IRAQI RECONSTRUCTION: RELIANCE ON PRIVATE MILITARY CONTRACTORS AND STATUS REPORT HEARING BEFORE THE COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM HOUSE OF REPRESENTATIVES ONE HUNDRED TENTH CONGRESS FIRST SESSION FEBRUARY 7, 2007 Serial No. 110–11 Printed for the use of the Committee on Oversight and Government Reform ( Available via the World Wide Web: http://www.gpoaccess.gov/congress/index.html http://www.house.gov/reform U.S. GOVERNMENT PRINTING OFFICE 36–546 PDF WASHINGTON : 2007 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) 512–2250 Mail: Stop SSOP, Washington, DC 20402–0001 VerDate 11-MAY-2000 10:54 Aug 15, 2007 Jkt 000000 PO 00000 Frm 00001 Fmt 5011 Sfmt 5011 C:\DOCS\36546.TXT HGOVREF1 PsN: HGOVREF1 COMMITTEE ON OVERSISGHT AND GOVERNMENT REFORM HENRY A. WAXMAN, California, Chairman TOM LANTOS, California TOM DAVIS, Virginia EDOLPHUS TOWNS, New York DAN BURTON, Indiana PAUL E. KANJORSKI, Pennsylvania CHRISTOPHER SHAYS, Connecticut CAROLYN B. MALONEY, New York JOHN M. MCHUGH, New York ELIJAH E. CUMMINGS, Maryland JOHN L. MICA, Florida DENNIS J. KUCINICH, Ohio MARK E. SOUDER, Indiana DANNY K. DAVIS, Illinois TODD RUSSELL PLATTS, Pennsylvania JOHN F. TIERNEY, Massachusetts CHRIS CANNON, Utah WM. LACY CLAY, Missouri JOHN J. DUNCAN, JR., Tennessee DIANE E. WATSON, California MICHAEL R. TURNER, Ohio STEPHEN F. LYNCH, Massachusetts DARRELL E. ISSA, California BRIAN HIGGINS, New York KENNY MARCHANT, Texas JOHN A. YARMUTH, Kentucky LYNN A. WESTMORELAND, Georgia BRUCE L. BRALEY, Iowa PATRICK T. MCHENRY, North Carolina ELEANOR HOLMES NORTON, District of VIRGINIA FOXX, North Carolina Columbia BRIAN P. BILBRAY, California BETTY MCCOLLUM, Minnesota BILL SALI, Idaho JIM COOPER, Tennessee ——— ——— CHRIS VAN HOLLEN, Maryland PAUL W. HODES, New Hampshire CHRISTOPHER S. MURPHY, Connecticut JOHN P. SARBANES, Maryland PETER WELCH, Vermont PHIL SCHILIRO, Chief of Staff PHIL BARNETT, Staff Director EARLEY GREEN, Chief Clerk DAVID MARIN, Minority Staff Director (II) VerDate 11-MAY-2000 10:54 Aug 15, 2007 Jkt 000000 PO 00000 Frm 00002 Fmt 5904 Sfmt 5904 C:\DOCS\36546.TXT HGOVREF1 PsN: HGOVREF1 C O N T E N T S Page Hearing held on February 7, 2007 ......................................................................... 1 Statement of: Ballard, Tina, Assistant Undersecretary for Procurement and Policy, U.S. Department of the Army; Andrew G. Howell, general counsel, Blackwater USA; R. Timothy Tapp, managing director, business oper- ations, Regency Hotel and Hospital Co.; W. Steve Murray, Jr., director of contracting, ESS Support Services Worldwide; George Seagle, direc- tor of security, government and infrastructure division, KBR; Tom Flo- res, senior director, corporate security, Fluor Corp.; and Alan Chvotkin, senior vice president and counsel, Professional Services Council ............. 111 Ballard, Tina .............................................................................................. 111 Chvotkin, Alan ........................................................................................... 135 Flores, Tom ................................................................................................ 133 Howell, Andrew G. .................................................................................... 121 Murray, W. Steve Jr. ................................................................................. 117 Seagle, George ........................................................................................... 128 Helvenston-Wettengel, Kathryn, mother of Blackwater employee Stephen Helvenston; Kristal Batalona, daughter of Blackwater employee Wesley Batalona; Rhonda Teague, wife of Blackwater employee Michael Teague; and Donna Zovko, mother of Blackwater employee Jerry Zovko .............................................................................................................. 71 Helvenston-Wettengel, Kathryn ............................................................... 71 Letters, statements, etc., submitted for the record by: Ballard, Tina, Assistant Undersecretary for Procurement and Policy, U.S. Department of the Army, prepared statement of ....................................... 113 Blackwater family members, prepared statement of ..................................... 76 Chvotkin, Alan, senior vice president and counsel, Professional Services Council, prepared statement of .................................................................... 138 Flores, Tom, senior director, corporate security, Fluor Corp., prepared statement of ................................................................................................... 134 Davis, Hon. Tom, a Representative in Congress from the State of Vir- ginia: Letter dated December 13, 2006 .............................................................. 15 Prepared statement of ............................................................................... 19 Howell, Andrew G., general counsel, Blackwater USA, prepared state- ment of ........................................................................................................... 123 Issa, Hon. Darrell E., a Representative in Congress from the State of California, letter dated December 13, 2006 ................................................ 35 Murray, W. Steve, Jr., director of contracting, ESS Support Services Worldwide, prepared statement of .............................................................. 119 Seagle, George, director of security, government and infrastructure divi- sion, KBR, prepared statement of ............................................................... 130 Waxman, Chairman Henry A., a Representative in Congress from the State of California: Memorandum dated February 7, 2007 .................................................... 27 Prepared statement of ............................................................................... 4 (III) VerDate 11-MAY-2000 10:54 Aug 15, 2007 Jkt 000000 PO 00000 Frm 00003 Fmt 5904 Sfmt 5904 C:\DOCS\36546.TXT HGOVREF1 PsN: HGOVREF1 VerDate 11-MAY-2000 10:54 Aug 15, 2007 Jkt 000000 PO 00000 Frm 00004 Fmt 5904 Sfmt 5904 C:\DOCS\36546.TXT HGOVREF1 PsN: HGOVREF1 IRAQI RECONSTRUCTION: RELIANCE ON PRI- VATE MILITARY CONTRACTORS AND STA- TUS REPORT WEDNESDAY, FEBRUARY 7, 2007 HOUSE OF REPRESENTATIVES, COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM, Washington, DC. The subcommittee met, pursuant to notice, at 10 a.m. in room 2157, Rayburn House Office Building, Hon. Henry A. Waxman (chairman of the committee) presiding. Present: Representatives Waxman, Lantos, Towns, Maloney, Cummings, Kucinich, Davis of Illinois, Tierney, Clay, Watson, Lynch, Higgins, Yarmuth, Braley, Holmes-Norton, Cooper, Van Hollen, Hodes, Murphy, Sarbanes, Welch, Davis of Virginia, Shays, Souder, Platts, Cannon, Duncan, Turner, Issa, Westmoreland, McHenry, Foxx, Bilbray, and Sali. Also present: Representative Schakowsky. Staff present: Phil Schiliro, chief of staff; Phil Barnett, staff di- rector and chief counsel; Kristin Amerling, general counsel; Karen Lightfood, communications director and senior policy advisor; David Rapallo, chief investigative counsel; Theodore Chuang, dep- uty chief investigative counsel; Jeff Baran, counsel; Christopher Davis, professional staff member; Earley Green, chief clerk; Teresa Coufal, deputy clerk; Matt Siegle, special assistant; Lauren Belive, Kerry Gutknecht, Davis Hake, and Will Ragland, staff assistants; Leneal Scott, information officer; David Martin, minority staff di- rector; Larry Halloran, minority deputy staff director; Jennifer Safavian, minority chief counsel for oversight and investigations; Keith Ausbrook, minority general counsel; Ellen Brown, minority legislative director and senior policy counsel; John Brosnan, minor- ity senior procurement counsel; Steve Castor, minority counsel; Ed- ward Kidd, Christopher Bright, and Allyson Blandford, minority professional staff members; John Cuaderes and Larry Brady, mi- nority senior investigator and policy advisors; Patrick Lyden, mi- nority parliamentarian and member services coordinator; Brian McNicoll, minority communications director; and Benjamin Chance, minority clerk. Chairman WAXMAN. The meeting of the committee will come to order. Today the committee will investigate potential fraud, waste, and abuse in the almost indecipherable world of contractors and sub- contractors. (1) VerDate 11-MAY-2000 10:54 Aug 15, 2007 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 C:\DOCS\36546.TXT HGOVREF1 PsN: HGOVREF1 2 In the last 2 years I have tried to get a clear answer to what I thought was a simple question: How much money the Halliburton subsidiary named KBR and private security subcontractors were making under the Army’s troop support contract called LOGCAP. We know that the war in Iraq has given private contractors an unprecedented role in providing security services. Almost $4 billion in taxpayer funds has been paid for private security services in the reconstruction effort, alone. But sorting out overhead, subcontracts, sub-subcontracts, profit, and performance has been nearly impos- sible. For over 18 months the Defense Department wouldn’t even re- spond to my inquiry. When it finally replied last July, it didn’t even supply the breakdown I requested. In fact, it denied that pri- vate security contractors did any work at all under the LOGCAP contract. We now know that isn’t true, and today we will try to un- derstand the layers of subcontractors, with a particular