The Project On Government Oversight (POGO) Blog

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.

NYT Misses Elephant in the Room: Defense Service Contractors

By DANA LIEBELSON

This week, Defense Secretary Leon Panetta is poised to deliver his recommendations on at least $450 billion in defense cuts over the next ten years, according to The New York Times. Although the paper outlines several important potential cuts (in a nifty multimedia chart!)-it fails to include on its list of targets something that should have a huge bull’s eye: Department of Defense (DoD) service contractors.

According to the Pentagon’s own analysis of personnel costs dated January 2011, service contractors are “increasingly unaffordable.” That same analysis goes on to say that “the savings are here” and growth in spending on service contractors “has been unchallenged.”  The chart shows that former Defense Secretary Robert Gates’ short-lived insourcing initiative only touched a tiny speck of the hundreds of billions the DoD spends each year on service contracting.

POGO found in its “Spending Less, Spending Smarter” report, that reducing spending on DoD service contractors by 15 percent would save about $300 billion over ten years. In FY2010 alone, DoD service contractors cost taxpayers more than $200 billion—$50 billion more than the cost of all uniformed personnel. Also, POGO’s analysis of 35 comparable job occupations fulfilled by federal employees and by government contractors found that, on average, contractors cost significantly more than federal workers.

Talk about an elephant in the room.

What Kool-Aid Is the Associated Press Drinking?

By Nick Schwellenbach 

This morning the Associated Press got it wrong on defense spending. Base budget Department of Defense (DoD) appropriations are not being cut as they claim in their article, “Spending Cuts Bill Hits Defense And Foreign Aid.” The lede: “Tea partyers insistent on cutting military spending and foreign aid will find plenty to like in the spending deal struck by President Barack Obama and congressional leaders.”

The AP reporter, Donna Cassata, claims there is a cut because what Congress has appropriated is less than what the White House wanted. The big problem? The White House, House Speaker John Boehner and Senate Leader Harry Reid have agreed on $513 billion for DoD: $5 billion MORE than last year’s amount. It may be the only major department that got a bump up in funding in the discretionary part of the federal budget (some agencies, such as Securities and Exchange Commission, did get an increase). This is hardly a cut.

White House Fails to List Transparency Meeting on President's Public Schedule

By Danielle Brian

Come to find out, Monday's meeting between myself, four other open government advocates, and President Obama wasn't listed on the White House daily schedule. Surprising, considering that the first meeting was listed on that calendar, and the President even noted that we would be listed on the White House visitor logs.

As I told The Washington Post, it was sheer stupidity that the meeting wasn't listed on the calendar. But this was not exactly a "secret meeting," as some reports have implied. It had been on the President's public daily schedule when it was initially slated for March 16. We had expected that the rescheduled meeting would be open to the press—but it is an overreach to say that the integrity of the meeting was compromised when we found out (right before the meeting) that it would not be open to the press. A White House videographer was taping the meeting, and we understood that video footage of the event would be available soon. I also thought that between the five of us—most of whom had planned ahead of time to write about the meeting—we'd have it pretty well covered. 

There are plenty of reasons to criticize Obama and his administration for their shortcomings in the open government arena—issues much bigger than the mistake of not putting this meeting back on the calendar once it was rescheduled. If the hullabaloo over our meeting with the President has focused attention on these bigger issues, even better.

So, while it's upsetting the way the White House bungled an opportunity to practice the transparency that it preaches, I stand by our reason to meet with the President—both to thank him for his commitment and highlight our priorities for what still needs to happen—and reject the notion that our principles have somehow been compromised by the meeting. I'm encouraged that it might produce tangible results in advancing important open government initiatives.

Danielle Brian is POGO's Executive Director. Read her first post about the meeting with the President here.

Are House GOP Freshmen Seriously Interested In Cutting the Defense Budget?

By Nick Schwellenbach

There is no shortage of headlines with a variation on a theme such as: “Tea Party Declares War on Military Spending,” “Tea Partiers Say Defense In Mix For Budget Cuts,” and “Veteran Republicans Fear Tea Party, Liberals Will Unite To Cut Defense.” Much of the media has fostered the narrative that the current crop of Tea Party-influenced GOP freshmen are gunning to slash the Defense Department’s budget. But the reality, so far, has hardly lived up to that storyline.

According to a new analysis by Heritage Action for America *, the lobbying arm of the conservative think tank the Heritage Foundation, freshman Republicans in the House have, on average, voted against defense cuts more than other House Republicans. At about one third of the discretionary federal budget, the more than $600 billion annual defense budget (and up to $1.2 TRILLION for the entire national security budget, depending on how you count it)—which has doubled in size since 9/11—is not currently facing any serious challenges from House GOP freshmen. It’s not for a lack of numerous proposals, such as the bipartisan Deficit Commission’s detailed defense proposals.

However, you might not know it reading some news reports. To be fair, some news outlets note that “most Tea Party candidates spoke little about national security and the military in fall political campaigns focused on cutting spending over all,” as one New York Times article did in January.

But take, for instance, news coverage the last few weeks on an amendment to cut $450 million in funding for a second engine for the Joint Strike Fighter that passed the House (President Barack Obama and Defense Secretary Robert Gates, as well as the Bush Administration have for years opposed the second engine). In the wake of that move—which does not mean funding for the second engine is canceled, at least not yet—several news outlets reported that this shows that GOP freshmen are willing to take on defense. That’s not quite right, at least not yet.

Morning Smoke: How Congress Can Deter Government Waste and Fraud

 Where there's smoke, there's fire. POGO's Morning Smoke is a collection of the previous day's investigations, scoops, and opinions related to the world of government oversight. Have a story you'd like to see included? Contact POGO's blog editor.

Editorial: Congress should act to help deter waste and fraud in government [Wisconsin State Journal]

Contact your Representative and tell them to vote YES on S. 372.

Monitoring America by Dana Priest and Willam M. Arkin [The Washington Post]

Size Protects Government Contractors That Stray by Ron Nixon [The New York Times]

Cost Cutters Fix Sights on F-35 Fighter by Nathan Hodge [The Wall Street Journal]

Justices Offer Receptive Ear to Business Interests by Adam Liptak [The New York Times]

Corporations Aim to Narrow SEC’s Proposed Whistleblower Protections by Amy Biegelsen [Center for Public Integrity]

Official: AFSOC unaware crashed CV-22 carried flight incident recorder by Stephen Trimble [The DEW Line]

Drug Companies Retain Tight Control of Physicians’ Presentations by Charles Ornstein and Tracy Weber [ProPublica]

Top Spine Surgeons Reap Royalties, Medicare Bounty by John Carreyrou and Tom McGinty [The Wall Street Journal]

BP Oil on Gulf Floor Draws Concern by Jeffrey Ball [The Wall Street Journal]

Swap Execution Facility: The New Term on Wall Street by Ben Protess [DealBook]

Senate panel ban seen as double standard by Scott Higham, Kimberly Kindy and Dan Keating [The Washington Post]

No Recess for Hill Gossip

According to The Huffington Post, infighting, racism, name-calling, and document tampering are tearing the House Oversight and Government Reform Committee asunder:

The main dispute is between a subcommittee staff director and a subcommittee clerk, with partisans of each dragged into the dispute, according to emails reviewed by HuffPost. The clerk, Jean Gosa, who has been a Hill staffer for more than 35 years, is now the subject of a personnel complaint and could be terminated within the week, according to a memo she wrote to the committee's chairman, Ed Towns (D-N.Y.). "Jaron Bourke filed a personnel complaint against Jean Gosa. The complaint is currently under investigation. No decisions have been made," said committee spokeswoman Jenny Rosenberg in a statement to HuffPost, declining to comment further.

But it doesn't stop there—while he's at it, Ryan Grim at HuffPo takes a leap to fan the flames of a presumed conflict between Committee Chair Ed Towns and Ranking Member Darrell Issa (R-CA), and also calls into question Rep. Towns' performance as Chair.

Maybe it's just a slow news week. All this comes as a surprise to POGO—though we haven't worked specifically with the subcommittee staffers mentioned, we do work closely with the Committee on many issues, and we've found the staff to be highly professional and dedicated. Furthermore, we've observed that the Towns and Issa camps have been working cooperatively in many areas—for example, on enhancing protections for federal whistleblowers. The two have also been like-minded on other issues, such as reforming the Minerals Management Service (MMS) in the wake of the oil spill (here and here) and eliminating secrecy at the Securities and Exchange Commission (exhibit A, exhibit B).

And lastly, though media attention may matter, what really matters is the quality of the work. Mr. Issa has put forward several bills POGO supports. And when it comes to Towns' body of work as Committee Chair, his record as both an investigator and as a legislating Chair has been far from shabby. He and his staff continue to work tirelessly behind the scenes on many issues important to POGO like whistleblower protections and reforms to the Inspector General system.

-- Bryan Rahija

This MMS We're In

Yesterday POGO Executive Director Danielle Brian testified before the House Natural Resource Committee's Subcommittee on Energy and Mineral Resources about the reorganization of the Minerals Management Service (MMS). Just about every reporter and every other person focusing on the Deepwater Horizon disaster was busy covering Energy and Commerce's firing-squad treatment of BP CEO Tony Hayward. The lack of attention on this hearing was disappointing—not just because Hey! POGO was testifying!—but because I think it's indicative of how the MMS became a little agency with a lot of responsibilities that largely escaped the kind of tough oversight that would force it to become effective. To whatever extent reporters think their job is to act as a watchdog for citizens—which means looking out for future and current problems, not just looking back and shaking your head—there should've been more people at the press table.

Though I didn't witness it in person, I will say that Representative Barton's (R-TX) since-rescinded apology to BP (that he doesn't want to "live in a country where anytime a citizen or a corporation does something that is legitimately wrong is subject to some kind of political pressure") is indicative of how many in Congress and the federal government have treated the oil industry: not just as government partners, but as the power players in the relationship that don’t need to be held accountable for their actions.

For those who are genuinely concerned about making sure that development of our natural resources is conducted responsibly, the Subcommittee's hearing was the one that mattered. In what has been a very partisan committee, an important bipartisan consensus has emerged: MMS is broken. But it's important to note that this conventional wisdom isn't new for most people who've bothered to pay attention to MMS. The Government Accountability Office (GAO), Interior's Inspector General (IG), and POGO all provided testimony based on many years of public reports that this is an agency with a broken culture struggling to maintain the technical expertise (and we'd underscore, the political will and intellectual confidence) to ensure that industry is complying with regulations. And in some cases, making sure they're at least calling industry on what's almost complete BS, like the claim that MORE THAN 100 percent of their production should be exempt from royalties because they were using more than they were harvesting for on-site operations. Representative John Sarbanes (D-MD) hit the nail on the head when he said that it seems pretty clear that "MMS gave industry the keys to the kingdom."

POGO's testimony supported the intent of the reorganization to separate out MMS's conflicted missions, but focused primarily on the agency's broken culture due to the revolving door, dependence on industry, and lack of transparency. Some of the reactions to our testimony illuminate how this agency got into the shape that it did. Representative Cynthia Lummis (R-WY) seemed to be very skeptical about implementing tougher revolving door regulations, asking Danielle:

• Whether we had a chart prescribing different cooling off periods for each position at MMS (usually about two years, and Danielle said something along the lines of "Frankly, for the Director of MMS, I'd be comfortable with a lifetime ban on going to work for the industries he was overseeing.");


• If she was uncomfortable with the fact that former MMS Director Randall Luthi used to be the head of the Fish and Wildlife Service. (Danielle said no, since we're concerned about when people have a financial interest. We had highlighted the fact that he was now the President of the National Oceans Industries Association as an "egregious" example of how bad things are at MMS.); and


• If we're concerned that this kind of revolving door prohibition would result in the heads of MMS not knowing anything about the industry they're regulating (Danielle pointed out that the technical expertise is needed at lower levels in the agency and for advisors, that the Director of MMS's skill set must largely be managerial, and that we've seen that those skills aren't so narrowly defined —a former Energy Department Deputy Secretary, for example, went on to a lucrative career heading a Telecommunications group—an industry that he had no part of at DOE).

Rep. Lummis’s questions represent common doubts about—and frankly, strawman arguments against—the feasibility of revolving door restrictions. Overall, the Subcommittee conducted an excellent hearing that should provide them with a lot of useful information as they mark up Chairman Nick Rahall's (D-WV) Consolidated Land, Energy, and Aquatic Resources Act of 2009 (H.R. 3534) to ensure that MMS and the Bureau of Land Management (BLM) have the tools they need to be effective inspectors, regulators, and collectors of royalties. Our fingers are crossed that Representative Bill Cassidy's (R-LA) agreement with POGO that more transparency is needed at MMS means that this will be part of the legislation when it's re-introduced.

-- Mandy Smithberger

See also:

• Testimony of Danielle Brian before the Subcommittee on Energy and Mineral Resources
• C-SPAN coverage of Danielle's testimony

While We're on the Subject of Informing . . .

Tsk Tsk, Washington Post, for equating “Tattle-Tale” with “whistleblower,” when describing the new Matt Damon movie “The Informant!” on its homepage. 

The film itself perpetuates an inaccurate and dangerous myth that those who choose to blow the whistle are unstable, anti-social, etc., by focusing on the mental health issues of the real-life Mark Whitacre, who exposed a massive and global price-fixing operation at his employer, ADM. We agree with the observation of Tom Devine from the Government Accountability Project, who concluded when the curtain closed at a special pre-screening of the film for groups who work with whistleblowers, “Thank God this film was not named ‘The Whistleblower.’”

The film did have some funny moments. It also highlights how important insiders are in bringing to the surface wrongdoing — without Whitacre it’s unlikely that ADM would have ever been caught, fined, or had some of the ringleaders serve time in prison.

But for those who see the film this weekend, it is important to keep in mind the reality of whistleblowing: federal government whistleblowers are still not adequately protected!  Please read our recent op-ed in Roll Call that tackles many of the myths surrounding whistleblowers. Stay tuned for details on our Whistleblower Film Festival, which will start in October and highlight the important role whistlblowers play in fighting waste, fraud, and abuse.

-- Ingrid Drake

Setting the Record Straight

Many in the media and Congress are still demanding answers from the White House on the removal of Corporation for National Community Service Inspector General Gerald Walpin. Some have even identified a pattern of political meddling, accusing the administration of infringing on the independence of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) and other IGs at the International Trade Commission, Amtrak, and the Library of Congress.

We take these allegations very seriously, but after hearing some of the accusations being leveled at the White House, we'd like to clear up a few misconceptions.

This morning, The Wall Street Journal ran an opinion piece subtly entitled "Abolish the Inspector General." In the Journal’s view, the media has given President Obama a free pass on the removal of Walpin and the possible infringement on the SIGTARP’s authority, whereas President Bush was repeatedly slammed with front-page stories about his administration's political meddling. This somehow leads the Journal to conclude that IGs should be eliminated altogether:

Can we suggest an alternative? Abolish the IG position across the government. IGs were chartered by Democrats when Republicans kept winning the executive branch. While some of them sometimes produce valuable work, mostly they answer to Congress by teeing up pseudoscandals and serving as witnesses for the prosecution. Their probes do nothing to curb federal spending, so why waste the money?

Mr. Obama professed to love the Inspectors General as a Senator, and he cosponsored legislation that bolstered their autonomy and required the president to give Congress a month's notice and a reason before firing an IG. Either the administration ought to abide by its own rules or get rid of the office.

Say what?? Even if you accept the argument that the media has failed to hold the administration accountable for the latest IG controversies, it's a pretty big leap to conclude that all IG offices are worthless and should be abolished.

There are two points to consider here. First, while POGO would be the first to admit that IGs could take many steps to improve their effectiveness, the Journal’s claim that IGs "do nothing to curb federal spending" is simply untrue. The Government Accountability Office (GAO) recently examined the monetary accomplishments of presidentially-appointed IGs in fiscal year 2007, and found that every dollar set aside for the IGs resulted in an average of $9.49 in identified savings for the taxpayer (see Appendix I).

Second, we disagree with the Journal’s claim that the administration failed to abide by its own rules on removing IGs. We’ve said it before, and we’ll say it again: the IG Reform Act of 2008 requires the president to provide an explanation to Congress 30 days before removing or transferring an IG. There’s nothing in the law that says it has to be a good reason. So when President Obama told Congress that he no longer had "the fullest confidence" in Walpin, he did technically follow the letter of the law. We don’t fault those who are demanding a better explanation, but if that’s really what Congress wants, they should amend the IG act to include a provision in the House’s version of the bill stating that the president can only remove an IG for a specified cause.

On another note, we read in Federal Eye this morning that Senator Charles Grassley (R-IA) is also concerned that the stimulus legislation contains a provision that will allow the Recovery Act Transparency and Accountability Board (RAT Board) to meddle with an IG’s investigation. He’s worried this will have a “chilling impact upon the independence” of IGs.

It’s no secret that we’re big fans of Sen. Grassley (a.k.a. the Watchdog’s Watchdog), but we have to respectfully disagree with him on this one. As we noted a few months ago, Phyllis Fong, Chair of the Council of the Inspectors General on Integrity and Efficiency, has already explained to Congress why these concerns are unfounded: 1) the RAT Board is composed entirely of IGs; 2) the Board is chaired by former Interior IG Earl Devaney, who has dedicated his career to investigating tough cases; and 3) another provision in the Recovery Act (Sec. 1527) explicitly recognizes the independence of IGs, and clarifies that they can deny any request made by the Board to initiate or terminate an investigation.

There are still many questions to be answered, especially about the administration's decision to remove Walpin and challenge the authority of the SIGTARP, and we applaud those in Congress and the media who are trying to get the bottom of it. But it’s important to keep the facts straight, and we’re concerned that some of the administration’s critics are starting to stretch the truth in order to make their point.

-- Michael Smallberg

An Ode to Beat Reporters

As we hear about regional newspapers shutting their doors, we take pause to recognize the critical function local beat reporters play in our lives.  Case in point: yesterday, Los Alamos National Laboratory (LANL) put out a press release, probably to preempt POGO's release to the press of a February 23 internal Department of Energy (DOE) letter that outlines how LANL has not been able to keep track of its huge stocks of plutonium and highly enriched uranium--enough for hundreds of nuclear weapons--via its Material Control and Accountability (MC&A) program.  Unlike the AP's stenography of LANL's press release, Sue Vorenberg of The Sante Fe New Mexican wrote an article that dug deeper into the press release, exposing the “circular logic” that LANL is using to avoid answering the question of how it can be 100 percent certain that no material has been stolen when it does not know where the material is.

Similarly able to see through the spin, NNSA-beat reporter Todd Jacobson with the Nuclear Weapons & Materials Monitor contacted POGO for a comment as soon as he saw LANL's press release, knowing full well that LANL would not be forthcoming with information about problems unless it was fearful of an impending media storm.  POGO has been raising concerns about MC&A at LANL for the last six months.

While the Monitor did mention it, one piece of the story has not yet gotten as much attention as it deserves: the fact that DOE was aware of MC&A problems last year, but still granted LANL the full $1.43 million performance award fee for security, which includes “Material Control and Accountability” as one of the areas of performance evaluated.

In addition to MC&A problems at LANL, this week the DOE IG released a report which found that of “about 37 percent (15 of 40) of the domestic facilities we reviewed [such as those that reprocess waste, universities, and other government agencies], the Department could not accurately account for the quantities and locations of certain nuclear materials” and that DOE “agreed to write-off large quantities without fully understanding the ultimate disposition of these materials.”  This is another issue that is best reported by a journalist who understands the DOE bureaucracy.

-- Ingrid Drake and Peter Stockton

Washington Times and Post Square Off on Federal Whistleblower Protections

An editorial in today's Washington Times offers a nice rebuttal to the Post's misguided attack on the recently passed House amendment to protect federal whistleblowers.

The Post was particularly opposed to a provision in the amendment that would extend whistleblower protections to federal employees in the intelligence community.  But as the Times points out, while these employees are on the front lines protecting Americans from dangerous and corrupt government practices, nobody is there to protect them from “retaliation in the form of harassment, intimidation in the workplace, and firings.”  To prove its point, the Times cites the experience of Robert MacLean and other federal air marshals who have paid a serious price for blowing the whistle--an issue that POGO explored in great depth in our recent report.

POGO and other groups have also responded to the Post's exaggerated claim about federal whistleblowers making unilateral security breaches: "In fact, because the law will allow for only lawful disclosures to those with the appropriate security clearances, it actually will prevent leaks and so-called 'breaches.'"  We've also argued that it is especially important to pass federal whistleblower protections as part of the stimulus bill:

The stimulus bill authorizes the expenditure of billions of taxpayer dollars; as taxpayers, we need the best oversight possible. Countless studies have verified that whistleblowers are the most effective weapon against fraud....whistleblower protections, unlike every other provision in the stimulus, will save money, not spend it.

Meanwhile, there has been some movement to include federal whistleblower protections in the Senate's version of the stimulus bill.  Senators Daniel Akaka (D-HI) and Susan Collins (R-ME) have reintroduced the Whistleblower Protection Enhancement Act of 2009, while St. Claire McCaskill (D-MO) has introduced a bill to strengthen whistleblower protections for nonfederal and contract workers.

If you haven't done so already, it's not too late to contact your Senators urging them to support the federal whistleblower amendment.

-- Michael Smallberg