DARPA Awards Contract to Company Founded by Agency Director

By Rhya Ghose

We’re all for family bonding, but in some situations, it just may not be appropriate. Consider the case of Regina Dugan, director of the Defense Advanced Research Projects Agency (DARPA). DARPA awarded a contract valued at $400,000 to a company that Dugan and her family founded. Dugan established RedXDefense along with her father and uncle in 2005 and holds over $15,000 of stock in the contractor, according to her Notice of Disqualification.

As indicated by her recusal memo, Dugan has agreed to refrain from issues dealing with RedXDefense for the two-year threshold outlined by ethics requirements set forth by President Obama. However, DARPA’s leading lady balances on an ethical tightrope by holding on to RedXDefense’s stock, given that the company vies for contracts with the agency. Keighan Gabriel, DARPA’s deputy director, insisted to The Hill that, “program and funding decisions ‘never’ reach the level of the director or the deputy director.”

RedXDefense’s contract fulfills a Broad Agency Announcement (BAA) outlining a widespread effort to expand the science and technology capabilities of the Department of Defense. The BAA also sets guidelines for the selection of contractors, noting that the government must police conflicts of interest that Program Managers might have. As Danger Room mentions, the document “doesn’t say anything about their bosses undergoing similar scrutiny.”

DARPA’s spokesman Eric Mazzacone did not comment to Danger Room on the selection process for the contract. “He didn’t answer questions about whether the contract was awarded competitively or what the criteria were for giving RedXDefense its $400,000,” write Noah Shachtman and Spencer Ackerman.

While Dugan supposedly had no part in selecting RedXDefense for the contract, as AllGov’s David Wallechinsky writes, “it surely must have come as a pleasant surprise to learn that DARPA’s contract management office had chosen the company she founded to do work for DARPA.”

So is it nepotism or merely a fair dealing between a government agency and what so happens to be the agency director’s former company? We cannot be sure yet, but the facts so far certainly don’t inspire confidence.

Danger Room reports that it has filed a Freedom of Information Act request for more documents related to the issue.

Rhya Ghose is an intern at POGO.

Image by Flickr user Joe Mud, used under Creative Commons License.

Comments

[RL]

Ken Gabriel had a similar setup in Pittsburgh while at CMU. State funding went through the MEMS department and ended up at his company, Akustica. He collected salaries from the company and the univ. at the same time. His title and position helped him land this funding, and that was coupled with a large amount of private angel and venture financing.

Akustica burned through over $77m in nine years before being "acquired" (for a fraction of the above...approx. $4-6m) by Bosch (which also is a big supporter of CMU and apparently did him and the school a favor as the company certainly would have went bankrupt). After the CEO and other staff was fired and used as scapegoats, before Bosch came in, he suddenly disappeared and ended up at DARPA due to his close relationship with Dugan. He certainly needed a job after Akustica but somehow managed to avoid the Akustica blow up. To date none of his startups have been successful. The only one in business is the "MEMS Industry Group" he founded and was seeded with money from....DARPA (AFTER he worked there the first time...)

The conflicts of interest in academia and what is mentioned here pales in comparison when realizing that the government funding also ends up in projects that include foreign nationals on the payroll, masters and Phd engineering and science students, who very openly transfer the tech and know how overseas. Federal and state government money funding these projects that violate conflict of interest and self-dealing rules is one thing, but when they also greatly expose the US to serious national security risks, someone needs to take notice...and action.

Would be interested to hear more from former DARPA program managers who worked there while he was there....

[Roseann]

Business as usual, same dealings with Cheeney and Rumsfeld. The revolving door between public and private sectors...many politicians are involved in these cost ++ no bid gov. contracts.Politicians like Nascar drivers should wear patches on their suits with the logos of the corporations they support and show the whores that they truly are.

[UnderRepresented]

Ken Gabriel is blowing smoke. I was a program manager at DARPA. The truth is, ALL program and funding decisions reach the level of the Director and Deputy Director.