The Project On Government Oversight (POGO) Blog

GAO Sustains 2nd Protest Over Rescue Helicopter Contract

Yesterday, Lockheed Martin and Sikorsky prevailed for the second time in protesting the Air Force’s handling of the contentious $15 billion CSAR-X search and rescue helicopter contract. POGO has been closely observing a growing series of questions which plague the contract including internal emails which may reveal the Air Force intends to continue steering the contract to current winner Boeing, and questions whether Boeing's helicopter meets contract requirements for such issues as downwash brownout and deployability. Here’s the Government Accountability Office’s statement which is not yet on line.

Govt Favors to Oil Industry Come Home to Roost

Congratulations are in order for the State of California which won a smack down summary judgment last night in a lawsuit to hold the Department of Interior (DOI) accountable for allowing major oil companies to cash in on the nation’s natural resources. In one of many examples of how she abused her authority to aid industry, former DOI Minerals Management Service Director Johnnie Burton issued a memo in 2002 which instructed the agency to drop efforts to collect royalties which were ripped off from government. In a notably lucrative favor to oil companies as well as mining companies, the memo went beyond the statute of limitations set by Congress and extended the write offs to royalty collections on minerals as well, even though Congress had not included. When the State of California moved to collect $44,000 in oil royalty underpayments from Area Energy LLC, the company appealed the collection to Johnnie Burton who supported the company’s efforts to fight the collections. The court overruled her decision and now Area will pay up its royalties.

No one knows how many hundreds of millions Johnnie Burton and her cohorts allowed oil, gas, and mining companies to pocket on her watch. It will take years of litigation, investigations and oversight to unravel the mess.

Another rumor on the grapevine is that Lucy Dennett, Associate Director of Minerals Revenue Management (MRM), may be leaving. Numerous investigations into misconduct and criminal activity are pending against the agency. Perhaps in a sign of what's to come, her "Associate Director's page on the MRM's website is blank today.

FCMD Contractor In the News, Part 2

This week, the Providence, R.I.-based Textron, Inc. settled Department of Justice and Securities and Exchange Commission investigations into its involvement in the United Nations' infamous Oil-For-Food program.

Employees of at least three French subsidiaries of Textron were alleged to have paid over $600,000 in kickbacks to Saddam Hussein's government in order to obtain contracts to provide industrial equipment under the humanitarian aid program, which ran from 1996 to 2003. In addition, it was alleged Textron’s subsidiaries made several other illicit payments (unrelated to the Oil-For-Food program) totaling almost $115,000 to win contracts in the United Arab Emirates, Bangladesh, Indonesia, Egypt, and India from 2001 to 2005. Textron paid approximately $4.6 million to settle the simultaneous criminal and civil actions. Textron’s public statement on the matter is posted here.

Out of 50 contractors, Textron ranks 25th in FY2005 federal contract dollars and 17th in misconduct penalties in POGO’s Federal Contractor Misconduct Database. Those interested in learning more about this multi-billion dollar, multi-industry company that produces everything from attack helicopters and smart bombs to golf carts and chain saws are encouraged to check out Textron’s profile in the database.

Given the information contained in the profile, is Textron the kind of company with which the federal government (or any government) should be doing business? POGO leaves it up to the database user to answer that question. 

-- Neil Gordon

Just Say No-Bid

Today's Washington Post fronts a story by Robert O'Harrow, its crack investigative reporter who digs deep into the world of government contracting with tales of skirted regulations and uncomfortably cozy connections between the private sector and government.  This story was no exception.

When the Homeland Security Departmen's anti-drug shop needed help developing "a system for measuring the effectiveness of drug-control efforts," a senior official there thought a former colleague of his could help out:

Scott Chronister, a senior official in the Office of Counternarcotics Enforcement, reached out to a former colleague at a private consulting firm for advice. The consultant suggested that Chronister's office could avoid competition and get the work done quickly under an arrangement in which the firm "approached the government with a 'unique and innovative concept,' " documents and interviews show.

Wait a second though, didn't the government approach the consultant first?

According to the Federal Acquisition Regulation, it looks like the Office of Counternarcotics Enforcement wrongly justified skirting competition since it went to the consultant first.  In other words, the government had to be approached by the contractor with a unique and innovative idea initially to justify bypassing an open competition:

6.302-1  Only one responsible source and no other supplies or services will satisfy agency requirements.

(a) Authority.

(1) Citations: 10 U.S.C. 2304(c)(1) or 41 U.S.C. 253(c)(1).

(2) When the supplies or services required by the agency are available from only one responsible source, or, for DoD, NASA, and the Coast Guard, from only one or a limited number of responsible sources, and no other type of supplies or services will satisfy agency requirements, full and open competition need not be provided for.

(i) Supplies or services may be considered to be available from only one source if the source has submitted an unsolicited research proposal that—

  (A) Demonstrates a unique and innovative concept (see definition at 2.101)

Leaving this aside, it's all okay that contractors run the show, says a DHS flack:

...a spokesman for the Homeland Security Department said it was not unusual for a contractor to tell agency officials how to arrange no-bid contracts because contractors sometimes know federal procurement regulations better than federal program managers. [emphasis added]

Shocking?  Perhaps not anymore and that's the problem.  Contractors now know or purport to know the game's rules better than the umpires.  And the umpires have bought into that system.

-- Nick Schwellenbach

Email: Air Force Secretary Wants to “Stay With” Boeing for CSAR-X

This March, Air Force Secretary Michael Wynne told Lt. General John L. "Jack" Hudson in an email that "I would like to stay with our selection" of Boeing's HH-47 Chinook helicopter for the combat search and rescue helicopter replacement (CSAR-X), according to a protest filing (pdf) by rival defense contractor Sikorsky. Lt. General Hudson is in charge of selecting the company that receives the contract for the CSAR-X. Wynne’s statement came after the Government Accountability Office (GAO) sustained procurement protests by rivals Sikorsky and Lockheed Martin, and Congress began to scrutinize the CSAR-X program’s selection of the Chinook last November.   

In February, the GAO ruled (pdf) that the Air Force’s evaluation of each proposal’s costs was not made according to the evaluation criteria made in the contract solicitation. GAO recommended that the Air Force clarify its basis for evaluations and request revised proposals from the competing contractors.  The Air Force released an amendment to its CSAR-X request for proposals in May, but has been met with additional protests by Lockheed Martin and Sikorsky for not addressing the problems found by GAO. The March 3, 2007, email appears to affirm the view of some insiders that the Air Force’s response to the GAO is simply a face-saving measure.

Sikorsky quoted Secretary Wynne’s email in its July 2, 2007, protest (pdf) of the Air Force's amended solicitation, which POGO has obtained.  Sikorsky obtained the email and other documents from the Air Force, which was responding to Sikorsky’s legal actions, according to the protest filing.  POGO does not have a copy of the email itself, so it is possible that necessary context has been left out.  On its face, however, the partial quote does raise questions about the Air Force's commitment to a fair and transparent evaluation.

Wynne's email seems consistent with his answers to reporters after his February 28, 2007, congressional testimony before the House Armed Services Committee that he would "like to stay with what we got [referring to the Boeing HH-47] and get this product going as soon as possible." He also stated that the Air Force is considering whether it can take corrective action "more narrowly" than what GAO had recommended, according to a Reuters article (Andrea Shalal-Esa, "US Air Force wants no long delay on new helicopter," February 28, 2007).

Either the Air Force is serious about fairly and transparently re-evaluating a bungled competition, or they're wasting everyone's time.  When coupled with the evaluation inconsistencies pointed out by Sikorsky and Lockheed Martin, this email seems to indicate the latter.

-- Nick Schwellenbach

Response to POGO’s FCMD Overwhelmingly Positive

POGO's updated Federal Contractor Misconduct Database (FCMD) has been up for almost a month, and, with one predictable exception, feedback has been overwhelmingly positive.

As expected, contractors didn’t trip over each other with praise (although we have received encouraging feedback from many small businesses). Judging from the media coverage of the FCMD the task of discrediting the FCMD was assigned to the contractor trade associations.

First, the associations dispute the need for the FCMD. They downplay the severity of the problem of contractor waste and fraud. To the extent they acknowledge a problem, they argue that other resources currently used by government contract officers, such as the Past Performance Information Retrieval System (PPIRS) and the Excluded Parties List System (EPLS), are a sufficient remedy. We have never said the FCMD should be the one and only resource used in this regard. Rather, we believe our database is just one of many tools that should be used to ensure a more efficient, accountable government.

Second, while not disputing the FCMD’s factual accuracy (which POGO diligently strives to maintain), the associations complain it lacks “context.” They believe acts of contractor misconduct are too complex to be explained in a 100-word synopsis. We agree. That’s why we upload source documents – some hundreds of pages long, some providing links to other sources of information – which readers looking for more than a brief synopsis can consult.

Third, they complain that relatively minor instances of misconduct are given the same weight as far more egregious instances and feel that some instances are too old to even be included. Ironically, we thought contractors would applaud – not condemn – this aspect of the FCMD. After all, what better way to provide “context” and “depth” than to include all misconduct, regardless of its nature, severity or when it occurred? POGO believes all acts of misconduct – from regulatory infractions costing a few thousand dollars to fraud cases costing millions – occurring any time in the last 12 years are equally important in establishing patterns of good or bad behavior. It’s up to the user to weigh this information when deciding whether or not to do business with a particular contractor.

Reading between the lines, it is clear that what most bothers the contractor associations is the fact that the FCMD even exists. Contractors are understandably nervous about a watchdog scrutinizing their every move. Rather than grouse to the news media about the perceived unfairness of our database, however, POGO invites contractors and their affiliated organizations to provide context on the record for each instance of misconduct contained in the FCMD.

-- Neil Gordon

New Security Breach at Los Alamos

The security problems at Los Alamos National Laboratory just keep piling up. Today, POGO issued a press release confirming another breach involving "unauthorized release of classified data via email" that occured last week. The Lab has officially designated the incident an Impact Measurement Index-1 (IMI-1), the highest threat level, despite an attempt to downgrade it to a lower level.

Despite recent congressional investigations, Dept. of Energy chastisement, and promises of improving, the Lab's frequency of security failures appears to be actually increasing over previous years - this latest one being the fourth so far this year. The vast majority of these failures have been in the area of cybersecurity, including today's revelation.

POGO Executive Director Danielle Brian stated in testimony earlier this year before a House Energy and Commerce subcommittee hearing that the National Nuclear Security Administration (NNSA), designed to improve security, shares a large part of the blame (pdf) for recent problems at Los Alamos. Not only has the NNSA often failed to take action, but it went so far as to transfer its oversight responsibilities to the Lab's contractor.

This latest failure further highlights the serious need for "independent federal oversight from the Dept. of Energy" and a stronger commitment to cybersecurity on the part of the Lab.

-- John Pruett

Missing Weapons in Iraq

Just last week we wrote about the possibility that American taxpayers’ money might be used to finance slave labor in the Iraqi embassy construction project, and this week comes the news that taxpayers might also be inadvertently supplying weapons to the very same Iraqi insurgents that are killing our troops.

The Washington Post story linked above uses a recently released Government Accountability Office (GAO) report entitled “Stabilizing Iraq: DOD Cannot Ensure That U.S.-Funded Equipment Has Reached Iraqi Security Forces” as its main source. According to the GAO report, the Department of Defense (DoD) has provided about $19.2 billion dollars since 2003 to develop, train, and arm the Iraqi security force. The train-and-equip program operated under the Multinational Force-Iraq (MNF-I) and the Multinational Security Transition Command-Iraq (MNSTC-I).

The report’s conclusion is unsettling: as of July 2007, the GAO has unable to find out what DoD accountability procedures, if any at all, were applied to the train-and-equip program. As a result, “DOD and MNF-I cannot fully account for Iraqi forces’ receipt of U.S.-funded equipment.”

Furthermore, GAO concludes that after reviewing the property books of MNSTC-I, at least 190,000 weapons are not accounted for as of September 22, 2005. According to the Post story, one senior Pentagon official acknowledges that these unaccounted-for weapons are probably being used against American forces, citing the dissolution of the Fallujah Iraqi brigade whose members later became insurgents.

Because of DoD’s failure to implement accountability procedures and provide oversight, American taxpayers may have unwittingly financed and supplied weapons to the insurgents that are killing our troops out in the field. This should outrage every American citizen, whether he supports or opposes the war in Iraq.

DoD says that it will implement more rigorous accounting procedures and ensure that sufficient staff and infrastructure are in place to support them, per the GAO recommendations. We hope that this is done as quickly as possible. After all, lives are at stake.

-- Michael Zhou

Blacked Out DoD MRAP Industrial Assessment

In a joke of a response, 30 out of 35 pages of the Defense Contract Management Agency's "Mine Resistant Ambush Protected (MRAP) Industrial Capability Assessment" were completely blacked out in the Defense Department's response to POGO's Freedom of Information Act request for the assessment.  Minimal information is contained in the 5 non-redacted pages which includes the title page. 

The redactions are due to exemption 4 -- trade secrets or commercial and financial information that is privileged or confidential -- and exemption 5 -- inter- and intra-agency communications protected by the deliberative process privilege.  POGO is considering an appeal -- it doesn't seem like 30 entire pages of the 35 page document should be completely withheld and that exemptions 4 and 5 were inappropriately used to black out entire pages instead of the specific information.  For example, it seems that specific information in sentences should be blacked out rather than the entire page, if the redactions were properly used to segregate unreleasable from releaseable information as the law mandates.

POGO does have to give the Pentagon some credit for the quick two week turnaround to POGO's request.  However, considering that this assessment is the only DCMA report specifically mentioned on its FOIA page, you'd think the DoD would be more willing to share its findings.

-- Nick Schwellenbach