Government Integrity

Leaked House Ethics Report (Yawn)

2009-10-31T23:01:00.005-04:00

The Washington Post caused quite a stir reporting on an inadvertantly leaked House Ethics Committee document revealing that over 30 lawmakers and aides are being investigated for financial dealings and campaign donations. The report, the committee's "Weekly Summary," names seven members serving on the House Defense Appropriations Subcommittee in its ongoing investigation into the PMA Group. PMA Group is the now-defunct lobbying firm, founded by a former John Murtha staffer, which has funneled millions in campaign contributions to Murtha alone.

Revisit Corruption Watch: Update on "Murthaville"...cue Jimmy Buffett.

Nearly half of the members of the defense subcommittee are named in the report: John P. Murtha (D-Pa.), Peter J. Visclosky (D-Ind.), James P. Moran Jr. (D-Va.), Norm Dicks (D-Wash.), Marcy Kaptur (D-Ohio), C.W. Bill Young (R-Fla.), and Todd Tiahrt (R-Kan.).

Here's the NY Times on PMA back in February:

[PMA] convinced 104 different House members to add separate earmarks into the [last year's] defense appropriations bill worth $300 million to PMA Group clients. These same lawmakers who looked out for the PMA Group have received $1.8 million in campaign donations from the lobbying firm since 2001, according to an analysis of new disclosure filings by Congressional Quarterly and Taxpayers for Common Sense, a watchdog group.

PMA's beneficence with political contributions was lavished especially on the seven members of the Defense Appropriations Subcommittee named in the leaked report (from the Washington Post):

Together, the seven legislators have personally steered more than $200 million in earmarks to clients of the PMA Group in the past two years, and received more than $6.2 million in campaign contributions from PMA and its clients in the past decade, according to an analysis by Congressional Quarterly and Taxpayers for Common Sense.

Converting Public Funds into Campaign Contributions

To most people, the quid pro quo nature of exchanging campaign contributions for earmarks is unmistakable. Money laundering is defined as disguising illegally gained money as legitimate financial transactions. The only reason that converting public funds into campaign contributions doesn't qualify as money laundering is because earmarking is legal. In theory, there is no shortage of legal theories available to target government corruption: kickbacks, bribery, etc. all prohibit the use of public office or funds in exchange for private gains.

In practice, however, the law places significant roadblocks and obstacles in the way of federal prosecutors in probing public corruption. Absent a confession or a still hot, smoking gun, prosecutors generally steer well clear of the U.S. Constitution's Speech and Debate Clause (Art I, sec 6, cl 1).

For example, here's some seriously discouraging guidance from DOJ's Criminal Resource Manual to U.S. Attorneys on prosecuting corruption:

A bribery charge can be premised on a campaign contribution. But be careful. It is problematical that a gratuity charge under 201(c) can rest on a bona fide campaign contribution, unless the contribution was a ruse that masqueraded for a gift to the personal benefit of the public officer as was the case in Brewster, supra. This is because campaign contributions represent a necessary feature of the American political process, they normally inure to the benefit of a campaign committee rather than directly to the personal benefit of a public officer, and they are almost always given and received with a generalized expectation of currying favor with the candidate benefitting therefrom. For these reasons, recent Federal jurisprudence on the subject suggests substantial judicial reluctance to extend the Federal crime of gratuities under section 201(c) to bona fide campaign donations.

PRACTICE TIP: Where the transaction represents a bona fide campaign contribution, prosecutors must normally be prepared to prove that it involved a quid pro quo understanding and thereby constituted a "bribe" offense actionable under section 201(b).

While the DOJ investigation into PMA may yet bear some unexpected fruit, I'm not exactly holding my breath. Barring the discovery of an email or letter on congressional letterhead demanding campaign contributions in return for earmarks or something equally unlikely (like foil-wrapped bricks of $100 bills or Blagojevich-type bravado), the U.S. attorney can only hope for a jittery suspect to "turn state's evidence" on a quid pro quo transaction. Fat chance of that when you have seasoned political pros operating inside an enormous legal gray area. It's also no surprise that the law is on the side of the lawmakers.

If the bar for prosecuting quid pro quo transactions is so high, can Congress police itself? Let's see what the House Ethics Committee might dish out:

Ethics committee investigations are not uncommon. Most result in private letters that either exonerate or reprimand a member. In some rare instances, the censure is more severe.

Penalties available to the House Ethics Committee such as reprimand, censure and expulsion (only 2 members of Congress have been expelled in over a century) don't quite instill fear in corrupt politicians and staffers. With the permissive legal environment for taking financial contributions, hamstrung federal prosecutors, and toothless self-enforcement on Capitol Hill, crooked lawmakers are sure to be shaking all the way to the bank. In fact, the junior staffer who inadvertently released the report may wind up being the only government employee to lose his/her job in this case.

When it comes to government integrity, there is a clear gap between what is expected by the people and what is delivered by our government. The continued failure to close this gap will further drain the public's dwindling faith and confidence in Washington.

DCAA's Stephenson Replaced

2009-10-29T18:12:00.001-04:00

April Stephenson is out at DCAA, replaced by the U.S. Army Audit Agency's Patrick Fitzgerald (GovExec reported earlier this week). As noted here in GAO Trashes DCAA, Stephenson's firing, err...replacement, was a foregone conclusion after being publicly lambasted by the GAO and members of the Senate Homeland Security and Government Affairs Committee (HSGAC).

Nothing against Patrick Fitzgerald but if Stephenson was fired for "facilitating DoD contracting," or for the "impaired independence" of her auditors whose "audits are a joke," Director Fitzgerald probably shouldn't unpack his boxes too soon either. Fitzgerald's credentials as a manager are as solid as his reputation as a company man and nothing in his background suggests that he has what it takes to clean house at DCAA.

DCAA's problems are systemic, and members of its upper management are widely considered to be a part of the problem. The culture of a government bureaucracy can't be changed without wholesale changes made to its upper management to send an unmistakable message rippling throught the ranks. Sacking the head of the embattled audit agency is like slaughtering a sacrificial lamb: a bloody and public spectacle meant to appease the restless onlookers. In the meantime, the deep-rooted, systemic problems that predate the brief tenure of April Stephenson are left to fester.

U.S. Diplomat in Afghanistan Province Resigns in Protest

2009-10-27T23:24:00.002-04:00

News from the Washington Post today that Mathew Hoh, the Senior Civilian Representative in Zabul Province, Afghanistan resigned from the State Department last month in protest over the war in Afghanistan. Hoh was clearly an up and comer at the State Department as he turned down two successive promotion offers (one at the embassy in Kabul and then one in Washington) from Admininistration officials in their attempt to convince him to reconsider.

Savvy diplomat that he is, Hoh couldn't have missed the fact that Afghanistan has become the hottest honeymoon destination for that unlikely marriage between neocons and liberal hawks (and their industry bridesmaids and blogosphere groomsmen). A case against an escalation in Afghanistan, grounded in history, is ok and all but, in this environment, there's no substitute for some solid "kill" credentials:

"I'm not some peacenik, pot-smoking hippie who wants everyone to be in love," Hoh said. Although he said his time in Zabul was the "second-best job I've ever had," his dominant experience is from the Marines, where many of his closest friends still serve.

"There are plenty of dudes who need to be killed," he said of al-Qaeda and the Taliban. "I was never more happy than when our Iraq team whacked a bunch of guys."

Cynicism aside, Hoh's resignation letter is thoughtful, nuanced, and a great read:
Hoh.ResignationLetter

COP Keating: More Questions that Should Have Been Asked

2009-10-17T11:40:00.004-04:00

The Washington Times reports that, only weeks prior to the deadly attack, several intelligence report were issued warning of an imminent assault on the base. From the article:

One of the intelligence reports on Kamdesh, released in part to The Times, stated that a new Taliban sub-commander in Kamdesh, named Ghulan Faroq, had been appointed and "charged with attacking COP Keating," but no date for the attack was given. COP is military shorthand for combat outpost. The report also stated that on or about Sept. 29 or 30, "fighters in Kamdesh received a resupply of B-10 ammunition" suitable for use with Soviet-design B-10 recoilless guns that fire 82 mm mortarlike rounds.

A second report stated that, around Oct. 2, a Taliban meeting took place in Kamdesh and that "a Taliban commander will arrive in Kamdesh soon to conduct attacks against coalition forces."

The third report stated that around late September, "a Taliban commander planned to conduct simultaneous attacks against coalition bases in Gewardesh, Kamu and Kamdesh regions of Nuristan and that each attack would be perpetrated by 10-15 Taliban fighters in each location." "At the same time as these attacks, another unit would attack Barg-e Matal with up to 150 fighters."

Despite the information in the intelligence reports, Maj. Taylor insisted that the attack took the 50 U.S. troops and 90 Afghan police officers and soldiers at the combat outposts by surprise.

"You get in trouble for asking questions"

In August 2009, British reporter Nick Walsh, briefly embedded with the 3-61st Cav at COP Keating, interviewed the soldiers after another firefight with insurgents firing from invisible positions in hillsides all around the American base (see video of "The Hills Around COP Keating").

The American outposts near Kamdesh seemed to serve no tactical purpose: American soldiers were not authorized to enter the village of Kamdesh, there have been no detention of insurgents for months, interdiction of insurgent moving through the area has all but stopped (there weren't enough troops to interdict in any case), and the base was slated to be abandoned by American forces within days (Washington Post). Still, soldiers from the 3-61st, like professional soldiers tend to do, drove on with the mission and trusted in the judgment of their superiors.

While the superior training and "swagger" of America's finest are evident in the video, one wonders about the thought process and what factors their chain of command weighed in balancing the military objective to be gained against the risks to which the mission exposed our soldiers.

From the Recipe for an Afghan Soup Sandwich (scroll down to view Walsh's interview):

(at 4:45)
Walsh: Do you ever think to yourself, why am I here?
Soldier #1: Not really, that’s not my job to ask that question, right Hardt? Ask the question of "why I’m here," you don’t ask that question, right?
Soldier #2 [Hardt?]: [Bleeped out] no.
Walsh: What questions do you ask?
Soldier #2: You don’t ask any questions, you get in trouble for asking questions.

Our soldiers are the best in the world. As professional soldiers, it is not their job to ask questions. As citizens of a representative democracy, it is our job to ask questions for them. In this case, there are many questions that should be asked.

Later today, SGT Joshua Hardt will be buried in a private funeral service. May he rest in peace.

Andrew Bacevich on Afghanistan Strategy and Fiscal Realities

2009-10-15T23:01:00.004-04:00

On Mid-east policy, Andrew Bacevich (whether you agree or disagree with him) is always worth reading. From Afghanistan - the Proxy War in Sunday's Boston Globe Op-Ed page:

If the president approves the McChrystal plan he will implicitly:

■ Anoint counterinsurgency - protracted campaigns of armed nation-building - as the new American way of war.
■ Embrace George W. Bush’s concept of open-ended war as the essential response to violent jihadism (even if the Obama White House has jettisoned the label “global war on terror’’).
■ Affirm that military might will remain the principal instrument for exercising American global leadership, as has been the case for decades.

While Bacevich's credentials as a West Point grad, Vietnam vet, and "Gold Star" parent can't (and shouldn't) lend substance to a debate, they do imbue Bacevich with a seriousness of purpose that is both rare (in an age when every shill and blowhard gets a "soapbox") and difficult to ignore. This piece didn't analyze the U.S. military campaign in Afghanistan (Bacevich has no shortage of those: click here, here, and here, for examples) but rather the battle lines being drawn back home.

Last year, recognizing that Obama's campaign rhetoric regarding the "war of choice" v. the "war of necessity" would surely lead to today's debate over just how much to additional resources to pour into Afghanistan, Bacevich gave this prescient warning to the new president-elect:

Were U.S. resources unlimited and U.S. interests in Afghanistan more important, upping the ante with additional combat forces might make sense. But U.S. power—especially military power—is quite limited these days, and U.S. priorities lie elsewhere.

Rather than committing more troops, therefore, the new president should withdraw them while devising a more realistic—and more affordable—strategy for Afghanistan.

If this blog has a single focus, it is that the government ignores today's urgent fiscal realities at its peril. Bacevich is one commentator on the wars in the Middle East who never divorces the nation's strategy from its fiscal constraints.

"To pursue global hegemony is to court bankruptcy," Bacevich wrote in American Triumphalism, "to persist in imagining otherwise will only hasten America’s decline." A nation's strategic success in foreign wars should never be viewed in isolation from its economic circumstances back home.

Wall Street's Disdain for the "Debt Ceiling"

2009-10-13T22:12:00.006-04:00

Credit ratings agency Standard & Poor's warns that the U.S. government is, once again, closing in fast on its statutory debt ceiling. Although it hasn't worked out that way, the debt ceiling was originally passed as law by Congress to rein in runaway government spending.

Statutory Debt Ceilings

In 1941, after over a century and a half of mixed success in controlling the public debt, Congress legislated a mandatory total debt ceiling for all government securities. The original debt ceiling was set at $65 billion. In the less 68 years since, the debt ceiling has been raised over 80 times. The current debt ceiling stands at $12.104 trillion, that's an increase of 18,622% (way more zeros than the calculator on my phone can handle so I hope that's right).

From late 1995 to early 1996, as a result of the Republican House majority and the Clinton administration failing to come to terms on the budget, the House refused to vote on raising the U.S. debt ceiling. As a result, the U.S. government was forced to shut down partially and temporarily (on multiple occasions) due to an inability to finance its operations. Just as I noted with the two dueling "Defund ACORN Acts" from Reps. Boehner and McCollum, it appears that the only time Congress worries about fiscal responsibility is when one party can use it to stick it to the other.

In the meantime, Congress raising self-imposed limits on its own spending, not unlike an alcoholic's promise to "stop drinking tomorrow," has become a foregone conclusion. From the S&P report:

The U.S. ...has its legislature vote on the limit most often apart from the approval of the budget. The bifurcated process can thus allow a lawmaker to vote for higher spending or lower taxes while later posturing against the government debt that is engendered by fiscal deficits. We consider that this process is not best practice and is a weak point in an otherwise strong budgetary framework.

First, an investor in government securities may be forgiven for taking the "otherwise strong budgetary framework" language with a grain of salt. After all, the memories of the S&P giving good to excellent credit ratings to the likes of Bear Stearns, Lehman Brothers, Fannie Mae, Freddie Mac, Countrywide, etc. all the way up until the eve of their failures are too recent to forget.

What stands out in the press release meant to reassure investors of the U.S. government's excellent credit rating is that the S&P couldn't resist calling out our elected representatives for their hypocrisy in "posturing against government debt" while voting for "higher spending or lower taxes." Even Goldman Sachs, the darling of Wall Street and, more importantly, of Pennsylvania Ave, also wanted in on some of that Fed bashing action. Goldman's Alec Phillips was quoted by ZeroHedge.com as saying:

One should not read too much into the rhetoric that is likely to come out of the upcoming debate over the debt limit, since much of it will be meant for public consumption but will have little bearing on other policy debates that follow.

The fact that Goldman and S&P are two of the biggest beneficiaries of last year's record-shattering deficit spending shouldn't be lost. In fact, most of the increase in the government deficit piled up from FY08 to FY09 was directly attributable to the various bailout programs for the financial industry.

The bailouts of AIG, Fannie, Freddie, Merrill Lynch, et al have come at the cost of hundreds of billions of dollars (and counting) to the taxpayers. In addition, over ten trillion dollars have been committed by the Fed since last year to prop up the financial system but are not tallied in the government's official budget numbers.

Is it just me or is it miserably poor form for the financial industry to take gobs of bailout money financed by deficit spending on the one hand while ridiculing the faux hand-wringing sure to come out of Washington during the next round of debt limit raising?

Why Would the Debt Limit Even Matter to Wall Street?

If the Congress were to suddenly enforce the law it passed limiting the amount of debt it can incur, the U.S. must either cut back on spending or risk insolvency. Either scenario would be a complete and unmitigated disaster for Wall Street. If the government were to freeze spending, you can forget TARPs and bailouts, we'll have social security checks bouncing, deep furloughs of public employees, and public safety breakdowns.

Curtailing deficit spending also means that the captains of the U.S. financial industry will suddenly find themselves in the unfamiliar position of having to sink or swim with no taxpayer lifelines. If, on the other hand, the government defaults on its debt, U.S. treasuries and the dollar will certainly become (more) worthless. The full scale of the social dislocation and chaos that might ensue is unimaginable.

Wall Street knows that the odds of either scenario occurring as a result of Congress enforcing its debt ceiling is virtually nil (but greater default risks do come with the historic debt level, debt ceiling or no). Given that the reckless risks Wall Street took will now be borne by generations of American taxpayers to come, one has to marvel at the complacency and entitled "ethos" of an industry that can hardly contain its disdain for something as basic to democratic governance as enforcing a maximum ceiling on government debt and spending.

U.S. Completes Planned Move out of COP Keating

2009-10-11T13:37:00.002-04:00

CBS News reports that U.S. forces have "withdrawn" from COP Keating and a nearby observation post, completing plans that were in place prior to the October 3rd attack. After troops abandoned the combat outpost, the abandoned site was bombarded by coalition aircraft to ensure that nothing of value falls into the hands of the Taliban. Also destroyed by coalition aircraft was the "local police headquarters" according to the report.

The CBS article did not offer an explanation as to why the Afghan police HQ in Kamdesh was also destroyed but, according to this AP article, the local Afghan police force seems to have deserted en masse the night before the attack:

The evening before the attack, insurgents comprised mostly of local Nuristani fighters began warning villagers "that something was going to go down and asked them to evacuate," Taylor told The Associated Press in a telephone interview from nearby Jalalabad.

It's unclear whether civilians fled, but local police units abandoned the village — nearly all except the police chief who was later captured and executed.

This seems to be fairly typical of Afghan provincial and border police forces who are notoriously corrupt and have been thoroughly infiltrated by the Taliban and by local militias. Of course, immediately after U.S. troops pulled out, the Taliban claims to have occupied the abandoned outposts, flying the Taliban flag over the site.

Here is a video tour of Camp Keating taken by a U.S. contractor:

FY 2009 Federal Tax Revenues Plummet as Spending, Deficits Soar

2009-10-10T06:03:00.005-04:00

The Congressional Budget Office (CBO) released its September Budget review for FY 09 (report below).

The Takeaways: A lethal combination in FY09 of record federal spending, deficit, and plummeting tax revenues.

Deficit: In fiscal year 2009 (FY09), the federal government collected roughly $2.1 trillion in taxes and spent over $3.5 trillion. In other words, $1.4 trillion or over 40% of the money the government spent in FY09 was borrowed. As a percentage of GDP, the 2009 federal deficit totals 10% (tripling the 3.2% in 2008). This is not just the largest annual deficit (by far) in the history of the U.S., it will be the largest as a percentage of GDP since the height of WWII spending in 1945.

Spending: Federal spending increased by almost 18% from $2.983 trillion in FY08 to $3.515 trillion in FY09. The federal government spent 25% of the nation's GDP in 2009, also the highest rate since 1945.

Revenues: Tax revenues dropped by 17% from FY08 to FY09. Individual income taxes collected declined by 20% while corporate tax collections plummeted 54% from 2008.

CBO.OCT09.MBR

DoD Announces the Casualties in the Attack on COP Keating

2009-10-08T12:59:00.004-04:00

The Department of Defense announced today the death of eight soldiers who were supporting Operation Enduring Freedom. They died Oct. 3 in Kamdesh, Afghanistan, of wounds suffered when enemy forces attacked their contingency outpost with small arms, rocket-propelled grenade and indirect fires. They were assigned to the 3rd Squadron, 61st Cavalry Regiment, 4th Brigade Combat Team, 4th Infantry Division, Fort Carson, Colo.

Killed were:

Staff Sgt. Vernon W. Martin, 25 of Savannah, Ga.

Sgt. Justin T. Gallegos, 27, of Tucson, Ariz.

Sgt. Joshua M. Hardt, 24, of Applegate, Calif.

Sgt. Joshua J. Kirk, 30, of South Portland, Maine.

Sgt. Michael P. Scusa, 22, of Villas, N.J.

Spc. Christopher T. Griffin, 24, of Kincheloe, Mich.

Spc. Stephan L. Mace, 21, of Lovettsville, Va.

Pfc. Kevin C. Thomson, 22, of Reno, Nev.

May these fallen heroes rest in peace. DoD news release here.

Another Defund "ACORN" Act -- Doing the Right Thing for the Wrong Reasons

2009-10-08T06:12:00.001-04:00

H.R. 3678, "ACORN Act" was introduced by Congresswoman Betty McCollum (D-MN). This bill mocks GOP leader John Boehner's "Defund ACORN Act" which passed the house with an overwhelming majority and was inserted into the "Student Aid" bill. In the case of H.R. 3678, "ACORN" stands for "Against Corporations Organizing to Rip off the Nation."

The Takeaways: Another sign that the members of Congress are more interested in playing politics than they are in actually being good stewards of taxpayers funds.

McCollum's "ACORN Act" is as cynical and political as it is timely and fundamental to good governance. While it is certainly laudable and necessary to prohibit taxpayer funds from going to pay off contractors with felony fraud convictions, everything about this bill smacks of snarky one-upmanship. From the precious "ACORN" acronym to the tit-for-tat timing, this bill emits the unmistakable odor of special interests at play.

Just as the "short-arm" of the Boehner law should be exposed for playing politics, McCollum's bill is guilty of the same. It's the same old Dem v. Repub game of protecting their stable of special interests. Meanwhile, fraud enforcement is elevated from an inconvenient afterthought into a cause with which to score political points.

Maybe the best thing is to hold our noses and take what we can get from this bunch. From McCollum's website:

“It’s time Congress get serious about taxpayer funding of corporate cheats, crooks, and criminals. Last month Congress took action to defund a non-profit serving poor Americans, but failed to act against the corporate crooks that are actually guilty of felonies – including defrauding taxpayers. Why are companies that break the law as a business strategy allowed to receive taxpayer funds? A government contract is a privilege, not a right. If a company commits a felony against the people of the United States, then that privilege must end,” Congresswoman McCollum said.

The ACORN Act is modeled after H.R. 3571 but respects the Constitution by requiring a corporation to be guilty of a felony before federal funds are cut off. The bill:

--Prohibits a corporation with a felony conviction from receiving any federal contracts, grants, or funds in any form for five years after the conviction.

--Prohibits federal employees or contractors from promoting corporate felons for five years.

--Prohibits corporate felons or any applicable individual from contributing to a candidate for federal office, to a political party, or to a federal political action committee for five years.

--Limits the corporation or any applicable individual to no more than $1 million annually for lobbying Congress or federal officials for a 5 year period.

--Provides presidential waiver authority if federal contracts, grants, and other agreements with corporate felons are determined to be in the national interest.

The Hills around COP Keating

2009-10-07T22:01:00.002-04:00

Another short video courtesy of Nick Paton Walsh at Snowblog showing the imposing hills pretty much right on top of COP Keating...and the (somewhat questionable, if you ask me) base security procedures demonstrated by Afghan forces in an adjacent base.

Also, does the following quote from the Washington Post article suggest that American commanders do not have complete and total control over the basing and deployment of their troops?

Meanwhile, the Americans were having trouble getting out. In the weeks leading up to the Aug. 20 presidential election, the Afghan government was reluctant to let Americans leave the Nurestan outposts and appear weaker by ceding territory to the Taliban.

Is it just sloppy reporting on the part of the Post or does internal Afghan politics have an undue influence on the tactical decisions of our field commanders? Did Kabul really need American soldiers to operate out of a death-trap of a combat outpost in order to appear stronger in a distant province (Nuristan)? If so, it's well past time to reassess the whole mission.

The Recipe for an Afghan Soup Sandwich

2009-10-06T21:30:00.011-04:00

Shortly after news reports of the attack that killed eight soldiers in Nuristan broke, I noted: "as more details come out about the attacks on the Kamdesh outposts over the next few days, I suspect that Camp Keating will be mentioned as one of those attacked" (read Sunday's post here).

Today, CNN and ABC reported that the attack over the weekend did, in fact, take place at Forward Operating Base (FOB) or, more accurately, Combat Outpost (COP) Keating. It also appears, with COP Keating scheduled to be closed within days, that the attack was timed to secure a political victory over the U.S. ABC News quotes a State Department official: "this [attack] gives the insurgents a propaganda victory because they can...claim to the locals that they forced the Americans out." What this revelation implies, of course, is that our troops at COP Keating may have been "sitting duck" targets for a patient, calculating enemy the whole time. So what was COP Keating like?

Combat Outpost Keating

By all accounts, COP Keating's location and terrain made it an easy target. Rocky ridges and cliffs providing elevated positions with plenty of cover and concealment encircle the base. Inexplicably, COP Keating is located on the floor of a narrow, claustrophobic valley. Obvious to the most amateur of military tacticians, defending COP Keating without occupying the high ground surrounding it would be an impossible task even for a brigade sized element. Reports estimated that only about 50 U.S. soldiers occupied Camp Keating at the time of the attack. Further, Keating was located adjacent to an Afghan Army post. It also appears from the videos below that the Afghans performed the bulk of the basecamp security duties. There simply aren't enough bodies in a 50-man detachment to secure a basecamp and to maintain combat effectiveness for any other mission. This likely had everything to do with reports indicating that the attackers managed to breach COP Keating's perimeter defenses.

Eery Interviews with Soldiers at COP Keating

Brit Nick Paton Walsh of Channel 4 News was embedded for a short time with the unit at COP Keating and filed this report in August. I was particularly struck by the following dialogue:

(2:20 into the video)

CPT Porter: We’re surrounded in that we’re sitting in a bowl. So we’re constantly under observation. There have been over 35 contacts with the enemy since we’ve been here...
Walsh: Why are you here?
CPT Porter: My boss told me to be here.

(3:00 into the video, a firefight breaks out while out on patrol)

(4:45 into the video, back at COP Keating)
Soldier #1: ...It’s just general douchebaggery.
Walsh: Do you ever think to yourself, why am I here?
Soldier #1: Not really, that’s not my job to ask that question, right Hardt? Ask the question of "why I’m here," you don’t ask that question, right?
Soldier #2 [Hardt?]: [Bleeped out] no.
Walsh: What questions do you ask?
Soldier #2: You don’t ask any questions, you get in trouble for asking questions.

Video courtesy of Nick Paton Walsh's blog--Snowblog: Watching the War from Nuristan's Idyllic Valleys

Is Afghan Warlord who Received Billions in U.S. Aid Behind Attacks in Kamdesh?

2009-10-05T06:12:00.009-04:00

The Washington Post reports that the attack that killed eight U.S. soldiers on Saturday in Kamdesh "appeared to be led by a local commander of the Hezb-e-Islami Gulbuddin insurgent group, which is run by Gulbuddin Hekmatyar." Similarly, an AP story on the attack calls Nuristan on the rugged northeastern border of Afghanistan and Pakistan home to "wanted terrorist Gulbuddin Hekmatyar."

Gulbuddin Hekmatyar may have started out as just another warlord in Afghanistan's modern version of feudalism and ended up as just another "wanted terrorist" in his own country, but he was, at one time, America's warlord. In Charlie Wilson's War (published 2003), George Crile recounted a warning from a Muslim academic and intellectual about Hekmatyar:

The meek-looking professor [Mojadeddi]...began, in a most remarkable fashion, to denounce Gulbuddin as a true monster and an enemy of Afghanistan. He accused Gulbuddin of being a dangerous fundamentalist, busy assassinating moderate Afghans, a man no self-respecting nation should support
...
America would be sorry one day if it didn't stop favoring him, [Mojadeddi] warned.

The chilling warning was given during the CIA's covert war in Afghanistan during the Soviet occupation, when Hekmatyar became a beneficiary of the weapons and funding the U.S. provided. Gulbuddin Hekmatyar was not just any other warlord, however, the former Afghan Prime Minister was also America's darling in the CIA's war in Afghanistan. He reportedly received the lion's share of the billions of dollars shoveled out by the U.S. and its Middle Eastern allies to arm an insurgency to defeat the Soviets during its occupation of Afghanistan (from Gary Leupp's 2003 article in Counterpunch):

During the 1980s, [Hekmatyar] received fully 90% the CIA-supplied funds doled out via Pakistan's Inter-Service Intelligence (ISI) to the Mujahadeen Islamic warriors (see Ahmed Rashid, Taliban [Yale University Press, 2000], p. 91). These funds amounted to some half-billion dollars per year throughout the 1980s, matched by equal sums from that other enthusiastic Mujahadeen patron, acting in close cooperation with the US: Saudi Arabia.

So, it appears that some undetermined billions (in 1980s dollars) of taxpayer funds were expended to train, feed, and equip an Afghan force that now has American blood on its hands. To which, our government's response will undoubtedly be to expend billions more in an attempt to hunt down Hekmatyar, our former ally in another war.

If dollars were to grow on trees, this approach to conducting foreign policy wouldn't be any less of a farce than it appears today. For now, our government's deficit spending budget can be "cultivated" through our "allies" (the Chinese, Russians, and Arab states for example) in a seemingly endless supply of debt and loan instruments, money that they know will go to fund misbegotten ventures such as Iraq and Afghanistan.

With the trillions of dollars our creditor allies reap from selling us consumer goods (China) and energy (oil/gas from the Middle East and Russia), what better investment can they make on their own economic future than to accomodate the burn-rate of our military adventurism around the globe?

But that will be another article for another day. Back in Afghanistan, as more details come out about the attacks on the Kamdesh outposts over the next few days, I suspect that Camp Keating will be mentioned as one of those attacked. A February 2007 Salon article described a remote combat outpost in Kamdesh this way:

Feb. 27, 2007 | At 9 p.m. on my first night at the U.S. Army base in Kamdesh, I was shaken awake by a 105 mm howitzer round. Then a symphony of incoming and outgoing fire sounded. BO-OM! BO-OM! BO-OM! Tat! Tat! Tat! Pop! Pop! Pop! Pop! Pop! From the pine- and cedar-lined mountain slope that loomed over the base, several insurgents were firing down on us with rocket-propelled grenades and AK-47s.
...

The Kamdesh base is the northernmost American outpost in Afghanistan, in an area of Nuristan so remote that local villagers asked American troops in August, when they arrived, if they were Russian. The base itself is not more than a quarter-mile wide, on a valley floor, next to a clear, trout-filled river. Three-thousand-foot mountains rise above the base on both sides of the river.

In the same 2007 article, the Salon reporter described his meeting with a young Lieutenant:

Showing me around the Kamdesh base was Ben Keating, a blue-eyed tree trunk of a young lieutenant on his first foreign deployment. Keating was proud of the 3-71's mission, but thought time was not on the Americans' side. "We've been up here for less than seven months," he told me. He held up a thick book on Alexander the Great's travails in the Hindu Kush mountains. "We have a couple of thousand years of history against us. You do the math." Keating was a history and political science major in college. "I'm not saying we're not doing any good -- we are -- but how long do we plan on staying?

If, as Lieutenant Keating observed, "the math" on an American victory in the "graveyard of empires" didn't quite add up from a strategic perspective, "the math" on the economics of "persistent conflict" (from the 2008 U.S. Army Posture Statement) is much more tenuous.

That remote outpost from the Salon piece was later renamed Camp Keating in honor of Lieutenant Keating after the truck he was riding in toppled over a cliff near Kamdesh during a night operation. (Read more about Camp Keating here and read about 1LT Ben Keating here)

May the souls of the brave Americans who fought and died in Afghanistan rest in peace.

BAE threatened with indictment in the UK; status as "responsible" US contractor may be jeopardized

2009-10-01T18:44:00.006-04:00

Britain's Serious Fraud Office (SFO) announced today that it is seeking to prosecute BAE for bribery and corruption (read the article on UK's TimesOnline.com here) related to its arms sales to South Africa, the Czech Republic, Romania, and elsewhere. BAE is the number one defense contractor in Great Britain and the 8th largest federal contractor in the U.S. in terms of dollars awarded.

A criminal indictment would severely impair BAE's ability to do business around the world, including here in the U.S. The Federal Acquisition Regulation (FAR) requires that a determination of contractor responsibility be made before every contract award. Civil judgments and indictments/criminal information ("by any court of competent jurisdiction"--FAR Part 9.403) generally subject a contractor to suspension or debarment action, either of which would effectively eliminate it from receiving U.S. government contracts.

Current procurement laws and regulations (with the exception of the "Defund" ACORN Act discussed yesterday) provide government agencies with broad discretion to determining contractor responsibility. The end result is a de facto "too big to debar" rule in determining contractor responsibility. Nevertheless, an indictment issued by the British government would force U.S. government agencies to at least go through the motion of reconsidering BAE's current responsibility. Given the deteriorating state of the federal budget, agencies that remain oblivious to the mounting public opposition against government fraud, waste, and corruption may continue to do business with criminal firms, but at their own peril.

BAE, the self-proclaimed "premier global defence, security, and aerospace company," didn't get that way by taking chances in the the court of public opinion. Nor, if given a reasonable alternative, will they elect to bear the litigation risks in a court of law. There's simply too much to lose as Europe's top government contractor with an increasing share of government market here on the American continent (see, for example, its participation in the plum $2.8 billion rebid of the "Medium Tactical Wheeled Vehicle.")

As for the British government, its interest clearly lies more in announcing a large public settlement (a la DOJ's $2.3B Pfizer announcement) so everyone has a job to go happily back to rather than in throwing its defense industry (and, as the argument goes, its national security) into disarray by securing a conviction.

No doubt, both BAE and the British government know well what is at stake. So we'll likely be treated to more "see you in court!" posturing from both sides until another agreeable settlement is reached in the long-running government-industry symbiosis. In this co-dependent relationship, one "completes" the other... and all of our pockets are lighter for it, unfortunately.

Fraud Watch: September Roundup

2009-10-01T17:21:00.000-04:00

Federal arrest warrant issued for USAID contractor Scott "Max" Anthony Walker for alleged kickback scheme in Afghanistan.

Former US Army Reserve Major Theresa Jeanne Baker sentenced to 70 months in prison and $825,000 restitution after pleading guilty to conspiracy and bribery charges involving DOD contracts at Camp Victory, Iraq.

Happy New Fiscal Year, America!

2009-10-01T12:12:00.002-04:00

In a world full of uncertainties, there's one thing we know for sure about what the new fiscal year will bring: that it will be yet another record-breaking year of living large on public spending. Larger than ever, in fact, on the inter-generational, national credit card...

(Chart courtesy of usgovernmentspending.com)

Will "Defunding" ACORN Force the Government to Stop Payment on Major Contractors?

2009-09-30T18:50:00.003-04:00

The much ballyhooed “Defund ACORN Act,” introduced by House Republican leader John Boehner (R-OH), passed by an overwhelming majority in the House and was inserted into H.R. 3221 (the “Student Aid” Bill). H.R. 3221 was subsequently passed by the House, largely along party lines, on September 17, 2009.

Unintended Consequences?

The inserted language from the “Defund ACORN Act” defines a “covered organization” as including one that has “filed a fraudulent form with any Federal or State regulatory agency.”

According to Danielle Brian of POGO, this language may inadvertantly cover “all federal contractors and grantees.”

POGO’s Federal Contractor Misconduct Database (however out of date) reads like the “who’s who” of federal contractors. It cites hundreds of instances of alleged false claims and misconduct by giants in the industry such as Lockheed Martin, Boeing, Northrop Grumman, General Dynamics, Raytheon, BAE, KBR, etc.

"Fraudulent form"

Ms. Brian, in her assessment, correctly equated the “fraudulent form” language from the Defund ACORN Act with language from the False Claims Act (FCA), which states:

(a) Liability for Certain Acts.— Any person who—

(1) knowingly presents, or causes to be presented, to an officer or employee of the United States Government or a member of the Armed Forces of the United States a false or fraudulent claim for payment or approval;

(2) knowingly makes, uses, or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the Government;
…

"Fraudulent forms" presented to the government for payment under the Defund Acorn Act can meet the FCA definition of a "false record or statement" if provided to induce payment. Ms. Brian is half right.

The "Short Arm" of the Boehner Law
Ms. Brian is also half wrong. The Boehner Defund ACORN Act's is limited in its application to organizations that commit fraud against a "regulatory agency." Thankfully, federal “regulatory agencies” (e.g., SEC, FTC, FDA, EPA, etc.) are not to be confused with the massive, free-spending, cash-flushed, nonregulatory agencies of the federal government (e.g., the DOD, DHS, DOS, etc.). For most federal contractors, the artfully drafted, narrowed scope of the Boehner Bill provides continued safe access to taxpayer funds regardless of how many "fraudulent forms" they may have filed.

So, unless a federal contractor performed work for and made the grave miscalculation of filing false/fraudulent claims with one of the dozen or so federal “regulatory agencies,” it should be safe from the “short arm of the [Defund Acorn] law.”

But wait...while we're at it, why not "defund" ALL fraudulent contractors?

The question begged, of course, is: why do allegations of fraud by ACORN (which total "a few million dollars," at most) generate so much righteous bloviation while we hear nary a peep from the same politicians on potentially billions of dollars of fraud committed by other government contractors? Instances of malfeasance on record against other large federal contractors are on an exponentially greater scale in terms of both dollars and number of allegations.

One can’t say it much better than Rep. Boehner: “This is a matter of common sense and respect for taxpayer dollars.” That is, of course, if one can just get over the breathtaking hypocrisy displayed by House Republicans in launching its staged surgical strike against fraud.

Waste Watch: "NSFW" at the NSF

2009-09-29T12:32:00.001-04:00

The Washington Times has a front page article today on federal employees surfing for porn on the taxpayers’ dime. This quote sums it up nicely:

For instance, one senior executive spent at least 331 days looking at pornography on his government computer and chatting online with nude or partially clad women without being detected, the records show.

When finally caught, the NSF official retired. He even offered, among other explanations, a humanitarian defense, suggesting that he frequented the porn sites to provide a living to the poor overseas women. Investigators put the cost to taxpayers of the senior official's porn surfing at between $13,800 and about $58,000.

"He explained that these young women are from poor countries and need to make money to help their parents and this site helps them do that," investigators wrote in a memo.

In other news, billions in earmarks and pork for unwanted programs and equipment in the 2010 Defense spending bill, according to today's Washington Post. Maybe the real story is how accounts of government waste have become news of "dog bites man." Just as the average American child becomes accustomed to violence after seeing 18,000 "murders" on TV by age of 18, we've all become accustomed, or at least numb, to government fraud, waste, and corruption.

Corruption Watch: New Jersey Democrats Influenced FDA Approval Process

2009-09-28T13:01:00.005-04:00

Menaflex, a $3,000 medical mesh device manufactured by ReGen Biologics that was rejected three times by the FDA over concerns of medical effectiveness and potential harmful effects, was reportedly approved after former FDA Commissioner von Eschenbach intervened on behalf of Menaflex. The Washington Post reports:

The internal probe found that ReGen executives had unusual access to von Eschenbach and that approval came after he met several times with members of the New Jersey congressional delegation. The lawmakers asked von Eschenbach to handle the ReGen matter personally. FDA staff members described the intensity of congressional involvement in the case as "highly unusual," the report said.

The “New Jersey congressional delegation” includes four New Jersey Democrats: Sen. Robert Menendez, Sen Frank Lautenberg, and Reps Steven Rothman and Frank Pallone. Despite its multiple failures in securing FDA approval, ReGen turned to the New Jersey congressional delegation, spending nearly $500,000 to lobby Congress since 2007. Subsequently, ReGen’s top lobbyists, consultants, and executives have contributed heavily to the campaign funds of the four New Jersey politicians.

A September 24th NY Times article on the ReGen matter found:

F.D.A. commissioner in January, became as a result of political pressure “personally engaged in the details of a process usually coordinated” by scientific staff. One agency manager concluded that Dr. von Eschenbach “was demanding not only an expedited process but also an outcome in favor of ReGen,” the report stated.
...
The F.D.A.’s report said that its Office of Legislation began receiving calls from members of Congress in December 2007 complaining about its review of the device, and the office’s director “described the pressure from the Hill as the most extreme he had seen.”

All four members of Congress denied that ReGen’s political contributions had played any role in their efforts on its behalf with the F.D.A. and said they were merely doing their jobs by trying to help a constituent company.

So what can we do about it?

The Post article quoted Ned Feder at the Project on Government Oversight: “... in any given instance, it’s generally impossible to prove that anything improper took place.”

Of course, the “proof” that Mr. Feder spoke of presumably referred to proof of guilt in a court of law. If we hold our elected representatives to standards that we hold criminal defendants on trial, it should be no surprise that we will increasingly treat them as such. If the record low approval rates for Congress and the perceived corruption and dysfunction in Washington is any indication, the image of Congress (and the campaign financing system) is in dire need of repair.

If public financing of political campaigns is not possible at this point, then the place to start to reform the system should be to institute a rule banning conduct that constitutes an appearance of impropriety. The basic sense of fairness that ordinary people rely on in our daily lives to judge right from wrong is absent in the chambers of Congress. Imagine if our children's teachers or coaches operated the way Congress does in awarding grades or selecting youth teams!

Refusing to apply fundamental rules of fairness and to acknowledge appearances of impropriety will ensure the continued dilution of the public’s faith in the country and its government.

The Takeaways: Air Force’s New Tanker Contract Adopts the “Cage-Match” Approach

2009-09-25T17:21:00.004-04:00

The Takeaways: The KC-X contract award promises to turn into one giant "cage-match" on price (what a novel idea!).

The Air Force released the draft request for proposal (RFP) for the KC-X this morning. This is their second go at awarding a contract for the next generation aerial refueling tanker to replace the 52 year old KC-135. The first attempt in 2008 ended in failure with the GAO objecting to the award on multiple grounds.

As competitions for major DOD systems go, this latest approach promises to be quite unique. Typically, the “best value” approach used for major systems acquisitions tend to maximize DOD officials’ discretion by relying on “trade-offs” to rate and evaluate selection factors. In major systems acquisitions, massive cost overruns and rampant schedule slippages become the rules rather than the exceptions. The controversies that ensue with the purchase of each major weapon systems dilute the public’s faith and confidence in the government.

With the KC-X contract, the Air Force acquisition community may be signaling a significant shift in its approach. Their unique strategy devised for this competition relies primarily on the GO-NO GO (“acceptable-unacceptable”) approach in evaluating 373 mandatory system requirements. While there is still plenty of room for subjective evaluations of these factors, the discussions built into the process should allow ample opportunities for bidders to ultimately achieve a “GO” on all mandatory requirements. Further, the Air Force is already quite familiar with the only two viable candidates (Boeing’s version of the 767 and the EADS-Northrop Grumman’s variant of the Airbus A330). Both were competitive during the last negotiations.

Ultimately, this procurement will force bidders to compete on price. The Pentagon’s Ashton Carter said during yesterday’s briefing “this approach [favors] no one except the war fighter or the taxpayers.” Basically, competition is structured such that the lowest priced offer rated technically acceptable on all mandatory factors will win. If final bid prices are within 1% of each other (all else being equal), 93 other “additional capabilities” will then be weighed, also based on price.

The focus on price is a major change to DOD’s approach to systems acquisition. To be fair, the R&D of the next generation tanker have advanced far enough to allow for an over-riding emphasis on squeezing the lowest price out of the bidders. Both Boeing and EADS-Northrop Grumman’s airframes have been around for years. The tanker variants have also been in development for a long time, both for sale to other nation’s air forces and in anticipation of this procurement. Whichever version wins, it will be as close to a commercial product as you can get as a military system.

As a result, it’s reasonable to assume that both competitors will pass the GO-NO GO phase with flying colors. After which, the competition turns into a "winner takes all" contest in which the only way to win is beat your competitor's price.

The requirement for there to be no greater than a 1% difference in evaluated price to force a “runoff” is also very interesting. For two entirely different airplane manufacturers with different cost structures and business processes, coming in within 1% of each other should be about as likely as two bullets colliding in flight—highly unlikely… that is, unless corporate intelligence and counter-intelligence are ratcheted up to whole new level.

I predict loud complaints from industry commentators alleging that the undue emphasis on price competition will threaten performance. The government will be accused of allocating too much of the cost and performance risks to the contractor. Perhaps a gentle reminder will be in order that this is potentially a $100B contract and promises be a cash cow for the winner. Also, when the government's requirements are clearly defined in advance, businesses should be expected to be able to generate accurate fixed-price estimates. Businesses simply won't propose prices below their costs, no matter who the customer is.

In any case, the “cage-match” approach will be a new way of doing business in the chummy world of government contracting. It’s nice to see the DOD using its leverage to try to get the best possible deal for taxpayers.

Charts accompanying yesterday's Pentagon briefing below...
090924-D-6570C-001

"FED," the New Epithet

2009-09-24T12:02:00.005-04:00

The AP reports that the word "FED" was written across the hanged census worker's body. The partly decomposed body of the 51 year old part-time federal employee was found on September 12 in Clay County, KY. According to the story, Mr. Sparkman, a former Eagle Scout is a substitute teacher who supplemented his income working as a field census worker.

According to a retired Kentucky state trooper interviewed in the article who worked with Mr. Sparkman, he was warned to "be careful because people are going to perceive you different than they do elsewhere," the people where Mr. Sparkman conducted field work "can view someone with any government agency as 'the government.'"

It's early yet in the Sparkman homicide investigation but it appears that this was just another instance of the simmering backlash against the federal government boiling over into a senseless act of violence.

Unemployment in America

The government's official unemployment rate is reported at 9.7%. That number does not include laid off workers who took part-time jobs at the local library, or the "self-employed" doing odd jobs to make ends meet, or the folks who "retire" by barely scraping by on a meager fixed income. The unemployment number also does not include the other "self-employed" individual business owners, entrepreneurs, consultants, and real estate agents who may not be breaking even after expenses.

The unemployment number also doesn't factor in people who are discouraged after months of looking jobs or those who, still young and optimistic, go back to school, incurring more debt, trying to develop new skills. But that 9.7% figure meticulously factored in tens of thousands of hypothetical "jobs" that are purportedly being created by small businesses using the the dubious "birth-death model." The government's own alternative unemployment figure counting part-time workers who can't find full-time positions and "discouraged" workers is approaching 17%. Arguably, even that figure undercounts the number of unemployed and underemployed in this country.

Clay County, KY v. Fairfax County, VA

In Clay County, KY, the average home costs roughly $40,000. WorkforceKentucky.ky.gov shows that the official unemployment rate in Clay County as of July 2009 is 14.5%. Who knows what the real unemployment rate is but it's safe to say that it's well above the government's reported rate. At the height of the booming economy in 2007, the average annual income per capita in Clay County was $17,803.

Less than 600 miles away in Washington, the federal government keeps breaking spending and deficit records, while doing nothing to appreciably improve the lives of people in places like Clay County, KY. It spends trillions of dollars keeping zombie banks alive, tens of billions keeping zombie car companies alive, and hundreds of billions on defense firms that do nothing for broad swaths of the nation outside of the few congressional districts, shiny and flushed with earmark money and home to select members of Congressional appropriations and defense committees. And, of course, the federal largesse stays close to home in the Greater Washington area, where the skyline is still filling up with gleaming buildings housing defense contractors.

Federal agencies, already bursting at the seams with an in-house workforce, fight for more and more billions to outsource "critical tasks" to eager contractors. This time of year is especially frenetic, when a new fiscal year is less than a week away and this year's money is set to "expire." Those dollars ripple out into the suburbs surrounding DC where the federal and contractor workforce live. Their houses, however modest, cost multiples of what the nicest home fetches in Clay County. In rush hour traffic, they sit behind the wheel of cars that cost more than the average house in Clay County or 3-4 times more than the annual family income in Clay County.

In contrast to Clay, Fairfax County's unemployment remains below 5% during the worst economic downturn in 60 years (see chart). The average single family home in Fairfax County has dropped since the bubble burst, but still costs over half a million dollars. Education and population demographics may explain some of the difference between Clay and Fairfax but the biggest advantage for Fairfax County is that the Beltway runs through it. Fairfax County has the highest concentration of federal workers and contractors in the nation. The fortunate folks living in Fairfax County may not know it but they are sitting in front of an open refrigerator after the A/C has gone out.

Drive between any two exits on the Beltway and you'll likely see at least one "Life is good" sticker on a gleaming new vehicle. That is because life is, in fact, very good in DC.

Every ten years the Census Bureau sends people like Mr. Sparkman, as a representative of the federal government, out to places like Clay County to ask questions and to collect data from suspicious locals. They would have had no clue why Mr. Sparkman was hanged from a tree had it not been for a three letter word scrawled across his chest. And, of course, it will take time and many studies to ascertain precisely why "FED" has become the new epithet.

The Takeaways: GAO trashes DCAA (Updated)

2009-09-23T14:59:00.003-04:00

A GAO report issued today found systemic problems in audit quality across the Defense Contract Audit Agency (DCAA). The report criticized DCAA for "facilitating DOD contracting" while failing to protect the "public interest." These findings are in addition to a July 2008 report citing "impaired independence" of DCAA auditors in dealing with the DOD and contractor community, management intimidation of field auditors, as well as "shortcuts" taken by field audit offices.

The Takeaways: Given that the report found that "significant reform" at DCAA will be necessary and that DCAA's "management environment and quality assurance structure" are to blame, one wonders how secure Director April Stephenson's job is given Secretary Gates' penchant for replacing suspect leadership.

Update: GovExec.com reported on the testimony today before the Senate Homeland Security and Government Affairs Committee by DCAA and GAO officials. From the tone of the questioning, it appears that influential members of the Committee have reached a consensus on the question of whether Director Stephenson stays or goes. Here are some choice quotes cited by GovExec:

"In the world of auditing, what has been happened[sic] here is a capital crime," said Sen. Claire McCaskill, D-Mo., a former state auditor for Missouri. "There can be no bigger indictment of an agency than this GAO report."

Sen. Susan Collins, R-Maine, called GAO's findings "an epic failure by the agency and the department," while Sen. Tom Coburn, R-Okla., said he "got sick" reading the report.

"I can't understand why the management of this agency hasn't been completely changed," Coburn said.
...
"At this point, DCAA audits are a joke," McCaskill said. "If someone is not fired over this, I don't think anyone should ever take this agency seriously again."

Deserved or not, this is the most pressure that GAO and HSGAC have brought to bear against an agency director that I can recall. These heavy-handed tactics by the legislative branch against a Director in the Executive branch might even backfire if it weren't for the long record of documented incompetence at DCAA.

Secretary Gates can't be happy with so much piling on by the members of Congress but in this case, he can only direct his anger at one individual: April Stephenson.

See also a DODIG report (from August) echoing GAO's concerns here (also courtesy of GovExec).

Thoughts on "Corporate Personhood"

2009-09-23T12:25:00.006-04:00

The NY Times editorial "The Rights of Corporations" bears a quick read.

The central issue in Citizens United v. Federal Election Commission, the case concerning "corporate personhood" currently before the U.S. Supreme Court, purports to be corporate influence over the democratic process. However, excluding corporations like "Citizens United" from slinging mud or jockeying for influence with the rest of them is both arbitrary and futile, at best.

We currently live in the golden age for corporate influence over the governance of America. Corporations already employ powerful lobbyists to reach deep inside House and Senate chambers to influence policy. Notwithstanding McCain-Feingold and other efforts at campaign financing reforms, corporate campaign contributions (and, therefore, influence) are as high as ever during recent national elections.

Moreover, profit-driven corporate media outlets already provide to the highest bidders the mouthpiece to influence public opinion during and between election seasons. Media outlets, as traditional sources of "news," currently enjoy a virtual monopoly in the field of corporate protected speech. In this context, the NY Times editorial and other media objections to "corporate personhood" is sheer hypocrisy. I harbor no illusions that the New York Times Company would hesitate to assert the full panoply of rights conferred upon "persons" under the Constitution if challenged.

In this context, the antidote to excessive corporate influence in the public arena is freer speech for all, even if it means protecting corporate speech. There are plenty of constitutional and philosophical reasons to oppose "corporate personhood." However, abridging the freedom of collective voices to express dissent should not be the place to start in an attempt to address the problem of undue corporate influence.

Corruption Watch: Updates on "Murthaville"...cue Jimmy Buffett

2009-09-21T23:58:00.005-04:00

Wasted away again in Murthaville
looking for my lost barrell of pork...

I'm linking another story today on how John Murtha brings home the bacon to his district from the Washington Post and a searing expose earlier this month from the New Republic--"Murthaville, the City that Pork Built."

It's infuriating enough that Murtha (and other members of Congress on both sides of the aisle, of course) can exempt themselves and their beneficiaries from laws requiring competition in federal contracting (e.g., the Competition in Contracting Act), they have diverted billions to pet projects that frequently fill no military requirements. As a result, taxpayer money that go to earmarked projects are misappropriated for no apparent benefit, other than to enrich corporate recipients. From the Washington Post article:

"Plans are underway to move the Murtha Institute from its dormitory basement suite to a $53 million IUP athletic arena and conference center now under construction. Murtha secured a $3 million federal earmark for the building two years ago, and he sought another earmark this year before abruptly changing course as investigations of his defense appropriations and lobbying connections heated up. Murtha redirected some of that request to IUP research.

In a district that also boasts a regional airport named for Murtha and nearly a dozen other facilities bearing his name, the institute is another example of how the congressman has used federal money to revitalize this economically depressed former coal-mining region. In doing so, he has raised questions among watchdog groups and outside critics about using taxpayer money to fund projects that appear to mostly benefit Murtha loyalists.

"He who pays the most homage to Murtha is the one who gets the money," said Cathy Wentzel..."

Once again, it's akin to a money laundering scheme disguised as lawmaking:

...In steel’s place, Murtha had become Johnstown’s economic engine, keeping it afloat with a steady stream of government cash that flowed to the city’s private businesses, its hospitals, even its airport--which, like so many things in Johnstown, now bore his name. Murtha was not just Johnstown’s congressman; he was its savior.

That night in August, Murtha would raise as much as $100,000 for his reelection bid. And, in the weeks to come, others who owed their good fortunes to Murtha would direct portions of those fortunes toward his campaign. Ultimately, he matched his Republican challenger in the fund-raising contest. And, although polls taken just a few days before the election showed a neck-and-neck race, Murtha used his war chest to mount a last-minute ad blitz that propelled him to a 16-point victory. For the time being, it appeared that Bill Kuchera and the rest of Johnstown’s business community had managed to save their savior, and themselves.

“It’s like we were sitting here with four aces and we weren’t sure if we were going to bet it all or fold,” Bill Polacek, the CEO of a local defense firm, told the Johnstown Tribune-Democrat. “With that kind of hand, why would you let the opportunity pass you by?”

As I noted previously, it’s a simple formula: public money goes OUT to defense contractors in the form of earmarks and (presto) “private” money comes back INTO the politicians' coffers in the form of “campaign contributions” from the same contractors and lobbyists beneficiaries (see previous post: "Earmarks for Campaign Contributions 'Corrupt as Hell.'")

One such lobbyist firm is the now defunct PMA Group founded by Paul Magliocchetti, a former Murtha senior staffer. Federal agents raided Magliocchetti's firm and home in November 2008, prompting PMA to close up shop earlier this year. However, during PMA's existence, Murtha accepted over $2.3 million in campaign contributions from its clients and employees and "requested" tens of millions more according to the Citizens for Responsibility and Ethics in Washington (CREW).

Since Congress has demonstrated no ability to police itself, does DOJ have what it takes go up against this lengendary practitioner of pork-barrel politics?

I expect the noose to continue to tighten around the principle players in the PMA corruption probe as, with each federal indictment issued, the odds of an associate "rolling over" and "turning state's evidence" rises exponentially (read about the July indictment of former Murtha ally Richard Ianeri here). Multiple defendants, each represented by separate law firms, will generally trip over themselves in a race to secure the best deal with federal prosecutors. Trust me on this, if AUSAs (Assistant U.S. Attorneys at DOJ) are adept at anything, it's putting the prisoner's dilemma to work to get the bad guys to "come to Jesus."

GovIntegrity's INTSUM: ArmorGroup

2009-09-21T00:37:00.004-04:00

INTSUM: "Intelligence Summary"--a roundup of relevant, actionable intelligence.

20 SEP 09: David Isenberg of the CATO Institute analyzes the Gordon v. ArmorGroup, et al complaint on PrivateMilitaryHerald.com (see also GovIntegrity's comments in response to this analysis).

18 SEP 09: Gordon's lawyers, Katz, Marshall & Banks, LLP (KMB), sends letter to the Commission on Wartime Contracting raising concerns about Mr. Sam Brinkley's (VP, Wackenhut Services, Inc.) testimony before the CWC on 14 SEP 09.

16 SEP 09: GovIntegrity--ArmorGroup: It's the PICTURES, stupid!

16 SEP 09: Senators McCaskill, Collins, and Bennett from the Subcommittee on Contracting Oversight of the Senate's Homeland Security and Government Affairs Committee (HSGAC) sends letter to the State Department expressing concern about the "extremely serious allegations" against AGNA.

14 SEP 09: Hearing on ArmorGroup before the Commission on Wartime Contracting.

11 SEP 09: GovIntegrity--Gordon v. ArmorGroup at first glance.

9 SEP 09: James Gordon files complaint against AmorGroup North America et al.

1 SEP 09: POGO publishes letter to Secretary of State Clinton, including the notorious Attachment 6, pictures of ArmorGroup's "bawdy little luau."

Wage wars: Income Stagnates in America for a Decade as Federal Wage Growth Accelerates

2009-09-19T07:33:00.004-04:00

Earlier this month, the Census Bureau released its annual report on Income, Poverty, and Health Insurance in the United States for 2008. David Leonhardt of the NY Times wrote about the report's findings on income in America in “A Decade With No Income Gain:”

The typical American household made less money last year than the typical household made a full decade ago.

To me, that’s the big news from the Census Bureau’s annual report on income, poverty and health insurance, which was released this morning. Median household fell to $50,303 last year, from $52,163 in 2007. In 1998, median income was $51,295. All these numbers are adjusted for inflation.

In the four decades that the Census Bureau has been tracking household income, there has never before been a full decade in which median income failed to rise. (The previous record was seven years, ending in 1985.) Other Census data suggest that it also never happened between the late 1940s and the late 1960s. So it doesn’t seem to have happened since at least the 1930s.

With wages stagnant in America for a decade, I wondered how the average income for federal employees would compare over the same period with that of the rest of America. I expected federal workers’ salary to keep up with or moderately exceed the national average (given the annual pay raises for federal employees) but what I found was surprising wage growth in the federal public sector.

CATO Institute’s Chris Edwards, using wage data from the Bureau of Economic Analysis, published a provocative piece in August comparing the average wages of federal employees and private sector employees (Federal Pay Continues Rapid Ascent). The commentary below (accompanied by the above chart) sums up his point on wage and benefits growth in the public sector:

What is going on here? Members of Congress who have large numbers of federal workers in their districts relentlessly push for expanding federal worker compensation. Also, the Bush administration had little interest in fiscal restraint, and it usually got rolled by the federal unions. The result has been an increasingly overpaid elite of government workers, who are insulated from the economic reality of recessions and from the tough competitive climate of the private sector.

It’s time to put a stop to this. Federal wages should be frozen for a period of years, at least until the private-sector economy has recovered and average workers start seeing some wage gains of their own. At the same time, gold-plated federal benefit packages should be scaled back as unaffordable given today’s massive budget deficits. There are many qualitative benefits of government work—such as extreme high job security—so taxpayers should not have to pay for such lavish government pay packages.

How can that be accurate?

Can the commonly held notion that public sector employees are underpaid compared to their counterparts in the private sector be that far off? Has Edwards managed, using the government’s own data, to prove the existence of the oft-whispered theory about a growing “elite” cadre of “overpaid” federal government bureaucrats?

Well, not quite, at least not based on the data on which Edwards relied. While I rarely pull punches in criticizing our bloated, inefficient government, I am unwaveringly committed to the principles of fairness and objectivity. There are more than enough government scandals involving fraud, waste, and corruption that one doesn't need to construct windmills to tilt. So, as troubling as the discrepancy between federal and private sector income data may appear to be at first, there is a rational basis that underlies much of the difference.

First, decades of “outsourcing” strategies relentlessly executed over several administrations have reduced the size of the federal workforce from 2.8 million employees where it was over two decades ago, to roughly 1.8 million today. This “downsizing” was achieved by hiring freezes and by the implementation of federal rules such as “Circular A-76” mandating the outsourcing of “commercial activities” to the private sector if costs savings can be realized. As a result, jobs that warranted lower pay (blue-collar and clerical jobs) were being outsourced or otherwise eliminated from the federal government. When federal agencies began hiring again after 9/11 to fill shortfalls and to meet the requirements of new bureaucracies such as the Department of Homeland Security, only higher paying management or technical positions were added. In addition, those federal positions that “survived” the A-76 competitions either performed “inherently governmental functions” or were proven (by definition) to be more cost-effective to keep in-house.

Moreover, as the predominantly boomer-aged federal workforce continues to gray, personnel turnover is also kept to a minimum. A myriad of factors likely contribute to the low employee turnover rate, with the "service ethos" shared by many public sector employees (placing a lower premium on pursuing personal profits) being at least as significant as the “golden handcuffs” phenomena about which Edwards hypothesized.

In any case, the number of new hires with entry-level salaries can hardly offset the higher salaries commanded over a career of service by the vastly greater number of older professional employees in the federal government. The demographics of the federal workforce skew heavily toward older, professional, technical experts and managers. Skilled and unskilled labor, which comprise the bulk of national income data, have simply been outsourced (along with all other "commercial functions") by the government due to congressional mandate. Comparing national to federal income averages is like comparing apples to apple pie.

In future posts, I will discuss how the true number of workers in the federal government is disguised and how federal salaries have more than kept up with the salaries of equivalent workers in the private sector. There may be something to those “overpaid” and “elitist” claims after all. Stay tuned.

(Updated) ArmorGroup: It's the PICTURES, stupid!

2009-09-16T23:41:00.011-04:00

In barely two weeks since the photos of ArmorGroup’s "bawdy little luau" went public, we have seen the Commission on Wartime Contracting (CWC) order a hearing, over a dozen guards fired, an entire Armorgroup management team replaced, executives and officials from Wackenhut (ArmorGroup's parent corporation) and the State Department testify before the Commission, and a civil complaint filed by a former manager against ArmorGroup.

Forget the Project on Government Oversight’s 10 page letter to the Secretary of State detailing numerous violations by ArmorGroup, nevermind the numerous allegations against ArmorGroup that preceded these, this level of damage control can only be triggered by one thing and one thing only: pictures, baby, P-I-C-S!

Let's face it, nothing triggers "damage-control" mode in Washington faster than a scandal illustrated by flesh toned pictures. Pictures, even relatively innocuous ones like those of the "bawdy little luau," can launch hearings, inquiries, and investigations by Washington's "photophobic" bureaucrats. Conversely, without photographic evidence, you can just about get away with murder.

Time and again, the same lesson is repeated: it's never the drugs, booze, prostitutes, sex slaves, illegal weapons, or contraband that are the biggest threat to interrupt the gravy train of contract dollars, it's always the camera phones/digital cameras.

Update: response to reader comment.

Question: "So true. Interested to have your thoughts on whether the Abu Gharib photos should be released."

My response: First, thanks for reading GovIntegrity and for your question. This is a very close call for me because the photos have the clear potential to exacerbate anti-American sentiment around the world.

The problem that I have with the argument to withhold the remainder of the Abu Ghraib photos from the public is that this decision seems to run counter to the official insistence that this conduct was isolated and "out of bounds." If the world is to believe that Graner et al acted with neither authority nor official sanction, the government should treat these photos the same as any other evidence of a crime. They should release them with the conviction/sentencing information for each of the soldiers depicted prominently stamped on each picture.

If this nation survived the photos of the My Lai massacre, we can survive the pictures from Abu Ghraib.

The Takeaways: Taking the "Tort" out of Torture

2009-09-15T17:40:00.008-04:00

The Takeaways:

1. The DC Circuit Court sends a message to military contractors: “yes, you can get away with ‘torture’” (or at least avoid having to defend against allegations of torture and prisoner abuse) if and only if [ahem, legal-disclaimer-announcer-guy voice] "during wartime, where a private service contractor is integrated into combatant activities over which the military retains command authority, a tort claim arising out of the contractor’s engagement in such activities shall be preempted."

2. Wait…hold up…what does “integrated into combatant activities over which the military retains command authority” really mean?

We know what it doesn’t mean: contractors working under performance-based contracts. The court specifically acknowledges that its holding in this case does not extend to contractors performing under “performance-based statements of work.” This concession to the dissent (cited below) renders the "preemption" defense an exceedingly narrow one and ensures that future cases will hinge upon the question of whether the contractors being sued are sufficiently “integrated into combatant activities.”

Performance-based contracting, (read the FAR definition here) the approach of structuring contracting terms and objectives around the desired outcome rather than specifying the manner in which work is to be performed, is now so prevalent as the government’s preferred method of contracting for services that this limitation will essentially render this case meaningless to the majority of defense contractors performing services world-wide.

The Background: Saleh v. Titan is a class action (250 plaintiffs) lawsuit brought against private contractors CACI International Incorporated and Titan Corporation (now L-3 Services). It charges the companies with torture and other unlawful acts while they were providing interrogation and translation services at Abu Ghraib. Here are the court’s stated rationales for its rulings:

The very purposes of tort law are in conflict with the pursuit of warfare. Thus, the instant case presents us with a more general conflict preemption, to coin a term, “battle-field preemption”: the federal government occupies the field when it comes to warfare, and its interest in combat is always “precisely contrary” to the imposition of a non-federal tort duty. Boyle, 487 U.S. at 500.

Be that as it may, there are specific conflicts created if tort suits are permitted. Of course, the costs of imposing tort liability on government contractors is passed through to the American taxpayer, as was recognized in Boyle. More important, whether the defendant is the military itself or its contractor, the prospect of military personnel being haled into lengthy and distracting court or deposition proceedings is the same where, as here, contract employees are so inextricably embedded in the military structure. Such proceedings, no doubt, will as often as not devolve into an exercise in finger-pointing between the defendant contractor and the military, requiring extensive judicial probing of the government’s wartime policies. Allowance of such suits will surely hamper military flexibility and cost-effectiveness, as contractors may prove reluctant to expose their employees to litigation-prone combat situations.

Further, given the numerous criminal and contractual enforcement options available to the government in responding to the alleged contractor misconduct–which options the government evidently has foregone–allowance of these claims will potentially interfere with the federal government’s authority to punish and deter misconduct by its own contractors. See, e.g., Buckman Co. v. Plaintiffs’ Legal Comm., 531 U.S. 341, 350-53 (2001).

The inclusion of the language "numerous criminal...enforcement options" in that last paragraph deserves comment. Given the state of federal laws (then in existence) providing jurisdiction over civilians accompanying the armed forces, the ability to exercise criminal jurisdiction over the contractors involved was a tenuous proposition, at best . Unable to prosecute the contractors themselves, the military command nevertheless referred three contractors to the Department of Justice for disposition. Not surprisingly, DOJ declined to file charges.

"Performance-based" contractors are not eligible for the preemption defense under Saleh (from pg 17 of the opinion):

We believe, compare Dissent Op. at 21-22, our decision is consistent with statements made by the Department of Defense in a rulemaking proceeding after the alleged events in this case in which it stated that “[t]he public policy rationale behind Boyle does not apply when a performance-based statement of work is used in a services contract, because the Government does not, in fact, exercise specific control over the actions and decisions of the contractor . . . .” Contractor Personnel Authorized to Accompany U.S. Armed Forces, 73 Fed. Reg. 16,764, 16,768 (Mar. 31, 2008) (emphasis supplied). Because performance based statements of work “describe the work in terms of the required results rather than either ‘how’ the work is to be accomplished or the number of hours to be provided,” 48 C.F.R. § 37.602(b)(1), by definition, the military could not retain command authority nor operational control over contractors working on that basis and thus tort suits against such contractors would not be preempted under our holding."

Now, this significant concession by Judge Silberman is, of course, non-binding dicta. It just seems unusual to me for the court to acknowledge in advance that its holding will not even apply to the majority of service contracts and contractors out there. What might Judge Silberman's motive(s) be for including this language? Here are some possibilities:

1. He is acknowledging the validity of an objection raised in the dissenting opinion and wants to clarify the limitations of the court's holding;

2. He is providing government acquisition professionals a roadmap to build contractor immunity into their contracts; and/or

3. He is preemptively defending his opinion against a likely appeal to the U.S. Supreme Court.
Saleh v. Titan DC Circuit decision (Sept. 11, 2009)

Corruption Watch: USMC Master Gunnery Sergeant Lopez Court-Martialed for Taking $67,000 in Bribes

2009-09-14T22:33:00.003-04:00

The local paper at Camp Lejeune reports last week that a Marine Corps Master Gunnery Sergeant with 26 years of service serving as a contracting officer Fallujah for 5 months in 2005 pleaded guilty at court-martial to taking $67,000 in bribes from three contractors in Iraq. Lopez was sentenced per his pre-trial agreement (which limits his exposure at sentencing to a maximum punishment negotiated by his defense lawyer) to:

-- a reprimand;

-- total forfeitures of all pay and allowances;

-- a $10,000 fine;

-- reduction to E-6 (still a respectable pay grade); and

-- 89 days of confinement.

That strikes me as awfully light punishment (yes, lighter than... bird feathers). Solid defense work all around by the Lopez legal team considering that, in pursuit of a personal payday amounting to more than twice the annual salary of a USMC private deployed to Iraq, Lopez betrayed his fellow Marines, ripped off the American taxpayers, and breached his fiduciary duty to his country, all accomplished in only 5 months on the job as a contracting officer. To top it all off, it appears that in a matter of weeks, SSgt. Lopez will get to retire as an E-7 receiving a full pension, VA benefits, an honorable discharge, and all the rights and privileges of a Marine who served honorably:

“Lopez was not discharged due to the pre-trial agreement, which suspended a possible discharge, reduction below E-7, confinement, forfeitures and any fine of more than $67,000 for one year, according to Marine Corps Forces Central Command. Also as part of the pre-trial agreement, Lopez is required to cooperate with government investigators and return the money he received and still possessed.
Lopez is, however, required to submit his retirement package within 30 days, said Griesmer.
“He will submit for retirement at an E-7 within 30 days; that was part of the agreement. … He is agreeing to testify and cooperate fully on other cases contracting-related,” he said.”

The trial of Master Sergeant Terence O. Walton, who also served as a contracting officer for the USMC in Fallujah, is up next. Hopefully, it will make sense then why the military prosecutor essentially rolled over on the Lopez pre-trial agreement. As for the three contractors who bought themselves another contracting officer (or two), I wouldn't hold my breath waiting to see footage of any executives doing the "perp walk." These are local outfits that, if history holds, will be dissolved and reoganized as other firms before the ink dries on the debarment letters.

Gordon v. ArmorGroup at first glance

2009-09-11T08:40:00.006-04:00

Read WashingtonPost article here.

At its heart, this case is nothing more than an employment dispute. The bulk of the sixty-six page complaint alleges a multitude of violations by the various defendants. It ambitiously inventories an impressive array of international legal and human rights transgressions by invoking the False Claims Act (FCA), the International Traffic in Arms Regulations (ITAR), prohibitions against human trafficking, obstruction of justice, fair labor practices, lying to government personnel, lying to Congress, breach of contract, and so on. One is led to wonder why this is not a sealed complaint under the Qui Tam provisions of the False Claims Act. After all, if the allegations are true, it would seem that the U.S. government is the true victim and Mr. Gordon would therefore have no legal standing to sue outside of the "whistleblower" (Qui Tam) provisions of the FCA.

It is not until page 56 that the complaint begins detailing the real causes of actions: unlawful retaliation against Gordon's "whistleblowing," tortious interference with contractual relations, wrongful discharge in violation of public policy, and common law conspiracy. Now, I may not be a tort lawyer but it occurred to me that one (or two) of the counts appear to be a rather "novel" application of the law. While it's certainly understandable why Gordon's lawyers had to "go there" with regards to the more serious allegations, it does seem like a huge tease to raise, but not follow through with, a False Claims Act suit.

A possible answer is that Qui Tam action under the FCA is required to be filed under seal (in total secrecy). Perhaps Mr. Gordon's legal team made the tactical election to drop this case before the dust settled from the POGO letter to Mrs. Clinton (with its lurid photographs). Perhaps settlement talks between ArmorGroup and Mr. Gordon broke down and the window to capitalize on the public's 15 minutes of outrage was closing.

In any case, if there is any merit whatsoever to Mr. Gordon's underlying allegations, we should hope to see DOJ following up with civil if not criminal actions against ArmorGroup and their personnel. Of course, this development, if it were to happen, would beg the question of where the adult supervision (aka contract oversight) over these "lost boys" was all along. All this, if true, stems from poor oversight, outright incompetence, and a complete abdication of responsibility by the government personnel involved.

090909- Gordon Complaint

Corruption watch: System of congressional earmarks for campaign contributions “corrupt as hell.”

2009-09-10T11:06:00.003-04:00

The Center for Public Integrity just released a report finding that twelve of the sixteen members of the influential House Appropriations Defense Subcommittee, including chairman John Murtha (D-PA), are involved in the ethically-challenged practice of rewarding former staffers and personal friends cum lobbyists with over $100 million of defense earmarks in 2008 alone. Earmarks are an annual ritual during the appropriations season whereby hundreds of millions of taxpayer dollars are diverted to reward the most connected contractors in a way that circumvents competition requirements for contract award. Because earmarks are specifically written into an appropriations bill and take on the force of law, they allow the business competitors of earmark beneficiaries zero legal recourse. Worse yet, earmarks take away from the total defense budget for operations and maintenance (O&M) to procure items or services that are frequently neither suitable nor required by our men and women in uniform.

From The Center for Public Integrity's "The Murtha Method":

“The Secretary believes there is a very real tradeoff with very real consequences when Congress adds money we didn’t ask for,” said Geoff Morell, the Pentagon’s press secretary, because “in an era of constraint which we’re entering, congressional additions are causing us to take money from programs that we view as more important.”

“So it comes at a cost to us, even if the up-front money is appropriated above and beyond what our budget request is,” Morell said. He used as an example the C-17 cargo plane, which has been repeatedly added to the defense budget the past several years. “Despite the fact that it’s a terrific plane, we have enough of them,” he said. And it’s not just about buying more planes. “Once they’re bought,” he added, “we have to maintain them, we have to staff them, and provide logistics.”

Former Senate staffer Wheeler goes farther. He says that earmarks are rarely additions to the budget, but are often funded by reducing the Defense Department’s operations and maintenance accounts — critical accounts used to keep troops supplied and trained and to repair vehicles and equipment

Of course, the flowing generosity of our elected representatives (on both sides of the aisle) is to be reciprocated in kind by the corporate beneficiaries of earmarks. It’s a simple formula really: public money goes OUT to defense contractors in the form of earmarks courtesy of lobbyist friends and former-staffers of our members of Congress… and (presto) “private” money comes back IN the politicians' coffers in the form of “campaign contributions” from the same contractors and lobbyists.

The Takeaways: In any industry other than politics, the practice of "earmarks" might easily be confused with a kickback or a money laundering scheme.

Fraud Watch: Jeff Mazon, former KBR manager, sentenced

2009-09-09T22:34:00.000-04:00

Fraud Watch: Jeff Mazon, former KBR/Halliburton manager, receives a sentence from the U.S. District Court at Rock Island, IL that’s… lighter than bird feathers.

Mazon, a contract manager for KBR/Halliburton under the Army’s LOGCAP III contract in 2003, awarded a fuel subcontract to La Nouvelle for $5.5 million. For a massive contract like LOGCAP III (providing the full range of logistics support and services to the troops) and one that had a constant “burn rate” in the hundreds of millions of dollars per month, this subcontract award may have seemed like a tiny drop in the proverbial bucket. Except that what started out as a $685,000 bid for subcontract by Kuwaiti company LaNouvelle was inflated by Mazon into a $5.5M bid and a subcontract award to the same bidder.

The government initially offered proof of a kickback from LaNouvelle to Mazon in the form of a $1 million check made out to him by a LaNouvelle executive (the cookie or the crumbs, we wonder). At two separate trials, Mazon’s defense team managed to secure mistrials, forcing the government, four years later, to accept the defense’s offer of a guilty plea by Mazon for making a false statement—a misdemeanor.

Mr. Mazon will spend six months of his one year probation on home confinement and pay a $5,000 fine feeling lighter than bird feathers, no doubt.

The takeaways: The five words that a DOJ prosecutor fears the most are “THE DEFENSE PLEADS ‘NOT GUILTY.’” When it comes to prosecuting procurement fraud cases, if you take out all the plea bargains and the civil settlements, you can just about count on one hand the number of major convictions secured by an Assistant U.S. Attorney in court.

The Takeaways: Feds to Field New Contractor Database -- Federal Awardee Performance and Integrity Information System

2009-09-06T23:08:00.001-04:00

Read the draft rule here

The Takeaways: A draft federal acquisition rule has been released establishing the new federal contractor database mandated by the 2009 Defense Authorization Act. The Federal Awardee Performance and Integrity Information System (FAPIIS) will provide contracting officers a single source for determining contractor past performance and responsibility. This “single bellybutton” approach, if executed correctly, can be a huge improvement over the current patchwork of disorganized, incomplete, and laughably primitive databases currently in use by contracting officers. A contractor may also access the proposed FAPIIS to post comments/responses to government entries as well as to certify convictions and civil judgments against the corporation or its officers. The system will not be open to the public.

Contractors Gone Wild: ArmorGroup's bawdy little luau

2009-09-06T19:20:00.001-04:00

"This is our island. It's a good island. Until the Grown-ups come and fetch us, we'll have fun..." Lord of the Flies

Here is the missing "Attachment 6" to the report that POGO removed from its site. Scroll down to view the "wrong on so many levels" pics...

Fraud (and Corruption?) Watch: Two Contractors Plead Guilty for Receiving Bribes and "Influencing" Contract Awards

2009-09-04T19:07:00.001-04:00

According to the charges filed today in the U.S. District Court in Brooklyn, N.Y., Darryl Jay Johnson and Henry Maldonado sought and received cash and valuables from companies doing business with the Ft. Hamilton Transportation Office from at least as early as September 2003 until at least September 2008. In exchange for those bribes, they "influenced" the award of contracts to those companies. The former inspectors have pleaded guilty to one count each of bribery.

Uhh…say again, over? How could these contractors exercise any “influence” whatsoever in the award of contracts to those companies who bribed them?

Awarding a government contract is an “inherently governmental function.” The fact that, in certain government circles, contractors can just pay off other contractors (without even bothering, apparently, to put government officials on the payroll) to receive “favorable treatment” on contracts billed to the American people shows that something is very very wrong in the state of government procurement. Nevermind that this case may expand my definition of “corruption” beyond misconduct committed by government officials, this case supports the concern of many that private contractors are performing functions that are either inherently governmental or closely related to inherently governmental, like awarding or “influencing” the award of government contracts.

Read DOJ Press Release here.

Contractors Gone Wild: POGO Letter to Secretary of State Hillary Clinton

2009-09-04T19:07:00.000-04:00

Here is the letter from the Project on Government Oversight to the Secretary of State.

Pogo.agna.Clinton

Fraud/Corruption Watch: Former U.S. executive pleads guilty to bribing UK official

2009-09-02T23:30:00.000-04:00

Executive from an American defense firm pleads guilty to bribing a UK Ministry of Defense official in order to “obtain a lucrative equipment contract with the U.K. Royal Air Force.” The US-UK connection in this case is a wrinkle on your typical Foreign Corrupt Practices Act (FCPA) case. These cases typically involve a major defense contractor buying off officials from a third-world nation with direct payments. Because public corruption is still relatively frowned upon in the UK, Mr. Smith had to go through the trouble of creating a “sham marketing agreement between [Pacific Consolidated Industries LP] PCI and a relative of the UK-MOD official to facilitate the payment of bribes.” Oddly, while Smith pleaded to making more than $70,000 in bribe payments using this arrangement, the British official “pleaded guilty in the United Kingdom to accepting more than $300,000 in bribes from PCI and was sentenced to two years in prison.”

A couple of questions come to mind:

1. Why the discrepancy in dollar figures? I’ll take a stab at an answer: plea agreements are based on what the Assistant U.S. Attorney (AUSA) can prove, which can range from the crumbs on a crook’s face to the cookies in the crook’s hands when he’s caught raiding the cookie jar. So...unless someone is minding the pantry, who really knows how many cookies have been gulped down when the cookie jar is raided?

2. Will PCI be suspended/debarred from doing business with the U.S. Government?

DOJ.SmithPCI.SEP09

Fraud Watch: USAID contractor pleads guilty to conspiracy to solicit kickbacks

2009-09-02T19:08:00.000-04:00

Fraud Watch: an Oklahoma man working for a USAID contractor pleaded guilty on September 2, 2009 to conspiracy to solicit kickbacks from private security contractors in return for award of security subcontracts to protect USAID officials. No dollar amount was specified in the press release.

Doj.burrows.sep09

The Takeaways: Wartime Contracting Commission Contractor Business Systems Hearing

2009-08-31T23:03:00.006-04:00

The Logistics Civil Augmentation Program (LOGCAP), a multi-billion dollars per year DOD contract for logistics services, is the model of a bumbling organization and a labyrinthine process put in place to perform “oversight” over some of the savviest heavy hitters in the defense industry. As introduction, here are the players from industry who perform the work under LOGCAP: current LOGCAP 4 contractors KBR, Fluor, and DynCorp. On the government side, we have the dysfunctional threesome of: (1) the Procurement Contracting Officer (PCO) who awards all the contracts in this several billion dollars a year contract for logistics services works out of Rock Island, a sleepy Army installation on the Mississippi River in western Illinois; (2) the Defense Contract Audit Agency (DCAA), who performs contract services using strict auditing standards; and (3) the Defense Contract Management Agency (DCMA) who fields a small army to administer and provide “quality assurance” on the LOGCAP contracts.

The DCAA has announced that, for years, LOGCAP contractors have had business systems in place that are inadequate to perform critical contract functions such as estimating performance costs, awarding subcontracts, and generating reliable invoices for providing accurate billing to the government. The Contract administrators at DCMA disagree with DCAA’s audits and, not bound by DCAA’s “advisory” reports, use their own relaxed standards to upgrade contractor business systems to “adequate” for ease of contract management. The Army PCO, caught between the squabbling between the two Defense agencies and the need to provide services to our deployed troops, not surprisingly, side with DCMA’s more forgiving assessments of contractor business systems to facilitate award of billions after billions of contracts. The end result is that the troops are fed and comfy (until they’re not, but that’s a topic for later) and our three contractors are destined to be locked in contract billing disputes in perpetuity against the not-so-fearsome threesome on the government side.

The Takeaways: LOGCAP contractors are relying on internal and public squabbling within government as an excuse for not having compliant business systems (“…we [the government] kind of got a Hatfields and McCoys situation…” pg. 14). In other words, it’s the three headed hydra from industry v. the Three Stooges from our government, folks.

Full transcript here: August 11, 2009 Hearing on LOGCAP Contractors' Business Systems

The takeaways...

2009-08-31T02:05:00.000-04:00

This week, I'm starting a new regular feature called "the takeaways..." My goal on "the takeaways..." is to sum up the salient points of a document (whether it is an audit, a report of investigation, a testimony transcript, legal filing, haiku, etc.) into a few pithy sentences in plain English (sort of like twitterature, just more...desiccated, but hey, look at what I'll have to work with).

House Oversight Committee to Review Army Procurement

2009-08-27T17:47:00.003-04:00

Two weeks after the Washington Post publishes Robert O'Harrow, Jr.'s story about a "cozy" relationship between George Raymond, a senior Army procurement official, and his (ahem) favored female contractor, Catherine Campbell ("A $191 Million Question"), O'Harrow gives us the scoop on an inquiry into the case by the House Oversight and Government Reform Committee. From yesterday's WaPo--House Panel Begins Broader Review of Procurement System (8/26/09):

The examination by the Oversight and Government Reform Committee is a step toward a broader "investigation of problems with the Federal procurement system," said an Aug. 20 letter signed by Chairman Edophus Towns (D-N.Y.).

Committee investigators are seeking files from the Merit Systems Protection Board that contain e-mails, Army reports and other documents related to contract awards in 2005 and 2006 that were worth up to $191 million.

"We are examining events surrounding the award of certain contracts involving the U.S. Army's Communications-Electronics Command (CECOM)," the Towns letter said.

What yesterday's article lacked in precious snippets of compromising emails between two ethically-challenged government procurement bureaucrats this time around, it certainly made up for in the seeming absurdity of the HCOGR initiating an investigation into an Army procurement by requesting personnel files from the Merit Systems Protection Board.

Huh? The "MSPB" is the federal government's process for hearing appeals on personnel actions. It has precious little to do with the Army's procurement system, other than the red tape, that is. Requesting MSPB files as a way to investigate a contract award is sort of like a mechanic looking in the trunk when you take your car in for service.

Since the rabidly tenacious Henry Waxman (D-CA) left the chairmanship of HCOGR to chair the House Energy and Commerce Committee earlier this year, the HCOGR has scarcely been heard from. Most conspicuously, it has essentially disappeared on matters involving defense contracting. Essentially overnight, the committee that became the bane of Halliburton's existence suddenly grew timid on procurement matters.

Did the kid gloves come back in performing its "oversight" mission over contracting activities by the Executive Branch during Obama's honeymoon? Or perhaps new chairman Edolphus Towns (D-NY) simply lacks his predecessor's appetite for raking government and defense industry executives over the coals?

Has the HCOGR forgotten how to conduct an investigation into an Army procurement? To be fair, there's no doubt that a certain whistleblower may have tipped the HCOGR staff on the potential for fertile ground contained in the MSPB files. Nevertheless, the image of the vaunted HCOGR poring over scraps of personnel files for signs of procurement irregularities while leaving the Army procurement officials and corporate executives involved free to conduct business as usual leaves us just a little befuddled.

Why "fraud, waste, and corruption"?

2009-08-25T17:50:00.003-04:00

“Fraud, waste, and abuse,” just a mantra?

Government watchdogs, inspectors general, the media, and even private citizens have, for as long as I can remember, referred to instances of government mismanagement of taxpayer money as “fraud, waste, and abuse.” A google search of “fraud, waste, and abuse” yielded 760,000 hits. Not surprising were the links to the GAO, Recovery.gov, Treasury, various state/local governments, HHS, DOJ, DOD, HUD, DOL, and an alphabet soup of governmental agencies, departments, and offices. Somewhat unexpected were the references to “fraud, waste, and abuse” not involving tax dollars in organizations such as AAU youth basketball. The phrase commonly refers to the misuse of public funds but its increasingly widespread use outside of the public context suggests that “fraud, waste, and abuse” enjoys a firm place in the national lexicon.

But what does “fraud, waste, and abuse” mean? A little deconstruction of the phrase may be in order here.

Deconstructing “fraud, waste, and abuse.”

The terms “fraud” and “waste” are easily defined. Criminal “Fraud” is intentionally deceptive conduct performed either for personal gain or to damage a victim. Civil fraud under common law requires a material false statement, knowledge of its falsity by the perpetrator, reliance on the material false statement by the victim, and damages/losses suffered by the victim. Generically, “fraud” describes a number of separate criminal and civil offenses that may be perpetrated by contractors in the world of government procurement.

Whereas fraudulent conduct universally requires proof of knowledge, there is no such requirement to allege “waste.” “Waste” results from unnecessary and reckless expenditures of funds that may not amount to fraud due primarily to a lack of (or inability to prove) criminal intent. “Waste” tends to have systemic causes in that it often arises from poor oversight, inefficiencies, and/or ineffective internal control systems or practices. As such, “waste” is attributed to governmental agencies/organizations and companies as a failure of oversight.

What, then, to make of the use of the word “abuse”? While this definition may be too narrow, “abuse” relates to the misuse of public office or governmental authority for personal gain. The word “abuse” very clearly connotes intentional conduct—government officials can scarcely abuse their authority or public office while remaining completely oblivious of the knowledge that such conduct is wrong. In my opinion, the word “abuse” is also intended to depict unsanctioned, isolated, back-room irregularities performed by “rogue” government employees. Out of the gate, categorizing potentially illegal conduct by government employees as “abuse” of official position is, implicitly, an exoneration of the organization, its chain of command, and perhaps its culture. It would be difficult to attribute abusive conduct to anyone (or anything) other than the abuser.

It seems to me that the logic of the “fraud, waste, and abuse” mantra is that it suggests that “rogue” actors are to be blamed for breakdowns in the system while institutional failures that waste public funds are, by definition, wholly unintentional and unattributable (legally, anyway) to organizational leadership.

Why “corruption”?

There is a more precise term for “abuse” and that is “corruption.” Corruption is the use of the inherent authority and influence of public office for personal gain. Offenses such as bribery, graft, extortion, embezzlement, illegal kickbacks, etc. are all examples of corruption when committed by government employees. Corruption, however, does not implicitly exonerate the organization or the supervisory chain. To the contrary, the most common definitions of the word “corruption” (according to Merriam Webster’s Dictionary) are “1 a: impairment of integrity, virtue, or moral principle: depravity” and “b: decay.”

Outside of prosecutorial circles, government agencies understandably tend to avoid using the word “corruption.” You’d be hard-pressed to find official agency hotlines called “fraud, waste, and corruption.” “Corruption” carries with it the unmistakable connotation of rottenness and internal decay. From where I sit, this is often neither an unfair nor inaccurate characterization of the the way in which government spends taxpayer money. For these reasons and in the interest of precision, I prefer to use “fraud waste, and corruption” to describe the primary focus of this blog.

Why GovIntegrity?

2009-08-24T17:01:00.001-04:00

Runaway government spending is foremost on the minds of many Americans today. Awarding government contracts is a major component of the federal budget. From fiscal year fiscal year (FY) 2000, total annual contract awards have more than doubled. To put our federal contracting system in perspective, the federal government is expected to spend more on contracts than the entire annual budgets of countries such as Russia, Canada, Australia, Spain, India, etc. In 2009, our federal procurement system will award more contracts than the entire annual spending budgets of 216 out of the 223 nations in the world.

At GovIntegrity, we seek to provide you with timely, incisive, and nonpartisan commentary on the successes and failures of government contracting. We intend to do so using common sense and plain language to encourage discourse toward the ultimate goal of making our government more responsive and accountable.

Spending Growth in Government Contracting

From USAspending.gov