The Project On Government Oversight (POGO) Blog

We've Seen This Video Before: Drunk Security Contractors Gone Wild

When we first heard that ABC News was working on a story about U.S. security contractors in Afghanistan getting drunk and doing drugs, we had one of those collective sighs: “Here we go again.”

The leaked cell phone video that ABC News and CNN broadcast this week showed a shirtless, staggering security manager for Jorge Scientific showing off his drunken Kung Fu and later wrestling another man. Even more troubling was a shot of the company’s chief medical officer appearing stoned out of his mind on what the report identified as the drug Ketamine.

As Danielle Brian, executive director of the Project On Government Oversight, told ABC News, the men in the video were not only endangering themselves, but also the civilians they were hired to protect.

There was other questionable behavior in investigative reporter Brian Ross’s Nightline report. Employees of Jorge Scientific, which has a $47 million contract to train Afghan police, also supposedly threw live ammo into bonfires they built outside their Kabul residence.

One of the former employees who blew the whistle on the improper behavior said, “It was like a frat house.”

Frat house antics. Drunk, shirtless contractors. Bonfires. It’s déjà vu all over again.

Three years ago, my colleagues at POGO heard similar stories from whistleblowers working for a different security contractor in Afghanistan. That contractor, ArmorGroup North America, provided security at the U.S. embassy in Kabul.

POGO Wants Reduced DoD Contractor Employee Compensation Cap

Yesterday, the Project On Government Oversight and nine government accountability, research, and labor groups urged members of Congress to lower the cap on maximum allowable compensation paid by taxpayers to all Department of Defense contract employees from $763,029 to $230,700, pursuant to section 842 of the National Defense Authorization Act for FY 2013 (S. 3254).

The most recent proposal was sponsored by Senator Joe Manchin (D-W.Va.), and follows bipartisan efforts by Senators Barbara Boxer (D-Calif.) and Charles Grassley (R-Iowa) and efforts by Representatives Paul Tonko (D-N.Y.) and Jackie Speier (D-Calif.).

Estimates predict a reduction in taxpayer-paid compensation would result in savings of at least $5 billion a year, almost 10 percent of the entire $55 billion reduction in 2013 required by sequestration. Those savings might be a low estimate—one senior official testified that the Army would save $6 billion if the compensation cap was reduced to $400,000, nearly double the current legislative proposal.

Pentagon Single-Bid Contracting Hurting Taxpayers

By SCOTT AMEY

Last week, the Department of Defense (DoD) Inspector General released a report finding that single-bid guidance isn’t being followed and, as a result, “the Services have not realized potential cost savings associated with increased competition and re-competing $390.9 million in contract modifications. DoD also cannot accurately assess the percent of improvements in DoD achieving effective competition.” Specifically, the DoD IG found:

The Services did not follow DoD single-bid guidance when awarding 31 contracts, valued at approximately $656.1 million, out of the sample of 78 contracts awarded as competitive, valued at approximately $1 billion, that we reviewed. Specifically, contracting offices:

• issued 16 of 31 single-bid contracts, valued at $165.3 million, without advertising solicitations for 30 days;
• issued 8 of 31 single-bid contracts, valued at $471.0 million, without adequately determining price reasonableness; and
• issued 7 of 31 single-bid contracts, valued at $19.8 million, without advertising solicitations for 30 days and adequately determining price reasonableness.

In addition, the IG found that DoD did not “develop specific steps to prevent 39 of 47 contract modifications, valued at $390.9 million, from exceeding the 3-year limitation on awarding contract modifications without first recompeting.”

This news is startling because, according to FPDS-NG (it’s not my number, so don’t shoot the messenger), single-bid offers accounted for $185 billion spent in base contracts and exercised options by DoD in FY 2011, and rules were violated in 31 of the 78 contracts sampled by the IG.

SIGAR Saves Money and Lives

U.S. Marines detonate an improvised explosive device in Sangin, Afghanistan.

How important are federal inspectors general (IGs)? Sometimes, they can be a matter of life and death.

On Wednesday, the Special Inspector General for Afghanistan Reconstruction (SIGAR) issued a safety alert letter warning U.S. commanders in Afghanistan of a heightened IED (improvised explosive device) threat due to the lack of culvert denial systems on roads around the country.

As described on this Army website, culvert denial systems are devices used to block unauthorized access to culverts, which are structures that channel water beneath roads, railways, and embankments. Culverts can also be used for more nefarious purposes, such as hiding IEDs.

In the one-page letter, Special Inspector General John F. Sopko warned of “potentially significant contract fraud in the installation and inspection of culvert denial systems” that poses a threat to the safety of U.S. forces:

Through our preliminary investigative work, we estimate that a large number of culvert denial systems might have been falsely reported by Afghan contractors as complete when, in fact, the denial systems were not installed or were installed in a defective manner, rendering them ineffective and susceptible to compromise by insurgents seeking to emplace IEDs.

Senate Report Silent on Fusion Center Reliance on Contractors

The Senate released an investigative report on Wednesday sharply criticizing anti-terrorism facilities set up throughout the country after the September 11, 2001, terrorist attacks to coordinate federal, state, and local intelligence. As the Project On Government Oversight detailed yesterday, the report found that these “fusion centers,” which have cost the federal government anywhere from $289 million to $1.4 billion total (incredibly, the government does not have a more exact figure), are producing very little useful terrorism-related intelligence and are committing widespread violations of citizens’ civil liberties.

But there’s another potential problem with fusion centers that the report did not address.

The centers rely on private contractors, and it isn’t clear that contractors should be playing such a big role in this sensitive work. 

Federal contracting law  lists “the direction and control of intelligence and counter-intelligence operations” as an inherently governmental function—in other words, a function that must be performed by a government employee.

The Senate report says that certain aspects of the program rely on contractors to the extent that contractor employees sometimes outnumber government employees and that some contractor employees are “under-trained or poor performers.”

Executive Order Focuses on Prohibiting Human Trafficking

By SCOTT AMEY

Last week, President Obama signed an Executive Order (EO) strengthening the government’s zero-tolerance policy rules governing trafficking in persons (TIP). The EO lays out detailed guidance for a new anti-trafficking rule that will prohibit U.S.-facilitated trafficking occurring abroad. The EO states:

More than 20 million men, women, and children throughout the world are victims of severe forms of trafficking in persons….

***

The United States has long had a zero-tolerance policy regarding Government employees and contractor personnel engaging in any form of this criminal behavior. As the largest single purchaser of goods and services in the world, the United States Government bears a responsibility to ensure that taxpayer dollars do not contribute to trafficking in persons. By providing our Government workforce with additional tools and training to apply and enforce existing policy, and by providing additional clarity to Government contractors and subcontractors on the steps necessary to fully comply with that policy, this order will help to protect vulnerable individuals as contractors and subcontractors perform vital services and manufacture the goods procured by the United States.

The added protections include expanding the current definition of human trafficking and the contract clause to include the following trafficking-related activities:

• Use of misleading or fraudulent recruiting practices
• Charging employees recruitment fees
• Destroying, concealing, confiscating, or denying access to employee personal identity documents
• Failing to pay return transportation costs for third country nationals (TCNs)

GAO Report Finds Federal Agencies Must Improve Service Contract Inventories

The Government Accountability Office (GAO) released a report finding that the civilian agencies are not doing enough to keep track of their service contractor workforce. The GAO reviewed 49 executive agencies’ procedures for compiling and reviewing service contract inventories—data compilations of service contracting activities most federal departments and agencies are required to maintain and release to the public every year—and found numerous problems that limit their accuracy and utility.

The GAO found similar problems in its review of the Department of Defense’s (DoD) service contract inventories, which the Project On Government Oversight blogged about back in April.

POGO has repeatedly called for the government to improve the quality of service contract inventories. These inventories are crucial for determining the true size and cost-effectiveness of the federal service contractor workforce and whether contractors are performing inherently governmental functions (functions required by law to be performed by federal government employees).

The Sequestration Sideshow: Jobs and Pentagon Contracting in Context

This week another major defense contractor used its employees as political pawns in its campaign to halt planned reductions in Pentagon spending.

The Los Angeles Times reported on Monday “Northrop to shed nearly 600 jobs.” The article includes all of the industry’s talking points about “budget uncertainties,” “jobs lost,” and “more cuts,” and even uses the erroneously high $600 billion amount for defense sequestration (the correct amount is $492, as ProPublica’s critique of media using the $600 billion figure illustrated). Unfortunately, the article not only overstates the actual amount of Pentagon sequestration by more than $100 billion, it also fails to put Northrop’s job-shedding into context. For those interested in a little more balance in their sequestration news, here are a few facts to mull over before jumping on the contractor “doomsday” bandwagon.

First, Northrop has reduced its workforce every year since 2008, cutting thousands of workers every year during a time in which its Department of Defense contract dollars remained fairly constant. Employment figures from its SEC filings for 2008, 2009, 2010, and 2011 chronicle this downsizing. Northrop wasn’t the only defense contractor to cut jobs either. In the past five years the top five defense contractors—Lockheed Martin, Boeing, General Dynamics, Northrop Grumman, and Raytheon—collectively cut nearly 20,000 jobs while their contracts from the DoD increased by more than $10 billion. In short, if there is any connection between revenue and employment it has, at least recently, been in the opposite direction that Northrop would have us believe.

Report Shows Suspensions and Debarments On the Rise

On Tuesday, the Interagency Suspension and Debarment Committee (ISDC) released its annual report to Congress on the status of the federal suspension and debarment system. Twenty-seven federal agencies and departments (accounting for 98 percent of all federal contract spending) reported a total of 5,838 suspensions, proposed debarments, and debarments in fiscal year 2011. This is a 39 percent increase over FY 2010 and a 119 percent increase over FY 2009, the years covered in last year’s report.

That the Department of Defense (DoD) had the most actions in FY 2011 isn’t surprising, considering DoD awarded 70 percent of all federal contract dollars that year. Somewhat more surprising are the numbers reported by the Office of Personnel Management (OPM): 794 proposed debarments, 765 debarments, and 4 suspensions. The first two totals seem grossly out of proportion for the relatively tiny OPM, which awarded .28 percent of all federal contract dollars in FY 2011. Meanwhile, the Nuclear Regulatory Commission (NRC) and Social Security Administration (SSA) both reported goose eggs: zero suspensions, proposed debarments, debarments, and administrative agreements. Judging from the table in Appendix 2 of the report, NRC and SSA have the least comprehensive suspension and debarment policies and practices of all the agencies.

The Department of Commerce finally got with the program last year and established a suspension and debarment office. According to the ISDC, its five actions were the first Commerce has undertaken “in at least 15 years.”

Bipartisan House Bill Would Expand Whistleblower Protections to Federal Contractors

The Project On Government Oversight applauds Reps. Jackie Speier (D-Calif.) and Todd Platts (R-Pa.) for introducing the bipartisan Non-Federal Employee Whistleblower Protection Act (H.R. 6406), an important bill that could save billions of taxpayer dollars. POGO has always supported granting strong whistleblower protections to all federal contractors and grant recipients of federal funds, and this bill would do just that. In April, the Senate Homeland Security and Governmental Affairs Committee passed Sen. Claire McCaskill’s (D-Mo.) companion legislation S.241, cosponsored by Senators Jim Webb (D-Va.) and Jon Tester (D-Mont.), and we are glad to see House members following McCaskill’s lead.

The Commission on Wartime Contracting estimated that up to $60 billion was lost in Iraq and Afghanistan due to waste and fraud, most of which was the result of questionable contracting. To stop this kind of gross waste in the future, would-be whistleblowers need to feel safe coming forward speaking out against the misuse of federal funds.

Cheating on Security Tests at Y-12 is Nothing New

By PETER STOCKTON and LYDIA DENNETT

Shortly after the security breach at Y-12 National Security Complex on July 28, the Independent Oversight Program at the Department of Energy (DOE) headquarters sent a team to Y-12 to conduct performance tests on the effectiveness of the Wackenhut Services Inc Oak Ridge guard force, according to a POGO source at the DOE. Two days ago, The Nuclear Weapons & Materials Monitor (printed with permission) reported that a federal inspector discovered copies of questions and answers from the written portion of the performance test in a guard force vehicle. The newest security director of Y-12, John Garrity, who took over the position after the break-in a month ago, has now been administratively re-assigned.

This incident of cheating on a performance test at Y-12 is nothing new for Wackenhut. Prior to the break in at Y-12, POGO had received an anonymous tip voicing concerns about cheating on security tests that sounded credible. We could not verify the allegation so were not able to release it at the time. But after another source contacted POGO and the latest revelation about guards with test questions and answers, there is certainly justification to do so now.

The source stated that “Wackenhut has a history of cheating on performance tests at Y12 and other locations. All of the in house testing that is scheduled to occur is relayed in advance to the security personnel so they always do a great job. All drills and tests done for the occasional outside agency are relayed ahead of time as to what they will be. There is no honest testing taking place. The security force cannot do any response without practicing and rehearsing ahead of time as they almost always do. Even though Wackenhut was caught cheating during an IG investigation in 2004, they were allowed to not only keep their contract, they were allowed to continue testing themselves. This is clearly a conflict on [sic] interest as it has been and it continiues [sic] to go on.”

Face the Facts: Why Health Net Escaped Consequences of IG Investigation

By NEIL GORDON

Last week, POGO blogged about a Department of Veterans Affairs Inspector General (IG) report finding that a service-disabled veteran-owned small business (SDVOSB) named Enterprise Technology Solutions (ETS) had used its special status to allow the Fortune 500-sized health insurance provider Health Net to improperly benefit from a federal contracting program for small and/or disadvantaged businesses. Despite catching both companies red-handed, however, the IG only referred ETS for possible suspension or debarment.

Is Health Net “too big to debar”? Let’s look at the facts:

Health Net currently has 22 instances of misconduct in our Federal Contractor Misconduct Database, including a temporary suspension from the Medicare program in 2010 and hundreds of millions of dollars in fines, penalties, and settlements paid to private plaintiffs and state regulators since 1995. However…

Health Net is a very big company. It currently ranks number 221 in the Fortune 500, with $11.9 billion in revenue and 7,400 employees.

More importantly, Health Net is also a very big federal contractor, receiving billions of dollars in contracts every year. Almost all of those dollars come from the Pentagon to administer part of the TRICARE health insurance program for millions of active-duty and retired military personnel and their families.

Relations between Health Net and the government are very cozy. Health Net has spent millions of dollars on federal lobbying and campaign contributions. Recall that ETS, the company that allowed Health Net to benefit from the SDVOSB program, was formed in 2006 – with Health Net’s encouragement – by a former senior VA official named Donald Neilson. (According to Nextgov, Neilson served as director of VA Information Management Services.) The Veterans Affairs IG has released three reports in recent years identifying contracting improprieties involving former VA employees who went on to form or work for SDVOSBs.