Originally published 04:45 a.m., October 5, 2009, updated 03:50 p.m.,
October 5, 2009
Pentagon auditor deemed serial failure

Shaun Waterman THE WASHINGTON TIMES

Some members of Congress are so disturbed by failures and malfeasance
described in a recent government report that they are considering
removing the agency that audits hundreds of billions of dollars in
Defense Department contracts from Pentagon supervision.

One legislator said he felt physically sickened by the report.

The lawmakers were reacting to findings by the Government
Accountability Office (GAO), the investigative arm of Congress, about
the Defense Contract Auditing Agency (DCAA).

The agency, which last year was responsible for ensuring that
taxpayers got good value for more than a half-trillion dollars in
defense contracts, revised audits to curry favor with contractors,
promoted a supervisor responsible for such revisions to a top position
and rushed through other audits out of fear that the work would be
outsourced if employees took too much time, the GAO said.

"Unbelievable problems at Def Contrctng Agncy [sic]," Sen. Claire
McCaskill, Missouri Democrat, wrote on her Twitter account just before
a recent hearing on the report. "Top of my head is about to pop off."

"I read a summary of the GAO report last night and quite frankly got
sick," said Sen. Tom Coburn, Oklahoma Republican, adding that he would
not use all his allotted time for questions because he was "a little
bit too upset to go where I really want to go."

"Each and every audit that GAO reviewed for this report was out of
compliance with auditing standards," said Sen. Joe Lieberman,
Connecticut independent and chairman of the Homeland Security and
Governmental Affairs Committee. The DCAA "has a unique role," as a
steward of taxpayer dollars, and consequently "needs to have
independence. It needs to stand up to pressures from both agencies and
contractors," he said. "Perhaps it's time for us to consider
separating DCAA from the Department of Defense and ... making it an
independent auditing agency."

The flaws identified by the GAO "allow contractors to overbill the
government in some cases for millions of dollars," said the committees
ranking Republican, Sen. Susan Collins of Maine.

Calling the DCAAs performance "completely unacceptable," she noted
that when the agency failed, "the fallout can cascade throughout the
system and ultimately shortchange our troops in the field."

Pentagon officials told the hearing that the GAO investigation
examined audits conducted years ago and that a series of remedial
measures already had been implemented, including a new oversight
committee of all the service comptrollers.

Robert Hale, the undersecretary of defense who serves as the
departments comptroller and chief financial officer, and the official
to whom the DCAA currently reports, said it might take time for the
reforms to show results and argued against any change in the agencys
status.

Nonetheless, Ms. Collins declared her "frustration" - a sentiment
widely shared by lawmakers at the hearing.

In one case, DCAA officials had attempted an audit of a major U.S.
defense contractor doing reconstruction work in Iraq. The contractor
was not named in the report, but a person familiar with the
investigation told The Washington Times that it was Parsons Corp., a
Pasadena, Calif.-based engineering firm whose work in the past has
been criticized as shoddy.

The GAO report said the firm did almost $900 million of U.S.
government contracting in 2004, the year the audit started, a
quarter-billion dollars worth of it in Iraq.

Two years after the DCAA began a review, in 2006, Stuart Bowen,
special inspector general for Iraq reconstruction, pledged to
investigate all of the $1 billion worth of contracting Parsons had
done in Iraq, after evidence emerged about unfinished and substandard
work. Last year, he released a report charging that the firm had been
paid $142 million for canceled reconstruction projects.

The initial DCAA audit identified eight serious deficiencies in the
firms billing system. But after the contractor objected, a supervisor
ordered DCAA staff to delete some of the documents the audit had
generated and revise others, the GAO found. When the final audit was
published, five of the eight deficiencies had been removed altogether
and the other three downgraded to suggestions, meaning the firm got a
"clean" audit rating.

That supervisor was subsequently promoted to become the quality
assurance manager for the DCAAs Western region, serving as the last
line of quality control over thousands of audits every year -
including many that ended up being questioned by the GAO - a
circumstance Ms. Collins called "devastating" to morale at the agency.

Erin Kuhlman, Parsons vice president for corporate relations, said the
company would not comment on the findings.

The GAOs top forensic accountant, Gregory Kutz, told lawmakers that
his staff had found a "lack of independence" at the DCAA, which had a
"production-focused culture resulting in part from flawed metrics ...
intended to show that they could do their work faster and cheaper than
public accounting firms," partly because it feared its work might
otherwise be outsourced.

"Taking time to find and address issues was discouraged," he added,
concluding that "thousands of good auditors [are] trapped in a broken
system" at the agency.

The GAO said that, in the short term, Congress could legislate to
provide the agency with the same budgetary and legal independence that
inspector generals have.

"This change could strengthen leadership, independence and
transparency," Mr. Kutz said.

In the longer term, he said, lawmakers could consider elevating the
agency to a "component agency" of the Department of Defense, reporting
directly to the Pentagons powerful deputy secretary; or even moving it
outside the department altogether, creating an independent audit
agency.

Mr. Hale, the Pentagon comptroller, told the hearing that the
administration opposed any such move.

Instead, he said, officials were working to strengthen the agencys
independence within the department, boosting resources and improving
oversight by establishing a special committee of defense auditors to
look at the agency's work.

DCAA Director April Stephenson told lawmakers that the agency hoped to
hire 700 more people for training over the next three years and had
already "completely revamped" its quality assurance processes.

Mr. Hale pointed out that the audits reviewed by GAO and the inspector
general "were completed three to five years ago," and that officials
had begun implementing corrective actions late last year, after the
problems were first identified by a DCAA whistleblower.

But he acknowledged that the effects of those reforms might not be visible.

"It took us years to get into this problem. It may take several years
for the full benefit of these actions to be realized," Mr. Hale said.

A reader just sent this. I would say my reader has a valid question. Boeing is proposing putting our newest technology onto an old plane so they might sell the planes to non-US customers. If they get away with this, we lose any measure of technology advance above other countries and interests. This company has been so busy selling or giving away our advantage in the opinion of this observer; the US is in sorry shape now, even without the loss of this particular technology.

Who is minding the store anyway? It seems like every system of security and protection has broken down. Agencies, like many members of Congress are so compromised, that they are not doing their due diligence to protect our citizens and country. It is sad when those who are supposed to be in oversight have forgotten whom they are supposed to be advocating for.

It appears there is so much corruption infiltrating both industry and government, it’s like watching a slow motion multi-car pile up and most of us, feel absolutely unable to do anything to avert the disaster and can only watch our country and national security go down the tube. -GFS

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G. Florence-

I wonder if Boeing will get this one past the State Department, Directorate of Defense Trade Controls and all those defense agencies that have a stake in its proliferation. Passing any level of Advanced Technology outside of the United States, to even our closest allies, should be contemplated only with the most cautious of trepidation.
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Stealthy International F-15 Proposal

Heavy Metal
Wednesday, April 15, 2009 @ 01:18PM
Boeing Proposes Stealthy F-15

With just about all the future fighter work having gone to Lockheed Martin, Boeing came up with an interesting proposal to keep the old McDonnell Douglas fighter production going.

Boeing got waxed on the ATF and JSF competitions (which resulted in the F-22 and F-35, respectively). While Boeing is doing some work for the F-22 as a subcontractor to Lockheed-Martin, the only fighter programs they have going are evolutions of the decades-old F-15 and F-18. Both programs have evolved astronomically since their inception (e.g. the ground-attack versions of the F-15, the 1/3 upsized F-18E/F programs), and are still quite competitive with 4th-generation fighters such as the Eurofighter, Rafale and Gripen. Along with the Lockheed-Martin F-16 of the same generation (which has also been radically evolved), Boeing offers both fighters into a number of international competitions.

But time is running out on the F-15. The US Air Force will be replacing it with the F-22, and the export market is becoming saturated. Most international competitions are looking for newer-generation fighters.

Late last month, Boeing came out with an interesting proposal - “stealthifying” the venerable F-15:
Boeing unveiled the prototype of a new variant of the F-15 Strike Eagle aimed at the Asian and Middle East markets that will incorporate stealthy coatings and structure here on Mar. 17.
Company officials hope the new aircraft will garner up to 190 orders, extending the F-15 line beyond the current backlog of 38 aircraft for South Korea and Singapore. Since the company lost the Joint Strike Fighter contest to Lockheed Martin, the future of its St. Louis manufacturing facility has been uncertain. Continued F-15 sales, as well as additional orders for F/A-18E/Fs and EA-18Gs, are the only work in the foreseeable future for the plant.

Major design changes in the new “Silent Eagle” version include internal bays within the existing conformal fuel tanks that can carry a variety of air-to-air and air-to-ground weapons. Each tank will be configured to hold two air-to-air missiles, including the AIM-9 and AIM-120 or a combination of the two. For the air-to-ground mission, 1,000- and 500-pound Joint Direct Attack Munitions can be carried or four 250-pound Small Diameter Bombs per tank. Weapons loadout can also be split between the AIM-120 and JDAM for a multirole mission. The Silent Eagle configuration includes 15-degree outward-canted V-tails - a shift away from the characteristic vertical fins of the F-15 that reduces the radar cross-section.

Check out the internal weapons storage:

This new plane isn’t going to be cheap:
Jones estimates the cost of a Silent Eagle will be about $100 million per aircraft, including spares, if built new. A retrofit kit including the conformal fuel tanks, DEWS and coatings could be added to existing Strike Eagles, he says.

$100M? That’s not much cheaper than the current target price of the F-35 (~$130M, I believe).

The F-22 isn’t exportable (due to its state-of-the-art stealth and radar/electronic warfare capabilities, not even our closest allies get access to it). The F-35 is likely to be widely exported (the UK, Japan, Israel and a number of smaller NATO countries), although in a downrated form (there’s a lot of debate over the stealth and EW capabilities for export partners.

I actually didn’t take this announcement all that seriously last month - the price tag is just too high, and I’m unconvinced that stealth can be retrofitted this way (in particular, the engine inlets). But with the F-22 being cancelled as part of the DoD 2010 budget rationalization, I could see the Air Force buying some of these proposed upgrade kits for some of its newer F-15s.
This program will be interesting to watch, from both the domestic and international customer perspective. I’ve certainly got to hand it to Boeing for trying this.

http://www.victoriousopposition.com/index.php/site/category/heavy-metal/

Jim Rogers calls most big U.S. banks “bankrupt”
By Jonathan Stempel
Reuters Dec. 11, 2008

NEW YORK (Reuters) - Jim Rogers, one of the world's most prominent international investors, on Thursday called most of the largest U.S. banks "totally bankrupt," and said government efforts to fix the sector are wrongheaded.
Speaking by teleconference at the Reuters Investment Outlook 2009 Summit, the co-founder with George Soros of the Quantum Fund, said the government's $700 billion rescue package for the sector doesn't address how banks manage their balance sheets, and instead rewards weaker lenders with new capital.
Dozens of banks have won infusions from the Troubled Asset Relief Program created in early October, just after the Sept 15 bankruptcy filing by Lehman Brothers Holdings Inc (LEHMQ.PK). Some of the funds are being used for acquisitions.
"Without giving specific names, most of the significant American banks, the larger banks, are bankrupt, totally bankrupt," said Rogers, who is now a private investor.
"What is outrageous economically and is outrageous morally is that normally in times like this, people who are competent and who saw it coming and who kept their powder dry go and take over the assets from the incompetent," he said. "What's happening this time is that the government is taking the assets from the competent people and giving them to the incompetent people and saying, now you can compete with the competent people. It is horrible economics."
Rogers said he shorted shares of Fannie Mae (FNM.P) and Freddie Mac (FRE.P) before the government nationalized the mortgage financiers in September, a week before Lehman failed.
Now a specialist in commodities, Rogers said he has used the recent rally in the U.S. dollar as an opportunity to exit dollar-denominated assets.
While not saying how long the U.S. economic recession will last, he said conditions could ultimately mirror those of Japan in the 1990s. "The way things are going, we're going to have a lost decade too, just like the 1970s," he said.
Goldman Sachs & Co analysts this week estimated that banks worldwide have suffered $850 billion of credit-related losses and writedowns since the global credit crisis began last year.
But Rogers said sound U.S. lenders remain. He said these could include banks that don't make or hold subprime mortgages, or which have high ratios of deposits to equity, "all the classic old ratios that most banks in America forgot or started ignoring because they were too old-fashioned."
Many analysts cite Lehman's Sept 15 bankruptcy as a trigger for the recent cratering in the economy and stock markets.
Rogers called that idea "laughable," noting that banks have been failing for hundreds of years. And yet, he said policymakers aren't doing enough to prevent another Lehman.
"Governments are making mistakes," he said. "They're saying to all the banks, you don't have to tell us your situation. You can continue to use your balance sheet that is phony.... All these guys are bankrupt, they're still worrying about their bonuses, they're still trying to pay their dividends, and the whole system is weakened."
Rogers said is investing in growth areas in China and Taiwan, in such areas as water treatment and agriculture, and recently bought positions in energy and agriculture indexes.
(For summit blog: summitnotebook.reuters.com/)
(Reporting by Jonathan Stempel; Additional reporting by Jennifer Ablan and Herbert Lash)

Interesting how things get around…

Last July (2009), Arab News in Saudi Arabia reported that:

A joint US-Israeli missile defense system meant to shield Israel from Iranian attack hit a snag when a series of tests were aborted because of malfunctions, defense officials said Thursday.

The project, said to be called “ The Arrow,” a joint project between Israel Aerospace Industries Ltd. And Chicago-based Boeing Company failed it’s tests, though the parties involved were said to play down the glitches and stated they expected in such a complicated multilayered missile-defense system, that those difficulties would not “affect the long-term development of the system.”

Arab news stated that a Pentagon Official who spoke “on condition of anonymity because they were not authorized to disclose details of the tests” said that “the mission was an interception test and also exercised the Arrow system’s interoperability with other elements of the US ballistic missile defense system.” They further stated that the tests took place off the coast of California, and it was “the communication glitches between the missile and the radar which led US defense officials to abort the test before an intercepting missile could be fired.”

The quote the Pentagon as further saying, “the target missile was dropped from a C-17 aircraft. It said the radar system detected the target, but not all test conditions to launch the Arrow Interceptor were met, and it was not launched.”

This is all a part of a system Israel is developing to protect it from all forms of attack, Arab news reports, “ranging from short-range rocket fire from Lebanon and Gaza to long-range missiles from Iran.”

Lobbyists Paid Off by China vs. 30,000 US Workers: Which Side Will Obama Choose?
Link: http://www.truthout.org/081309G?n

Monday 10 August 2009
by: Mike Elk | Visit article original @ Campaign for America's Future

A Chinese rubber company worker inspects tires at a factory. China is flooding the US market with tire imports. (Photo: Mark Ralston / Agence France-Presse / Getty Images)
As the International Trade Commission considers comments on its recommendation to impose tariffs on Chinese tire imports, President Obama stands at a crossroads in the fight to rebuild the American economy.
President Obama has made a commitment in the past to uphold previously signed trade agreements. China, however, is violating these agreements by flooding the market with a massive 300 percent increase in tire imports in an attempt to wipe out American tire manufacturers. In 2004, China sent 14 million tires to the U.S. valued at $453 million. By last year, that had increased to 46 million tires valued at $1.7 billion.
The Chinese are shipping cheaply made tires in an effort that isn't just killing American manufacturing, but also killing people. So far, two people have died as a result of the low quality of some of these Chinese import tires. The U.S. Government has launched a massive of recall of the tire in question, but so far the Chinese manufacturer has refused to cooperate fully with the recall.
So far over 8,000 people have lost their jobs, and over 20,000 more jobs are at risk if the Chinese are allowed to continue with this strategy of not obeying trade laws.
Next month Obama will be challenged to uphold his campaign pledge to enforce current trade laws when a decision on illegal Chinese tire imports came to his desk. Last month, a majority of the U.S. International Trade Commission (ITC) found that tariff relief was needed to urgently reduce tire imports because of market disruption. According to the United Steelworkers, between 2004 and the end of this year, more than 8,100 workers in the tire industry have lost or will lose their jobs and another 20,000 jobs are threatened.
Speaking last week, USW President Leo Gerard said that this will "prove to be a test of enforcement of trade laws that China agreed to." A ruling to enforce current U.S. trade laws would mark a clear break with Bush era economic policy. During the Bush Administration the United State International Trade Commission ruled four separate times that China had violated trade law and recommended measures to stop the flow. However, each time Bush refused to obey these recommendations.
If President Obama follows the commission recommendations, it would send a stern message to China that the Obama administration, unlike the Bush administration, intends to enforce U.S. trade law. He is expected to decide on September 17, one week before the G-20 summit in Pittsburgh. If Obama chooses to enforce tariffs on illegal Chinese competition, that would send a message throughout the world that U.S. intends to enforce trade law.
Unfortunately, corporate lobbyists paid for by the Chinese Chamber of Commerce, like former Bush official and Ohio U.S. Senate candidate Robert Portman, are running an aggressive misinformation campaign in attempt to thwart U.S. trade law. These groups have been claiming that limiting tire imports would cost Americans jobs and raise the costs of tires for consumers. However, the United States Commission on Trade found that the total benefits exceed the costs by $884 million.
Chinese importers, in conjunction with the Chinese Chamber of Commerce, have ironically formed a lobbying front group ironically named American Coalition for Free Trade in Tires. The coalition is run by Jochum, Shore & Trossevin, a Washington D.C. lobby firm run by former Bush trade officials who are cashing in on their years of U.S. government service to advise foreign competitors. The law firm has used its ties to power to advise Chinese manufacturers on how to get around loopholes in the law. As a result, eight members of Congress wrote a letter this past June calling on the Government Accountability Office to investigate.
Congressman Michael Michaud of Maine said " "Many of these individuals appear to be repaying the investment that the American taxpayers made in them with their hard-earned tax dollars by using the knowledge, expertise and contacts they gained while on the federal payroll in ways that are adverse to the interests of our workers and our producers."
Speaking last week at a factory in Indiana, President Obama said that rebuilding American manufacturing was the key to build a vibrant economy. As President Obama has said previously many times we can't go back to an economy, where 45 percent of our profits come from the financial sector. As Dave Johnson pointed out last week we in his piece "Manufacture or Borrow (Until We Can't)":
"When it comes down to it you can't have a healthy service sector unless you are manufacturing items to sell and trade because you can't pay for the restaurant bill or insurance or hotel room or lawyer or even the doctor if you don't make something to sell and trade. And mostly you can't keep buying the things made elsewhere. You can only borrow for so long."
President Obama has announced bold new initiatives to invest billions of dollars into new green energy initiatives. However, if we don't have to even enforce the current trade laws that we have, American manufacturing will be wiped out by low-wage Chinese manufacturing. As I highlighted previously, companies such as GE have already begun to move so-called green jobs to China already.
The fight over whether to enforce trade laws against illegal Chinese tire imports will set a precedent that the U.S. will enforce previous trade agreements. President Obama has a choice of whether he will side with American workers or corporate lobbyists paid off by China.