The Project On Government Oversight (POGO) Blog

Morning Smoke: Pentagon Estimates JSF Could Cost $17 Billion More Than Expected, Prompts Staffers to Call for Restructure of Program

Hill Aides Call For JSF Restructure [DoD Buzz]

Osprey Deployment Update [Defense Tech]

New rules due on defense outsources [Politico]

Panel to debate new government powers over troubled firms [The Hill]

If Lenders Say 'The Dog Ate Your Mortgage' [The New York Times]

Senate Kickstarts Government Performance Task Force [Fedblog]

Medicare Drug Planners Now Lobbyists, With Billions at Stake [ProPublica]

A Pattern of Contract Oversight Problems at the State Department?

A new Inspector General (IG) audit has recommended that the Department of State (DoS) seek a $132 million rebate from a contractor for a host of construction deficiencies at the American embassy in Baghdad. The contractor, First Kuwaiti Trading and Contracting, received $470 million in no-bid contracts for construction of the embassy (referred to in the report as NEC Baghdad). Specific flaws that figure into the $132 million sum include:

• "$4.6 million to repair safe areas, which are vital to protecting staff in emergency situations but which were not constructed according to con­tract specifications;"


• "$4.4 million to repair the NEC’s power distribution system because First Kuwaiti substituted a less reliable system, including using nonstandard wiring;"


• "$4.6 million to correct fire protection systems because the walls in the housing units were not compliant with code and fire protection water mains were improperly constructed;" and


• "$1.5 million to correct plumbing deficiencies at over 200 locations at the NEC."

This isn't the first time we've heard about First Kuwaiti's problems working on NEC Baghdad: back in July 2007, two whistleblowers accused the company of engaging in human trafficking, and in a letter to the State Department later that year, the House Committee on Oversight and Government Reform cataloged the numerous construction problems already manifesting themselves in the project, and even implicated a managing partner from the firm in an illegal kickback scheme.

But the IG report does shed new light on a problem we've seen recently at another key American embassy: contract oversight deficiencies at the State Department. In this case, DoS' Bureau of Overseas Buildings Operations created a special new group to administer the project: the Emergency Project Coordination Office (EPCO). Unfortunately, as the IG reports, EPCO was rife with problems and was "managed by an individual who did not enforce contract provisions, most notably design and construction require­ments, which resulted in many of the construction deficiencies listed." Specifically, the IG found that: 

Buying Influence: New FTC Regulations Could Reveal Who's Funding "Independent" Think Tanks

This morning Roxana Tiron at The Hill reported about Citizens Against Government Waste's (CAGW) campaign against a second engine for the F-35 Joint Strike Fighter engine, questioning whether Pratt & Whitney — the company supplying the Pentagon the first engine — is funding the campaign. Tiron's not the first reporter to question this campaign — Bloomberg's Tony Capaccio and Rachel Layne, among others, questioned whether Pratt & Whitney was funding the campaign in August. And in both cases, neither Pratt & Whitney nor CAGW will confirm who is funding the estimated $2 million campaign — Pratt & Whitney said they're not funding the ads, but they won't admit to or deny funding CAGW in general — and as a tax-exempt organization, they don't have to.

Maybe.

Recently the Federal Trade Commission (FTC) revised their Guides Concerning the Use of Endorsements and Testimonials in Advertising, requiring bloggers that make an endorsement to "disclose material connections between the advertiser and endorsers." And when the FTC enforces the policy, according to the regulations, the company may be liable:

Morning Smoke: More Embassy Contract Oversight Woes for State Department

Report: Rebate needed for Baghdad embassy work [Government Executive]

Freddie Mac, Given Oversight of Mortgage Mod Program, Falls Down on Job [ProPublica]

New consumer financial agency passes its first test [The Hill]

Ethics laws can't work [Felix Salmon]

Audit clears Boeing in C-17 lobbying probe [Daily Herald]

Senator to Pentagon: Stop the Sweetheart Russian Helo Deals [Danger Room]

Warnings About Revolving Door in Pentagon from Ex-Lobbyist Official [Center for Public Integrity]

Senate creates new government performance panel [Federal Eye]

"What's In a Name?" [OMB Watch]

F-35 is the subject of watchdog’s media blitz [The Hill]

Flu Vaccine Shortage: It's Time to Explain Why It Happened

As reported in a variety of news outlets yesterday, the shortage of H1N1 flu vaccine has now become obvious. Throughout the country, many of those lining up to be vaccinated are being turned away. 

Why is vaccine in short supply? Explanations are emerging slowly from the Department of Health and Human Services (HHS). HHS Secretary Kathleen Sebelius was one of three cabinet officers testifying on October 21 before the Senate Committee on Homeland Security and Governmental Affairs. She blamed the shortage of vaccine in part on manufacturing delays, which she said have been corrected. 

She also confirmed that the U.S. is dependent on foreign manufacturers for much of its vaccine and said this country needs to enhance its domestic manufacturing capacity in the future. Several senators asked whether, during the present pandemic, supplies of vaccine we expect from abroad might instead be retained within their home countries. Secretary Sebelius responded that the U.S. is “at the front of the line” with orders it had placed with foreign manufacturers. However, she did not comment on the possibility, raised by committee chairman Joseph Lieberman, that the government of a foreign country might require its vaccine manufacturers to fill its own needs first. 

America’s dependence on foreign sources of vaccine is just one of many shortcomings that seriously detract from the strengths of the U.S. government’s program for producing vaccine in a pandemic. POGO – in letters to the Secretary of HHS, articles, and other public documents for more than 18 months – has urged a comprehensive disclosure of weaknesses in the vaccine program. Our documents identified specific weaknesses that could lead to a shortage of vaccine in a pandemic. 

On September 30, POGO sent its most recent letter, with an attached article, to Secretary Sebelius. In these documents and others linked to them we urge greater transparency in the vaccine program.

-- Ned Feder

POGO Contracting Survey Update

A reminder to federal government and contractor employees with experience in federal service contracts: please consider taking part in POGO’s online federal service contracts survey to help us gain insight into the federal government’s policies and practices regarding its use of private sector contractors.

It’s been over a week since we launched the survey, and the responses are starting to trickle in. So far, over 130 people have visited the survey. Only a small fraction of them have completed it, but overall we are pleased by the quality of the responses.

We’d like to have all responses in by November 30 so we can forge ahead on analyzing the data and writing up a report. What are you waiting for? Go fulfill your patriotic duty and take the survey now!

-- Neil Gordon

Reminder: Whistleblower Film Screening Tonight on the Hill

Tonight we'll be hosting another film screening and discussion as part of our Whistleblower Film Series.  It should be a special night — we're showing The Insider, starring Al Pacino and Russell Crowe, who plays Dr. Jeffrey Wigand, a former tobacco executive who came under personal and professional attack after he decided to appear on a "60 Minutes" exposé of the tobacco industry.  Our post-film discussion will feature Dr. Wigand himself. Here are the details:

The Insider
Tonight at 6:30 P.M.
The Rayburn House Office Building, room 2247
Discussion with Dr. Wigand to follow
Free and open to the public!

Information about the film and a link to the trailer can be found here. If you're in the D.C. area tonight, we would love to see you there!  

-- Bryan Rahija

Morning Smoke: O'Keefe's Connections Bring "Reinforcement" to EADS Position in Tanker Competition

EADS taps government vet [Politico] - O'Keefe was also accused of having an overly close relationship with former NASA Inspector General Robert "Moose" Cobb 

HOMELAND SECURITY: WMD Commission Criticizes Homeland Security Oversight [Center for Public Integrity]

Keeping Up With KC-X Tidbits [Air Force Magazine]

Wall Street Pay Cuts Stoke Debate About Washington's Reach [Bloomberg]

President Obama tightens lobbying stance [Politico]

F.D.A. Lags in Banning Researchers After Fraud [The New York Times]

Senators bemoan H1N1 vaccine shortages [Government Executive]

SIGTARP Reports That Bailout Accomplishments Came at a Great Cost

A new report released today by the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) offers compelling evidence that the government’s bailout programs helped bring the economy back from the brink of collapse. But in tallying up the excessive costs associated with the TARP, the report forces us to consider whether the bailout’s successes have been a Pyrrhic victory for the government and the taxpayer.

As the report points out, some of the bailout’s costs are financial: it is highly unlikely, for instance, that taxpayers will fully recoup their investment from the TARP’s mortgage modification program or from the substantial assistance extended to AIG and the auto companies. But the SIGTARP also argues that we have to look beyond financial costs when analyzing the effectiveness of the bailout.

Moral Hazards and Damaged Credibility

Small Business Advocacy Group Prevails in FOIA Legal Fees Dispute

Last year, POGO blogged about the possibility that the Small Business Administration (SBA) was being less than forthcoming about the extent to which contracts intended for small companies were instead ending up in the hands of some very large, Fortune 500-sized companies. The inspiration for that blog post was the news that the American Small Business League (ASBL) had prevailed in a FOIA lawsuit compelling the SBA to release the names of entities that received federal small business contracts.

In August 2007, the SBA proclaimed that $77.7 billion in federal contracts were awarded to small businesses in 2006. The ASBL sought to fact-check this by requesting the complete list of small business entities and contract amounts for fiscal years 2005 and 2006. Several months of “bureaucratic foot-dragging” ensued, until the United States District Court for the Northern District of California instructed the SBA to turn over the requested data, which revealed that a sizable number of small business contracts went to the likes of Lockheed Martin, Boeing and Bechtel. From the data, the ASBL estimated that legitimate small businesses lose more than $100 billion a year in federal small business contracts to some of the world’s largest companies. (According to a real-time counter displayed on the ASBL’s home page, small businesses this year have lost roughly $80 billion.)

Having prevailed on its FOIA claim, the ASBL then sought to recover the legal fees it incurred in bringing the lawsuit. The court sided with the ASBL and ordered the SBA to pay their legal fees. The SBA filed an appeal.

That was in the summer of 2008. This week, it was announced that the Department of Justice has dropped its appeal of the legal fees ruling. POGO wonders how much the government’s two-year standoff with the ASBL will ultimately cost taxpayers. In the meantime, there are still questions as to whether the SBA is doing all it can to ensure that small business contracts are only being awarded to actual small businesses.

-- Neil Gordon

Morning Smoke: Senators Introduce Legislation to Audit Fed's Emergency Lending Programs

Senators Unveil New Bill to Audit the Fed [Real Time Economics]

The Warning [Frontline]

Watchdog: Bailout helped but at a great cost [Associated Press]

Government watchdogs are given their due [Federal Diary]

Half of stimulus contract spending falls into risky categories [Government Executive]

"Acid Test" for the Osprey in Afghanistan [The Line of Departure]

No Issues with M4 at Wanat [Defense Tech]

Merit board nominees pledge to rebuild workforce, boost efficiency [Government Executive]

Morning Smoke: Struggles Continue for Some Bailout Recipients

Four Banks in Govt's 'Healthy Bank' Bailout Struggle to Survive [ProPublica]

The Race to Save Lehman Brothers [The New York Times]

Gutierrez letter shows efforts to save a bank [The Hill]

Army Touts Flexible FCS Son [DoD Buzz]

Drip, drip... White House investigating leaks [The Cable]

Whose Test is the Best? [Defense Tech]