Cutting through the fog of war

Open records law offers flawed glimpse of government contracting

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Raytheon Aerospace, which changed its name to Vertex Aerospace in June 2003, and its related companies have received more than $2.7 billion in U.S. government contracts since 1990, and the company is currently in Afghanistan with a contract from the Defense Department worth at least $7.4 million involving aircraft repair and maintenance.

If Raytheon had its way, that might be all that is known about its work for the Pentagon.

Under a presidential directive signed by Ronald Reagan on June 23, 1987, known as Executive Order 12600, companies have potential veto power over Freedom of Information Act requests for copies of their contracts with the U.S. government.

To comply with the Executive Order, before releasing any contract, a FOIA officer must contact the company to ask whether there is any information that should be withheld because it constitutes confidential commercial information that could cause competitive harm if released. Withholding this information is allowed under Exemption 4 of the Freedom of Information Act, which states that records cannot be obtained if they contain "trade secrets and commercial or financial information obtained from a person and (are) privileged or confidential."

In trying to determine which U.S. companies received government contracts for work in post-war Iraq and Afghanistan, the Center for Public Integrity filed 73 FOIA requests and appeals with the State Department, the U.S. Agency for International Development and the Pentagon and its related uniformed services.

In an initial response in May, the Pentagon listed a $7,382,194 contract with Raytheon for work in Afghanistan. But requests for a copy of the actual taxpayer-funded contract remain pending.

"The contractor is reluctant to release the information," Deborah Ann Smith, a Freedom of Information official who works at Tinker Air Force base in Oklahoma, told the Center on Oct. 23. Smith said lawyers for the company and the military were discussing the Center's request.

The Center made a similar request to the U.S. Army's Transatlantic Program Center for a contract awarded to Contrack International Inc. for work in Afghanistan. The Army then notified the contractor that a request had been made under the Freedom of Information Act for a copy of the company's contract, adding that "if you believe the … information should be withheld, please supply the reasons, and citation to authority under FOIA, supporting your position." The letter to Contrack, a copy of which was provided to the Center, goes on to say that if the company objects to the release of the material, "We will carefully consider the justification you provide us and will endeavor to protect the confidentiality of the information you supplied to us to the extent permitted under the law."

"Should we disagree with your position regarding some or all of the information requested and determine it to be releasable, we will provide you with advance notice of our decision so that you may take whatever steps you consider appropriate to protect your interests," the letter continues.

As the letter makes clear, government contractors don't have absolute veto power over FOIA requests, but one FOIA officer told the Center for Public Integrity, rarely does the organization disagree with requests for redactions by contractors.

Ultimately, the Center received the Contrack International contract. But companies such as Raytheon can involve their lawyers in a dispute with a FOIA office that will ordinarily delay the release of any information because nothing can be released until the matter is settled, Smith said. Meanwhile, a requester does not have the right to a hearing if the company objects to the disclosure of information.

Exemption 4 is more often used to redact portions of a contract that could potentially harm a company's competitiveness, such as individual unit costs. The business concern is that if a competitor had detailed inside information on how much a company was charging the government for each item in a contract, the company might be underbid when the contract came up for renewal. But the level of redaction can vary greatly from FOIA department to FOIA department, as the Center found in its investigation.

For example, the Army supplied copies of seven contracts awarded to Science Applications International Corporation for work in Iraq, under a FOIA request, but the total value of each contract was redacted, along with most – though not all – unit prices.

"Due to the sensitive nature of the Iraqi contracts, it was determined that redaction of much of the pricing information was an appropriate way to avoid substantial competitive harm to the contractor," Army FOIA attorney Chris A. Warren said in an Oct. 6 e-mail to the Center.

In all, the Center received 29 contracts—four from USAID and the rest from various agencies within the Defense Department—among the more than 92 requested. Most had some redacted information; however, a few were heavily redacted. For example, a 15-page Pentagon contract with Dataline Inc. for work in Iraq was released to the Center for Public Integrity with the text on seven pages blacked out. The State Department has yet to provide the Center with any of the information.

Each agency dealt with the FOIA requests differently, and the Center found numerous discrepancies in the information the agencies provided.

The initial response from both the Defense Department and USAID was to provide the Center with lists of contracts they had awarded for work in Iraq and Afghanistan, showing a company's name, a dollar amount and the location where the contract was performed. In the Pentagon's case, the Center then had to determine which branch of the military and which office held the actual contract and then file a separate FOIA request with it. The Center also had to make separate requests to USAID for the contracts it initially listed for the Center. The agency warned that it would take time to produce them because many of the contracts were held in global field offices, and the Washington headquarters did not have copies of everything.

The State Department was the least responsive agency. Six months after filing its first FOIA request, the Center has not received a list of contractors, much less a contract, awarded by the department. After numerous appeals—required by State—arguing that contracting in Iraq and Afghanistan was both a breaking and an important news story, the department finally granted "expedited processing" to the Center's Iraq request, but not to its request for contracts in Afghanistan. Of course, "expedited processing" does not mean speedy process. The State Department warns that it has a significant backlog of such fast-track cases.

The initial lists of contractors provided by the Pentagon and USAID frequently had incomplete or incorrect contract values. They were also lacking several major contractors that had received extensive publicity, sometimes even in an agency's own press releases or Web sites.

For example, the list the Center received from USAID on Aug. 1, 2003, of the agency's contracts in Iraq omitted several contracts that USAID mentioned on its own Web site.

The companies missing from the FOIA response included:

  • Bechtel, which received the largest contract awarded by the agency. The contract was listed on USAID's Web site as being worth up to $680 million over 18 months. Later, a company official confirmed the value of the Bechtel contract was worth up to $1.03 billion.
  • Research Triangle Institute, which is listed on the USAID Web site as having a contract worth up to $167.9 million. After receiving the actual contract, it was clear that the full potential worth of the work, adding the option years, was $466 million.
  • BearingPoint, which is listed on USAID's Web site as having a $9 million contract in Iraq. USAID says the contract has a total value of $79,538,885.

"I do not know why the companies … were not on the listing," Sylvia Lankford, USAID's FOIA team leader, said on Oct. 1, in answering repeated inquiries from the Center as to why companies listed on the agency's Web site did not appear on a list provided under FOIA.

In addition, USAID had contracts with some companies that did not appear on the FOIA disclosure or its Web site, but had been reported in the media or released by the companies themselves. Creative Associates International, for example, referred to its USAID contract for work in Afghanistan on the company Web site, but the contractor was not on the USAID list. BearingPoint, which has a contract for work in Afghanistan worth up to $64.1 million, issued a press release discussing its work with USAID, but it, too, was not on the list provided by the agency. After repeated inquiries, USAID said it would add these companies, among others that were missing, into the Center for Public Integrity's request for contract copies.

Similar problems were encountered with the lists provided by the Defense Department. For example, the list of Afghanistan contracts did not include Kellogg, Brown & Root, the Halliburton subsidiary that had been extensively covered by the media because of its ties to U.S. Vice President Dick Cheney. Also not on the list of contractors in Iraq and Afghanistan were Washington Group International and Fluor, which together with Perini (which was on the Afghanistan list but for only one project worth $14 million) have contracts for work in Afghanistan, Iraq and 23 other countries. These contracts initially had a maximum value of $100 million for each company, which was later increased to $500 million.

The Center's investigation also found that many of the contract figures listed by the agencies or on the agencies' Web sites did not give a full accounting of the contract, such as was the case with the Research Triangle Institute contract.

USAID spokesmen say it is wrong to calculate beyond the first year because there is no guarantee that future funds will be made available. And, yet, combining the first and optional two years on a contract awarded to Creative International is precisely what USAID's Inspector General did in an audit of that contract's awarding, amid allegations of improprieties in the contracting process.

Other discrepancies in the dollar amounts were noted. USAID's list of Afghanistan contracts states that Management Systems International received a $3.5 million contract. But USAID officials in Afghanistan told the Center that the two-year contract was worth $14.7 million.

In order to get a full picture of a contract's scope, it was necessary to look at numerous sources. In the list of Iraq contracts received on Aug. 1, 2003 from USAID, International Resources Group was listed as having a contract worth $246,433, which is described as "funds for IRG contractor Jack Balaban." The USAID Web site, however, lists IRG as having a contract worth an initial $7.1 million for a 90-day contract awarded on Feb. 7, 2003, which could be extended for two one-year periods. A spokesman for USAID told the Center for Public Integrity that the contract had been extended for a year with a potential value of $36 million.

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