Zach Toombs stories from The Center for Public Integrity

Lawmakers complain about monopoly space launch deal

Orbital Sciences Corporation — 2012-08-13T17:24:23-04:00

For six years, the Air Force has relied mostly on a single, high-cost rocket manufacturer to loft its reconnaissance, communications, and GPS satellites into space and it is about to double down. In the fall of 2013, it plans to give the company a new $19 billion contract for all of the Air Force launches scheduled through 2017.

Some members of Congress are upset by the pricetag, however, and key lawmakers — acting with the support of an array of upstart rocket firms — are starting to push back against the Air Force’s plan to reward its contractor with a five-year lock on all launches.

The latest salvo comes from House Intelligence Committee Chairman Mike Rogers, R-Mich., and ranking member C.A. Dutch Ruppersberger, D-Md., who complained in an Aug. 2 letter that the Pentagon’s largest launch project “lacks domestic competition and is unable to compete internationally due to high costs.” The Air Force satellite project is known as the Evolved Expendable Vehicle Launch (EELV) program.

The firm that the Air Force favors is United Launch Alliance, a joint project formed in 2006 by the Pentagon’s top two contractors, Lockheed Martin and Boeing. The Air Force plans to award the $19 billion deal between June and October 2013.

Although it has not explicitly picked ULA yet, only the company’s Delta IV, produced by Boeing, can lift the government’s heaviest payloads, such as telescopic cameras that take images of Earth and GPS satellites used for military intelligence, which reach 50,000 lbs. These will be part of the deal, according to the Air Force.

Cristina Chaplain, who audits the Pentagon’s space programs for the Government Accountability Office, said in an interview the decision will come after the Air Force has confirmed that the contractor can modify certain rockets to limit vibrations capable of harming sensitive satellites.

The contract has aroused controversy partly because it would group both heavy and lighter satellite launches into a single deal, effectively blocking an opportunity for smaller firms to grab some of the lightweight satellite business.

Rogers and Ruppersberger, in their letter, encouraged the Pentagon to consider two other companies before awarding the EELV contract — SpaceX and Orbital. The lawmakers said those two companies opened “an important window of opportunity to make room for new EELV competitors and reap significant cost savings, without sacrificing launch reliability.”

They also pushed for the elimination of a taxpayer-funded subsidy given to ULA that amounts to about $100 million per launch. The subsidy is meant to help with maintenance and overhead for the various U.S. launches handled by ULA, but it’s a financial favor not provided to any other commercial space launch companies.

A September 2011 Government Accountability Office report did not say how much money is at stake but predicted that keeping an option open to contract launches for different-sized satellites to different companies the next five years could drive down costs. According to the report, “competition could incentivize ULA pricing and efficiencies, potentially yielding cost savings to the government.”

Neither Rogers’ nor Ruppersberger’s spokespersons provided an estimate of the savings if the Pentagon took their advice. A spokeswoman for the House Intelligence Committee did not return a request for comment.

Aerospace, ATK, Coleman, Orbital Sciences Corporation and Space Exploration Technologies (SpaceX), have been trying to break ULA’s hold on Pentagon satellite launches since Lockheed and Boeing created the consortium in 2006. The year ULA was formed, SpaceX sued the two contracting giants to challenge the legality of the merger on antitrust grounds, but without success.

On its website, SpaceX claims it could save the Pentagon $1 billion annually if it was allowed to compete on all satellite launches, partly by forgoing the subsidy the government provides to ULA. Figures for launch prices for each company vary greatly depending on the weight and type of the payload.

Tracy Bunko, an Air Force spokeswoman, defended the contracting plan, explaining that it encompasses launches of various sizes and spans a five-year period to give a contractor the chance to buy in bulk and receive a quantity discount from subcontractors. She said ULA presented its best price for a range of six to 10 booster cores per year and over contract periods ranging from three to five years.

But the 2011 GAO report warned that bulk buying could backfire on the Air Force, saying the “expected block buy may commit the government to buy more booster cores than it needs and could result in a surplus of hardware requiring storage and potentially rework if stored for extended periods.”

Reliability is also a consideration for the Air Force. Bunko told Defense Daily that the Air Force will open the contract to competition as soon as at least one of them can meet the government’s risk requirements for launching important national security payloads into space.

According to Bunko, only four of the 46 EELV launches scheduled from 2013 to 2017 qualify as heavy-class. More than 10 times as many fall into smaller weight classes, the Air Force spokeswoman said.

Although Boeing’s $16.1 million and Lockheed’s $15.1 million in 2011 lobbying expenses dwarfs that of SpaceX and Orbital, the smaller companies have been lobbying more heavily on Capitol Hill in the last few years. SpaceX went from spending $163,000 on lobbying in 2006 to $860,000 in 2011, according to data tallied by the Center for Responsive Politics. In that same time, Orbital’s spending on lobbying jumped from $160,000 to $290,000.

Orbital, which maintains a software development facility 17 miles from Ruppersberger’s district in Maryland, has donated $13,000 to the lawmaker from its political action committee since the start of 2009, according to a Center for Public Integrity analysis of campaign finance data from CQMoneyline. Marc Gunderson, an Orbital executive, also gave Ruppersberger the maximum donation of $2,400 in 2010. SpaceX has donated $5,000 to Ruppersberger and $2,000 to Rogers during that same period.

In a statement denouncing the letter from Ruppersberger and Rogers, ULA spokeswoman Jessica Rye said the representatives’ stance “appears to be in response to special interest political pressures promulgated by less capable, unproven launch providers with a much longer history of rhetoric than launch success.”

But Boeing and Lockheed have also given the two representatives campaign donations — and in larger amounts than what SpaceX and Orbital gave. Lockheed’s PAC has donated $20,000 to Ruppersberger and $17,000 to Rogers since 2009. In that period, Boeing’s PAC also gave $20,000 to Ruppersberger and gave $16,000 Rogers.

An industry official at a rival space launch company, speaking on condition he not be named, said the “quantity discount” argument made sense a few years ago when ULA was the sole contractor capable of lifting a wide variety of payloads, but there are now other companies with rockets, such as SpaceX’s Falcon 9 and Orbital’s Antares, that could do the job with medium-sized and smaller loads — and for a cheaper price — without the overhead subsidy provided to ULA.

“The Air Force is going down the road with ULA at hideously exorbitant prices for no apparent reason. Why lock yourself in for the next few years at such high prices?” the industry official said. “They’re in a position where they should be able to leverage for lower prices and less taxpayer money spent on these launches, because there are less expensive rockets that can do the job at a medium class level.”

Senators suggest new penalties in Chinese helicopter probe

China — 2012-08-07T12:58:05-04:00

Two senior members of the Senate Armed Services Committee called on Monday for the Defense Department to consider suspending or blocking its ties to a major weapons contractor that admitted illegally helping China develop a new attack helicopter.

Sen. Carl Levin (D-Mich.), the committee chairman, and Sen. John McCain (Ariz.), its senior Republican member, asserted in an Aug. 6 letter to Defense Secretary Leon Panetta and Secretary of State Hillary Clinton that a series of export violations by the Canadian branch of helicopter engine manufacturer Pratt and Whitney and its parent company United Technologies “may have caused significant harm to our national security.”

Although Pratt, United Technologies and another firm agreed to pay a total of $75 million in fines when they publicly admitting wrongdoing in June, Levin and McCain complained that “no individual manager or employee has been held personally accountable.” The senators said that although the State Department has restricted some licensing privileges for Pratt’s Canadian branch, “we believe that the Defense Department should itself evaluate this case for the appropriateness of contract suspension or debarment.”

In its settlement with the Justice Department and the State Department, Pratt and United Technologies acknowledged that Pratt knowingly sent critical software to China for use with a military attack helicopter, the Z10, because it hoped to win a lucrative contract for a civilian version. “We find the crime to which P&WC [Pratt & Whitney Canada] pleaded guilty enormously troubling,” the two senators said.

United Technologies, headquartered in Hartford, Connecticut, was the ninth largest U.S. defense contractor in 2010. Since July 2006, when the company filed statements about the software exports to China that it admitted this year were incorrect, the Pentagon has awarded it more than $1.67 billion in contracts, according to an article the Center published about the case in July. One of Pratt’s major contracts with the department now is to supply jet engines for the troubled F-35 Joint Strike Fighter jets, the most expensive military program in history.

U.S. Attorney for Connecticut David Fein, who directed the government's effort, said at the time of the settlement that it marked “one of the largest resolutions of export violations with a major defense contractor in the Justice Department’s history.” Assistant Attorney General Lisa Monaco, who spoke with Fein, said Pratt had compromised “U.S. national security for the sake of profits and then lie[d] about it to the government.”

After closely examining company procedures and internal records, the government found United Technologies responsible for 576 violations of the State Department’s export rules. U.S. military exports to China have been embargoed by the department since 1989.

The senators said in their letter that “the widespread nature of these violations by just this one major defense contractor raises the possibility of systemic deficiencies with the oversight and enforcement of federal export controls.” They asked both secretaries to explain what their departments are doing to ensure better compliance.

Pentagon spokeswoman Cheryl Irwin said the department had not seen the letter as of Monday afternoon and had no immediate comment. A United Technologies spokesman did not immediately respond to a phone call and e-mail requesting comment. The company has previously said it is taking steps to improve oversight, including assigning more specially-trained personnel to review its export-related actions.

Counter-IED efforts still beset by poor oversight and duplication

2012-08-13T11:03:32-04:00

The Pentagon has pumped billions of dollars into programs to counter the dangers of improvised explosive devices over the last decade but still lacks a way to track whether its initiatives are meeting their goals — a circumstance that a government watchdog warns could lead to overlap and wasted taxpayer funds.

Poor record keeping has hindered the Defense Department’s ability to monitor more than 1,300 individual anti-IED projects, complicating any effort by outsiders to assess whether the funds have been well spent, a report released Wednesday by the Government Accountability Office said.

“DOD has not determined, and does not have a ready means for determining,” just how many anti-IED projects it is currently funding, the report said. Although GAO accounted for $4.8 billion in Pentagon spending, it called that estimate “understated,” because many anti-IED initiatives weren’t properly recorded.

“DOD has funded hundreds of C-IED initiatives but has not developed a comprehensive database of these initiatives or the organizations conducting them,” the report stated.

The report is a follow up to a February 2012 GAO study that concluded DOD does not have “full visibility” over its anti-IED projects.

The Joint Improvised Explosive Device Defeat Organization (JIEDDO), which oversees all this work, has become a symbol of the organizational mess that can ensue when huge government sums are thrown at an urgent project. Improvised Explosive Devices, better known as IEDs, remain a weapon of choice against U.S. and allied forces in Afghanistan, where 16,500 IEDs were detonated or discovered being used against U.S. troops in Afghanistan in 2011.

A sudden infusion of funds by the Pentagon in 2006 turned JIEDDO from a 12-person Army task force into a $21 billion organization with 1,900 personnel. But, as noted by the Center in March 2011, the IED-fighting force never developed any new methods or technology for improving detection of explosives, and its impact was muted. A soldier’s chances of finding an IED before it detonates has remained about 50 percent since the Pentagon formed JIEDDO.

Of the 1,340 anti-IED initiatives funded by the Pentagon since 2008, 596 of them were conducted by JIEDDO. But the organization was unable to provide the accountability office with information on the cost or the effectiveness of four-fifths of those initiatives. In comparison, 80 percent of the non-JIEDDO initiatives completed the GAO survey.

As an example of overlap, GAO’s survey uncovered 107 initiatives spread over 19 organizations working to neutralize cell phone-triggered IEDs, a situation GAO warns “demonstrates overlap and the potential for duplication of effort.”

Other areas of potential overlap included two organizations that produced similar IED-related intelligence reports, two organizations that developed similar robots to detect IEDs from a safe distance, and two organizations that created anti-IED devices using chemical sensors “similar in their technologies and capabilities.”

In its response to the report, the Pentagon criticized the watchdog agency for portraying JIEDDO as “uncooperative” despite having opened up its record books to investigators. GAO noted that, while they agree they were provided access, the limitations of available data showed the extent of JIEDDO’s disorganization.

The Pentagon also disputed GAO’s claims of overlap in counter-IED efforts. For example, the Defense Department noted that when the agency pointed to 60 chemical sensor projects by 14 organizations, it failed to mention the sensors are meant to detect different chemical signatures.

GAO’s response? Without a comprehensive list of counter-IED efforts, neither DOD nor the watchdog agency can tell how and “to what degree” the chemical sensors are actually different from each other — and so “the potential for duplication exists.”

The Pentagon also took issue with GAO’s comparison of two intelligence analysis groups working on counter-IED projects. Although GAO’s report stated the two groups worked in similar areas without knowledge of the other’s activities, the Pentagon said that assessment was outdated and that the two analysis groups are now communicating.

Bipartisan group of lawmakers demands better Pentagon auditing

2012-08-03T15:04:21-04:00

A bill proposed by a bipartisan group of senators Thursday would punish Pentagon agencies for failing to meet a series of deadlines for conducting proper internal audits, marking a major ratcheting up of congressional pressure about a good-government goal first set in legislation enacted 18 years ago.

Sen. Tom Coburn, R-Okla., a member of a subcommittee on federal financial management, is leading the effort to provide new incentives to the military services, which have moved slowly to comply with a target of completing successful audits of their expenditures by 2017. He was joined this week by five other Republicans and two Democrats.

Under their bill, military branches that don’t meet the 2017 deadline would see the development of weapons systems blocked before reaching the production and deployment stage.The bill would also reward agencies for meeting deadlines by conferring more control over their own budgets, including the ability to shift between $30 million and $60 million annually between accounts to pay for more weapons procurement, operations and maintenance, research or personnel, all without congressional approval.

The bill would also insist that the military services appoint some top officials who have previously worked as a chief financial officer of a government agency or a public company that has received an audit during their tenure there.

Each branch of the U.S. military has had difficulty meeting a set of interim auditing deadlines. A report from the Center for Public Integrity last week noted that problems with new accounting software systems have led to $8 billion in cost overruns. The Pentagon’s inspector general said recently that deadlines for completing the work have repeatedly slipped, with, for example, the Army’s launch date for its new auditing system pushed back 12 years, from 2004 to 2016.

Coburn has urged the Pentagon to get its financial house in order before, arguing that doing so will cut waste in military spending and increase efficiency. In January 2011, he wrote Admiral Gary Roughead, chief of naval operations, to say, “the Pentagon is one of the few agencies in the federal government that cannot produce auditable financial statements in accordance with the law … I will continue to push for a budget-freeze of all base budget non-military personnel accounts at the Defense Department until it complies with the law regarding auditable financial statements.”

Cosponsoring the bill with Sen. Coburn are Sens. Kelly Ayotte, R-N.H., John Cornyn, R-Texas, Chuck Grassley, R-Iowa, Ron Johnson, R-Wis., Joe Manchin, D-W.Va., Claire McCaskill, D-Mo., and Rand Paul, R-Ky.

Millions of dollars in U.S. aid wasted in Afghanistan

Nangarhar Province,Afghanistan — 2012-07-31T12:17:53-04:00

In the Nangarhar province near Afghanistan’s eastern border sits an abandoned police base, built with $4.5 million of U.S. taxpayer dollars and completed just 13 months ago. The base, known as Lal Por 2, is badly needed but remains empty because it lacks any viable water supply. No efforts are underway to add one.

A neighboring base on the border, also built with U.S. funds, has some Afghan police, but lacks a fully-functioning septic system or air conditioning. Those shortcomings, along with drainage problems in the main buildings, put the base at risk for abandonment as well, according to a new report by the Special Inspector General for Afghanistan Reconstruction.

John Sopko, a former deputy director at Homeland Security and prosecutor who just filled the inspector general role July 2, says in his quarterly report published Monday that these two bases are prime examples of rampant waste throughout the Afghan reconstruction effort. Costing a total of $19 million, the bases, along with two others in the Nangahar province facing their own problems, are meant to give Afghan police a watchful eye along the nation’s militarily-significant border with Pakistan.

Instead, they serve as a reminder that some of the $400 million the U.S. has sunk into “large-scale” construction projects in Afghanistan has gone to waste, according to the inspector general. The report also uncovered $12 million of grants for construction that was disbursed by the Department of State without adequate follow-up to ensure the money was being put to good use. Looking at one of those grants, the inspector general found that $253,432 had been wasted after a project was scrapped and no money was returned to State.

Sopko’s quarterly report includes multiple examples of U.S.-funded roads, buildings and facilities going to waste, including the police bases in the Nangarhar province. Neither the contractor who built the facilities — Afghanistan’s Road & Roof Construction Co. — nor the U.S. Army Corps of Engineers effectively checked the quality of the project upon its completion, according to the inspector general’s report.

A separate inspector general report published Monday provides extra detail on the Lal Por bases. In a letter to the inspector general that appears in that Lal Por report, the Army Corps of Engineers claims that some shortcomings at the bases can be attributed to poor security in the region.

“This is especially the case with projects covered in this report which are located in extremely remote and predominantly inaccessible sites,” the Corps of Engineers’ Col. John Hurley wrote in a letter included in the report Monday. “The SIGAR report does not mention the critical security and access issues which are the root cause for the specific quality management discrepancies.”

Indeed, the Nangarhar province’s main road, the Jalalabad-Kabul highway, has been labeled one of the most dangerous roads in the world — though that’s due to vehicle accidents, not insurgent attacks. In 2010, The New York Times said the mountainous 40-mile stretch between Jalalabad and Afghanistan’s capital “claims so many lives so regularly that most people stopped counting long ago.”

The inspector general also says his office uncovered cases of fraud and bribery, which resulted in two convictions, five arrests, and $900,000 in recovered funds.

Sopko wrote in the quarterly report that his office’s next review of Afghanistan reconstruction this fall will focus on the sustainability of facilities the U.S. will leave for Afghanis when the last combat troops leave in 2014.

“Without effective security — the object of more than $50 billion in U.S. appropriations since 2002 — governance and socioeconomic development cannot succeed,” Sopko wrote. “But without sustainability, no amount of success in security can long endure.”

Top defense oversight staffer received $1.6 million payout from Lockheed Martin

Lockheed Martin Corporation — 2012-07-30T11:10:44-04:00

A former executive for the Pentagon’s top defense contractor collected $1.66 million in salary, consulting fees and retirement pay from two top defense contractors last year before becoming the Republican chief of staff for the Senate Armed Services Committee in February.

The appointment is the second by a Republican member of either the House or Senate Armed Services committee to provoke criticism from independent groups that consider it a conflict of interest.

Ann Elise Sauer, who was appointed to her present job by Sen. John McCain, R-Ariz., worked for more than a decade as a vice president and lobbyist for Lockheed Martin before leaving in Jan. 2011, according to a financial disclosure she made to the Secretary of the Senate in April.

In 2011, she was paid a salary and bonus totalling $660,390, deferred compensation of $769,574, and $232,872 labeled as “retired pay” on the financial disclosure form. Lockheed is the Defense Department’s largest corporate contractor, earning $28.3 billion, or 61 percent, of its sales from the department in 2011, according to the company’s annual report.

Sauer then worked as a consultant and analyst for BAE Systems, earning $55,000 from the firm, according to her financial disclosure form. BAE is the Pentagon’s ninth largest contractor.

The Project on Government Oversight’s Ben Freeman said Thursday that Sauer’s appointment to the principal Senate committee tasked with overseeing all military spending and contracting creates a huge conflict of interest.

“$1.6 million — that gives a lot of reasons to remember your former employer,” said Freeman, who specializes in defense contracting issues for POGO. “When you’ve been working for a company for 10 years and then just last year you got $1.6 million, I have to think that affects your decision making.”

Sauer’s LinkedIn page shows she served on various McCain political campaigns from 1998 through 2008. This won’t be her first turn on the Armed Services Committee; she worked there as a professional staff member in the late 1970s. She then worked as a legislative assistant and legislative director on McCain’s staff in the 1990s.

In an emailed statement, McCain spokesman Brian Rogers said Sauer’s appointment as Republican staff director on the Armed Services Committee is on a “stop-gap, temporary, one-year basis.” He also noted that, although she received $1.6 million in compensation last year, Sauer holds no stock in Lockheed Martin.

Her former employer has repeatedly drawn the ire of government watchdogs, most recently for its work on the problem-plagued F-35 and F-22 jet fighters. The Center wrote in June about the latest of those troubles, including $1 billion in cost overruns on four early production contracts for the F-35; it is the single most costly military program in U.S. history. A spokesperson for Lockheed Martin did not return request for comment on Sauer’s appointment.

Sauer is not alone in taking a key job — and a major pay cut — to work on Capitol Hill helping oversee federal contracts with a former employer. Last year, when Northrop Grumman lobbyist Thomas MacKenzie joined the House Armed Services Committee, he held between $100,000 and $250,000 of stock in his former company, according to his own financial disclosure to the House Clerk.

Claude Chasin, the committee spokesman, did not immediately respond to questions about the appointment. But Robert Lee Simmons II, staff director of the House Armed Services Committee, told a reporter for Hearst newspapers in June that MacKenzie, who runs the staff for the subcommittee on seapower and projection forces, is "the kind of person we would want to have in his job. We are lucky to have Tom."

Craig Holman, a lobbyist at the nonprofit watchdog group Public Citizen, had a different view. He told both POGO and the Center that “it’s not uncommon for a senior K Street lobbyist to have a quarter of a million dollars tucked away in stock. But it is uncommon for someone who is a congressional staffer. This poses a very serious conflict of interest.”

Officials turn to cheaper detectors to find a terrorist's nuclear materials

2012-07-27T11:02:29-04:00

Federal officials in charge of detecting dangerous nuclear materials charted a new strategy at a House hearing on July 26, in the aftermath of the government’s failed attempt to build large, advanced radiation scanners for ports and border crossings.

Huban Gowadia, the acting director for the Domestic Nuclear Detection Office, said her office will sharply increase the use of hand-held monitors, which she said are both cheaper and more reliable than the stationary scanners the government spent six years trying to develop.

But she emphasized that the task of preventing the importation of dangerous nuclear materials — including those that could be fashioned into so-called “dirty bombs” — remained an “inherently difficult technical task,” and offered no near-term, comprehensive solution.

The nuclear detection office, part of the Homeland Security department, sunk $230 million into developing 13 Advanced Spectroscopic Portals that scientists and nuclear security experts assessed as a bad investment.

In 2011, the National Academy of Sciences reported that much of the nuclear detection office’s testing on its own product was “misleading.” The academy found that the new machines, despite their high price tag, offered little improvement over previous technology and even performed worse in some key areas, such as detecting radiation that would have been “masked,” or concealed in lead lining, for example.

The new machines cost $1.2 million each to develop — twice as much as older radiation monitors that the government deployed at nearly 600 locations after the 2001 terrorist attacks. According to the Raytheon Corporation, one of the developers of the new machines, the older ones were unable to distinguish between genuine threats and naturally-radioactive fertilizer or bananas — requiring costly second inspections whenever they alarm.

Rep. Dan Lungren, R-Calif., who chaired Thursday’s hearing of the House subcommittee on Cybersecurity, Infrastructure Protection, and Security Technologies, called the new machines a “costly failure” and said they left the government “without the improved radiation detection equipment needed.”

Rep. Yvette Clarke, D-N.Y., the committee’s senior Democrat, said, “I hope that our congressional oversight has had an effect in bringing to light decisions that caused the taxpayers a lot of money with little to show,” Clarke said. “I hope we don’t see that kind of decision making again.”

Gowadia responded, “We’ve had lessons learned. We’ve definitely stepped up — based on your oversight and GAO’s recommendations — a solutions development process. All around, the rigor of our program management and execution has come far.”

David Maurer, the Government Accountability Office’s director of Homeland Security and Justice issues, told the subcommittee that Homeland Security is learning from its past mistakes and that “the best evidence of this is the department’s announcement last week that it was cancelling the ASP program.”

He attributed much of that program’s failure to a lack of coordination within the nuclear detection office, but said he was pleased with new focus on addressing that problem.

“A key challenge they face is that often times the people at DHS who were developing new technologies weren’t talking to the actual end-users,” Maurer said. “So, sometimes there were some pretty serious disconnects between folks developing technologies and those who actually ended up using them in the field. And they have plans in place now to address that problem.”

Gowadia said several of the 13 advanced portal machines already developed by her office would be handed over to state detection agencies for use in weigh stations and monitoring trucks crossing the Mexico-U.S. border.

Pentagon efforts to straighten out bookkeeping face billion-dollar cost overruns

2012-07-24T12:03:14-04:00

Multiple Pentagon efforts to account precisely for the flow of military spending are facing major delays and at least an $8 billion cost overrun, according to a new report by the Defense Department’s inspector general.

The internal watchdog, in a report last week, said that the military services have missed their deadlines for designing and integrating new accounting software meant to bring their bookkeeping up to modern standards and manage their parts and weapons inventories more efficiently. In the Army’s case, the launch date for its new accounting system has slid 12 years, from 2004 to 2016.

The delays threaten to derail Defense Secretary Leon Panetta’s goal of completing a major financial audit for the Pentagon by 2017, according to the inspector general’s report. The aim of such audits is give the Pentagon’s top brass a better understanding of how their funds are being spent and help avoid misspending and waste.

Accounting software systems for the Navy and Air Force have also experienced delays and cost overruns. Launch of the Air Force’s program, managed by Accenture, has been postponed from October 2009 launch to April 2017, and its cost has jumped from $420 million to almost $2.2 billion, according to the new report. The Navy’s program, developed by IBM, is to be launched in August 2013, more than two years behind schedule.

“As a result of the schedule delays, DoD will continue using outdated legacy systems and diminish the estimated savings associated with transforming business operations through … modernization,” said Amy J. Frontz, the principal assistant inspector general for auditing, in an introduction to the report.

As noted in an October 2011 article by the Center, Congress has been pressing for more accurate accounting systems partly to help stop improper payments, such as the $1.8 billion the Navy awarded to Northrop Grumman for work on a high-altitude surveillance plane. The Pentagon’s Inspector General found that money was paid without scrutiny, and Northrop eventually refunded $206,000 to the Navy in funds that paid for golf outings in Paris, Singapore, and elsewhere.

The new systems are supposed to be used by more than 268,700 personnel, and replace 238 existing systems, at a total cost now estimated to be $15.2 billion.

The Pentagon’s top financial office did not contest the findings and promised to track the work more closely. But contractors involved in the effort had little to say this week about the reasons for the setbacks.

Computer Sciences Corporation spokesman Joel Shadle declined to comment on his company’s handling of the Army’s long-delayed accounting software. At Accenture, which oversees the Air Force’s new system, spokeswoman Joanne Veto deferred questions to the Air Force. IBM spokeswoman Whitney Forster did not return a request for comment on the Navy’s program.

Army and Air Force officials attributed the delays to the difficulty of adapting “commercial-off-the-shelf” software to their existing accounting routines. Navy officials said the cost of their system had gone up because new requirements were tacked on and more onsite support was needed than the Navy had anticipated.

Russ Rumbaugh, the director of budgeting for the foreign affairs and defense program at the nonprofit Stimson Center, said software contracting is often complicated. “Software moves particularly fast — it moves so fast that a traditional DoD acquisition process doesn’t really keep up with that,” said Rumbaugh, a former Defense analyst for the Senate Budget Committee.

But Rumbaugh added that “it doesn’t look good. They’ve been trying for this audit for a decade and a half now … Certainly their record on this doesn’t give you a lot of confidence.”

GAO: Missile defense initiative faces continuing challenges

United States — 2012-07-23T07:17:21-04:00

For years, the U.S. has pursued a reliable missile defense shield. But major parts of the program need better management or the entire effort will experience serious delays, says a new report from the Government Accountability Office.

Cost estimates and timetables for five key missile defense programs are “either not reliable or the program is missing information that could make it more efficient,” according to the report, released Friday.

Systems analyzed by the GAO were the Standard Missile-3 (SM-3) Block IIA, Aegis Ashore, Ground-based Midcourse Defense (GMD), Precision Tracking Space System (PTSS), and the Targets and Countermeasures Extended Medium-Range Ballistic Missile.

GAO lists ten “best practices” that the programs should be following, and found only four cases — out of a possible 50 — where the programs “fully” met these criteria. In ten cases the criteria were just “minimally” met. To help improve the “transparency and needed accountability” of the programs, GAO recommended that they be directed to “improve their compliance” with best practices. For long term solutions, managers need to do a better job of overseeing and pacing the work, the report said.

In its response to a draft version of the report, officials at the Pentagon said they agreed with GAO’s overall findings and recommendations.

The GAO's review included a reminder that the agency has “consistently reported … troubled acquisition histories” for the missile defense effort. One such report came in April. That study found that President Barack Obama’s administration was repeating a mistake made by his predecessor, George W. Bush.

In 2004, the Bush administration rushed a missile interception system through the development process to meet deadlines, leading to “unexpected cost increases, schedule delays, test problems, and performance shortfalls,” the report stated. In the past decade alone, the Pentagon has spent $80 billion on all its missile defense efforts, and it forecasts spending another $44 billion over the next four years.

A similar scenario is now playing out involving U.S. missile defenses in Europe. In 2010, Obama chose to deploy missile systems across the continent and improve interceptors by 2020. But a series of missile test failures have hindered those plans, slowing production for three of four interceptors the U.S. plans to place in Europe.

U.S. arms control official: Test ban treaty faces 'uphill' fight in Senate

United States — 2012-07-23T09:19:20-04:00

The Obama administration’s top nuclear disarmament expert expressed concern Friday over partisan sentiments on Capitol Hill that could affect the passage of a key nuclear treaty.

In a conference call, Rose Gottemoeller, the assistant secretary of State for the Bureau of Arms Control, Verification and Compliance, told members of the American Bar Association that her office faces a complicated challenge in working with the Senate to ratify the Nuclear Test Ban Treaty. The agreement would permanently ban nuclear testing and explosions worldwide for any purposes.

“We have a highly charged political atmosphere in Washington these days,” Gottemoeller said. “I know we will have a tough uphill fight, but I remain hopeful. We’re working to get these facts out to members of staff on the Hill — many of whom have never dealt with this treaty.”

Like all treaties, the agreement on nuclear test bans requires a two-thirds majority approval from the Senate for U.S. ratification. In September 1996, it was signed by two-thirds of the United Nations General Assembly, including the United States. But it cannot enter into legal force until it is ratified by the United States and a handful of other remaining nations with nuclear arms or advanced nuclear programs. Gottemoeller said the Obama administration still has no specific timetable for pushing the treaty through the Senate.

“We understand that people want to get their heads around this and understand it fully, so we have no set time frames,” she said. “But we’re going to be patient and we’ll be ready to bring the treaty before the Senate for a vote when the time is right.”

Both as a candidate and as president, Obama has made the passage of the test ban treaty a keynote issue in his nuclear security policy. During the 2008 election campaign, he promised to reach out to the Senate to ratify the treaty “at the earliest practical date.” In April 2009 in Prague, the president told an international audience his administration would “immediately and aggressively pursue U.S. ratification” of the treaty.

The Senate rejected the Test Ban Treaty in 1999 and its critics are still vocal. Last year, while speaking at the Carnegie International Nuclear Policy Conference, Senate Minority Whip Jon Kyl, R-Ariz., said “there is even less reason to support the CTBT than 11 years ago when it was roundly defeated.” Kyl expressed doubt that the U.S. would be able to hold other nations accountable to the treaty’s terms — specifically citing concern over the possibility of covert testing in North Korea and Russia.

A report this year by nine experts for the National Research Council largely rejected such concerns, concluding that militarily-significant cheating would be detected.

Joining Gottemoeller on the American Bar Association call was Ambassador Thomas Graham Jr., a senior U.S. diplomat who helped negotiate every major international arms control agreement from 1970 to 1997. Although treaties are always “vigorously fought over” by U.S. lawmakers, Graham said, he believes nuclear disarmament and security is a bipartisan issue, citing treaties signed by each president since John F. Kennedy — regardless of party.

He touted the test ban treaty as an essential step toward eventual nuclear disarmament. Graham said the success of the high-profile non-proliferation treaty rested on the ratification of the test ban agreement first. But he added that an ultimate drawdown in weapons faces many obstacles — most notably a lack of cooperation from nuclear states such as Pakistan, India and North Korea.

Electrical grid is not well protected

2012-07-19T12:03:31-04:00

A government watchdog is calling for tighter — and more coordinated — cyber security efforts by federal agencies to protect the U.S. electricity grid, a potentially vulnerable target for U.S. enemies.

The volume of malicious software and online attacks targeting overall U.S. computer networks has tripled in the last two years, raising the possibility of an eventual threat to the flow of electric power to homes, businesses, and the Internet itself, according to a Government Accountability Office report released Tuesday.

“Terrorists, hackers, and other non-government groups all have the desire and are trying to gain the ability to get into our electricity infrastructure,” Gregory Wilhusen, the director for information security issues at GAO, said in an interview. “The impact of widespread outages could have national security implications. And, in residential areas, it not only affects homes and customers. It also has major effects on commerce.”

According to a report three weeks ago by the Department of Homeland Security’s Computer Emergency Response Team, reported attacks on organizations in the electrical energy sector in the U.S. have increased from three in 2009 to 31 in 2011. These amounted to 21 percent of the total reported in that time period.

Several of the attacks cited in the report were carried out through spear-phishing, an attempt to steal information for monetary gain. In one case, an employee at what the report identified only as a “bulk electric power organization” opened to door to hackers merely by clicking on what appeared to be a PDF of an e-mailed industry newsletter; the attachment then released malicious software onto the company computer. Homeland Security’s response team was called on to deal with what it labeled as a “sophisticated threat.”

A spear-phishing effort also targeted what the report called “an Energy Sector organization” in 2010, successfully withdrawing data from the group’s network. Called to the site, Homeland Security’s team found evidence of a targeted attack — versions of malicious software that had been specially adapted to the organization, allowing hackers to retrieve information. Homeland Security’s report said its response team was able to “identify, mitigate, and eradicate” the threat.

According to GAO, security for smart grids — which measure energy use and redirect power to areas that need it most — is threatened by a lack of coordination between authorities tasked with energy and water security at the federal level and those at state and city levels.

So far, many of the attacks have not been aimed at shutting off service but at avoiding paying for it. Wilhusen said some hackers have tinkered with usage software, allowing them to escape proper billing.

Although the Federal Energy Regulatory Commission is responsible for electrical security on a national scale, local authorities handle security for smart grids within their own jurisdictions, with no mandatory standards to follow. Instead, local offices are supposed to follow voluntary standards put in place by the Energy Independence and Security Act of 2007. However, the GAO report notes that federal regulators have no way of checking who’s adhering to those.

“Without a good understanding of whether utilities and manufacturers are following smart grid standards, it would be difficult for FERC and other regulators to know whether a voluntary approach to standards setting is effective or if changes are needed,” according to the GAO report.

The Federal Energy Regulatory Commission did not return a request for comment.

U.S. official says government wasted $6-8 billion in Iraq reconstruction

Iraq — 2012-07-18T10:40:07-04:00

The official in charge of monitoring America’s $51 billion effort to reconstruct Iraq has estimated that $6 billion to $8 billion of that amount was lost to waste, fraud and abuse.

Stuart Bowen, the Special Inspector General for Iraq Reconstruction (SIGIR) for the past eight years, gave that estimate in an interview with the Center for Public Integrity on Monday, shortly after releasing a new summary of his office’s many grim discoveries since it began work in in 2004.

In Friday’s report, Bowen said the exact funds lost to fraud and waste “can never be known,” largely because of poor record-keeping by the U.S. agencies involved in the effort. These include the Departments of State and Defense, along with the U.S. Agency for International Development.

According to the report, auditors repeatedly found that the State Department and Defense Department failed to properly review invoices from government contractors, often approving billions of dollars in services without checking if costs were accurate or efficient. “I think the consistent theme throughout our eight years of oversight work has been the inconsistent availability of records and information on contracts and costs,” said Bowen, a former Texas lawyer.

Bowen said his efforts were hampered from the outset by the ineffectiveness of a clearinghouse created in Iraq for government departments to submit reconstruction bills and contracts for review and oversight. Known as the Iraq Reconstruction Management System, the system was often ignored, with the result that nearly a third of all the contracts could not be monitored adequately.

"Agencies often inconsistently used it - such as USAID. Sometimes projects were put in there, sometimes they weren’t,” said Bowen. Aides said his $6 to $8 billion figure is based on his review of audits and reconstruction costs, as well of estimates of waste in programs where key data is missing.

Bowen’s Deputy Inspector General, Glenn Furbish, said separately in the interview that the cost of many contracts was steadily increased due to frequent modifications. “Once U.S. agencies started down this road, they rarely stopped and said ‘this is getting out of hand,’” Furbish said.

He also noted that many agencies sometimes skipped appropriate review of their bills in an effort to spend money within a deadline, so they did not have to return it to the Treasury.

Since its founding in 2004, SIGIR has investigated $635 million in spending, resulting in $176 million in “fines, forfeitures, and other monetary results.” In total, the agency estimates it has saved around $1.5 billion in taxpayer funds.

Friday’s report mostly detailed the persistent poor handling of government contracts. “In some instances, invoices were reviewed months after they were paid,” according to the report. “Poor and/or delayed invoice reviews add risk that the government may overpay, or pay unallowable and unreasonable costs.”

The report lays much of the blame on a lack of manpower dedicated to reviewing and overseeing government contracts. The State Department enlisted a single contracting officer to handle a $2.5 billion deal with DynCorp International to train Iraqi police forces, for example. Auditors called this decision “especially disturbing" because of problems in earlier DynCorp contracts. According to Furbish, after SIGIR singled out the contract, the State Department reviewed its original agreement with DynCorp and recovered more than $60 million from the company.

DynCorp spokeswoman Ashley Burke confirmed that her company returned funds to the government but said it had not engaged in misconduct.

SIGIR’s investigation also uncovered instances of bid-rigging and bribe-taking by State and Pentagon officials.

Fraudulent activities uncovered by the special inspector general resulted in 87 indictments, according to the report. Of those cases, 61 involved contract kickbacks, 11 involved contract fraud, and nine were related to embezzlement. Both military officers and defense contractors were frequently implicated.

The report details one such case, involving U.S. Army Major Roderick Sanchez, who served from 2004 to 2007 as a contracting officer in Afghanistan, Iraq, and Kuwait. Sanchez used his authority to solicit cash payments, Rolex watches and other expensive gifts in exchange for steering Pentagon contracts to foreign companies, reaping benefits worth more than $200,000, according to the report. He was sentenced to five years in prison and a fine of $15,000.

A Navy Lieutenant Commander named Frankie Hand, stationed at Camp Taji in Iraq as a contracting officer, entered into a secret agreement with two U.S. contractors — Michelle Adams and Peter Dunn — agreeing to rig government contracts to their benefit in exchange for a cut of the profits, the report said. The two contractors paid Hand $757,525 after obtaining two contracts improperly. An Air Force Master Sergeant received $50,000 in bribe money for “assistance” in the deal, the report said.

Hand received three years in prison and forfeited his share of contract profits, while Adams and Dunn received 15 and 14 months in prison, respectively.

Friday’s report, titled “Final Forensic Audit Report of Iraq Reconstruction Funds”, was wider in scope than most of SIGIR’s work, covering not just a specific project, but a broader picture of Iraq’s reconstruction. SIGIR spokesman Chris Griffith said however that Bowen' has one more major report to publish in January.

Many of the challenges described in the Iraq report mirror those depicted in similar reports by its cousin, the office of the Special Inspector General for Afghanistan Reconstruction. In a May report to Congress, for example, that office concluded that “corruption remains a major threat to the reconstruction effort” and said contractors were taking advantage of lax oversight in Afghanistan.

'Drastic' defense cuts would set the clock back only to 2006

2012-07-17T12:12:35-04:00

Defense spending cuts slated to take effect automatically in January if the two parties cannot agree on a more balanced budget would still leave the Defense Department with more funding than it received six years ago, according to a report Wednesday from the Congressional Budget Office.

It projects that the so-called "sequestration" of military and other funds, ordered by a law enacted last year, would cut the Pentagon’s requested FY 2013 budget of $526 billion to $469 billion, an amount it said was still “larger than it was in 2006 (in 2013 dollars) and larger than the average base budget during the 1980s.”

Sequestration would cut spending for the Pentagon by about $1 trillion over the next decade. The pending cut has prompted panic from Defense Secretary Leon Panetta, who said it would cause “an unacceptable risk in future combat operations.” Lawmakers such as House Armed Services Committee chairman Buck McKeon (R-Calif.) have said they want to block any cuts to defense spending — whether through sequestration or through President Barack Obama’s plan to keep the defense budget mostly level over the next 10 years.

Gordon Adams, a former Office of Management and Budget associate director for national security and international affairs under President Bill Clinton who is now at the Stimson Center, a nonprofit think tank, said he doubts sequestration will happen at all but that “the fact is Defense would not really suffer under those automatic cuts. 2006 was a very healthy level for defense spending.”

The CBO report Wednesday also claimed the Pentagon had underestimated many of its own costs for health care and pay for soldiers and civilian personnel. Although the Defense Department’s five-year projection through FY 2017 sets aside $615 billion for these costs, CBO predicts $738 billion, or 5 percent, more will be needed.

Pentagon spokesman George Little noted that the report also predicted the department would not be able to cutback as much as it has predicted on ballooning expenditures for major weapons systems. The CBO's analysis "instead assumes that future acquisitions programs will perform as they have too often in the past. Their analysis makes clear that we can't let that happen and that we instead have to improve the performance of our acquisition programs," Little said.

Company earned millions in defense contracts while making illegal sales to China

China — 2012-07-05T15:36:00-04:00

The Canadian arm of the aircraft engine manufacturer Pratt & Whitney closed a six-year U.S. government probe last week by admitting that the lure of up to $2 billion in helicopter sales to China had caused it to export computer software illegally that helped China create its first modern attack helicopter.

“This case is a clear example of how the illegal export of sensitive technology reduces the advantages our military currently possesses,” Immigration and Customs Enforcement Director John Morton said in a statement released on June 28. That’s when the government disclosed that Pratt & Whitney and two related companies agreed to pay a total of $75 million in fines for multiple violations of export rules policed by the State Department.

The software probe and the heavy financial sanction appear to have had no punishing impact on Pratt & Whitney’s extensive and continuing contract work for the Defense Department, however. That’s the same department that in an ironic twist announced this spring that it was reorienting its forces to deal with what its officials regard as a rising Chinese military threat against U.S. allies in the region.

The events are once again raising questions about the circumstances under which major defense contractors might be barred from government work. Independent watchdogs have long complained that few such firms have been barred or suspended, even for egregious lawbreaking, such as supplying armaments or related equipment to a potential adversary. Nothing in the settlement agreement directly threatens Pratt's existing or future government contracting.

Since July 2006, when United Technologies — the parent company of Pratt and another firm, Hamilton Sundstrand, which also admitted wrongdoing — filed statements about the software exports with the government that it now admits were erroneous, the Pentagon has awarded more than $1.67 billion in contracts to Pratt and its affiliates, according to a search of the Federal Procurement Data System. And since Pratt & Whitney began its dealings with China in September 2000, the company has received $2.27 billion in Pentagon contracts.

One of Pratt & Whitney’s principal contracts with the department now is to supply jet engines for F-35 Joint Strike Fighter jets. The Obama administration waged a major battle to make the company the sole provider of those engines over the last two years, writing General Electric’s rival engine contract out of federal budgets in an effort to save money. The Pentagon explained in the White House’s proposed fiscal year 2011 budget — issued Feb. 1, 2010 — that Pratt & Whitney’s engine work was “progressing well,” making GE’s work superfluous. The Government Accountability Offices subsequently disclosed in December 2010 that engine costs for the jets have risen by 75 percent since 2001.

The jet is being developed in part to ensure that the U.S. military can prevail against any hypothetical adversary, including major powers able to field mutiple advanced aircraft, such as China.

It’s not the first time that United Technologies or one of its subsidiaries has run afoul of government regulations. An SEC filing by the firm in February, in which the company disclosed the probe’s existence, listed two earlier lawsuits filed by the government against the company over its defense-related work; both were listed as still pending in the courts.

The Project on Government Oversight, a nonprofit watchdog group in Washington, ranks United Technologies at number seven on a list of the top 100 contractors cited for misconduct since 1995.

“They’ve had a smattering of issues over the years — everything from environmental violations to false claims made to the government,” said Neil Gordon, a POGO investigator focusing on government contracting issues. “The military relies on too few companies for these weapons and services. So, they often have few other options when a provider is guilty of misconduct.”

In addition to judicial prosecution, the U.S. government has three options for taking action against defense contractors. Suspension typically bars a company from receiving government contracts for 18 months, and debarment does the same for a longer period — three years. The State Department can also choose to revoke a company’s export license, blocking sales to foreign governments or corporations.

Cheryl Irwin, a spokeswoman for Secretary of Defense’s office, said the Defense Department to her knowledge had not taken action against UTC and its affiliates or reviewed the company’s contracts in light of last week’s settlement.

The prosecution marked “one of the largest resolutions of export violations with a major defense contractor in the Justice Department’s history,” according to U.S. Attorney for Connecticut David Fein, who directed the government's effort. Assistant Attorney General Lisa Monaco, who spoke with Fein at a press conference in Bridgeport, Connecticut said Pratt had compromised “U.S. national security for the sake of profits and then lie[d] about it to the government.” After closely examining company procedures and internal records, it found United Technologies responsible for a string of 576 export-related violations.

What the Defense Department knew and when it knew it is not completely clear. When the Justice Department launched its probe in 2006, it made no public announcement. DOJ spokesman Dean Boyd first said that to his knowledge, others besides the State Department weren't notified, but he later affirmed that the Defense Criminal Investigative Service, an arm of the Pentagon, had assisted the investigation. In the SEC filing, Pratt & Whitney said the Justice Department had been in discussions with the company about the violations since Nov. 2011.

In the settlement, Pratt admitted that some officials in its Canadian subsidiary were aware from the outset that the work with China was initially to be of military use. A marketing manager referred explicitly in an Aug. 2000 e-mail to the company’s export officials to the task of making engines for an “attack helicopter,” an agreed “Statement of Facts” accompanying the settlement recounted. The Chinese called the helicopter the “Z10.”

The United States has had an embargo on military exports to China since the events in Tiananmen Square in 1989. But the company told the Canadian government that because the engines were already approved for civilian export, it needed no special permission for use on a military aircraft. Canadian regulators disagreed, and demanded that company request a permit.

After Pratt conveyed this news to the Chinese, China’s Aviation Industry Corporation suddenly told the company it had begun developing a civilian variant of the military helicopter – the “Z10C,” which it said would be used for sightseeing, business VIPs, and search-and-rescue missions.

Management within Pratt & Whitney was skeptical of the civilian helicopter program’s “sudden appearance,” according to United Technologies’ deferred prosecution agreement. But the company nonetheless saw the claim as providing a useful opening: On November 13, 2000, a Pratt & Whitney manager for Asia Marketing emailed two other executives that whether the civil program was “real or imagined,” the company could bid for an exclusive role.

After being told about the parallel Z10C helicopter, Canadian authorities approved the export of 10 engines.

Pratt & Whitney’s Canadian subsidiary next asked its sister subsidiary Hamilton Sundstrand — headquartered in the United States — to write the software needed to control the engines, without saying that the purpose was to equip a military helicopter. From January 2002 to October 2003, Hamilton Sundstrand exported 12 versions of the software to Pratt & Whitney, which sent six of those on to China for use in the development model of the Z10 helicopter, according to the settlement agreement.

Pratt & Whitney executives also kept the military end-use of its engines and software secret from some of the company’s engineers. When two were dispatched to China in March 2003 to observe the helicopters, one asked a Chinese official, "where are the other 10 seats,” meaning those intended for civilian passengers? The helicopter they saw had only two seats in tandem — typical of an attack model — and mock weapons on the hull. According to federal prosecutors who interviewed the engineers, the Chinese official smiled and said, in effect, that it had always been an attack helicopter.

The engineers reported their observation — and their concerns — to Pratt & Whitney’s manager for Asian marketing upon returning to the company’s Montreal headquarters. But no restrictions were imposed by the firm and they kept working on the project.

When Hamilton finally discovered the military use of its software in Feb. 2004, it shut down its production in less than a week. Pratt, still holding out hope for the large civilian helicopter contract, picked up where Hamilton Sundstrand left off and resumed exporting its own versions of the software to China through June 2005.

United Technologies made a limited disclosure about its involvement to the State Department in 2006, after an institutional investor said it was researching the company’s role in helping China’s military and threatened to disinvest. The company has now admitted that disclosure — which claimed the company believed at the outset there were dual civilian and military helicopter programs — was inaccurate.

In the end, Pratt got nothing more for its troubles than a federal probe. In early 2006, China’s Aviation Industry Corporation told Pratt & Whitney the parallel civilian helicopter development would be scrapped. Instead, China said it would instead build a much larger civilian helicopter, too large for the engines built by Pratt & Whitney.

According to the Justice Department’s statement announcing the settlement, the first batches of the Z10 attack helicopter were delivered to the People’s Liberation Army of China in 2009 and 2010. The helicopter remains in production and comes outfitted with 30 mm cannons, anti-tank guided missiles, air-to-air missiles and unguided rockets.

UTC, a company with $58 billion in 2011 sales, told the Center through an email on Friday it was taking steps to improve oversight. Spokesman John Moran said UTC has established a new “Export Council” to internally inspect arms shipments and is now requiring online training for employees working with exports.

The company’s deferred prosecution agreement also shows a lengthy list of reforms the company has promised in response to the exports violation, assigning 175 executives to keep an eye on export law compliance for UTC and its subsidiaries, along with requiring internal reviews of exports from all its subsidiaries, including Pratt & Whitney.

Staff reporter Aaron Mehta contributed to this article. Photo courtesy of Global Security

This story was updated 7/5/12 to reflect DOJ spokesman Dean Boyd's clarification that DCIS was involved in the investigation into United Technologies.

Congress can’t say no to military pay raises

2012-06-25T16:09:31-04:00

While civilian salary increases have slowed to a crawl in the last five years, a new Pentagon report shows rapidly-growing military payrolls have proved immune to the economic pain felt in the private sector.

The Defense Department’s latest Quadrennial Review of Military Compensation confirms that after years of special benefits provided by Congress, it's now much more lucrative to be a soldier than a civilian. While average pay for civilians with a two-year college degree rises $3,000 between their tenth and twentieth year in the workforce (to reach $45,000), comparable enlisted Defense personnel see their salaries increase $15,000 in that time (to reach $73,000).

In fact, at every point in someone’s career, pay in the armed services tops that of civilians. In their first year, military officers make $20,000 more than private sector workers with a bachelor's degree, according to the review by representatives from the Army, Navy, Air Force, Marine Corps, National Guard and various Defense bureaus. By their twentieth year, that difference has grown to $60,000. And the shortfall is larger for civilians with some college experience or a high school diploma.

A separate report last month by the Center for American Progress, a non-partisan educational institution, concluded that the military's salaries overall have risen 28 percent since 2000, with the average cost per soldier growing from $64,606 to $80,292 in 2012. Defense personnel experts attribute this to Congress’ desire to reward troops for their service in recent wars — including a pay bonus begun in 2004 — and a swelling of the armed forces’ top ranks.

Former Secretary of Defense Robert Gates pushed, to no avail, for major changes to Pentagon compensation and warned of its rising costs before leaving the position last July. In a speech at The American Enterprise Institute, he called the military pay system a “rigid, one-size-fits-all approach … left over from the last century.”

“A more tiered and targeted system — one that weights compensation towards the most high demand and dangerous specialties — could bring down costs while attracting and retaining the high quality personnel we need,” Gates said.

For many years, Defense pay was pegged to civilian pay, and meant to rise at the same rate. But Congress changed the rules in 2004 by mandating that soldiers’ pay increase at the rate of the Employment Cost Index plus 0.5 percent. It was meant to bolster military recruitment efforts for the conflicts in Iraq and Afghanistan.

Gordon Adams, a former Office of Management and Budget associate director for national security and international affairs under President Bill Clinton, said the Hill’s push came at a time when the Pentagon’s pay was often worse than the private sector’s. But Congress’ rationale has been weak for some time, according to critics. Since 2006, the Pentagon has been able to meet its recruitment goals every year, according to the center’s report. Adams said a slowing private sector economy, not the special pay, is responsible for the military’s recruiting success.

The Pentagon has proposed leveling off pay increases starting in fiscal year 2015 and has estimated that plan would save $16.5 billion by 2020. But it has encountered resistance from Congress, which has continually shown support for pay raises at all levels of the armed forces. Lawmakers have also blocked targeted increases for positions where recruiting has lagged, such as drone operators and information technology specialists.

“The best ideas for reigning in costs are all known — this has been researched to death. It’s the politics that kills you,” Adams said. “Congress and [military] retirees want everyone to get their raises across the board — rather than in specific areas where pay lags — and it’s good politics, but it’s not good force management.”

Ben Freeman, who specializes in Defense personnel issues at the Project on Government Oversight, notes that there are also more highly-paid officers on the rolls now. Historically, wars have swelled the military’s lower ranks, but it now has less than five enlisted personnel for every officer for the first time in 200 years, he said.

And soldiers — especially those who have served 10 or 15 years — have huge financial incentive to stay on the rolls longer and rise through the ranks. Under a policy put in place in 1948, they have to stay in the military for 20 years to access their retirement benefits and pension — a retirements “cliff” that complicates managing personnel costs.

U.S. points finger, and arms exports, at human rights abusers

United States — 2012-07-13T11:30:52-04:00

Every May and June, different branches of the State Department paint contrasting portraits of how Washington views dozens of strategically significant countries around the world, in seemingly rivalrous reports by its Human Rights and Political-Military Affairs bureaus.

The former routinely criticizes other nations for a lack of fealty to democratic principles, citing abuses of the right to expression, assembly, speech and political choice. The latter tallies the government’s latest successes in the export of American weaponry, often to the same countries criticized by the former.

This year was no different. The State Department’s Military Assistance Report on June 8 stated that it approved $44.28 billion in arms shipments to 173 nations in the last fiscal year, including some that struggled with human rights problems. These nations include the United Arab Emirates, Qatar, Israel, Djibouti, Honduras, Saudi Arabia, Kuwait, and Bahrain.

Three nations with records of suppressing democratic dissent in the last year — Algeria, Egypt, and Peru — are listed in the report as recently receiving U.S. firearms, armored vehicles, and items from a category that includes chemical and riot control agents like tear gas. The State Department confirmed that U.S. tear gas was delivered to Egypt up to the end of November, but has declined to confirm it was also sent to Algeria and Peru.

The export of American arms to countries around the world — what the State Department calls a tangible expression of American “partnership” — is in fact booming. The commercial arms sales reviewed by the State Department reached $44.28 billion in fiscal year 2011, a $10 billion sales increase since 2010. Next year should see another increase of 70 percent, the department says.

Those sales — plus the government-to-government arms exports overseen by the Pentagon — make the United States the world’s top provider of major conventional weapons, according to the Stockholm International Peace Research Institute. Russia, France, and China followed behind. Much of the recent U.S. increase came from vastly expanded sales to Saudi Arabia, Brazil and India.

“Obviously, we’re going to continue to press and advocate for U.S. arms sales,” said Assistant Secretary for the Bureau of Political-Military Affairs Andrew Shapiro in a June 14 news conference addressing arms exports. “We are hopeful that arms sales to India will increase. We’ve made tremendous progress in this relationship over the last decade.”

Shapiro explained that by “progress” he meant that U.S. arms sales to India went from “nearly zero” to around $8 billion in that period.

Here’s what the May 24 report issued by State’s Bureau of Democracy, Human Rights and Labor said about India: “The most significant human rights problems were police and security force abuses, including extrajudicial killings, torture, and rape; widespread corruption at all levels of government; and separatist, insurgent, and societal violence. Other human rights problems included disappearances, poor prison conditions that were frequently life threatening, arbitrary arrest and detention, and lengthy pretrial detention.”

India is not alone in getting U.S. arms sales pitches at the same time Washington points at rights abuses. Commercial arms sales totalling $2.4 billion were approved to the United Arab Emirates, which the State Department said had abridged key political freedoms; sales totalling $1.7 billion were approved to Qatar, which lacks independent media and restricts freedom of assembly; and sales totalling $1.39 billion were approved to Djibouti, whch State said had harassed, abused and detained government critics. (A top 10 country list appears at the end of this article.)

“When we deem that cooperating with an ally or partner in the security sector will advance our national security, we advocate tirelessly on behalf of U.S. [arms manufacturing] companies,” Shapiro said.

No law requires that U.S. arms be exported only to countries that the State Department — in its annual human rights assessments — determines are treating their citizens well. Instead, a more narrow restriction known as the so-called “Leahy Law,” named for author Sen. Patrick Leahy (D-VT.) and passed in 1997, prohibits U.S. assistance to specific military and police units deemed responsible for human rights abuses.

Moreover, as Leahy spokesman David Carle pointed out in an interview, the law only covers direct government-to-government transfers overseen by the Defense Department, a stream of exports separate from the commercial sales reviewed and approved by the State Department. So, although the Defense Department’s $34.8 billion in direct government-to-government sales are covered by the Leahy Law, the $44.28 billion in sales authorized by State are not.

Adotei Akwei, the managing director of Amnesty International’s government relations efforts, said that “In all of these countries, there’s a need for a much more rigorous process for looking at where these weapons are going and how they’re being used. Even though the State Department identifies problems, we still see these sales taking place over and over again. There’s a much-exemplified disconnect between the identifying of abuse and the sales.”

Shapiro, at the press conference, said his Bureau of Political-Military Affairs ensures any military assistance to foreign militaries and companies “is fully in line with U.S. foreign policy.” Officials vet governments as well as the companies on both sides of the sale, he said. “We only allow a sale after we carefully examine issues like human rights, regional security, and nonproliferation concerns.”

The State Department emphasizes that many items shipped to foreign militaries are used only for external defense, not for internal suppression. In the case of the United Arab Emirates, for example, a $29.4 billion sale authorized in January for fiscal year 2012 consisted mostly of the purchase of 84 F-15 fighter aircraft. But State also authorized billions of dollars in sales of small arms, ammunition and toxicological agents to various countries, including $3,091,166 of firearms to Peru and $1,153,617 to Honduras.

Although State’s public export declaration lists such broad categories of exported weaponry, determining exactly what the shipments contained is still a challenge. Spokesman David McKeeby declined to discuss whether Peru and Algeria got riot control agents, for example, despite the department's confirmation that Egypt did. Asked why, he said “Egypt was a very unique case. Unfortunately, I can’t tell you any more details about these countries, or these licenses.”

McKeeby added that “what I can tell you in Bahrain and Algeria’s case, for example, is that a lot of these licenses predate the Arab Spring period, and that’s something that’s being considered for licenses for the next fiscal year. But the information you want falls under ITAR. That’s how these reports are written, and that’s what we leave it at.” ITAR stands for State’s International Traffic in Arms Regulations, which say that details of the arms exports “may generally not be disclosed to the public.”

Representatives of several companies linked in public accounts to shipments of tear gas canisters to Middle Eastern nations declined to comment. Jose Corbera, a spokesman for the Peruvian embassy’s Commercial Office did not return a request for comment, and officials at Algeria’s embassy also declined to provide data on imports of U.S. munitions.

State spokeswoman Beth Gosselin did note that some of the weapons exports listed in the State Department’s report were meant for use by U.S. forces abroad, not by foreign militaries. In Bahrain, for example, $266.7 million of the $280.3 million worth of military arms and equipment were items for the Navy’s “Fifth Fleet” station on the island nation, she said. Gosselin declined to provide similar data for other countries.

Matt Schroeder, director of the Arms Sales Monitoring Project at the Federation of American Scientists, said the U.S. vetting process for militaries and governments receiving arms is better than that of many nations, but that information on which weapons go to U.S. forces and which weapons go to other users is rarely accessible. “It’s difficult to take the dollar value of arms shipped to a country and extrapolate which section of these items may be vulnerable to misuse,” Schroeder said. “It’s tough to make that call.”

A provision written by Leahy and passed by Congress in 2011 requires legislative approval for the sale of crowd-control material to Middle Eastern governments facing democratic unrest. That provision forced an initial halt to weapons transfers to Bahrain, which has seen protests dating back to last year’s Arab Spring. But in May, the U.S. ended the months-long freeze for some items, renewing the export of arms meant to be used for external defense, such as harbor security boats and engines for jet planes.

The issue of arms exports to countries engaged in repression of their own populaces has been debated recently by top U.S. and Russian officials. Secretary of State Hillary Clinton on June 12 accused Russia of shipping attack helicopters to Syrian President Bashar al-Assad’s regime, charging that those weapons were being turned against Syria’s own people. In a retort, Russian Foreign Minister Sergey Lavrov said, "We are not supplying to Syria or anywhere else things that are used in fighting with peaceful demonstrators, in contrast to the United States, which is regularly sending such special means to countries in the region.”

Lavrov did not mention any nation by name, but Shapiro took the comment as a critique of U.S. exports to Bahrain and called the Russian criticism ”totally specious …We have made clear that we’re not selling equipment to Bahrain now that can be used for internal security purposes until there is improvement on human rights, and … as Secretary Clinton pointed out, the sales to Syria are directly implicated in attacking innocent people, innocent civilians. So we believe that that comparison does not hold water.”

Next month, the United Nations is scheduled to discuss a global treaty that would require annual reports from all nations detailing the value and type of weapons they exported. Although President George W. Bush’s administration opposed the U.N. Arms Trade Treaty in favor of handling weapons tracking on a national level, Clinton reversed that position in a statement in October 2009, saying, “The United States is prepared to work hard for a strong international standard.”

U.S. officials have said the treaty, expected to be approved by the end of July, would effectively force other nations to make declarations comparable to what the State Department already does in its annual military assistance report. Akwei expressed hope that the result will be a more concrete system for tracking international arms shipments and ensuring they’re not used in cases of human rights abuse.

“The treaty finally focuses an international lens on this huge trade where the oversight is scarce and haphazard,” Akwei said. “It will be largely dependent on cooperation of countries like China and Russia, but it will give NGOs in those countries, and worldwide, the ability to see records and ask questions about arms trade.”

What follows is a list of the top 10 national recipients in fiscal 2011 of commercially sold U.S. weapons that were cited by the State Department for human rights shortcomings in calendar 2011:

United Arab Emirates

Commercial arms authorized:

Total:	$2,465,144,471 (4th highest value out of 173 nations)
Types of weapons:	Missiles / rockets / torpedoes, firearms, toxicological agents (may have included tear gas and riot control agents)
Types of equipment:	Aircraft and equipment, ammunition

Human rights problems

“Three core human rights issues continue to be of concern: citizens’ inability to change their government; limitations on citizens’ civil liberties (including the freedoms of speech, press, assembly, and association); and lack of judicial independence … political parties are not permitted. The government continued to interfere with privacy and to restrict civil liberties, including usage of the Internet.”
“Political organizations, political parties, and trade unions are illegal.”

The government does not provide equal rights for women and foreign workers. UAE courts reserve the option of imposing flogging as punishment for adultery, prostitution, consensual premarital sex, pregnancy outside marriage, defamation of character, and drug or alcohol abuse.

Qatar

Commercial arms authorized:

Total:	$1,792,415,581 (8th)
Types of weapons:	Explosives, missiles / rockets / torpedoes
Types of equipment:	Military electronics, aircraft and equipment, ammunition

Human rights problems

“The constitution provides for, but strictly regulates, freedom of assembly. Organizers must meet a number of restrictions and conditions to acquire a permit for a public meeting. For example, the Director General of Public Security at the Ministry of Interior must give permission for a meeting, a decision which is subject to appeal to the minister of interior, who has the final decision.”

“The constitution provides for freedom of speech and press in accordance with the law, but the government limited these rights in practice … The law provides for restrictive procedures on the establishment of newspapers, closure, and confiscation of assets of a publication. It also criminalizes libel and slander, including injury to dignity. All print media were owned by members of the ruling family or proprietors who enjoyed close ties to government officials. There were no independent broadcast media, and state-owned television and radio reflected government views … In at least one case, the authorities contacted a reporter with a warning after the reporter published an article critical of the government.” There is no law criminalizing domestic violence or spousal rape.

Israel

Commercial arms authorized:

Total:	$1,462,319,370 (10th)
Types of weapons:	Firearms, toxicological agents (may have included tear gas and riot control agents), missiles / rockets / torpedoes
Types of equipment:	Armored vehicles, aircraft and equipment, ammunition

Human rights problems

“The most significant human rights issues during the year were terrorist attacks against civilians; institutional and societal discrimination against Arab citizens—in particular issues of access to housing and employment opportunities; and societal discrimination and domestic violence against women.”

“NGOs continued to criticize … detention practices they termed abusive, including isolation, sleep deprivation, and psychological abuse, such as threats to interrogate family members or demolish family homes.”

Djibouti

Commercial arms authorized:

Total:	$1,396,999,702 (12th)
Types of weapons:	Heavy guns / armament, missiles / rockets / torpedoes
Types of equipment:	Military electronics, cameras / auxiliary equipment, ammunition

Human rights problems

“The most serious human rights problem in the country was the government’s abridgement of the right of citizens to change or significantly influence their government; it did so by harassing, abusing, and detaining government critics and by its unwillingness to permit the population access to independent sources of information within the country.”

“Numerous persons were detained for political reasons during the months leading up to the election and released afterwards. For example, the government charged eight men—including human rights activist Jean Paul Noel Abdi—with conspiring against the state. The prisoners were permitted legal representation and were allowed to meet with their attorneys before trial. Noel Abdi was released two weeks later. The remaining prisoners were detained for two months and released shortly after the election.”

“Although the constitution provides for freedom of assembly, the government severely restricted this right. The Interior Ministry requires permits for peaceful assemblies and denied such permits to opposition groups during the election campaign.”

Honduras

Commercial arms authorized:

Total:	$1,390,675,958 (13th)
Types of weapons:	Firearms
Types of equipment:	Aircraft and equipment, fire-control systems, guided missile tracking equipment

Human rights problems

“Among the most serious human rights problems were corruption within the national police force, institutional weakness of the judiciary, and discrimination and violence against vulnerable populations. Police and government agents committed unlawful killings. Vigilantes and former members of the security forces carried out arbitrary and summary killings … Although the constitution and law prohibit such practices, there were instances in which the police and military employed them, including police beatings and other abuse of detainees.”

“On December 7, unknown gunmen on a motorcycle shot and killed former senior government adviser for security Alfredo Landaverde. In the weeks preceding his death, Landaverde had publicly called for cleaning up the National Police and alleged that its leadership was linked to organized crime. An investigation into his death continued at year’s end.”

“During the year confrontations over a long-standing land dispute between owners of African palm plantations and rural field workers in the Aguan Valley, Colon Department, resulted in the deaths of or injuries to approximately 55 persons, including field hands, private security guards, security force members, one judge, and bystanders. At year’s end responsibility for all but two of these deaths had not been established. Human rights groups alleged that police, soldiers, and private security guards used disproportionate force against the protesting workers.”

Saudi Arabia

Commercial arms authorized:

Total:	$877,678,790 (16th)
Types of weapons:	Firearms, toxicological agents (may have included tear gas and riot control agents), heavy guns / armament, explosives, missiles / rockets / torpedoes
Types of equipment:	Armored vehicles, aircraft and equipment, guided missile systems

Human rights problems

“The most important human rights problems reported included citizens’ lack of the right and legal means to change their government; pervasive restrictions on universal rights such as freedom of expression, including on the Internet, and freedom of assembly, association, movement, and religion; and a lack of equal rights for women and children, as well as for workers.”

“ … on July 27, security officials reportedly took a prominent human rights activist, Mekhlef bin Daham al-Shammary, from his prison cell at the Damman General Prison to a room where there were no surveillance cameras and severely beat him. A guard then allegedly poured an antiseptic cleaning liquid down al-Shammary’s throat, resulting in his being taken to a hospital.”

“There were reports that at least two of a group of 16 men found guilty of security-related offenses were tortured in the period between their arrest in 2007 and their conviction on November 22. Among them, according to the nongovernmental organization (NGO) Amnesty International (AI), was Suliman al-Reshoudi, a 73-year-old former judge, who was subjected in prison to “severe physical and psychological tortures,” including more than three years of solitary confinement. One of the detainees was allegedly beaten on at least seven occasions with metal sticks and received electric shocks. Saud al-Hashimi was reportedly abused by being placed for five hours in a severely cold cell and forced to confess, among other acts, to contacting Al-Jazeera television station and to collecting money without the permission of the ruler.”

Kuwait

Commercial arms authorized:

Total:	$693,691,173 (19th)
Types of weapons:	Firearms, toxicological agents (may have included tear gas and riot control agents), heavy guns / armament, missiles / rockets / torpedoes
Types of equipment:	Armored vehicles, aircraft and equipment

Human rights problems

“… there were reports that some police and members of the security forces abused detainees during the year. Police and security forces were more likely to inflict such abuse on noncitizens, particularly non-Gulf Arabs and Asians. Security forces reportedly detained, harassed, and sexually abused transgender persons.”

“The government restricted freedom of speech, particularly in instances purportedly related to national security. The law also specifically prohibits material insulting Islam, the emir, the constitution, or the neutrality of the courts or Public Prosecutor’s Office. The law mandates jail terms for anyone who “defames religion,” and any Muslim citizen may file criminal charges against a person the citizen believes has defamed Islam, the ruling family, or public morals.”

“In December 2010 authorities shut the local offices of the Al Jazeera television network and withdrew its accreditation after it broadcast footage of police using force to break up an unauthorized gathering of oppositionists and subsequently gave airtime to opposition parliamentarians who strongly criticized the government for the police actions.”

Algeria

Commercial arms authorized:

Total:	$406,056,112 (20th)
Types of weapons:	Firearms, heavy guns / armament, explosives, toxicological agents (may have included tear gas and riot control agents)
Types of equipment:	Armored vehicles, aircraft and equipment

Human rights problems

“There were reports of dozens of individuals detained for political reasons, including peaceful assembly in Algiers. In virtually all of the instances, police detained activists participating in protests or marches and held them either in the backs of riot trucks on site or transported them to nearby police precincts. Police released the activists without charges once the protests had subsided … Other human rights concerns were reports of unlawful killings, overuse of pretrial detention, poor prison conditions, abuse of prisoners, and lack of judicial independence.”

“Every Saturday from February 12 to late April, government security forces prevented protesters with the political opposition group National Coordination for Change and Democracy (CNCD) from staging a march in Algiers. On several occasions, CNCD organizers submitted paperwork to local officials requesting permission to march, but the requests were denied on security grounds. In some cases police arrested protesters and injured some of them as a result of participation in unsanctioned protests.”

“Between 3,000 and 5,000 university students on April 12 staged the first successful public march in Algiers since 2001, despite police efforts to prevent it. Students were largely nonviolent, but there were approximately 100 injuries.”

“Radio and television were government-owned and frequently broadcasted coverage favorable to the government. Sources maintained that broadcast media did not grant sufficient access to opposition parties and critical NGOs. During nonelection periods opposition parties and spokesmen regularly were denied access to public radio or television.”

Peru

Commercial arms authorized:

Total:	$404,325,333 (21st)
Types of weapons:	Firearms, heavy guns / armament, toxicological agents (may have included tear gas and riot control agents)
Types of equipment:	Armored vehicles, aircraft and equipment

Human rights problems

“The following human rights problems …were reported: killings by security forces of protesters during demonstrations, harsh prison conditions, abuse of detainees and inmates by prison security forces, lengthy pretrial detention and inordinate trial delays, intimidation of the media, incomplete registration of internally displaced persons, and discrimination against women.”

“Allegations of abuse most often arose immediately following an arrest, when families were prohibited from visiting suspects and when attorneys had limited access to detainees. In some cases police and security forces threatened or harassed victims, relatives, and witnesses to prevent them from filing charges of human rights violations.”

Bahrain

Commercial arms authorized:

Total:	$280,373,829 (28th)
Types of weapons:	Firearms, heavy guns / armament
Types of equipment:	Ammunition, aircraft and equipment, military electronics

Human rights problems

“On several occasions government forces used unnecessary and disproportionate force to disperse protesters … the government used excessive force on February 17 when it used tear gas, shotguns, batons, sound bombs, and rubber bullets to disperse protesters from the GCC/Pearl Roundabout. Approximately 1,000 MOI [Ministry of Interior] personnel entered the GCC/Pearl Roundabout at 3 a.m. to disperse camping protesters. Personnel from the BNSA, CID, and BDF Intelligence were also on site. Security forces fired numerous rounds of tear gas to disperse protesters and engaged protesters directly. The MOI indicated that a number of protesters assaulted police officers with rocks, sticks, metal rods, swords, knives, and other sharp objects. As a result, more than 40 officers sustained injuries, including severe cuts to limbs. The clearing operation and subsequent clashes between security personnel and protesters led to the deaths of four individuals from shotgun wounds and injuries to 50 protesters. Soon after the police crackdown, BDF tanks occupied the GCC/Pearl Roundabout to stop demonstrators from occupying the area. On February 19, security forces withdrew from the GCC/Pearl Roundabout, allowing demonstrators to retake control of the area.”

“[In prisons] Many reports followed a similar pattern of abuse: arbitrary arrest, beating without interrogation, beating with interrogation, harassment and intimidation without further physical abuse, and then release of the detainee after any visible wounds or signs of mistreatment had healed.”

Army's mishandling of Afghanistan police contract boosted costs

Afghanistan — 2012-06-13T14:23:06-04:00

As the U.S. military heads for the door in Afghanistan, one of its most important tasks is to train Afghan police to take control of the nation’s security. But a billion-dollar Afghan police training contract, now being administered by the Army, has encountered some troubles, according to a new report by the Defense Department’s Inspector General’s office.

In just the first four months after the contract was signed in December 2010, its cost shot up $145 million, or 14 percent. A series of late revisions has slowed the training process for Afghan police, the IG report said, and the contract has been written in a way that allows new costs to accumulate without penalty.

The IG blamed the Army for the early cost hike, asserting that those overseeing the work by the lead contractor, DynCorp International, should have anticipated that its scope would be greater than initially estimated.

The new contract replaces three previous training contracts, costing a total of $4.954 billion. Two of these were also held by DynCorp. It started adding personnel and associated expenses at the Army’s request less than a month after the contract was awarded.

In January 2011, for example, Army officials told DynCorp to provide a communications system that would ensure contact with patrols and to create a database tracking ANP personnel records. The Army also amended the contract to add 31 trainers, 15 instructors and medics and four senior mentors to lead teams of advisers. According to the IG report, these positions were essential to training the Afghan police and should have been included in the initial proposal.

According to DynCorp spokeswoman Ashley Burke, the company had to increase its support staff from 29 to 73 to oversee the added field personnel, eventually tripling the costs of its program management office from $8 million to $24 million.

In a response included with the IG report, Army contracting officials defended the $145 million cost jump as a consequence of “the vagaries of wartime environment.” Army Contracting Command spokeswoman Ann Jensis-Dale said officials at Central Command, or CENTCOM, made the changes based on new information in Afghanistan.

CENTCOM spokesman Oscar Seara, said the late contract revisions were partly a result of Afghan police having “been largely neglected” in the last 10 or 11 years, as the U.S. military worked exclusively with the Afghan National Army. Seara said, during that time, development of Afghan law enforcement fell outside the scope of DoD’s mission in Afghanistan.

Ben Freeman, an investigator for the non-profit Project on Government Oversight, who specializes in Defense personnel, called the Army’s reasoning faulty.

Adding costs within a month of the contract’s signing suggests that Army contracting officials should have foreseen those costs and included it in the original contract, Freeman said. He also faulted the Army for offering a fixed-price-plus-cost contract, an agreement that allows defense contractors to increase costs of the contract as the mission progresses.

“It creates a perverse incentive for the defense contractor,” Freeman said. “They know they’re going to get their money, and whatever comes on top of that won’t come out of their pocket.”

At the same time it faulted the Army’s handling of the police training contract, the Pentagon’s Inspector General cited 19 other contracts Army officials failed to properly award or manage out of 45 active contracts reviewed.

Army contracting officials failed to properly oversee the bidding process for six of those contracts, the IG said in two separate reports (one from May 25, and the other from May 30). In thirteen cases, the Army allowed subcontracts to go to companies before adequately vetting them. The 19 contracts were valued at approximately $45.4 million.

Vacuum cleaner sucks $440 million from Navy

Miami,Florida,United States — 2012-07-24T14:37:40-04:00

Update, July 24, 2012, 2:37p.m.: A civilian worker admitted to starting the fire aboard the USS Miami to leave work early, according to an affidavit filed by the Navy Criminal Investigative Service with the United State District Court in Portland, Maine. It said that while Casey James Fury was undergoing a lie-detector test, he told the NCIS he set fire to a few rags in a bunk room in the submarine, starting the fire that resulted in $400 million of damage to the vessel.

According to the seven-page affidavit, at the time he started the fire, Fury was anxious over a text message exchange with his ex-girlfriend about a man she had begun dating. Fury faces two counts of arson. If convicted of either, he could see a maximum penalty of life imprisonment and be forced to pay a fine of up to $250,000 along with restitution for damage caused to the submarine.

It can take a powerful enemy to damage the nuclear powered submarines that form the linchpin of the U.S. naval arsenal. The most worrisome threats are usually sub-killing torpedoes or large mines. But the subs’ designers evidently forgot to incorporate countermeasures against another threat: vacuum cleaners.

According to a news release Friday from the Portsmouth Naval Shipyard, it was a vacuum cleaner that caused an estimated $400 million in damages to the nuclear-powered USS Miami on May 23. The 22-year-old Miami was docked at Portsmouth as part of a dry dock repair period when the fire broke out, and over the next 12 hours it damaged crew quarters as well as command spaces and the torpedo room.

The fire did not damage the nuclear reactors, which were shut down two months earlier. “Findings indicate the fire started in a vacuum cleaner used to clean work sites at end of shift, and stored in an unoccupied space,” according the release. “Preliminary investigations indicate that the fire started with a heat source being vacuumed up and igniting the debris in the vacuum cleaner.”

In plain language: The vacuum sucked up something hot it shouldn’t have and, while sitting in a closet, ignited. It sounds like a cigarette. But a shipyard spokeswoman, Debbie White, said there is a no-smoking policy on board even while the ship is in dry dock and that it is currently unclear what the “heat source” that started the fire was.

“We have an investigation, and the investigation’s ongoing,” White said. “What exactly started the fire, we won’t know until that’s through.”

The $400 million repair estimate is likely to go up — the Navy estimates another $40 million could be needed for “secondary effects, such as disruption to other planned work across all Naval Shipyards, and the potential need to contract work to the private sector.”

The Miami is one of 42 active Los Angeles class nuclear-powered submarines. The Navy commissioned the ship in 1990 and has used it to carry out anti-submarine warfare exercises since it returned from deployment in worldwide anti-terrorism efforts in 2004. Armed with both torpedoes and Tomahawk missiles, the Miami can hold over 110 service members on board.

The Los Angeles class submarines are slowly being replaced by the newer Virginia class attack subs, which have been a source of budget disagreements between the Pentagon and members of Congress.

On its website, the Navy describes Los Angeles class subs as the “backbone” of the submarine force, a ship designed to engage enemy forces as well as carry out reconnaissance missions.

But never let it be said that Navy cannot adapt to rolling seas, or the threat posed by small suctioning motors: As a result of the fire, the shipyard has ordered that all of the industrial-strength vacuums be emptied at the end of each shift or removed from the ship.