$30 billion out of the wallets of australians, and given it to others. on this side, we will take money and give it generously to others. >> the opposition, a call of order. [unintelligible] >> order. the prime minister has the call. >> thanks very much, mr. speaker. the position here is whether you want to put a cross on polluters and give assistance to households, where if you want to take money of households and give assistance to the others. out of their wallets and out of the others. >> next. >> thanks, mr. speaker. the statement was in response to a breakout. this is a situation well in hand. some riot broke out. the facility was set on fire. authorities had to retake the facility by force. it damage the property of the commonwealth. >> the prime minister. >> thanks mr. speaker. [unintelligible] here is what i have as follows. criminal charges can be laid by the prosecution following a police investigation into the incident. violence and destruction is wrong. it is criminal behavior. it is what we would expect in any part of the nation where someone else was engaged in criminal behavior. on the immigration act, as you may be aware, character is an important consideration in determining whether or not someone should be granted. immigration act requires him to consider cases one at a time. these decisions may be turned on facts of an individual case. it is considered on a case by case basis. character considerations will be taken into account. some have organized this sort of activity. i am happy to state what i have said publicly. these kinds of conduct by individuals on christmas ireland is grossly wrong. there should be criminal charges flowing following a proper police investigation. we know from our understanding of the law that acts of violence and destruction are criminal acts. this can and will be taken into account after the proper procedures of the migration act. what i would say to the member, as i have said publicly, no one who engages in this kind of conduct will profit from it. and the minutes have made that absolutely clear. i am happy to state it. >> this is a supplementary to the prime minister. will she guaranteeing that the asylum seekers that have been engaging in this behavior will never get a visit to weeks country. >> order. >> it is not in accordance with the migration act. i will run through it. they may want to study this outside during his time -- during his time outside of the chamber. it requires the ministers of immigration to deal with cases on a case by case basis. it requires immigration to look at the facts. as the minister has said publicly, in considering questions of character, conduct engaged by the individual has been taken into account on the principle of character. it is not in accordance with the migration act. it deals with people that have been engaged in misconduct. they can test the decisions the minister made in relation to this. rather than engage in this kind of silly such shenanigans, we will continue to go through this. to the police will do a proper investigation. the minister for immigration will consider this on a case by case basis, as he is required to by the law, taking into questions of character, and the kind of bad conduct will be taken into account in the character determination. [unintelligible] >> thank you, mr. president. my question is to the minister representing that for -- climate change. can the government please explain the statement by an economics professor that australian farmers will be exempted from a carbon tax, from the beginning. in the head of its coverage governed by carbon emissions -- doesn't have a different plan to -- does it have a different plan to equate farmers and their tax? c-span.o[unintelligible] >> thanks i would like to emphasize that these are reports in which the government has sought at the request of many members of parliament regarding climate change. they are intended to inform this debate on what is important public policy issues we believe that climate change is real end something can be done about it here we like to ensure that we work through the various policy issues associated with this very difficult public policy problem. his reports are a contribution to that discussion, a contribution that is important. it would set a whole range of issues. we saw discussion about the means by which assistance to household can be delivered. there was discussion on what sort of assistance can be provided by way of transition. these are all issues that we have a view on. the government has not made final decisions on this. we have gone through this process of dealing with the various policy questions that present themselves, when you look at the price on carbon. the carbon farming initiative -- >> the time has expired. >> thanks very much, mr. president. thanks for the initial answer. we have a query about this nowadays. does the government commit to not introducing a carbon tax on farmers before the next election and any future proposal to introduce a common debt will be taken to an election before its adoption. >> thanks. >> we are proceeding with the announcement. the car been farming initiative , -- >> continued. continue. >> thanks. it will and neighbor of -- enable land owners to generate this. the views of the professors are of his. the government ahead has made clear about its policy in the announcement in relation to the sources being excluded. >> thanks, mr. speaker. my comments are directly related to the treasurer. tell me about the market-based mechanism. the the >> the deputy prime minister to the treasurer. >> it is a very important question. they believe climate change is real. we do need to transform our congress. this is a very big reform. one of the reasons is due to 20 years of continuous growth. many have given as a strength and resilience which we've deal with as well. 20 continuous years of growth. we want more years of continuous growth. that is why economists are saying there is a fundamental problem here that must be fixed. the problem is that the largest polluters continue to pump pollution into the atmosphere. it has cost the environment, the community, and our economy. that is why we must have a market-sized approach to deal with it. we have to deal with the incentives. that is what we have to do. it is a fundamental, market- based performer. this is what the treasury believes we must do. it is what others believe we must do. >> order. >> the treasurer really should be more careful. >> it has become very clear in the house tonight that there are many on the side of the house that our climate change skeptics. >> order. members need to be careful. >> i think the treasurer should be asked to make a withdrawal as i have been asked to do so. >> order. >> order. [unintelligible] the minister for defense with a drawl whilst not calling on the deputy prime minister to withdraw, the point that he has any response, it is hard to see how it is directly relevant to the question as it was asked. order. the treasurer has the call. he will be directly relevant to the question. >> the point of was making is that they do not believe in the power of market anymore. this is a fundamental point. nor do they believe in a climate change. it is a powerful, destructive combination. not believing in climate change for the market, makes its essentials. >> not be leaving in the basic, and in the basic economics. some did believe in the power. others believe in dealing with carbon pollution. this is what they had to say. the the in 2010, and here is what he said. we should have this. it should be in 2002. i believe a market mechanism is the best way to deal with this. that is what a couple of prominent notices were made. this is why i describe it this way. they do not believe in the power of markets. i am somewhat embarrassed about this. there are plenty efforts on this time around. the time has expired. >> [unintelligible] order. order. order. order. please return to his estate. the member will return to his seat. -- please return to your seats. the member will return to his seat. order. order. order. order. the treasurer and the member must be given the opportunity to discuss the debate outside. the angelic member for north sydney will get back to being quite yet. he hoodwinks me by his angelic presence. he made an approach outside of the layout. i ask this question on behalf of the thousands of people gathered outside of parliament. order. >> order. >> wooshy refuse legislation into this house? will she seek to make the next election a referendum on the unnecessary tax? >> the prime minister. >> order. order. [unintelligible] >> thanks. i thank the leader of the opposition for his questions. on the rally outside, i am not aware that i was invited. as i understand it, the leader of the opposition did not lack for redheaded company outside of the rally. i am sure he would not have missed me. on the question he has asked me about talking to the australian people and campaigning for climate change, let me remind the leader of the opposition who seems to have forgotten every day he has had in the house. a truly remarkable feat. he has declined the prime minister political means. he sat there day after day making decisions for the government. amongst the decisions, it went to elections as for an emissions trading scheme. many have been arguing this state. they have been arguing for emissions trading scheme. we understand that the leader of opposition is looking at this. he only knows one thing which is to scare people. to deny the future. but bob what is remarkable, -- what is remarkable is that he would march away from the government and march away from the commitment to emissions trading. march away from the liberal party dealing with this. the opposition may be stuck in this denial. it may be stuck in this inability to deal with policy for the future, but we are not. we will get on the job of leading this nation to a clean energy future. if you care about the jobs of the future, care about the environment, you want to do this. [unintelligible] >> the member. >> the prime minister. >> thanks very much. thanks for the question. she is one of many members in this town who spent weeks or summer assisting communities hurt by natural disasters. in her case, the city of rockhampton being flooded. members on both sides of the house were called upon to assist their communities in the time of the flooding. members are still being called upon to help these communities suffered from flooding. i made a pledge on the nation's behalf, that we would assist the community that suffered so greatly during this time to rebuild. we want to help them during the rebuilding in recovery stage. we will get on with good judgment, so we can assist the community to rebuild and get on with their lives. s night, two bills passed the senate. -- last night, two bills passed the senate. these disasters have come at a terrible human cost, and a cost to the economy. one piece of our economy suffered badly. some suggest that the gdp growth will be lower than otherwise would have been the case. crop production will be around $1.2 billion less. billions of dollars less in tourism. as we go about this recovery and rebuilding, we know despite this economic setback, the underlying economy is strong. that is why it is appropriate to pay as we go. as the economy trends back to full capacity, we look at the stock option @ four years from now. the government took the decision to engage in this. it was the right thing to do. the decision for infrastructure, it was not easy, but we did the right thing to do. and to ask the australian people to pay a flood levee, fairly constructive. 60% of taxpayers are paying less than $1 per wage. in doing so, we did not apply the politics of fear or cut programs. we got on with the methodical decision making necessary to rebuild the nation. >> it goes to relevance, mr. speaker. the victorian people have been taxed. [unintelligible] >> it is hard for me to decide if members should know on the basis of this pre-existing knowledge of the standing orders that it is not the standing order. the next time that he interrupt proceedings in that manner, he will be dealt with. i think i have been overly generous to a number of people who interjected. he does not have special privileges. i warn the members. the prime minister has the call. >> thanks. we will rebuild victoriously. plan -- it wass led by the leader of the opposition. that smear campaign is silent now. this is ultimately the leader of the opposition scare campaign. some of already fallen because fear cannot stand up against facts. >> order. >> the introduction of the carbon price can lead to incentives for such industries to a halve production offshore. there may be no environmental gain. offer willenhagen see is carbon image -- carbon emissions rise by over 400% by 2020. 23% of global emissions responsible for one side. does the government agree with this? and >> we have so representing climate change and energy. >> [unintelligible] the paragraph is referencing from my recollection, what the government was putting forward in transition assistance. we need to take account what is happening in the rest of the world. we need to make sure that there is transition assistance. that is what we put in place under the carbon reduction in emissions program. they can throw different things at us. we do have a fundamental difference between the two parties of government. we think we need to work on climate change. you do not. that is the difference. what we have said very clearly is that we should ensure the process deciding to make sure we do that. we need to ensure that we continue to support through the transition as well as the clean energy section of the economy. when it comes to china and other countries, the facts do not stand up. that is the usual case when it comes to climate change. this debate is more on facts and less on fear. >> the government's plan to take action on climate change -- is an important debate. is the minister aware of the this and what is the government's response? [unintelligible] in the efficiency, and -- . >> thanks. i had a meeting with representatives who reiterated to me, as they have done to many others, the correct action on climate change. i am very pleased that members from both sides of the house attended the forum. there are others who oppose climate change. >> at the rally, the leader of the opposition had encouraged this part of the revolt. there were some that discussed this on the issue of the science. carbon dioxide is not pollution. say no to a carbon tax. as we saw on television last night, it was much worse. the so-called people's revolt against carbon pricing has attracted supporters such as one nation, a number of climate change skeptics. it is important for leaders of the community, and other parties, to not being associated in the debate over carbon emissions. one person refuses to associate himself with these groups. he did say, that was a representative snapshot of a real australia. if that is the case, you must be kidding. they did not find a representative on their own views. the fact is, it is not forbidding someone that wants to be leader of our nation. it goes to character and judgment. it is on an important points. >> warning to members. the summit may not be aware of the practices of the house. >> there is not much courage when it really counts. not reflecting on the words of one person on the seventh of july when explain the need of climate change. they are in tradition of the liberal party. they can do this with a modern economy. world-class expertise. an enviable reputation. no great challenges ever yielded to this. nor will this one. i cannot agree with it more. >> those were the highlights of the austrian parliament in march. the next one will be in may. kobe can join as for an update then. things. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] 1] ♪ ♪ >> this week on prime minister's questions, david cameron updates the situation in libya and discusses the station to arm libyan rebels. he also talks about domestic issues, including the university tuition fee increases. cuts in emergency loans for the unemployed, and terrorism in northern ireland. his question sunday at 9:00 p.m. eastern on c-span. >> next, a senate hearing on the defense cost overruns. in a commission on wartime contracting. in your calls and comments on "washington journal." >> si spans road to the white house sunday at 6:30 p.m.. -- c-span road to the white house on sunday at 6:30 p.m. eastern. >> the defense cost assessment deputy director testified tuesday on capitol hill before the senate homeland committee on defense cost overruns. according to a new report, 80% of the defense department's major acquisition program have exceeded their initial estimates. this portion is two hours in 40 minutes. -- a and 40 minutes. -- two hours and 40 minutes. [unintelligible] >> the hearing will now come to order. i have asked to start off with a chart. you are looking at major weapon systems cost overruns, going back to fiscal year 2000. the number was about $42 billion. then it went to a number of $202 billion. in 2007, $295 billion. then $402 billion for the year 2010. we have not been able to balance our budget since 1968. president clinton and the republicans were in majority years ago. we were looking at defense spending, entitlements, and revenues. in the year where we had a balanced budget, the contributions was 42 billion. i just thought we would start off with that. a picture is worth 1000 words. we will yield to ranking republican, senator brown. it will be on held the defense can deal with the costly weapons systems. we are looking and nato allies to avoid a humanitarian crisis in libya. we want them to help level the playing field against a regime that has launched attacks against protesters and hurting their own population. we need to keep in mind, the cost of being involved in three simultaneous wars, contributing to an unsustainable spending level that already exists. our nation look said these costs the economic challenges that has led to a huge budget deficit. we created as much new debt as we had in the previous two and injured eight years of our nation's history. we will double the debt again in the next decade if we do not do. a certain's debt is percentage of gdp. we were at this percentage at the second world war. greece and turkey have higher numbers than that. we do not want to go there. while most americans want to reduce the deficit, they know it will not always be easy. some are incapable of doing the hard work. many look at the spending decisions we have made in recent years in question whether the culture has been broken. are people making the tough decisions that they and their families are making for their own households? we need to establish a different kind of culture when it comes to spending. we need to establish a culture of thrift -- what some call spendthrift. we need to look at federal spending, domestic defense, entitlements, along with tax expenditures. is it possible to get better results with less money for possible to get better results with more money? many funding levels will need to be reduced. even some of the popular programs, most of us support, will be asked to do more with less or with the same level of funding. we will see we cannot simply cut our way out of the debt or save our way out of the debt. we have to grow our way out of the debt. that is what happened in the late 1990's. it was not just working on entitlement reforms. we will labor to support our nation's health. -- were able to support our nation's health. given the limited resources for this kind of investment, there are some programs that do not help us achievable as a country. we will look at inefficient spending, especially -- especially the acquisition system. three years ago, the cost growth for major weapons systems had increased greatly. we can see that at the chart to my left. something like $402 billion. these cost overruns did not only waste taxpayer money, but prohibited us from investing in the highest need of our military. some recall that every dollar wasted on these cost overruns is a dollar not available to take care of our military. when the wars we are in, and leave us potentially vulnerable. we have to reverse the trend of growing weapons systems costs. today's hearing will look at some of the root causes that we have seen in recent years. we will look at the tools available for the department of defense. one of the tools of managing cost overruns is a lot that serves as a trip wire for costs that are spiraling out of control. this tool is simple. the cost rose by more than 50%, and authorities must be notified. it has to certify that it meet he requirements. they look at breaches that may help us determine the effectiveness of these tools. since 1997, one in three major weapons systems have experience cost overruns enough to cause security breaches. they were subjected to the possibility of termination as a result. they also identified transistor and mismanagement. -- trends in mismanagement. that is between 1997 and 2009. 16 companies during this time had more than one of the weapons system triggered a security breach. [unintelligible] these trends tell us that tim many of our weapons systems have costs that are spiraling out of control -- to many of ever weapons systems have costs that are spiraling out of control. we need to whatever budget that spends hundreds of millions of dollars to deal with the spirit we want to take a look at the causes of this into the tools available to control them and what we need to use to prevent it in the future. i would like to turn it over to senator brown for more comments. >> good to see you again. we are moving offices today. >> i mentioned how please we were. the enforcer. it is great to see you. >> thanks for holding this important hearing to protect -- protect our tax dollars. i appreciate your efforts in this pursuit. when i got here, a little over one year. no more than ever, we have to find the best value for our tax dollars. the defense department budget consensus and least 16% of our budget. we have a lot of challenges. unfortunately, we need to be mindful that the dod budget is not exempt from this. it is simple when we deal with cost overruns and a major defense system acquisitions. they consume billions of dollars every year. i am still amazed as to why we do not have the overruns and why there are penalties and the fact that we tried to stop the program, we have to pay the penalty, but if we do not, we get sued. i do not want to talk about what is happening here. it is unbelievable for the amount of money we spend with weapons systems that are over budget. we have nothing to show for it. $4 million just to close it out. i understand that sometimes projects go over budget, and i understand that sometimes based on the changing needs of the battle for the war fighting needs of our soldiers -- i get that. it seems to be the norm rather than the exception. we need to change the process that allows programs like this to go on for years. i am flabbergasted. we need to change the thinking that if only we give a program a few more years, the program will ultimately be successful. if a program has not worked in 20 years, by then, the technology is an obsolete. it makes no sense. especially in this tough, physical circumstance, if we divert our precious tax dollars, we do what is quicker and more effective and timely. we must not be afraid of taking the risks necessary to develop the next generation of weapons systems. the next generation will depend on this. it is clear that we will be the world leader when we are trying to solve the world problems. it just does not make sense to me looking at some of this. i appreciate the witnesses. let's get right to the questions. >> things. >> i do not have an opening statement but thanks for doing this. >> welcome. this is the first time i am able to introduce you as a senior senator. i am glad you could join us. >> a quick introduction for our witnesses, and we will get right into it. >> i apologize. i was reading this. >> thanks for that clarification. the office of acquisition technology and acquisition oversees the technology and purchase of all weapons. we work with these officials to ensure that this is meant through acquisition of appropriate technologies. it is serving as assistant deputy for strategic defense systems. tellus tell the department of defense intends to curb the overruns in the system. what must be done to achieve this goal in save scarce tax paying dollars? i asked him where he went to school, and he said he spent some time in the army. how long did you serve? >> active duty for about 11 years. >> when you retired, was it as a major general? >> return it -- lieutenant colonel. >> good for you. thanks for your service. the second witness is dr. richard burke. the current deputy of product assessment. it provides independent cost estimates of major systems under the weapons systems acquisition passed into law in 2009. serving as deputy director, he served as deputy director of one program. he served as chairman of the cost analysis and improvement group. it is a mouthful. he is in answering our questions on how we can achieve this, so that we do not experience cost overruns in the larger stages. we thank you for being here, and your testimony. as i understand it, he will deliver statements for both of you. we will be watching carefully to see if your lips moves as he speaks. things for joining us today. please proceed. take around five minutes or a little bit beyond that. if you go a ways beyond that, not so good. >> thanks. to the distinguished members of the subcommittee, i am frank candle. -- kendall. i am delighted to be here today. i am a senior cost analyst for the department of defense. instead of summarizing my written submission is step back and address the reasons we have cost overruns in defense programs. i will be happy to take your questions later. we are looking at a number of measures to deal with our costs. it deals with the weapons system. there are measures included in the recent act. we are looking at some of the initiatives undersecretary carter. i would like to discuss the deeper issues that we can address. why is it so endemic to the enterprise. i have been with this study for several years. a lot of those supplemental dollars had to be spent on urgent, wartime capabilities. you have seen a stretched came gradually be more efficient. i think the under capacity for what they were asked to do was reduced in the '90s. >> sometimes when we hold these hearings, we focus on disappointing performance by actors, those sorts of things. i also like to focus on exemplary work. a spot law -- a spotlight was but on disappointing results, and also good ones. can you provide us with a couple of examples of the systems we're beginning to write? maybe you can name some other systems that are being delivered on time, maybe under budget. what do you think the keys are for better performance? >> i would love to talk to you for about an hour about this. i would try to be brief and clear. i went to eliminate some other issues. one of the things i thought through in the navy was the conversion of trident submarines. i sketched out a way to do that program. there was an insistence that we do it on both coasts and do it as fast as possible. part of that came from the white house level. they said the president mentioned this, so we must do this. we did that program as fast as possible. john young said, no, we are not going to concurrently do this. and we are going to do one submarine and then take those people over to the other coast. it was a public, private partnership. it was a difficult program. >> so, john young dropped the president. you do not have to say that. >> i had to have a discussion with the national security council. >> was president was this? >> george w. bush. >> i had a meeting with him once and he said to me, "who is john young?" >> i talked to you about the fact that lots of different forces can get engaged in trying to do a program the right way. ddt-1000 -- today that debate is diminished. and not that things were done right. it is very important at multiple levels. there were 13 engineering development models of the power plant, begun, all the systems on the ddg-1000 which were proven so that we could take that chip -- that ship and to design and build the ship. there were claims of that ship being $5 billion or $6 billion. the ship is 40% complete. it is on budget. it is going to be about $3.50 billion. the program has performed pretty well. a lot of the right things were done along the way. the program has been somewhat killed because of the debate and the projections of of riches that have not happen. you have to work your way to those things. >> i would like to see my program that you mentioned. it came off the rails with a lot of discipline. the program was put back on the rails. it has continued to be treated like a multi-year. va class -- the congress extended an unprecedented authority to us and the department before we had the first submarine because we were being asked largely by the congress to build these submarines at one a year in two different yards. that is a horrible strategy to build one submarine a year between two yards. at least congress gave us the authority to put the submarines under a multi-year period that they stability to the program. it allowed us to deliver it effectively. i can give you a lot of good examples. i appreciate the chance to give you some of those examples. >> a special appreciation for your good work. any good examples you and decide very quickly? >> it was a really well done program. the paa is in development now. it is a -- >> loss sunday to call it the "mighty p3." >> that has been an excellent program. a lot of the f-18s are modifications in many ways. nonetheless, they were able to comment with a realistic process. the growler is the same way. there has been a lot of programs. the jdam was a favorite. >> the what? >> the joint directive [unintelligible] it explored precision strike a long time ago. it was basically a program where they did a dumb bomb and strap a kit on it to make it be able to go with they wanted it to go. that was a very successful program. there has been a lot. >> you did a dumb bomb and strapped a kid? >> kit. a dumb blonde. a gravity bomb. i think what all those programs share -- by the way, the f-15 and f-16 were successful programs. we should look that up right approach and try to do that again. they all share a common themes. the number one thing is, they all have an awful lot of support from very senior leadership. senior leadership is on board and they are going to get that job done. they all seem to have a real need out there that they are going to fulfill. there is an added incentive -- patriotic, if you will. the paa is like that. i think the p3 has about had it. they sure those things in common. there is a real need. senior leadership has got on board. season has allowed the team that is going to sell that program to do a realistic estimate and keep requirements reasonable. >> thank you. mr. schwartz -- last word on this question? you help us develop a consensus before we close. >> thank you. i will give you two examples of programs we are considering. the va class submarine, while it is true that it had some cost estimating problems early on, the actual execution of the problem has been pointed to as an example of excellent program management. the results will take some time to come in. some of the reasons or because the marine program has but a lot of effort into hiring capable personnel as well as limiting their management stands for the last program or so. that is distinct from other situations, for example, the t.a.k.e. it was only under one program manager. that was a contributing factor. one of the approaches the va class submarine as used is bought five technology and answer some problems. -- programs. as those technologies are becoming more right, they are inserting them into the next block 5 to avoid some of the concerns that were raised as far as immature technology. they have had a very carefully planned approach to cost production as they spell out and start to stick to. i would also mention the super hornet. it is a program that has been pursued by a number of people as a good example. it was more than just an upgrade. it had more challenges. the other point i would like to add it is -- i will quote john young -- "half of the cost is five or 10 programs." one way to look at it is which programs are doing good and how can we emulate that. another potential approach -- which programs cause the most risk and how can we take a different approach to those? some people will say tighten scrutiny of everybody, tighten the scrutiny of nobody. what are the jobbing forces of higher risk? i will give one example. in 2001, the work by helicopter programs. four of them were pretty egregious. they represent four of the complete number of nine. work has indicated that helicopter programs have a higher risk of cost growth than other acquisition programs. at that is the case, how do we think of these programs differently than the other programs that may not have as high a history of cost or risk? thank you. >> thank you. that brings us to the conclusion. you may recall that before we were asking questions of this panel i said that i wanted you to help us focus on consensus. that is what we need in order to get anything done around here. we had the benefit of hearing from the first panel. we had the benefit of hearing one another. you had the benefit of your user experience. just some closing thoughts and things we want to reemphasize and underline that you think maybe a special help for us as we try to develop consensus. mr. young, do you want to go first? >> i would like to go backwards. i would be remiss if i did not emphasize that i believe the mrap program is a good program. it is a program where we had money that was not even a question. we had requirement, but the requirement was to do the best we could as fast as we could. it was not an unattainable requirement. if something was unattainable, we were asked to step back and deliver faster rather than slower. we had leadership support. all of that could have gone south if you did not have the teamwork and collaboration. thattary gates's big fear i worked hard on was to make sure that we build 10,000 vehicles, they could be deployed. people could be trained. spare parts would arrive for that vehicle said the soldiers could actually use them. that is how i go forward with that example and tell you that you have to have leadership. i think some of that leadership is from people who are accountable to the president said they can do the right thing. they are spending taxpayer money. they need to have trained people working for them. they need to be supported. they can not be promoted because they said no to a program. i think you need to change some of the incentive structures in the contract. the department as a whole needs to deal a meaningful five-year budget. i said this all the time when i was at the pentagon. the building is actively building the 2013 budget. the truth is, they just built the 2012 budget. that ought to be quality. the truth is, it is one year budget. they are not as meaningful as they should be. if we had a meaningful five-year budget, we would have a meaningful and stable outlook for acquisition programs to execute. i think that is something important that has not been said today. i pursue it -- i appreciate your pursuit of this knowledge and consensus. >> we applaud your continued efforts here. mr. sullivan? >> so much has been said today that i agree with, including the first panel. i think the department at this point understands what it has to do. it is beginning to understand the budget constraints. i would focus on -- i think the five-year budget is a good idea. i would not start a program unless the requirements were very well defined with a preliminary design to prove that everything is there. i would not let them exceed five years. i think it is good to use an incremental approach. i think the f-16 program is a potential model. some of the ones we named earlier -- those are good examples of how to do a program. competition. we talked a lot about the -- the department, it does not seem to me, has come out with a clear policy, message, or plan on how or when it is going to complete things. there are different levels in which you can compete. you can compete in technology. you can compete during product development. each step is more expensive. you can even compete in production. if you're talking about missiles ammunitions, you can do that sort of thing. if you're talking about a bomber and gets more difficult. the department can focus on how it can best used competition at various times during an acquisition and stick to that, i guess. have a clear policy about how it is going to use that. >> thank you. mr. schwartz, the one to close this out? >> with the goal of consensus, i think there are three things i have heard recurring. we have all agreed on the need to improve cost estimating early on. without a good cost estimate, you start behind the eightball, as it were. the second one is requirements. i would add change orders. we had millions of dollars and change orders, which is something -- we are probably going to renegotiate the contract. it is going to raise costs. that should help. the third was all work force and sent to the station. that is on the department of defense side as well as the contractor's side. it can also play a key role here. the only thing i would like to add, as great as a lot of these ideas are and as optimistic as people are, it all comes down to execution in making sure the initiatives are working and being adhered to. you can have a policy that is not necessarily being followed. for example, in 1972, the cost analysis improvement group was established which the sole purpose of improving dod cost estimates. in 1987, the acquisition board was established. what other goals was to improve cost estimates. in 2009, the cost analysis evaluation group had the goal of improving cost estimates. it all comes down to execution. we need to change the culture to truly embrace the goals of these policies. thank you. >> that is a good noted to close on. we got to each of you. we appreciate your preparation for today. we would ask that you -- some of the folks on our committee are probably going to some extra questions. we ask you to respond to this promptly. members have two weeks to submit those questions. i want to thank our staff, both democrat and republican for their work. to date has been very constructive. you have given us a lot to chew on. we know we can continue our oversight in the years to come. we extend that bar graphs over a couple of years ago for into the future. we will see it coming back down. less red ink. maybe today's hearing will help get us on the right track. this hearing is adjourned. >> thank you, mr. chairman. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] next, the commission on wartime contracting let's set procedures in afghanistan and iraq. live at 7:00 a.m., your calls and comments on "washington journal." washington congressman and the ranking member of the appropriations committee to discuss his efforts to get a spending bill that republicans and democrats can agree on. the current spending measure expires on april 8. newsmakers today at 10:00 a.m. and again at 6:00 p.m. eastern on c-span. >> policies ban on twitter. it is the fastest way to get scheduling updates. it can also join in the conversation and tweet questions directly to our washington journal guess. join the viewers to follow our twitter feeds. get started at twitter.com/cspan. >> the commission on wartime contract in continued its investigation monday it to help u.s. tax dollars are spent on contracting projects in afghanistan and iraq. the defense secretary of acquisitions and testified on the pentagon but the efforts to cut costs on federal contracts, increased competition, and approve acquisition practices. the bipartisan commission is expected to give its final report to congress in july. this is about 90 minutes. good morning. i am christopher shays, co- chairman of the commission on wartime contracting in iraq and afghanistan. the other commissioners at the dais are robert henke, katherine schinasi, charles tiefer, and dov zakheim. co-chairman michael thibault and commissioners clark kent ervin and grant green could not be with us today. this hearing will come to a hard stop at 11:30 a.m., so this statement is short. we want to maximize the time available for the question-and- answer session. today's hearing has a single witness, ashton b. carter, ph.d., who has served the nation as under secretary of defense for acquisition, technology, and logistics since april 2009. his formidable resume includes degrees in physics and medieval history, positions at harvard and the mitre corporation, and authorship of 11 books. we have asked dr. carter to talk with us today because his work bears critically on contingency contracting, which is the focus of all the commission's efforts. we had three purposes in mind -- one, we are looking for his current assessment of the progress and prospects of his "better buying power" initiatives at the department of defense, especially a they relate to contingency contracting. dr. carter's initiatives aim at targets like cost and process efficiencies, increased competition and incentives, and improved acquisition "tradecraft"-all topics of interest in the commission's work as well. we are also interested in how these initiatives will fare given the chronic understaffing of the federal acquisition workforce and the poor outlook for addressing that shortfall under current funding pressures. two, we are interested in his reaction to the recommendations we offered to congress late last month in second interim report, "at what risk? correcting over-reliance on contractors in contingency operations." three, as we prepare our final report for release in july 2011, we welcome dr. carter's thoughts on contingency- contracting issues that may warrant further analysis or new directions for improvement. individual commissioners may hold differing views on details and directions of dr. carter's work, but all of us appreciate the insight and dedication that he brings to his mission. and we recognize that bringing policy, cultural, and process change to defense acquisition is both urgent and challenging in light of operational demands and the battles over the federal budget. the commission thanks dr. carter for joining us today. now, if the witness will rise and raise his right hand, i will swear him in. do you solemnly swear or affirm that the testimony you will give in this hearing is the truth, the whole truth, and nothing but the truth? thank you. let the record show that all the witness answered in the affirmative. mr. secretary, please begin. it is important that it be on the record and we listen to it as well as read it. >> thank you, mr. chairman. it is a pleasure to be here before the commission. i appreciate the introduction. i salute the work of this commission. i was a more about that in a moment. if you do not mind, i will certainly not read it or try to cover all the material in the written statement. i did much to make some preparatory comments. >> your full statement will obviously be on the record. >> thank you, very much. let me begin by thanking you all for taking the time did you are taking to serve on this commission and congratulate you on your work in the interim report, which i have read carefully. i know you have worked very hard. for my part, i thank you and are grateful for your interest in this topic. i wanted to be with you today because of the importance of your work. i have emphasized since i've gotten to know the commission that we are working off the same list of challenges that you have identified and you have been working on, namely to combat waste, fraud, and abuse in contingency contract in, to root out corruption in the wake of our contingency contract think, to get control of the particular risk of abuse posed by private security contractors, and above all of these, to balance effective response to war fighter needs and values to the taxpayer in the different -- in the difficult circumstances of wartime contingencies. failure to do so is not only eight out from the taxpayer, it is a theft from those who put their basel's in harm's way on our behalf. -- themselves in harm's way on our behalf. we have to support the people being protected. it is fair to say that we have not done contingency contacting as well as the taxpayer in the war fighter deserves. the learning curve has been gradual and we are not yet where we need to be that we have made a lot of progress. with of it is associated the difficult local stances -- local circumstances. we have to learn and get better early on. we are trying to learn the lessons of iraq and applied them to afghanistan. i think we are. secretary gates asked me two years ago to work hard on these issues, and i have they are central to the two principal missions i have. first, to support the current fight. second, to get better value for the taxpayer in our acquisitions. in my opening remarks, i would like to make the connection between the work of the commission and these two missions -- support the current fight and get better value for the taxpayer in our acquisitions. let me say over all that we have been working closely with this commission and had benefited from doing so. witnesses have testified at 16 separate hearings of commissions. 33 different officials have made 49 appearances before this commission. i have read all of the 32 recommendations in your second interim report. i see and share the intent of every single one. nine of them fall outside of my purview. of the 23 remaining, we agree with 19 and are, in fact, implementing them. we disagree in part not with the intent, but the method of implementation of four of them. let me now make a few remarks about the larger context in which the management of the department is taking. as i said earlier, this context has two parts -- improving more support in general and improving value to the taxpayer and contacting in general. we will start with the report for ongoing operations. when secretary gates and i first talked about this job, he said to me something that made a big impression. he said that the troops are at war and the pentagon is not especially your part. i took that to heart. i have been trying to make that not so over the last two years. the focus overwhelmingly is on afghanistan. we did, i think, as a department a remarkable job of the uplift last summer. part of that was logistics'. i say that our logistics community achieved a miracle last summer. we started in december of 2009. president obama told us he wanted the but left completed by the end of august. if you had asked me if we could do that in the most forbidding of logistics' environment, i would have told you we would try, but i was not sure. i was very gratified and kind of amazed that by the end of august, we were able not only to get in the uplift forces, but to accomplish the rotation of the forces already there and provide the enablers that make that forced not only larger, but richer and more capable than it was the force in afghanistan again be years before. might focus right now -- today i was discussing this with secretary gates -- is making sure we are doing the same thing this year as we approach bring in afghanistan and that we are providing to our forces everything we possibly can to make them safer and make them more successful. for that reason, we have come to the congress in recent weeks for reprogramming. these are difficult things for the congress to approve. but our budget system -- our annual budget system is not adequate for dealing with ongoing wars. we have to do things to reprogram. i am happy to say that before the committees of congress supported our request, now we are focused on program execution and then on delivery into theater. i will give you some examples of things we are looking at. these are four or five examples drawn from so many. if you have just come back from afghanistan, even seen some of these. -- you have seen some of these. we will be more than doubling the number of tethered air staff for intelligence, and reconnaissance. that was out of recognition one year ago that despite the fact we are constantly increasing the number of creditor shadow, warrior, puma, and so forth aircrafts and orbits in afghanistan, general mcchrystal said one year ago that we were only able to service a small fraction of the requests for overhead, and full motion video. i realized we would never be able to do that with six of wing aircraft. we experimented in iraq with a tethered aerostats with a camera on it. we began to buy and deploy them in afghanistan. it was a difficult thing to do. you have to have a plant to make helium. you know how things are in afghanistan. if you have a helium plant, you have to clear a space around the airport of mines. iraq to bring in the workers to do the work. you got to have the housing for the workers to do the work. you have to have the housing for the people who bring in the housing. everything is like that. we were able to do that. the reports coming back is just remarkable. these people are able to look down the road at the market and see how much activity there is. they are able to surveil the road. they are able to look around their perimeter and see if somebody -- see if somebody is approaching their perimeter. it is really extraordinary. we are putting on those and other surveillance aircraft now as a replacement for the full motion video. you see these on the highway traffic helicopters on your morning television. that kind of thing. we replaced them with a wide area sensors that take it essentially a continuous high- pixel photographs of everything beneath the aerostat. you do not want to look at that data all the time, but it is available to you. you can go back to the film and see where the vehicle came from the detonated the bomb and so forth. it is very powerful. another example is mraps. in summer of 2009 i signed it be ordered for the all terrain vehicle. a few months ago kandahar solve the delivery to the marines down there. they are remarkable things. they have the protection of an mrap but the off-road burst ability -- versatility of the atv. i was at walter reed yesterday. there were at least five soldiers there to are alive because of mrap. many of them are alive because of the mrap atv. there are all sorts of detectors for ited's. they are difficult to detect. the best detector of explosives or the dog. they have a lot of practice with fertilizer-like material. they turned out to be very good at it. we are making increased use of dogs. somebody who is used by tankers, helicopters, and sort forth -- and so forth feist himself buying dollars these days. -- buying dogs these days. job one for the acquisition of work force in today's environment -- i tell folks this all the time, we have to make sure we are doing everything we possibly can. we have to be as effective and as safe as we possibly can. we are doing everything we possibly can. our system does not make that easy. the ppbs system was designed for normal times. it was designed to prepare for war, not to wage war. it is an annual cycle. if we follow that, we would always be behind the eightball in afghanistan and iraq. we have to create a fast lane for contingency acquisition so that requirements are done, not in the usual way, but quickly. if we do the acquisition quickly, including resisting our contracting officers to use all the latitude they have in getting under contract quickly. the funding i mentioned already requires reprogramming. it requires help from the congress. it requires a fast lane in the committees of jurisdiction in congress. all of those things the normal system will not do. we are constantly working around them. that is not satisfactory. we need a better system. the secretary has asked me to put on a more permanent footing the constellation of ad hoc systems that we have been using. i am doing that. i am doing that while also making sure that we take the time -- that we do not take attention away to the task at hand. i want to change the subject to a second front -- the second most important thing we tried to do, which is a deal with the new budget realities we face. we are entering a new era. secretary gates began to sell that note about a year and a half ago. he made a speech at the eisenhower library. he said that we needed to conduct our business in a way which was "respectful of the taxpayer at a time of economic and fiscal distress in the country." we do not anticipate and we certainly do not plan to see the defense budget go down like it did in the 1990's. after all, the country is at war. we have -- we cannot compromise on the capabilities that that we now plan on acquiring and fielding. at the same time, we are not expect -- or not enjoy the double-digit growth we enjoyed in the years after 9/11. it is going to feel very different to us from ever upward. the secretary wanted us, particularly those of us who manage in the department, to begin to adjust in the new era. looking at the last five years, you are aware that we have identified over all in the defense budget $178 billion of value added activity. we have taken those fines and reinvested in higher priority capabilities we and the -- within the defense budget and return money to the treasury. my part of that, the part that secretary gates has charged me and my office with, is the $400 billion out of the $700 billion total defense budget -- the sum of the basic budget that oversees community operations and committee funding. a total of $700 billion. the $400 million is contracted out for goods and services. $200,000,000.199999988 dollars evenly. -- $200 million and $200 million evenly. we are looking for what you experience when you get into the computer store. you buy a computer this year that is better than the one he could have bought last year and cheaper, too. that is called productivity growth. the question is, why am i in the position of going before congress for a fighter this year that cost more? what is predicted to grow in a defense economy? >> we need to find that. over the last couple of years we have cancelled a lot of programs that were not value-added. as time had passed and we had enough of them or they were not performing. what we have left are things that we do what and do need. we need to get them for the amount of money we're going to be given. that is the purpose of the better buying power initiative the secretary gates and i announced on september 14. i will touch on a few features of it. many of them are germane. >> if you can try to do that in the next few minutes. >> i will try to do that. the key is affordability. as we start new things like the ohio class replacements, and the presidential helicopter, a bomber in the air force, and so forth -- all of them will have to be designed with affordability in mind. we are doing something called ship cost for our ongoing programs. it is a counterpoint to the cost estimation process, which i call will-cost. it tells you what something will cost a few key managing the way you were managing already. we are going to start our managers and managing to what things should cost. we see competition at port in the kcx solicitation. it was one of the major drivers of valued defense. it is important for services contract in. this is, over all, $200 million is so much money that we cannot continue to have poor tradecraft in the acquisition of services. we are trying to improve our acquisition of services. that is also germane to your report. finally, the acquisition work force -- you have made reference to the importance of that. none of what i have talked about so far and nothing that is what -- and nothing that is in the initiative matters if we do not have good people. we are short of good people we oversteered in the direction of reducing the size of the acquisition work force. secretary gates has made it clear that the acquisition work force initiative that he began two years ago is an exception to some of the hiring actions he has taken. the acquisition of work force improvements will continue. contingency contract and is a subset of our overall contract thing. the work force that does that has some unique skills, unique to contended the hijacking. the signal some of that in your report. my point is, chairman, all of this is connected to the work of the commission -- but what we do in general to support the war's end will we do to pursue better value. contacting officer representatives are an essential part of the acquisition work force. competition is the key driver of value. services is a key area where we need to improve our acquisition tradecraft. the annual budget cycle is a cold war creation that does not keep up with modern contingencies. we are still adapting to the realities that there are and will be contractors on the battlefield. most of all, i in the closing days of march when we face rising combat in afghanistan, we need to renew our efforts to balance effectiveness and efficiency in our wartime contracting efforts. the commission is aware of all these connections. i salute you for your efforts and your wise counsel. >> thank you, dr. carter. we are going to get you out at 11:35. that is agreed to. i am it will take a minute of my eight minutes right now before going -- before boarding out that we will go to mr. kiefer and mr. hanky. we are going to do eight minutes as we have all agreed to and then we will figure out how much time we have to get you out at 11:35. i want to say with gratitude that your folks have been incredibly helpful to us and probably have made you feel that you did not need to come. thank you for coming. >> thank you for mentioning that. they are both incredibly able and they are right at the center. >> they could not have been more cooperative. we appreciate their help. also like to point out that robert has been incredibly helpful to us. mr. dixon has been incredibly helpful to us this whole time. we appreciate his work as well. i just want to say, for the record, that we look at waste, fraud, and to be used in many forms. we can see if the project is wasteful. we see a lot of waste. we see poor planning and oversight by the u.s. government as well as poor performance in the park -- on the part of contractors. we have had time and money misspent. finally, we see criminal behavior and blatant corruption. that is to be addressed as well. what is disconcerting about your statement is you tended to focus on the hardware. services are half of the contract. we know that the hardware is easy to identify and illustrate in terms of savings, but we are going to focus on the service part of your work, which i know you spent a good amount of time focusing on as well. with that, we'll start off with questions. >> thank you, mr. chairman. i did just come back from two weeks in afghanistan. the dust of efficiency initiative to ensure -- the dust of kandahar has not been shaken off my shoes. you talked about the dogs. you can drag me to the kennel to see the been trained. i note you yourself go to kandahar. it means a lot to the troops for you to show yourself as you did. it means a lot to them. my first questions -- i would tell you might issue up front and then tell you the background -- a sole-source extensions of contrast, i think, or a pernicious problem that i would like to see you tackle. you had your memorandum instructions and you had your implementing a memorandum. it is something you could cover in a supplement. here is what we found out. last year an article in the washington post revealed that the defense logistics agency had sold-sourced 8 $2 billion extension for in theater food service. we followed up. i spent the whole day with someone who turned the cards up on the table. the public was not let in on what the reasons were the d oa gave for this situation where they had to put all their solicitation for more than a year. the number one reason was the surge. they were faced with the new problem of 40,000 troops. they wanted more time to do this solicitation. that was the reason. that is not good enough. there are two peoples in the sole source extension. number one, we need more frequent we compete. number two, this shows that the end, but has much too large an advantage. as you point out in your memo that the incumbents have been advantage. -- it -- have an advantage. do you think you can put something in writing about the sole-source extension? we dealt with iraq before. >> should i respond to that? first of all, thank you for going to kandahar. i appreciate that you took the time to go there. i believe the troops are as grateful to see you at to see me. they want to see anybody from back home to is working on their problems and supporting what they are trying to accomplish. thank you for that. on retrospects to sole source extensions, you are right that more frequent the department is managing the -- more frequent recompetes are important. acquisition of services is probably the area where we had the greatest opportunity for improvement in an acquisition. we have been after planes, tanks, ships -- try to do better there for a long time. we still have a ways to go. in the area of services tradecraft, that has received a lot less attention and is generally under the word reform. yet it has accumulated into half of our contracts spent. have this on services, have is on goods. we cannot ignore that $200 million. whether it is contingency services, lawn mowing at the base, professional services, sustainment of services for field systems -- we have to improve our game. competition is what the key ways of doing that acid is in all acquisitions. therefore, you have to have composition and you have to continue to challenge incumbents to deliver better value because if they do not, they will be replaced. you are right. i get the contingency circumstance, and income but does have an inherent advantage because -- an incumbent does have an inherited advantage because we cannot afford to let the troops down. they had the advantage of continuity, but notwithstanding that and in the interest of better value, we need to be able to change horses. that is a challenge for people, but not an insurmountable challenge. i do not want to go into specific cases only to say that on occasion the argument can be made that it is too hard to change horses and the effectiveness of the support provided to the troops will suffer. that we cannot allow to have happened. at the same time, it is reasonable to expect our managers to be able to change horses without letting the war fighter downed in interest a better value. this cannot be an excuse for not recompeting. >> i thank you for analyzing that so well. it turns out that supreme food service got this sole-source extension even though the -- -- even though a report that said $600 million of their cost or questions. over $400 million for food and vegetables. what concerns me is that the comment on this excellent report from the deputy secretary of logistics' is that those sums of money would be treated "as potential" and not "validated overcharges." i found out what that meant. here are my two questions, and to get you have to save it for next time. >> good morning and thank you for being here this morning. i would like to pick up on your written statement. you make the observation as it relates to project management and proper contract surveillance that having a properly positioned senior leadership is a -- is important to success. one of the most critical agencies for yielding value for a dollar in execution and managing support contracts in afghanistan and iraq is the defense contract management agency. it is what your subordinates. the report to you. they provide critical surveillance. they manage contracts that are in place. the department has been challenged since the onset of the war with putting the right number of management professionals in place. obviously it is a difficult task. it was led by a three-star officer. officer.