Return-Path: <sentto-279987-4642-1020690635-fc=all.net@returns.groups.yahoo.com> Delivered-To: fc@all.net Received: from 204.181.12.215 [204.181.12.215] by localhost with POP3 (fetchmail-5.7.4) for fc@localhost (single-drop); Mon, 06 May 2002 07:18:08 -0700 (PDT) Received: (qmail 13720 invoked by uid 510); 6 May 2002 14:16:12 -0000 Received: from n27.grp.scd.yahoo.com (66.218.66.83) by all.net with SMTP; 6 May 2002 14:16:12 -0000 X-eGroups-Return: sentto-279987-4642-1020690635-fc=all.net@returns.groups.yahoo.com Received: from [66.218.66.96] by n27.grp.scd.yahoo.com with NNFMP; 06 May 2002 13:10:38 -0000 X-Sender: fc@red.all.net X-Apparently-To: iwar@onelist.com Received: (EGP: mail-8_0_3_2); 6 May 2002 13:10:32 -0000 Received: (qmail 44472 invoked from network); 6 May 2002 13:10:31 -0000 Received: from unknown (66.218.66.218) by m13.grp.scd.yahoo.com with QMQP; 6 May 2002 13:10:31 -0000 Received: from unknown (HELO red.all.net) (12.232.72.152) by mta3.grp.scd.yahoo.com with SMTP; 6 May 2002 13:10:27 -0000 Received: (from fc@localhost) by red.all.net (8.11.2/8.11.2) id g46DAxg08512 for iwar@onelist.com; Mon, 6 May 2002 06:10:59 -0700 Message-Id: <200205061310.g46DAxg08512@red.all.net> To: iwar@onelist.com (Information Warfare Mailing List) Organization: I'm not allowed to say X-Mailer: don't even ask X-Mailer: ELM [version 2.5 PL3] From: Fred Cohen <fc@all.net> X-Yahoo-Profile: fcallnet Mailing-List: list iwar@yahoogroups.com; contact iwar-owner@yahoogroups.com Delivered-To: mailing list iwar@yahoogroups.com Precedence: bulk List-Unsubscribe: <mailto:iwar-unsubscribe@yahoogroups.com> Date: Mon, 6 May 2002 06:10:59 -0700 (PDT) Subject: [iwar] [fc:9-11.Lances.Boil;.MICC's.Puss.Spews] Reply-To: iwar@yahoogroups.com Content-Type: text/plain; charset=US-ASCII Content-Transfer-Encoding: 8bit ===================================== Date: May 5, 2002 Subject: #447: 9-11 Lances Boil; MICC's Puss Spews Forth ===================================== Discussion Thread - Comment #s - see following links for related information Military and Society <a href="http://www.d-n-i.net/second_level/military_in_society.htm">http://www.d-n-i.net/second_level/military_in_society.htm> Constitutionality <a href="http://www.d-n-i.net/second_level/constitutionality.htm">http://www.d-n-i.net/second_level/constitutionality.htm> Defense Power Games http://www.d-n-i.net/second_level/defense_power_games.htm Fixing Financial Systems http://www.d-n-i.net/second_level/fixing_financial.htm Budget and Fiscal Realities http://www.d-n-i.net/second_level/budget_fiscal.htm URLs for Past Comments are Archived at 2 Locations: - Defense & National Interest Website: http://www.d-n-i.net/ - Chronological Archive: <a href="http://www.infowar.com/iwftp/cspinney/">http://www.infowar.com/iwftp/cspinney/> Free Adobe Acrobat Reader can be downloaded from - http://www.adobe.com/products/acrobat/readstep.html Attached References: [1] Christopher H. Schmitt, "Wages of sin: Why lawbreakers still win government contracts," U.S. News and World Report, Cover Story 5/13/02, Page 28 http://www.usnews.com/usnews/issue/020513/usnews/13criminal.htm [2] Peter Cary, "The pork game Even after 9/11, Congress's priorities are unchanged," U.S. News and World Report, Cover Story 5/13/02, Page 25 http://www.usnews.com/usnews/issue/020513/usnews/13pork.htm [3] President Dwight D. Eisenhower, "Farewell Radio and Television Address to the American People," January 17, 1961. Separate Attachment [4] Spartacus, "Mr. Smith Is Dead: No One Stands in the Way as Congress Laces Post-September 11 Defense Bills with Pork." ======================================= The front-loading and political-engineering power games [see Defense Power Games] of the Military - Industrial - Congressional Complex (MICC) can be likened to poison generators inside a boil, lying just beneath the patriotic epidermis covering the body politic, always building up pressure, slowly, almost insensibly, for the entire 40 years of mobilization for Cold War. No institution has been more corrupted by these poisons than the target of these games: the United States Congress. But if the information assembled independently by Spartacus (an anonymous patriot on the congressional staff), the investigative staff of U.S. News and World Report, and the Project on Government Oversight (POGO) is correct, that boil has been pricked. Scoundrels are cashing in on the emotions unleashed by the horrendous attacks of September 11, and an eruption of pork is spewing out its sickening goo all over the land. Today, the Congress is less a chapel of democracy than a servant to the special interests in the MICC. Oversight of money has given way to Overlook as money is shoveled indiscriminately out the door to pay for porkbarrel projects masquerading as a response to a national emergency. President Eisenhower warned us in vain about this danger as well as the need for vigilance when he said, "This conjunction of an immense military establishment and a large arms industry is new in the American experience. The total influence -- economic, political, even spiritual -- is felt in every city, every state house, every office of the Federal government. S In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist." [The entire address is attached as Reference 3 below.] Given the grand sweep of an influence that is felt "in every city, every state house, every office of the Federal government," a reader might wonder why Eisenhower omitted a specific reference to Congress. My good friend the late Lars-Eric Nelson, a nationally syndicated columnist, told me shortly before his death that he found an early draft of Eisenhower's speech in the National Archives that used the phrase "Military - Industrial - Congressional Complex," but according to Nelson, Eisenhower dropped it because he did not want to offend Congress. The same cannot be said for Spartacus, the nom de plume for a courageous member of the Congressional staff. He has written a devastating report documenting in detail how members of Congress are cashing in on 9-11. His important report, "Mr. Smith Is Dead: No One Stands in the Way as Congress Laces Post-September 11 Defense Bills with Pork," is attached separately to this message in Adobe Acrobat Format as Reference 4. Or, it can also be found by clicking on the following link: <a href="http://www.d-n-i.net/fcs/spartacus_mr_smith.htm">http://www.d-n-i.net/fcs/spartacus_mr_smith.htm>. I urge you to read the Spartacus Report carefully, before continuing. Bear in mind Spartacus is not some kook in the back room - he is an insider who knows the score. Nor is he alone in this analysis. After reading his report, I urge you to also read the cover story of the current issue of U.S. News & World Report (immediately below) and as well as other related articles (attached as References 1 & 2 below). War profiteering Cashing in on the post-9/11 defense build-up By Julian E. Barnes U.S. News and World Report Cover Story 5/13/02 --------[Sidebar in Original]-------- "Spartacus" speaks A veteran congressional aide has written a white paper under the pen name "Spartacus" attacking projects that have been inserted in the defense- spending bills since 9/11. http://www.d-n-i.net ---------[End Sidebar]------- At 12:42 p.m. on Pearl Harbor Day, December 7, John McCain strode to a podium on the Senate floor. In his hand was a list of 245 items that had been added into the 2002 defense appropriations bill. Among his colleagues, McCain had a reputation as an acerbic critic of wasteful Pentagon spending. The reputation was richly deserved. In the past year, McCain had delivered 18 speeches on the Senate floor decrying his colleagues' seemingly insatiable appetite for pork. Over the years, the former prisoner of war had made hundreds of such speeches, flaying senators for the pet projects his sharp-eyed staffers ferreted out of the massive defense-spending bills. Even to McCain's jaded eye, however, the spending bill before the Senate that day was especially disturbing. Many of the 245 items on his list, he believed, were egregious. But one in particular stood out. It was a $20 billion Air Force plan to lease 100 refueling tankers from the Boeing Aircraft Co. The planes would cost $150 million apiece. The lease would run for 10 years. Then the Air Force would pay $30 million to reconfigure each of the 767s for commercial use and give the planes back to Boeing. In his 15 years in the Senate, John McCain had never seen such audacity. "This is the wrong thing to do," he intoned, leaning into the podium. "We are going to spend $20 billion plus over a 10-year period and 10 years from now are going to have nothing to show for it." Some senators, however, knew they would have plenty to show. The Boeing planes would be built in Washington State, converted to tankers in Kansas, and, possibly, based in North Dakota. In due course, just as day follows night, senators from those three states rose to endorse the tanker deal. Washington's Patty Murray spoke feelingly about the impact of all the new jobs the Boeing contract would bring to her state. Kansas's Pat Roberts reminded senators how important the new planes would be in the war in Afghanistan-never mind that not a single one would be ready to fly before the war on terror moved on to other venues. It fell to North Dakota's Kent Conrad to take on McCain directly. The Arizona senator's math, Conrad said, was "sheer nonsense." Conrad didn't deign to say why McCain's numbers were wrong and his right. He knew where the votes were. Off the Senate floor, in the storied cloakroom where Robert Taft and Everett Dirksen had long ago perfected the art of the deal, a hearty septuagenarian went quietly to work. Ted Stevens is the senior senator from Alaska and the ranking Republican on the Appropriations Committee. Slowly, he prowled the room. Rick Santorum, the junior senator from Pennsylvania, turned to Stevens, his fellow Republican. Why couldn't the Air Force keep the 767s, he asked his older colleague, after the lease was up? Stevens, wearing his favorite Incredible Hulk tie, shook his head. "We can't do that," he said. "It will queer the deal." Santorum dropped the question. Stevens moved on. Later that day, appropriators slid five Santorum amendments into the appropriations bill. The amendments added $18 million in defense projects. All were earmarked for Pennsylvania. That wasn't the end of it. Stevens and his colleagues didn't finish adding amendments to the $318 billion appropriations bill until nearly midnight, after a mammoth round-the-clock session of horse-trading and arm-twisting. When the senators were finally through, they didn't even bother to call the roll. The measure passed on an unusual voice vote, meaning the names of the senators who supported it were not recorded. Less than two weeks later, the final version of the bill passed the House. The vote was 408-6. In the Senate, the tally was 94-2; McCain and Phil Gramm of Texas voted no. Shades of Ike. Dwight Eisenhower, in his valedictory address to the nation, warned famously of the perils of ignoring the influence of what he christened the military-industrial complex. Ike's words have been repeated endlessly, and there have been countless editorials decrying "beltway bandits" and their predilection for waste, fraud, and abuse. But there is no gainsaying the value of the billion-dollar corporations that have provided America with the most powerful military in the world. The weapons deployed in the war in Afghanistan, for example, are many times superior to the smart bombs and surveillance planes of the Persian Gulf War just a decade ago. There's another side of the coin, however. Before September 11, government contractors regularly paid bribes, cut corners, and delivered high-priced hardware that didn't work. Instead of being sanctioned or barred from competing for future government contracts, many of these same companies-and often, the largest of them-returned to the bidding room and walked away with new contracts many times bigger and fatter (story, Page 28). [i.e., Reference 1 below] It's not just contractors who have managed to game the system, however. Members of Congress have long been eager enablers of the binge drinking that often passes for government spending in Washington-especially when they can ensure that lots of that spending happens back in their home states and districts. The larding of pork into legislation is a time-honored tradition. But what has dismayed pork-watchers is how even after September 11 lawmakers, lobbyists, and government contractors continue to use the defense budget for all kinds of new spending schemes (i.e., Page 25). [See Reference 2 below] In overwhelming numbers, Americans support President Bush's decision to prosecute the war on terror. But it is not immediately clear how a new gym in Texas, a harbor cleanup in California, or raising a Civil War-era ironclad in Virginia do much to advance that war. A veteran congressional aide who specializes in defense issues has written a white paper under the pen name "Spartacus" attacking projects like the Boeing deal that have been inserted in the defense- spending bills since September 11. McCain has demanded investigations of the Boeing deal. "This is clearly war profiteering," he says. "It is obscene." Done deal. It is also, in all likelihood, going to happen. James Roche, the Air Force secretary, says the cost comparisons between a lease and a purchase agreement for the Boeing planes are premature and simplistic. A lease deal, Roche says, would allow the Air Force to pay for the planes more slowly while acquiring them more quickly. The Air Force would reap billions of dollars in savings from retiring old tankers and avoiding big maintenance costs, Roche adds, by flying more-modern, fuel-efficient aircraft. "We want to be transparent as we can be," Roche said. "We are not blowing smoke up anyone's nose." The Air Force and Boeing declined to provide new cost estimates for a lease or a purchase. For Boeing, obviously, the deal is, if not a lifesaver, an awfully well-timed windfall. The September 11 attacks resulted in a huge drop-off in air travel, and airlines canceled millions of dollars in orders for new planes. On September 18, Boeing announced that it would lay off up to 30,000 people. Soon after, Congress lined up behind a $15 billion bailout for the airlines. Boeing was already in the hunt for its own aid package. The aircraft maker has plenty of friends on Capitol Hill. Since 1997, according to the Center for Responsive Politics, Boeing's executives and political action committees have given Democrats $1.9 million and Republicans $2.6 million. By late September, Rudy de Leon, Boeing's chief lobbyist and a former deputy secretary of defense, met with Stevens. An acknowledged master of the arcane appropriations process, Stevens quickly breathed new life into Boeing's proposal for the Air Force to acquire a new fleet of 767s. The senator called Air Force officers and told them he wanted the service to explore "creative funding" to acquire new Boeing planes to replace the aging KC-135 tanker refueling fleet, according to a congressional defense aide. Stevens told Air Force officials what he had in mind was a lease. "It was my idea to start replacing the fleet," Stevens says. "And my idea to use the leasing." The lease deal, Stevens says, expands the amount of money available for new weapons systems by not dipping into the Pentagon's procurement budget and by tapping its operations and maintenance funds instead. But that budget is normally used to pay for training and to buy bullets, bombs, and spare parts. With the arsenal depleted from the Afghanistan war, some in the Pentagon say, now is not the time to raid the operations budget. Not to worry, proponents of the lease deal counter. Stevens says that the savings from retiring old planes that need constant maintenance will offset some of the costs. Marvin Sambur, the Air Force assistant secretary for acquisitions, says the Pentagon can always move money from other parts of the budget. "It will not hurt readiness," Sambur says, "because, obviously, if the need be, we will have to put more money in the operations-and-maintenance budget.'' Low priority. If the refueling tankers were as important as the Air Force says, the service certainly hadn't made much of a fuss about them before Congress got into the act. It wasn't until October 9 that Roche wrote Rep. Norm Dicks, a Washington Democrat, to ask for the tankers. The Air Force hadn't mentioned them in the Quadrennial Defense Review, a key budget document published just a few weeks before Roche's letter to Dicks. They also weren't mentioned in the Pentagon's classified Future Years Defense Plan. Even after Roche's October 9 letter, the tankers weren't added to the Air Force's list of 60 unfunded priorities submitted to Congress, on October 22. Just because the Air Force didn't ask for the tankers, however, doesn't mean it didn't need them. As far back as 1996, a General Accounting Office study criticized the growing repair costs for the aging KC-135 tankers. The average age of the KC-135 fleet is 41 years. Sambur says the extensive use of the tankers in the Afghan war really revealed the stresses on them. "The only time when you really think of tankers," he says, "is when you are in a war-type environment." Pentagon and congressional aides say the tankers never made the Air Force wish lists because the brass worried that adding them would mean cutting F-22 fighters and C-17 cargo planes. Critics say the C-17 is too expensive and believe the F-22 is designed to meet a threat that no longer exists. The Air Force wants both-badly. "If they highlighted that the tankers were a problem," a Pentagon analyst says, "Congress might have jumped on it and taken money from the C-17 and F-22." The lease deal, in other words, could allow the Air Force to have its cake and eat it, too. Although the lease plan won admirers among top Air Force officials, elsewhere in the Pentagon there were doubters. According to a Defense Department cost assessment, the Pentagon found that the lease would cost an extra $11.8 billion. Pete Aldridge, the Pentagon acquisitions chief, says leasing lowers initial costs, but he acknowledges the drawbacks. "Leasing will always exceed the price of purchasing," he says. Boeing, he believes, will eventually try to extend the lease, "which is a good deal for the company. It is not such a good deal from a total point of view for the military." Because of that, some in the administration hate the deal. On November 2, Mitchell Daniels, the director of the Office of Management and Budget, wrote a two-page letter to Conrad, the Senate Budget Committee chairman. Past leases had led to cost overruns, the letter said. Because of those abuses, OMB required the Boeing deal to be accounted for like a normal purchase. "I believe it is more important than ever," Daniels wrote, "that we properly record the obligations and costs of the government." To get around Daniels's objections, appropriators decided in November to change the deal. If the Air Force gave the planes back at the end of the lease, or had to pay a substantial residual payment to keep them, the deal could be considered an operating lease. That meant appropriators could spread the costs out over many years. The compromise met the letter of the budget rules, but it also made a bad deal worse, because after the 10-year lease ended, the Air Force would be left with no planes. And now, U.S. News has learned, the proposal could get worse still. Pentagon, Boeing, and congressional sources say the lease will last only five to seven years. That will reduce the expense but means the Air Force could get even less use from the tankers. And a GAO study released last week says a lease could leave the military with a tanker shortage in 2015. Opponents of the lease have not given up the fight. Daniels notes that the final agreement between Boeing and the Air Force has not been signed yet: "You haven't seen any planes delivered." McCain says he'll try to put a measure in the new defense authorization bill that would force the money for the lease to come from the procurement budget, not from maintenance funds. "We need to focus attention on one of the great rip-offs in the history of the United States of America," he said. "And I don't say that lightly." Air Force brass, unsurprisingly, don't see it quite that way. Sambur, the Air Force acquisitions chief, pledges he won't sign any agreement that hurts taxpayers: "We want to make sure this deal is good for America." With Noam Neusner and Mark Mazzetti CROSS HAIRS Hardened target Defense Secretary Donald Rumsfeld has pledged to kill unnecessary Cold War-era weapons and spend money on new technology. His first target: the Army's Crusader howitzer, an $11 billion, 42-ton tracked gun originally developed to fight the Soviet Union. But the Army wants to save the program. And since the Crusader would be built and tested in Oklahoma, powerful Republican lawmakers Rep. J. C. Watts and Sen. James Inhofe will fight the fight on Capitol Hill. Frank Carlucci, a former defense secretary and president of Carlyle Group, whose subsidiary United Defense Industries is building the gun, can also be expected to lobby to keep Crusader off the chopping block. - M.M. -------[End Cover Story]-------- Chuck Spinney Archives of past commentaries or reports can be found at Defense & National Interest Website: http://www.d-n-i.net/ or Infowar at http://www.infowar.com/iwftp/cspinney/ [Disclaimer: In accordance with 17 U.S.C. 107, this material is distributed without profit or payment to those who have expressed a prior interest in receiving this information for non-profit research and educational purposes only.] ===========[ Reference #1] ===========< Cover Story 5/13/02 Wages of sin Why lawbreakers still win government contracts By Christopher H. Schmitt U.S. News and World Report Cover Story 5/13/02 Page 28 http://www.usnews.com/usnews/issue/020513/usnews/13criminal.htm ---------[Sidebar]-------- A report by the Project on Government Oversight shows which federal contractors have faced the most legal and regulatory trouble. <a href="http://www.pogo.org/p/contracts/co-020505-contractors.html">http://www.pogo.org/p/contracts/co-020505-contractors.html> <a href="http://www.pogo.org/db/index.cfm">http://www.pogo.org/db/index.cfm> <a href="http://www.pogo.org">http://www.pogo.org> ---------[End Sidebar]----------- In the mid-1970s, Lockheed Aircraft Corp. was center stage in a scorching bribery scandal. Millions in secret payments were slipped to public officials and political parties around the globe, to curry favor and win government contracts. Stung by the blowback, the company promised stringent reforms. Two decades later, Lockheed was again in the spotlight, pleading guilty to paying off an Egyptian official to win a deal for C-130 cargo planes. Once more, the company was contrite. Standing before a federal judge in 1995, a top executive pledged Lockheed's "commitment to the highest ethical standards of conduct." In the years since, however, Lockheed's troubles have only grown. The company has been named in at least 33 more cases covering overcharges on government contracts, improper technology transfer to China, falsifying results of nuclear safety tests, job discrimination, environmental pollution, and more. These cases, some of which were in motion before the 1995 conviction, have produced at least $145.3 million in penalties, settlements, and restitution. And at least 13 more cases are pending. Lockheed Martin, as the company is known today, says it has a vigorous ethics and compliance program. And, it turns out, that promise is good enough for the Pentagon. Last October, despite the company's record, the federal government awarded Lockheed the richest military contract in history-a deal to build the nation's next-generation jet. The project, the F-35 Joint Strike Fighter, could be worth as much as $200 billion over several decades. Lockheed Martin is not the only big federal contractor that continues to do business with Washington despite repeated contract difficulties and other legal and regulatory trouble. In the past dozen years, 30 of the 43 largest federal contractors have racked up more than 400 enforcement cases, resulting in at least 28 criminal convictions, 286 civil settlements, and 88 administrative settlements, mostly involving their government contracts, according to data from the Project on Government Oversight, a nonprofit Washington, D.C., group that investigates government activities, and additional research by U.S. News. The companies have breached environmental, labor, and securities regulations as well. For their difficulties, the analysis shows, they have paid at least $3.4 billion in fines, penalties, and restitution. Injuries. The cases cover a wide swath, including price fixing, bogus testing, polluting, overcharging, hiding product defects, violating export laws, and withholding financial data from the government. They also represent more than accounting quibbles: Company workers have been killed and seriously injured and national security potentially put at risk. Yet, together, these firms have corralled more than 4 of every 10 federal procurement dollars. "If it was a food-stamp recipient, they'd go to jail," says Rep. Peter DeFazio, an Oregon Democrat, who complains about repeat offenders. "If it was a student-loan recipient who wasn't paying, they'd have their wages garnisheed. It's an extraordinary double standard." The government actually has a process for cutting off wayward contractors from future work, but in practice, purchasing officers focus on getting projects done, not holding firms accountable for past behavior. And other officials responsible for barring firms can't legally use punishment as a motive, says Robert Meunier, head of a committee of those officials. "We're here to protect the government's business interest," he says. Even if a current contractor is prevented from doing future business, the company could continue to do billions of dollars' worth of government work under existing agreements. As best as can be determined, the government has cut off only one of the 30 big contractors with problems-General Electric Co.-and, even then, suspended the company for just a few days. If federal agencies wanted to crack down on offending contractors, they couldn't. The U.S. government is the biggest shopper on the planet, buying some $235 billion worth of goods and services last year-everything from military hardware to management of nuclear laboratories to food for school lunches. But for reasons of cost, bureaucracy, and plain indifference, it doesn't keep tabs on the behavior of its vendors. Contracting officers don't know, for instance, if a company has already agreed with other agencies to clean up its act, and several agencies-including the General Services Administration-can't even produce a list of whom they have suspended or barred from further contracts. In effect, contractors have no official history when they line up for government work. Little guys. The military tops the government's buying list-with contracts for $156.5 billion last year. Not surprisingly, some of the worst offenders are military contractors. But while the government may be reluctant to move against its biggest suppliers, federal agencies don't have the same qualms about cracking down on small firms. Officials maintain that federal rules are written evenhandedly, but they acknowledge that larger companies can navigate them more successfully. Take James Verlander, a Houston-area researcher who in the early 1990s got tangled up in Operation Lightning Strike, a federal sting operation targeting NASA suppliers. Federal agents drew Verlander and several others into a scheme revolving around a bogus medical device that supposedly could improve monitoring of space-station astronauts. Threatened with a heavy prison sentence, he pleaded guilty to having accepted $2,000 as part of an effort to win approval and funding for the device, says his attorney, Charles Portz. Barred from government work ever since, Verlander suffered a nervous breakdown and has since become a medical technician. By contrast, two big contractors that came under scrutiny in the affair-Martin Marietta and General Electric-settled their involvement by paying $1 million to defray the government's expenses. "They didn't want to make arrests of the higher-up people because it would damage the space program," says Portz, "so they busted a bunch of little people." Small fry get nailed more often because it's more likely that senior executives were involved in any wrongdoing, say those familiar with the issue. And large contractors have more financial juice to make a case go away-to hire pricey legal talent, create compliance programs, or pay settlements. "They're pretty willing to settle it to stay in business," says Jacques Gansler, former undersecretary of defense for acquisition, technology, and logistics, who is now a professor of public affairs at the University of Maryland. Oversight of military and other federal spending has been kneecapped in recent years-through budget cuts and under the banner of streamlining regulation-and new proposals would weaken it further. Reflecting those developments and changing priorities, federal prosecution of contract fraud has fallen sharply in recent years, as have attempts by federal agencies themselves to rein in abuse, according to government data obtained by the Transactional Records Access Clearinghouse at Syracuse University. Many expect enforcement efforts to suffer further still as homeland defense comes to the fore. U.S. Department of Justice officials did not respond to requests for comment. Corporate crime. Even in extreme situations, the biggest firms don't face contracting's version of the death penalty. Take behemoth General Electric. In the early 1990s, problems including bribery and mispricing became so pervasive that the Pentagon's Defense Contract Management Agency took the unusual step of setting up a special investigations office just for GE. The office produced 22 criminal indictments of the company, its subcontractors, and employees, and recovered $221.7 million. Although individuals were booted from future government work, the company was not, despite recommendations from frustrated investigators. Not barring the firm "is clearly a disincentive to forcing a major contractor to institute [change]," they said at the time. "Other remedial actions, including criminal prosecutions, did not seem to be effective." Since then, GE has been named in new cases, involving both its military and civilian businesses. GE spokesman Gary Sheffer says that the earlier cases involved a small number of people and that the company used the experience to tighten an already strong compliance program. The takeover trend sweeping military contractors shows why it will be harder still for government to get tough with wayward contractors. In 1999, two units of Litton Industries, the Southern California electronics and shipbuilding firm, agreed to pay $18.5 million after pleading guilty to federal fraud charges. In one of the biggest cases of its kind, Litton had paid more than $16 million in illegal commissions to "consultants" in Taiwan and Greece for help in winning military contracts, then falsified its books and tried to lead investigators astray. Last June, Litton was acquired by Northrop Grumman Corp., itself the product of a 1994 megadeal. Fair or not, size matters. "If you need a nuclear submarine, you've only got two people left to buy it from," says Steven Schooner, a George Washington University associate professor and former official in the Office of Federal Procurement Policy. Northrop Grumman did not return calls for comment. In some cases, misspent tax dollars are the least of the story. In 2000, a federal jury said United Technology Corp.'s Sikorsky Aircraft unit was negligent when it failed to warn the Army that unbalanced fuel loads could make its Black Hawk chopper uncontrollable. It awarded $22.9 million to the families of four servicemen killed and two seri- ously burned in a crash during night maneuvers near Fort Chaffee, Ark., In Louisiana in 1999, the federal Occupational Safety and Health Administration cited shipbuilder Avondale Industries, a unit of Litton, for accidents and safety problems, including three cases in which workers fell to their deaths; overall, there have been nine deaths in recent years, including a worker impaled on a post and another crushed by a 4,800-pound bulkhead. Buried alive. In its waning days, the Clinton administration issued new rules aimed at holding contractors more accountable by requiring contracting officers to consider not only a company's ability to do the job but also its overall record in complying with tax, labor, employment, environmental, antitrust, and consumer protection laws. The rules would have considered incidents like the 1997 deaths of two grain-bin workers at a plant run by Cargill Inc., a top contractor for the U.S. Department of Agriculture. The workers were buried alive by grain while unplugging a clog in a huge storage bin. Neither was wearing required safety belts, and OSHA judged the incident a violation of the highest gravity. Cargill maintains it was never cited. Whatever the case, the incident has no bearing on future contracts: In one of its first acts, the Bush administration suspended, then later revoked, the Clinton-era rules. Current rules provide the potential to consider a contractor's total compliance record, by requiring that firms have "a satisfactory record of integrity and business ethics." But the rules are ill-defined, and buying officials rarely seize the opportunity, Schooner says. For starters, any attempt to deny a company a contract will quickly draw a lawsuit, he says. On top of that, federal agencies, needing everything from bullets to office supplies, don't much like their buying plans upset. So purchasing officials think, " ' Why would I touch that with a 10-foot pole?' " Schooner says. The issue of contractors' repeat offenses hasn't attracted a wide following, but concerns are bipartisan. "To me, I'd say, 'One strike and you're out,' " says Rep. Bob Barr, a Georgia Republican on the House Government Reform Committee. "The government should not do business with corporations that are unethical." Rep. Carolyn Maloney, a New York Democrat also on the reform committee, says she'll introduce legislation requiring tracking of contractor problems, a system she battled to create while a city council member in New York City. "There's no reason to be giving a contract to a repeat violator," she says. Officials from the Pentagon, the Bush administration, and the General Services Administration declined or did not respond to repeated requests for comment. Although the largest contractors still regularly get into trouble, these firms, especially military contractors, have made improvements in their compliance programs. Companywide ethics training is not uncommon, and executives say that flouting the rules can be a firing offense. Some of the government's cases result from voluntary disclosure by the firms themselves-although companies sometimes confess to protect their own interests. Still, human nature, coupled with pressure to meet aggressive financial goals, makes it impossible to root out all problems, maintain company executives and government regulators. Lockheed Martin policy, for instance, says it is essential for employees to speak out without fear of retribution. Yet in 1999, the U.S. Department of Energy ruled that Lockheed Martin fired a worker in retaliation for disclosing safety problems. "No program is any more perfect than the people responsible to make the program work," says Lockheed Martin spokesman James Fetig. More sting. Those who urge getting tougher with habitual offenders say it's possible to do more, even with concerns about national security or the limited number of suppliers. Rather than letting offending contractors pay a penalty and move on, for instance, the government could require firms to agree in advance to give up future business following any new violation. Putting more sting in penalties for pollution or safety violations could spur better compliance in areas not directly related to government contracts. And a public repository of enforcement actions could bring pressure for change, just as publicizing toxic emissions has spurred companies to cut back on pollution. But unless someone lights a fire, history suggests any change will be a while in coming. Consider, for instance, new regulations that federal officials expect to finish this fall, aimed at improving oversight in nonprocurement areas such as government grants and loans. Work on the rule began under President Bush-the first one, that is. ===========[ Reference #2] ===========< Cover Story 5/13/02 The pork game Even after 9/11, Congress's priorities are unchanged By Peter Cary U.S. News and World Report Cover Story 5/13/02 Page 25 http://www.usnews.com/usnews/issue/020513/usnews/13pork.htm Sen. Dianne Feinstein was in full voice. "Given the events of the past few weeks, and the events that we expect to unfold over the coming weeks and months, this bill could not be more timely," declared the chairwoman of the Senate Subcommittee on Military Construction. Fifteen days earlier, al Qaeda terrorists had attacked the World Trade Center and the Pentagon. Now it was time to focus on George W. Bush's defense budget. "Our men and women in uniform," Feinstein said, arguing for her bill, "cannot afford any delay in getting these projects underway." But what projects? Among the 120 new items in the final military construction bill was $71 million for Feinstein's home state. They included $50.6 million for environmental cleanup at Hunters Point Naval Shipyard, $5.9 million for a new barracks complex at Monterey's Defense Language Institute, and $7.2 million for a new fire and crash station at March Air Force Reserve Base, near Riverside. Included also was $71 million in add-ons for Texas, home of Sen. Kay Bailey Hutchison, the ranking Republican member of the committee. The money would buy air-conditioning upgrades at a naval air station, a new gym at an air base, and a water-treatment plant at Fort Bliss, near El Paso. Feinstein says that all such additions were requested by the military. "Environmental cleanup of a hazardous site is not pork," she says. The haul. Perhaps, but there was plenty in that bill and two bigger defense-spending measures approved by Congress that would seem to qualify. There was $8.4 million for a celestial observatory in New Mexico, $3 million for a new public-health laboratory in Las Vegas, and the acceptance of an estimated $50 million in liability for pollution caused by the Homestake Mine in Lead, S.D. The Army was also forced to spend $2 million to buy nitrocellulose from a New Jersey company in danger of going bust. All told, Citizens Against Government Waste, a congressional watchdog group, toted up $8.8 billion of congressional add-ons to the $318 billion defense bill. "You don't have to be a pork expert," says Citizens' Vice President David Williams, "to realize that this stuff is not crucial to the nation's defense needs." With the massive Pentagon budget augmented by $17 billion more in supplemental war funding this year, the opportunities for lawmakers to bring home the bacon were greater than ever. The old saw about the making of sausage and the making of legislation is apt: It ain't pretty, but it's not that complicated either. Members of Congress, besieged with requests from constituents, formalize the ones they like into something called "member request" letters. These then go to a series of subcommittees and committees, whose members are continually lobbied by colleagues and their staffers to get items included in legislation. In both the House and the Senate, three separate defense bills-military construction, defense authorization, and appropriations-work their way toward approval at the same time. For some lawmakers, even the authorization bills, which are supposed to deal with policy and programs, hold opportunity. A fair amount of dollar-specific pork gets inserted into them. Additionally, savvy solons know it's easier to get money for a project if it has previously been "authorized." The projects get paid for in all sorts of ways. Sometimes they get added on to the president's requested budget, in the hope he will live with it. (Last year's military construction bill, for example, was increased from $9.971 billion to $10.5 billion.) In other cases, Congress steals a bit here and there from the president's proposed projects. Then Congress can just get cute: It arbitrarily decided, one insider says, that the value of the dollar would rise vis-à-vis foreign currencies for spending on overseas projects. That freed up a cool $60 million. The process also works the other way, with the Pentagon coming to Congress with its own wish lists. These, in the parlance of appropriations, are called "UFRs," or unfunded requirements. Translation: Pentagon brass couldn't get certain items into the president's defense bill, so they ask Congress to do it. Every year, at least a few UFRs make it into the bills reported out of committee to be voted on by the House and the Senate. Priorities. The bills then go to a conference committee to be reconciled by lawmakers from the two chambers. The conference is composed of the chairs of the subcommittees and several senior members from both sides of the aisle. In the Capitol, the chairs are known as "cardinals." Only they can perform a feat known among congressional theologians as an "immaculate conception." That's when a brand-new item is added into a bill, one that has not previously been seen or heard of in the House or theSenate. Just before they voted to approve the tanker-lease deal between Boeing and the Air Force last year, House conferees added four Boeing 737s for VIP-read, Pentagon brass and themselves-transportation. Typical of most immaculate conceptions, it's difficult to figure out who added the 737s, because the whole process happened behind closed doors. After the conference committee concludes its work, a single copy of its report is delivered to the Senate and the House cloakrooms. Then, before anyone has time to study it, it's time to vote. This time, the process didn't end with the passage of the defense bills. On March 21, the White House sent Congress a brand-new $27 billion supplemental spending plan, of which $14 billion was for defense. Already, lawmakers are plotting to add numerous items of their own. And then it's on to next year's bills. Last week, a subcommittee of the House Armed Services Committee added $3.2 billion in items to the $70.2 billion procurement part of the 2003 defense budget. "I would have liked to have added more," subcommittee Chairman Rep. Curt Weldon, a Pennsylvania Republican, told reporters. But first he had to deal with the Pentagon's UFR lists and $14 billion of additional requests by lawmakers. With Ann M. Wakefield ===========[ Reference #3] ===========< Farewell Radio and Television Address to the American People by President Dwight D. Eisenhower, January 17, 1961. My fellow Americans: Three days from now, after half a century in the service of our country, I shall lay down the responsibilities of office as, in traditional and solemn ceremony, the authority of the Presidency is vested in my successor. This evening I come to you with a message of leave-taking and farewell, and to share a few final thoughts with you, my countrymen. Like every other citizen, I wish the new President, and all who will labor with him, Godspeed. I pray that the coming years will be blessed with peace and prosperity for all. Our people expect their President and the Congress to find essential agreement on issues of great moment, the wise resolution of which will better shape the future of the Nation. My own relations with the Congress, which began on a remote and tenuous basis when, long ago, a member of the Senate appointed me to West Point, have since ranged to the intimate during the war and immediate post-war period, and, finally, to the mutually interdependent during these past eight years. In this final relationship, the Congress and the Administration have, on most vital issues, cooperated well, to serve the national good rather than mere partisanship, and so have assured that the business of the Nation should go forward. So, my official relationship with the Congress ends in a feeling, on my part, of gratitude that we have been able to do so much together. II We now stand ten years past the midpoint of a century that has witnessed four major wars among great nations. Three of these involved our own country. Despite these holocausts America is today the strongest, the most influential and most productive nation in the world. Understandably proud of this pre-eminence, we yet realize that America's leadership and prestige depend, not merely upon our unmatched material progress, riches and military strength, but on how we use our power in the interests of world peace and human betterment. III Throughout America's adventure in free government, our basic purposes have been to keep the peace; to foster progress in human achievement, and to enhance liberty, dignity and integrity among people and among nations. To strive for less would be unworthy of a free and religious people. Any failure traceable to arrogance, or our lack of comprehension or readiness to sacrifice would inflict upon us grievous hurt both at home and abroad. Progress toward these noble goals is persistently threatened by the conflict now engulfing the world. It commands our whole attention, absorbs our very beings. We face a hostile ideology-global in scope, atheistic in character, ruthless in purpose, and insidious in method. Unhappily the danger it poses promises to be of indefinite duration. To meet it successfully, there is called for, not so much the emotional and transitory sacrifices of crisis, but rather those which enable us to carry forward steadily, surely, and without complaint the burdens of a prolonged and complex struggle-with liberty at stake. Only thus shall we remain, despite every provocation, on our charted course toward permanent peace and human betterment. Crises there will continue to be. In meeting them, whether foreign or domestic, great or small,there is a recurring temptation to feel that some spectacular and costly action could become the miraculous solution to all current difficulties. A huge increase in newer elements of our defense; development of unrealistic programs to cure every ill in agriculture; a dramatic expansion in basic and applied research-these and many other possibilities, each possibly promising in itself, may be suggested as the only way to the road we which to travel. But each proposal must be weighed in the light of a broader consideration: the need to maintain balance in and among national programs-balance between the private and the public economy, balance between cost and hoped for advantage-balance between the clearly necessary and the comfortably desirable; balance between our essential requirements as a nation and the duties imposed by the nation upon the individual; balance between action of the moment and the national welfare of the future. Good judgment seeks balance and progress; lack of it eventually finds imbalance and frustration. The record of many decades stands as proof that our people and their government have, in the main, understood these truths and have responded to them well, in the face of stress and threat. But threats, new in kind or degree, constantly arise. I mention two only. IV A vital element in keeping the peace is our military establishment. Our arms must be mighty, ready for instant action, so that no potential aggressor may be tempted to risk his own destruction. Our military organization today bears little relation to that known by any of my predecessors in peace time, or indeed by the fighting men of World War II or Korea. Until the latest of our world conflicts, the United States had no armaments industry. American makers of plowshares could, with time and as required, make swords as well. But now we can no longer risk emergency improvisation of national defense; we have been compelled to create a permanent armaments industry of vast proportions. Added to this, three and a half million men and women are directly engaged in the defense establishment. We annually spend on military security more than the net income of all United State corporations. This conjunction of an immense military establishment and a large arms industry is new in the American experience. The total influence -- economic, political, even spiritual -- is felt in every city, every state house, every office of the Federal government. We recognize the imperative need for this development. Yet we must not fail to comprehend its grave implications. Our toil, resources and livelihood are all involved; so is the very structure of our society. In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist. We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted only an alert and knowledgeable citizenry can compel the proper meshing of huge industrial and military machinery of defense with our peaceful methods and goals, so that security and liberty may prosper together. Akin to, and largely responsible for the sweeping changes in our industrial-military posture, has been the technological revolution during recent decades. In this revolution, research has become central; it also becomes more formalized, complex, and costly. A steadily increasing share is conducted for, by, or at the direction of, the Federal government. Today, the solitary inventor, tinkering in his shop, has been over shadowed by task forces of scientists in laboratories and testing fields. In the same fashion, the free university, historically the fountainhead of free ideas and scientific discovery, has experienced a revolution in the conduct of research. Partly because of the huge costs involved, a government contract becomes virtually a substitute for intellectual curiosity. For every old blackboard there are now hundreds of new electronic computers. The prospect of domination of the nation's scholars by Federal employment, project allocations, and the power of money is ever present and is gravely to be regarded. Yet, in holding scientific research and discovery in respect, as we should, we must also be alert to the equal and opposite danger that public policy could itself become the captive of a scientific-technological elite. It is the task of statesmanship to mold, to balance, and to integrate these and other forces, new and old, within the principles of our democratic system-ever aiming toward the supreme goals of our free society. V Another factor in maintaining balance involves the element of time. As we peer into society's future, we-you and I, and our government-must avoid the impulse to live only for today, plundering, for our own ease and convenience, the precious resources of tomorrow. We cannot mortgage the material assets of our grandchildren without risking the loss also of their political and spiritual heritage. We want democracy to survive for all generations to come, not to become the insolvent phantom of tomorrow. VI Down the long lane of the history yet to be written America knows that this world of ours, ever growing smaller, must avoid becoming a community of dreadful fear and hate, and be, instead, a proud confederation of mutual trust and respect. Such a confederation must be one of equals. The weakest must come to the conference table with the same confidence as do we, protected as we are by our moral, economic, and military strength. That table, though scarred by many past frustrations, cannot be abandoned for the certain agony of the battlefield. Disarmament, with mutual honor and confidence, is a continuing imperative. Together we must learn how to compose difference, not with arms, but with intellect and decent purpose. Because this need is so sharp and apparent I confess that I lay down my official responsibilities in this field with a definite sense of disappointment. As one who has witnessed the horror and the lingering sadness of war-as one who knows that another war could utterly destroy this civilization which has been so slowly and painfully built over thousands of years-I wish I could say tonight that a lasting peace is in sight. Happily, I can say that war has been avoided. Steady progress toward our ultimate goal has been made. But, so much remains to be done. As a private citizen, I shall never cease to do what little I can to help the world advance along that road. VII So-in this my last good night to you as your President-I thank you for the many opportunities you have given me for public service in war and peace. I trust that in that service you find somethings worthy; as for the rest of it, I know you will find ways to improve performance in the future. You and I-my fellow citizens-need to be strong in our faith that all nations, under God, will reach the goal of peace with justice. May we be ever unswerving in devotion to principle, confident but humble with power, diligent in pursuit of the Nation's great goals. To all the peoples of the world, I once more give expression to America's prayerful and continuing inspiration: We pray that peoples of all faiths, all races, all nations, may have their great human needs satisfied; that those now denied opportunity shall come to enjoy it to the full; that all who yearn for freedom may experience its spiritual blessings; that those who have freedom will understand, also, its heavy responsibilities; that all who are insensitive to the needs of others will learn charity; that the scourges of poverty, disease and ignorance will be made to disappear from the earth, and that, in the goodness of time, all peoples will come to live together in a peace guaranteed by the binding force of mutual respect and love. Note: Delivered from the President's Office at 8:30 p.m. ------------------------ Yahoo! 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