[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]
EMERGING THREATS: ASSESSING DOD CONTROL OF SURPLUS CHEMICAL AND
BIOLOGICAL EQUIPMENT AND MATERIAL
=======================================================================
HEARING
before the
SUBCOMMITTEE ON NATIONAL SECURITY,
EMERGING THREATS AND INTERNATIONAL
RELATIONS
of the
COMMITTEE ON
GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTH CONGRESS
FIRST SESSION
__________
OCTOBER 7, 2003
__________
Serial No. 108-121
__________
Printed for the use of the Committee on Government Reform
Available via the World Wide Web: http://www.gpo.gov/congress/house
http://www.house.gov/reform
______
92-564 U.S. GOVERNMENT PRINTING OFFICE
WASHINGTON : 2003
____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; (202) 512�091800
Fax: (202) 512�092250 Mail: Stop SSOP, Washington, DC 20402�090001
COMMITTEE ON GOVERNMENT REFORM
TOM DAVIS, Virginia, Chairman
DAN BURTON, Indiana HENRY A. WAXMAN, California
CHRISTOPHER SHAYS, Connecticut TOM LANTOS, California
ILEANA ROS-LEHTINEN, Florida MAJOR R. OWENS, New York
JOHN M. McHUGH, New York EDOLPHUS TOWNS, New York
JOHN L. MICA, Florida PAUL E. KANJORSKI, Pennsylvania
MARK E. SOUDER, Indiana CAROLYN B. MALONEY, New York
STEVEN C. LaTOURETTE, Ohio ELIJAH E. CUMMINGS, Maryland
DOUG OSE, California DENNIS J. KUCINICH, Ohio
RON LEWIS, Kentucky DANNY K. DAVIS, Illinois
JO ANN DAVIS, Virginia JOHN F. TIERNEY, Massachusetts
TODD RUSSELL PLATTS, Pennsylvania WM. LACY CLAY, Missouri
CHRIS CANNON, Utah DIANE E. WATSON, California
ADAM H. PUTNAM, Florida STEPHEN F. LYNCH, Massachusetts
EDWARD L. SCHROCK, Virginia CHRIS VAN HOLLEN, Maryland
JOHN J. DUNCAN, Jr., Tennessee LINDA T. SANCHEZ, California
JOHN SULLIVAN, Oklahoma C.A. ``DUTCH'' RUPPERSBERGER,
NATHAN DEAL, Georgia Maryland
CANDICE S. MILLER, Michigan ELEANOR HOLMES NORTON, District of
TIM MURPHY, Pennsylvania Columbia
MICHAEL R. TURNER, Ohio JIM COOPER, Tennessee
JOHN R. CARTER, Texas CHRIS BELL, Texas
WILLIAM J. JANKLOW, South Dakota ------
MARSHA BLACKBURN, Tennessee BERNARD SANDERS, Vermont
(Independent)
Peter Sirh, Staff Director
Melissa Wojciak, Deputy Staff Director
Rob Borden, Parliamentarian
Teresa Austin, Chief Clerk
Philip M. Schiliro, Minority Staff Director
Subcommittee on National Security, Emerging Threats and International
Relations
CHRISTOPHER SHAYS, Connecticut, Chairman
MICHAEL R. TURNER, Ohio
DAN BURTON, Indiana DENNIS J. KUCINICH, Ohio
STEVEN C. LaTOURETTE, Ohio TOM LANTOS, California
RON LEWIS, Kentucky BERNARD SANDERS, Vermont
TODD RUSSELL PLATTS, Pennsylvania STEPHEN F. LYNCH, Massachusetts
ADAM H. PUTNAM, Florida CAROLYN B. MALONEY, New York
EDWARD L. SCHROCK, Virginia LINDA T. SANCHEZ, California
JOHN J. DUNCAN, Jr., Tennessee C.A. ``DUTCH'' RUPPERSBERGER,
TIM MURPHY, Pennsylvania Maryland
WILLIAM J. JANKLOW, South Dakota CHRIS BELL, Texas
JOHN F. TIERNEY, Massachusetts
Ex Officio
TOM DAVIS, Virginia HENRY A. WAXMAN, California
Lawrence J. Halloran, Staff Director and Counsel
J. Vincent Chase, Chief Investigator
Robert A. Briggs, Clerk
David Rapallo, Minority Counsel
C O N T E N T S
----------
Page
Hearing held on October 7, 2003.................................. 1
Statement of:
Estevez, Alan F., Assistant Deputy Under Secretary of
Defense, Supply Chain Integration, Department of Defense;
Frederick N. Baillie, Executive Director, Distribution and
Reutilization Policy, Defense Logistics Agency; and Patrick
E. O'Donnell, Commander, Defense Reutilization and
Marketing Service.......................................... 113
Kutz, Gregory, Director, Financial Management and Assurance
Team, U.S. General Accounting Office, accompanied by Gayle
L. Fischer, Assistant Director, Financial Management and
Assurance Team; John J. Ryan, Assistant Director, Office of
Special Investigations; Keith Rhodes, Chief Technologist,
Applied Research and Methods; and Shelton Young, Director,
Readiness and Support Directorate, Office of Inspector
General, Department of Defense............................. 12
Letters, statements, etc., submitted for the record by:
Baillie, Frederick N., Executive Director, Distribution and
Reutilization Policy, Defense Logistics Agency, prepared
statement of............................................... 122
Estevez, Alan F., Assistant Deputy Under Secretary of
Defense, Supply Chain Integration, Department of Defense,
prepared statement of...................................... 115
Kutz, Gregory, Director, Financial Management and Assurance
Team, U.S. General Accounting Office, prepared statement of 15
O'Donnell, Patrick E., Commander, Defense Reutilization and
Marketing Service, prepared statement of................... 130
Ruppersberger, Hon. C.A. Dutch, a Representative in Congress
from the State of Maryland, prepared statement of.......... 8
Shays, Hon. Christopher, a Representative in Congress from
the State of Connecticut:
Prepared statement of.................................... 3
Various letters........................................ 87, 104
Young, Shelton, Director, Readiness and Support Directorate,
Office of Inspector General, Department of Defense,
prepared statement of...................................... 63
EMERGING THREATS: ASSESSING DOD CONTROL OF SURPLUS CHEMICAL AND
BIOLOGICAL EQUIPMENT AND MATERIAL
----------
TUESDAY, OCTOBER 7, 2003
House of Representatives,
Subcommittee on National Security, Emerging Threats
and International Relations,
Committee on Government Reform,
Washington, DC.
The subcommittee met, pursuant to notice, at 10 a.m., in
room 2154, Rayburn House Office Building, Hon. Christopher
Shays (chairman of the subcommittee) presiding.
Present: Representatives Shays, Turner, Janklow,
Ruppersberger, and Bell.
Staff present: Lawrence Halloran, staff director and
counsel; J. Vincent Chase, chief investigator; R. Nicholas
Palarino, senior policy analyst; Thomas Costa, professional
staff member; Joseph McGowan, detailee; Christopher Skaluba,
Presidential management intern, Robert Briggs, clerk/
professional staff member; David Rapallo, minority counsel;
Karen Lightfoot, minority communications director/senior policy
analyst; and Jean Gosa, minority assistant clerk.
Mr. Shays. A quorum being present, the Subcommittee on
National Security, Emerging Threats and International Relations
hearing entitled, ``Emerging Threats, Assessing DOD Control of
Surplus CB Equipment and Material,'' is called to order.
Since the anthrax attacks of October 2001, much has been
done to strengthen national defenses against biological
warfare. Millions have been spent amassing pharmaceutical
stockpiles, developing new antidotes and modernizing public
health surveillance and response capacities.
The Department of Homeland Security has begun monitoring
imports and exports of items like these in this hearing room
sought by terrorists, but the increased threat of bioterrorism
here at home has not yet affected the way the Department of
Defense [DOD] handles the disposition of surplus lab equipment
and protective gear that could be of use to would be
bioterrorists.
Lax controls may mean DOD may be selling critical
components of the bio weapons manufacturing process to persons
or nations who wish us harm. Poor inventory controls mean
protective suits and masks could end up shielding terrorists
while defective suits are given to America's local first
responders.
In June of last year, the subcommittee heard testimony from
the General Accounting Office [GAO] that new protective gear
was being sold cheaply on the Internet as surplus while
military units were trying to purchase the same equipment for
an obviously far higher price. So we asked GAO to look more
closely at what was being sold from the Pentagon's bargain
basement.
GAO audited sales of several items that might appear on a
bioterrorist's shopping list. Between October 1, 1999 and March
31st of this year, DOD sold more than 600 pieces of lab
equipment and more than a quarter of a million protective
suits. The equipment found its way to Canada, the Philippines
and even the Middle East. To demonstrate how easily and cheaply
these potentially sensitive items can be acquired, GAO actually
purchased lab equipment and protective gear. The material you
see here, and more, originally cost DOD $46,900. It was
purchased online for about $4,100, 10 cents on the dollar.
After our earlier hearings, DOD said all defective chem/bio
suits could be found and taken out of active circulation and
that other surplus suits would no longer be available for
public sale. The GAO was able to acquire hundreds of the older
battle dress overgarments, some of which were from the
defective lots GAO has been trying to cull from the supply
chain for more than 3 years. Incredibly, some of those bad
suits had been given to a local first responder unit. GAO
concludes almost 5,000 of the defective suits may have been
issued to State and local law enforcement agencies and others.
Vague recall notices by the Defense Logistics Agency mean some
first responders may still be relying on protective gear that
won't work.
Why raise this subject publicly? We're certainly not trying
to give terrorists any ideas. The fact is they already know it.
Someone has obviously already thought through the process of
making and mailing deadly anthrax, and we're not trying to stop
legitimate military surplus vendors. They provide a valuable
service to DOD and the public, but the risk of biological
terrorism has to be confronted openly and aggressively.
Business as usual will not neutralize the potentially lethal
combination of lax inventory management, nonexistent end use
controls and weak accountability over the germs terrorists want
to weaponize.
Yes, much of this equipment can be acquired elsewhere. That
may point to a much larger problem. But that portion of the
problem attributable to the Department of Defense can be fixed.
DOD should not be a discount outlet for bioterrorism equipment.
Witnesses from GAO, the DOD Inspector General's office and the
Department of Defense will describe the scope of these
challenges and what can be done to reduce the risk of homegrown
biological terrorism. We welcome their testimony and their
service to our country.
At this time the Chair would recognize Mr. Bell.
[The prepared statement of Hon. Christopher Shays follows:]
[GRAPHIC] [TIFF OMITTED] T2564.001
[GRAPHIC] [TIFF OMITTED] T2564.002
Mr. Bell. Thank you, Mr. Chairman. The findings of GAO's
undercover investigation are extremely troubling. As you
stated, Mr. Chairman, the Defense Department is actively
selling to the public equipment that can be used to produce and
disseminate biological weapons. To me the most disturbing issue
is that these sales aren't one-time accidents or bureaucratic
lapses. Quite the contrary. Incubators, evaporators, even
protective suits for personal protection were available via the
Internet to anyone with a credit card; protective suits that we
fail to provide to our men and women in uniform fighting on the
front lines in Iraq and Afghanistan, available on the Internet.
These same protective suits were sold by DOD for less than
the cost of a McDonald's happy meal and were easier to purchase
than a Gap sweater off of eBay.
Mr. Chairman, I apologize for my sarcasm, but this is not
what my constituents or the American people would consider
adequate homeland security. It is an outrage to think that DOD
could have sold equipment used to produce biological agents
such as anthrax at one-tenth of its cost to would-be
terrorists.
Since the tragic events of September 11th, we no longer
have the luxury of waiting for reports like this one to prompt
action. Secretary Rumsfeld has recognized this, at least in
public appearances. On September 22, 2002, the Secretary asked,
do we believe it is our responsibility to wait for a chemical
or biological or even nuclear September 11th, or is it the
responsibility of free people to take steps to deal with the
threat before we are attacked? Of course we know the answer. We
must act now to protect this Nation. So why didn't the Pentagon
do so?
Why didn't the Department heed the warnings from the
Customs Bureau and the Department of Homeland Security last
December when they warned that all five items purchased by GAO
could be used by terrorists to produce biological weapons? The
dots were not just connected. They drew a bold-faced arrow
directly to this Pentagon Web site. I certainly hope our
witnesses can shed some light on these events.
Finally, Mr. Chairman, I would like to convey the regrets
of Representative Schakowsky and Representative Kucinich, the
other two Members who originally requested this investigation.
Both of them wanted to be here to see GAO's presentation, but
they are attending a funeral for Mervin Jones, the late husband
of my colleague, Representative Stephanie Tubbs Jones. I know
they wanted to attend this hearing because they have been
working on this issue for several years, and if this latest
report is any indication of the progress so far, there is much
work to be done.
Thank you, Mr. Chairman.
Mr. Shays. Thank you, Mr. Bell.
At this time the Chair will recognize the vice chairman of
the committee, Mr. Turner.
Mr. Turner. Thank you, Mr. Chairman. Mr. Chairman, I want
to continue to thank you for your leadership in this committee
and bringing to light the numerous areas of which we have
threats to our homeland security, sometimes through our own
government and our own agencies. You've caused this committee
to look at issues concerning DOE, Department of Energy safety,
Department of Defense and also private industry and things that
we're not doing that we need to be doing and things we are
doing that we shouldn't be doing.
Today we're going to be looking at an issue that is
outrageous when you look at the context of where our country is
in trying to defend the citizens of the United States. We're
not looking at an issue of bureaucratic rigidity. We're looking
at issues that seem to violate common sense. They are
outrageous when you look at price and just the disposition of
government property, when you look at the need domestically and
homeland security and first responders and when you look at the
threat that we're always trying to diminish in our country. We
know we have the knowledge since September 11th of the types of
threats that we are facing. I appreciate the chairman bringing
to light that also in this process we need to keep in mind the
issue that some--in this disposition process some defective
suits may be in the hands of local responders, why we have this
type of equipment possibly going into the hands of those who
want to harm Americans, and, Mr. Chairman, I thank you for your
efforts.
Mr. Shays. I thank the gentleman.
At this time the Chair would recognize Mr. Ruppersberger.
Mr. Ruppersberger. Again, Mr. Chairman, I also thank you
for your leadership in bringing this issue to our attention. I
must admit that before this hearing was called I, like a
majority of my constituents, was unaware that so much military
equipment and materials was not only being sold to the public
but being sold over the Internet. Without passing judgment and
whether selling these resources was a good or bad idea, I was
anxious to learn more about the inventory, the supply chain,
the procedures by which these resources were sold and, most
important, the oversight throughout the entire process.
It is this oversight that has disappointed me the most. As
the GAO report being released today notes, the American
government is now in the business of selling resources at a
fraction of the original cost. If that was not disturbing
enough, it is these--in these tough economic times, much of
that equipment is still needed elsewhere in the military or
even by America's first responders.
I don't understand how we can purchase top-dollar chemical
and biological protective suits and then sell them online for
$3 when these suits are needed elsewhere by our military,
police or firefighters. I think our new world requires a new
way of thinking and a new way of doing business.
With limited dollars, we need to remember that we are all
on Team America, and we must provide all responders, those
abroad and at home, with the equipment they need to keep us
safe. If one military unit has excess, it should go to another.
If the military has excess overall, it should go to first
responders.
I know this is how it is supposed to work in theory, but
this report leads me to believe that this is not happening. I
look forward to the testimony today and learning more about
this process, how this process works and how the decisionmaking
process works throughout.
Thank you, Mr. Chairman.
[The prepared statement of Hon. C.A. Dutch Ruppersberger
follows:]
[GRAPHIC] [TIFF OMITTED] T2564.003
[GRAPHIC] [TIFF OMITTED] T2564.004
Mr. Shays. I thank the gentleman.
At this time the Chair would recognize Mr. Janklow. Welcome
back.
Mr. Janklow. Thank you, Mr. Chairman, very much, and,
again, I'd like to reiterate what the others have said. Your
leadership in these areas that deal with the security of our
country and its people in a very nonpartisan, bipartisan way is
really astounding and commendable.
Mr. Chairman, as I read the testimony of the various
witnesses, the GAO report and the testimony of the witnesses, I
thought I was reading fiction. I had no idea that this was
nonfiction. It doesn't make any difference where you look. One
has to wonder what are these people doing that are responsible
for the safety, the security of this type of equipment? With
respect to the physical security, of 27 reports, 23 of the
reports found weaknesses in physical security. Now, 27 reports,
23 identified weaknesses in control for personal access. Of 27
reports, 23 reported weaknesses in inventory controls, several
of them not even able to figure out what their inventory is
with respect to these agents, these materials, this equipment
that can cause huge havoc and destruction and devastation to
people.
With respect to contingency plans, they were defective.
Export-import agents, management oversight, the list is
endless.
In addition to that, I find it amazing that it isn't that
you can buy this stuff on the Internet. It's what are they--who
is responsible? We need to know who are the people that are
truly responsible for not doing anything. It would be better to
have nobody in some of these positions. Then at least we could
say that we have to do something about it. What we're stuck
with are people that actually have titles and have
responsibilities in these areas as they sell defective suits or
donate them to local first responders at the same time they can
buy the good suits if you want to just make a general purchase
over the Internet or another way.
And then as I read the testimony over and over. Some
phrases are--people like to use them. We share your concerns,
as it says on page 2 of one report, we share your concerns it
says on page 3 of a report; we share your concern, as it says
another place on page 3. Sharing concern isn't enough, Mr.
Chairman. This is ludicrous. It's absurd. We need to know who
is responsible. We need to know what is being done to fix it,
why isn't it being done on a crash basis.
Daily we worry about other countries and their distribution
of weapons of mass destruction. Daily we worry about
radioactive isotopes that could escape from other countries and
go out into the chain of the world. Daily we worry about
weapons of mass destruction like anthrax, Ebola, smallpox, what
you can do with livestock with hoof and mouth disease. We read
in the news where somebody recovers from a pond a cooler, like
an igloo cooler with holes cut in it with places for rubber
gloves where they can manipulate anthrax or other agents. Why
do they do that? Why ruin a cooler when they can just buy it
from the Department of Defense at a reduced price? This is
crazy.
Mr. Chairman, I look forward to this hearing and the
testimony of these witnesses. This is a great service that
you're performing for the people of America. Now what we need
to do is get to the bottom of the problem and see how it gets
fixed.
Thank you.
Mr. Shays. I thank the gentleman.
This is a team effort, and Ms. Schakowsky had been--when
she was a member of the committee, had been very active in this
issue, and I also want to say, having been at Congress 16
years, that we have very devoted people in our departments who
try to wrestle with these problems and the spirit of this
effort, and this committee will try to understand what their
challenges are and to see how we can move the process along in
a constructive way.
Before recognizing our first panel, I ask unanimous consent
that all members of this subcommittee be permitted to place an
opening statement in the record and that the record remain open
for 3 days for that purpose, and without objection so ordered.
I ask further unanimous consent that all witnesses be
permitted to include their written statements in the record,
and without objection so ordered.
At this time the Chair would recognize the Chair of the
full committee, Mr. Tom Davis, who has done an extraordinary
job as chairman of this committee, and we're all very proud I
think on both sides of the aisle to work with him and
appreciate his leadership.
Chairman Tom Davis. I'll just be very brief. Thank you. I
think a picture is worth 1,000 words. What we see here, I think
to all of us and to the public, is very disturbing, so I'll be
interested to hear what the explanations are, where we proceed
from here and how something like this could happen. But I
appreciate you holding this hearing today. I think it will shed
some light on some of the practices that we can then visit I
think after we've heard the information that is imparted to us.
Thank you.
Mr. Shays. Thank you, Mr. Davis, and we appreciate all the
resources you provide to this subcommittee so we can do our
job.
At this time the Chair would just recognize our panel. We
have Mr. Gregory Kutz, Director, Financial Management and
Assurance Team of the U.S. General Accounting Office;
accompanied by Ms. Gayle L. Fischer, Assistant Director,
Financial Management and Assurance Team; Mr. J. John Ryan,
Assistant Director, Office of Special Investigations; Mr. Keith
Rhodes, Chief Technologist, Applied Research and Methods.
Additionally, we have a second testimony from Mr. Shelton
Young, Director, Readiness and Logistic Support Directorate,
Office of the Inspector General, Department of Defense.
At this time if our witnesses would stand up, and if there
is anyone else that may be called on to respond to questions,
I'd like them to stand up so we don't have to swear them in a
second time.
[Witnesses sworn.]
Mr. Shays. Thank you. We'll start with you, Mr. Kutz. Thank
you.
STATEMENTS OF GREGORY KUTZ, DIRECTOR, FINANCIAL MANAGEMENT AND
ASSURANCE TEAM, U.S. GENERAL ACCOUNTING OFFICE, ACCOMPANIED BY
GAYLE L. FISCHER, ASSISTANT DIRECTOR, FINANCIAL MANAGEMENT AND
ASSURANCE TEAM; JOHN J. RYAN, ASSISTANT DIRECTOR, OFFICE OF
SPECIAL INVESTIGATIONS; KEITH RHODES, CHIEF TECHNOLOGIST,
APPLIED RESEARCH AND METHODS; AND SHELTON YOUNG, DIRECTOR,
READINESS AND SUPPORT DIRECTORATE, OFFICE OF INSPECTOR GENERAL,
DEPARTMENT OF DEFENSE
Mr. Kutz. Mr. Chairman, members of the subcommittee----
Mr. Shays. Let me just say that we're going to do a 5-
minute time, then roll over the clock another 5 minutes. I
understand your testimony may creep a little over 10, but I
think it's important for you to set up this issue, and so we
understand that your testimony may be a little longer than
usual.
Mr. Kutz. I appreciate that, and thank you for the
opportunity to be here to discuss the sale of DOD excess
property. As you mentioned, last year we told this subcommittee
that DOD was selling JSLIST chem/bio suits on the Internet for
pennies on the dollar, while at the same time buying new ones.
Public sales of the suits our soldiers wear today raise
concerns about security issues such as reverse engineering. Now
we've identified another problem with controls over the sale of
excess property. Today our bottom line is that DOD is selling
excess property that could be used to produce and disseminate
anthrax or other biological agents.
My testimony has three parts. First, background on controls
over biological source agents and the expertise needed to
produce anthrax. Second, the sale of excess DOD biological
equipment and protective clothing. And third, controls over
public sales of these items.
First, the anthrax attacks of 2001 have heightened the
public's awareness to the risk of a biological attack on the
United States. Experts advised us that the production of
biological agents for use as a weapon of mass destruction would
require substantial expertise and sophisticated equipment.
However, they told us it was more likely that terrorists could
produce and disseminate a crude form of anthrax that could be
used to cause fear, significant economic consequences and some
deaths.
The biological source agent is also needed to produce
anthrax. Subsequent to the anthrax attacks of 2001, GAO and
agency IGs assessed controls at laboratories that handle
biological source agents. Substantial problems were identified
such as inventory control, physical control and transfer
controls. As a result, biological agents may have fallen into
the wrong hands.
Moving on to my second point, we found that DOD is selling
excess property that could be used to produce and disseminate
anthrax. Similar property is available from other sources such
as medical industry suppliers, indicating a broader problem.
As you requested, we established a fictitious company and
purchased excess DOD property over the Internet from
govliquidation.com. We spent $4,100 to purchase these new and
usable items. We have with us today the biological equipment
and some of the chem/bio suits and related protective gear that
we purchased. The biological equipment currently has no
restrictions for sales to the public.
Let me walk you through the six exhibits which you'll
probably have difficulty seeing from up there, but they will be
on the monitor at the same time. First, and to my far right, we
purchased a biological safety cabinet. We found that at least
18 similar cabinets were sold by DOD over the last 3\1/2\
years. Although purchased by DOD several years ago, this
cabinet appears to be unused.
Second, a bacteriological incubator, we found that DOD sold
at least 199 similar incubators over the last 3\1/2\ years,
including larger versions.
Third, a laboratory centrifuge, we found that DOD sold at
least 521 centrifuges over the last 3\1/2\ years.
Fourth, a laboratory evaporator, we found that DOD sold at
least 65 laboratory evaporators over the last 3\1/2\ years.
Experts told us that the final two exhibits, chem/bio suits
and related protective gear, would be critical to the
protection of terrorists during the production, handling and
dissemination of anthrax.
Unlike biological equipment, DOD's policy is that the chem/
bio suits and protective gear should not be sold to the public.
However, as our fifth exhibit clearly shows, this policy has
not been effective.
In June and August 2003 we purchased two DOD bid lots that
included over 500 chem/bio suits. We found that DOD sold at
least 286,000 chem/bio suits over the last 3\1/2\ years.
Several of the suits you see exhibited are unused in sealed
packages and have not exceeded their expiration date for
effectiveness. To purchase these suits, we submitted fictitious
information to DOD and had an end use certificate issued for
these purchases.
In addition, 379 of the suits we purchased were defective
battle dress overgarments. As you may recall from prior
hearings of this subcommittee, DOD has been unable to account
for about 250,000 of these defective suits. Our investigation
found that all 379 of the defective suits that we purchased had
previously been issued to local law enforcement agencies. In
addition, 4,700 suits that may be defective were also issued to
local law enforcement.
In addition to chem/bio suits, DOD was selling restricted
protective gear similar to our sixth exhibit. We found that DOD
sold several hundred thousand pieces of protective gear over
the last 3\1/2\ years.
Because protective gear was only available in large bid
lots at the time we made our purchases, we bought these items
from a private sector vendor that sells them to DOD. We paid
$190 for the items shown on the table, including a mask,
filters, hood, gloves and boot covers.
We also found that DOD excess property is feeding a robust
secondary market. The purchase and sale of DOD excess property
appears to be a profitable venture with many individuals and
businesses involved. We investigated 42 buyers of our case
study items. We found that 15 of these buyers exported used
laboratory equipment to countries such as the United Arab
Emirates and the Philippines. Individuals in these countries
are known to be involved in transshipments to terrorist-
supporting countries.
One of the buyers we investigated had been contacted
previously by the FBI has part of the anthrax investigations
from 2001. The FBI contacted this buyer about the disposition
of several micromilling machines purchased originally from DOD.
My third point is that Federal regulations and policies do
not restrict DOD from selling our case study biological
equipment to the general public. Initiatives exist to monitor
and control exports of the type of items that we purchased,
such as Customs Operation Shield America and the Australia
Group Agreement. However, there are no Federal regulations for
control of domestic sales of any of these items.
In summary, sales of biological equipment and protective
clothing is a much broader issue than DOD excess property. The
biological equipment and protective gear being sold by DOD are
available from a number of sources worldwide. However,
uncontrolled public sale of DOD excess property increases the
risk that terrorists could obtain and use these items to
produce and deliver anthrax within the United States.
Our related report includes two basic recommendations for
DOD, which they concur with. First, a risk assessment of excess
property sales should be done in conjunction with the DOD
scientific community and the Department of Homeland Security.
It may be that several of the items that we purchased or other
items should not be sold to the public.
Second, DOD needs to establish mechanisms to ensure that
protective suits and related gear are not sold to the public.
Lack of adherence to valid policies is a chronic problem at DOD
that in this case could have significant consequences.
Mr. Chairman, this ends my statement. Mr. Rhodes, Special
Agent Ryan, Ms. Fischer and I will be happy to answer any
questions.
[The prepared statement of Mr. Kutz follows:]
[GRAPHIC] [TIFF OMITTED] T2564.005
[GRAPHIC] [TIFF OMITTED] T2564.006
[GRAPHIC] [TIFF OMITTED] T2564.007
[GRAPHIC] [TIFF OMITTED] T2564.008
[GRAPHIC] [TIFF OMITTED] T2564.009
[GRAPHIC] [TIFF OMITTED] T2564.010
[GRAPHIC] [TIFF OMITTED] T2564.011
[GRAPHIC] [TIFF OMITTED] T2564.012
[GRAPHIC] [TIFF OMITTED] T2564.013
[GRAPHIC] [TIFF OMITTED] T2564.014
[GRAPHIC] [TIFF OMITTED] T2564.015
[GRAPHIC] [TIFF OMITTED] T2564.016
[GRAPHIC] [TIFF OMITTED] T2564.017
[GRAPHIC] [TIFF OMITTED] T2564.018
[GRAPHIC] [TIFF OMITTED] T2564.019
[GRAPHIC] [TIFF OMITTED] T2564.020
[GRAPHIC] [TIFF OMITTED] T2564.021
[GRAPHIC] [TIFF OMITTED] T2564.022
[GRAPHIC] [TIFF OMITTED] T2564.023
[GRAPHIC] [TIFF OMITTED] T2564.024
[GRAPHIC] [TIFF OMITTED] T2564.025
[GRAPHIC] [TIFF OMITTED] T2564.026
[GRAPHIC] [TIFF OMITTED] T2564.027
[GRAPHIC] [TIFF OMITTED] T2564.028
[GRAPHIC] [TIFF OMITTED] T2564.029
[GRAPHIC] [TIFF OMITTED] T2564.030
[GRAPHIC] [TIFF OMITTED] T2564.031
[GRAPHIC] [TIFF OMITTED] T2564.032
[GRAPHIC] [TIFF OMITTED] T2564.033
[GRAPHIC] [TIFF OMITTED] T2564.034
[GRAPHIC] [TIFF OMITTED] T2564.035
[GRAPHIC] [TIFF OMITTED] T2564.036
[GRAPHIC] [TIFF OMITTED] T2564.037
[GRAPHIC] [TIFF OMITTED] T2564.038
[GRAPHIC] [TIFF OMITTED] T2564.039
[GRAPHIC] [TIFF OMITTED] T2564.040
[GRAPHIC] [TIFF OMITTED] T2564.041
[GRAPHIC] [TIFF OMITTED] T2564.042
[GRAPHIC] [TIFF OMITTED] T2564.043
[GRAPHIC] [TIFF OMITTED] T2564.044
[GRAPHIC] [TIFF OMITTED] T2564.045
[GRAPHIC] [TIFF OMITTED] T2564.046
[GRAPHIC] [TIFF OMITTED] T2564.047
[GRAPHIC] [TIFF OMITTED] T2564.048
[GRAPHIC] [TIFF OMITTED] T2564.049
[GRAPHIC] [TIFF OMITTED] T2564.050
Mr. Shays. Thank you, Mr. Kutz. Thank you for the good work
that GAO does.
At this time the Chair would recognize Mr. Shelton Young,
Director of Readiness and Logistic Support Directorate from the
Office of Inspector General. Welcome, Mr. Young.
Mr. Young. Thank you.
Mr. Shays. Is your mic on, sir?
Mr. Young. OK. Thank you. Mr. Chairman, members--is it on?
Is it on now?
Mr. Shays. You just need to get closer to it, sir, if you
would.
Mr. Young. Mr. Chairman and members of the subcommittee----
Mr. Shays. I think it was on. I think we turned it off on
you here. Tap the mic just so we can see here. And we're going
to get you a little closer. Thank you. And take your time.
Mr. Young. OK. Mr. Chairman, members of the subcommittee,
thank you for the opportunity to appear before your committee
today to address your questions regarding controls over
disposal of DOD surplus equipment and controls over select
biological agents.
Like the General Accounting Office, we at the DOD IG have
identified problems with controls over the disposal of DOD
surplus equipment. In our June 2003 report on the Law
Enforcement Support Office Excess Property Program, we found
that DOD was distributing excess property to law enforcement
agencies without the accountability necessary to ensure that
property was properly and appropriately transferred.
My main focus with my testimony focuses on a June--or an
August 2003 interagency report on security controls over
biological agents. The report consolidates the issues
identified in 27 reports published by the OIGs of Agriculture,
Army, Defense, Energy, Health and Human Services and Veterans
Affairs. The 27 reports included 236 government facilities, 4
contractors and 9 universities.
In this open hearing I cannot identify any specific
laboratories or agencies with vulnerabilities. Instead, I'm
addressing the nine systemic problems that we did find. We are
pleased to report that corrective actions were initiated by the
six agencies on the recommendations in the individual agency
reports.
Five of the six agencies identified problems with physical
security controls. For example, three agencies reported that
some laboratories lacked adequate physical controls over
freezers or units used to store biological select agents. Four
agencies identified the lack of intrusion detection systems or
physical barriers that were easily bypassed. Also as shown in
our written testimony are examples of open and accessible
biological agent storage rooms, open access to research
facilities and a research laboratory housed in a mobile
trailer.
We also found problems with physical access controls which
were identified by five of the six agencies. Three agencies
identified lack of access restrictions for foreign nationals,
scientists or students. Four agencies reported that some
laboratories gave employees access without any background
investigations or pending the results of background
investigations.
All six agencies identified problems with inventory
accountability and controls. For example, one agency reported
that of 62 locations required to keep inventories, only 39 kept
inventories, and only 22 updated their inventories annually.
Another agency reported that laboratory inventories were
not reliable because the way researchers introduced biological
agents into the facilities, including use of personal or
government credit cards to directly purchase these agents from
private vendors, independent reproducing of cultures without
adjusting the inventory records and by undocumented sharing of
specimens with colleagues from other facilities.
We also found three agencies that identified problems with
the adequacy of contingency plans. For instance, one agency
could not perform a vulnerability assessment because they
lacked a consolidated data base to track the types and
locations of agents stored and used.
We also found problems with Centers for Disease Control and
Prevention registration. Problems included two agencies'
identified laboratories that did not know which agents require
CDC registration. One laboratory did not comply with the CDC
transfer requirements, because it was unaware of the existence
of biological agents at its own facility.
Import and export of agents was another area that was
looked at. Three agencies address import and exports of
biological agents. Concerns about the import of agents was
addressed by one agency, stating in their report that its
components lacked a system to track the number of shipments
that came into the Nation--our Nation under any individual
import permit.
As GAO mentioned, certain biological agents and related
technology are export controlled. Two agencies identified
examples of inadequate reporting of biological agent shipments.
One agency identified the shipment of a biological agent
without obtaining an export license.
Four agencies identified the lack of safety and security
training, to include personnel controlling access to a facility
that had received no security response training.
All six agencies identified management oversight and lack
of adequate policies and procedures as the major contributing
factors to the previously discussed inadequate controls. For
instance, it was reported that management emphasis and
oversight focused on bio safety for laboratory personnel rather
than bio security.
In summary, Federal agencies, contractors and universities
as holders of biological agents do have a responsibility to
ensure the security of the biological agents, but senior
officials at each agency have initiated corrective actions to
improve security controls over these agents.
That concludes my testimony.
[The prepared statement of Mr. Young follows:]
[GRAPHIC] [TIFF OMITTED] T2564.051
[GRAPHIC] [TIFF OMITTED] T2564.052
[GRAPHIC] [TIFF OMITTED] T2564.053
[GRAPHIC] [TIFF OMITTED] T2564.054
[GRAPHIC] [TIFF OMITTED] T2564.055
[GRAPHIC] [TIFF OMITTED] T2564.056
[GRAPHIC] [TIFF OMITTED] T2564.057
[GRAPHIC] [TIFF OMITTED] T2564.058
Mr. Shays. Thank you, Mr. Young.
At this time the Chair would recognize Mr. Turner. What
we're going to do is we're going to have 8-minute questioning.
We'll have a second round if we need it. So we'll go to Mr.
Turner and then to Mr. Bell.
Mr. Turner. Mr. Kutz, if you could walk me through this
process a little bit, because it--I mean, your testimony, as
you can tell from the reaction that you received when we were
giving our opening statements, is pretty strong and shocking,
and as our chairman of the full committee said, a picture is
worth 1,000 words. You can look at this equipment and without a
whole lot of knowledge with your giving us an understanding of
what it represents, it can tell that this should not have
occurred.
But the process I would like for you to walk us through is
that initially you looked at this issue with GAO, and there was
a period of time where there were not policies in place at the
Department of Defense concerning some of these items, and then
subsequently there were policies which apparently are not being
followed.
In looking at your testimony, you go on to say that overall
DOD sold at least 286,232 chemical and biological protective
suits in fiscal year 2000 through March 2003, including about
4,000 after implementation of the January 2003 policy
restricting them to DOD use only.
So in the first part we have a lack of a DOD assessment of
a problem. Then we have a policy, and then it not being
followed. And then applying it past the suits, there are areas
where you say that there are still not policies in place. My
concern obviously is that even when you conclude at the end of
this hearing that you need additional policies if the process
is not working or not being followed, we're not going to
achieve much.
Could you walk us through that process of the DOD's
policies and how they are supposed to be implemented and how
this failure could have occurred.
Mr. Kutz. Right. With the suits, before January 2003 the
suits were required to go through a process called an end use
certificate where the buyer is required to provide certain
information to DOD that really provides a trail, but is not a
preventive control, it is more of a detective control, and so
that was the policy in place. I mentioned that what we did to
circumvent that policy was submit fictitious information. So
that is a policy that is not effective.
Mr. Turner. That apparently no one confirmed?
Mr. Kutz. Well, they tried to confirm, and Special Agent
Ryan can give you more details, but they were not able to
determine that we were a fictitious company. And I'll have him
elaborate on that in a moment.
Mr. Turner. That would be great.
Mr. Kutz. So starting in January 2003, and I believe
because of the hearing you had last June and October, they put
in place controls where the suits were not supposed to be sold
to the public; and after that we were able to buy 15,150 suits
and protective gear. The policy was for both the suits, the
mask, the boots, the gloves, etc. So after that they still sold
over 15,000 of these items, including the ones that we
purchased in June and August 2003. That's when we purchased the
suits from DOD.
The biological equipment, there are no policies and
procedures in place for restriction of those at this point, and
that's what we've asked them to take a look at, is to do a risk
and vulnerability assessment of whether or not the equipment
should be sold to the public. So right now as of today, the
suits and protective gear are not supposed to be sold to the
public, and they are looking--I believe they've frozen the
equipment from sale right now to the public as they're doing a
risk and vulnerability assessment in conjunction with the
Department of Homeland Security.
Mr. Turner. OK. Back to the two issues then, the one issue
where there is a policy in place but it's not followed, and the
other that we need a policy, but obviously putting a policy in
place doesn't help us if the policies themselves, the process
that we're following, is defective. So, yes, I'd love you to
elaborate on the way that you acquired these through a
fictitious company, where the policy was circumvented.
Mr. Ryan. The committee asked us to set up the company,
which we did. The items other than the bio/chem suits, like
Greg said, there's no policy. So there's no end use certificate
that is required. For the bio/chem suits, there was an end use
certificate that was required. In that particular case, we
filled out the paperwork, we put down information that we had
made up, then we forwarded it to them.
They called us and wanted to check on a particular piece of
information which we--I would say altered a document and
forwarded back to them. After we forwarded the document back,
we were given our clearance and allowed to pick up the suits.
Mr. Turner. Let's just break this one down also. So what
you're saying is you didn't even set up an elaborate deceptive
process other than credit contact between the fictitious
company and DOD?
Mr. Ryan. There is nothing elaborate--there's nothing
elaborate about what we did. There is absolutely nothing
elaborate. This is a basic scheme to defraud. You assume the
identity, you pass on the documentation, and you get what you
need.
Mr. Turner. You didn't even need third parties then to
attempt to verify your fictitious information? It was only a
DOD and fictitious company exchange?
Mr. Ryan. Yes.
Mr. Turner. Well, obviously that continues to be troubling,
because you go to the next level of saying for the materials
that we have in front of us for which there was not a policy,
if we do put a policy in place, if DOD is not sufficiently
following them, then we have no real confidence that we're not
going to have the same presentation in front of us for those
items which a new policy applies.
In addition to your recommendations on the risk assessment
through the DOD of homeland security, talk a bit about the
failures in the Department of Defense obviously for the
policies to be affective.
Mr. Kutz. Well, it would be a combination of I believe
after January some of the suits were in, I'll call it, the
pipeline. The way it works is the Defense Reutilization
Marketing Service provides them to a private sector contractor
who sells them to the public on the Internet. That is
govliquidation.com.
Some of the suits were already in the pipeline, and they
did not--were unable to get them successfully back out of that
pipeline. The other part is the chronic issue of the----
Mr. Turner. Do you know why? You said they were not
successful in getting them out of the pipeline.
Mr. Kutz. They probably got some out of the pipeline but
the rest of them stayed in the pipeline and were sold, some of
them to us. So that is one of the things. So that should no
longer be the case. They should be able to prevent those from
getting in the pipeline. The other is just getting out the
information to all of the different organizations and units out
there involved in this process and providing some sort of a
mechanism to ensure that the policy is enforced, and I
mentioned in my opening statement it's a chronic issue at DOD.
You have a lot of good policies at the Department, but it's so
large and so stovepiped and decentralized it's very difficult
to get consistent compliance with those policies across this
very, very large organization.
Mr. Turner. Well, that's another area that I have a
concern. In looking at your recommendation of--for the items
that there currently isn't a policy, you had indicated that a
risk assessment should be undertaken between DOD and Homeland
Security. Apparently there is not a process within DOD wherein
that risk assessment--you're comfortable that they're able to
identify what items need to be controlled.
Mr. Kutz. In conjunction with the scientific community and
the scientific community over at the Department of Homeland
Security, they should have the bigger picture, and keep in mind
this picture is much broader than the Department of Defense
excess property. You're talking about lots of people out there
that are selling this equipment domestically and worldwide. So
whatever solution they have--they might be able to fix this
problem, but it is a broader problem, because there's a lot of
other organizations and companies out there selling this, and
as I mentioned in my opening statement, there's a large
secondary market for this equipment that DOD was feeding into.
And so Agent Ryan when he was doing his investigations of the
buyers found that there was a lot of this equipment going
around, and certainly DOD was a large feeder of equipment into
this process, but probably in the whole scheme of things they
were a very small piece of the puzzle.
Mr. Shays. Thank you. Mr. Bell.
Mr. Bell. Thank you, Mr. Chairman. After September 11th we
heard the term ``connecting the dots'' used a great deal, and a
lot of times it was used because there was concern that Federal
agencies weren't taking adequate proactive measures to keep the
Nation safe, and after September 11th we told ourselves that
this would never happen again, but Mr. Kutz, it's clear from
your testimony that it has. And your report also seems to
suggest that the Defense Department was warned about this
particular problem and then chose to take no action. Is that
fair?
Mr. Kutz. With respect to the suits, I would say that's
fair. I'm not sure about the equipment. I believe that the
equipment has flown under the radar screen, and it was not
really thought about in a way that this could actually be used
to harm us. And so the suits there was certainly ample warning
on, and they have made an attempt. I mentioned in my opening
statement that we found JSLIST suits. That is the current suits
being used by the soldiers today that were used in Iraq being
sold last year. We saw no evidence since your hearing last year
that any more of those suits have gone out. So the only suits
that we saw going out were what's called the battle dress
overgarments, which is the prior generation of technology. But
with the equipment, I honestly believe that this was just
something that had kind of slipped under the radar screen.
Mr. Bell. Well, let's talk about that, because obviously
one of our purposes here today is to try to figure out how we
got to this point, how this problem was created so that we can
do something about it.
Can you tell me about the effort by Customs and the
Department of Homeland Security to identify equipment that
could potentially be used by terrorists?
Mr. Kutz. Yeah. A little bit, and then I'll let my
colleagues chime in on this, but the Customs has the Operation
Shield America that I mentioned, and we did meet with the
agents from Customs, who as part of Homeland Security here,
with respect to that. And that really is warning people and
getting an awareness out there of suspicious activity of
purchasers of new equipment for the most part, and it's also
focused on export of that equipment. So Customs does have a
program, and they did brief the Department on this program.
And, again, I don't think the Defense Department did a lot
after that briefing, which is another warning possibly with the
equipment, as you mentioned. But Customs does have an active
program. There are lots of investigations that they have
underway looking at suspicious activity with respect to
primarily new equipment.
Mr. Bell. Well, a list was created, was it not, of items
that could be potentially used by terrorists?
Mr. Kutz. Correct.
Mr. Bell. And isn't it as correct that all five of the
items that you ultimately purchased from the Department of
Defense were on that list?
Mr. Kutz. They were either on the list or they were very
similar to items on the list. That was one of the issues is
that in looking at the list from a narrow perspective, if you
only looked at the hundred items on that list, you may very
well miss important items, but they were similar items to the
items that were on the Customs Operation Shield America and the
Australia Group Agreement. That is more of an international
group looking to try to stem the proliferation of biological
weapons worldwide. But they were very similar to the items on
those, and in some cases they may have been the same
technology. They might have also been a step down in
technology. Mr. Rhodes can probably add to that. That could
actually be configured in a way that could be used for the same
purpose.
Mr. Bell. Mr. Rhodes, do you want to add to that?
Mr. Rhodes. Yes. Thank you. One point that I would make
goes to the heart of the recommendation about the risk
assessment and, is that if you look at any of these lists and
you take any one of these individual devices narrowly and you
say I'm going to look at the centrifuge, for example, and you
look at the specification of the centrifuge and you say, all
right, that individual device in that configuration does not
meet the threshold of the list, fine. What is the weapon you're
trying to build? This equipment cannot make material equal to
what was sent through the mail in October--September and
October 2001. It can, however, make anthrax, and it can make
anthrax in the crude form that Mr. Kutz is talking about, which
is not necessarily going to be at that level, but you are going
to be able to make anthrax and you are going to be able to
wreak havoc with it.
There's an added benefit of being able to buy all of this
equipment, because the suit adds value to the bio safety
cabinet, which adds value to the centrifuge, which adds value
to the incubator, which adds value to the other equipment.
That's really at the heart of the risk assessment is to look at
all of this as an ensemble rather than this particular
evaporator needs additional equipment in order to be at the
level to break the threshold on a list. So that's what we're
getting to at the heart of this risk assessment.
Thank you.
Mr. Bell. Mr. Kutz, at some point are you aware of whether
the Customs officials met with the Department of Defense to let
them know that they were selling equipment that could be used
in the manufacture of biological weapons?
Mr. Kutz. Customs did meet with DOD and provided the same
presentation I believe that they provide to private sector
companies. I don't know--go ahead.
Ms. Fischer. Customs agents told us that they met with the
Under Secretary of Defense for Policy related to
counterproliferation----
Mr. Bell. Do you know who that was?
Ms. Fischer. Lisa Bronson--in December 2002 and briefed her
on their concerns with regard to the items on their Operation
Shield America list.
Mr. Bell. And they didn't immediately halt their sales
though, did they?
Ms. Fischer. No, they didn't. We tried to meet with Deputy
Under Secretary Bronson ourselves to determine what action DOD
might have taken as a result of that briefing, and she declined
a meeting with us.
Mr. Bell. She declined the meeting?
Ms. Fischer. Yes. She sent us a letter that basically said
that they follow the Federal regulations that only control the
specific items that Mr. Rhodes mentioned to you a few minutes
ago--items that are controlled for export purposes, but we were
more interested in what DOD thought about the range of items
that could be used for the same purpose, and we didn't get an
answer to that question.
Mr. Bell. Well, let me get this straight, because you all
were investigating this issue at the request of Congress, were
you not?
Ms. Fischer. Correct.
Mr. Bell. And on what basis then did she refuse to
cooperate?
Ms. Fischer. I think you would probably have to ask her
that question. She----
Mr. Bell. So as far as you know, they just continued to
sell the equipment after being confronted with it?
Ms. Fischer. Yes. Her written response was that they follow
the guidance in the Federal regulations, and it just stopped
there. It didn't go any further to say whether they were
considering broader controls or not. Since we did not get to
meet with her, we really weren't able to discuss this issue
further.
Mr. Bell. Well----
Mr. Shays. Could the gentleman suspend a second?
Mr. Bell. Sure.
Mr. Shays. This is something the committee will followup
and appreciate the gentleman pursuing these questions. We want
to know why she didn't meet with you, and so we'll follow it
up.
Mr. Bell. So the sales were not halted even after the
information was brought to the attention of the Defense
Department. At some point they were finally halted, and in your
opinion was that just because of the threat of bad publicity?
Mr. Kutz. It was as a result of our recommendation to them
to do a risk and vulnerability assessment. So I think that they
took that very seriously. And as a result of that in the
meantime while they're doing the risk assessment, which may
take several months, they are freezing the sale of those items.
And let me clarify on the Customs Operation Shield America,
they don't prohibit private sector organizations from selling
equipment. What they do is they try to educate them that if a
suspicious pattern of purchasing activity happens with some of
the people who are buying from you or if a buyer you are not
familiar with is trying to acquire some of these items, call us
and we will investigate. And that would get into the kind of
purchases we made. We made a pattern of purchases here that,
again, I think no one was really looking to see if something
suspicious was happening.
Mr. Bell. Just to wrap this line of questioning up, Mr.
Kutz, or anyone else on the panel, what would your
recommendation be to the Defense Department in terms of being
more proactive in the future?
Mr. Kutz. I believe that they--in addition to looking at
biological here, they will be looking at chemical also. If you
look at the excess property pipeline, there is a tremendous
amount of items that go through there. A lot of those items are
demilitarized. They are supposed to be controlled from being
sold to the public. Or if they're sold to the public, they're
altered so that they don't meet their initial purpose. I
believe they're going to take a broader look, and you can ask
the next panel, to determine if not only this type of equipment
but chemical, other types of equipment, may be going out that
should be restricted in some way. And I concur that would be
the right move here.
Mr. Bell. Thank you, Mr. Chairman.
Mr. Shays. I thank the gentleman.
Mr. Janklow.
Mr. Janklow. Thank you very much, Mr. Chairman. Mr. Young,
or you, Mr. Kutz, any of you, if the Department of Defense were
to be searching in a country and found large numbers of safety
cabinets, incubators, centrifuges, lab evaporators, chemical,
bio gear and milling machines, I assume that we would think
that we had found weapons of mass destruction in a country.
Would that be correct? Mr. Rhodes, maybe you can help me.
Mr. Rhodes. It would definitely signify intent. I mean,
you're looking for an adversary----
Mr. Janklow. And these are all the things that we're
disposing of through the Department of Defense or other
agencies?
Mr. Rhodes. Yes, sir.
Mr. Janklow. And we talk about them falling under the radar
screen. One has to wonder does it really take Members of
Congress and people asking for special investigations and
audits and Inspector Generals to figure out that this stuff
could be dangerous in the wrong hands to this country or
another country? I guess it's a rhetorical question.
Mr. Rhodes. Following your question, prior--I mean, we were
surprised at what we could buy, and our assumption had always
been prior to this job and the previous work, that----
Mr. Janklow. That it wasn't happening?
Mr. Rhodes. Well, that, OK, there's some pieces of this
equipment that will sneak through, and there may be a suit or
two, but you don't have to worry about it, because no one can
get the source material. But as you've heard from the Inspector
General, that's not true.
Mr. Janklow. Mr. Young, I'm really--as I read your
testimony, you found one laboratory that maintains salmonella
and didn't even know it.
Mr. Young. That's correct.
Mr. Janklow. You found another one that--where the
secretary of an agency was misreporting to the Department of
Homeland Security that the location was not using BSL-3 agents
when in fact you found Bluetongue, which is a livestock virus,
a deadly livestock virus, highly contagious, and vesicular
stomatitis virus; and they were misreporting saying they didn't
even have these items.
Mr. Young. That's correct.
Mr. Janklow. Sir, what I'm wondering is as the Inspector
Generals did their analysis or their reports, are we dealing
with legal problems, are we dealing with indifference, are we
dealing with incompetence or a combination of all three? What
else is there that we're dealing with?
Mr. Young. Well, I think before the anthrax mailings, their
emphasis was on bio safety of the lab personnel. That was their
emphasis of management controls over that, and they were not
too concerned about bio security----
Mr. Janklow. But, sir, that is prior to anthrax. When did
the anthrax thing take place?
Mr. Young. This was September 2001--October 2001.
Mr. Janklow. And this is, if I remember, past September
2003. When were these Inspector General reports done? They were
done this year, weren't they?
Mr. Young. Some of the reports were done before September
11, 2001 or October 2001. Some of the reports were ongoing
before that event, and so the timeframe of the reports is from
2001 through 2003.
Mr. Janklow. Sir, is there anybody that you know of that's
responsible in the government of the United States to deal with
these types of issues that deal with what I'll call atomic,
biological, chemical types of issues in the security of the--
and the dissemination of that to the public improperly?
Mr. Young. Well, from the Federal perspective, the CDC has
to--should be looking at these labs to see if they do meet
standards as far as bio safety, and it would be my
recommendation that they also look at least at the physical
controls at the lab to make sure the lab itself has adequate
controls.
But from a DOD perspective, it's a combination of offices
between under Secretary of Defense for Intelligence, they have
a role; under Secretary of Defense for Acquisition Technology
and Logistics, they also have a different role; and Lisa
Bronson's office, as you've mentioned before, she's concerned
with the export side.
Mr. Janklow. Is this too complicated? Is there a way to fix
this, or have we got a pretty good system that just isn't being
followed?
Mr. Young. Primarily we need guidance and procedures that
didn't exist, and so we've issued interim policies and
procedures in the Department for--such as for safeguarding
select agents they've issued interim policy and guidance on
export controls over biological agents.
Mr. Janklow. Sir, they issue guidances, and nobody follows
them.
Mr. Young. Well, this is in response to our reports. In
response to our four reports, these are some of the corrective
actions they took. They assigned a full-time staff officer to
establish policy and procedures. They issued guidance on
safeguarding select agents, and they issued guidance on export
controls.
Mr. Janklow. Sir, should this be different for different
agencies? Why shouldn't this be uniform? We have laboratories.
What difference does it make if they're in the Veterans
Administration or CDC or in the Defense Department or on a
contract agency in some university from the Federal Government?
Why isn't this all being administered under one set of
controls?
Mr. Young. Something like Code of Federal Regulations, to
come out with some standard minimum security standards or--
right now it's up to each Federal agency to establish their own
controls.
Mr. Janklow. But that doesn't make sense, does it, for the
safety of America?
Mr. Young. Right.
Mr. Janklow. If I could also ask you, sir, one agency
couldn't perform a vulnerability assessment because the agency
lacked a consolidated data base to track the types and
locations of agents stored and used. That particular agency,
was it required to have a data base?
Mr. Young. They weren't required to. It's something that
they should have had, because, how do you know--that's the
agency that misreported to the Department of Homeland Defense
or Homeland Security that they didn't have these types of
agents, and yet they did, but they didn't have a data base.
That's one of the recommendations that was made, and each
Federal agency is to establish a data base.
Mr. Janklow. If there was a centralized office or
individual that was responsible for these things in the
government, it would really make more sense; wouldn't it?
Mr. Young. Yeah.
Mr. Janklow. Another area dealing with the import and
export, I noticed concerns about the import of pathogens was
addressed by one agency, which stated in its report its
components lacked the system to track the number of shipments
entering the country under any individual permit, or to ensure
that any incoming shipment is actually associated with a valid
import permit.
My question is, sir, these agencies that find all these
problems in administering the law, are you aware of any system
whereby they ever notify their superiors or an administration
or the Congress or anybody that they're having problems
implementing what they're supposed to be doing?
Mr. Young. No----
Mr. Janklow. Or just when they have problems they just
ignore them.
Mr. Young. Well, it takes auditors and reports to raise
mass awareness of the problem, so they can take corrective
action.
Mr. Janklow. Management isn't expected to do that on their
own?
Mr. Young. That's correct, because lack of oversight is one
of the main reasons we have a problem.
Mr. Janklow. And it says disperse from the Agriculture
Department to the Veterans Administration to the Defense
Department. And I notice the Army is involved in there. What
about the Navy and the Air Force?
Mr. Young. They didn't participate in this effort.
Mr. Janklow. Thank you, Mr. Chairman.
Mr. Shays. I thank the gentleman. Mr. Ruppersberger.
Mr. Ruppersberger. Yes.
You made a comment that I would like to explore a little
bit, the fact that the Department of Defense generally has been
known to really not to be--you give the statement. I'm asking
for your statement, not being listening, adhering to certain
policies that could be relevant to situations like today, what
was that comment?
Mr. Kutz. Right, I mean in the work that we've done, in the
financial management, inventory management and other areas, and
keep in mind DOD today has nine high-risk areas on our list of
26, so they have lots of challenges in the area of business
support, but certainly, the adherence to valid policies and
procedures we see in many of the studies we do. And again, I
believe it gets back to a large decentralized organization and
diffuse power across the Department as to, you know, compliance
with policy. So, again, there is a lot of good policy, but it
is a chronic issue we've seen.
Mr. Ruppersberger. Well, that's what I think, really. We're
talking about one issue today, an example of, I believe, that
your mission was to go in the area of biological and chemical
and we have what we have here today just because of that.
What concerns me is the systemic problem that exists with
DOD and how we're going to have oversight and hopefully
recommend how things are going to be changed so we do not have
these situations.
On page 32 of your report, the GAO report, I just quote
just a small part: ``our ability to purchase these items
demonstrates ineffective DOD supply chain management.''
Do you agree with that?
Mr. Kutz. Yes, absolutely.
Mr. Ruppersberger. And why do you agree with that
statement?
Mr. Kutz. Well, with respect to the defective suits in
particular, which is what I believe we're talking about, the
problem they've had in controlling the suits is that once they
leave the Defense Logistics Agency's warehouse they go up to
the various services, Army, Navy, Air Force, Marines. Those
services do not have consistent systems or policies for
tracking the suits once they leave the DLA warehouses; for
example, some have systems, some have spreadsheets, some use
pen and paper, some use nothing. And so, when you try to get
visibility from the top of all the suits, when do they expire,
there's absolutely no way to roll it up, so what happened was
when the defective suits have gotten out to the Department,
they were unable to recall and find for sure 250,000 of them,
and it gets into something I looked into for the subcommittee
last year.
I took a visit to Wal-Mart and we looked at Wal-Mart at
their supply chain management, which is world class, and they
were able to find a tube of toothpaste in a minute, that was--
how many tubes of toothpaste were there in Fairfax, VA in 1
minute. Here we are, 3 years later, with the defective
biosuits----
Mr. Ruppersberger. That's a good point, because it seems
like the DOD was attempting to run a business. It was
attempting to really have an inventory chain. It wasn't managed
properly. You know, I'm sure Wal-Mart, whatever they sell, they
have certain licensings they have to go through, and these are
all problems that I'm sure that you did find because you
testified to that today.
Mr. Kutz. And what Wal-Mart told us, interestingly, was
remember the Tylenol scare 10 years ago? They needed to get
that off the shelves in a matter of hours and they feel they
need to get things off the shelves that have problems within an
hour or two.
Again, I know the Department is trying to modernize their
systems so that they have that same kind of world class supply
chain management, but another one of our high-risk areas has
been the inability to modernize high-risk systems. So that's
going to be a critical element in dealing with the problems
you've just identified.
Mr. Ruppersberger. And you talk about the inventory
control. It's my understanding that defective suits were sold,
defective suits that really probably should have been
maintained by DOD to use for training?
Mr. Kutz. Correct.
Mr. Ruppersberger. And then those defective suits were sold
and those suits, and I am not sure whether that was in the
report, but I thought I read it, but those suits were literally
sold back to us; is that correct?
Mr. Kutz. Well some of them were turned over to local law
enforcement agencies who then returned them to DOD who sold
them to us; 379 of the ones that we purchased came back from
local law enforcement agencies. Others, it appears that as many
as over 100,000 of the 250,000 defective suits could very well
have been sold to the public.
In looking at our data base out of the 286,000 suits that
were sold over the last 3\1/2\ years--it's possible that as
many as 158,000 of them could be defective, based on the
national stock numbers. It's unlikely that all of those are
defective because there were multiple manufacturers of these
defective suits. Isratex is the one that manufactured the
defective suits.
Mr. Ruppersberger. What I'm interested in, we have hearings
after hearings, and hopefully, we will benefit from the
hearings so that we can try to have an effect and have change.
That's Congress's oversight mission, so to speak. What I'm
interested in, and DOD's going to be the second panel and we're
going to be able to ask them certain questions, and this is
probably not the most joyful hearing for them, what could we
do, from your position or from where you stand, what could we
do to try to effect it and I think really probably a lot of
problems start at the top so we're going to have to effectuate
a recommendation that will go to the top level of DOD to change
the system. And, for example, I love the comparison you made.
You have Wal-Mart who has inventory and was able to find
something right away, and yet DOD cannot.
Help me out. What questions would you want me to ask the
Defense Department? Were they on the next panel? I haven't done
that before, but I thought it was a pretty good question.
Mr. Kutz. Well, with respect to this, and I think even in
the written statement, they said they would be in a position in
3 months to try to come up here and deal with these issues, so
you may want to have another hearing and have them come back up
and hold them accountable and say have you fixed these problems
and we can see whether these problems have been fixed. The
things that get DOD's attention are the things before us today
or dealing with the money issue and cutting parts of the budget
where there is poor performance, so those are the ways that you
can impact.
Mr. Ruppersberger. And also good management setting a
deadline and holding them accountable for the deadline.
Mr. Kutz. Right.
Mr. Ruppersberger. But in your opinion, it's going to have
to go to a high level to effectuate this?
Mr. Kutz. Right. This should be from the very top levels of
DOD that this is important, and it can be done; I mean, if you
look at the DOD from a mission and we always break it into
mission and mission support. If you look at mission, the
ability to fight and win wars, they get an A. If you look at
mission support, as my boss David Walker has said, they get a
D.
Mr. Ruppersberger. Well is it a technology problem, is it a
lack of technology.
Mr. Kutz. It isn't a lack of technology. It's a lack of
effective technology.
Mr. Ruppersberger. What do you mean?
Mr. Kutz. Well, they spend $18 or $19 billion a year on
their business systems, and those systems are dysfunctional at
this point.
Mr. Ruppersberger. Well, that's an important issue and
that's something specific that I think we can look at that you
feel the systems that they have in DOD generally are
dysfunctional for what the needs are today.
Mr. Kutz. That's correct, and Chairman Shays has had
hearings on that before, and so this subcommittee has had
oversight over that issue.
Mr. Ruppersberger. Another thing that concerns me greatly,
this is just one small investigation, what else is out there
that could even have more impact on what we're dealing with
today?
Mr. Kutz. I mean, I obviously cannot tell you, but
certainly this is a small example of a broader management
challenge the Department faces that gets into, again, the high-
risk areas.
Mr. Ruppersberger. Do you feel that the leadership and DOD
is putting their head in the sand as relates to this phase of
running the Department?
Mr. Kutz. When you say, which phase do you mean?
Mr. Ruppersberger. Well, the phase of inventory control,
management, we're giving an A on fighting the wars, but on
actual inventory control, accountability, those issues?
Mr. Kutz. I believe mission always gets priority over
mission support, but I do believe they're taking mission
support very seriously, and they are trying very hard to
modernize their systems; I mean, they have represented that the
supply chain management for the Iraqi war is much improved over
what they had 10 years earlier, and they can maybe talk to you
about that as part of the second panel.
Mr. Ruppersberger. Mr. Chairman could I just ask one more
question of my time.
Mr. Shays. Yes.
Mr. Ruppersberger. One more question, where I would just
ask if you have any information whether we sold equipment and
bought it back? Can you give me some examples of this?
I think maybe Mr. Ryan might know that more than you.
Maybe Mr. Ryan might know that more than you.
Mr. Ryan. In the case that you refer to, Congressman, it's
an area in which they were turned in, these suits were turned
in. There was a large quantity of these suits that were turned
into DRMO's. They're what they call reutilized. Someone went
in, didn't purchase them, but within DOD they were reutilized.
That was a special DODAC--that was a law enforcement
support organization requisitioned those, California's State
coordinator requisitioned over 700 of these suits.
Out of that, one particular law enforcement group in
southern California got over 400 of these suits. They were
going to use them for an exercise, a mock exercise. The mock
exercise did not work. They turned them back in to DOD. At that
point, they should have been taken out of service--they should
have been taken off line and sent for destruction because there
was a notice to destroy those suits.
While they were doing that, there were three other units
within DOD that requisitioned them. They got them. The others
were then placed in GL's custody for sale, at which time we
bought them.
Mr. Ruppersberger. But what I was referring to also was a
Wall Street Journal Article of May 13 about plane parts?
Mr. Ryan. I----
Mr. Ruppersberger. Did you know that?
Mr. Kutz. No.
Mr. Ruppersberger. They were referring to plane parts that
were sold and that we bought back.
Mr. Ruppersberger. I guess you haven't read the article.
Mr. Kutz. I haven't, no.
Mr. Shays. It's not like they have enough to do; I mean one
of the challenges we have with the Department of Defense, we've
had tremendous challenges financially and with inventory
control that stretches back decades and decades; I mean, at one
point, there was an audit that said 7 trillion transactions in
DOD were not auditable, and that went down to 1 trillion today,
a little more than that.
Now, that's obviously the same item and the same dollars
going back-and-forth and so on, but it's a number that just
defies logic. The reason why, in my judgment, you do not get a
handle on it is DOD knows that like in any other government
agency, we're not going to shut them down, so it just doesn't
get the priority, and that's one of the reasons we have these
hearings, to have it show up on the radar screen, and frankly
to give it a little more public emphasis.
Let me just start with you, Mr. Kutz. In your written
testimony, first let me set it up. This is equipment that you,
Mr. Ryan, were able to buy.
Mr. Kutz. That's correct.
Mr. Shays. And, in your testimony in response to questions,
you pointed out that you could do basic chemical--biological
agents, terrorist agents, such as anthrax. The difference here
would be it wouldn't be milled anthrax, but let me come to your
statement, Mr. Kutz. You said we also know that DOD excess
property sales included other items that would use full
laboratory equipment for the production of anthrax, such as
microscopes, not here, and micro milling machines also not
here. Micro milling machines are high-speed grinders that can
be used to grind dried anthrax into small particles for
dissemination. While anthrax can be ground by hand, a milling
machine makes the process more efficient and ensures the
production of microscopic particles.
DOD sold 13 milling machines over the Internet since June
2001. That was in your testimony.
Now, I'm told that the anthrax that made its way to the
Capitol, a handful of anthrax was potentially a billion spores,
so we're talking about not a million, a billion, and, at one
point, we were told that they might even have to tear apart the
Hart Building and build a new building; I mean, that's how
difficult this stuff became for us, so it's your testimony that
while Mr. Ryan was not able to buy a micro milling machine,
it's your testimony, since 2000, June 2001, 13 were sold; is
that correct?
Mr. Kutz. Right. They just weren't available during the
time we were doing your investigation.
Mr. Shays. Is it your testimony that some of these 13 were
sold after September 11?
Mr. Kutz. Yes.
Mr. Shays. So they weren't all sold between June 2001 and
September 2001?
Mr. Kutz. Correct. Some were sold through March 2003. I do
not remember the last date of sale, but they were sold during
the period of June 2001 to March 2003.
Mr. Shays. So, if we added both the microscopes and the
milling equipment, milling machines, would you have been able
to build a more sophisticated biological agent, Mr. Rhodes?
Mr. Rhodes. Yes.
Mr. Shays. And then to reiterate, the only difference is,
Mr. Ryan, you weren't able to buy them at that point, but they
were for sale sometime since June 2001?
Mr. Ryan. That's correct.
Mr. Shays. And after September 11, 2001?
Mr. Ryan. That's correct.
Mr. Shays. This is--yes.
Yes, Mr. Rhodes.
Mr. Rhodes. I also wanted to make one point about the
equipment. This is notional equipment; notional, I mean, you've
given us a threshold on time and money. Three additional points
we will make. There were biological safety cabinets that were
the size of this hearing table that were available. There were
centrifuges that were the size of washing machines. There were
incubators that were the size of refrigerators, so----
Mr. Shays. For sale?
Mr. Rhodes. For sale.
Mr. Shays. Over the Internet.
Mr. Rhodes. Yes; and I just want to make one point, that,
in our discussions with other folks in the counterterrorism and
biowarfare community, we were discussing relative volume, what
can you make, and we all understand that this would make a very
small, very, very small amount of material, but, when I was
discussing the larger pieces of equipment then everyone became
nervous. You know, they said well this will be good for a
notional discussion, but when you're talking about a biosafety
cabinet that's the size of this hearing desk, you're talking
about centrifuges that are as large as washing machines, and
you're talking about incubators that are as big as
refrigerators. Now you're talking about volume. And now, you're
talking about you become--you reach a point at which you can
overcome the inefficiencies of material development.
Mr. Shays. And is it your testimony that this equipment was
for sale and also sold?
Mr. Rhodes. It was for sale. I do not know that the larger
equipment was sold, but the lots were moving, and to get to the
point about intransit visibility, 1 day when we went to
delivery sites, the storage sites, the person that walked us
into the building was absolutely certain that there were no bio
suits, no chem-bio suits available, and we looked into a
container and the container was actually marked for boat
equipment. It was life vests and brass fittings and things like
that, and the suits were in there, so----
Mr. Shays. My understanding is sometimes lots are sold with
a variety of equipment in it. It's almost like a miscellaneous
shipment that you buy and then you kind of open up with some
interest, as to what you've purchased.
Mr. Rhodes. It's like----
Mr. Kutz. It's like a grab bag, yes; I mean there might be
some good things in there that you never envisioned were in the
box.
Mr. Shays. But you're willing to take the risk of what you
buy; is that correct?
Mr. Kutz. That might be what certain buyers have learned
over time because a lot of people are buying this from the
Department.
Mr. Shays. I wasn't intending to ask this line of
questioning, but we were presented with the requested meeting
with Lisa Bronson, and Mr. Bell's rightfully raising some
question about that frankly really surprised me, not that he
raised it, but the results of the questions.
In the e-mail you sent, we understand that this is a longer
e-mail to Mr. Shortwell; is that right?
Ms. Fischer. Shotwell.
Mr. Shays. Yes. It says we understand the customer
manager's briefed Lisa Bronson, who is Deputy Under Secretary
of Defense Technology Security Policy and Counterproliferation,
and it said we understand the customs managers briefed Lisa
Bronson on their Operation Shield America program last year. We
would like about 30 minutes of Under Secretary Bronson's time
to discuss the following: Has DOD prepared a vulnerability
assessment that considers the risk associated with sale of
certain excess biological laboratory equipment to the public;
No. 2, what, if any, consideration has DOD given to controlling
or restricting the release of its excess biological or
laboratory equipment items outside DOD; so that's bottom line
what you requested.
You got an answer that, basically, it's so short I'm just
going to read it, and then we will submit it for the record.
In response to your e-mail request dated June 6, 2003, for
information regarding controls over JSLIST suits, the following
is provided our primary focus on this issue is from an expert
control perspective, rather than an inventory control
perspective. As of November 27, 2002, military clothing and
mass design to protect against chemical and biological agents
would include the JSLIST suit have been added to the U.S.
munitions list. Excerpts from the State Department's final laws
appeared in the Federal Registry as attached. For your
information, effort is underway to add protective suits, so do
you feel that her letter to you was, in any way, responsive to
your questions?
Ms. Fischer. No, we do not, Mr. Chairman.
Mr. Shays. I mean, the obvious fact is it wasn't. I'm
surprised that you even needed to say you only wanted 30
minutes of her time. Is it that meeting, is it that difficult
to have a meeting to do your job?
Ms. Fischer. When we asked for a meeting, we worked through
Mr. Shotwell, the Under Secretary's special assistant. They
said they were very busy, Ms. Bronson was going out of town and
didn't have much time available, and that's when we offered to
meet for just 30 minutes.
Mr. Shays. Let me just say for the record, and I think some
of you know that I shouldn't have to say this, that the next
time this happens, we shouldn't and you shouldn't be faced with
this. You should contact the committee and the committee should
inquire, as to why there's not this kind of cooperation,
because not only did she not meet with you, she didn't even
respond to your questions, which raises a heck of a lot of
questions in our minds, so we will obviously be in touch with
her and we look forward to you accompanying us.
Ms. Fischer. OK.
Mr. Shays. And well, without objection, submit this for the
record.
[The information referred to follows:]
[GRAPHIC] [TIFF OMITTED] T2564.059
[GRAPHIC] [TIFF OMITTED] T2564.060
[GRAPHIC] [TIFF OMITTED] T2564.061
[GRAPHIC] [TIFF OMITTED] T2564.062
[GRAPHIC] [TIFF OMITTED] T2564.063
[GRAPHIC] [TIFF OMITTED] T2564.064
[GRAPHIC] [TIFF OMITTED] T2564.065
Mr. Shays. My time is running down but let me just pursue.
Mr. Young, in your testimony, and you're here because you're
the other part of the story. You're the part of the story that
says we have this lab equipment and this lab equipment can make
biological agents and basically, your testimony, it seems to
me, you raise serious concerns over potential availability of
the germs anthrax, the terrorists who would want to cook in
this equipment lab. Do not know where the biological agents are
in some cases you found, so they do not control physical access
to the agents, you found that out as well, they do not control
who has access to the agents. They do not always know where the
agents are being exported; is that correct?
Mr. Young. That's correct.
Mr. Shays. So, when you combine this to your part of the
story, I'm a lot more concerned than I was before we started
this hearing. This is far more serious than even I had been led
to believe.
Here's what we're going to do. We're going to do 5
minutes--we haven't even talked in the kind of length that I
would like just about how it's possible that our first
responders could get protective gear that may be defective, how
we could grab them this faulty gear back and then reput it out
again is simply something that, you know, takes my breath away.
Mr. Bell, we're going to go with you first and then we will
go to Mr. Turner, so you have 5 more minutes, give or take. If
you need more, use it.
Mr. Bell. Thanks a lot, Mr. Chairman.
I guess if we were just talking about a single instance of
this happening, a single purchase slipping under the radar
screen, perhaps, we wouldn't be responding in quite such a
dramatic fashion, but we're not talking about just one item.
We're talking about five items that appear to be critical to
the process of making biological weapons, and I'm just curious:
On that fact alone, Mr. Kutz, should there be some warnings or
some alarms going off somewhere within the Department of
Defense.
Mr. Kutz. What do you mean, with respect to the sheer
volume?
Mr. Bell. Right.
Mr. Kutz. Of sales of this?
Certainly with respect to what we did, there would have
been potentially a pattern with respect to the purchases of
what we put together here.
On a broader perspective on the volume, with respect to the
protective gear, 903,000 of hoods, masks, etc., have been sold
over the last, I guess that's the last year and a half, so I
think it's just something that was done. I'm not sure. Should
there have been a thought of this?
Yes. I wouldn't make any excuses for the Department,
they'll have to answer why there wasn't, but the world hasn't
necessarily--it hasn't changed how hard it is to make anthrax,
necessarily, but the risk of it is more visible because of
what's happened, so maybe the thought process should have been
what could possibly have been going out the door now that we
have the threat.
Mr. Bell. And that was the whole idea of post-September 11,
that people would have to reevaluate, that some of these things
that perhaps wouldn't have sounded alarms before September 11,
the idea was to reevaluate and make sure that they would in the
future.
Mr. Ryan, let me ask you this, because you were responsible
for overseeing the undercover investigation; were you not?
Mr. Ryan. That's correct.
Mr. Bell. Was the same credit card used----
Mr. Ryan. Yes, it was.
Mr. Bell. For all purchases?
Mr. Ryan. And the same address for delivery; so, from an
intelligence standpoint, if you were looking to gather
information, what you're talking about is opening up the sky
and looking at more things that are going on.
We try to stay consistent with that and seeing if there was
any clue who would identify who we were.
Mr. Bell. And the same names were used for all the
purchases?
Mr. Ryan. Same name.
Mr. Bell. Same credit card, and there was a fictitious
business name and address, correct?
Mr. Ryan. That's right.
Mr. Bell. And there were false identities that were being
used to make the purchases, correct?
Mr. Ryan. Yes, we used a made-up name.
Mr. Bell. And then did you forge or alter documents?
Mr. Ryan. Yes. We did.
Mr. Bell. OK; so that could have been a basis for denying
the sales?
Mr. Ryan. If they would have caught it.
Mr. Bell. Right.
Do you know why they didn't?
Mr. Ryan. I think you'd have to ask them on how much
importance they put on doing appropriate followup to the
information they received. We tested the system. We believe
that the system was vulnerable to beat, and that was our goal
and we did it.
Mr. Bell. Well, let me ask anyone: What is it about a
negative assurance system that allows something like this to
happen?
Mr. Kutz. Well, this end-user certificate, I mean, and I'll
give you my view on it. It is not a protective control. It's a
detective control that in a best case scenario that could help
you identify who did it after it happened. I do not think it's
necessarily going to prevent something from happening, and,
again, I do not believe they would have been able to find Mr.
Ryan if something had happened with this equipment.
Mr. Ryan. The end-user certificate kind of puts the
emphasis on the person who's filling it out to be truthful. If
you try to be deceptive, you can beat the system, so there's a
reliance that people are going to be truthful, and that's my
experience. It doesn't always happen.
Mr. Bell. Well, what's frightening about this, terrorists
aren't always known for their truthfulness.
Mr. Ryan. I would agree with you and----
Mr. Bell. And isn't this precisely or exactly the way a
terrorist might operate in order to get his hands needed on
equipment to make a biological weapon?
Mr. Ryan. Absolutely.
Mr. Bell. And shouldn't any system that we design be at
least capable of catching some of these discrepancies?
Mr. Ryan. I think they need to do an assessment deciding
what is the best way to go about it, using what systems and
what information we have available in the law enforcement
community and Intelligence Community to decide if the
information being submitted is accurate and correct and could
be verified.
Mr. Bell. Thank you very much, Mr. Chairman.
Mr. Shays. Mr. Turner.
I thank the gentleman.
Mr. Turner. Thank you.
Mr. Kutz, we were talking about the issue of the end-user
certificate and the Department of Homeland Security and the
Department of Defense working together on a threat assessment
for these materials for this equipment. Wright-Patterson Air
Force Base is located in my district, which as you probably
know, has a significant research laboratory area which is
responsive to the Air Force's needs for weapons systems in the
future, and I know if you walked through their labs, you would
see some of the types of equipment that you see here.
One thing that strikes me is I know in walking through
those labs, if I stopped and talked to the people who are
utilizing the equipment, that they'd be able to, with their
equipment and their expertise, to very adequately tell me what
the threat is of the potential equipment, if it should fall
into the wrong hands, regardless of the fact that they're using
it for something completely unrelated to biohazard or chemical
hazard, and I wondered in your review of the system, whether
you found any originating years or participation in the
Department of Defense's determination, as to how material
should be disseminated?
Mr. Kutz. With respect to the biological equipment, I do
not think there was any, and that is why our recommendation to
them--we do not know the answer necessarily to this challenge
here, but what we did believe was the risk assessment should be
done with heavy consultation with the DOD scientific community,
because they have some of the top people in the world who
should know which of this stuff could be used, and Mr. Rhodes
has interacted with those people before and maybe could even
add to that.
Mr. Rhodes. Your example of going through wright lab, for
example, and seeing the scientists using their equipment and
saying well, what specifically is the threat, that's a good
assessment, because that's the operator using the equipment,
and she or he would understand, but then there's a broader--the
consultation that we're talking about is a broader view in
saying: If I were your opponent, would this be good enough to
do something, because sometimes the scientist working with the
equipment will say, yeah, the threat is here, but I would use
something different or I would do this or I would do that, and
in that kind of discussion, then the individual items fall
below the radar.
It's to make certain, as Mr. Kutz has said, that the broad
thinking in DOD, both the covert thinking, as well as the overt
thinking in the scientific community steps up and says, well,
if I can get this suit and I can get this and I can get this
and I can get this, then I have a cumulative effect, and
therefore, I can make it, material of this grade; and that can
wreak havoc, and that's really the risk. We're trying to get
the Department to view risk as a broader issue than just what
can I do with one thing and what can I do with certain
knowledge and what can I do with certain material. It's, well,
what can I do that's good enough, not perfect.
Mr. Turner. I appreciate that, and I believe that your
recommendation on the Department of Defense working in
conjunction with homeland security is a very important one; I
mean, I think you have illustrated that in your discussion of
how do you put these pieces together and what you're then able
to amass, that is a threat that alone each individual piece
would not, but it does strike me that, in addition to that,
we're not just dealing with an issue of the Department of
Defense not having internally the knowledge.
And that's why I asked the question, is because I think
it's certainly important to look at what are the resources that
we have in homeland security that can supplement what the
Department of Defense is doing, and on a critical basis, to
what you're doing because some of these pieces may not even
come from the same locations, but at the point that I'm
concerned about, it would seem to me, again, looking at the
common sense issue of this, that the Department of Defense does
have within it the knowledge for someone to pause and say, you
know, we really ought not to do this. It should take GAO in a
congressional hearing for the Department of Defense to say it
probably isn't best.
And so I was wondering in your processes, if you saw any
effort to engage the user, because it would seem to me that if
I'm working in my labs at Wright-Patterson Air Force Base and a
piece of this equipment is going to go somewhere that I'm
probably not involved in the system at all, that it just
disappears and goes away into the vast bureaucracy of the
Department of Defense, and I would think that more valuable
than the end-user certificate that doesn't require any third-
party verification might be an originating user certificate
that has some--description of a threat assessment by the
originating user. Do you see value in that or have you even
seen any process that uses that?
Mr. Ryan. If I can use what you're talking about also to
bring out the point that DOD has a lot of contractors, and
there's a lot of colleges and universities and hospitals that
get grant money and Federal money to continue the research of
what you're talking about, not only in the DOD labs. If you
follow through on your same thought pattern in regards to
making them accountable, they're also adding additional
equipment into the secondary market.
If there was some type of a control that was put in place
whereby DOD would also have to step in and do an analysis of
that type of equipment that's being disposed of, again, that
would be the original person using it would have to make some
assessment, and that also gets back into trying to limit the
amount of property that's getting into the secondary markets
that's causing the problem.
Mr. Turner. My time is up, but an interesting topic that I
do want to discuss at some point is in looking at the values--
thank you, Mr. Ryan, if you do not mind, the question that
comes to mind when you look at this is original acquisition
value $46,960 worth of equipment that you purchased for $4,100,
and following on what you're saying, Mr. Ryan, there's this
huge resale market, there is a resale market because someone
sees profits; meaning that the $4,100 that this is sold for is
less than its value, and there aren't controls that are being
placed on that recent market. You basically have Sanford-and-
son type groups that are being formed that are utilizing high
level technology Department of Defense equipment without regard
to the same controls the Department of Defense is supposed to
be following in their policies.
What would you say is the value of this in the resale
market, the $4,100 worth of equipment?
Mr. Kutz. Well, I think it probably is--the way it's being
sold, since we bought it for that, that would be by definition
the market, but what happens is this is a little different than
eBay. These are typically very large lots, which is why we
wound up buying the masks from the DOD vendor because they were
selling the gloves like in lots of 10,000 pairs of gloves. We
didn't want to buy 10,000 pairs of gloves. They wouldn't fit in
the GAO building probably, so what happens is it's almost like
a wholesale type of an eBay where you're selling these large
bid lots to wholesalers who cut them up into the small pieces
and sell them singly, either on eBay, on Web page or something
else.
So is there potential for some more revenue on this?
Possibly, I do not know, but it is a little more different than
eBay in that there's much more bulk and it limits the
individual. Like an individual might not want to buy 500 suits
at a time but, if they had to chance to buy one for hunting
purposes or something like that, they might do that. So on eBay
they might sell them one or two at a time, versus DOD might
sell 300 at a time.
Mr. Ryan. And following up on that, there was one lot that
went up for sale that they were bidding on, the agents were
tracking it, and they had the microscopes, they had the
Heidolph.
Well, we really wanted the Heidolph, but we were willing to
buy the batch, the lot. We end up losing that bid by about $50.
Well, what we did is we found out who the buyer was and, 2
weeks later, we contacted them and asked them hey, by the way,
do I have a Heidolph for sale. Guy says, oh, yeah, I just
happened to get one in a lot and he sold it to us and basically
we saved the taxpayers about $800 because we only paid $400
where we lost the lot for $1,300, so there is a secondary
market.
The primary goal of that buyer was not to buy the Heidolph,
but to buy the microscopes because they were worth a lot more
money.
Mr. Kutz. The Heidolph is the exhibit for the evaporator
that we purchased.
Mr. Ryan. So given the fact that they're breaking the lots
down and yes, they are selling them in individual pieces and
making money off them.
Mr. Shays. It's hard to get to the next panel because you
keep, you know, revealing a little more information. It's
fascinating.
Mr. Ruppersberger.
Mr. Ruppersberger. I will try to ask one question so we can
get to the next panel.
We're all trying to find a way, including the Department of
Defense, I'm sure, to resolve and fix the problem. We talked
about systems and maybe the technology's there, but we do not
have the appropriate systems or whatever that is.
I'm going to ask a question I'm sure you cannot answer, but
I want to have your opinion: What's it going to cost to really
resolve this issue as it relates to the inventory control and
the background checks that might have to be looked at,
depending on the type of equipment that you're going to sell,
and I ask that question, and again, your opinion, I'm sure you
will not have any specificity as to the cause, but also is it
really worth having this program to begin with?
I mean, how much money are we getting back in the
Department of Defense, how much money are we getting back in
and the amount of hours that we're putting in with DOD
personnel and then all of the issues and the problems that
exist, and this is just one small part, so what do you feel the
cost factor would be if you have any idea to really resolve
this and to fix it right.
Mr. Kutz. Right--well, with respect to the Defense
Reutilization marketing service, we do not believe conceptually
that's a bad idea. We think that's probably a good idea.
There's a lot of good that's been done.
They re-utilize a large number of property. A lot of it
doesn't get sold to the public. A lot of it does appropriately
get reused within the Department of Defense.
A lot of it goes to Federal agencies, State and local
governments and other needy organizations, so I believe
conceptually that it makes sense. It's a matter of controlling
sensitive military equipment from going out improperly or
biological or chemical equipment or other things like that, so
assuming you can put good controls in place over it, it does
make business sense.
To solve the broader supply chain management of inventory
problems, I cannot tell you if and when they'll fix it, but
they certainly plan to spend billions of dollars to do so.
Mr. Ruppersberger. In my comment earlier on, it's going to
take a commitment from the top level of management, and the
people on the next panel coming here today are the people doing
the work every day. If they're not given the resources or the
ability to do the job, how are they going to do that? There has
to be a strong commitment there.
Somehow I hope we can develop that in the next panel, so
I'm going to stop so we can get to that.
Mr. Kutz. No, and sustained top level leadership in this
and other business or mission support areas of DOD we have said
is one of the key elements to success, and we agree with you on
that.
Mr. Ruppersberger. OK.
Thank you, Mr. Chairman.
Mr. Shays. Thanks, gentlemen. Mr. Janklow.
Mr. Janklow. Thanks, Mr. Chairman.
Mr. Young, I just have a couple questions: One, in the end
of your report in your summary, you talk about the different
agencies responding in different ways. There were 27 reports
issued by, I believe, six different agencies or six different
cabinet level departments, and I'm pretending the Army's one
for purpose of discussion.
One of them set up a task force. One of them appointed a
full-time staffer to deal with bioexports. One of them created
an informational Web site. And one of them initiated followup
actions to determine status of actions taken.
What did all the rest do? Anything?
They do not appear to be very substantive. With problems of
the magnitude that you've suggested in your reports that you've
found from the 27 reports; appointing a full-time staffer to
deal with bioexperts' agency; setting up an informational Web
site by another agency; setting up a task force by a third
agency; and a fourth one initiating followup actions to
determine status of actions taken; that's all that was done?
Mr. Young. There were 27 reports, and I'm just using the
assumption that there were probably four recommendations per
report. It's probably over 100 recommendations in those
reports. All we did in our summary report was highlight some of
the recommendations that were at the top level of the agency.
Obviously, the recommendations at a given university would be
to fix the controls at that individual university. But again,
we were just summarizing the results at the high level, and
some of the recommendations came to us that were classified so
they were not included in our report.
Mr. Janklow. Mr. Kutz or Mr. Rhodes, I do not know which
one of you gentlemen, was this report--was the GAO report
shared with the agencies prior to the time of this hearing
today?
Ms. Fischer.
Ms. Fischer. Our draft audit report, Congressman Janklow,
our draft audit report was provided to DOD for comment on
September 16.
Mr. Janklow. Did they comment?
Ms. Fischer. Not yet. They have until October 14.
Mr. Janklow. Right.
Have you had any feedback at all, as to whether or not they
agree or disagree with what you folks have written?
Ms. Fischer. They told us they concurred with our
recommendations and would be taking action.
Mr. Janklow. Ms. Fischer, do you sense a sense of urgency
by them, in terms of what it is that's escaping from the
Defense Department and other agencies out that we do not know
who?
Ms. Fischer. Yes, I do, Congressman Janklow. When we
briefed them in mid-August, they pulled back many of the
chemsuit sales from the Internet.
However, they were unable to identify those in mixed batch
lots, the grab-bag type sales and some of those continued to be
sold. They did freeze the sales of the biological equipment
prior to this hearing.
Mr. Janklow. One has to wonder where in the world anyone
would think in this country there would be a market for 286,000
of those suits that had been declared surplus by them and I
realize there's a lot of first responders, but they could have
gotten them by donation, they didn't have to go buy them, and
so they were passed up in the donation chain, in order to get
to the dot com sales.
Mr. Kutz. The ones who bought the ones that we had
investigated, and Agent Ryan can add to this, were hunters and
farmers, and I am not sure what the farmers planned to use them
for, but----
Mr. Janklow. They probably deal with more chemicals than
the hunters.
In terms of the systems that appear to be a problem in the
Defense Department, one understands the magnitude, or at least
tries to understand the magnitude of hundreds of billions of
dollars' worth of spending annually, millions of different
items and trying to have inventory control. But in substance,
it's not really different than what Wal-Mart's doing, it's just
maybe different items, but Wal-Mart has a lot of stores,
probably as many stores as military bases, probably more. They
certainly do not have as many items, but maybe the answer is to
go have Wal-Mart or Sears or somebody go help these folks put
their systems in place. Spending billions of dollars inventing
your systems to help keep track of inventory doesn't make a lot
of sense in today's world.
Mr. Kutz. I mean the Department has outreached. I know
Secretary Rumsfeld has an outside group of experts, including
people from Sears and other companies who are experts in this
area, so they are trying to get the best and brightest input
into their modernization efforts, but they've done that before
and not be successful, so, again, it's going to take sustained
leadership and a lot of good things happening.
Mr. Janklow. Can I ask one last question, Mr. Chairman,
very briefly?
It's to you, Mr. Young, Mr. Kutz, and Mr. Rhodes. What
were, if you were in the Congress, what would you try to do to
try and solve this problem to make it safe for the American
people and the world? And if I could just ask you, Mr. Rhodes,
and I will just ask you three folks.
Mr. Rhodes. The first step would be to enforce the controls
that the IG has spoken of. The equipment is important, but the
source material is most important, so, from your legislative
point of view, as Mr. Kutz described earlier, you have both
tools at your disposal. You have the legislation that
establishes the law and you also have the legislation that
gives the money, and the thing that worries me the most, yes,
buying this equipment scares me but being able to get the
source material scares me the most, and that would be the first
step that I would take.
The parallel step, of course, would be to use those same
tools that you have at your disposal to make certain that there
is inventory visibility to enforce the points that Mr. Turner
was making about the operator being in the loop on the
discussion of how the material should be disposed, the
equipment should be disposed of, as well as the higher levels
inside the Department of Defense.
Those would be the parallel tracks I would recommend.
Mr. Kutz. I would say what you're doing today is one of the
things, consistent oversight. You've had several hearings on
these suits, I know, and so that ultimately, hopefully, we can
get that one solved. It's consistent oversight, a demand for
results, and followup, using GAO and the Inspector General to
let you know that the issues have been resolved would be my
view on what we can do.
Mr. Young. I agree with what you're saying. The problem is
a lot bigger than DOD. Because if you look at agriculture,
they've got 336 labs, Veterans Administration's 88 labs, and
DOD's got 21 labs. That's a really huge problem, and it's going
to take across-the-board Federal agencies working together,
implementing their recommended actions to get a handle on this.
Mr. Shays. Would you give those numbers again?
Mr. Young. Agriculture is 336 labs, Veterans
Administration's 88 labs, and DOD has 21 labs.
Mr. Shays. And do those include labs at universities?
Mr. Young. Well, there is, also, nine universities as part
of the study, but there's other ongoing audits right now at the
universities.
Mr. Shays. Because there's a lot more than nine.
Mr. Young. There's a lot more than nine.
Mr. Shays. So these were not--thank you.
You've answered the question. I just have a few more
questions and then we will get to our next panel.
With the battle dress overgarment, is it your testimony,
Mr. Kutz, that the battle dress overgarment, some of which were
defective, were sold both to commercial enterprises and given
to government first responders?
Mr. Kutz. Some were sold to GAO. Some to the commercial
people and have been provided to local law enforcement.
Mr. Shays. And is it your testimony that some of those
battle dress overgarments were defective or may be defective?
Mr. Kutz. The ones that we purchased were definitely
defective. The ones, the 4,700 with local law enforcement may
be, and that's why we said for them to followup and as many as
158,000 of the ones sold to the public could be of the numbers
tens of thousands.
Mr. Shays. But the bottom line is when someone goes to
purchase this, this is a battle dress overgarment. They believe
that it will protect them, and it may be defective, correct?
Mr. Kutz. That's correct. Now, if it's already out of the
sealed package, it doesn't matter whether it's defective, or
not, it's not good, but if it's in a sealed package and it
hasn't exceeded its expiration date, one might assume that it
would be effective.
Mr. Shays. And you did buy some that were in a sealed
package?
Mr. Kutz. Correct.
Mr. Shays. So what did we do to get these back when we had
our hearings earlier from our own military, because originally
we had a hearing that pointed out that our military was getting
these defective suits.
What did DOD try to do to get those back?
Mr. Kutz. It would have been data calls.
Again, they do not have the systems from a top level
standpoint that can find out in an hour or two, like Wal-Mart
could, where all of the defective suits, lot numbers, contract
numbers are, so it was a massive data call and it was
unsuccessful; I mean, they were able to recall, as I believe,
hundreds of thousands of about 800,000 defective Isratex suits,
but there were still 250,000 unaccounted for as of your last
hearing.
Mr. Shays. Right.
Now, when they sent out the notice to the military, on the
top, they had death or serious injury to soldiers will occur if
the instructions in this message are not followed. That kind of
gets your attention.
Mr. Kutz. Yes.
Mr. Shays. The memorandum for all State coordinators that
and law enforcement agencies [LEA's], is a warning on chemical
protective or battle dress overgarment.
The purpose of this memorandum is to advise the State and
the LEA's of the issues involving chemical protection of BDO
suits that your agency may have received through defense
reutilization marketing.
It says the protection suits used by today's military is
state-of-the-art and provides excellent protection in a variety
of situations. The same cannot be assured for old or excess
equipment which has been provided to Federal and State agencies
in an as-is condition.
Due to the change of our national threat, the Defense
Logistic Agency is concerned that persons having older excess
suits may be under the impression they are afforded a level of
protection higher than actually exists.
I'm not reading that they might say that death or serious
injury to individuals who use it, so have you looked at both of
these----
Mr. Kutz. Yes.
Mr. Shays. What was your reaction when you saw these?
Mr. Kutz. The one to the military services got my attention
more than the other one.
Mr. Shays. Yes, OK, but it is your intention that the
public and the first responders may have defective suits?
Mr. Kutz. Correct.
Mr. Shays. I think that I'm going to--is there anything
else that we have--oh, yes.
Let me ask each of you to address this question because it
will come up. How will it reduce the risk of bioterror to
control the sales of this equipment when so many others are
selling it as well; for instance, and I will put in the record,
that we've received a number of letters from people who were in
the business. They buy it and they sell it and if they can buy
it at 10 cents on the dollar, and if they can get brand-new
stuff at 10 cents on the dollar or less, it's quite a nice
business.
We are going to put their letters in the record and the
gist of their letters are, you know, what's the big deal,
because GSA is selling this equipment and others as well, DOD
and so on, so my question to you is, how will it reduce the
risk of bioterrorism and control DOD sales of this equipment
when so many others are selling as well, GSA, private firms,
and so on?
[The information referred to follows:]
[GRAPHIC] [TIFF OMITTED] T2564.066
[GRAPHIC] [TIFF OMITTED] T2564.067
[GRAPHIC] [TIFF OMITTED] T2564.068
[GRAPHIC] [TIFF OMITTED] T2564.069
[GRAPHIC] [TIFF OMITTED] T2564.070
[GRAPHIC] [TIFF OMITTED] T2564.071
[GRAPHIC] [TIFF OMITTED] T2564.072
[GRAPHIC] [TIFF OMITTED] T2564.073
Mr. Kutz. I will start; I mean, we've talked about this
internally, and certainly this is a small part of a much
broader challenge, and dealing with the DOD would certainly
help but not resolve the issues.
And dealings with the DOD would certainly help, but not
resolve, the issue. So that's why we have recommended to DOD
that they look at this within the Department of Homeland
Security, not just what the government is selling, but, again,
back to the Customs Operations Shield America and all the
private sector and other sources of this material to take a
look at this and find out if what we're doing today makes sense
from not just DOD, but from a governmentwide and nationwide
standpoint.
Mr. Shays. So you're basically saying don't make the
argument that since GSA is doing it, it's OK for DOD. Your
argument is we need to look at GSA, what the Department of
Agriculture may sell independently or through GSA and so on,
and see if we need to tighten up there as well.
Mr. Kutz. Correct.
Mr. Shays. Anyone else choose to add anything more to that?
OK. You kind of take our breath away. Congratulations for
doing this work. I will just say, Mr. Ryan, I want the
testimony to reflect accurately, do you feel--and I think it
does, but I'd like you to answer this question again. Do you
feel that you did anything out of the ordinary to deceive the
government or DOD so that you could buy, or could someone like
me or anyone else have done the same thing you did?
Mr. Ryan. Anyone can do it. You can do it. Anybody can do
it.
Mr. Shays. And you could have set up many different
purchasing agents, so, for instance, if you were starting to
develop the whole picture for developing anthrax, but wouldn't
want to bring someone's attention to the fact that you bought
this, this and this, though I'm not sure DOD controls would
have noticed, but just to protect yourself you could have
bought from someone else who had bought, as you did, or you
could have had five or six or seven different purchasers that
you set up to have bought little parts and then collected it
together, correct?
Mr. Ryan. That's fine. I could have a conspiracy with
several people and each buy one item and have it shipped to a
different place not to bring attention to exactly what's going
on, you know, the creation of a lab or whatever you wanted to
do with the materials.
Mr. Shays. And the bottom line is the people who would want
to do this already know they can do it.
Mr. Ryan. Yes.
Mr. Shays. So we're not telling them anything they don't
know.
All right, folks. Thank you so much for your testimony.
Anything you want to put on the record before we go to the next
panel? Anything that needs to be put on the record? I don't
want you to tell me afterwards we missed something.
Ms. Fischer. Yes. Mr. Chairman, I do want to point out that
last year Congress passed the Public Health Security and
Bioterrorism Preparedness and Response Act, and that did
address some of the issues with respect to controls over source
agents, including a requirement for inventories of those
materials. The Department of Health and Human Services issued
regulations last December to start implementing those controls.
It may not be perfect yet, but Congress has taken some action
in that regard.
Mr. Shays. Thank you very much. We'll get to the next
panel, and Mr. Turner will take over from there.
Mr. Turner [presiding]. Are we missing Mr. O'Donnell?
Colonel O'Donnell. There he is.
Our next panel will consist of Mr. Alan F. Estevez,
Assistant Deputy Under Secretary of Defense, Supply Chain
Integration, Department of Defense; Mr. Frederick N. Baillie,
Executive Director, Distribution and Reutilization Policy,
Defense Logistics Agency; and Colonel Patrick E. O'Donnell,
Commander, Defense Reutilization and Marketing Service.
Gentlemen, if you'd please stand for administering the
oath.
[Witnesses sworn.]
Mr. Turner. Note for the record that the witnesses have
responded in the affirmative.
Mr. Estevez, I will be beginning with you.
STATEMENTS OF ALAN F. ESTEVEZ, ASSISTANT DEPUTY UNDER SECRETARY
OF DEFENSE, SUPPLY CHAIN INTEGRATION, DEPARTMENT OF DEFENSE;
FREDERICK N. BAILLIE, EXECUTIVE DIRECTOR, DISTRIBUTION AND
REUTILIZATION POLICY, DEFENSE LOGISTICS AGENCY; AND PATRICK E.
O'DONNELL, COMMANDER, DEFENSE REUTILIZATION AND MARKETING
SERVICE
Mr. Estevez. Mr. Chairman, distinguished members of the
subcommittee, I'm Alan Estevez, Assistant Deputy Under
Secretary of Defense for Supply Chain Integration. With me
today is Mr. Fred Baillie, Executive Director for Distribution
and Reutilization Policy of the Defense Logistics Agency; and
Colonel Patrick O'Donnell, Commander of Defense Reutilization
and Marketing Service. We welcome the opportunity to address
your concerns regarding the disposal of DOD excess chemical and
biological suits and laboratory equipment.
I'm responsible for developing policy regarding materiel
management within the Department of Defense. During my
testimony I will briefly discuss the Department's view of the
GAO report and provide a brief discussion of relevant materiel
management policy. I will be followed by Mr. Baillie, who will
provide specific responses to the GAO report.
To begin, let me state that the Department recognizes the
findings and recommendations of the General Accounting Office
report on excess property. We are keenly aware of the tragedy
the Nation endured on September 11, 2001, and the need for
heightened awareness of the potential threat that our Nation
faces. The Department concurs with the GAO recommendation to
conduct a risk and vulnerability assessment to determine if
additional controls are necessary to ensure excess DOD supplies
and equipment are not accessible by those who in turn may use
those assets to develop chemical and biological agents with the
intent to harm the United States.
As recommended in the GAO report, the Assistant Secretary
of Defense for Homeland Defense has agreed to take the lead in
bringing together an interagency group to conduct the risk and
vulnerability assessment. In addition, we have begun a review
of DOD logistics policies and procedures used in processing
excess property. We will stay actively engaged with the team
developing the risk assessment to determine if new or amended
guidance is needed. The risk assessment will focus not only on
the laboratory equipment identified in this report, but on the
broad scope of DOD excess property that could be used to
develop chemical or biological agents. This will be a large
undertaking and will require coordination within the Department
and among Federal agencies to ensure that the risk is assessed
appropriately and consistent implementing policies are
developed. We anticipate being able to update this committee on
our progress in approximately 3 months.
The results of the risk assessment will play a pivotal time
role in the creation and/or revision of our policies regarding
the sale of excess property by the Department of Defense. There
are a host of policies, rules, and regulations regarding the
disposal of excess property. Some of those rules include
interactions or involvement with the Department of State and
Department of Commerce and other Federal agencies. While these
policies are detailed and quite specific, they do need to be
reassessed, and, in light of the post-September 11 climate, to
ensure that they achieve the goals of accountability and
control of the items that could be used against the United
States or its allies.
We are aware and understand the potential terrorist threats
to the general public, but offer the following to keep this
issue in perspective: While we have some control over the
extent to which the public can acquire supplies and equipment
through the Department of Defense that can be used to harm the
United States, the items cited in the report are readily
available on the commercial market.
In closing, Mr. Chairman, I would like to reiterate the
fact that we take the potential threat of terrorism at home and
abroad very seriously. If that requires us to change our
materiel management policy, we will certainly do so.
Thank you, sir.
Mr. Turner. Thank you.
[The prepared statement of Mr. Estevez follows:]
[GRAPHIC] [TIFF OMITTED] T2564.074
[GRAPHIC] [TIFF OMITTED] T2564.075
[GRAPHIC] [TIFF OMITTED] T2564.076
[GRAPHIC] [TIFF OMITTED] T2564.077
[GRAPHIC] [TIFF OMITTED] T2564.078
Mr. Turner. Mr. Baillie.
Mr. Baillie. Mr. Chairman, distinguished members of the
subcommittee, I'm Fred Baillie, the Executive Director for
Distribution and Reutilization Policy of the Defense Logistics
Agency. Like Mr. Estevez, I welcome the opportunity to address
the disposal of DOD excess nuclear, biological and chemical
[NBC], protective equipment and the potential use of excess
medical laboratory equipment for the production of chemical and
biological agents. My office is responsible for implementing
policy on the reutilization, transfer, donation and sale of
excess surplus DOD property and equipment. As such, we agree
that effective control measures are needed to prevent excess
DOD property and equipment from falling into the hands of those
who wish the United States and its allies harm.
DLA is responsible for managing millions of pieces of
equipment for DOD. As stewards of this property and equipment,
our focus is to maximize accountability and insure that
internal controls that are in place are followed or upgraded as
needed. We continue to incorporate the results of our own
internal assessments with external checks by GAO and the
inspector general to validate established measures and affect
improvement as necessary.
We recognize the problems identified in the GAO report that
excess DOD NBC clothing and equipment could be used to make and
disseminate biological agents. We also are concerned that first
responders not receive faulty NBC protective gear. We take both
problems identified very seriously. Actions have been taken to
address them already, including, as you noted, notifying the
affected agencies of established policies and providing
disposition instructions for NBC gear and equipment.
We are doing even more. If the property meets current NBC
protective standards, it will be issued to the military
services. If not, it will be utilized for training purposes
only or destroyed.
As GAO identified, our surplus sales contractor, Government
Liquidation [GL], received NBC suits that were fit for training
only to sell to the public. We have addressed this matter.
First, we are reviewing all clothing turned in, removing any
chemical and biological suits, and sequestering them.
Additionally, GL is returning to DLA all NBC suits in its
possession.
State and local law enforcement agencies are eligible to
receive excess and surplus DOD property under special programs
authorized by Congress. Each State has a coordinator and works
through DLA's Law Enforcement Support Office [LESO], to receive
excess property. We have contacted these coordinators about the
NBC suits, issuing a warning alert and personally notifying
them that the suits may be defective. We requested that those
law enforcement agencies in possession of NBC suits in question
take the suits out of service by using them for training
purposes only or disposing of them.
The recommendations directed toward DLA in the GAO report
are valid, and we concur with their usefulness in our efforts
to maintain accountability, issue only serviceable equipment,
and to maintain control of that equipment. We also concur with
the recommendation for the conduct of a risk assessment to
determine what controls are necessary to ensure all excess DOD
supplies and equipment are not accessible to those who may use
them to develop chemical or biological agents to use against
the United States.
We welcome and appreciate the Assistant Secretary of
Defense for Homeland Defense taking the lead in bringing
together an interagency group to conduct this risk and
vulnerability assessment. DLA will be an active member of that
risk assessment group.
We recognize the problems noted in the GAO report and are
addressing these problems. We understand what is at stake here.
The procedures we have in place today are being thoroughly
reviewed and are being changed as appropriate to ensure
adequate control measures are in place to prevent excess DOD
property and equipment from falling into the hands of
terrorists. The procedures we implemented to dispose of NBC
protective equipment, coupled with quality control actions
recently initiated will help ensure our military and first
responders have effective, safe and serviceable equipment.
Mr. Chairman, that concludes my testimony. I look forward
to answering your questions. I will be followed by Colonel
O'Donnell, Commander of the Defense Reutilization and Marketing
Service.
Mr. Turner. Thank you.
[The prepared statement of Mr. Baillie follows:]
[GRAPHIC] [TIFF OMITTED] T2564.079
[GRAPHIC] [TIFF OMITTED] T2564.080
[GRAPHIC] [TIFF OMITTED] T2564.081
[GRAPHIC] [TIFF OMITTED] T2564.082
[GRAPHIC] [TIFF OMITTED] T2564.083
[GRAPHIC] [TIFF OMITTED] T2564.084
Mr. Turner. Colonel.
Colonel O'Donnell. Mr. Chairman and distinguished members
of the subcommittee, I am Colonel Patrick O'Donnell, Commander
of the Defense Reutilization and Marketing Service for the
Defense Logistics Agency. I welcome this opportunity to address
your concerns regarding the disposal of DOD excess nuclear,
biological and chemical [NBC], protective equipment and
laboratory equipment. DRMS is responsible for the execution of
DOD policy on the reutilization, transfer, donation, sale,
environmentally responsible disposition and control of DOD
excess property.
DRMS supports U.S. forces worldwide, screening their excess
for redistribution within DOD, or transfer to other Federal
agencies, donation to authorized organizations, sale to
authorized purchasers, and contracted disposal of
environmentally regulated property. As such, we share your
concerns regarding effective control measures to prevent excess
DOD property from falling into the hands of those who wish the
United States harm. To that end, DRMS has always placed a
primary emphasis on protecting national security through
compliance with processing excess DOD property according to its
assigned demilitarization [DEMIL] code.
Items requiring demilitarization are destroyed under U.S.
Government control at secure facilities. Items subject to State
Department or Commerce Department controls are only sold when
the purchaser has been cleared by the Defense Criminal
Investigative Agency. Environmentally regulated property is
disposed of in accordance with all Federal, State and foreign
country laws and regulations.
Mr. Chairman, we take our stewardship responsibilities for
protecting the public's interest very seriously. It is
important that those items identified in the GAO report and
other items that can be used against the United States be
assessed for the risk they pose to our national security and
homeland defense. We wholeheartedly support and look forward to
participating with our parent agency, the Defense Logistics
Agency, and the interagency group to conduct the risk and
vulnerability assessment recommended by the GAO.
In addition, DRMS has taken a number of actions to reduce
risk and vulnerability while the Department is conducting the
interagency assessment. As recommended by the GAO, Government
Liquidation [GL], has returned, and DRMS has confirmed all
potential restricted DOD-use-only items of chemical and
biological protective clothing in its possession to DRMS.
Government employees are now performing a 100 percent
inspection of all suspected potential restricted DOD-use-only
in order to sequester those items pending the completion of the
Department's risk assessment, risk and vulnerability
assessment.
DRMS has also stopped delivery and sales of all laboratory
equipment pending completion of the risk assessment. DRMS
routinely works with the DLA, Demilitarization Coding
Management Office [DCMO], to improve controls over the
assignment of DEMIL codes to restricted items. DRMS has added
an inspection protocol to ensure that excess chemical and
biological protective clothing is being properly controlled at
its defense reutilization and marketing offices.
To the quarterly DRMO self-assessment checklist. Every 3
months each chief of each DRMO performs an internal inspection
of the DRMO using inspection protocols developed by DRMS
headquarters staff to reflect potential at-risk situations. The
DRMO certifies in writing compliance or noncompliance with each
protocol being inspected. For those situations where the DRMO
is not in compliance with the protocol, the DRMO chief must
submit a corrected plan of action to one of my two field
commanders.
The chemical and biological protective clothing protocol is
in use this quarter. This protocol has also been added to the
command compliance assessment visits of the DRMOs that are
performed by the DRMS headquarters staff and members of Mr.
Baillie's staff. DRMS is assisting the program manager for the
Law Enforcement Support Office [LESO], to recover any defective
battle dress overgarment LESO recipients may have inadvertently
received. Pending the Department of State commodity
jurisdiction determination, DRMS suspended the processing of
any textiles with the potential to have the infrared reflectant
[IR], properties.
Mr. Chairman, distinguished committee members, we recognize
the problems noted in the GAO report and took the appropriate
measures necessary to ensure--identify items that pose risk to
our national security and homeland defense are not released to
unauthorized parties. DRMS stands ready to execute all policy
and procedure changes that ensure adequate control members for
items identified as being restricted use items.
Thank you, Mr. Chairman.
Mr. Turner. Thank you.
[The prepared statement of Colonel O'Donnell follows:]
[GRAPHIC] [TIFF OMITTED] T2564.085
[GRAPHIC] [TIFF OMITTED] T2564.086
[GRAPHIC] [TIFF OMITTED] T2564.087
[GRAPHIC] [TIFF OMITTED] T2564.088
[GRAPHIC] [TIFF OMITTED] T2564.089
Mr. Turner. We will now turn to our chairman to begin an 8-
minute round of questions.
Mr. Chairman.
Mr. Shays. Thank you, gentlemen. Thank you for being here.
Thank you for your service to our country.
I would like to know what, if anything, did you hear from
the first panel or from the Members of the Congress who sit on
this committee that you disagree with or want to qualify?
Mr. Baillie. Regarding the trade security control and the
GAO investigation that was conducted, I'd like to state that
while, in fact, the undercover operation began in May 2003 and
progressed through June and July, there are also checks and
balances throughout the process of issuing that end user
certificate. DLA's Office of Criminal Investigation Activity
does conduct postsale investigations. During one of those
postsale investigations, we did discover the company that was
set up by Mr. Ryan and his investigators. So while certainly a
dedicated, informed individual can access the vulnerability of
the system up front, there are checks and balances that, at
least in this case, did catch the fact it was a fictitious
corporation.
Mr. Shays. Just so we can be more specific, when did you
discover it?
Mr. Baillie. I believe early August was when our people
found--conducted the postsale investigation and subsequently
determined that was, in fact, a fictitious organization.
Mr. Shays. August of----
Mr. Baillie. 2004. I believe May 2003 is when Mr. Ryan----
Mr. Shays. Had they already made most of their purchases by
then?
Mr. Baillie. I believe so, yes, sir.
Mr. Shays. OK. Anything else?
Mr. Estevez.
Mr. Estevez. Yes. I'd just like to add that the equipment
here, none of this equipment is on the Commerce control list or
the U.S. munitions list, so there's no restrictions on the
export of equipment; fully agree with GAO that there's a
pattern here that we need to look at, which is why we concur
with their recommendation of doing the risk assessment on how
we do it. But this equipment is available on the commercial
market, exportable, so the fact that we're accessing it is just
one small part of the thing that needs to be done.
Mr. Shays. Any other part that you would qualify? Colonel?
So basically, though, you would concur with, as you
remember them, what was said from the panel and what was said
from up here at the dais? Is there anything else that we said
that you might want to just qualify?
OK. Just getting on that side of the equation, dealing with
the suits. I mean, there's three issues here. One is the end
use controls, the lab equipment, as I see it, and the other is
inventory controls for protective suits. Why was it possible
for these protective suits to be sold after it had been
determined and committed to Congress that they would not be
sold, would not be issued to any military people unless they
were marked as potentially defective, and, therefore, as
practice suits and not suits you'd use in battle? Mr. Baillie.
Mr. Baillie. Yes, sir. Mr. Chairman, once the GAO
identified that this was an issue, that they were being sold,
Colonel O'Donnell's people went back and did a complete scrub
of the processes that we used to move that equipment through
the system. As the first panel mentioned, there are a number of
turn-ins that are done in batch lots, if you will. A batch lot
literally is a very large box that sits on a pallet probably
half the size of this testimony table. In there, when the
services turn in equipment and goods, it is literally stacked
in without potentially full accountability. As part of
assessing the process, it was determined that was one of the
major ways these suits were making it through the screening,
through the policy that had been set up.
Subsequent to the GAO findings, Colonel O'Donnell has
instituted a process change where all of those batch lots will
literally be torn apart and inspected item by item. So while
this will add substantial time to his processing time, we
believe this is a serious enough issue that's the kind of
action we need to take.
Mr. Shays. As it relates to the notification, I saw a real
difference between what we told our military personnel last
year, death could result, versus really a vanilla-type
notification to the commercial folks. First off, it's true we
don't know who has the battle dress overgarments, correct?
Mr. Baillie. We know at least from the GAO report that
there's approximately 718 individuals out there with suits;
California Office of Criminal Justice, Nevada Department of
Public Safety and the Sacramento FBI Office. Of the 718, 474
were subsequently turned in. We have not only sent out the
across-the-board warning letter that you mentioned, sir, but
have personally contacted each of those individual coordinators
with the identified suits, in addition to which this week, in
Atlanta, we are currently having a--our regular recurring
conference where we bring all the States together. This subject
is being discussed in detail within the confines of that
particular conference.
Mr. Shays. When you say that those are the local
governments that have suits potentially for their first
responders, it is very possible that other local governments,
counties, have them for first responders that we don't know
about, correct?
Mr. Baillie. It's possible, yes, sir.
Mr. Shays. It's also possible, I mean, also dealing with
the whole issue of the commercial sales, when people see these
suits, they have reason to believe they work, particularly if
they are sealed and within expiration date. How many suits do
we have out in the commercial market; do we know?
Mr. Baillie. I don't have that figure offhand sir.
Mr. Shays. I mean, the bottom line is we really don't know;
isn't that correct?
Mr. Baillie. I don't know.
Mr. Shays. Colonel O'Donnell, do you?
Colonel O'Donnell. Sir, at this time I could not give you
an accurate answer.
Mr. Shays. But there is a reason why. I mean, it's not that
you haven't looked at your notes. It's there were some that
were batched that you don't know were bad.
Colonel O'Donnell. Yes, sir. In other words, as Mr.
Baillie's indicated, when property goes out in batched lots,
it's----
Mr. Shays. So when you say ``at this time,'' you wouldn't
be able to tell me at any time.
Colonel O'Donnell. No, sir. In fact, after I said that, I
thought, you know, we don't track as that property goes out
whether or not those items are still in the bags or out as a
part of a batch lot.
Mr. Shays. But even if they're not in the bags, even if
they are in the bags, they could be defective.
Colonel O'Donnell. Yes, sir. From the standpoint when they
are taken out----
Mr. Shays. No, you need to hit that again. I'm sorry.
Colonel O'Donnell. When those suits are taken out of the
bag----
Mr. Shays. No, I don't need to go that way. When they're
taken out, there's no guarantee of anything. But you didn't
send bags that were taken out. You sent bags that were sealed
that may still be defective. I mean, these are like a no-
brainer kind of answer. I mean, don't drag this one out. I'm
just basically asking a point of fact that some of the suits
that we sent out were defective. If they're not in their
protective container, they are deemed not to be proper to use.
If they are, you can make an assumption, particularly if the
expiration date hasn't been reached, that they work. And the
fact is that some of them don't work properly; isn't that
correct?
Colonel O'Donnell. Yes, sir.
Mr. Shays. And it's also correct we don't know who has
those suits.
Colonel O'Donnell. That is also correct.
Mr. Shays. OK. Thank you.
Thank you, Mr. Chairman.
Mr. Turner. Mr. Bell.
Mr. Bell. Thank you, Mr. Chairman. And thank you all for
your testimony here today.
Mr. Baillie, you testified that the Department of Defense
detected that it was dealing with a fictitious company, Mr.
Ryan's fictitious company.
Mr. Baillie. Yes, sir. Mr. Bell, that is the information
that our criminal investigation people have passed on to me
prior to this hearing.
Mr. Bell. So you're not basing that on your personal
knowledge, but what you have been told; is that correct?
Mr. Baillie. Yes, sir.
Mr. Bell. Would it surprise you to know that the GAO
actually informed the Department of Defense in August that it
was a fictitious company with which it had been dealing?
Mr. Baillie. My information, sir, was that somewhere before
August, GAO informed that they were running an investigation
like this, but did not identify the company. What I have been
informed is that the postsale investigation identified the
company.
Mr. Bell. But the purchases were actually made--well, let
me clarify what you just said. That they had been told, given
some information by GAO, regarding a fictitious company, but
not the name of the company?
Mr. Baillie. Right; that GAO was conducting the undercover
audit, and that it was ongoing. Other than that they were not
provided the name, as I was informed.
Mr. Bell. And so after that point, the Department of
Defense was able to uncover----
Mr. Baillie. The particular organization or individual's
name, yes.
Mr. Bell. And I'm not going to belabor the point, but that
type of excuse is what troubles me, because obviously, if we're
not dealing with an undercover investigation, if it is actually
a terrorist who's making these purchases, they're not going to
provide that kind of information to the Department of Defense.
Mr. Baillie. Yes, sir.
Mr. Bell. And the purchases were made between May and July,
and during the time that the purchases were being made, there
was no detection whatsoever that this was a fictitious company,
despite the fact that the same credit card was being used, that
false names were being used, documents were being forged, etc.
Would you agree with that?
Mr. Baillie. Yes, sir.
Mr. Bell. Would you also agree that the red flags and
alarms should have sounded long before GAO made any type of
report to the Department of Defense that an undercover
investigation was being conducted?
Mr. Baillie. Certainly the process in and of itself should
have identified those things, yes, sir.
Mr. Bell. Mr. Estevez, I'm somewhat fascinated by the
safety cabinet that we have here today, because according to
the GAO--and I have never shopped for a safety cabinet, so I
certainly couldn't say one way or the other, but according to
the GAO, it appears to have never been used. Is that--do you
know?
Mr. Estevez. I'm sorry. No, sir, I don't.
Mr. Bell. If that's correct, and let's assume that it is,
why would the Defense Department be selling a new high-quality
safety cabinet for pennies on the dollar if it had never been
used?
Mr. Estevez. I can't address specifically why this cabinet
was turned in for reutilization.
Mr. Bell. Or any new large piece of equipment such as that.
Mr. Estevez. The using unit has excess or has no need for
this, any piece of equipment, they turn in into the Defense
Reutilization and Marketing Service. And I'll let the colonel
walk through the process, but essentially other defense
activities can then requisition that while it's in DRMO. At
some point DRMO passes it over for resale if--depending on what
its militarization characteristics are and export controls,
etc., and we recoup what we can based on the value of the item
on the open market.
Mr. Bell. So if it's no longer----
Mr. Estevez. Required by the Department, by the activity in
the Department.
Mr. Bell. Can you say that nobody else in the Defense
Department purchased a new safety cabinet during this same
timeframe that we're talking about?
Mr. Estevez. I can say while this was available in DRMO, no
one purchased one when they could have gotten this one. I can't
say that no one was out looking for one in the same time period
when this one was no longer available.
Mr. Bell. Colonel, do you know?
Colonel O'Donnell. No, sir, I don't.
Mr. Bell. OK. Did you want to add to Mr. Estevez's answer
on the process?
Colonel O'Donnell. Well, I think, in a short answer, he's
encapsulated how the process works. Each of the services at
each of its--their different installations determines, you
know, locally what is excess to their requirements. There are
processes within those services to review property across the
board or at some level across the organization and make those
internal adjustments, and the property is then turned in to a
DRMO. It is offered for redistribution DOD-wide. If at the end
of that screening process, which is exclusive to DOD, that
window of opportunity to observe the property by authorized
Federal agencies and other authorized screeners, they've got
access to view the property over our Web site, and at the end
of that reutilization transfer and donation screening process,
a disposition decision is made with respect to what's going to
happen on the property. And then in the case of these
particular items, they were transferred to our commercial
partner, government-liquidations.com, for sale.
Mr. Bell. A policy directive was issued by the Department
of Defense in January to restrict sales of chemical and
biological protective suits from being sold to the public. But
in spite of that directive, the Department of Defense has
continued to sell the protective suits to the public, and the
GAO has found that you're selling them to the public to this
very day. Whoever wants to answer the question may, but I'm
curious as to why the Department of Defense has failed to
follow its own directive.
Mr. Baillie. Yes, sir. That goes to the batch lot issue
that I discussed before and that the first panel commented on.
We do not allow the suits to go when they are identified if
they are, in effect, mixed in with very large batch lots of
things. Prior to Colonel O'Donnell's changes his----
Mr. Bell. Well, let me stop you there, because GAO
purchased two lots of chemical and biological suits, and I
believe one was in April, and the other purchase was in June,
and they bought hundreds of suits, and there was nothing in
those lots except those suits. There was no question about
separating the suits from other equipment. So let me go ahead
and ask you again why didn't you all follow your own directive?
Mr. Baillie. OK. We have not actually analyzed the
particular purchases that GAO made, sir.
Mr. Bell. Will you go back and do so now that you know that
they were not mixed in with any other equipment?
Mr. Baillie. Absolutely. In order to ensure that we make
those changes to the process, it's key to us that we find out
what broke down, and that we in turn change the process to fix
that.
Mr. Bell. I think it's also troubling to this committee
that after Customs and the Department of Homeland Security had
made the Department of Defense aware of the dangers posed by
uncontrolled sales and some of the activity that was going on,
that no action seems to have been taken to restrict the sale of
the biological equipment after the briefing. Do you know why no
action was taken?
Mr. Baillie. I think I need to turn to Mr. Estevez at the
OSD level to address that, sir.
Mr. Estevez. Sir, of course I can't address, having not
been the person that Customs came to talk to. I will say that
my understanding from USD policy is at the time it was a
general briefing. We were focused on going to war in Iraq, and
we were certainly taking it seriously at this point. We will be
focused on this.
Mr. Bell. You're certainly not suggesting that everything
else just comes to a standstill at the Department of Defense
when we're preparing for war.
Mr. Estevez. Absolutely not, sir.
Mr. Bell. OK. Well--and you all did decide to restrict
sales after the GAO report came out, correct?
Mr. Estevez. That is correct.
Mr. Bell. My time has expired, Mr. Chairman. Thank you.
Mr. Turner. Mr. Janklow.
Mr. Janklow. Thank you very much, Mr. Chairman.
Mr. Estevez, your testimony indicates we were asked by the
subcommittee to determine whether the sale and disposal of
excess medical and laboratory equipment and protective CB
clothing pose a national security risk. Have you done that?
Mr. Estevez. In the area of clothing we've obviously
restricted the sale.
Mr. Janklow. Let's go to the medical equipment.
Mr. Estevez. Yes, sir. For the equipment, that is why we
are going to do the risk assessment that the GAO has suggested
that we do. All this equipment in and of itself is available.
There are no restrictions on it from export controls, from the
Commerce control, from U.S. munitions list. So we have to look
at things that are not necessarily in and of themselves a
danger, and we are going to do that risk assessment.
Mr. Janklow. When are you going to do it?
Mr. Estevez. Based on the GAO finding, we are initiating it
now under our Assistant Deputy Under Secretary, our Assistant
Secretary for Homeland Defense.
Mr. Janklow. Are you still continuing to get rid of the
equipment in the interim?
Mr. Estevez. The equipment identified by GAO is no longer
for sale, and we have suspended sales while we do this risk
assessment.
Mr. Janklow. You know Government Liquidators, you
referenced them as a partner; is that right, Mr. Baillie, or--
--
Colonel O'Donnell. Yes, sir. They are a commercial venture
partner.
Mr. Janklow. Do they pay you for this stuff, or do you pay
them for doing their work?
Colonel O'Donnell. No, sir. We have a profit split
arrangement with GL; 80 percent of the proceeds that they
receive for the property sold in any given lot or any given
sale is returned to----
Mr. Janklow. Why do they think--let's take the laboratory
equipment. When you said you wanted it back, that it was
already in their custody, why did they think they didn't have
to return it; that if they did, it would be gratuitously?
Colonel O'Donnell. We have an extremely positive
relationship with GL in terms of our working relationship.
Mr. Janklow. Which means when you give them something, they
don't ever have to give it back even if you want it? Is that
right?
Colonel O'Donnell. The title for that property that's
passed to GL, sir, passes to that company. If they were to----
Mr. Janklow. Excuse me. It passes before it's sold?
Colonel O'Donnell. Yes, sir.
Mr. Janklow. OK.
Colonel O'Donnell. Title passes to GL. But if in those
instances where--in this particular instance where we have
asked them to return property to DOD control, they have
complied with those requests.
Mr. Janklow. I know that, but I just wondered why they
didn't think they had to if they didn't want to.
Can I ask all three of you, why--isn't most of this we're
talking about today common sense, whether or not these things
could be of danger to the people of America if they're not used
properly? Isn't this really common sense? And to defend by
saying, well, you can go out and buy it someplace else, that's
kinds of what the kids say when they sell dope. Well,
everybody's doing it, so what's wrong with us doing it?
What I'm really curious about is that why did it take a
congressional GAO audit to uncover this stuff and then prompt
someone to fix it? Isn't that your job, Mr. Estevez? Isn't that
your job, Mr. Baillie? Isn't that your job, Colonel? Isn't that
what your titles imply?
Mr. Estevez. Sir, I'm focusing on the overall material
management policy for the Department of Defense. This is
certainly part of my job, identifying a pattern. I agree--you
know, I have to agree with you. We probably should have stepped
up to this sooner. However, I do have to point out, again, in
and of itself this equipment is used by laboratories,
hospitals, universities around the world, and there's no
restrictions on it. So focusing on our small piece of this is
not going to solve this problem, which, again, is why we're
going with Homeland Security, the Department of Homeland
Security, and our Assistant Secretary on Homeland Defense to
lead the entire risk assessment of this. It's going to involve
State, Commerce and other activities in order to get this
right.
Mr. Janklow. But I'm puzzled. My question is, does it--just
because it's commercially available, does that mean you ought
to be selling it at 10 percent of its value to get it out of
your inventory? Take protective suits. Why don't you just give
them away to all the local governments, which you do? And why
are you keeping defective ones for any purpose?
The fact of the matter is you've set up a pretty elaborate
system on how you're going to now audit every couple of years
to make sure of all of these local governments that have these
suits are using them for training purposes only. Isn't that a
little futile really?
Mr. Baillie. You're absolutely correct, sir, as far as the
defective suits. I believe some prior Department policy had
said to use them for training purposes. Subsequent policy has
said the defective suits, the Isratex suits, that this
committee discussed a number of years ago are to be destroyed.
They are currently the ones that we identify in the Department
being processed by Colonel O'Donnell's people at Red River.
They are being shredded and put in a landfill.
Mr. Janklow. Now, what about the ones that are out there?
Wouldn't it behoove us to just tell them turn them in, we'll
trade you--there aren't that many of them out there, are
there--and give them what you get when you sell the new ones?
Why don't you just trade them; tell them, turn them in, and
we'll give you more out of inventory?
Mr. Baillie. You're absolutely right, sir. Our instructions
are for the, I believe, 16 stock numbers that the Isratex suits
include, we have said return them to us. We will dispose of
them. For the other older BDOs, we are allowing people the
choice of either disposing of them, using them for training
purposes, which is a legitimate action. But the defective
suits, sir, you're correct, we need to retain control of them
and ensure that they are disposed of, shredded, put in the
landfill down at Red River.
Mr. Janklow. Let me ask you, this spins off of something
Mr. Estevez indicated, are the functions that each of you
perform so great--and they very well may be; I mean, I don't
suggest for a moment you're not busy--that the concerns about
certain types of equipment being disposed of to--we'll call to
the general public and getting into the wrong hands, should
that be handled by a single entity someplace within the
government with a very strict set of controls, and not within
your three particular bailiwicks, or can you all handle it? And
we're just dealing with the Defense Department, with you. We're
not dealing with the Energy Department, the Veterans
Administration, the Agriculture Department, all these other
agencies that were the subject of IGs' examinations.
Mr. Baillie. Sir, at least speaking for the Defense
Logistics Agency, there is nothing more important than making
sure that people's lives are protected. The issue, I think, as
the first panel identified, is that this is exceptionally
broad, ranges across the whole government, not to mention the
entire Department of Defense.
Within DLA we have subsequently on our--we had on our own,
prior to the GAO investigation, identified other areas that are
similar risks to the public. One, I believe, was noted in the
GAO report, the infrared reflectant technology in a lot of our
clothing. That was identified by the Demilitarization Coding
Management Office in DLA. We have also identified some issues
with gas masks. Colonel O'Donnell's people have identified
additional things to include such common items as fertilizer.
You know, following the Oklahoma City tragedy, Colonel
O'Donnell's folks went through and pulled fertilizer off as an
item for sale.
So I think the reason we welcome this hearing is that it
focuses all of us on the much, much bigger issue. We can take
individual actions within DLA, but this is clearly a
governmentwide issue.
Mr. Janklow. Mr. Chairman, can I ask one more quick
question? It will be very brief.
Mr. Turner. Sure.
Mr. Janklow. Thank you.
With respect to the hearings that have been had in a
legitimate way, if you were in Congress--let me just ask anyone
of the three of you to respond. If you were in Congress, what
would you do? Is there anything you think you could do to make
this situation better, or is this something that can be fixed
within the executive branch?
Mr. Estevez. I'd like to be able to answer that. I really
can't, sir. I can say that we in the executive branch,
certainly speaking for the Department, I can't speak for the
executive branch as a whole, are now focused on this, and we
will be focused on this issue. And it is not--it is a complex
issue because each and every one of these items in and of
itself can't, you know, produce bad things. It's the pattern
and how do you tie that pattern together, and we're going to
work to get it right. If, you know, we need legislation, we
would be happy to come to you and ask.
Mr. Janklow. It's like bullets and rifles. You have to put
them together to have a problem.
Mr. Estevez. Absolutely, sir.
Mr. Janklow. Colonel.
Colonel O'Donnell. Well, I think that's been a common thing
this morning that this is an extremely wide problem and no
doubt a very, very complex one. Trying to make good judgments
as to, you know, how all these various components can be put
together to create biological weapons and/or other weapons of
mass destruction is a very significant undertaking and
requires, you know, expertise across all governmental agencies.
I don't think anyone would hold themselves out to be an expert,
you know, in an area that broad. So this is something that's
far-reaching and has some pretty profound consequences.
Mr. Janklow. Thank you, Mr. Chairman.
Mr. Turner. Mr. Ruppersberger.
Mr. Ruppersberger. Yes. The areas that we really are
talking about here today are twofold. It is more the broader
issue, the systemic problem generally of the inventory control
and the program that is going on, and then second the more--the
serious issue of--at this point is the biological.
But before I get to some of those issues, I do want to get
this clear as it relates to Ms. Bronson. You know,
congressional oversight is extremely important. It's our system
of government. And, you know, it's important that we have--the
people doing the job for us have the ability to get
information, and that people will see them, and that really
disturbs me that there's lack of cooperation. And I wouldn't
like to have a sting operation involved in my operation either,
but, bottom line, there was a reason for it, and we have this
hearing today because of it. But when someone does not
cooperate in that regard, that's an affront, I think, to
Congress and to the country.
The first thing, I want to ask you a question. Did Ms.
Bronson refuse to cooperate with GAO on her own, or was she
directed not to cooperate? Does anybody know the answer to
that?
Mr. Estevez. Sir, my understanding from her office is that
she did not refuse to cooperate. Her understanding was that a
letter would suffice rather than a meeting. They did not refuse
the meeting. Again, that's my understanding from her office.
Mr. Ruppsersberger. Well, it seems to me that's her opinion
about a letter should suffice. I think it's very extremely
important that we make Ms. Bronson available to this committee
just to make sure that we get it straight on what the roles
that we do have and that we do have that cooperation, and I
would hope that you could take that message back. But to say a
letter would suffice on something as serious as this, that
doesn't get it here, and I think it's something that we really
need to deal with. And not--you know, her name has been
mentioned today, and I'm sure this happens a lot, and it's a
matter of a broader problem that we need to cooperate. No one
likes it, but it's something that we are trying to get to the
bottom so we can do what's best for our country.
Now, on the issues of this program, the first thing I want
to get into just the broader scale, and then I'll come into the
chemical and biological. Should this system that we have, the
distribution and what is it, reutilization program that you
three are really very much involved, the GAO testified that
they thought it was a good system for some situations. How do
you analyze the systems that you or they are involved with? Is
it really worth what we are doing? In other words, are we
getting moneys back? Are we able--that are going to justify
what we need to do? If, in fact, we have problems--and we have
problems here today, and it worries me what the other problems
might be because we don't have control over a large quantity of
information and documents and whatever. Is it worth it to keep
going on with that system, and if it is, how much is it going
to cost to do from what you see from your perspective to give
you the resources and the tools, including the manpower, to
move forward in an appropriate way?
Mr. Estevez. Let me address from the broad term,
Congressman. We think it is a good system. It enables us to get
some recoupment on the investment of excess property that we
would have to pay to destroy if we weren't selling it. And, in
fact, we do destroy equipment that has military characteristics
that we can't put out on the market. So, for the stuff that has
reuse, it makes it available to not only for sale, but prior to
that for use throughout the Federal--you, know the Department
of Defense first, then the Federal Government, and through
donations to selected parties, law enforcement, some
universities, etc.
So it's a program that helps the general public. It helps
us recoup some investment on inventory that is no longer needed
within the Department of Defense.
Mr. Ruppersberger. Bottom line, what does it cost to run
this program? Will you please stop my time for a second? I'm
just kidding.
Colonel O'Donnell. Sir, last year, my annual revenue for
actually fiscal year 2003, our operating budget was $292
million.
Mr. Ruppersberger. OK.
Colonel O'Donnell. Total revenue generated by DRMS in
fiscal year 2003 was $333 million.
Mr. Ruppersberger. All right. Well, your budget includes
what? Does it include manpower?
Colonel O'Donnell. Manpower, sir, infrastructure,
buildings.
Mr. Ruppersberger. Technology?
Colonel O'Donnell. Yes, sir.
Mr. Ruppersberger. What kind of technology do you have for
your inventory? What systems do you have?
Colonel O'Donnell. We have Daisy, which is an internal--
which is a DRMS-unique program that manages our inventory; in
other words, when this property is in our control, provides us
a number of ways of looking at the property not only in terms
of its location, but tells us a lot about the physical
characteristics of the property, its acquisition value, its
demilitarization code.
Mr. Ruppersberger. Do you agree that there is an inventory
control problem, the ability to identify what you have and
where it's going?
Colonel O'Donnell. Sir, I would agree that at least within
DRMS we work real hard to follow all of the policies and
procedures that are currently in effect with respect to the
disposition of excess DOD property. Our ability to make
management decisions relative to property that's in our custody
is really a function of the quality of information that we
receive from our customers or our generators in terms of the
accuracy of the descriptions, the accuracy of the stock
numbers, because, again, that's what my people make inventory
management decisions based upon.
Mr. Ruppersberger. Well, I can understand that, and that's
maybe part of the problem. But, you know, we had testimony here
today that a Wal-Mart or Sears within 1 minute can determine,
you know, what they have as far as their inventory is
concerned. And it seems to me that should be a goal of ours.
But, you know, what I'm really leading to here, I know you
can only deal with the information that you have, that you have
in there, but when you have new equipment, you know, that is--
you can't identify it, when you have--and I'm sure of this. I
have two Army bases in my district. They're always talking
about getting more resources, and when you--is there any system
there when, say, your military bases are asking for resources,
and within that inventory that you can check to see whether or
not what you're selling is something that someone else might
need? Do you have any system in place that can deal with that?
Mr. Estevez. Sir, we have a multitude of systems that do
that. Each of the services has their own systems of wholesale
and retail levels like at the national level and down at the
base level. If you're at an Army base, and you're
requisitioning an item, it'll search other Army bases to see
whether they have that item before it'll go to the national
level.
With that said, because we have these multiple systems,
there are gaps, and we are--as Mr. Kutz indicated, we have a
fairly intensive effort to modernize our systems, and we are
working with people like Wal-Mart and Sears to see how their
practices work.
Mr. Ruppersberger. I have to go because I see the yellow
light's on. I want to get to the other phase, and we're not
going to solve all this right here. I'm going to request that
our chairman bring you back and that we give you a timeframe to
give us a report on where the systems are, including how can
you meet the same goal that the private sector has with respect
to finding out where your inventory is. If you know what you
have, it seems that solves part of the problem, and it is very
important, I think.
Now, I want to get into just--there's the red light. You
told me I was going to have a couple of minutes. I want to get
into the biological and chemical issue. To begin with, have
you, as a result of what is out there and what we're concerned
about--and you've said you've coordinated with Homeland
Security. Have you given this information to the relative
intelligence agencies so that they can deal with it, FBI, other
groups such as that? Are they involved with determining and
working with you on the risk assessment on where, what we have
out there that we need to retrieve?
Mr. Estevez. Sir, it's really preliminary. We are just
kicking this thing off based on the report that we had and the
recommendation. So we are just standing up this task force to
do that.
Mr. Ruppersberger. Well, it seems to me that it's an
extremely high priority and something that really should be
done right away.
Second, in order to be able to retrieve some of this, these
materials or equipment or whatever that is out there, there
probably is going to be a legal problem, because once you have
sold something to somebody, you've passed title. And I would
think that--and I would again ask our chairman that we consider
legislation that would allow us to retrieve that, those items
that were necessary to get back into our control, because right
now we could have a serious legal problem that we can't get it
back because we've already--we've sold it, and the title has
passed. Do you have any comments on that?
Mr. Estevez. Actually, we've proposed legislation to that
effect.
Mr. Ruppersberger. Do you have it out there already, or you
would----
Mr. Baillie. In talking with our counsel, DLA has proposed
to OSD and had approved by OMB for at least a couple of years
legislation that would have allowed that. It has not made it
into the subsequent final legislation. We do, in fact, have
similar legislation working at OSD again this year. We would
obviously welcome that kind of language in helping us with this
issue.
Mr. Ruppersberger. Well, I know our chairman is a man of
action, so maybe we can help you along in that regards. And one
other thing. If we find, based on the risk assessment, that we
have vulnerabilities as it relates to our national security
with respect to what has happened now, do you feel that part of
your program should be shut down for at least 6 months or a
year to make sure that we know exactly what we have, what we
need to do, and to get it right?
Mr. Estevez. I would say we would do what's necessary, and
if that's what it takes, we will do that in order to get it
right.
Mr. Ruppsersberger. But you don't have enough information
right now to analyze what you need to do in that regard.
Mr. Estevez. That is correct, sir.
Mr. Ruppersberger. I said it before, and I want to say it
again: We have to get the attention of the leadership. I mean,
you're sitting here taking it today, and that's your job, but
you need resources. You need commitment from the top to make
sure you can do what you have to do. And I know that it's very
difficult, especially when you have a very strong leader, that
you have to maybe say what you want to say at some times that
might offend policy that could be different. But this is
serious. This is something we have to work on, and we're going
to hold you accountable to come back to make sure that we get
this right.
Mr. Baillie. If I may agree with Mr. Estevez's last
statement, it's been somewhat unpopular, especially with the
infrared technology issue. We've had that frozen now for at
least 6 months, if not 9 months. We're getting a lot of concern
from the commercial sector out there about it. But when you're
dealing with people's lives, as Mr. Estevez said, we'll take
the actions we need to take.
Mr. Ruppersberger. OK. Thank you.
Mr. Turner. Thank you.
Gentlemen, as part of your opening statements, you made
statements such as, you know, we agree with the GAO report. We
recognize the issues. We have concerns. We're committed. We've
revised modified policies. And, you know, I think the questions
that you've been getting from this committee have been focusing
on the issue of then what? And I know that in your statements I
appreciate your identifying this issue as broader than just the
Department of Defense by indicating that of course there are no
restrictions on private sector sales of some of these types of
equipment.
And you've also talked about, you know, our education curve
as we become more aware of threats that we are facing with
different types of equipment, because similarly, as you
identified, Mr. Baillie, I think, fertilizer, I mean, you could
begin to put things over here in the exhibit that we have that
we would not normally have thought of as terrorist tools; box
cutters, for example. But some things are more easily
identifiable as intuitively a problem, such as this lab
equipment that we have in front of us.
So even granting that there isn't similar controls in the
private sector, and that some types of equipment that we
wouldn't normally think of as terrorists using could also be
used in this example, we do have a situation here where the
Department of Defense either has policies in place that they're
not following, or areas where we can easily view where there
should be policies in place. And my concern, and my first
question, relates to two things. One, in the areas where there
are policies in place that obviously were not being followed,
I'd like your comments on that, because any discussions that we
have about expanding policies really don't give us any comfort
level that's going to result in anything if there are existing
policies that are not being followed.
So I'd like you in my first question to discuss the issues
of policies not being followed and how they could be more
effective, and in that I'd like you to also talk about the
issue of this ineffective end user certificate, because when we
had our earlier testimony, GAO was saying that, you know, Mr.
Ryan, who had coordinated this, would not be able to be located
by any of systems. Once you ultimately did determine if you--
had independently determined that there had been a purchaser
that was suspect, it sounds as if you have in place a process
that doesn't do anything but push paper and is going to be
ineffective in accomplishing its goal. If you would address
that, please. Mr. Estevez first.
Mr. Estevez. With regard to the policies not being
followed, we have a number of mechanisms to identify problems
in the Department of that regard. IG, GAO, the military
services each have one of their own reports that come into my
office, for instance, and this--and on DRMS activities. So
while I would like to say that the process worked, in fact it
did after a time, that's sort of the mechanisms that we rely
on. And we were stepping up, in this area, our assessment
teams, and I'll make sure that those reports get the Office of
Secretary of Defense-level review.
For the specific thing on the end user certificate, I'm
going to have to turn that over to Mr. Baillie on the specifics
on that.
Mr. Baillie. Thank you.
Yes, sir. We would agree the end user certificate process
needs to be strengthened. The fact that Mr. Ryan was able to do
what he was able to do causes us great concern. We are working
with a number of the law enforcement agencies, Justice,
Homeland Security, some of the other folks, to give us access
to additional criminal information data bases that will allow
us to do what the system should do, which is to prevent the
kind of thing that happened in this case. So at this point the
process, yes, could be strengthened. We are working to do that
across the government.
Mr. Turner. Colonel.
Colonel O'Donnell. Sir, again, from the DRMS perspective,
again we've got in place, I think, what appears to be a viable
set of policies and procedures. Our execution of those policies
and procedures, again, from the DRMS perspective, is as good as
our ability to identify the property that flows through our
various facilities. In terms of, again----
Mr. Turner. I'm sorry. Let me interrupt you a second,
Colonel. You just distinguished between policy and their
implementation, and my suspicion--and correct me if I'm wrong,
and tell me what the difference is--don't your policies include
the implementation processes? I mean, are you saying that you
have these policies of we won't do these things, and then
separately the implementation processes are put together, and
do you need to change those?
Colonel O'Donnell. At the Department level policies are
broad policy guidance decisions on how--what should be done and
how the process should work. They don't go into the individual
processes of how DMRS should operate. Those are implemented by
Defense Logistics Agency down through their component.
Mr. Turner. OK, Colonel. Then in making that statement, if
you could be specific as to how the policies are good, but the
implementation is not?
Colonel O'Donnell. Well, the policies and ultimately the
procedures are well thought out and are changed, you know, over
time as conditions would indicate that there's a need to
change. Our challenge is in terms of executing a lot of the
policies, and I think about it in the context of this
particular investigation where you have property that's
introduced into the DRMS inventory. And as I indicated earlier,
our ability to make management decisions or disposition
decisions relative to that property is as good as the
information that we're getting from our customers.
I guess, having said that, you know, we don't have a way to
look back up the pipeline to assess whether or not the
information we've got is accurate. We deal with the here and
now. I've got a series of stock numbers. I have property
management codes, deauthorization codes that tell me I can do
certain things or not, as the case may be, and we react or we
execute accordingly.
Mr. Turner. Taking that question that I had asked to the
first panel was concerning the operator involvement. You had
taken some action to look at end user identity, but, again,
having Wright Patterson Air Force Base in my district, knowing
the labs that are there, knowing and having spoken to operators
of some of those labs, I know that would probably be a very
fertile environment for initial assessment or description of
the threat for threat assessment that some of the equipment or
materials might pose, and I think I hear you saying that there
is no operator involvement. At least when I asked the first
panel, they were not aware of any. So I guess the question is,
is there originating operator involvement in that threat
assessment; and, two, if there isn't, do you believe it would
be helpful?
Let's start with the Colonel. He was discussing the issue
of his lack of full and complete information.
Colonel O'Donnell. The information that we get from a
customer on a turned-in document doesn't indicate, other than
if there's a demil code attached to a particular stock number,
that there is a threat. So I'm not suggesting for a moment
that, you know, operators or the owners or the proponents of
that equipment haven't thought that process through.
But in the case of things like textiles, for example, where
you get in property that has locally assigned stock numbers,
you don't have a code that, you know, gives you some
restrictive guidance as to what you're supposed to do with the
property; and----
Mr. Turner. Colonel, I understand that. You described a
very clear code before, and it sounded pretty much like your
position is you were describing it was that of a traffic cop. I
get in this. It goes there. I get that in, and it goes there.
My question is, how do you think it would make your system work
better; and, specifically, what additional information from the
originating operator would be helpful?
Colonel O'Donnell. Sir, I guess that goes back to,
ultimately, the item manager for a given piece of equipment,
and to have at the outset--in other words, at the beginning of
the supply chain for an individual item a good, solid, reasoned
determination as to what demilitarization requirements need to
be ascribed to an individual piece of equipment, if any.
Mr. Turner. So is that answer a yes?
Colonel O'Donnell. Yes, sir.
Mr. Turner. Thank you.
Mr. Baillie.
Mr. Baillie. Congressman Turner, the Colonel hit on another
one of the key control issues that we discovered subsequent to
the GAO report, and that's that local stock number. What the
Colonel has had his folks do, in addition to tearing apart
every batch lot, is to reject any submissions of clothing and
textile that an operator submits with a local stock number. You
know, sometimes the local operator does not know or can't find
the national stock number, which is the key to all the things
the Colonel was talking about. It's got the demil, it's got the
identification, and it's what the daisy system runs off of.
When something is submitted with a local stock number, that
piece of the process just stops, and it's then----
Mr. Turner. Back to my original question just for a second,
because it just seems like, again, that we're asking a question
that I can't imagine the answer isn't just yes, but I don't
quite understand the answer I'm getting back. The question is,
one, is the originating operator of the equipment that's being
disposed involved in the assessment in DOD in determining its
threat; and, if not, do you think that would be helpful?
Mr. Baillie. The person who determines the threat in the
Department is the procuring inventory control point. So the
service or DLA inventory control point that buys a particular
item, in this case I believe most of those are DLA items, that
inventory control point is the one who puts the demil code and
the kind of sensitivity on it. So, yes, sir, involving them is
key.
Mr. Turner. But that's not the original operator.
Mr. Estevez. Actually, I was going to say what Mr. Baillie
said, that the procuring activity who's buying it for that
operator assigns the demil code. Of course, what we have here
is any one of these items in and of itself would have no demil
code. So that raises the complexity of how do you look at, you
know, one thing--it goes back to putting the gun together. This
is putting the gun together. So one thing may not have a demil
code. Putting in a collective activity may require a different
category.
As we do our risk assessment, we'll certainly be working
with the scientific community and the Department to determine
what can be used for what and in what combinations.
Mr. Turner. Thank you.
Mr. Chairman.
Mr. Shays. Thank you.
The problem with the gun analogy is we're not talking about
guns. We're talking about weapons of mass destruction. That is
the real problem with this dialog, so there has to be a much
heightened concern.
First, on protective gear, the battle dress overgarment,
Colonel, I don't understand, frankly, why this protective gear
was sold in the commercial market. I don't understand why it
was given to potentially a first responder, other than the
argument that it was put in a batch that we didn't identify.
But what I really don't understand is, once you track these
suits that were defective, why they were reentered into the
disposal process after the suits were returned by local law
enforcement agencies. Why did that happen? You collected the
bad suits that should never have been sent out in the first
place, and then we resold them.
Colonel O'Donnell. Sir, part of the problem I think in this
particular situation is the fact that you had defective suits
that had the same stock number--national stock number as
nondefective or the older battle dress overgarments. Without
having ready access to a contract number to go, you know, piece
by piece against that contract number----
Mr. Shays. Well, with all due respect, though, no suits
were to be resold. So when you identified you had sent out bad
suits, none of these suits were to be sold. Correct? That was
the agreement that we had. Correct? Is that not correct, Mr.
Baillie?
Mr. Baillie. Yes, sir. That was the agreement.
Mr. Shays. So there really is no good answer. Is that
correct?
Colonel O'Donnell. Sir, other than the fact that suits were
in the pipeline, as was alluded to by the first panel, I'd have
to agree with that.
Mr. Shays. I've been trying to be respectful of the fact
that this is a difficult situation, and I try to imagine that
you are my constituents. So how would I feel if my constituents
were being asked these questions? That just kind of gives me a
little reality.
But you did agree that--except in two exceptions, you
agreed with what the first panel said, and you didn't disagree
with anything that we said in the first one. It's pretty
devastating stuff, but, Colonel, we swear our witnesses in not
because we think they're going to lie but because we don't want
it to be casual. And I felt that the question that you had
said--this proactive comment to us that you had discovered Mr.
Ryan's faults in operation--or the GAO's faults in operation in
August was a little surprising to me, particularly after
speaking to GAO, and Mr. Bell went through this; and I would
like you to be what--I think less casual and be very precise,
because it's important that you not give us a false impression.
I want you to tell me if you think it is an impression you
want me to have that you discovered in August on your own
without any assistance that this was happening, or whether
there may have been more to the story than that. And if you're
getting it secondhand, I really would advise you to make sure
that you're really precise on this. And I'm asking you,
Colonel, because you are the one who brought it up--I'm sorry,
Mr. Baillie.
Mr. Baillie. No, I did, sir.
Mr. Shays. OK. I'm sorry, Colonel.
Mr. Baillie. My intention was, as Congressman Turner
offered, was there any additional information that we wished to
introduce into the record. Certainly it was not my intention in
using that particular piece of information to convey any casual
nature to this. This entire thing is very serious. My intention
was to say for the completeness of the record that----
Mr. Shays. I want to make sure that I ask it this way, just
so you don't get yourself in a hole here. Did you on your own,
without any knowledge or any indication from GAO, discover this
operation?
Mr. Baillie. No, sir. If you predicate it on knowledge of
GAO, the information I was given----
Mr. Shays. The answer is no, right? And I think that is a
better answer.
Mr. Baillie. Yes, sir.
Mr. Shays. GAO did inform you that they had some operation
going on. OK. I mean, even if you did, I would have said the
operation had really concluded, but I just think it's a little
misleading to us to have it seem like the system on its own
discovered this, and I don't think that's accurate. And you've
clarified the record.
Mr. Baillie. Yes, sir.
Mr. Shays. OK. Thank you, and I thank Mr. Bell for asking
those questions. I'm done.
Mr. Turner. Mr. Bell.
Mr. Bell. Just a couple of questions to wrap up; and if you
covered it when I was out of the room, I apologize.
But earlier you heard the testimony from GAO regarding Ms.
Bronson and her lack of cooperation when they sought to meet
with her, and I'm curious as to whether, if you know, if Ms.
Bronson refused to cooperate with GAO and basically with
Congress since we had requested GAO to carry out this
investigation, did she do that on her own accord or was she
directed by someone not to cooperate?
Mr. Estevez. And my response to that earlier, sir, my
understanding is that Ms. Bronson was led to believe that
writing a letter back to GAO was an adequate response and that
no meeting was necessary.
Mr. Bell. Do you know if she talked to any higher up----
Mr. Estevez. Not to my knowledge, sir.
Mr. Bell. I think it's important, as we go forward, as the
GAO needs to meet with Ms. Bronson or anyone else, that there
be greater cooperation on the Department. Would you agree with
that?
Mr. Estevez. Sir, speaking for myself, we stand fully ready
to cooperate with GAO and Congress on any matters that they
bring to us, and I think the folks behind me who have worked
with me before would back me up on that.
Mr. Bell. Based on what you all know today, do you plan on
enhancing the post-sale followup and investigations in any way
on the equipment that's being sold by the Department?
Mr. Baillie. Yes, sir. As I stated before, we are actively
working--our criminal investigation folks are actively working
with Justice and other law enforcement agencies to get us
access to additional criminal and terrorist data bases that we
believe are necessary to screen out the kinds of things that
happened in this case before they ever get into the system.
Mr. Bell. Let me just say this in closing, that--and you
all can comment if you care to--that I think we all realize
what a difficult position you're in; and I'm also certain that
this is probably--you're not--not your most pleasant experience
coming here and having to answer these questions. But in my way
of thinking and probably in the thinking of the other members
of the committee, you've really been given somewhat of a gift
here through this report, because proactivity is tough, and as
creatures of government, we don't do it very well. We wait
until there's a major blackout before we start talking about
passing an energy bill. We wait until public education is in
the tank before we start passing laws to improve public school,
educate. We are reactive creatures in government, but September
11th changed everything.
I was sitting up here and I was trying to imagine what the
first lines of a story would be if this had been different and
you had been dealing with an actual terrorist instead of a GAO
investigation. And I wrote something: Federal authorities
reveal today that the anthrax believed responsible for killing
hundreds over the course of the last 3 months was produced by
terrorists using biological equipment they purchased on the
Internet from the U.S. Department of Defense.
I don't think any of us can begin to imagine what that
would do to the trust of the American people, what the hearing
would be like following such a story and how unpleasant that
would be. So we're on notice now. We're on notice now, and
hopefully the Department of Defense will take it very seriously
and do everything they can not just to respond to what GAO has
brought to light but whatever else comes to light, not sweep it
under the rug but actually try to respond to it. I sense that
will be your attitude going forward, and I hope it will be, and
you're free to respond.
Mr. Estevez. I couldn't agree with you more, sir. You know
that we do not concur with every GAO report that comes our way.
We wholeheartedly concur with this one. It is a good response,
and we take it seriously and intend to take it seriously, and
we're going to look at more than just these little items here
that are out here. We intend to do this as a broad sweep of how
we are--what we are putting out for sale and working with our
interagency counterparts in order to get this right. You're
absolutely right, sir.
Mr. Bell. Thank you for your testimony.
Mr. Chairman, thank you for calling this hearing.
Mr. Turner. Mr. Janklow.
Mr. Janklow. Thank you. I've got two quick questions.
One, Mr. Baillie, you just talked about your working to get
additional data base access. Doesn't that really belie the
whole issue, sir? The reality of the situation is, to the
extent that I can legally buy equipment from the Department on
the bids or from an agency on the bids, you have no way in a
practical sense to ever determine who I'm selling it to. So as
long as I can clear your scrutiny, the rest of it's irrelevant.
Wouldn't you agree with that?
Mr. Baillie. I would agree, sir, that the entire process
needs to be assessed as a part of the risk and vulnerability
assessment. You're correct. We can----
Mr. Janklow. And the second thing I'd like to ask you,
you've all indicated you're undergoing this risk assessment, at
least in the Defense Department. Is this Department-wide, or is
this Army-based?
Mr. Estevez. This is going to be interagency, sir. This is
led by Homeland, Defense and the Department with Homeland
Security.
Mr. Janklow. How long do you anticipate this risk
assessment will take? And, two, when would we be able to have a
report of what's been accomplished or what's been implemented?
Mr. Estevez. We're prepared to come back within 3 months to
give you our progress status report on where we are.
Mr. Janklow. Do you feel that you will have the risk
assessment done and the plan in place by then?
Mr. Estevez. I would hesitate to say that, sir.
Mr. Janklow. OK. Thank you very much, Mr. Chairman.
Mr. Turner. We thank you for your participating in this
hearing, and I'd like to ask if throughout the questions and
your answers if at this point you have any additional thoughts
that you would like to include in the record before we adjourn?
Does anyone from GAO at this point want to comment on
anything that they have heard in this testimony on our second
panel before we adjourn?
If not, we thank you all for participating, and we'll be
adjourned.
[Whereupon, at 1:20 p.m., the subcommittee was adjourned.]