepared statement...........................................    39
Schmitt, James D.:
    Testimony....................................................    12
    Prepared statement...........................................    52


Questions and Responses for the Record from:
    Mr. Kennedy..................................................    76
    Mr. Bell.....................................................   122
    Mr. Schmitt..................................................   149
    Ms. Dickinson................................................   158

                      ON PRIVATE SECURITY FIRMS IN
                          OVERSEAS OPERATIONS


                      WEDNESDAY, FEBRUARY 27, 2008

                                     U.S. Senate,  
                       Committee on Homeland Security and  
                                      Governmental Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:02 a.m., in 
Room SD-342, Dirksen Senate Office Building, Hon. Joseph I. 
Lieberman, Chairman of the Committee, presiding.
    Present: Senators Lieberman, Akaka, Carper, McCaskill, 
Tester, Collins, and Sununu.


    Chairman Lieberman. The hearing will come to order. Thank 
you all for being here.
    Throughout our history, the American military has relied on 
the private sector in what has been called a ``great arsenal of 
democracy'' to provide weapons and supplies for our fighting 
forces. But once the private sector delivered the goods, 
generally speaking its responsibility ended.
    Over the past 15 years, we have seen a significant 
expansion of the role of private firms in overseas operations 
from being the manufacturers of military supplies and equipment 
to becoming suppliers of crucial military services, like the 
logistical support of our troops, the training of foreign 
police and armies, the conduct of interrogations, and the 
provision of armed security details.
    It is the latter--the use of private security contractors 
(PSCs)--that is the subject of today's hearing because of 
questions that have been raised about the use of private 
security contractors in the ongoing conflicts in Iraq and 
    Traditionally, bearing arms and employing force in arenas 
of military conflict have been the sole province of the armed 
services. But our present military is just not large enough to 
fulfill the need for the protection of American personnel, 
convoys, key facilities, and reconstruction projects.
    So the use of PSCs has become necessary in Iraq and 
Afghanistan. PSC employees have, in fact, performed 
effectively, honorably, and in many instances, heroically. Many 
of the PSC employees are ex-service members. They are patriots 
who are deeply dedicated to the U.S. mission and ready every 
day to risk their lives--and sometimes lose them--protecting 
American personnel and America's cause.
    We all remember in this regard the horrific sight of the 
bodies of those four Blackwater contractors, private security 
contractors, being dragged through the streets of Fallujah in 
    But there have also, of course, been problems with the 
private security contractors. The rapid growth in their use has 
been ad hoc and without a comprehensive framework for the 
hiring, training, vetting, or even use of their services.
    Insufficient oversight of PSCs has drawn strong criticism 
from within our government and our military itself, including 
Defense Secretary Robert Gates, who said in October that the 
mission of many contractors was ``at cross purposes to our 
larger mission in Iraq.''
    A special panel convened by Secretary of State Condoleezza 
Rice to look at PSCs--directed by Under Secretary Patrick 
Kennedy, who is one of our witnesses today--concluded that PSCs 
``operate in an overall environment that is chaotic, 
unsupervised, deficient in oversight and accountability, and 
poorly coordinated.'' Those are tough words that need to be 
taken seriously by us.
    These concerns are reinforced, of course, by incidents like 
the September 16, 2007, shooting incident in Baghdad involving 
Blackwater security agents in which 17 Iraqis died. Incidents 
like that one have exposed gaps in our own laws that leave our 
government with limited ability to prosecute employees of 
Federal contractors who may have committed criminal acts 
    The House of Representatives, in fact, has passed 
legislation to address these gaps, and I understand that 
Senators Leahy, Obama, and others are currently working to 
bring a similar bill to the Senate floor.
    But beyond changing the laws so we can punish criminal 
behavior when it occurs--which, again, I stress, are a minority 
of cases--we also need to have a discussion about our rapidly 
growing reliance on PSCs with the goal of developing a better 
framework across our government for deciding how and where we 
are going to use them.
    Our Committee staff has conducted an extensive 
investigation into the use of PSCs in Iraq and Afghanistan that 
leads to the following findings:
    First, there are no government-wide standards for the 
hiring, vetting, and training of PSCs.
    Second, oversight of PSCs has been hobbled by 
jurisdictional squabbles between the State Department and the 
Department of Defense (DOD), as well as insufficient numbers of 
personnel from both departments in theater to supervise the 
    Third, reconstruction companies, non-governmental 
organizations (NGOs), and other kinds of non-governmental 
entities also employ armed security contractors--many of them 
third-party nationals--further complicating the creation of a 
uniform framework for security services.
    And, fourth, Federal agencies are doing very little to 
assess our future needs for PSCs or entering into a process to 
decide by some rational standards which functions must remain 
governmental and which can be contracted out.
    That has led our staff to make some recommendations to us 
for consideration, for instance: To give consideration to 
creating a licensing authority for security companies and their 
employees; to set training standards on everything from the 
proper use of weapons to the application of international human 
rights laws; better coordination among agencies to oversee 
PSCs; and to create a clear chain of command when multiple 
agencies are involved in an operation. And, again, the 
fundamental question that has to be answered--and it seems to 
us is not now answered--is what kind of missions private 
security contractors should be hired for in the first place.
    In December 2007, the Department of Defense and the 
Department of State took a first step by signing a Memorandum 
of Agreement (MOA) to commit to the development of common 
standards for management of PSCs in Iraq and to clarify their 
respective roles.
    But this only applies to Iraq and only applies to the 
Departments of State and Defense, not to other potential fields 
of battle or to other agencies such as the U.S. Agency for 
International Development (USAID) and the Department of 
Justice, which also are involved in the retention of private 
security contractors.
    The need for standards and regulations on the use of PSCs 
goes far beyond today's missions in Iraq and Afghanistan. For 
instance, peacekeeping and stabilization, I believe, will be a 
major focus of the new Africa Command (AFRICOM) at the 
Department of Defense. The State Department is currently 
bidding a private contract worth approximately $1 billion to 
train peacekeepers and provide logistics for use in Africa.
    So, we have to assume that in the normal course the need 
for PSCs in the Federal Government is only going to grow, and I 
think we have to determine together, Congress and the Executive 
Branch, where that growth is necessary and where it is 
reasonable. And we have to put in place clear rules for their 
hiring of PSCs, and then, I hope, comprehensive systems to 
ensure proper training, vetting, and accountability of their 
    I thank our staff for the good work they have done 
preparing for this hearing. I thank our witnesses for being 
here. And now I would call on the Ranking Member of the 
Committee, Senator Collins.


    Senator Collins. Thank you, Mr. Chairman. This is a very 
interesting and important subject, and I appreciate your 
decision to focus the Committee's efforts on it.
    Over the past two decades, the end strength of the U.S. 
military has declined by a third, from 3.3 million in 1987 to 
2.2 million today.
    That dramatic post-Cold War decline has imposed enormous 
strains on our troops and caused some unintended consequences 
as America undertook large-scale military operations in 
Afghanistan and Iraq.
    As the Government Accountability Office (GAO) recently 
concluded, the decline in force strength, coupled with the 
demands of overseas deployments, has greatly increased the 
demand for private contractors, including private security 
    When thousands of contract security employees are involved 
in guarding facilities and escorting convoys in a hostile zone 
and face a high risk of violent incidents, we confront a 
fundamental question: Should private contractors be responsible 
for jobs in a combat zone that have traditionally been 
performed by military personnel? Where should the line be drawn 
between inherently governmental military operations and 
contract services?
    There are, of course, many valid reasons to employ 
contractors to carry out or augment overseas tasks. But as the 
Congressional Research Service has pointed out, never before 
have private sector employees played such an extensive role in 
a combat zone.
    Furthermore, the heavy reliance on contractors without 
effective acquisition policies and contract oversight has led 
in some cases to wasteful spending, unsatisfactory performance, 
and failure to achieve mission objectives. When the Departments 
of State and Defense, USAID, or other agencies hire firms that 
place armed civilians in foreign countries, their actions can 
also have a significant impact on America's foreign policy 
    It is also true that private security firms are providing 
valuable services in hostile settings overseas, especially at a 
time when our military forces are stretched so thin. They guard 
vital infrastructure, protect American and foreign officials, 
and escort convoys. Their employees, as the Chairman pointed 
out, are often highly skilled, disciplined, and honorable 
professionals, typically with extensive military experience.
    Nevertheless, the actions of some contract employees, 
combined with legally tenuous or ambiguous accountability 
mechanisms, have tarnished the industry.
    A team of Justice Department prosecutors and the FBI are 
currently in Baghdad on a 2-week mission to interview local 
witnesses to the September 2007 incident in which Blackwater 
private security guards under contract to the State Department 
opened fire in a public square. Seventeen Iraqi civilians died, 
and others were wounded.
    Now, the facts of this incident remain to be determined, 
but they raise a broader issue about the lingering uncertainty 
about whether these security guards are subject to any legal 
accountability. And that degree of uncertainty should not be 
acceptable at this stage in the war. And the degree of 
accountability should not hinge, as it appears to do today, 
upon whether the contractor was supporting a Defense Department 
mission or acting on behalf of the State Department.
    The problem is not new. In recent years, several 
contractors implicated in violence have simply left the area to 
avoid any legal consequences.
    These examples underscore a stark truth: The United States 
cannot expect trust and respect from other peoples if we cannot 
impose clear constraints and enforce serious legal consequences 
for illegal conduct by private security contractors.
    Improving private security performance and protecting 
Federal interests demand explicit expectations, precise 
contract requirements, sharp oversight, clear standards for the 
use of force, and a framework for ensuring legal 
    Our hearing today will raise many difficult questions, and 
it is evident that we need better answers than we seem to have 
today. Devising an effective set of answers must also include 
improving our Nation's ability to recruit, train, and retain a 
skilled Federal acquisition workforce.
    Our acquisition workforce must not only be strengthened, 
but be able to apply its skills in a war zone. And that is why 
the Chairman and I have worked very hard to include provisions 
in our contracting reform bill that will strengthen our Federal 
acquisition workforce and create a Contingency Contracting 
Corps that could be marshalled to deploy experienced 
acquisition professionals in hostile settings such as Iraq and 
    The rule of law, our obligations to other governments and 
to non-combatants, our responsibilities to taxpayers, and our 
interest in the success of our foreign policy all suggest that 
we need to ask fundamental questions about the role of private 
security firms in a war zone. We need to improve the regulation 
and oversight of these firms when they are used, and most of 
all, we need to ensure accountability. Thank you, Mr. Chairman.
    Chairman Lieberman. Thank you, Senator Collins, for an 
excellent opening statement, and you raise some very important 
    I welcome Senator Tester and Senator Sununu to the hearing 
this morning.
    We will proceed now with the witnesses. I believe we are 
going to give each of you 10 minutes. I appreciate that you are 
here. I think you are exactly the people we wanted to be here 
to help us with our deliberations.
    We will begin with Patrick Kennedy, Under Secretary of 
Management for the Department of State. Mr. Kennedy was asked 
by Secretary Rice last fall to serve as executive director of a 
special panel convened to examine the State Department's 
contracting for security, so I welcome you and look forward to 
your testimony now.


    Mr. Kennedy. Good morning. Thank you very much, Mr. 
Chairman, Ranking Member Collins, distinguished Members of the 
Committee. I am honored to appear before you today with my 
distinguished colleagues. I would like to thank you and the 
Committee Members for your continued support and interest in 
the Department of State's programs and foreign policy 
    \1\ The prepared statement of Mr. Kennedy appears in the Appendix 
on page 39.
    The Bureau of Diplomatic Security, the law enforcement and 
security bureau of the Department, has the primary 
responsibility for ensuring the safety and security of State 
Department and other U.S. Government personnel operating under 
Chief-of-Mission authority overseas. The Diplomatic Security's 
nearly 1,500 special agents serve in the United States and 
around the world, in embassy and consulate Regional Security 
Offices, and manage security programs designed to protect U.S. 
Government personnel, facilities, and classified information at 
285 posts worldwide.
    Even with this presence, the employment of security 
contractors has become a critical Department tool since the 
1980s for providing services necessary to protect U.S. 
personnel, buildings, and information. After the bombing of the 
U.S. Embassy in Beirut in 1983, private companies were afforded 
the opportunity to compete for security contracts at U.S. 
overseas missions under the Diplomatic Security and 
Antiterrorism Act of 1986. Over the years, security contractors 
have been employed in diverse hot spots around the world, and 
as these contracts have evolved, the Department has sought to 
standardize the way posts contracted and paid for guard force 
services to enhance uniform fiscal reporting responsibilities 
and to streamline security management.
    Over the past decade, conflicts, wars, political unrest, 
and terrorist activities have increasingly required the 
deployment of diplomats to areas that are inherently dangerous 
places to live and work. As the U.S. Government continues its 
diplomatic efforts in these critical areas, the assets and 
resources required to ensure the safety and security of U.S. 
diplomats and other governmental representatives have also 
    The use of security contractors in these dangerous places 
has allowed the Department the flexibility to rapidly expand 
its capabilities to meet these increased security requirements 
and to support national security initiatives without the delays 
inherent in recruiting, hiring, and training full-time 
personnel. The employment of security contractors remains an 
essential cost-effective tool utilized by the Department to 
provide security services necessary to support U.S. personnel 
and facilities.
    The government's Federal Acquisition Regulation (FAR) 
enables the Department to procure, sometimes with little 
notice, the services of a skilled cadre of security 
professionals for emergency needs as world events unfold. The 
Department's security contractors perform a narrow range of 
defensive duties abroad, including the protection of certain 
foreign heads of State, high-level U.S. Government officials--
including Members of Congress--and U.S. diplomats under Chief-
of-Mission authority. These functions are not inherently 
governmental, as Department security contractors are engaged in 
protecting our diplomats and other officials and are not 
authorized to engage in law enforcement or combat activities. 
The use of contract personnel allows the Department the 
flexibility to rapidly expand or contract the level of security 
personnel deployed based upon changing requirements. Most 
importantly, it is through the contracting mechanism that the 
Department requires security contractors to adhere to stringent 
standards of recruiting and training.
    The establishment of interagency standards for contractors 
would ensure that all U.S. Government security contractors or 
subcontractors meet core standards regarding their 
qualifications, training, and operations. Over the past several 
months, the Department of State has been working closely with 
the Department of Defense to accomplish this goal. Agencies 
should be allowed the flexibility to augment core standards, as 
needed, with additional training and operational requirements.
    Contract provisions requiring contractors to comply with 
local laws and regulations are additional measures that ensure 
appropriate security contractor activity. Such provisions are 
currently included in Department of State contracts; for 
example, existing contracts require contractors to comply with 
all licensing requirements that are established by the host 
government. In general, such provisions require contractors to 
secure a business license, firearms permits, and firearms 
storage licenses, etc.
    Contract requirements and government-wide standards are 
only as effective as the management and oversight controls 
implemented, as the Chairman noted in his opening remarks. The 
Secretary of State's Panel on Personal Protective Services in 
Iraq, on which I served, carried out a comprehensive review of 
the embassy's security practices in Iraq and provided 
recommendations, all of which have been adopted by the 
Secretary to strengthen these procedures.
    The panel also encouraged enhanced coordination and 
communication with the U.S. military. To that end, the 
Secretaries of State and Defense signed on December 7, 2007, a 
memorandum to jointly develop, implement, and follow core 
standards in these areas.
    Over the past several months, the Department has undertaken 
to quickly institute new policies and procedures governing 
security contractors. Diplomatic Security agents are now 
``embedded'' with every embassy movement of personnel in Iraq. 
Procedures have been established to ensure that the Multi-
National Force in Iraq (MNF-I) and the embassy are aware of and 
coordinate all movements by each other's details. This 
maximizes the Department of State protective support and 
provides visibility to battle-space commanders. Respective 
liaison officers now serve in operations centers, and both 
entities have established procedures to respond to and 
investigate incidents.
    The State Department has developed new investigative 
procedures on the use of force which will also facilitate the 
referral of cases to the Department of Justice where there is 
evidence of potentially criminal misconduct.
    A Joint Embassy Review Board, which also includes U.S. 
force representatives, periodically reviews incident 
investigations to develop lessons learned, determine trends, 
and make recommendations for improvements in private security 
contractor operations.
    Embassy Baghdad's Mission Firearms Policy has been revised 
and reissued to reflect the common principles on ``Rules for 
the Use of Force'' that govern private security contractors, as 
agreed in the State and Defense Department MOA. And the 
Regional Security Officer in Baghdad has established direct 
channels of communication and working arrangements on 
coordination and liaison with senior Iraqi officials at the 
National Police, the Ministry of the Interior, and the Ministry 
of Defense.
    Moreover, the Department of State strongly supports efforts 
to provide greater legal accountability for unlawful acts its 
security contractors may commit abroad. The Administration is 
currently working with the Congress on legislation concerning 
extraterritorial coverage of U.S. criminal laws. We would very 
much like to see this critical legislation enacted as soon as 
    In addition to private security contractors that contract 
directly with the Department of State, there are also those 
with contractual arrangements with other contractors, 
subcontractors, or grantees of the Department or other civilian 
agencies. In accordance with the State and Defense Department 
MOA, the State Department has also taken strides to strengthen 
oversight and accountability of these security contractors. The 
State Department has been actively engaged with the Department 
of Defense and the Agency for International Development in 
developing core policies for vetting, background 
investigations, training, weapons authorizations, movement 
coordination, and incident response procedures and 
investigations for these subcontractors, arrangements we 
already have in place for our direct contractors.
    In that vein, on January 30, 2008, the Departments of State 
and Defense co-hosted a meeting at the Pentagon with company 
executives to discuss further efforts to strengthen security 
contractor operations, oversight, management, and 
    With the passage of the National Defense Authorization Act 
(NDAA) for Fiscal Year 2008, the Departments of State and 
Defense are now actively engaged in the development of formal 
regulations governing private security contractors operating in 
combat zones, as well as the development of a Memorandum of 
Understanding that will address all contractors operating in 
Iraq and Afghanistan and establish a common database of 
information, as required by Sections 861 and 862 of the Act. 
Our joint efforts in developing and implementing the December 
2007 MOA have already established a strong foundation for these 
regulations. Moreover, the State Department is prepared to 
participate in the Defense Department's Synchronized Pre-
deployment Operational Tracking (SPOT) database of these 
contractors, anticipated for a DOD rollout in March.
    This enhanced coordination with the Defense Department and 
our own increased oversight of our private security contractors 
has necessitated additional staffing in Iraq by State 
Department personnel. In response, the State Department has 
initiated temporary deployments of additional Diplomatic 
Security special agents to Iraq and authorized a permanent 
increase in Baghdad staffing consistent with the recommendation 
of the Secretary of State's Panel. With these staffing 
requirements straining personnel resources and the need to meet 
continual and emerging worldwide security demands, the State 
Department will be hiring additional special agents. The 
additional requirements are being requested, and with them the 
Department will be able to meet these requirements and continue 
to provide a safe and secure environment for the conduct of 
U.S. foreign policy.
    Chairman Lieberman, Ranking Member Collins, I thank you 
very much, and other Members of the Committee, for the 
opportunity to appear here today, and at the end of the 
testimony, I would be glad to receive any questions that you 
might have. Thank you very much.
    Chairman Lieberman. Thanks, Mr. Kennedy. A good beginning. 
I am impressed that you completed your statement exactly as the 
10 minutes expired. We do not see that too often.
    Mr. Bell, thanks for being here. Jack Bell, Deputy Under 
Secretary of Defense for Logistics and Materiel Readiness, has 
been a leader in the Department of Defense efforts to 
strengthen the integration, oversight, and management of the 
large contractor force working alongside military personnel in 
Iraq. So you are right in the middle of exactly the questions 
we have on our minds, and we look forward to your testimony 


    Mr. Bell. Thank you. Chairman Lieberman, Ranking Member 
Collins, other Members of the Committee, thanks for this 
opportunity to appear before you to discuss DOD's initiatives 
to improve the management and oversight of personal security 
contractors--operating in Iraq and Afghanistan.
    \1\ The prepared statement of Mr. Bell appears in the Appendix on 
page 45.
    As Chairman Lieberman pointed out, contractors supporting 
our military forces in contingency operations, both at home and 
deployed, are performing critical support functions that are 
integral to the success of our military operations. DOD 
military forces--civilian forces also--have been downsized 
significantly over the last 25 years, as Ranking Member Collins 
has pointed out, and our dependence on contractors has, 
accordingly, increased.
    In addition, the increasing technical complexity of DOD 
weapons systems and equipment requires a level of specialized 
technical expertise that DOD does not believe can be cost-
effectively supported by a military force capability.
    The current scale and duration of DOD military force 
deployments in support of the global war on terrorism (GWOT) 
are the first major contingency operations to reflect the full 
impact of the shift of the reliance on contractor personnel to 
support critical functions of the military deployed in the 
field. This has required a substantial commitment by DOD 
contractors to deploy with our military forces in forward 
areas. As of the first quarter of fiscal year 2008, which ended 
December 31, 2007, for example, Central Command (CENTCOM) 
reported in January about 163,590 DOD contractor personnel 
working in Iraq and 36,520 personnel for DOD working in 
    Chairman Lieberman. Give us those numbers again, because 
those are quite significant--some might say stunning.
    Mr. Bell. Glad to do that. As of December 31, 2007, CENTCOM 
reported in January about 163,590 DOD contractor personnel 
working in Iraq and 36,520 DOD contractor personnel working in 
    Chairman Lieberman. So, in Iraq, that is about as high, or 
maybe a little higher than uniform personnel that we have had 
    Mr. Bell. That is correct. The ratio in both theaters is 
about 1:1, roughly.
    Chairman Lieberman. Yes. That is very important for us to 
understand. Please go ahead.
    Mr. Bell. Thank you. This unprecedented scale of dependence 
on contractors has led us at DOD to recognize the situation 
that deployed contractors are a significant and continuing part 
of our total force, and DOD must manage our contractors on an 
integrated basis with our military forces.
    Since 2005, we have launched several major initiatives that 
are already strengthening the management of all DOD contractors 
and contractor personnel. I will briefly outline those for you.
    First of all, we have been working since 2005 on 
establishing a strategic policy and operational framework for 
managing contractors and contractor personnel in future 
operations on a systematic basis.
    Second, we have focused on strengthening the management of 
current DOD contractor operations in Iraq and Afghanistan.
    Third, we are responding to the recommendations in the 
Gansler Report on Contracting in the CENTCOM area of 
    Fourth, as Mr. Kennedy has pointed out, we are implementing 
State Department-DOD Memorandum of Agreement governing PSC 
operations, specifically in Iraq.
    And, fifth, we are both working with the State Department 
again and with USAID on implementing Sections 861 and 862 of 
the 2008 National Defense Authorization Act.
    However, in my testimony today, I would like to focus on 
what DOD is doing with the State Department to strengthen the 
management of PSC operations in Iraq and Afghanistan.
    The operations in Iraq and Afghanistan, as we have all 
recognized, have required PSCs to fulfill a variety of 
important security missions, operating in non-permissive 
environments in support of both the DOD military mission and 
State Department diplomatic mission. These include both mobile 
physical protection for individuals and delegations, such as 
congressional delegation trips (CODELs), and facility 
protection for bases, buildings, and supplies.
    Again, referring to the first quarter 2008 CENTCOM census 
for the period ending December 31, 2007, there were 
approximately 6,467 armed DOD personal security contractor 
personnel in Iraq and 2,745 DOD personal security contractors 
in Afghanistan performing security functions.
    Both DOD and the State Department have recognized the need 
for more effective coordination of PSC operations in Iraq. On 
December 5, DOD and the State Department signed a Memorandum of 
Agreement--I will be referring to it as a ``MOA''--defining a 
framework for improving both the accountability over PSC 
operations and strengthening the actual operational procedures. 
This MOA covers a broad range of management policies and 
operational procedures to achieve more effective management 
coordination in Iraq. The specific provisions of the MOA are 
detailed in my written testimony, and also a copy is available 
on the DOD website.
    The purposes of the MOA, briefly, are to: Establish core 
standards for vetting, training, and certifying PSC personnel; 
to specifically avoid situations where there is a high risk of 
incidents occurring; to integrate incident management and 
investigations; to integrate follow-ups with the government of 
Iraq's Ministry of Interior and our own Tactical Operations 
Centers; and to coordinate follow-ups with any persons affected 
by an incident and any witnesses thereto.
    MNF-I has already executed and implemented what we call a 
Fragmentary Order (FRAGO)--titled 07-428. It establishes 
authorities, responsibilities, and requirements for oversight 
of all DOD civilians and DOD contractors. The State Department, 
as Mr. Kennedy points out, is developing a counterpart document 
to reflect U.S. Embassy Baghdad's policies for U.S. Government 
agencies working under Chief-of-Mission authority.
    Many aspects of the MOA have already been implemented. In 
fact, we have adopted interim procedures in cases where 
permanent solutions require additional work. At the Office of 
the Secretary of Defense (OSD), we are closely monitoring the 
implementation status of these elements as they are being put 
together in-country.
    On January 30, again, as Mr. Kennedy pointed out, Deputy 
Defense Secretary Gordon England and Deputy Secretary of State 
John Negroponte co-hosted a meeting of PSC company executives. 
In this meeting, we discussed the new initiatives covered by 
the MOA. We particularly emphasized contractor responsibilities 
for the elimination of sexual harassment, ethnic 
discrimination, employee misconduct, and criminal activity. We 
also covered the implementation of the Uniform Code of Military 
Justice, which is applicable to DOD contractor personnel 
deployed with our military forces. And again, most importantly, 
we emphasized the need to support U.S. strategic goals in the 
operations in Iraq and Afghanistan as well as performing 
contract missions.
    We also discussed the efforts of both the State Department 
and DOD to obtain legislation to strengthen the Military 
Extraterritorial Jurisdiction Act--MEJA, as we call it--because 
we feel it is important to clarify the legal accountability of 
non-DOD U.S. Government contractors overseas.
    In response to the requirements of Sections 861 and 862 of 
the 2008 NDAA, DOD and the State Department are jointly 
developing a Memorandum of Understanding (MOU), covering 
matters relating to the State Department, DOD, and USAID 
contractor operations in Iraq and Afghanistan, and that covers 
all contractors, not just PSCs. Once this memorandum is signed, 
the MOU will be implemented through DOD, the State Department, 
and USAID policies and regulations.
    We are also moving ahead at the State Department with 
efforts to comply with the provisions of Section 862 of the 
2008 NDAA, and that specifically focuses on the management of 
PSC operations in Iraq and Afghanistan.
    We have already placed a high priority at DOD and the State 
Department on registering contracts and contractor personnel in 
the theater of operations in something called the Synchronized 
Pre-deployment and Operational Tracker System. SPOT provides a 
system to: Track contractor personnel movements within Iraq, 
Afghanistan, and CENTCOM AOR; verify specifically the authority 
of the individual to have authorization and access to specific 
facilities; and establish their eligibility for specific 
support services.
    We are approaching at DOD 100 percent registration and 
accountability of all DOD PSCs and contractor personnel 
involved in translation and interpretation activities. We 
anticipate that SPOT will be a system used also in compliance 
with Section 861. The State Department is already participating 
in getting their contractors in and is on schedule to basically 
get their personal security contractors under prime contracts 
into the system by March 2008. USAID is also evaluating how 
best to implement the system.
    Taken together, these initiatives substantially strengthen 
DOD's, the State's Department, and USAID's capabilities in 
managing its contractors and in particular its PSC contractors 
and contractor personnel compliant with Sections 861 and 862.
    We thank you for your interest and support in this effort, 
and at this time I look forward to your questions whenever the 
other people have finished testifying. Thank you.
    Chairman Lieberman. Thank you very much, Mr. Bell.
    Mr. Schmitt, you are next. As Senior Vice President of the 
ArmorGroup of North America, you served last year as the Chair 
of the private security industry's association, the 
International Peace Operations Association. The ArmorGroup 
itself has 9,000 employees in 38 countries, including 1,600 in 
Iraq. Thank you for being here, and I look forward to your 
testimony now.


    Mr. Schmitt. Thank you, Mr. Chairman. Mr. Chairman, Senator 
Collins, Members of the Committee, I would like to thank you 
for having me appear in front of you today with such 
distinguished leadership from the Department of Defense, the 
Department of State, and from academia.
    \1\ The prepared statement of Mr. Schmitt appears in the Appendix 
on page 52.
    It is an honor to assist the Committee in its review of the 
use of the private security industry. And as noted this 
morning, the private security industry, my industry, has been 
under a great deal of scrutiny due to the recent events and 
significant incidents in Iraq and Afghanistan. These events, 
especially tragic incidents involving the deaths of private 
security employees and local civilians alike, have brought 
questions concerning the practices of private security 
providers, their oversight, and their accountability to the 
front pages of newspapers and morning discussions across 
kitchen tables throughout America.
    At best, we are viewed as a necessary evil and, at worst, 
as trigger-happy thugs who sacrifice America's reputation at 
home and abroad and damage its strategic operations by 
operating as if we are above the law in the pursuit of a quick, 
opportunistic buck. From our perspective, this view is a gross 
caricature of an industry in which ArmorGroup, my company, has 
been operating for more than 26 years, providing a wide range 
of defensive protective services, risk avoidance training, 
humanitarian and mine action, and reconstruction and 
stabilization efforts.
    As private security contractors, it is our actions--good or 
bad--and the image we project that influence and shape how the 
local civilian populations view our Nation. Perceptions matter. 
The conduct and disposition of private security contractors 
paint a striking canvas from which we, as a Nation, are viewed 
by local inhabitants. As an American, I know how I would feel 
about large numbers of foreign security contractors driving 
down our streets. Would we really expect the Iraqi people or 
the population of any other nation to feel so differently when 
they witness an expatriate-laden security convoy careen through 
their neighborhood?
    While the development of a coordinated and comprehensive 
U.S. Government framework for using PSCs has been under 
discussion and long in the making, it seems to me that the 
question is not when we will use private security providers 
but, rather, which firms are best qualified to provide the 
optimal support commensurate with our national interests.
    Of course, the specific decision on whether to use a PSC 
will always depend on the U.S.'s requirements at that time and 
on given needs and circumstances. However, experience has shown 
that contingency requirements normally develop with little 
warning. Hurricane Katrina, the deteriorating security 
situation of Iraq in 2003 and 2004, the need to train and 
mentor a large number of local security sector personnel in 
Iraq, Afghanistan, West Africa, and elsewhere all indicate that 
the U.S.'s interests could be best served by identifying, 
validating, and competing suitable firms for contingency 
response contracts in advance of a crisis or need.
    Likewise, U.S. Government demand for private security 
contractors seems poised for continued growth with the 
establishment of National Security Presidential Directive 44 
and Department of Defense Directive 3000.5 for Stability, 
Security, Transition, and Reconstruction, both of which 
demonstrate the U.S. Government's intent to include the private 
sector in future reconstruction and stabilization efforts in 
high-risk areas around the world.
    For this reason, I believe the U.S. Government's 
coordinated framework for determining when to use private 
security companies should be less about deciding the when and 
more about setting the common standards, the validation, and 
oversight procedures necessary that have been addressed so far 
this morning. My company, along with many other committed 
firms, would prefer to do everything we can in terms of proving 
our standards and procedures before a contingency operation 
even gets underway so that we are able to respond and deliver 
immediately when called upon to do so.
    As to the question on whether there is a need to establish 
government-wide standards, licensing requirements, or contract 
provisions for security providers, the answer can only be 
``absolutely, yes.''
    The development of industry standards, best practices, and 
accountability provisions was first addressed by the private 
security industry well before the ramp-up of PSCs in Iraq in 
2003. In the case of my company, we have long-established 
formal corporate programs to ensure that company employees act 
at all times within the relevant international and local legal 
and humanitarian frameworks including an employee Code of 
Conduct, a stringent ethics policy, and an ethics review board. 
We implement deliberate leave rotation, provide personal 
insurance and welfare policies, and we teach cultural training 
to ensure our employees--whom we refer to as our ``quiet 
professionals''--are prepared to provide our protective 
services in an ethically sensitive fashion in the most complex 
of environments.
    In 2004, in keeping with our commitment to transparency, we 
published the PSC industry's first white paper, calling on the 
U.K. Government to regulate the industry, and we became a 
publicly traded company.
    Unfortunately, a number of newer PSCs working in support of 
U.S. Government programs in Iraq and elsewhere, but without 
this rigorous approach to ethics, have found themselves 
embroiled in difficult incidents which have resulted in 
controversy surrounding the U.S. Government's use of PSCs. The 
U.S. Government regulations are clearly beginning to take 
shape, including the key oversight provisions for PSCs, as 
discussed this morning by the Hon. Patrick Kennedy and the Hon. 
Jack Bell. In fact, with regulation now established, the 
industry stands ready to assist in its implementation.
    PSCs will gladly follow the U.S. Government's regulatory 
requirements provided to them. And with the establishment of 
the MOA between the Department of State and the Department of 
Defense for PSC operations in Iraq, and the provisions of the 
2008 National Defense Authorization Act, the industry is 
hopeful that this will be a blueprint of interagency policies 
and operating practices that can be applied to other future 
areas of operations as required.
    We stand ready to assist and will do so more efficiently 
when the implementation procedures are developed in an 
inclusive manner with the U.S. Government taking into account 
companies' experiences and management practices. Companies that 
comply with prescribed regulatory and performance standards 
should be rewarded with more opportunities to support the U.S. 
Government stabilization objectives; companies that do not 
should be held accountable through the loss of contracts and 
the ineligibility to bid on new ones.
    We also suggest implementation of the following mechanisms:
    First, involve PSCs and other stakeholders in ongoing 
standard-setting dialogues and implementation processes;
    Second, a codification of standards and best practices in 
company policies and daily operating procedures;
    Third, training of U.S. Government personnel interacting 
with PSCs within the Combatant Command (COCOM)/Chief-of-Mission 
    And, last, education for impacted local populations on the 
means to identify PSCs and how to register a complaint through 
appropriate authorities concerning PSC operations. 
Additionally, we also see a more proactive role for trade 
    While many industry best practices are codified in the 
existing codes of conduct and ethics policies of individual 
firms and internationally recognized trade associations, not 
all U.S. Government private security contractors are members of 
these trade associations or have adopted codes of conduct.
    An alternative method of regulation could be that the U.S. 
Government mandates that its PSCs require some type of third-
party accreditation, potentially through trade associations, to 
validate their attainment of industry standards. Strict 
enforcement of these standards ultimately depends upon the will 
and consensus of the association's members to prove an 
effective self-enforcement mechanism exists, and upon the U.S. 
Government to demonstrate that it takes these standards 
seriously by committing to only work with those companies who 
have obtained accreditation.
    Oversight for private security contractors begins with a 
corporate commitment to the ethical delivery of services that 
we believe at a minimum should contain the following 
provisions: Knowledge of, and respect for, indigenous 
populations; a defined corporate ``operating envelope'' which 
limits a company's role to purely protective, defensive 
security support; a formal declaration that the company will 
not plan or participate in offensive operations; full adherence 
in mandatory induction and continuation training on U.S. and 
host Nation local laws, international human rights and 
humanitarian law, and country-specific rules for the use of 
force; a commitment to cooperate with local and all law 
enforcement agencies and submit records of all notifiable 
incidents to those agencies; a commitment to transparency by 
registering host Nation subsidiary companies; a formal 
declaration that the company will not plan or participate in 
any operations that seek to destabilize governments or alter 
the political or military balance in a host nation; a 
commitment that the company will not supply lethal equipment 
nor permit employees to bear arms, except for those carried for 
personal protection or for the defense of clients, without 
possessing a license from the host government or mandated 
authority; and, finally, the establishment of an executive-
level ethics committee to review and approve all significant 
new client contracts.
    Additionally, and in closing, we believe that U.S. 
Government resources in areas of operation would help provide 
improved oversight to private security providers.
    While reputable PSCs can and have established policies and 
codes to ensure the ethical delivery of their services, 
ultimately only the U.S. Government can establish formal 
industry-wide regulatory and ethical standards though the 
introduction of more stringent contractual obligations and a 
commitment to the enforcement of these obligations
    The regulatory provisions described above and discussed 
earlier are an important step in establishing standards, but 
will only be effective if sufficient resources are committed to 
ensure that they are upheld and a more rigorous approach is 
taken towards those who do not uphold them.
    Working under the direction and guidance of Congress and 
the U.S. Government agencies we support, the private security 
industry is capable of providing meaningful contributions to 
U.S. Government stabilization and reconstruction efforts in 
high-risk areas around the world. This work, we know, must be 
delivered with full adherence to U.S. and host Nation local law 
and with full commitment to the provisions of international 
human rights and humanitarian law.
    I very much appreciate the opportunity to speak to you this 
morning, Chairman Lieberman and Ranking Member Collins, and to 
the Members of the Committee, and I look forward to taking any 
    Chairman Lieberman. Thanks, Mr. Schmitt, for that 
constructive testimony. I appreciate it.
    Our last witness this morning is Professor Laura Dickinson 
of the University of Connecticut Law School. I will express 
parochial pride in the fact that you are here from UConn Law, 
and I will say with additional parochial pride that is not why 
you are here. But the staff of the Committee, in asking people 
who in academia would have the most to contribute, kept 
receiving your name in answer to that question, and I was very 
pleased to hear that.
    Professor Dickinson has written extensively on U.S. 
Government privatization of foreign affairs functions. She 
served during the Clinton Administration in the Department of 
State's Bureau of Democracy, Human Rights, and Labor.
    Thank you very much for being here.

                   CONNECTICUT SCHOOL OF LAW

    Ms. Dickinson. Thank you, Mr. Chairman, Ranking Member 
Collins, and other Members of the Committee. It is a great 
privilege to be here with such a distinguished panel.
    \1\ The prepared statement of Ms. Dickinson appears in the Appendix 
on page 60.
    While most contractors have performed admirably and have 
filled vital roles--and, indeed, more than 1,100 have died in 
Iraq--many have committed serious abuses without being held 
accountable. The use of private security contractors and 
interrogators poses special risks and potentially threatens 
core values embodied in our legal system, including respect for 
human dignity and limits on the use of force, as well as a 
commitment to transparency and accountability.
    How should Congress respond to the problems posed by 
private security contractors? One possibility is to define 
certain functions as inherently governmental, such as security, 
and ban outsourcing of these functions entirely. However, the 
drive to use contractors will likely persist and may even 
expand, particularly once the inevitable drawdown of troops in 
Iraq begins. Therefore, it may be difficult, and perhaps even 
unwise, to limit significantly the use of such contractors.
    Another approach might be for Congress to define such 
functions as core functions rather than inherently 
governmental, which would permit outsourcing, but at the same 
time impose limits on the percentage of positions that may be 
turned over to contractors while mandating higher standards of 
oversight for these positions.
    Regardless, Congress will need to institute more effective 
measures to punish contractors who commit abuses. The MEJA 
Expansion Act of 2007, which has already passed in the House 
and which is pending in the Senate, would close important 
loopholes in the Federal courts' jurisdiction over contractors 
who commit crimes overseas. I suspect, however, that these 
types of back-end enforcement measures, while critical, will be 
insufficient. I, therefore, propose five steps that Congress 
can take to improve contracting practices, oversight, and 
monitoring so as to better prevent abuses before they occur.
    First, Congress should establish minimum standards for 
contractual terms. As my co-panelists Mr. Bell and Mr. Kennedy 
have testified, the Department of State and the Department of 
Defense have made significant progress in this area. However, I 
recommend that we do more. I think Congress should go further 
and establish a set of minimum standards to guide the drafting 
of private sector contracts. These minimum standards would 
explicitly make contractors subject to clear, consistent rules 
regarding the use of force and establish specific requirements 
for training and recruitment.
    With respect to the use of force in particular, these rules 
should be both specific and consistent across governmental 
departments. Indeed, the Department of Defense and the 
Department of State rules have sometimes differed from each 
other. For example, as Mr. Kennedy's report concluded in the 
wake of the September 16, 2007, Blackwater incident, the 
Department of Defense at the time required its security 
contractors to fire aimed shots when responding to a threat, 
while the Department of State did not.
    Similarly, Congress could mandate that contracts with 
private security companies do more to explicitly require that 
contractor employees receive training in the applicable limits 
on the use of force, including very specific training in 
international human rights and humanitarian law. Experts have 
concluded that training thus far has in some cases been 
insufficient. DOD's recently proposed rule that certain 
security contractors should receive training by military 
lawyers is a very strong measure that would be a significant 
improvement. I would argue, however, that Congress should 
legislatively require such training rather than leaving it up 
to agency discretion, as the agencies have differed in their 
practices on this question.
    Congressionally mandated standard contractual terms should 
also include consistent recruiting and vetting requirements for 
security contractor employees. Vetting becomes even more 
critical and more difficult as the number of non-citizen 
contract employees rises. Finally, in the increasingly global 
market for labor, recruiting practices are particularly 
important, and Congress could impose minimum standards here as 
    Second, Congress should encourage better interagency 
coordination. Government officials from the multiple agencies 
that have hired security contractors have not in the past 
communicated well with each other in the field or in 
Washington, contributing to a climate of confusion that can 
create abuse. For example, in some cases, military commanders 
have not known when security contractors hired by other 
agencies passed through their areas because there was no clear 
system in place to communicate that information to them. And 
the agencies have not had a working, unified system for 
counting, let alone keeping track of what contractors are 
    As mentioned above, agencies have applied different rules 
regarding the use of force, and when there are investigations, 
multiple agencies have been on the scene. Moreover, the precise 
jurisdiction of each agency has been unclear, leading to 
further confusion.
    For this reason, we must improve interagency coordination 
of contractors both on the ground and in Washington. The 
Memorandum of Understanding between the State and Defense 
Departments is an important step, but we can do much more. I 
would argue that Congress should require the establishment of 
an interagency working group to set common standards for 
security contractors and design uniform systems for keeping 
track of them, improving communication, and clarifying lines of 
    Third, Congress should expand the contract monitoring 
regime. An effective contractual regime must include sufficient 
numbers of trained and experienced governmental contract 
monitors. We have recently cut back on the acquisitions 
workforce, and the personnel who are on the payroll do not have 
adequate incentives to serve in Iraq and other conflict zones. 
The problems caused by the sheer low number of personnel are 
exacerbated by a lack of expertise in the particular issues 
raised by security contractors. Many of the contract personnel 
were trained in another era. They did not learn how to manage 
service contracts, let alone service contracts that raised the 
specific problems regarding security.
    Congress should mandate that agencies increase the number 
of monitoring and oversight personnel, ensure that they 
specialize in the types of tasks they are overseeing, and 
require that they receive specific training in rules regarding 
the use of force.
    Fourth, Congress should require regular reporting. One of 
the factors that is creating the oversight challenge is a lack 
of information, combined with the piecemeal way that much 
information about contractors comes to Congress and to the 
public at large. Recent legislation and bills in the pipeline 
would improve the situation but do not go far enough. Congress 
should require each agency to report to Congress quarterly or 
every 6 months. If Congress establishes an interagency working 
group, it could be the task of this group to coordinate and 
provide the report. Moreover, this report should not only 
identify the number of contractors and oversight personnel, but 
it should provide information about the tasks the contractors 
are performing, the number of incidents in which security 
contractors fire their weapons and injure third parties, and 
qualitative assessments about whether these incidents raised 
    Furthermore, the reports should provide information about 
follow-up: Whether there was an investigation, what the 
conclusion was, and what happened subsequent to the 
investigation. If the State Department can report annually on 
the human rights conditions in all of the countries around the 
world, the agencies should be able to provide Congress with 
minimal information about their own security contractors. Of 
course, any mandate should be funded so that the agencies have 
the resources to do this work.
    Finally, Congress should foster accreditation and 
licensing. Congress should encourage the creation of third-
party monitoring, accreditation, and certification entities and 
then consider requiring such third-party approval as part of 
the contract. At least one industry organization, the 
International Peace Operations Association, has launched this 
sort of a system, and its work has been very important. 
Accreditation by an independent organization, I would argue, 
would be an even better approach, but no organization yet 
exists. The National Committee on Quality Assurance, which 
rates and monitors health maintenance organizations (HMOs) in 
the health care area, might serve as a model. Congress could 
encourage the creation of such an entity by providing seed 
funding or, as it has done in the health care area, by giving 
agencies the authority to deem ratings by such an independent 
entity as sufficient to satisfy congressionally mandated 
    In conclusion, it is extremely important that Congress move 
forward with this Committee's efforts to impose greater 
contractual standards and monitoring requirements on private 
security contractors. To that end, in addition to any 
legislation arising from this Committee, the work of the new 
Commission on Wartime Contracting in Iraq and Afghanistan will 
provide an important forum for further consideration of these 
    Thank you very much for the opportunity to address this 
    Chairman Lieberman. Thank you very much, Professor 
Dickinson. Thanks for the suggestions, and I promise you that 
we will consider those as we consider whether and how to 
legislate, as we will the suggestions that Mr. Schmitt made. We 
are going to do a 6-minute round of questioning to move the 
discussion around to the Members here.
    I appreciate what has been done to provide for better 
management of private security contractors, as both Mr. Kennedy 
and Mr. Bell have testified to. Let me try to focus on the 
question on which I am interested in, which is, are we using 
private security contractors too much? In other words, are we 
for various reasons using private security contractors in what 
might be called inherently governmental functions that would 
better be carried out by full-time government personnel?
    I know you could talk for hours on that. I want to ask Mr. 
Kennedy and Mr. Bell just to give me a quick response to that 
overall question. Too many PSCs?
    Mr. Kennedy. Mr. Chairman, I do not think so, for two 
reasons. The way the State Department uses PSCs, we ensure that 
they do not engage in any law enforcement activities and they 
do not engage in any what I will call ``aggressive combat 
activities.'' They simply engage in defensive activities.
    The second point I would make, Mr. Chairman, is that, at 
least for the State Department, the ebb and flow of the 
activities in Iraq today, Xanadu tomorrow, or Shangri-La next 
year create a curve that I do not believe that the State 
Department has the resources to meet. We only have 1,500 
special agents. To deploy them all to Iraq and Afghanistan 
would mean we would have no defensive advisory capability at 
any other post in the world, as well as no one in Washington to 
pursue important activities such as combating passport and visa 
fraud. So I believe that private security contractors, with 
appropriate oversight, with the full panoply of restrictions 
and injunctions placed into the contracts, constitute an 
important tool for the State Department to carry out its 
    Chairman Lieberman. So I understand the second part of what 
you said. Obviously, there is a benefit to a private security 
contractor because it is not a full-time governmental employee 
and you can retain their services in the arena where you need 
them. But I wonder, if I can phrase this question differently, 
whether we are at a point where we ought to be able to foresee 
not only the need for private security contractors in Iraq and 
Afghanistan but, to carry on your wonderful fantasy names, 
Shangri-La and Xanadu and, therefore, increase the total number 
of full-time Diplomatic Security beyond the 1,500 that it is at 
    Mr. Kennedy. Mr. Chairman, we employ in Iraq alone 1,518 
contractors, just in the security arena, which is almost 
exactly the same number as the Diplomatic Security special 
agents we have. We also employ other contractors, for example, 
assisting our personnel who go into the Gaza Strip or the West 
    I do not feel confident to say that requirement would 
continue in perpetuity. I wish to have a robust Diplomatic 
Security Service. I think that is essential to permit us to 
carry out our activities abroad. But a doubling or a tripling 
of the Diplomatic Security Service, I am not sure about, Mr. 
Chairman. We are seeking a few additional resources so that we 
can have, as the Secretary has mandated from the report, a 
Diplomatic Security special agent move as the agent in charge 
in every one of these convoys. I think that pairing of a 
Federal agent as the agent in charge, backed up by contractors, 
is the appropriate way to go, sir.
    Chairman Lieberman. Mr. Bell, what is your quick answer on 
the DOD side? Too many PSCs?
    Mr. Bell. Sir, we do not believe so, and I think it is 
important to insert in the record here very briefly that we are 
operating within a well-defined U.S. Government policy 
regarding what is an inherently governmental function and what 
is not. As you know, Policy Letter 92-1 from the Office of 
Management and Budget (OMB) defines what is an inherently 
governmental function and what is not. And I would just like to 
emphasize that Appendix B, Paragraph 19 of that Public Policy 
Letter specifically exempts personal security contractor 
functions as not being inherently governmental.
    That policy has been in place since 1992. We have built our 
DOD force structure around the assumption that they would not 
be inherently governmental.
    So, for example, if you looked at the approximately 9,200 
personal security contractors that we have in Iraq and 
Afghanistan, using the Congressional Budget Office analytical 
construct from their work in 2005 on DOD staffing, it would 
indicate we would probably have to have somewhere on the order 
of magnitude of nine brigades of military forces to support the 
rotation of troops in and out for a fielded force of 9,200 
private security contractors.
    Chairman Lieberman. I hear you on that. The fact is that 
there have been numerous incidents that have drawn private 
security contractors in Iraq into hostilities, when they have 
been deployed to protect personnel, convoys, or facilities in 
hot zones. I understand, for instance, that Forward Operating 
Base Shield, which is a quarter mile from Sadr City, is guarded 
by a contractor.
    So I wonder whether there has been any shift in the 
Department's policies about when security contractors should be 
used and when they should not, and whether, in fact, they are 
not inherently in some of these cases in hot zones performing 
governmental functions.
    Mr. Bell. The line of distinction, as Mr. Kennedy has 
pointed out, is whether they are used for defensive purposes or 
need to be involved in offensive combat operations. Static base 
security is considered to be defense. The private security 
contractor personnel that we have engaged in that static 
security defense are clearly trained on the fact they are not 
to engage in offensive operations. But as for any base that is 
threatened by a hostile force, the role of that security force 
is to protect that base.
    So that is the distinction that we have been using within 
the Executive Branch, certainly at DOD, regarding what is an 
appropriate role for a private security contractor.
    Chairman Lieberman. OK. My time is up, but I want to come 
back to this in the second round. Thanks very much. Senator 
    Senator Collins. Thank you. Actually, Mr. Chairman, you 
have set up perfectly the questions that I want to ask, because 
I, too, believe that the fundamental question here is what 
functions are appropriate to contract out and what functions 
should be retained and are, in the bureaucratic term that we 
use, inherently governmental.
    This is a section of the Army Field Manual, and as you can 
see, it is a very thick section. And it is entitled 
``Contractors on the Battlefield.'' It sets forth the standards 
for when you would use a contractor. It is very detailed. It 
was written by a contractor. In other words, a private security 
contractor wrote the guidance in the Army Field Manual for 
using contractors on the battlefield. And I want to ask each of 
you whether you think that is appropriate.
    It seems to me that this is inherently governmental, but 
even if it is not inherently governmental, it seems to me that 
there is at least an inherent conflict of interest to have a 
contractor writing the section of the manual on the use of 
contractors. But I am going to start with you, Mr. Bell, since 
it is a DOD document.
    Mr. Bell. With all due respect, Senator Collins, I am sure 
that that document was not issued without detailed review by 
both military and civilian employees of the Department of 
Defense. We do, as you know, use contractors for different 
drafting purposes. I have not actually seen the manual in 
detail. I know specifically what it is. But I would suggest 
that the document has been thoroughly vetted by both DOD 
military personnel as well as civilian personnel in its 
    Obviously, there is the appearance, as you are pointing 
out, of an apparent conflict of interest in that, but I would 
suggest that that probably had very detailed screening.
    Senator Collins. Well, our understanding is that the 
contractor received some basic guidance, but essentially did 
the job. It obviously was reviewed----
    Mr. Bell. Right.
    Senator Collins [continuing]. As you have said. I want to 
ask the professor her opinion on this.
    Ms. Dickinson. Well, I do think it raises concerns, a 
broader concern, which is that when you outsource certain 
functions, there is a risk that you lose the capability in-
house. Now I am not suggesting that the military has lost the 
capability of doing that particular job, but with respect to 
security, I think there is a risk, and that is why I think we 
ought to think about limiting the percentage of positions that 
can be outsourced. And, of course, anytime you have risk to 
human life, then there is a greater concern, and so there 
should be greater oversight.
    Senator Collins. Thank you.
    Mr. Bell, another specific issue that is raised by this 
Army Field Manual is the role of contractors in the 
interrogation of prisoners. Now, I am told that an earlier 
version of this manual in 2000 had a specific prohibition 
against intelligence work being performed by private 
contractors. But in 2003, when the manual was revised--this 
version--that policy was omitted. And, subsequently, we had the 
abuse at Abu Ghraib. And according to the Fay Report, private 
contractors allegedly were involved in 10 of the incidents of 
abuse of Iraqi prisoners.
    Do you believe that the interrogation of prisoners is an 
inherently governmental function that should not be contracted 
    Mr. Bell. I can say, irrespective of my personal beliefs on 
this, that it has been defined that interrogation, translation, 
and prisoner/detainee operations are not considered inherently 
governmental functions. I think to the extent that we wanted to 
get into personal discussions, there would be a lot of 
different opinions on that. What we operate on is what is 
provided for specifically in the U.S. Government guidance.
    Senator Collins. Are you aware of a dispute within the Army 
on whether the earlier policy should have been reinserted into 
the 2003 version of this manual?
    Mr. Bell. Senator Collins, I actually am not.
    Senator Collins. OK. Mr. Kennedy, I also want to get your 
views on the timeline for finalizing a Memorandum of 
Understanding for Afghanistan. I understand it is finished for 
Iraq, but where are we as far as coming up with the same sort 
of guidance for Afghanistan?
    Mr. Kennedy. Senator, the requirement in the Defense 
Authorization Act for 2008 requires this to be done within 6 
months of the date of enactment. And Mr. Bell and I are under 
specific orders from Deputy Secretary England and Deputy 
Secretary Negroponte that we are not to fail to meet that 
deadline. So it will be done within 6 months, and it will 
incorporate Afghanistan and Iraq as the Defense Authorization 
Act requires.
    There is already a first draft of it circulating among our 
agencies, and we have every intention of making it. It is a 
complicated issue because of the volume of individuals to be 
registered and conforming practices. But there is a clear 
congressional mandate, and we will meet it, ma'am.
    Senator Collins. Thank you.
    Mr. Bell. Let me clarify Mr. Kennedy's comment. With 
specific regard to PSC operations for Iraq and Afghanistan, we 
have 120 days after the enactment of the legislation to comply 
with Section 862. Mr. Kennedy was referring to the larger 
issue, and Section 861 is where we have to put in place the 
database, the tracking mechanisms, and the policies regarding 
all DOD, State Department, and USAID contractors. But the 
deadline for PSC compliance is 120 days after enactment, so 
that is in April.
    Senator Collins. Thank you.
    Chairman Lieberman. Thanks, Senator Collins. Senator 


    Senator Tester. Thank you, Mr. Chairman. I want to thank 
all the witnesses today for being here. This is a very 
important hearing. It has been very valuable to me. I think 
there are a couple reasons why we have such a hearing, and 
other people may have different opinions: to make sure that 
taxpayer dollars are spent to the best effect and that they are 
not being wasted. Regrettably, I do not see an urgency there, 
and I have heard a lot of information about what has been going 
on with contractors, particularly in Iraq. And it is of great 
concern to me.
    I am very proud of the nine freshmen in this Senate, led by 
Senator Webb, Senator McCaskill, and others, who are setting up 
a contracting commission to find out what is going on and get 
to the bottom of how these dollars are being spent. 
Unfortunately, I think the President put a signing statement on 
that DOD authorization bill that I hope does not block this 
important work.
    It is important we spend the dollars correctly for obvious 
reasons. When you are at war, the money has to go to what is 
important--armor protection, bullets, equipment, those kind of 
things. And then we also need to understand how contracting 
would affect our troops, and there is a lot of information out 
there about what the contractors are getting paid versus what 
the troops are getting paid--6 or 7 times as much is what I 
have heard. And I think that could have a tremendously negative 
effect on morale. So I really appreciate your being here. I do 
have some questions.
    Mr. Kennedy, you talked about local laws and regulations 
being adhered to by the contractors. When did this start 
    Mr. Kennedy. Senator, it is a requirement in the State 
Department worldwide security contract that we issue that 
governs all the contractors we employ. It is a prima facie 
    Senator Tester. OK. Has that been put in all the contracts 
from the beginning? Because there are plenty of examples where 
contractors have, well, to be blunt, killed Iraqis and have 
been escorted out of the country before any law enforcement 
could take place in Iraq.
    Mr. Kennedy. It has been in the contract. We have referred 
the case, I believe, that you are referring to, Senator, to the 
Department of Justice. And, unfortunately, I cannot comment on 
it any more because I do not have any information from DOJ.
    Senator Tester. That is fine.
    Mr. Kennedy. But we are pursuing that case at DOJ, and if 
it is appropriate, the individual would be brought to justice.
    Senator Tester. How many contractors are Americans and how 
many are foreign?
    Mr. Bell. It varies, depending on whether they are personal 
security contractors or not.
    Senator Tester. Well, of the total 163,000--well, over 
200,000, approximately, ballpark figure?
    Mr. Bell. The figure, I believe, is about 17 percent 
    Senator Tester. Seventeen percent American, 83 percent 
foreign born?
    Mr. Bell. Yes, sir. Most of those are third-country 
nationals, but we have some host-country nationals as well.
    Senator Tester. Is that about the same ratio in the 
Department of State?
    Mr. Kennedy. No, sir. All of our direct personal security 
contractors are Americans.
    Senator Tester. OK, so of that 9,200 that you talked about?
    Mr. Kennedy. It was 1,500, sir, we have 1,500 personal 
security contractors in Iraq; 792 are personal security 
professionals. They are all Americans.
    Senator Tester. OK.
    Mr. Kennedy. We have 431 static guards. Almost all of those 
are third-country nationals with American supervisors. And then 
there is some support personnel, technical personnel, cooks, 
etc., who are----
    Senator Tester. OK. You actually used two terms. You used 
1,500 special agents, and then during testimony somewhere--and 
I think this was attributed to you--you said there are 9,200 
PSCs. Is that incorrect?
    Mr. Bell. That is actually my quote, Senator. That is 9,200 
in Iraq and Afghanistan for the Department of Defense.
    Senator Tester. Help me out. You have 163,590.
    Mr. Bell. Yes, sir.
    Senator Tester. Where is the 9,200?
    Mr. Bell. The 9,200 are a subset of that. Those are the 
personal security contractors that are a subset of the total 
number of contractors.
    Mr. Kennedy. And, Senator, if I might, it just happens to 
be that our number of contractors in Iraq is 1,518, and the 
total number of our special agents worldwide is 1,500
    Senator Tester. So you are saying that 1,518 is 100 percent 
    Mr. Kennedy. No, sir. Half of--792 of the 1,518----
    Senator Tester. So half American.
    Mr. Kennedy [continuing]. Are Americans. Half of them, and 
then of the other half, about 10 percent or so have American 
supervisors, but those are static guards or support personnel.
    Senator Tester. Good enough. One thing that came to me--and 
this goes back to the questions of the Chairman and Senator 
Collins. Mr. Bell, you talked about weapons systems were pretty 
much being manned by contractor personnel. That is somewhat 
concerning to me. We are talking about weapons systems that are 
being operated by contract personnel that, quite frankly, could 
go to the highest bidder anywhere in the country.
    Mr. Bell. The way it works, Senator, is we have about 
12,500 contract----
    Senator Tester. Numbers aside, just that philosophy, can 
you tell me what the justification of it is?
    Mr. Bell. The justification is usually the original 
equipment manufacturer (OEM) of a system--it is not usually the 
entire weapons system. It is a specific component of the 
weapons system. It is involving technology that has to be 
    Senator Tester. OK.
    Mr. Bell. And so most of the contractors that we have doing 
that are representatives of the OEM.
    Senator Tester. OK. Thank you, Mr. Chairman.
    Chairman Lieberman. Thanks very much, Senator Tester. 
Senator McCaskill.


    Senator McCaskill. Thank you, Mr. Chairman, and thank you 
to the panel this morning. I have sent a letter to President 
Bush about the Status of Forces Agreement (SOFA). What I am 
really concerned about here is this notion that we are 
negotiating potential immunity from Iraqi law for contractors 
before it is very clear that every single contractor involved 
in a contingency operation or in a war zone is accountable to 
    As you all know, there are various, different types of laws 
that contractors are potentially accountable under. There is 
the Military Extraterritorial Jurisdiction Act, obviously. 
There is the Uniform Code of Military Justice. There are laws 
in the United States of America. And depending on what kind of 
contractor you are, it is not clear where you fall under these 
various accountability regulations.
    What I would particularly like to hear from Mr. Kennedy and 
Mr. Bell is a commitment on the part of the Departments of 
State and Defense that you would support the notion that we 
should enter into no agreement until it is laid out under the 
letter of the law, the accountability for acts performed by 
contractors that are in direct violation of our standards of 
conduct in the United States of America.
    Mr. Bell. Senator, we are already on the record, both the 
State Department and DOD, as strongly encouraging Congress to 
pass the amendment for the MEJA provision here. We think there 
is ambiguity in the current law that needs some attention, and 
until that is done, obviously, there are some questions about 
    I think certainly we would feel it would be ill-advised to 
issue an additional task order in support of our troops and our 
combat operations until that law passes because it is obviously 
something outside our control. But we very strongly endorse the 
recommendation that the MEJA law be passed as quickly as 
    Mr. Kennedy. If I could second that, one of the 
recommendations of the panel for which I was executive director 
is specifically to seek clarity, and in turn, the Secretary of 
State and Secretary of Defense have talked about this, along 
with the Department of Justice. And we fully agree with you, 
this must be clarified.
    There are statutes that are available to the Diplomatic 
Security Service if the event takes place on U.S. Government 
owned or leased property abroad. But there are obviously gray 
areas, and we want absolute clarity. We fully support, believe, 
and endorse that if a contractor employee commits a violation, 
it would be a violation in the United States, that individual 
should be brought to justice.
    Senator McCaskill. Do you agree that the President should 
not negotiate any Status of Forces Agreement and execute any 
agreement unless and until that law is clarified?
    Mr. Bell. Our great hope, Senator McCaskill, is that the 
law will be passed well in advance of the conclusion of SOFA 
negotiations, which are not scheduled to be concluded until 
some months from now. It is our view that this law needs to be 
passed as quickly as possible.
    Mr. Kennedy. Negotiating something as complex as the SOFA 
agreement or an agreement based upon the Vienna Convention is a 
very complex and time-consuming activity. And I believe that it 
is important that the negotiations proceed sequentially.
    Senator McCaskill. On another topic, I want to make sure I 
get both Defense and State Departments on the record today 
about the new auditing authority given to the Special Inspector 
General for Iraq Reconstruction (SIGIR) and to the Special 
Inspector General for Afghanistan Reconstruction (SIGAR) in 
last year's defense authorization bill that was signed into law 
by the President. I sponsored an amendment that expanded the 
authority of the SIGIR and for the new SIGAR to be able to do 
audit work in the area of these security contracts.
    The tricky part is getting the Inspectors General at the 
State Department and at DOD to cooperate and work effectively 
in order to make sure that the horizon is covered with the 
appropriate audit work. I know that Mr. Krongard had testified 
in front of Congress that he did not have sufficient resources 
to do the kind of audit work that, frankly, would have exposed 
some of the problems that have been exposed in the press. It is 
bad when we learn about bad stuff by someone other than the 
Inspectors General because that means the Inspectors General 
are not adequately doing their jobs or do not have the 
resources to do their jobs. And many times it is the latter, 
not a lack of will.
    I know that Mr. Krongard is now gone from the State 
Department, but it is my understanding there have been 
meetings, regarding where we have jurisdiction here, and we are 
not sure, so we are anxious for you to do these audits. This 
amendment was passed to make sure that no one had the excuse 
that someone did not have the responsibility for doing the 
audit work in this important area.
    Mr. Bell.
    Mr. Bell. Having spent 7 months in Afghanistan in 2003 and 
2004, Senator McCaskill, I strongly welcome the approval of the 
SIGAR authority, to establish the same authority there we have 
in Iraq with SIGIR. So I welcome that.
    I personally have not seen any evidence of any territorial 
disputes between DOD and SIGIR. I do not know the personnel who 
may eventually be nominated to take the responsibility for 
SIGAR. I know some qualified candidates. Knowing General 
Kicklighter, who is our Inspector General, I would assume that 
he has no sense of turf or stovepiping desire in his duties and 
would welcome that opportunity.
    I believe that SIGIR has done a good job as much in 
preventive oversight as in retroactive oversight, and I think 
that is an important thing to establish. We have recognized in 
some work the Secretary asked me to do last September that we 
needed to strengthen the oversight in the field. We have given 
authority to the Joint Contracting Command in Iraq and 
Afghanistan so that they must pre-clear all contracts. We are 
adding up to 300 Defense Contract Management Agency (DCMA) 
personnel going into Iraq and Afghanistan before the end of 
March; a hundred of them are already deployed--all with the 
point of view I think the direction you are leading, which is 
we need much stronger integrated oversight of all post-award 
contract administration.
    Senator McCaskill. And I am more worried about the State 
Department than I am the Defense Department in this regard.
    Mr. Kennedy. As you know, Senator, the Inspector General is 
an independent entity within the State Department and not under 
the jurisdiction of the Under Secretary for Management, as it 
should be.
    I have been briefed that the Inspector General of the State 
Department's team and SIGIR have already engaged in some joint 
reviews. I know that the Inspector General of the State 
Department is in the process of staffing a regional office in 
Amman, Jordan, so that the new Inspector General or the current 
Acting Inspector General will have resources in the field, 
because I fully agree that oversight by an independent entity 
such as an Inspector General is a critical element. I welcome 
that. I welcome the information that the Inspectors General can 
provide to me as the management adviser to the Secretary so I 
can make course corrections when I see that.
    If I could also second something that Mr. Bell has said, we 
are just in the process of changing over our entire contracting 
support operation in Iraq to what we call a working capital 
fund so that we assess a small fee on every contract and that 
fee goes to the contracting office that guarantees, as work 
rises and falls, they have sufficient resources to give every 
contract the sufficient front-end work, signing work, and post-
award work.
    So these are activities that I personally am very committed 
to, and I know that our Inspector General is working with SIGIR 
and is working to push personnel into the field so they are 
closer to the scene in Iraq and can do a better job.
    Senator McCaskill. OK. Thank you, Mr. Chairman.
    Chairman Lieberman. Thanks very much, Senator McCaskill. 
Senator Akaka, welcome.


    Senator Akaka. Thank you very much, Mr. Chairman. Let me 
apologize for being here late as I was chairing another 
    Chairman Lieberman. Understood. Thank you. Glad you came.
    Senator Akaka. And I welcome our witnesses here. Mr. Bell, 
many reports indicate that Department of Defense private 
security contractors utilize non-American personnel. 
Specifically, a January L.A. Times article pointed out a firm 
called Triple Canopy that relied on Peruvian citizens to work 
security in Iraq.
    How can the Department adequately ensure the suitability of 
non-U.S. citizens for work as security contractors? And what 
additional challenges do they pose for the Department?
    Mr. Bell. Thank you, Senator Akaka. It is good to see you 
again, sir. Obviously, every private security contractor has to 
be vetted from a security perspective in their home country, 
just as they would for an interpreter, a translator, or an 
intelligence operative. And so the vetting process is conducted 
against the same standards we would use for any other function 
where we recruit foreign nationals to do that.
    Out of the 6,467 armed security contractors we have in Iraq 
working for DOD, about 5,300 of them are third-country 
nationals. Many of them come from countries where that vetting 
process is relatively easy, such as the U.K. and South Africa. 
There are a number of others where it is more difficult, but we 
have the procedures and the capability to do that vetting, and 
that has not been, to our knowledge, a problem.
    Senator Akaka. I understand some of these have experience 
as ex-military personnel and ex-policemen in their countries. 
Let me ask, are there background checks made on each one of 
these individuals?
    Mr. Bell. There are, sir, and in fairness, when we recruit 
people, for example, there are a substantial number of former 
British Army Gurkhas, who have obviously been vetted by the 
British Government themselves, who are working as private 
security contractors. We do additional vetting over and above 
their credentials for having served in a government. So that is 
done on an individual basis.
    Senator Akaka. Mr. Schmitt, in your testimony you alluded 
to security contracts being awarded based more on claimed 
versus demonstrated capabilities. Can you please explain that?
    Mr. Schmitt. Certainly, Senator, and good morning.
    Senator Akaka. Good morning.
    Mr. Schmitt. That basis really comes from some of the 
observations that I personally had when I had the opportunity 
to serve at the Coalition Provisional Authority (CPA) in 2003 
and 2004 in Iraq. And more publicly, from some of the instances 
we have seen that are really a matter of public record--and I 
guess probably the most striking example would be the Custer 
Battles Company, which, as I recall, had really no background 
or past performance as a security provider whatsoever, but was 
awarded a security contract to provide the security for the 
Baghdad International Airport.
    So for an established firm, not just mine but many others, 
to see something like that and then to see that contract really 
disintegrate, we took great concern with that. And certainly 
the FAR exists for a reason, both at the Federal level and at 
the agency level, but we also are sympathetic that there was 
such great need at that time and such great demand that the 
services need to be rendered quickly.
    Our view is that, as I mentioned this morning, Senator, if 
we can identify the processes in advance, much like the 
indefinite delivery/indefinite quality (IDIQ) contracts that 
are more greatly being used by the agencies, the agencies then 
can identify suitable providers before the need occurs. And 
when that need occurs, the providers are ready to respond. The 
American taxpayer has the assurance that the provider is, in 
fact, qualified and is, in fact, prepared to do what they have 
demonstrated they can do through the evaluation process.
    Senator Akaka. Thank you.
    Mr. Bell, one concern raised in a joint Subcommittee 
hearing I co-chaired on January 24, 2008, regarding contingency 
contracting in Iraq and Afghanistan was that contractors are 
not under the same obligations as U.S. servicemen and 
servicewomen. For example, a contractor could refuse to travel 
to dangerous areas of Iraq.
    Does the Department feel comfortable that there is a strong 
chain of command with private security contractors?
    Mr. Bell. Yes, Senator Akaka, we did discuss that at the 
last hearing. We are comfortable that we are being fully 
supported by the contractor companies. If they have an internal 
problem with an individual contractor personnel refusing the 
mission, they also have the obligation to supply somebody 
according to the timetable we have to perform that mission. I 
have actually had personal conversations with the heads of 
several of the private security contractors who provide those 
kinds of services, such as KBR, Inc., which has the Logistics 
Civil Augmentation Program (LOGCAP) contract, to query whether 
this has at any time been a problem or looks like it could be a 
problem. We are getting strong, consistent assurances that with 
our reliance on the individual company to provide the personnel 
required, they do not anticipate any problem in that regard.
    Senator Akaka. Well, thank you very much. Thank you for 
your responses.
    Mr. Chairman, I have a statement that I would like to be 
included in the record in the proper place. Thank you.
    [The prepared statement of Senator Akaka follows:]
    Thank you, Mr. Chairman, for holding this important hearing.
    I have made it a point over the past year to take a close look at 
government contracting for goods and services. At several hearings with 
both in this Committee, and in the Armed Services Committee, a pattern 
of insufficient contract oversight and poor execution has emerged. In 
too many cases, contracts are awarded hastily with not enough Federal 
employees overseeing them, putting the government at risk of waste, 
fraud, or abuse.
    In particular, I have been concerned about hiring contract workers 
to fill gaps in the Federal workforce. Agencies across the Federal 
Government rely on contractors to fulfill critical government 
functions. Alarmingly, many agencies don't even know how many 
contractors are working for them, side by side with Federal employees, 
at any one time.
    The Federal Government has all too often passed off the job of 
managing contractors to the contracting firms themselves. There are 
currently no consistent standards across agencies that say who can be a 
private security contractor or how they should be managed. Different 
contract security firms conduct different levels of background checks 
and have different hiring standards.
    The legal status of many contractors operating outside of the 
United States needs to be clarified. The law is ambiguous at best as to 
how private security contractors are treated when they break the law in 
foreign countries.
    For the foreseeable future, private security contractors will need 
to be used abroad. Our dependence on them can not be ended quickly, but 
we can do more to ensure better oversight and management. Reforms are 
needed to make sure that the Federal Government is using private 
security contractors appropriately and that they are well suited to 
work for the Federal Government.
    I am a cosponsor of the Security Contractor Accountability Act 
which would clarify the legal status of security contractors overseas 
to ensure that they are accountable for their actions. However, the 
legal status of contractors is only part of the problem. Perhaps even 
more importantly we must institute standards for private security 
contractors to ensure that they behave appropriately in the field.
    This Committee has an important role in reforming contracting rules 
conducting oversight. Contractors should be held to the same high 
standards as our outstanding Federal workforce. Even though contractors 
overseas are not government employees, it is essential that their 
actions reflect well on the United States.

    Chairman Lieberman. Thank you very much, Senator Akaka.
    I would like to return to a few of the questions that I 
raised at the outset, regarding the kind of functions that 
private security contractors are performing now. They have been 
involved in so many shooting incidents, and I am assuming, for 
the record, that those are justified incidents of shooting. But 
I wonder if the distinctions that we are making that we 
discussed earlier, Mr. Bell, between defensive and offensive 
operations really are relevant in that sense. I will start with 
Ambassador Kennedy because I did not have a chance to ask him 
about this. The security contractors from the Department 
obviously are often assigned tasks or sent into areas that put 
them at high risk of being engaged in the use of force. And I 
know you spoke to this issue somewhat in earlier comments, but 
I want to ask you if you would address the validity of the 
distinction between defensive and offensive security.
    Mr. Kennedy. Clearly, Senator, we ask our security 
contracting professional colleagues to engage in dangerous 
    Chairman Lieberman. Right.
    Mr. Kennedy. During calendar year 2007, in Iraq--this is in 
both Baghdad and other locations where the State Department 
uses personal security contractors--we asked them to run over 
5,648 missions. There was a very small percentage of those 
missions--I will calculate that and get it to you--where there 
was escalation of force and actual shooting. So the numbers are 
relatively small, but they have been deadly over the years. 
During the course of the existence of the American Embassy in 
Iraq after it was turned over to the State Department from the 
CPA, two State Department Foreign Service security officers, 
government employees, have been killed, and 28 colleagues from 
the contract security forces have been killed as well. So this 
is inherently dangerous.
    Chairman Lieberman. Yes.
    Mr. Kennedy. However, their actions that they take are 
entirely defensive. They do not fire unless they are approached 
and encroached into the zone, and then they go through a very 
specific and laid-out rubric, flashing lights, hand signals, 
large placards on the back of the trailing vehicle. So we have 
very specific rules of engagement that say you do not fire. And 
then as the next to the last resort, you fire shots into the 
engine body of the vehicle that is encroaching on you to 
attempt to disable the vehicle, and only then as a last resort 
do you fire into the cabin or the body of the vehicle.
    So it is a dangerous environment, but the percentages are 
relatively small, where escalation of force and actual shooting 
occurred but the number of missions, as you can see, is very 
large, over 5,600 in 1 year.
    Chairman Lieberman. Mr. Schmitt, let me ask you to get into 
this from the contractor's point of view. Is the distinction 
between offensive and defensive actions is a meaningful one? 
And, parenthetically--I know the parent company of ArmorGroup 
is British--I'd like to know whether, from your own experience 
whether the British Government system, both for hiring 
contractors and for describing responsibility once hired, is 
different from our own.
    Mr. Schmitt. Certainly, Senator. Clearly, the British 
Government took an early lead on this, even, I would say, 
earlier than we did, in really about 2004.
    Chairman Lieberman. Meaning the use of the contractors or 
in rules to govern the use?
    Mr. Schmitt. The use and the rules themselves for the 
employment of the contractors. It is an essential question on 
the rules of force, which are different than rules of 
engagement, actually, and as the Under Secretary described, 
there is a whole series of procedures and actions that do 
    We believe that the most essential thing is that you train 
individuals prior to employing them on these tasks so that 
there is no question of how to de-escalate when you have a 
situation. Much can be determined on how a contractor is 
perceived by the local population.
    I will give you an example from my own experiences in 
Hurricane Katrina. I was deployed immediately upon landfall of 
Hurricane Katrina to set up our support for the de-watering of 
the city, and the thing that I felt was most important was the 
type of weaponry that we would use. We chose to use--and it was 
very dangerous, very lawless at the time--only shotguns, not 
    Now, you may ask, it is still a firearm, but the 
distinction in how it looks and how it is perceived by the 
local population makes all the difference. And the same is true 
in Iraq, and we believe that if you train individuals 
appropriately before placing them in the situation, you can do 
much to avoid the incident to begin with--not always. Sometimes 
you have to actually escalate very quickly to the rules of 
force where you may have to engage to protect life or limb. 
Many times you can avoid it.
    Chairman Lieberman. So do you think the existing defensive/
offensive security distinction that our government is following 
is a meaningful one?
    Mr. Schmitt. I do, Senator, and I think it is essentially 
important that we clearly state as a government and as a 
country that we only allow private security providers to 
provide defensive work. Private security providers are not 
agents of the U.S. Government. They are contractors.
    Chairman Lieberman. Right. Thank you. My time is up. 
Senator Collins.
    Senator Collins. Mr. Bell, I want to refer to a December 
2006 GAO report that is entitled ``High-Level DOD Action Needed 
to Address Long-standing Problems with the Management and 
Oversight of Contractors Supporting Deployed Forces.'' There 
were a number of recommendations in the report. One is that DOD 
had such limited visibility over contractors because 
information was not aggregated, and as a result, senior leaders 
and military commanders could not develop a complete picture of 
the extent to which they could rely or did rely on contractors 
to support their operations. And the GAO went on to give an 
example of a base consolidation plan that DOD officials were 
unable to determine how many contractors were even deployed to 
bases in Iraq.
    What is the current status in terms of DOD's visibility 
over contractors? This report is about 14 months old now.
    Mr. Bell. Thank you, Senator Collins. The report itself, 
even when it was issued, was somewhat dated, and I have had a 
series of conversations with Bill Solis about this. Let me give 
you the current status of those arrangements.
    First, as I mentioned earlier, we are in the process of 
implementing now a system we call SPOT, which actually will 
identify every DOD contractor who comes on a military base, and 
we will know where they are on the base--if they come to a 
dining facility, medical care facility, or when they leave the 
base. So we can actually identify and aggregate the statistics 
regarding the individual contractor personnel.
    Equally important, we have put into place in October of 
this last year the authority that all contracts and task orders 
that are going to be implemented in Iraq or Afghanistan must be 
pre-cleared by the Joint Contracting Command for Iraq and 
Afghanistan, so that not only do we know about the individuals 
who are transiting and moving around our AOR, we actually know 
what contracts are being implemented. This was not the case 
prior to that effort of putting the Joint Contracting Command 
Authority in place and as we implement the actual SPOT system, 
as we call it, for tracking the personnel. So we have about 
75,000 contractor personnel and contracts in the system already 
that is being fielded today. The State Department is pilot 
testing that for their own personnel for contractors. So we 
believe by this summer that the combination of having the Joint 
Contracting Command oversight of any contract to be implemented 
there as well as the actual ability to track individual 
contractor personnel and their movements will give us that kind 
of information.
    Senator Collins. Thank you.
    Another concern that GAO raised about the oversight of 
contractors is that DOD did not have sufficient contracting 
officers in-country. I know from my many briefings with the 
Special Inspector General for Iraq Reconstruction that he 
believes this is still a problem. Similarly, Ambassador, with 
the State Department, the October 2007 report found that there 
was not sufficient State Department contracting officers in-
country. There is a very startling statistic that my staff 
found that in 2003, USAID had only four employees to oversee 
its Iraq contract work.
    What is the status of your efforts to ensure that there is 
sufficient DOD acquisition personnel? I will start with you, 
Mr. Bell, and then the same question to you, Ambassador.
    Mr. Bell. Thank you again, Senator Collins. The Secretary 
of Defense asked me to do an assessment for him in September 
about how effectively we were managing contractors, addressing 
the whole range of operational and contract management 
activities. At that time, I recommended to him exactly what you 
have indicated here, that we need to substantially strengthen 
both the staffing and contracting authority of the Joint 
Contracting Command as well as significantly increase the 
amount of DCMA post-award contract administration.
    Subsequent to that, he has approved all those 
recommendations. We are in the process of adding 48 people just 
to the Joint Contracting Command as contracting officers. We 
have already put 100 additional DCMA personnel in. We have 
another 150 that are going in before the end of March. That 
meets the short-term need.
    The long-term need is one we have to address, which is the 
need to enlarge the civilian and military contracting 
capability and personnel force that we have available to deploy 
to support post-award contracting activity. That is a long-term 
problem. The Gansler Commission has some important 
recommendations regarding the need to strengthen that, 
particularly not only to train the people but to career-path 
them so we have appropriate levels of experience, both in 
contracting in general, but particularly in contingency 
    Senator Collins. Thank you. Ambassador Kennedy.
    Mr. Kennedy. Senator, the State Department approaches the 
problem slightly differently. We do not do major contracts in 
Iraq. In order to reduce the number of people at risk and make 
sure that we have the most robust contract oversight, all of 
our major contracts are written, negotiated, and executed in 
Washington by our contracting professionals here. So that is 
why we do not have as many contract executors there. What we 
do, though, in parallel to Defense, is we have contracting 
officer's representatives. For example, every Diplomatic 
Security special agent who is being assigned to Iraq now 
receives a 40-hour course on how to ensure that they enforce 
the provisions of the contract. We have contracts for 
telecommunications and so our information management 
supervisors there provide the oversight of the contract and 
refer any questions back to Washington. The same with our 
facilities and the same with our logistics.
    So we have the contract officer's representatives there who 
are professionals in the field that they are overseeing and 
they then refer questions or doubts about it to our central 
headquarters in Washington where the contract was negotiated 
and where there is the solid expertise on that. And that 
reduces the number of personnel at risk while at the same time 
maintains a robust oversight of the execution of the contract.
    Senator Collins. I will tell you, Ambassador, based on the 
discussions that I have had with Stuart Bowen, if you do not 
have the contracting officials in-country, you have a lessening 
of accountability and oversight. I realize the negotiation can 
be done in the safety of Washington, but look at all the 
terminations for convenience of the government that we have 
seen in Iraq when they really should have been terminations for 
default. And it is because you do not have the people on the 
ground. I think nothing substitutes for that on-site oversight.
    Mr. Kennedy. Senator, I have read Mr. Bowen's reports. I 
fully agree with you for those kind of contracts, but those are 
not the kind of contracts that are within my jurisdiction. 
Developmental contracts are the purview of the Agency for 
International Development. The one division that we have out 
there, the Bureau of International Narcotics and Law 
Enforcement that does various kinds of training, they do have a 
robust staff. I believe they are up to 11 contracting people 
overseeing that.
    I will be glad to get that data, but I fully agree with 
you, but it is the distinction of the type of contract that we 
use versus the kind DOD uses or the kind the Agency for 
International Development or some other body that is doing 
developmental work as opposed to internal operations 
    Senator Collins. Thank you.
    Chairman Lieberman. Thank, Senator Collins. Senator Tester.
    Senator Tester. Yes, thank you, Mr. Chairman,
    As I alluded to earlier, I think that any time taxpayer 
dollars end up unnecessarily in the contractor's pockets 
instead of going to support the troops in terms of body armor, 
vehicles, bullets, or just general overall support, I think it 
is a travesty. And I think it is our job to make sure that any 
fraud or abuse that happens does not happen.
    Along that line, Mr. Kennedy, in 2004, there was a 
Worldwide Personnel Protective Services (WPPS) contract 
awarded, which you alluded to earlier, for $332 million to 
Blackwater. Two years later, Blackwater received for that 
contract $488 million, over $150 million more than what the 
contract said.
    Was that contract competitively bid in the beginning? 
Explain to me why Blackwater would underbid a contract by that 
    Mr. Kennedy. Senator, the original Blackwater contract to 
provide protective security operations in Iraq was awarded by 
the Department of Defense in 2003. When the U.S. Embassy was 
stood up on relatively short notice in 2004, there was a brief, 
sole-source award to Blackwater by the State Department.
    Senator Tester. And that was this contract?
    Mr. Kennedy. The original one. However, the State 
Department was then in the process of awarding what we call the 
Worldwide Personnel Protective Security contract. That pre-
qualified companies, and there were three companies that won as 
being certified: Triple Canopy, Blackwater, and DynCorp. Then 
we post task orders to that contract that say we want you to 
bid now among the qualified firms for this particular task 
order. And then the three companies bid on that.
    Senator Tester. It was competitively bid?
    Mr. Kennedy. Yes, sir. And then the task orders are 
competitively bid. However, if during the period of the 
contract running for the year, if circumstances greatly change 
on the ground and we need additional PSCs, because of increased 
danger or expanded presence.
    Senator Tester. And that is the case?
    Mr. Kennedy. We then amend the task order, but they are 
paid the same rate that they won the bid on.
    Senator Tester. So Blackwater billed the State Department 
$1,222 a day for their employees, which was about $445,000 a 
year, which is well above the poverty line and well above what 
you pay our soldiers in the field. Is that typical?
    Mr. Kennedy. I hate to say it, Senator, but that is the 
competitively bid going rate, yes, sir. We competitively bid 
the contract, and we take the best price and best value. And it 
is what it costs these days----
    Senator Tester. And this is cost-effective rather than 
going with our active military to provide the support we want, 
to have control over, and as Senator McCaskill said, to be able 
to work our forces so everybody knows where they are at and 
integrate what is happening. That is cost-effective?
    Mr. Kennedy. Two things on that, Senator. When I was a 
member of the Secretary's special panel, I interviewed every 
senior U.S. military officer in and around Iraq from four stars 
to one star.
    Senator Tester. Yes.
    Mr. Kennedy. And I said if the State Department stopped 
using contractors to provide the protective security 
    Senator Tester. Yes.
    Mr. Kennedy [continuing]. For diplomatic activities there, 
do you, DOD, have the resources and the troops to take on the 
mission? And the answer was 100 percent uniformly, ``No.''
    Senator Tester. I do not doubt that a bit, but shouldn't we 
step up our efforts to make the active military more suitable 
because we are at war?
    Mr. Kennedy. That, Senator, is a question that I do not 
feel qualified to answer.
    Senator Tester. OK.
    Mr. Kennedy. But if I might, one other thing.
    Senator Tester. Yes.
    Mr. Kennedy. We have vetting procedures. We run through a 
complete schedule to make sure that we are getting everything 
that the taxpayer has paid for under the terms of those 
    Senator Tester. I understand, but if the bar is set at 
$1,200 a day, that is pretty incredible from my perspective. I 
mean, it is truly incredible.
    Mr. Kennedy. That is, of course, Senator, you realize, a 
fully loaded cost where they are providing the housing, the 
meals, the transportation.
    Senator Tester. Are you sure about that? When I went to 
Iraq, the folks who guarded me--they did a very fine job, I 
might say--were contractors and ate in the same barracks 
everybody else ate in.
    Mr. Kennedy. No, sir. If you went to Baghdad, you were 
protected by the Regional Security Office which uses 
    Senator Tester. Right.
    Mr. Kennedy. There is a Blackwater camp where they sleep. 
There is a Blackwater dining hall where they eat. And their ID 
card does not entitle them----
    Senator Tester. That is amazing.
    Mr. Kennedy [continuing]. To services in the Defense mess 
hall, which the State Department pays for independently.
    Senator Tester. All right.
    Mr. Bell. If I could, Senator Tester?
    Senator Tester. Yes.
    Mr. Bell. What you may have observed is they were on duty 
providing protection to you, which requires them to be in 
proximity to you when you have your meals.
    Senator Tester. OK. All right. Could you give me any kind 
of ballpark figure--and I know I am running out of time rapidly 
here. But of the $70 billion we just appropriated for Iraq and 
Afghanistan, what percentage of those dollars that you get will 
be used for contracts across the board, not just PSC but all 
contracts? Just give me an idea. And if you cannot, you can get 
back to me with what that amount might be.\1\
    \1\ See Mr. Bell's response to question for the record, which 
appears in the Appendix on page 147.
    Mr. Bell. I would like to take that as a question for the 
record because I think you deserve a good, specific answer on 
    Senator Tester. That would be fine, yes.
    Mr. Kennedy. I have a ballpark figure. I would say in Iraq 
it is about $400 million a year. But let me provide you with an 
exact figure for the record, Senator, because that would allow 
me to make sure I encompass all the costs, including the 
Northern portion and the Southern portion.\1\
    \1\ See Mr. Kennedy's response to question for the record, which 
appears in the Appendix on page 120.
    Senator Tester. That would be good. I know the contractors 
do a good job because I saw them. The ones I dealt with did a 
good job. But one of the things, I think, that the American 
public does not understand and why red flags go up on a 
contractor is because we think we have 150,000 or 170,000 
troops in Iraq. Well, we are paying for twice that many. And as 
you said earlier, Mr. Bell, only 17 percent are Americans, but 
we are supporting twice that many troops in Iraq. I know the 
militaries went down from 3.3 million to 2.2 million, and I do 
not doubt that. But this policy decision was made, and I just 
do not know if I quite agree with it, to be honest with you, 
from my perspective. And we can debate that some other time.
    Thank you very much.
    Chairman Lieberman. Thanks very much, Senator Tester. 
Thanks for your participation in the hearing.
    I would note the presence of the distinguished Senator from 
Delaware, Senator Carper.
    With apologies to the witnesses, I am going to turn the 
gavel over to Senator Akaka because I have to go to the Senate 
floor. So he will decide who winds this up. I want to thank the 
witnesses. You have been very constructive, and I appreciate it 
a lot.
    The hearing record will remain open if you want to submit 
additional testimony for at least 15 days, and we may want to 
submit questions. Some of you have made suggestions here that I 
would like to invite the others to comment on, particularly 
Professor Dickinson's suggestions.
    The Committee thinks there is a need to legislate here, but 
obviously we want to do it thoughtfully and only as necessary. 
So your input will remain very important to us.
    I want to say finally that Senator Levin wanted to be here, 
but has been unable to get away from a very important hearing 
of the Senate Armed Services Committee. He asked me to thank 
the witnesses on his behalf and to indicate that he will have 
questions to ask you for the record, so you have something to 
look forward to when you leave the hearing.
    With that, I thank you and turn the gavel over to the 
Senator from Hawaii.
    Senator Akaka [presiding]. Thank you very much, Mr. 
    Mr. Bell, subcontracting has been an area where there have 
been questions. In a letter to Chairman Henry Waxman of the 
House Oversight Committee, the Department of Defense found that 
prime contractor KBR, Inc., had subcontracted for private 
security under a dining and facilities contract. At the time, 
the Department had no idea such a subcontract had been put into 
place by KBR, Inc.
    Does the Federal Government have authority over these 
subcontractors? Or must we rely on prime contractors to oversee 
    Mr. Bell. We have the authority to specify the deliverables 
under a performance contract, and IDIQ contract, which KBR, 
Inc. has under LOGCAP. They were specifically prohibited from 
providing security services under that contract, but were 
authorized to subcontract that out to qualified security 
companies should the need be determined to do that. So in this 
particular case, I am not sure of the specifics it was 
responding to. I am sure that what happened is that they found 
a need, given a deteriorating security situation, to get 
security contract protection for that facility and did that 
through a subcontract.
    Senator Akaka. I see. So my question was whether the 
Federal Government has authority over those subcontractors?
    Mr. Bell. We do have authority over all subcontractors. We 
even have authority over contracts where the services and the 
goods have not yet been turned over to the U.S. Government, and 
we are exercising, for example, jurisdiction over private 
security contractors on deliveries that have not yet changed 
ownership to the U.S. Government.
    Senator Akaka. Thank you, Mr. Bell.
    Mr. Kennedy, Homeland Security Presidential Directive 12 
(HSPD-12) requires that all Federal employees and contractors 
have a common proven identity card (PIV), which requires a 
background check. According to the Department of State website, 
due to difficulty in conducting background checks for many 
overseas employees, you do not expect to implement PIV cards 
for everyone until 2011 because of your many overseas employees 
and contractors.
    How many private security contractors working for the 
Department of State have obtained PIV cards and undergone the 
mandatory background check?
    Mr. Kennedy. Senator, every single direct personal services 
contractor protective agent is an American, we only employ 
Americans for those jobs. When the contractor proposes the 
individual to us, we vet that individual. We check their 
credentials. In the beginning, they already must be an 
honorably discharged U.S. military veteran or someone with 
Federal, State, or local law enforcement experience. Then we 
run a security check on them under all the relevant U.S. 
Executive Orders and bring them up to the Secret security 
clearance level. So every one of our American employees is 
fully cleared and has a Secret security clearance among the 
    For our contractors who are non-Americans--and we only use 
those individuals as static guards--not any of the movement 
security professionals that you may have seen if you have been 
in any one of the State Department threatened posts, as I know 
you have. For static guards, support personnel, cooks, 
cleaners, maintenance personnel, and others, we run every 
single local check that is possible under the State 
Department's rubric and the State Department's liaison with the 
intelligence community and other law enforcement.
    The problem that HSPD-12 causes for the State Department is 
that you can run all the checks that they want on Americans, 
but you cannot run them all to the same degree on local 
employees, which is why we do not give third-country nationals 
or locally engaged staff security clearances, and HSPD-12 
drives that.
    So there is an important distinction there, but in terms of 
the security professionals we hire for convoy and movement 
security, they all, sir, have a full U.S. Government Secret 
security clearance and the appropriate suitability checks that 
go with it.
    Senator Akaka. Well, thanks for the distinction. Let me ask 
Mr. Bell the same question.
    Mr. Bell. As you know, Senator Akaka, we use both U.S., 
third-country nationals, and foreign nationals for our private 
security contractors. Our requirements under the rules we have 
at DOD and certainly the rules we have with the multi-national 
force over in Iraq and Afghanistan require that background 
checks must be completed and security clearances must be 
provided. We use, obviously, Interpol and the FBI; we use U.S. 
embassy facilities if they are third-country nationals. And any 
investigation of local records from their city or province of 
origin are also checked to make sure they have no criminal 
    To the extent they have been in the United States, 
obviously, we check to make sure that they have not been 
convicted of any crime that would prohibit them from being 
armed and, in fact, that they have no other criminal 
investigation against them. So we do conduct, particularly on 
private security contractors, very thorough background 
    Senator Akaka. Well, thank you. I really appreciate your 
responses. You have been helpful to the Committee. What we have 
put into the record now will certainly clarify and explain some 
of the questions surrounding this important issue.
    So, with that, I want to thank Mr. Kennedy, Mr. Bell, Mr. 
Schmitt, and Ms. Dickinson for being here today and being part 
of this hearing. This hearing is adjourned.
    [Whereupon, at 12:10 p.m., the Committee was adjourned.]

                            A P P E N D I X