[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]





 
                         [H.A.S.C. No. 114-121]

                    EVALUATING DEPARTMENT OF DEFENSE

                      INVESTMENTS: CASE STUDIES IN

                      AFGHANISTAN INITIATIVES AND

                        U.S. WEAPONS SUSTAINMENT

                               __________

                                HEARING

                               BEFORE THE

              SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

                                 OF THE

                      COMMITTEE ON ARMED SERVICES

                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                               __________

                              HEARING HELD

                             APRIL 15, 2016

 
 [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                                     




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              SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

                  VICKY HARTZLER, Missouri, Chairwoman

JEFF MILLER, Florida                 JACKIE SPEIER, California
K. MICHAEL CONAWAY, Texas            JIM COOPER, Tennessee
JOSEPH J. HECK, Nevada               HENRY C. ``HANK'' JOHNSON, Jr., 
AUSTIN SCOTT, Georgia                    Georgia
MARTHA McSALLY, Arizona              GWEN GRAHAM, Florida
                 Heath Bope, Professional Staff Member
                 Katy Quinn, Professional Staff Member
                           Mike Gancio, Clerk
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                            C O N T E N T S

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              STATEMENTS PRESENTED BY MEMBERS OF CONGRESS

Hartzler, Hon. Vicky, a Representative from Missouri, Chairwoman, 
  Subcommittee on Oversight and Investigations...................     1
Speier, Hon. Jackie, a Representative from California, Ranking 
  Member, Subcommittee on Oversight and Investigations...........     3

                               WITNESSES

Lilli, Charlie, Deputy Commander, DLA Aviation, Department of 
  Defense........................................................     8
Sopko, Hon. John F., Special Inspector General for Afghanistan 
  Reconstruction.................................................     5
Wicecarver, Jacqueline L., Acting Deputy Inspector General for 
  Auditing, Department of Defense................................     6

                                APPENDIX

Prepared Statements:

    Lilli, Charlie...............................................   102
    Hartzler, Hon. Vicky.........................................    35
    Sopko, Hon. John F...........................................    39
    Speier, Hon. Jackie..........................................    37
    Wicecarver, Jacqueline L.....................................    93

Documents Submitted for the Record:

    Letter from the Department of Defense Inspector General 
      office regarding sampling methodology......................   126
    Testimony of Brian P. McKeon, Principal Deputy Under 
      Secretary of Defense for Policy............................   111

Witness Responses to Questions Asked During the Hearing:

    Mr. Conaway..................................................   131
    Ms. McSally..................................................   131
    Ms. Speier...................................................   131

Questions Submitted by Members Post Hearing:

    [There were no Questions submitted post hearing.]
    
    
    
    
    
    
    
    
     EVALUATING DEPARTMENT OF DEFENSE INVESTMENTS: CASE STUDIES IN 
          AFGHANISTAN INITIATIVES AND U.S. WEAPONS SUSTAINMENT

                              ----------                              

                  House of Representatives,
                       Committee on Armed Services,
              Subcommittee on Oversight and Investigations,
                            Washington, DC, Friday, April 15, 2016.
    The subcommittee met, pursuant to call, at 9:02 a.m., in 
room 2212, Rayburn House Office Building, Hon. Vicky Hartzler 
(chairwoman of the subcommittee) presiding.

OPENING STATEMENT OF HON. VICKY HARTZLER, A REPRESENTATIVE FROM 
      MISSOURI, CHAIRWOMAN, SUBCOMMITTEE ON OVERSIGHT AND 
                         INVESTIGATIONS

    Mrs. Hartzler. Welcome. I am delighted to convene this 
hearing. Overseeing the investment of taxpayer dollars is 
extremely important. It is one of the core responsibilities we 
assume as representatives of the people. I know Ranking Member 
Speier and others of this committee all find this obligation 
equally significant.
    In the year since September 11, 2001, the Department of 
Defense has been in a fight against emboldened terrorists. 
Congress met the increased national security demands by 
significantly enhancing the Department's base budget and 
overseas contingency operations fund to address new threats and 
meet new requirements.
    Since 2010, Congress has slashed defense spending by $1.3 
trillion, however. And today we are realizing significant 
negative impacts within the Department of Defense based on 
those decisions.
    Readiness of all of our Armed Forces is at an all-time low. 
Our Air Force is smaller and older than when it was conceived 
in 1947. Our Navy has fewer ships to meet an ever-increasing 
operations tempo. Our ground and amphibious forces of the Army 
and Marine Corps still have yet to recapitalize and reset from 
past years of combat operations. And most unfortunate is that 
our standing among our partners and allies leaves many 
questioning U.S. commitment and resolve to navigate through the 
multitude of emerging security challenges we face as a nation 
and leader of the free world.
    China is rising. Russia is resurging, emboldened by a lack 
of checking its power. Iran is beginning to flourish militarily 
from the good deal they got from our nuclear negotiations. 
North Korea consistently acts out from some form of provocation 
against its neighbors as it tries to achieve nuclear 
capability, and extremist ideologies are spreading through the 
Middle East and other parts of the world at alarming rates.
    In addition to my service on this committee, I am also 
privileged to serve on the House Budget Committee and I am the 
only member of my party to sit on both. Many other members of 
the Budget Committee and I are concerned about the combination 
of these emerging threats and the desperately low levels of 
funding we are devoting to defense against these current and 
developing national security threats. The picture is clear. 
These threats cannot go unaddressed and our national defense is 
in need of more resources to ensure our national security and 
the common defense is secure.
    At the same time, it would be very difficult for anyone in 
this room to dismiss our country's current $19 trillion in 
debt, and as representatives of those who are ultimately on the 
hook for that debt, the taxpayers, we would be neglectful not 
to investigate and scrutinize how their tax dollars are being 
spent. We need to be able to look our colleagues and our 
constituents in the eye to sincerely assure them we are doing 
everything we can to oversee wise investments.
    That brings us to the heart of our hearing today. We are 
here to examine a number of cases coming from the later stages 
of operations in Iraq and Afghanistan to investigate how 
taxpayer dollars were spent and determine what if any changes 
need to be made going forward to assure the people their tax 
dollars are being spent responsibly. Nation building is not a 
core responsibility of the Department of Defense. Yet, as major 
combat operations of Iraq and Afghanistan began to subside in 
2010, the Department shouldered much of the post-hostility 
responsibility, primarily because it is large enough and has 
the ability to provide immediate resources and capabilities.
    Consequently, the Department of Defense established the 
Task Force for Business Stability Operations, first in Iraq, 
and then again in Afghanistan in 2010, with similar and 
parallel goals to support the transition away from war, what is 
known as phase 4 and phase 5 efforts. The task force case 
studies we plan to discuss today include the Afghan compressed 
natural gas infrastructure project, the Italian cashmere goat 
import project, and the housing and security accommodations 
that task force personnel utilize while deployed in 
Afghanistan.
    But not all imprudent spending decisions occur during 
contingency operations. For example, as the Department of 
Defense Inspector General previously reported, there have been 
some problems with the aviation spare parts supply chain of the 
Defense Logistics Agency. While it is extremely important that 
we scrutinize the Department's purchases to ensure they are 
smart and reasonable, it is just as important that we use all 
means necessary to get our taxpayers' money back or exchange 
parts from vendors that may have supplied parts that did not 
meet contractual requirements or technical specifications. In 
other words, if our airmen receive the wrong or defective 
parts, we must make it right by the taxpayer.
    Again, I reiterate the importance of hearings such as this 
one. We live in a world of vast and expanding threats that 
require a robust and full response. If we are going to use 
hard-earned tax dollars to fulfill our obligation to provide 
for the common defense, we owe it to those taxpayers to 
rigorously scrutinize how those dollars are spent and the 
qualifications of those making spending decisions.
    I look forward to exploring and learning more about these 
certain high-profile case studies which, as Department of 
Defense investigators have recently reported, may have 
benefitted from more exacting standards of how those 
investments were made.
    And so before I introduce the witnesses, I turn to the 
Oversight and Investigation Subcommittee ranking member for any 
opening remarks she wishes to make.
    [The prepared statement of Mrs. Hartzler can be found in 
the Appendix on page 35.]

    STATEMENT OF HON. JACKIE SPEIER, A REPRESENTATIVE FROM 
   CALIFORNIA, RANKING MEMBER, SUBCOMMITTEE ON OVERSIGHT AND 
                         INVESTIGATIONS

    Ms. Speier. Thank you, Madam Chair, and I thank our 
witnesses for being here today. I want to especially thank Mr. 
Sopko and Ms. Wicecarver for the service that you provide to 
our country and to the taxpayers of this country.
    Today's hearing includes discussing a herd of cashmere 
goats; yes, goats. DOD [Department of Defense] spent millions 
of dollars on a project involving shipping male Italian goats 
to Afghanistan to be mated with female Afghan goats in order to 
make cashmere. Too bad many of the female goats were already 
infected with a disease that could have wiped out the entire 
herd. Too bad that only two of those fancy Italian goats are 
still usable in the project.
    I think we can safely say that manufacturing warm, fluffy 
sweaters are not the key to economic recovery in Afghanistan; 
nor, is it in DOD's expertise. But that is not all. DOD also 
wasted money on an unused coal storage facility, an 
unsustainable business incubator, and one of the most expensive 
gas stations in the world.
    The Special Inspector General for Afghan[istan] 
Reconstruction [SIGAR] estimates the gas station alone cost $43 
million. Now, we can quibble about how much it really cost, but 
in the end, it costs over $43 million. And a gas station in 
Pakistan, similar to the gas station in Afghanistan, cost only 
$200,000.
    Today we are going to discuss two dysfunctional DOD 
programs that are desperately in need of oversight and 
budgetary common sense. The first is DOD's ill-conceived and 
badly executed USAID [U.S. Agency for International 
Development] knockoff, the Task Force for Business and 
Stability Operations, TFBSO for short. Starting in Afghanistan 
in 2010, TFBSO was supposed to catalyze economic development in 
support of the military. But according to SIGAR, they have 
received more complaints, more complaints about fraud, waste, 
and abuse over the last 2 years than any other organization 
operating in Afghanistan. Even compared with the old 
boondoggles in Afghanistan, the shortsightedness and sheer 
absurdity of these projects is mind-boggling.
    These projects are tailor-made ammunition for critics of 
our nation-building misadventure here. We will also discuss 
poor practices at the Defense Logistics Agency [DLA] which put 
our service men and women at risk. At the core of this hearing 
is, what do we have to show for our money? For TFBSO, I can say 
that the answer to this question is not much.
    Here is what we got for the nearly $1 billion, nearly $1 
billion spent at TFBSO activities: a defunct cashmere goat 
farm; private villas for TFBSO staff; and an outrageously 
expensive gas station. Is that it? We don't know, since the 
Pentagon apparently no longer possesses the expertise to 
address the question. Were there any successes or sustainable 
accomplishments from TFBSO, or should we have just left 
economic development to USAID and the State Department, instead 
of using the military as untrained aid workers? As IG 
[Inspector General] Sopko recently said, tasking DOD to do 
development is, quote, ``like giving the Postal Service the 
mission to run our drones in Afghanistan.'' Unquote.
    The DODIG's [Department of Defense Inspector General] 
report is equally damning on DLA Aviation and the problems 
associated with defective parts. For example, the DODIG found 
that defective tie-down straps used to attach oxygen hoses to 
pilots' helmets remained in the inventory even after the Air 
Force reported that they should be recalled. The flaw was 
severe. The ties did not hold the oxygen hose to the mask which 
could have caused the loss of oxygen to aircrew members during 
flight. The frightening part is, these defective ties may still 
be in DLA inventory.
    This and other poor oversight and procedures are projected 
to have cost taxpayers $12.3 million in unrecovered funds over 
just 6 months. Unfortunately, this is old news. Past DODIG and 
GAO [Government Accountability Office] reports have found that 
the DLA has regularly overpaid for spare parts and badly 
manages their bloated inventory.
    Today I would like to know what the DOD has learned from 
the SIGAR and DODIG reports. Has oversight coordination and 
accountability been improved or will it be improved as a 
result? Or does the DOD intend to go on wasting taxpayer moneys 
on Italian goats and defective spare parts?
    We have to remember that we have many competing uses for 
funding, and wasted funds hurt our troops and their readiness. 
This is the kind of stuff that belongs on Last Week Tonight 
with John Oliver, not as a subject of a congressional hearing. 
On behalf of the Department of Defense, I apologize to the 
American taxpayers for the wasteful spending that has gone on, 
and with that, I yield back.
    [The prepared statement of Ms. Speier can be found in the 
Appendix on page 37.]
    Mrs. Hartzler. Thank you, Ms. Speier. I am pleased to 
recognize our witnesses. I want to thank them for making the 
time to be with us. Today we have Mr. John Sopko, the Special 
Inspector General for Afghanistan Reconstruction; Ms. 
Jacqueline Wicecarver, the Acting Deputy Inspector General for 
Auditing from the Department of Defense; and Mr. Charlie Lilli, 
the Deputy Director of Aviation and Head of Aviation 
Contracting Activity from the Defense Logistics Agency. So 
thank you all for being with us here today.
    So we will begin now with your opening statements. Mr. 
Sopko.

STATEMENT OF HON. JOHN F. SOPKO, SPECIAL INSPECTOR GENERAL FOR 
                   AFGHANISTAN RECONSTRUCTION

    Mr. Sopko. Thank you very much. Chairwoman Hartzler, 
Ranking Member Speier, and members of the subcommittee, I am 
very pleased to be here again to discuss SIGAR's activities in 
Afghanistan, and particularly, our review of DOD's Task Force 
for Business Stability Operations, commonly known as TFBSO, and 
three specific aspects of that operation that the chairwoman 
asked me to look at or to comment on.
    The first one dealt with the construction of a compressed 
natural gas program in Afghanistan. TFBSO spent approximately 
$43 million to construct such a gas filling station in 
Sheberghan, Afghanistan. The project was intended to take 
advantage of Afghanistan's natural gas reserves and reduce the 
country's reliance on expensive imported gas. However, SIGAR 
has been unable to find any evidence that TFBSO considered the 
myriad of potential obstacles to the success of the project, 
including the lack of a natural gas transmission and 
distribution infrastructure, the cost of converting gas-powered 
cars to run on compressed natural gas, as well as the lack of a 
market. As a result, the project failed.
    The second project you wished us to discuss has to do with 
TFBSO's spending of $150 million or approximately 20 percent of 
their overall budget on providing private villas and security 
for their staff while in Afghanistan. To date, again, SIGAR, as 
well as the Office of the Secretary of Defense Policy shop, 
have been unable to find any evidence that TFBSO conducted a 
cost-benefit analysis of quote-unquote ``living on the 
economy'' rather than in U.S. Government facilities in 
Afghanistan. In fact, in a memo from June 2011, then TFBSO 
Director Paul Brinkley directed all TFBSO personnel in 
Afghanistan to move back to U.S. military bases by August of 
that year. It remains unclear to this day as to why Mr. 
Brinkley's directive went unimplemented for another 2 years.
    The third issue you wished us to address has to deal with 
goats. And as I think Ranking Member Speier and the 
Congresswoman has mentioned, you may wonder why I am talking 
about goats in the Armed Services Committee and not the 
Agriculture Committee. But TFBSO spent millions of dollars to 
bolster Afghanistan's cashmere industry. The purpose of the 
program was to breed lighter-haired Afghan goats which would 
yield a higher price on the international market. To do so, 
TFBSO paid to have 9 Italian goats and 10 Tajik goats imported 
to Afghanistan. Ultimately, this program also failed because it 
was overly ambitious, poorly staffed, poorly managed by TFBSO, 
and in essence, what they tried to do in a couple of years 
would normally have taken decades. It also, as I said, was a 
failure.
    TFBSO in these three instances apparently lacked effective 
oversight, project development, and execution. In addition, our 
comprehensive review of TFBSO's operations in Afghanistan have 
identified three broader challenges. TFBSO did not have a clear 
strategy. Secondly, it lacked a focused and consistent 
management and leadership team. And lastly, it did not 
coordinate its efforts with the other U.S. agencies.
    Now, one may ask, why does any of this matter now? TFBSO 
has closed its doors. The money has been spent. And to be quite 
honest with you, I doubt if we will recover any of that nearly 
$1 billion. However, you have to remember there is $12 billion 
still in the pipeline. This is money that has been authorized 
and appropriated to be spent in Afghanistan. We have also 
promised a decade of support at $6- to $8 billion a year in 
Afghanistan. So despite these commitments, the management 
available to oversee these massive efforts has decreased. This 
means that learning from past experiences is more important 
than ever if we are to protect future taxpayer dollars.
    Before the U.S. contemplates similar endeavors, either in 
Afghanistan or elsewhere, several questions must be answered. 
And the most fundamental being, should DOD be tasked with 
economic development operations during future contingency 
operations? SIGAR will continue to do its part to help answer 
these questions about the task force as well as other questions 
about our operations in Afghanistan. And I am happy to answer 
any questions at your pleasure.
    [The prepared statement of Mr. Sopko can be found in the 
Appendix on page 39.]
    Mrs. Hartzler. Thank you, Mr. Sopko. Ms. Wicecarver.

STATEMENT OF JACQUELINE L. WICECARVER, ACTING DEPUTY INSPECTOR 
          GENERAL FOR AUDITING, DEPARTMENT OF DEFENSE

    Ms. Wicecarver. Thank you and good morning. Chairwoman 
Hartzler, Ranking Member Speier, and distinguished members of 
the subcommittee, thank you for the opportunity to appear 
before you to discuss our audit of the Defense Logistics Agency 
Aviation process to obtain restitution for contractors that 
provided defective spare parts.
    We audited DLA's product quality deficiency reporting 
process. A product quality deficiency report identifies 
problems in parts design, workmanship, specifications, 
material, and other nonconforming conditions. Our first two 
audits focused on the DLA Aviation supply chain. An ongoing 
audit is on the DLA Land and Maritime supply chain. Today I 
will discuss the second report on DLA Aviation's processes to 
obtain restitution from contractors for defective parts. I 
request the report be submitted for the record.
    [The information referred to is retained in the committee 
files and can be viewed upon request.]
    Ms. Wicecarver. Based on the results of our finding for 65 
sample items, we projected for 269 stock numbers, contractor 
supplied defective parts, and DLA did not recover at least 
$12.3 million in restitution for those defective parts. We 
found that DLA Aviation missed opportunities to hold poor-
performing contractors accountable and for DOD to receive the 
appropriate restitution. DLA shortcomings in pursuing and 
obtaining restitution left defective parts unaccounted for in 
DOD inventory, negatively impacting warfighter, and safety and 
readiness.
    To pursue and obtain appropriate contractor restitution the 
DLA needs to complete four steps either independently or with 
assistance from other designated personnel such as users or 
Defense Contract Management Agency.
    Let me go into further detail. DLA did not ensure that 
contractors responsible for defective parts were contacted and 
that restitution was pursued. DLA did not adequately search DOD 
inventory to remove and to identify and remove defective parts. 
While DLA usually searched its own depots for defective parts, 
it rarely notified DOD customers to search their inventory for 
defective parts.
    DLA did not always return defective parts to responsible 
contractors to receive replacements or provide instructions to 
DOD customers or DLA depot holding defective parts, and did not 
follow up to ensure that the instructions provided were 
properly implemented.
    Finally, DLA did not properly track and maintain oversight 
of defective parts, return to contractors to ensure that 
appropriate restitution was received. In most cases the failure 
to successfully complete any one of these steps prevented or 
limited DLA's ability to pursue and obtain appropriate 
restitution for the defective parts.
    I would like to share two examples, one which Congresswoman 
Speier already talked about where the readiness and safety of 
our warfighters were jeopardized. First, the 412th Maintenance 
Squadron at Edwards Air Force Base California issued a 
deficiency report on tie-down straps stating that the straps 
broke causing loss of oxygen to aircrew member during flight. 
These tie-down straps valued at $1 per hundred straps were 
considered critical application items and were used to attach 
oxygen hoses to pilots' helmets. DLA investigated the 
deficiency report and determined that the contractor was 
responsible for the defect. The contractor had delivered 52,314 
tie-down straps on the contract. In response, DLA searched its 
depots and located 16,701 of the defective tie-down straps. The 
remaining 36,613 of the tie-down straps were unaccounted for in 
the supply system.
    The second example. We reviewed a deficiency report 
investigation for the C-5 aircraft that had defective copilot 
control wheels valued at about $36,000 each. The 436 
Maintenance Squadron, at Dover Air Force Base in Delaware, 
initiated this deficiency report and stated that the improperly 
manufactured parts prevented the control wheel assembly from 
being properly installed. The deficiency report further stated 
that continuously changing the component caused a work 
stoppage, hampering the ability to complete the required 
maintenance. The deficiency report investigation determined 
that the contractor had provided 30 defective control wheels. 
The contractor replaced three control wheels and agreed to 
replace the other 27 upon receipt. Although DLA instructed its 
depot to ship the control wheels to contractor, it could not 
produce any evidence, when asked, that the control wheels were 
ever shipped or the restitution was received.
    For both examples, DLA did not notify other customers who 
purchased the remaining defective parts and request a search 
for DOD inventory.
    We made five recommendations, in our report to DLA, to 
address the deficiencies identified during this audit. The 
director of DLA agreed with the recommendations and stated DLA 
would complete corrective actions by March 31, 2016. We did not 
receive formal written response outlining the status of the 
corrective actions. However, a DLA official informed us that 
several actions were either planned or in progress.
    This concludes my statement and I would be happy to answer 
any questions you may have regarding this audit.
    [The prepared statement of Ms. Wicecarver can be found in 
the Appendix on page 93.]
    Mrs. Hartzler. Thank you, Ms. Wicecarver. Mr. Lilli.

    STATEMENT OF CHARLIE LILLI, DEPUTY DIRECTOR OF 
  AVIATION AND HEAD OF AVIATION CONTRACTING ACTIVITY, DEFENSE 
LOGISTICS AGENCY, DEPARTMENT OF DEFENSE *** OR ***  deg.DEPUTY 
         COMMANDER, DLA AVIATION, DEPARTMENT OF DEFENSE

    Mr. Lilli. Good morning Chairwoman Hartzler, Ranking Member 
Speier, distinguished members of the subcommittee. I am Charlie 
Lilli, the deputy commander of the Defense Logistics Agency 
Aviation headquartered in Richmond, Virginia.
    DLA Aviation is a field activity of the Defense Logistics 
Agency of the Department of Defense's Combat Logistics Support 
Agency. DLA's mission is to provide effective and efficient 
global solutions to warfighters and our other valued customers. 
We are a global enterprise which manages nearly 5.1 million 
lines through 9 supply chains which provide virtually every 
consumable item to our military forces required, including 
food, fuel, medical supplies, uniform items, and weapon systems 
repair parts.
    DLA Aviation is the lead for more than 1,340 aviation 
platforms and systems and acts as the U.S. military's 
integrated material manager for more than 1.2 million national 
stock numbered items. Last year we delivered repair parts 
valued at roughly $4.2 billion, procuring those items from more 
than 4,500 unique suppliers. On average, we receive about 2,400 
deficiency reports annually. And of those, about 20 percent or 
480 reports represent defective material. We take very 
seriously our responsibilities to identify and prevent 
defective parts from entering into the supply chain and to 
ensure we are good stewards of the taxpayer dollars.
    We appreciate this opportunity to discuss the findings of 
the February 23, 2016, DODIG report and inform you of the 
actions we have taken and will take to improve our processes to 
obtain restitution from contractors that provide deficient 
spare parts. We recognize the issues identified in the report 
and concur with the recommendations. We agree that the 
oversight and management control of this program needs to be 
strengthened and have taken aggressive action.
    Our first priority was to ensure that defective parts are 
removed from the supply chain to mitigate any impact on our 
warfighters and readiness safety. To that end, we immediately 
reviewed the entire population of product deficiency reports 
received at DLA Aviation over the last 24 months and have taken 
the necessary action to segregate and freeze the defective 
stock until proper disposition can be determined.
    In addition we alerted the customers about the potential 
for defective parts and provided them with disposition 
instruction. As a result of the findings documented in the 
draft report published in October, we updated our desktop 
guides based on best practices across DLA enterprise. These 
guides provide step-by-step procedures to ensure that material 
is dispositioned as required. We conducted training with all 
personnel involved in the proper processing of deficiency 
reports and the new procedure is implemented in the updated 
guides. We developed a plan to pursue restitution of any 
material or funds the government is entitled to and will 
execute that plan over the next 6 months.
    Finally, we are establishing both first-line and senior 
level oversight procedures, corporate metrics, and a 
surveillance program to enable us to more effectively manage 
this program in the future. As an enterprise, the Director of 
Logistics Operations initiated a review of all DLA supply chain 
deficiency reports discovered since January of 2014 to validate 
the removal of deficient items from inventories.
    In addition, DLA has established an enterprise-wide 
supplier restitution working group consisting of cross-
functional team members who will thoroughly evaluate the 
requirements for enhanced oversight of the PQDR [product 
quality deficiency reporting] process, examining from a process 
and systems perspective what changes would be required to 
improve visibility and facilitate the resolution of these 
cases.
    Madam Chairwoman, distinguished committee members, we have 
gained a valuable insight from the DODIG and we appreciate any 
feedback that improves our support to our warfighter and 
strengthens our management controls. As a retired Navy flight 
officer, as the father of two daughters, both naval officers, 
one currently deployed in the Middle East, and the father-in-
law of a Marine Corps V-22 pilot also deployed to the Middle 
East, I assure you that no one takes this issue more seriously 
than I do.
    Thank you for the opportunity to testify today, and I 
welcome your questions.
    [The prepared statement of Mr. Lilli can be found in the 
Appendix on page 102.]
    Mrs. Hartzler. Thank you to all of the witnesses for your 
testimony. This is very, very important to not only our 
national security, but certainly to the lives of our service 
members.
    I want to start with Ms. Wicecarver and Mr. Lilli because 
we are talking about two separate instances of potential waste 
or inefficiencies in the Department of Defense that we want to 
look at so that we can address and get better. One was from the 
past, as Mr. Sopko indicated. The program dealing with 
Afghanistan reconstruction has ended but we have a lot of 
lessons learned there so we want to talk about that for the 
future.
    But I want to start with you because this something that is 
currently going on right now as we have pilots in the air and 
we have planes flying, we want to make sure that the parts that 
are in those planes are up to the specifications they need to 
be and no warfighter is in danger.
    So Ms. Wicecarver, it is apparent the defective parts DLA 
received from its vendors made it into the service's supply 
chain. Did your team find any instances in which any of the 
defective parts were installed in any end items as replacement 
parts for repair or return to service?
    Ms. Wicecarver. Madam Chairwoman, we did not find as a 
result of this, but we do know they are in the supply chain 
because they left 36,000-plus straps in the supply chain and we 
know that they are there. We don't though if they have been on 
a flight--put in, customers were not notified, but I believe 
that they are in the supply chain and should be pulled.
    Mrs. Hartzler. Yeah. So Mr. Lilli, what are you doing to 
try to find these 36,000 parts that are potentially still out 
there in pilots' helmets.
    Mr. Lilli. The way that we go about identifying and finding 
parts that are in the customer's inventory is to provide what 
we call a supply alert. Each service has a screening activity 
which is then responsible for working with their individual 
service customers to alert them to the deficiencies of the--
potential deficiencies of the parts and then work to have them 
notified and then coordinate the return of those materials to 
our defense depots.
    So as a result of the audit, when we were alerted to this 
incident, we went back and ensured that that notification was 
sent and we sent an additional notification to once again 
reinforce the fact that we had this potential. It will be 
dependent now though and we will continue to work with the 
services to try and identify parts that are in the inventory 
and pull them back.
    In addition to all of this, in 2008, this particular--they 
call it a tie strap, but it is a zip tie, a small about 2-inch 
piece of plastic zip tie that you put on to hold that hose to 
the helmet. So those zip ties were identified with several 
other sizes of zip tie in 2008 as a potential problem. And in 
2008 the inventory that is in DLA warehouses was the frozen and 
has been frozen since that time. And in 2008 those particular 
zip ties were included in a larger suspension where our 
customers were notified.
    So back in 2008--and those by the way, those particular 
products have remained in litigation since 2008. That 
litigation was finally cleared in 2014. The result of that 
litigation was that the customer representative that faced the 
Department of Defense for that company was disbarred. He is no 
longer available or allowed to do business with us. And we 
fined that company and we received $400,000 back for the 
deficient material.
    Mrs. Hartzler. Well, that is good. Now, didn't you just 
complete your audit fairly recently, Ms. Wicecarver?
    Ms. Wicecarver. Yes, ma'am, in February 2015--I am sorry, 
2016.
    Mrs. Hartzler. Okay. So we have in April of 2016. You just 
released this in February. So I understand, Mr. Lilli, you have 
only had a couple of months to start making corrective actions. 
And we appreciate your, you know, commitment to doing that and 
the steps you have already taken.
    What procedures will you follow to track this 36,000 ties 
that are out there that are defective? So you have sent the 
alert. How will you know whether they have turned them back in, 
they have recovered them, is there a checklist, or how will you 
have assurance that this has been taken care of?
    Mr. Lilli. As a result of the audit, we have taken several 
steps to improve and strengthen our processes. One of the steps 
we have established is the creation of a position we call the 
product deficiency report coordinator. We have now assigned one 
person, an individual who is going to be responsible for 
monitoring PQDRs, from the day that they are established in the 
system until the day that the materials actually is returned 
back to the system as repaired or refunded to us.
    And so this person will be responsible in this particular 
case for now picking up that tracking to ensure that number 
one, any material that is identified in the inventory system is 
returned to us, and that we then send it--well, in this case, 
because of the low dollar value and the inability of a 
manufacturer to repair the ties, they will be destroyed and we 
will get a refund for those.
    Mrs. Hartzler. Now, I understand you have only had 2 months 
to get started on this.
    Mr. Lilli. Uh-huh.
    Mrs. Hartzler. But how much of the $12.3 billion--million 
dollars.
    Mr. Lilli. Million.
    Mrs. Hartzler. Okay, $12.3 million estimated worth of 
restitution that is recoverable from defective parts, how much 
of that do you anticipate that we will be able to get and how 
will we know as Members of Congress how much of that has been 
recovered?
    Mr. Lilli. We are conducting the comprehensive review of 
all of the PQDRs that we have in file. Currently, we have 
gotten through half of them, of their 1,077 total over that 
time period. We have gotten through half of them and have 
determined that for those PQDRs, we have recovered $3.5 million 
as a part of our normal process. So those are things that have 
been recovered before the audit.
    That is not to say that there is a lot of material out 
there. We completely agree on that. Where our process broke 
down was after the alert, we didn't have a good mechanism to 
track as has been pointed out in the hearing, the follow-on 
return to the supply system and then back to the vendor.
    So we have 500 now PQDRs that we are working as a result of 
our comprehensive review. We have a line-by-line, step-by-step 
procedure to go and take for each one of those 500 we have 
inventory in the system. What it will require for us is to 
discuss with the suppliers that provided them a restitution 
plan, whether that be, that we will ship those 500 items back 
to the supplier for repair and then return to us, whether they 
will pay us to fix them internally in our organic depots, or 
whether they will just provide us credit back. We intend to 
complete that process of those 500 PQDRs by August of this 
summer.
    Mrs. Hartzler. Okay, very good. And I know I have other 
questions for all of you, Mr. Sopko, but I am going to let my 
colleagues ask their questions and move on. And then we will 
come back to another round.
    Ms. Speier, ranking member.
    Ms. Speier. Thank you, Madam Chair. Deputy Inspector 
General Wicecarver, this is not the first report that has been 
done on DLA to suggest that they are not doing their job is it?
    Ms. Wicecarver. No, ma'am, we have issued several reports.
    Ms. Speier. How many?
    Ms. Wicecarver. We have 16 reports that we issued over a 
number of years on the parts and inventory area.
    Ms. Speier. And in your estimation has DLA been responsive 
to these reports?
    Ms. Wicecarver. They have tried in the most part, yes.
    Ms. Speier. In your review this time, you looked at just a 
few parts. Wasn't it just about 65 parts that you arbitrarily 
picked out of the 5 million?
    Ms. Wicecarver. We actually did a statistical sampling and 
came up with 65. That is so that we could get our arms around, 
if you will, what we are going to audit. We try to do them in a 
timely manner and so we do statistical sampling so we can 
project across the whole of the parts.
    Ms. Speier. So 5 million lines of parts, you took 65. And 
of those 65, you were able to determine that at least one in 
particular was so defective that it could put at risk those 
pilots flying planes because this part had been determined to 
be defective when, these straps?
    Ms. Wicecarver. I don't recall. I would have to take that 
for the record exactly when the Edwards Air Force Base 
maintenance group found it. I would have to take that back.
    [The information referred to can be found in the Appendix 
on page 131.]
    Ms. Speier. Was it, I mean, a year ago, do you think, 3 
years ago?
    Mr. Lilli. In 2012.
    Ms. Wicecarver. In 2012, Mr. Charlie says, so----
    Ms. Speier. Okay. So 2012 we were made aware that this is a 
defective part; that it could place our pilots at risk. And by 
happenstance, Deputy Inspector General Wicecarver does the 
statistical sample which includes these straps, finds out it is 
still in the supply chain. That, to me, is frightening. How 
long have you been in your post, Mr. Lilli?
    Mr. Lilli. Three years.
    Ms. Speier. Three years.
    Mr. Lilli. Yes, ma'am.
    Ms. Speir. So certainly, it was already deemed defective 
when you came into your post. Correct?
    Mr. Lilli. Correct.
    Ms. Speier. And nothing had happened relative to this item 
until the inspector general did a report and now you are taking 
steps. Do we need a report from the inspector general to get 
the Department of Defense DLA to take defective parts out of 
the supply chain?
    Mr. Lilli. No, ma'am. We have procedures in place.
    Ms. Speir. Well, why didn't these get removed?
    Mr. Lilli. As I stated, we--in 2008, all of these parts 
were frozen in inventory.
    Ms. Speir. What does frozen mean?
    Mr. Lilli. It means that we code them. It is a code in our 
distribution system computers that prevents any issuing of that 
material so if a customer requisitions it, it is from DLA 
stock. It is not allowed to be issued. It prevents it. There is 
no way it could happen.
    So what I mentioned earlier was that in 2008, this part 
along with several other parts manufactured by that same 
company, was frozen in stock. There were 16,000 of those straps 
issued before the first quality deficiency report was received. 
Those were in the customer inventory. We alerted in 2008 all 
supply customers of the fact that these straps and other sizes, 
in addition, were potential defective parts. And at that time 
that material was screened and the materials should have been 
returned back.
    If a sailor, or a soldier, or an airman had some stock in 
their bin and missed the lot screening, that is possible. Maybe 
that material stayed in the supply system. But once again, as a 
result of the audit, we reissued those notifications to ensure 
that, and asked our service partners to go and search their 
inventory to ensure that nothing--this material would be 
removed, if possible.
    Ms. Speier. Mr. Lilli, I don't have a lot of confidence in 
DLA's response, generally. I think the fact that the inspector 
general has done all of these reports and there are still 
problems, should make us all pause. As it relates to the $12.3 
million that is due the taxpayers in restitution for these 
faulty parts, I would like for you to report back to this 
committee on a regular basis until we know confidently that 
restitution has been sought and received for all of these 
defective parts.
    Inspector General Sopko, you said in previous congressional 
testimony that data was missing from the hard drive provided by 
DOD and forensic accountants were reviewing to determine if the 
data had been manipulated. Has that review been concluded?
    Mr. Sopko. Yes, it has. And although we can't tell if it 
was manipulated, we think we don't have all of the data. And it 
could just be that the records are so poor at TFBSO that they 
just don't have the data.
    Ms. Speier. When the TFBSO program wasn't doing well for a 
number of years, and yet, it was on autopilot, it seems to me 
based on your report, from your perspective, how do we prevent 
the wasteful spending of almost a $1 billion on a program like 
TFBSO, when, you know, a quarter of the way through, half of 
the way through, it is clear that it is not working?
    Mr. Sopko. You know, that is a very good question, and I 
don't have a great answer for it. Reports were filed with 
Congress. I am not certain that those reports were accurate and 
were truthful and really reflected what was going on. And I am 
certain, having worked in Congress myself as a staffer, you are 
inundated with reports. I don't even know if anybody even noted 
those reports.
    I think a critical problem you had with TFBSO was it was a 
new mission for the Department of Defense and nobody planned 
for having extra oversight over that new mission. And it was 
almost like a perfect storm. That program reported to the 
Secretary of Defense's office.
    Now, the Secretary of Defense has many things on his plate, 
but operating a $1 billion program is usually not something he 
is going to focus or she is going to focus on. Later they moved 
it down to the Deputy Secretary of Defense for reporting. 
Again, he doesn't really run day-to-day operations. So it was 
reporting to the wrong spot in DOD. Lastly, they moved it down 
to report to the policy shop, the Under Secretary of Defense 
for Policy. Again, maybe very good in policy, but normally the 
policy shop does not oversee day-to-day operations of an 
agency. And I think that was one of the critical problems.
    And nobody really read the reports and the warning signs. I 
know somebody--I mean I know the House Armed Services Committee 
raised some concerns about this program early on, and then some 
of the legislation raised those concerns. But apparently, it 
fell through the cracks.
    Ms. Speier. Well, we somehow sometimes think that we are 
doing our job when we put report language in, and then they 
don't report to us, and nothing transpires.
    This gas station that cost $43 million, the one in Pakistan 
cost between $200,000 and $300,000, we then actually equipped 
some Afghan vehicles so that they could take CNG [compressed 
natural gas]. Is that correct?
    Mr. Sopko. That is correct, ma'am.
    Ms. Speier. But what a harebrained idea when to retrofit 
these vehicles is equivalent to the salary for an Afghani for a 
year.
    Mr. Sopko. That is correct, ma'am. And again, it goes back 
to common sense.
    Ms. Speier. Which this program didn't have.
    Mr. Sopko. Do a cost-benefit analysis. I am sorry, but do a 
cost-benefit analysis. And it doesn't seem like anyone did a 
real cost-benefit analysis on this program. You would have seen 
there were inherent problems. Everyone had written, you have to 
have an infrastructure in place. There is no infrastructure in 
Afghanistan. You have to have a market. There is no market. And 
that is just repetition we have seen through almost all of the 
TFBSO programs.
    Ms. Speier. My last question. In your comments you said 
this is one of the worst programs that you have investigated in 
Afghanistan. I believe you said, the most waste, the most 
fraud, when were you first made aware of it?
    Mr. Sopko. I think I started to hear complaints almost when 
I started the job 4 years ago, but it was a relatively small 
program in comparison. Remember, we have spent $113 billion 
here. So we had put it on our audit schedule a couple of years 
ago and we came out with our first audit, I believe, on the 
mineral section and we did two audits on that. So it has been 
in our view for at least 2 or 3 years.
    Ms. Speier. Again, thank you both, Inspector General Sopko 
and Deputy Inspector General Wicecarver, for your great 
service. I yield back.
    Mrs. Hartzler. Thank you. Mr. Scott.
    Mr. Scott. Thank you, Madam Chair. Mr. Lilli, thank you for 
straightening out what I was discussing with Mr. Conaway over 
here, and that at a penny apiece, it sure sounded like a zip 
tie to me, something that most of us probably have. You could 
walk down to Walmart or a CVS, or pretty much certainly any 
hardware store would have them.
    So $523.14 worth of zip ties, by my calculation, 52,314 at 
a penny apiece. I am sorry that you are getting browbeaten over 
a zip tie or 52,000 of them, to be honest with you. I just 
wonder how much money--this has gone on over these zip ties 
since 2008. Is that right?
    Mr. Lilli. Correct, sir.
    Mr. Scott. We have five Members of Congress, staff, we have 
three of you here and we are talking about zip ties. I mean, if 
I put one on something and it breaks, I would simply put two of 
them on the next time if it wouldn't hold. I mean, the people 
that I know that work in the Air Force, that are pilots, that 
get our men and women and aviators ready to roll, they are 
smart enough to know if one zip tie won't work, maybe you use 
two. Maybe you use a different size one. How much money--is it 
possible to calculate how much money the government has spent, 
the taxpayers have spent over $523 worth of zip ties in trying 
to find them?
    Mr. Lilli. Oh, I can't answer that. We could probably come 
up with an estimate. It is a lot of money.
    Mr. Scott. Would you agree with me that you could buy a zip 
tie at any hardware store out there?
    Mr. Lilli. Well, sir, you can get those zip ties at any 
hardware store, but because of the regulations in our FAR 
[Federal Acquisition Regulation] and the processes we have to 
do to ensure that we buy them from qualified sources, we 
probably wouldn't go to Lowe's. We would have to follow the 
FAR. But you are right. It is the same type of zip tie that is 
out there.
    Mr. Scott. And I just wonder, you know, how much--as a 
private business owner, I would never spend $10,000, or 
$100,000 or however much money has been spent from 2008 to 2014 
over $523 worth of zip ties. I am somewhat taken back that we 
are even discussing zip ties here.
    Anyway, Mr. Sopko, the full financial audit for TFBSO 
activities has it begun, and if so, when can we expect that 
audit to be complete? And is it going to go so far that it is 
going to identify parts that are a penny apiece and maybe how 
much money was spent trying to find zip ties?
    Mr. Sopko. Well, I don't think we are going to be looking 
at zip ties. The full financial audit is----
    Mr. Scott. Would you agree, obviously, someone has spent an 
awful lot of money, more money has been spent searching for the 
zip ties than the zip ties cost.
    Mr. Sopko. It appears that way, sir. Remember, I am not 
doing the zip tie investigation.
    Mr. Scott. I am glad to know that.
    Mr. Sopko. On TFBSO, we were asked by Senator Ayotte on the 
Senate side to conduct a financial audit as well as a program 
audit. The program audit, I believe, we are putting that 
together and if it hasn't started it is about ready to start.
    And then we are going to just, you know, a program audit is 
a little different than a financial audit. The financial audit, 
I don't believe we have started that yet. We have also been 
joined or asked by Senator Grassley to conduct both of those. 
So there is a lot of interest on the other side.
    Mr. Scott. Well, I look forward to seeing that and I will 
yield the remainder of my time. I am under a minute.
    Mrs. Hartzler. Thank you, gentlemen. Now we go to Ms. 
Graham.
    Ms. Graham. Thank you, Madam Chairwoman. Thank you all very 
much for being here today. My question is in the category of 
lessons learned.
    Inspector General Sopko, you mentioned in your written 
testimony that a major source of TFBSO's issues in Afghanistan, 
is that it didn't implement any changes based on the experience 
in Iraq.
    Mr. Sopko. That is correct.
    Ms. Graham. Is there now a formal system for capturing 
lessons learned and what are your recommendations for ensuring 
that they are incorporated into future protocol?
    Mr. Sopko. Some agencies of the government have a formal 
structure to capture lessons learned. The Department of Defense 
is probably the best one for doing that, and the various 
agencies of the Department of Defense, so the Air Force, the 
Army, the Marines, will be doing their lessons learned and 
hopefully those will be applied.
    The biggest problem we see, Congresswoman, is that there is 
no whole-of-government approach to lessons learned. If one 
thing we learned in Afghanistan and Iraq, it is not only that 
DOD is going to be there, State Department is going to be 
there, AID is going to be there, and our allies. And no one is 
doing that.
    And actually, we are doing that at the recommendation of 
General Allen. I remember him coming over and saying, laying 
that out to me. He says, DOD will do a pretty good job, but the 
next time we do this, when you are going to a provincial 
reconstruction team, there will be spots for AID and State and 
all of the other government entities, but nobody has that 
jurisdiction. We are stovepiped. DOD will do their lessons 
learned, but nobody is doing the whole of government. So we are 
actually embarking upon that at the suggestion of General Allen 
and other people. And we are hoping to do that.
    The other thing I would seriously consider is neither State 
or AID have the system of doing lessons learned in their budget 
as well as the staffing to do it like DOD does. And that is 
going to be an inherent problem.
    Ms. Graham. I would agree with you. In every facet of life, 
you need to learn from the past and do better in the future. 
Well, thank you, I guess.
    Mr. Lilli, I would ask the same question of you. It is not 
your fault, by the way. I understand the inspector general. Is 
there a formal process by which DLA has incorporated lessons 
learned into its processes and procedures?
    Mr. Lilli. As a result of our audit, we learned a lot, and 
so we have five recommendations that we have been--that we are 
implementing. As I mentioned earlier, in DLA Aviation, we have 
taken and reviewed all the PQDRs to make sure that we recover 
all the money, and we will report back as we were asked. We 
have also frozen and made sure that that stock is frozen and so 
it can't be issued, and alerted our customers. But we have also 
established some new procedures as a result of that.
    So what we will be doing is creating a position called a 
PQDR coordinator in our supply center that will then track from 
the beginning to the end every time we receive one to ensure 
that we, number one, alert our customers as fast as possible, 
but then ensure that material is received and sent back to the 
suppliers for restitution.
    We have also established some first-line supervisor and 
senior leader oversight to include checklists that will have to 
be signed as we go to ensure that that process is done 
correctly. In addition to that, we have some corporate metrics 
now that we track the opening and closure of each one, the 
total number, and the total age of those PQDRs. That report is 
provided by the coordinator to myself and the commanding 
general once a week. So we will be tracking that to ensure that 
never happens again.
    On a broader scale, those lessons that we have learned as a 
result of this audit and this review have been provided to the 
DLA headquarters. And as I have mentioned earlier in testimony, 
the DLA director has established a working group to take a look 
at the entire process across DLA. And through that working 
group, we will take the lessons we learned and incorporate them 
into the overall review and then come up with a revision of the 
process that will hopefully be better, and will allow us to 
have tighter control, and to execute our responsibilities for 
stewardship in a better manner.
    Ms. Graham. Thank you for that.
    I hope, Mr. Inspector General, that we can learn from these 
lessons, and we need to be working together so we don't repeat 
the mistakes of the past. I don't know where to start with 
putting that in place, but seems to me that when we are 
working--as the United States of America is working overseas in 
various countries, all aspects of our country need to be 
working together to make sure we are doing it efficiently and 
effectively. So I am out of time, but if you want to respond.
    Mr. Sopko. I agree wholeheartedly with you, and hopefully 
our Lessons Learned Program will help in that process. But 
remember, there is a difference between lessons observed and 
lessons learned. There are lot of reports on the shelves, but 
very few people sometimes read them, and they are not put into 
doctrine and put into the training. And before somebody goes 
back out to Afghanistan, whether he is a Foreign Service 
officer, an AID officer, or a captain in the Marines, he should 
be given a document which tells him what have we learned from 
Afghanistan before, what have we learned from Iraq, what have 
we learned from other experiences. And that is what people keep 
coming back to me.
    I mean, we do these audits. We do these reports, and I have 
been approached by many people in the administration and on the 
Hill saying, so what does it mean, and how do we do it? And I 
understand that frustration, and that is why we have this 
Lessons Learned Program we have put together, brought in some 
very bright people, and trying to get buy-in from the various 
agencies. That is what General Allen encouraged us to do, and 
so we are following on his guidance. Hopefully it will help.
    Ms. Graham. Great. I remain ever hopeful. I appreciate it. 
Thank you. I yield back what time I do not have anymore.
    Mrs. Hartzler. The lady's time is expired. And that is one 
of the reasons we are having the hearing as well today, Mr. 
Sopko, is so that we can flush out the concerns that we have 
had and learn as we go forward.
    Now Mr. Conaway from Texas.
    Mr. Conaway. Well, thank you. Just to make sure, I am a CPA 
[certified public accountant] and my license is still current, 
so I am one election from being back in public practice. I 
spent a lot of years auditing.
    Mr. Sopko, when you come to a circumstance like this 
filling station, gas station, it just absolutely makes no sense 
in hindsight. Did you have access to the documents that were 
prepared and put in place and the decisionmaking processes that 
were there to come to these conclusions? I mean, when you have 
a circumstance that makes no sense, we typically don't have all 
the facts available to figure out how the decision makers who, 
unless you want to project malfeasance on them, were working to 
try to do the right thing. And did you look at how they got 
there, what their rationale was for it?
    Mr. Sopko. To be honest with you, Congressman, we did not 
have full access to the records.
    Mr. Conaway. Okay. So the billion dollars spent, all of it 
was wasted? Is that your conclusion?
    Mr. Sopko. No, not all of it.
    Mr. Conaway. So 50 percent?
    Mr. Sopko. I mean, you know, we did build a gas station.
    Mr. Conaway. Well, that is a waste.
    Mr. Sopko. Yeah.
    Mr. Conaway. That is a waste.
    Mr. Sopko. But it was built, and there are----
    Mr. Conaway. Okay. How well is it functioning today?
    Mr. Sopko. Well, the--oh, I am sorry.
    Mr. Conaway. I am just trying to figure out there was 100 
percent error. Great. Got that.
    Mr. Sopko. Yeah.
    Mr. Conaway. But were there--did you find any successes 
whatsoever in the deal?
    Mr. Sopko. We found a few successes.
    Mr. Conaway. Okay.
    Mr. Sopko. But the problem is, you know, we measure inputs, 
outputs, and outcomes. The output was you got a gas station. 
The output was you actually got 400 taxi drivers, I believe 
about 400, got their cars converted at----
    Mr. Conaway. Okay.
    Mr. Sopko [continuing]. U.S. taxpayer expense. They are 
very happy.
    Mr. Conaway. I am not trying to defend this deal.
    Mr. Sopko. Yeah.
    Mr. Conaway. I am just trying to make that sure we 
understand the circumstance.
    Ms. Wicecarver, total dollars spent over your audit, not 
you personally, but your auditing, how much money spent by DLA 
over those 16 audits that you made reference to, total dollars 
spent? Trillions?
    Ms. Wicecarver. Not a trillion, no, sir. We had about 
$300,000.
    Mr. Conaway. Just for example, my--dust off old audit stats 
stuff. You do a statistical sample in order to project the 
error rate across the bigger piece.
    Ms. Wicecarver. Yes, sir.
    Mr. Conaway. So you found the error with the zip ties. Your 
overall conclusions on your statistical sample, what was the 
error rate throughout the entire universe of what you were 
auditing?
    Ms. Wicecarver. 90 to 95 percent, sir.
    Mr. Conaway. So 95 percent of what DLA spent, they spent 
wrong?
    Ms. Wicecarver. Of the sample that we collected.
    Mr. Conaway. So did you expand your sample?
    Ms. Wicecarver. No, sir.
    Mr. Conaway. Why not?
    Ms. Wicecarver. Because we had enough, we thought----
    Mr. Conaway. So 90--make sure I get the record straight 
here. They spent half a billion dollars?
    Ms. Wicecarver. Not on these parts, sir.
    Mr. Conaway. No, no, no. Why would you do a statistical 
sample if you are not trying to extrapolate that over the 
bigger--you are not going to look at all 5 million parts? Is 
that what you said? How many parts were in your universe, 
ma'am?
    Ms. Wicecarver. 269.
    Mr. Conaway. And you audited 65 of it?
    Ms. Wicecarver. Yes, sir.
    Mr. Conaway. Okay. And of that, you are saying that of 
those 269 parts that you audited, 95 percent of the money spent 
was spent incorrectly?
    Ms. Wicecarver. We weren't talking about the dollars spent. 
We looked at actually the product deficiency reports that we 
were reporting and how it all equals dollars and cents. I 
understand that. But I would have to get back to the record 
specifically what it is we are talking about. We just projected 
because----
    Mr. Conaway. So of the 269 parts, your conclusion would be 
that 95 percent of those parts were deficient?
    Ms. Wicecarver. No, sir. We had a 95 percent confidence 
rate on our sampling, is what I am saying.
    Mr. Conaway. No, ma'am. That is not what you said. My 
question was, what was the overall projected error rate within 
the overall universe, and you said it was 95 percent. I 
understand the 95 percent confidence, that your 65 percent is 
representative of the whole. What I am asking, of the 65 
percent that was wrong, that you found wrong, how much of that 
do you say is in the full universe of 269 parts? Of the 65 that 
you audited, how many of those had problems?
    Ms. Wicecarver. I am sorry. How many of those had?
    Mr. Conaway. Had audit deficiencies that rose to this 
conclusion that the zip ties were out of whack?
    Ms. Wicecarver. Well, we had many examples in our report 
and in our audit.
    Mr. Conaway. I don't----
    Ms. Wicecarver. I will have to take it for the record. I 
guess I don't understand all of that one.
    [The information referred to can be found in the Appendix 
on page 131.]
    Mr. Conaway. Are you an auditor yourself?
    Ms. Wicecarver. Yes, I am.
    Mr. Conaway. Okay. Why would you use a statistical sample 
of the universe? What is the purpose of statistically sampling 
rather than looking at the whole universe?
    Ms. Wicecarver. Timeliness of the report so we can get the 
evidence out to the agency.
    Mr. Conaway. Isn't it to look at a small sample, if you 
don't have any errors in that small sample, you are 95 percent 
confident that the rest of the universe is okay? Isn't that a 
better explanation of why you statistically sample something? 
And you statistically sampled 65, you picked 65 on a 
statistically sound basis so that you can say, all right, we 
are going to look at these 65 so we don't have to look at all 
269. We looked at the 65, and the error rates or whatever you 
want to call them, in this 65 leads us to believe that the 
universe of 269 is either good or bad.
    So what I am trying to figure out is you found the error 
with this one part, however insignificant it might be, but 
because it was statistically picked, it has a greater 
significance to the overall conclusions. Because if you can't 
get the little things right, you are not going to get the big 
things right. So you looked at the 65. You got at least one, 
zip ties, that you had a problem with. What else did you find 
among the 65 that you then projected to the greater inventory?
    Ms. Wicecarver. As I said, we found many of the 69 that had 
problems.
    Mr. Conaway. Okay. I don't have a clue--I don't have a clue 
of what the word ``many'' means. I am asking you, of the 65, we 
have got a discrete universe of items you looked at. For the 
record, would you please get back to us with a better 
explanation on what the value of the statistical sample was? 
Because if you are not going to use it from a statistical 
sampling basis, why would you pick the top 10 most expensive 
parts and look at those as opposed to picking zip ties? You 
only picked zip ties because you are trying to get a--all 
right.
    [The information referred to can be found in the Appendix 
on page 131.]
    Mr. Conaway. On the failure of the zip ties--and I know I 
am past my time. Mr. Lilli, did the zip ties fail when it was 
snugged up against the--when did it fail, and what did that 
failure result in? Because when we use the words ``warfighters 
are put at risk,'' those are pretty inflammatory words. Those 
are words we ought to pay attention to.
    Help us put in context. There is an air hose coming off the 
helmet going to somewhere in the cockpit. You snug it up with a 
zip tie. What was the point of failure, that first snip--
somewhere in the life of the zip tie being on there?
    Mr. Lilli. No, sir. Actually, the failure was discovered as 
they were putting the zip ties on the hose itself. So in the 
routine maintenance--I read the PQDR that was submitted, and in 
the routine maintenance of replacing the----
    Mr. Conaway. All right. So the point of failure is known 
before the helmet goes on the pilot's head----
    Mr. Lilli. Yes.
    Mr. Conaway [continuing]. And before he takes off the 
ground?
    Mr. Lilli. In the case of this particular PQDR, exactly 
right.
    Mr. Conaway. Okay. Well, if we can't use--from a 
statistically valid standpoint, Ms. Wicecarver, if you can't 
project that audit of that zip tie to a greater use than what 
appears to be the case, then I would have to agree with my 
colleague that we may have missed the boat. I would rather you 
look at the top 10 most expensive parts of your 269, rather 
than--and I yield back. I am sorry. I am a little frustrated. I 
yield back.
    Mrs. Hartzler. The gentleman's time has expired.
    Ms. McSally.
    Ms. McSally. Thank you, Madam Chairwoman. And let me just 
follow up on the previous line of discussion. I was in the 
military for 26 years, and I often would call them lessons 
identified, not lessons learned. And when you say the military 
is the best at it, we have some significant shortcomings.
    You know, we are good at having conferences and maybe 
writing things down, but because of some of the things that 
were identified even in here because of high turnover and, you 
know, motivated people trying to bring their own bright ideas 
in the new assignment in, we are reinventing the wheel all the 
time in the military. When I read the testimony, when we look 
into the details of these failures, it is just infuriating to 
me, honestly.
    My last assignment was at U.S. Africa Command. We were 
intended to try and have a whole-of-government combatant 
command. We had members of USAID and Office of Foreign Disaster 
Assistance with us on the staff. We would often see how we in 
the military, we want to just, you know, go in there and just 
fix everything, whether it is a disaster, even though we have 
no idea what we are doing. Our job is to fight and win 
America's wars, to kill people and break things, and somehow we 
find ourselves in these situations where we are doing things 
totally outside of our core competencies for a variety of 
different reasons. And it is infuriating to see that, after all 
we have learned over these years, we are still doing stupid 
things like this.
    And the waste of taxpayers' money at a time when our 
military right now, our readiness, our force structure, our 
personnel, it is infuriating to see that this much money was 
wasted in the Department of Defense for bright ideas that are 
just absolutely failed. So what I don't even understand, 
because I think about my time in Africa Command, it isn't about 
lessons learned. It is about we are stovepiped on the front 
end. We don't have the same chain of command. We don't have the 
same funding lines. And so we can have a little love fest as we 
are coordinating things, but in reality, we don't report to--
you know, we don't have the same title and lines of funding. 
And so I don't even get like what the authorities were that 
allowed them to do this.
    Can you just explain to me how the Pentagon thought this 
was a good idea and under what authorities they had to do this, 
as opposed to letting the lead Federal agencies and those that 
are experts in these areas taking the lead?
    Mr. Sopko. Congresswoman, I experience and feel your anger 
in the absurdity of some of these things.
    Ms. McSally. Yeah.
    Mr. Sopko. If it wasn't the fact that we lost nearly 2,300 
lives in Afghanistan, most of what we have found could probably 
appear on Comedy Central. I mean, I cannot believe some of the 
things I have uncovered, and I am outraged too.
    Ms. McSally. Yeah.
    Mr. Sopko. And I worked on the Hill for 15 years for Sam 
Nunn, and I thought I saw some really boneheaded moves. But 
this----
    Ms. McSally. This is the ultimate bonehead.
    Mr. Sopko. This is the ultimate.
    Ms. McSally. Yeah.
    Mr. Sopko. I wish I could answer your question on the 
authority because the authority is kind of mixed on the TFBSO. 
It started in Iraq as really not to do contracting, just to 
sort of fix things with the industry. Then it sort of morphed 
into actually a contracting role. And initially, the Secretary 
of Defense's general counsel's office raised concerns that this 
whole thing was illegal.
    Ms. McSally. What is the funding stream? Is this OCO money?
    Mr. Sopko. I believe it was OCO money.
    Ms. McSally. How are we using OCO money to build villas and 
gas stations? This is----
    Mr. Sopko. We are trying to find it. We still haven't 
found, there is a memo issued by the Office of the Secretary of 
Defense--and this is why I am so frustrated and your colleague 
has hit the frustration point. This program didn't disappear in 
1944. This isn't like something that Harry Truman ran. This 
program went out of existence less than a year ago, and I could 
not find a soul in the Department of Defense who could explain 
any of these questions.
    I call this a rare case of amnesia in the Department of 
Defense. I had to fight to get those records which 
Congresswoman Speier has asked me about. The amount of records 
I got for TFBSO, fewer than one of my staff has on her cell 
phone, the gigabytes.
    Ms. McSally. Right.
    Mr. Sopko. So this is the most bizarre investigation I have 
done, and I have gotten so much pushback----
    Ms. McSally. Yeah.
    Mr. Sopko [continuing]. From the Defense Department on this 
$1 billion program.
    Now, we have looked at some of the major parts of it, but I 
follow the lead of your colleague. You know, there is many more 
billions of dollars that have been wasted and at stake. So we 
did not want to focus on TFBSO. I did not want to turn this 
SIGAR into the TFBSO inspector general. There is many more 
problems out there. But every time we open a rock or uncover a 
rock, something crawls out which just sort of you can't 
understand. This is a mystery to me how this program got into 
action and why it survived.
    Ms. McSally. So if there were no authorities for spending 
this money, what accountability is happening? I mean, if 
somebody is illegally spending taxpayers' money, where is the 
accountability on that?
    Mr. Sopko. Well, it was added to, if I am not mistaken, to 
the Authorization Act. So it was authorized at one time. 
Initially, it came from OCO, and I think it was--and I don't 
want to misspeak. I would have to ask my colleagues.
    Fiscal year 2011 I am told it was authorized in the NDAA 
[National Defense Authorization Act], prior to that. And it is 
interesting is that in fiscal year 2011, that is when the head 
of the organization basically says we ought to shut the thing 
down, it can't operate, and that was ignored.
    Ms. McSally. Right. And then they are spending more. I know 
I am out of time. But how do we make sure here, and we can 
follow up for the record, that something like this never 
happens again, never, ever, ever happens again? Everybody needs 
to stay in their lanes. Fight and win America's wars, military. 
USAID does development and economic stuff. We have got to make 
sure this never happens again. So we would love to follow up on 
that. And I am out of time.
    [The information referred to can be found in the Appendix 
on page 131.]
    Mr. Sopko. We will try.
    Ms. McSally. Thank you, Madam Chair.
    Mrs. Hartzler. Thank you. I want to talk about that a 
little bit, authority. There was a Brian McKeon, the Principal 
Deputy Under Secretary of Defense for Policy, who was invited 
to attend today, and due to a family prearranged activity, he 
wasn't able to be here. I believe he appeared before the Senate 
Armed Services Committee, but he did submit his testimony, 
which I have read.
    [The testimony from Mr. McKeon can be found in the Appendix 
on page 111.]
    And in there it talks about how in fiscal year 2014, 
Congress made an amendment to a law, you know, authorizing for 
this program to continue. So I think Congress has a role in 
this as well. So we, you know, need to, certainly as Members of 
Congress, in the future have a very important role in deciding 
whether we do something like this again or how we apply these 
lessons learned. But that is one reason we are having this 
hearing today, to go back and say, hey, you know, did it work? 
Is it wise, and should we ever do that again?
    I did want to also ask you, Mr. Sopko, about the amount of 
money spent. Because in Mr. McKeon's testimony that I have read 
here, he says that there was $800 million that were obligated, 
$600 million that were disbursed. So I would assume the 
Department of Defense would say that they spent around $600 
million on this rather than the $1 billion that is being thrown 
around today in this hearing. So which is it? How much would 
you say is more accurate for how much was spent on the program?
    Mr. Sopko. It is not a billion. I know that.
    Mrs. Hartzler. $800 million was obligated, but only $600- 
was--I say only. That is still a lot of money.
    Mr. Sopko. Our review was, as you said, $822 million was 
authorized, and $759 million was obligated.
    Mrs. Hartzler. How much was disbursed of that, actually 
spent?
    Mr. Sopko. We are actually doing the audit. We don't have 
that number.
    Mrs. Hartzler. Okay. So that is just something for us to be 
aware of. But that is still a tremendous amount of money.
    Secondly, we haven't talked about the villas, and I wanted 
to ask you about that. Your testimony states that the TFBSO 
spent $150 million to reside and operate out of the villas. And 
you have brought a picture of those here for us today. Did the 
TFBSO use funding to build the villas, or did another 
government agency do the construction?
    Mr. Sopko. No. The villas were not built by us. These are 
all rentals. We rented the villas from Afghans.
    Mrs. Hartzler. Okay. What time period does the $150 million 
cost cover?
    Mr. Sopko. Well, for almost as long as they were there. As 
soon as they came over from Iraq, they pursued using, living on 
the economy like that, and until--although Director Brinkley 
said to bring them back in August of 2011, they continued in 
the villas till, I believe, the end of the program, which would 
have been the end of 2014, if I am not mistaken.
    Mrs. Hartzler. It seems like I read, perhaps in Mr. 
McKeon's testimony, was it 3 years?
    Mr. Sopko. That would be about right.
    Mrs. Hartzler. About right. So $50 million a year, and that 
included the security as well as you talk about a lot of the 
amenities that were in there, which is a 27-inch flat screen 
TV, a queen-size bed, menus for the catering of two entrees 
every night, options, and options on site. So, you know, 
certainly not what I would think our soldiers would be eating 
and how they would be living over there, and I know it is not 
quite the same.
    How do you account for Paul Brinkley, the first director, 
saying that the task force should move back into our military 
facilities and not continue living in the rentals, and yet that 
was ignored?
    Mr. Sopko. We are trying to get to the bottom of that. We 
don't have an answer. We have his memorandum, which he says 
because of security reasons and also because of management 
problems, he wants to bring everybody back, and he orders them, 
I think by August of 2011, everyone will move back onto 
military bases. But we have no further information as to why 
that was ignored, and that is again a problem we have with 
TFBSO. The records are so abysmal. It is hard to figure out 
what they did and why they did it.
    Mrs. Hartzler. Okay. Regarding the natural gas facility, 
the gas station, you just said a minute ago you have to have a 
market, and there is no market. And I think those are very wise 
words, is before you do any of these projects, there needs to 
be a marketing analysis done, and it wasn't done. And you look 
at the list of the projects that were done there. And the 
average businessman or woman here in Missouri--well, here in 
the United States or from my State, Missouri, would just 
probably say, no, this isn't wise that we invest here; we move 
forward.
    I wanted to mention, since Mr. McKeon isn't here, in his 
testimony he does say on page 11, to be sure the average Afghan 
does not own a vehicle. So I think the Department of Defense 
also is, you know, bringing up that point.
    Now, he does say in there, though, that you had a question 
to the Department of Defense about whether the station was 
still operating. And he says: My staff contacted the operator 
of the CNG station by email on November 15th of last year. The 
operator indicated that the station was working normally, that 
230 cars had been converted, and that every day approximately 
160 cars obtained fuel from the station.
    Do you think that is accurate? It is still open; it is 
operating; there are some cars that the taxpayer here in 
America paid for that are using it?
    Mr. Sopko. It would make sense that they would use it. I 
mean, we gave them a free conversion kit. We converted their 
car for free. And using the compressed natural gas is cheaper 
than using gasoline in Afghanistan. The question is, is it 
sustainable? I mean, those are happy taxi drivers, just like 
there are happy goats in Afghanistan. But is any of this 
sustainable?
    The purpose of this program wasn't to make a bunch of taxi 
drivers in Sheberghan rich at U.S. taxpayers' expense. You have 
got to go back to the documents, and we do have some of the 
documents as to what the purpose was, and they didn't attain 
it.
    So I go back to it. The input, we know how much was spent. 
The output was they did do a gas station, they did convert 
cars. But the outcome was to create a market all over northern 
Afghanistan, and that never occurred, and the reason is because 
no one ever looked. There was no infrastructure.
    Mrs. Hartzler. Okay. So I just wanted to clarify because 
earlier in this hearing you said the project failed, in your 
opening comments. But yet you would not say--I mean, it is 
operating. So you are just using that terminology just based 
on----
    Mr. Sopko. What it was supposed to accomplish, you know.
    Mrs. Hartzler. Okay. That is all. For the record, we 
should, you know, due diligence, clarify it.
    And I wanted to get into the testimony of the Department of 
Defense that was submitted regarding the cost because I know 
you and the Department of Defense have been disagreeing on 
that. The number, $43 million cost of the compressed natural 
gas station, you know, has been used. So did the gas station 
itself cost $43 million alone, or was that the cost of the 
entire compressed natural gas station infrastructure project 
that also included refurbishing the existing pipeline, 
purchasing new pipeline for installation, for funding?
    I will say that in Mr. McKeon's testimony here that he 
submitted, he says the cost for the entire project was $5.1 
million, and that is for actually the infrastructure. And then 
he alleges that you extrapolated the consulting costs over the 
entire country and projected all those overhead, the $30 
million overhead costs for that, on to you. And I may be, you 
know, not adequately summarizing what he is saying there. But I 
would like for you to kind of share what your thoughts were on 
how you arrived at the $43 million cost. Is that really 
accurate? And how do you disagree or not with what the 
Department of Defense alleges it only cost?
    Mr. Sopko. Well, I haven't seen Mr. McKeon's testimony, but 
I remember testifying with him before. The approximately $43 
million number is not SIGAR's number. We did not compile that. 
We found that in the records we uncovered, and it was records 
prepared by a contractor for TFBSO. We spoke to the contractor. 
He prepared an economic impact assessment for TFBSO, was paid 
$2 million by TFBSO to do it.
    In his report when we interviewed him, he is the one who 
gave us the number. He broke the number down by direct costs, 
indirect costs, subject matter, expert costs, overhead costs. 
Those were his numbers that he got from TFBSO. So first of all, 
those are the Department of Defense's numbers, not ours. 
Secondly, when we interviewed him, he said and gave us records 
about a back and forth between his office and TFBSO over the 
preparing of the economic impact assessment.
    Many times that assessment was reviewed and approved by 
TFBSO way before we came in to do the audit. As a matter of 
fact, the director of TFBSO approved those numbers. The 
director actually changed other numbers related to the gas 
price, but never changed that $43 million number. This is the 
best number we have. We acknowledge that the records kept by 
TFBSO are abysmal. We actually interviewed a comptroller 
employee who Mr. McKeon sent over to try to review the records. 
And he said he thought the number was wrong, but he couldn't 
come up with a better number either because the records are in 
such poor shape.
    So we are stuck with this number, but ultimately the 
taxpayer paid, U.S. taxpayer paid $43 million. Whether it 
included that gas station, whether the overhead numbers are 
correct or not, it is the best number we can come up with. If 
we can find a better number, we will report it.
    Ms. Hartzler. Right.
    Mr. Sopko. But so far, no one has given us a better number.
    Mrs. Hartzler. Okay. Thank you for that explanation.
    Ranking Member Speier.
    Ms. Speier. Thank you, Madam Chairman. I am not interested 
in quibbling over whether it was $10 million or $43 million, 
when we know in Pakistan they built it for $200- or $300,000. 
The real question is, does TFBSO belong in the Department of 
Defense? Should the Department of Defense be engaged in doing 
economic development? And I think the examples that Mr. Sopko 
has provided us make it clear that we should not be in this 
business within DOD. It is not part of their expertise.
    Now, I do want to point out, I think that Brian McKeon 
tries his darnedest to try and defend the program, but in the 
end he does say, and I will quote, ``I am skeptical that the 
Department of Defense is the natural home for this mission of 
promoting economic development.'' So regardless of why he goes 
about trying to defend it, he comes to the conclusion that we 
shouldn't be doing that.
    And Mr. Sopko as our Inspector General on Afghanistan 
Reconstruction has done an extraordinary job, I think, over 
these number of years pointing out where we fail. And to 
everyone's point that has been made here, just pointing out is 
not good enough. We have got to clean it up. And my concern is 
that we see a problem, we have enough evidence, and we don't 
shut it down. It continues to operate on auto pilot.
    Now, to Mr. Scott's comments and also to others, I think in 
fairness to Ms. Wicecarver, it wasn't just the zip ties that 
they looked at. And in her report she talks about the defective 
copilot control wheels for the C-5 aircraft valued at $35,000 
each. The investigation determined that all 30 parts provided 
on the contract were defective and that the contractor was at 
fault. DLA Aviation searched the DLA distribution depot 
inventory in March 2014 and identified that 23 of the remaining 
defective control wheels were being stored at the DLA 
distribution depot in Warner Robins, Georgia. DLA instructs the 
DLA distribution depot to ship the parts back to the 
contractor. However, DLA Aviation officials did not respond to 
our inquiries about the 23 control wheels, and DLA transaction 
data showed that the defective control wheels were never 
shipped from the DLA distribution depot in Warner Robins.
    According to DLA Aviation, could not produce any evidence 
that it received restitution for 23 of the 27 defective parts 
valued at $825,000. In addition, DLA Aviation did not notify 
the other customers who purchased the remaining 4 of the 27 
defective control wheels. So it wasn't just zip ties. We were 
looking at more expensive equipment. And there is a problem 
with defective parts not being returned to the contractor and 
that restitution is not recovered.
    Now, Ms. Wicecarver, this is just one area within DLA. 
Isn't it true that you are now working in another area as well, 
and could you tell us about that?
    Ms. Wicecarver. Yes, ma'am. We have some ongoing audits on 
price reasonableness. We have some on inventory. Both those 
areas we have worked in the past, and we are working in the 
future on.
    Ms. Speier. Isn't there one you are doing about marine 
parts that is underway?
    Ms. Wicecarver. We are looking at the land and maritime 
area in DLA, the same type audit, if you will, just on a 
different area, land and marine maritime.
    Ms. Speier. Besides zip ties and these wheels, are there 
other examples of parts that were in the chain, the supply 
chain, that restitution was not sought and that were continuing 
to reside within the supply chain?
    Ms. Wicecarver. Yes, ma'am. We had about six other examples 
in the report, switch and bracket parts, and the other one 
was--there are several of them. We have pictures, and that is 
in the full report that I put for the record.
    Ms. Speier. I yield back.
    Mrs. Hartzler. Thank you.
    Mr. Scott.
    Mr. Scott. Thank you, Madam Chair.
    Sir, you testified on the zip tie issue that they were 
identified prior to being put in flight, so no crews ever lost 
oxygen or anything along those lines from those zip ties?
    Mr. Lilli. That is correct, sir.
    Mr. Scott. The report that I have before me reads: causing 
loss of oxygen to air crew members during flight. It doesn't 
say could have potentially. It says: causing loss of oxygen to 
air crew members during flight.
    I ran up to my office. This is a zip tie. This is what we 
are talking about. It is a single-use item. When you do any 
type of work on the helmet, you would cut the old zip tie off, 
I would assume, and replace it with a new one. And if the new 
one didn't hold, you would grab another one from the bin and 
put another one on it. Is that pretty much the way?
    Mr. Lilli. Yes, sir, that is the way.
    Mr. Scott. And I think the problem is, when you--one is I 
think your people should be commended for identifying the 
problem prior to putting it in flight. So thank you for that. 
And I know you have got a lot of family in the military, and if 
I am not mistaken, spent some time yourself there, and I am 
glad to have you in the position you are in.
    I will tell you, the idea that this is--that 36,000 of 
these are specialized aviation parts is ridiculous. And I hope 
you don't spend any time or waste any time looking for them. I 
hope you just get rid of them if they don't work, and you can 
go buy some more somewhere. You have got to have the 
flexibility in anything that you do to discard things that are 
just not worth more than a penny. It doesn't make sense to 
spend dollars tracking them down. No private business would do 
that.
    The other thing I will tell you is I will get the facts on 
the C-5 wheel. I know those people well. Robins Air Force Base 
is in my district. And those are very skilled people that work 
at that facility, and I have no doubt that if a part needed a 
minor modification, that they have not only the tools, but they 
have the talent to make a minor modification to anything that 
may have come in. And I will seek that out and find that 
myself.
    But I would like to know this, ma'am, when you--the zip 
ties, you identified that as 36,000 potential problems. Are the 
36,000 zip ties identified as 36,000 individual potential 
problems?
    Ms. Wicecarver. No, sir. What I said was they were left in 
the inventory.
    Mr. Scott. Well, I will yield the remainder of my time. But 
I think that disposable parts, disposable parts that are worth 
a penny apiece shouldn't be part of--what did you say?
    Ms. Speier. I said they should be able to buy them at 
Lowe's too.
    Mr. Scott. I prefer Home Depot, Home Depot being a Georgia 
company. But I agree with you. I mean, the reason it costs so 
much to do anything for the government is because we 
micromanage every aspect of what the people at the DLA do. With 
that, I yield the remainder of my time.
    Mrs. Hartzler. Thank you, gentleman. I think we have had a 
very, very good productive discussion today where our job is 
oversight and investigate how the taxpayer dollars are used. 
And we want to, while we are advocating for more money to our 
national defense because we see all the threats in the world, 
and we see the needs, and we see the cuts that have occurred 
and our readiness in jeopardy and modernization not where it 
needs to be, at the same time we need to make sure every dollar 
that is spent and authorized from this committee to the 
Department of Defense is spent wisely. And we need to make sure 
that our men and women in uniform are safe.
    And so I appreciate your work, Mr. Sopko. I appreciate, you 
know, the lessons learned that we are learning. And I agree 
with my colleagues as well as the gentleman, Mr. McKeon, from 
the Department of Defense. And I was going to bring up that 
same quote in my closing statement here, that we need to 
question whether the Department of Defense should do this 
again, should take on this mission, because there clearly was 
perhaps some mistakes made over there and some money that was 
spent that could have been spent more wisely. And so thank you 
for your work there.
    And thank you as well, Ms. Wicecarver and Mr. Lilli, for 
what you do. We want to make sure that parts--I am familiar 
with farm equipment business, and there is parts and service, 
and it is important when there is a defective part, if it is 
something that--I appreciate my colleagues' comments about zip 
ties. I think there is a lot of wisdom in that too. We ought to 
have common sense mixed in here. But if there are major parts 
that could endanger our warfighters, we need to make sure that 
they are not only returned, make sure they are not put back on 
to the airplanes or whatever the equipment is, but also that 
restitution is made. If there is a warranty, we need to turn it 
in. Get that money back for the taxpayer. Or if it is a 
defective part that is of major consequence where we could have 
it replaced, it needs to be followed through.
    So thank you, Mr. Lilli, for the efforts you are going to 
make. And I look forward to the reports that Ms. Speier 
requested and I agree with to keep us apprised of how this is 
going. So thank you all very much for participating. This 
hearing is adjourned.
    [Whereupon, at 10:35 a.m., the subcommittee was adjourned.]

      
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                            A P P E N D I X

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                             April 15, 2016

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              WITNESS RESPONSES TO QUESTIONS ASKED DURING

                              THE HEARING

                             April 15, 2016

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              RESPONSE TO QUESTION SUBMITTED BY MS. SPEIER

    Ms. Wicecarver. The sampled product quality deficiency report was 
submitted by the Edwards Air Force Base maintenance group in September 
2012 and was one of several deficiency reports submitted by Air Force 
customers for the defective tie down straps delivered on the contract. 
The DLA product quality deficiency report investigation was completed 
and closed in January 2014. Our audit found that the DLA product 
quality deficiency report investigation did not account for all 
defective tie down straps in the DOD inventory.   [See page 12.]
                                 ______
                                 
            RESPONSES TO QUESTIONS SUBMITTED BY MR. CONAWAY
    Ms. Wicecarver. The answer to the question, ``What I'm asking, of 
the 65 percent that was wrong, that you found wrong, how much of that 
do you say is in the full universe of 269 parts? Of the 65 that you 
audited, how many of those had problems?'' is as follows. Specifically, 
of the 65 sampled stock numbers, there were 57 that had problems. These 
problems resulted in DLA Aviation receiving less than appropriate 
restitution. This projected to 269 of 312 stock numbers with problems 
in the population.   [See page 19.]
    Ms. Wicecarver. Overall, we determined that DLA Aviation did not 
adequately perform the steps needed to obtain appropriate contractor 
restitution for 57 of the 65 sample items and resulted in DLA Aviation 
receiving less than appropriate restitution. We calculated the 
difference between the restitution that DLA Aviation should have 
received versus what they actually received for the defective parts. 
The value of the defective parts associated with the 65 sample items 
was $4,180,479 and DLA Aviation only provided evidence that it received 
$287,330 in restitution. The OIG DOD's analyst projected the audit 
findings to the population of defective parts and concluded that DLA 
Aviation did not recover at least $12.3 million in restitution for 269 
of the 312 stock numbers that it identified contractors supplied 
defective parts.   [See page 20.]
                                 ______
                                 
             RESPONSE TO QUESTION SUBMITTED BY MS. McSALLY
    Mr. Sopko. As cited in SIGAR's written testimony \1\ before the 
subcommittee, ``TFBSO [Task Force for Business Stability Operations] 
was originally created in 2006 by the Deputy Secretary of Defense to 
help revive the post-invasion economy of Iraq. The Task Force reported 
to the Office of the Secretary of Defense. At its inception, TFBSO was 
not envisioned to execute projects and programs, but rather to advise 
Department of Defense (DOD) entities on ways to improve contracting 
processes and procedures. The memorandum establishing the Task Force 
stated,
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    \1\ SIGAR Testimony before the House Committee on Armed Services 
Subcommittee on Oversight and Investigations titled ``DOD Task Force 
for Business and Stability Operations in Afghanistan: Review of 
Selected Expenditures Highlights Serious Management and Oversight 
Problems.''--Statement of John F. Sopko, Special Inspector General for 
Afghanistan Reconstruction, April 15, 2016 (SIGAR 16-29-TY).
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    ``The Task Force will not be responsible for contracting, but will 
advise existing DOD contracting offices on improved contracting 
processes and associated systems solutions consistent with applicable 
statutory and regulatory requirements as a means to create economic 
opportunity.'' \2\
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    \2\ Memorandum from Deputy Secretary of Defense Gordon England to 
the Secretaries of the Military Departments, et.al. June 22, 2006.
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    Over time, TFBSO evolved to take a larger role in identifying 
economic development needs in Iraq and directly executed programs and 
projects in response to those needs. In 2009, the Secretary of Defense 
formalized a new TFBSO mission and called on the Task Force to leverage 
economic development in Iraq as a strategic and operational tool.\3\ 
Late in 2009, TFBSO was redirected to Afghanistan, and it began 
operations there in early 2010.'' \4\
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    \3\ Memorandum from Secretary of Defense Robert Gates to the 
Secretaries of the Military Departments, et al., March 11, 2009.
    \4\ See, Robert M. Gates, Secretary of Defense, Continuation of 
Task Force for Business and Stability Operations, March 25, 2010; GAO, 
DOD Task Force for Business and Stability Operations: Actions Needed to 
Establish Project Management Guidelines and Enhance Information 
Sharing, GAO-11-715, July 29, 2011.
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    As referenced in Principal Deputy Under Secretary for Defense for 
Policy Brian McKeon's written statement to the subcommittee,
    ``Later [in 2010], some uncertainty about the status of the Task 
Force arose with the Office of General Counsel cast doubt on the legal 
authority of the Department of Defense to conduct economic development 
activities in a foreign country, as they appeared to be inconsistent 
with the Department's authorities. Many activities of the Task Force 
were suspended. Congress clarified the situation in the FY 2011 
National Defense Authorization Act, providing statutory authority for 
activities of the Task Force in Afghanistan.'' \5\
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    \5\ Statement of Brian P. McKeon, Principal Deputy Under Secretary 
of Defense For Policy, Submitted to the House Armed Services 
Subcommittee on Oversight and Investigations, April 15, 2016.
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    TFBSO was authorized in section 1535 of the National Defense 
Authorization Act for Fiscal Year 2011 (P.L. 111-383) and reauthorized 
in subsequent fiscal years. The National Defense Authorization Act for 
Fiscal Year 2014 (P.L. 113-66) extended TFBSO's authorization through 
December 31, 2014, at which time the Task Force ended its programs in 
Afghanistan, and ceased all operations on March 31, 2015.
    In regard to Representative McSally's question about preventing 
similar circumstances in the future, I would point to Principal Deputy 
Under Secretary McKeon's statement to the subcommittee on the 
``overarching question'' for policy makers about promoting economic 
development during a contingency operation. ``I am skeptical that the 
Department of Defense is the natural home for that mission,'' he 
said.\6\
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    \6\ McKeon, Ibid.
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    While I am hesitant to suggest legislative actions to the committee 
which authorized TFBSO, I would highlight two points. First, between 
2006 and the DOD General Counsel's 2010 opinion, DOD was using internal 
funds for TFBSO operations. Increased congressional oversight, or 
legislation prohibiting DOD from undertaking similar economic 
development missions in the future without congressional authorization, 
may be warranted. However, if the committee determines, as it did 
between 2010 and 2014, that it supports DOD engaging in economic 
development in a contingency environment, then it should consider 
providing statutory authority as it did for TFBSO in Afghanistan. Such 
authority should include provisions providing for rigorous oversight, 
creating stringent project requirements, ensuring that qualified staff 
with regional and subject matter expertise are hired, mandating cost- 
benefit analyses, and requiring thorough record keeping.
    Finally, SIGAR recently initiated performance and financial audits 
of TFBSO's activities in Afghanistan. These audits will provide 
additional insight into how the Task Force operated in Afghanistan and 
used U.S. taxpayer resources. We expect to issue these audits in late 
2016 or early 2017 and we will report our findings to this committee.   
[See page 23.]

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