The Project On Government Oversight (POGO) Blog

Secrecy Outweighs Public Interest at DOE

In the December 9^th edition of the Federal Register, the Department of Energy (DOE) announced a proposal to remove a discretionary clause governing Freedom Of Information Act (FOIA) exemptions. The “extra balancing test,” as written at 10 C.F.R. 1004.1, allows a FOIA officer to make records public which might otherwise be withheld if they deem it to be in the public interest. DOE claims that eliminating this rule would “streamline” the FOIA process, speed request responses, and get rid of “unnecessary administrative requirements.” They say that this rule is more or less vestigial anyway since it is not covered in the Justice Department's guide for FOIA exemptions.

While we are all for more efficient FOIA processing, POGO thinks that the extra balancing test is rather important. Without such a rule it would seem that a FOIA officer must withhold any information that falls under any exemption even if a compelling public interest exists.

This move seems foolishly secretive in the face of an incoming administration that appears to be pushing for more transparency and accountability.

-- Eric Orenstein

PART is not the Whole Picture for Evaluating Agency Performance

The Hill recently published an op-ed lauding the Program Assessment Rating Tool (PART). For those unfamiliar with PART, it is a rubric designed to measure and improve agency performance. POGO's recommendations for the next administration raised concerns that the information used by the PART is infrequently used, and moreover, that it's overly focused on the quantifiable outputs of an agency rather than the impact of its work. We argued that if the next administration wants to continue to use this tool, it's important to place it into context: the PART found that the SEC's regulation of securities trading and market participants and its regulation of the investment management industry "to minimize the financial risks to investors from fraud, mismanagement, self-dealing and misleading or incomplete disclosure in the investment company and investment adviser segments of the financial services industry" was effective, the highest rating the system gives (whoops?). And in case you think it's just a matter of the government being blindsided by all things finance, the PART also found that the Minerals Management Service's Minerals Revenue Management--of contracts "unauditable by our [Interior Department Inspector General] forensic accountants" fame--was moderately effective. At the very least, as Ingrid points out, the accuracy of the terminology the government uses when evaluating itself leaves something to be desired.

-- Mandy Smithberger

Livermore Lab Has to Pay for Safety and Security Problems: Is that Enough?

Last Friday, Nuclear Weapons and Materials Monitor’s Todd Jacobson reported that that National Nuclear Security Administration (NNSA) reduced by 30 percent Lawrence Livermore National Security, LLC’s award for the FY 2008 management of the Lawrence Livermore National Laboratory (LLNL) from a possible $53.7 million to $37.7 million.

Part of the reason NNSA cut $16 million was LLNL’s disastrous performance in an April security test by the DOE Office of Health, Safety and Security (HSS). In a fee recommendation memo, NNSA’s Principal Deputy Administrator for Military Application Brig. Gen. Jonathan George found “the Contractor’s performance in the area of protective force operations and information security to be ‘unsatisfactory’ based in large part on the Contractor’s security failures surrounding the HSS audit.”

“Unsatisfactory” is not the word POGO would use to describe LLNL’s performance when mock-terrorists successfully broke into the nuclear weapons lab, created an improvised nuclear device, and stole plutonium and highly enriched uranium. As you may recall, in March POGO had predicted that LLNL would fare poorly in a security assessment because the Lab’s location inside a residential community (with 7 million people living within a 50-mile radius) makes the site impossible to secure.

While the penalty is significantly larger than the $3 million that Los Alamos got whacked with for its CREM de meth debacle, we still don’t think a 70 percent approval rating reflects the seriousness of what happened at Livermore. How could LLNL have gotten the full amount of its fixed fee for managing the Lab, when there’s proof that intruders can steal plutonium and detonate an IND, a clear failure in management?

NNSA stated that LLNL’s contractor was also penalized for issues “concerning the adequacy of the Chronic Beryllium Disease Prevention Program.” These inadequacies resulted in five beryllium related events over the last 18 months, including a case where both lab and subcontracted workers may have been exposed to beryllium for years without their knowledge and without precautionary measures in place. However, it’s not clear how much of the at-risk fee was subtracted for LLNL’s dangerous and shoddy management of that Program.

There needs to be a clear message to the contractors at other NNSA and DOE sites how seriously this program should be taken. If the contractors do not comply with the Program, Lab workers’ can be exposed to beryllium, which can lead to the development of the incurable and potentially fatal lung disease, chronic beryllium disease.

POGO recently asked HSS to take a look at how well Oak Ridge National Laboratory has done resolving serious problems in beryllium controls raised by the DOE Inspector General in 2006.

-- Ingrid Drake and Peter Stockton

BAILOUT POGO!

Ok, not really.  But if you think it's important that we're urging careful oversight of the TARP to prevent taxpayers from getting ripped off, including making sure that there's an Inspector General to oversee the process ASAP, or if you're desperate to see real whistleblower protections (we're looking at you, Axel, though in all seriousness we know of many people that really need(ed) this), or if you're concerned about the safety of our nuclear weapons, or if you're sick of seeing wasteful defense spending that doesn't improve our national security, or if you just want the Department of the Interior to FINALLY collect the royalties owed to taxpayers for drilling for gas and oil on federal lands, please donate to POGO.

But maybe you don't care about any of those issues.  Maybe what you want is Inspector General reforms that restore them to being the junkyard dogs for taxpayers they were intended to be, or you think that real contracting oversight--including considerations of contractor responsibility when awarding contracts--needs to happen, or you would just be happy if the government would be more open and transparent about what they are doing on behalf of taxpayers, or you are so excited about our suggestions for the next administration that you can't wait to see POGO give Congress the what-for (or at least remind them about how to best use their oversight powers)--then you should donate.

Whew, we do a lot, don't we?  We count on donations from readers like you to continue to cover all of these issues well, and it is through these donations that we are able to maintain our independence by refusing funds from government, unions, corporate interests, or anyone else with a financial stake in our investigations.

POGO: Exposing problems, exploring solutions.  Please donate.  Don't make me resort to knock-knock jokes--because you know I probably would.

-- Mandy Smithberger

Big Banks Seek Backdoor Access to Tarp Funds

Yesterday POGO sent a letter to Congress about another issue to add to the laundry list of things to fix with the Troubled Asset Relief Program (TARP).  The TARP was ostensibly created for the purpose of propping up the financial system by assisting institutions in danger of going under.  But it looks like a few big financial groups are trying to morph into different animals in order to get a piece of the federal pie.

We heard through the grapevine that a Dutch insurance company called Aegon was attempting to purchase a bank in Maryland in order to get at TARP funds.  While their bid seems doomed to fail, we found eight other institutions that look to be doing the same thing: Lincoln National Corporation, Hartford Financial, Genworth Financial, CIT Group, Morgan Stanely, GMAC Financial Services, Goldman Sachs, and American Express.

These insurance companies, investment banks, and credit agencies seem to be straying from their business models in order to become traditional banks.  Lincoln, Genworth, and Hartford are attempting to become Federal savings and loan holders through the Office of Thrift Supervision.  Should they be approved, they would then theoretically qualify for TARP funds.  The others have added Bank Holding Company to their list of services by opening branches in Utah and receiving approval from the Federal Reserve Board of Governors.  They too would apparently be eligible for TARP funds once approved.

Bear in mind, there is nothing illegal with what these companies are doing; financial institutions acquire each other all the time.  What struck us as fishy was the timing.  Four of these companies claimed to be in good financial shape just a few weeks before applying for bailout money.  As a matter of fact, Kenneth Chenault, American Express's CEO, asserted that the company's “business model is well positioned to generate earnings and excess capital even in an economic environment that is likely to be among the weakest in many years” less than a month before becoming a Bank Holding Company and, presumably, applying for TARP funds.

Again, we don't mean to accuse anyone of anything.  We just want to make sure that Congress knows about this practice.  They must decide if taxpayers should be footing the bill for companies that are apparently trying to jump on the gravy train.

-- Eric Orenstein

Even More Problems to Solve at the OSC?

This week OSC Watch asked Attorney General Mukasey to investigate senior officials (including former Special Counsel Scott Bloch) at the Office of Special Counsel (OSC) for obstruction of justice.  OSC Watch also charges in a lawsuit that ever since the OSC's founding in 1978, it has not followed its legal obligation as an investigatory agency to formally report its determinations of "reasonable grounds to believe" that violations of laws, rules, or regulations have occurred within its jurisdiction.  Instead, the OSC only reports the violations it decides to prosecute, something that happens only a few times a year according to the OSC's Annual Reports to Congress.

This shoddy record is a problem: the OSC is supposed to be the primary agency protecting federal employees from agency violations of the merit principles, known as prohibited personnel practices (PPPs).  PPPs include political coercion, nepotism, and the deceit or willful obstruction of anyone from competing for employment.  Any such allegations should be rigorously investigated.

In addition, OSC Watch has raised concerns that the Merit System Protection Board (MSPB) has not followed the law by failing to conduct “special studies” of whether federal employees are adequately protected from PPPs.  All of these are issues that need to be urgently addressed in a congressional review of the OSC and MSPB, as we recommended in our recent report, Breaking the Sound Barrier: Experiences of Air Marshals Confirm Need for Reform at the OSC.  The Obama Administration should also make it a priority to resolve these problems.

-- Ingrid Drake

Hold Tight to Those Purse Strings!

There has been a lot of talk recently about the need for a post-Cold War nuclear strategy.  However, instead of outlining a new way of looking at the world and our national priorities, much of the rhetoric seems to focus on how old our stockpile is and the need to modernize our arsenal and complex.  Glimpses of this can be seen in the interim report of the Congressional Commission on the Strategic Posture of the United States released yesterday.

POGO has a different take than the Washington Post's Walter Pincus, who writes that “the interim report took no position on the Bush administration's effort to produce a new nuclear warhead under the now-deferred Reliable Replacement Warhead [RRW] program.”  We think the report actually does contain some coded references to RRW, which Chair of the House Armed Services subcommittee on Strategic Forces Rep. Ellen Tauscher (D-CA) recommended renaming in order to avoid all the opposition RRW has garnered in Congress and among the public.  For example, an interim finding of the report states the need for the complex to be “refurbished” and that:

Although the Life Extension Program has been successful to date, it will face increasing challenges as components age and more changes are made.  In our final report we intend to define the most efficient and effective way to maintain a credible, safe, secure, and reliable deterrent for the long term.  We recognize also that broader infrastructure issues must be addressed in any such program. [Emphasis added]

With so many people dreaming about a modernized nuclear weapons complex, it was refreshing to read the recently released House Appropriations Committee Energy and Water Subcommittee fiscal year 2009 Report, which explained why the Committee denied President Bush's request for RRW funds:

The Committee will not spend the taxpayers' money for a new generation of warheads promoted as leading to nuclear reductions absent a specified glide path to a specified, much smaller force of nuclear weapons....

The Committee also finds no validity in arguments that we should (1) first build a new nuclear weapons complex and later decide what to do with it, (2) produce a new nuclear warhead and later contemplate how to arrive at a contemporary, coherent, and durable strategy for it, or (3) design a new high-margin warhead first and consider the question of nuclear testing afterward.

The report also highlights an example of why it is so important to exercise restraint and accountability in spending for our stockpile:

The Committee was dismayed at a recent hearing to find that the Deputy Secretary of Defense was unaware that the cost of the nuclear stockpile is the responsibility of the Department of Energy.

For further reading, we highly recommend checking out an article published this week in the Bulletin for Atomic Scientists by Yousaf Butt, a staff scientist at the Harvard-Smithsonian Center for Astrophysics, with recommendations for the next administration on a wide range of nuclear security issues.  Another thought-provoking piece recently published in Slate offers some important lessons from William Weed Kaufmann, a leading Cold War nuclear strategist who passed away this week at the age of 90.  After spending most of his career working on nuclear issues at RAND and the Pentagon, Kaufmann's observation about being entrenched in the defense establishment is particularly relevant to today's debate:

"...it was easy to get caught up in the whole nuclear business.  You could eat and breathe the stuff....Then you'd move away from it for a while, look at it from a distance, and think, 'God, that's a crazy world.'"

-- Ingrid Drake

FAMS Director Defends Agency's Treatment of Whistleblowers

POGO just received a letter from Federal Air Marshal Service (FAMS) Director Robert Bray in response to our November 25th letter in which we raised concerns about the agency's treatment of whistleblowers.

While POGO was pleased to hear that FAMS supervisors are receiving training on whistleblower protections, and that there are a number of initiatives in place to reach out to federal air marshals for input, Bray did not respond to our recommendation to “rehire and make whole those federal air marshals who improperly lost their jobs after disclosing incidents of workplace wrongdoing but who still would like to come back and continue to support FAMS' mission.”

This includes former federal air marshal Robert MacLean, and security assistant Richard Hoskins, whose experiences we recently highlighted in Breaking the Sound Barrier: Experiences of Air Marshals Confirm Need for Reform at the OSC.

Bray did, however, respond to POGO's critique of his Deputy Director's efforts to insulate Bray from correspondence with his employees.  He pointed out that “managing the flow of information is crucial” at a large agency such as FAMS, and argued that we are being unfair in focusing so much on this one incident.  Nevertheless, we remain concerned that the Deputy Director appears to have a policy of sheltering Bray from complaints raised by current and former employees.  Somehow this doesn't quite seem to support Bray's earlier claim that “FAMS leadership has been engaging with our frontline workforce and maintaining regular dialogues with air marshals.”

-- Ingrid Drake

So Much for Bailout Limits on Executive Compensation

We have some good news and some bad news to report on the government's bailout and housing efforts.

First the bad news.  The Washington Post reported yesterday that the Treasury Department made an eleventh hour change to the bailout bill that could severely limit the government's ability to punish banks for spending taxpayer dollars on executive compensation. 

The revision stipulates that the penalty for executive compensation will only apply to those banks that sold their troubled assets to the government.  Although the government might have originally intended to purchase troubled assets, Treasury quickly changed its approach, deciding instead to inject capital directly into the failing banks.  In fact, with $335 billion in bailout funds already out the door, not a penny has been spent on purchasing troubled assets, which means that the executive compensation provision is virtually worthless.

Although a Treasury spokeswoman maintains that the government still has "all the remedies available to us for a breach of contract," a former SEC general counsel points out that the government might not have the legal standing to impose penalties without fair warning.  Also, according to the Post, Treasury misled Congress about its plans to inject capital directly into the banks:

[Treasury Secretary Henry] Paulson repeatedly told lawmakers that he did not plan to use bailout funds to inject capital directly into financial institutions.  Privately, however, his staff was developing plans to do just that, Paulson acknowledged in an interview.

In October, Treasury issued new regulations on executive compensation and other issues, but provided no guidance as to how these restrictions would be enforced.  In a report released earlier this month on the Troubled Asset Relief Program (TARP), the GAO observed that Treasury officials can't even agree on their own responsibilities to oversee executive compensation, with one regulator noting that Treasury would "rely on the [financial] institution's board of directors to assess compliance."

This is not the first time Treasury has made a secretive, last minute regulatory change with far-reaching consequences.  In fact, it's only further evidence that Treasury is implementing the bailout with almost no transparency or justification, as POGO argued in a letter sent to bailout policymakers last month.

Now for the good news.  As reported in the Post and New York Times, Fannie Mae is letting thousands of renters remain in their homes this winter even if their landlords lost the properties due to foreclosure.  Many of these renters had been faithfully keeping up with their payments, but suddenly faced eviction because their landlords got in trouble.  POGO applauds Fannie's new policy, which will keep thousands of people off the streets this holiday season, and hopes that Freddie Mac and private banks will soon follow suit.

-- Michael Smallberg

Follow Up on POGO's CSAR-X Investigation

In November 2007, POGO raised concerns that the acquisition process for the CSAR-X was subverted, undermining the war fighter needs of the helicopter.  Specifically, POGO raised concerns that the Air Force Special Operations Command watered down the deployability requirement, even though a key performance parameter of the helicopter is the amount of time it can be deployed and ready to go in theater.  We worried that the change in requirements may have resulted in the Air Force procuring the wrong helicopter for the mission.

The Department of Defense Inspector General found that this requirement was not changed improperly, and that the changes would not "adversely affect special operations capabilities in the Global War on Terror."  Neither the report nor the results have been made publicly available--but we have the results in brief.

-- Mandy Smithberger

No ICBM Left Behind

The Air Force just notified Congress that the 90th Missile Wing at F.E. Warren Air Force Base received unsatisfactory ratings for two areas in the scheduled Defense Nuclear Security Inspection conducted by the Defense Threat Reduction Agency.  The inspection found that 1) management and administration, and 2) tools, test, tie down and handling equipment were all unsatisfactory.

On Saturday, Noah Shachtman at Wired's Danger Room reported from inside sources that the wing had failed the test of readiness to handle nuclear warheads and that there were problems with the personnel reliability program.

The Air Force has stated many times, and as recently as yesterday, that maintaining accountability and improving stewardship of the Air Force's nuclear program is a top priority.  But this is the third Air Force nuclear unit to fail an inspection this year, and moreover, it now means that all three missile bases with deployed land-based Minuteman III intercontinental ballistic missiles (ICBM)--Minot, Malmstrom, and now Warren-- have failed their security tests.  Let's review: the 5th missile wing at Minot Air Force Base failed a security test in May; officers removed classified nuclear missile components from the base in August; the 341st missile wing at the Malmstrom Air Force Base failed a security test last month; and in August 2006, the Air Force accidentally sent a shipment of classified ballistic missile components to Taiwan.

While the Air Force has disciplined numerous officers over past nuclear botches, this latest security test failure raises serious questions about whether accountability is working at the Air Force.  Sources at these facilities tell POGO that they are seriously concerned, and that they believe the Air Force's attitude towards security is all wrong.  The Defense Threat Reduction Agency's security tests isn't exactly reassuring.

This most recent failure also begs the question of whether now is the time for moving away from the ICBM leg of our triad, which also includes submarine-launched ballistic missiles and air-delivered missiles.  The idea of a dyad is an issue of serious debate: the recently released Nuclear Weapons in 21st Century U.S. National Security reports that scientists and advisors are “divided” on this topic, although there is little doubt that the financial savings would be substantial.

-- Peter Stockton, Ingrid Drake, and Mandy Smithberger

The Perils of Whistleblowing

Michael Isikoff at Newsweek offers a pointed portrayal this week of whistleblower Thomas Tamm, who tipped off the New York Times to illegal domestic NSA surveillance.  Tamm's journey has made him the target of a relentless investigation by FBI agents, in which they've trawled his personal life, interrogated his friends and family, raided his home, and forced him to live under the constant threat of prosecution.

Perhaps channeling Marie Antoinette, former White House counterterrorism advisor Frances Fragos Townsend argues that government employees who witness illegal activity should simply pursue whistleblower complaint processes.  Just about anyone in the know will tell you that filing a whistleblower complaint, especially if you are a national security whistleblower, is usually the first step toward committing career suicide.  And, as Tamm experienced first-hand when he was rebuffed by a Senate Judiciary staff member, whistleblowers who go to Congress are frequently ignored, often because staffers are either inexperienced working with whistleblowers or don't believe that working with whistleblowers should be part of their job.

Asa Hutchinson, another former Bush Administration official, has a different and more reasonable take:

"When I looked at this, I was convinced that the action he took was based on his view of a higher responsibility," says Asa Hutchinson, the former U.S. attorney in Little Rock and under secretary of the Department of Homeland Security who is assisting in Tamm's defense.  "It reflected a lawyer's responsibility to protect the rule of law."

Previous efforts to protect national security whistleblowers have failed, even though Congress has the most to gain from ensuring that employees inform them of Executive Branch wrongdoing.  As a result, whistleblowers will be forced to continue to go to the news media anonymously, since this is currently the safest channel for disclosing illegal activities by the government.

-- Beth Daley