Veco Exec Won Over Pol With Talk Of Barbados Warden Gig
By Laura McGann - September 11, 2007, 5:26 PM


It's the American dream to retire to a job as a prison warden near topless beaches in Barbados. Well, at least, that was former state Rep. Pete Kott's (R-AK) dream, and Veco CEO Bill Allen was going to do his best to make it happen -- in exchange for a lucrative oil pipeline, of course.

In opening statements in Kott's public corruption trial, the prosecution played the jury phone conversations recorded by the FBI where Kott jokes (at least once while audibly tipsy) about his hopes for the prison position, but is serious about a future with Veco after leaving his post.

The tapes also reveal how Allen -- also known for overseeing the doubling of Sen. Ted Stevens' (R-AK) Girdwood home -- sees his relationships with politicians: In one lengthy call between Allen and [former Veco vice president Rick Smith] on Feb. 20, 2006, Allen goes on a tirade about Veco's new young lobbyist, Kris Knauss. Allen was angry that Knauss was using Allen's own well-cultivated influence with Kott as if it were his own, turning it to his advantage with Gov. Frank Murkowski's chief of staff, Jim Clark.

"Well f---. I put more money into Pete Kott than he's ever even thought about," Allen sputtered at one point.
Some investments are better than others.

From: www.tpmmuckraker.com

Suit claims worker fired for reporting violations at nuclear plant
The News Courier / Athens, Alabama
From staff and wire reports

A former construction foreman at Browns Ferry Nuclear Plant filed a whistleblower lawsuit Friday, claiming he was fired in 2004 by a Tennessee Valley Authority contractor for reporting serious safety violations at the plant.

Attorneys for James Speegle filed the suit in U.S. District Court in Huntsville against the contractor, Massachusetts-based Stone & Webster Construction, seeking a jury trial.
Speegle alleges in the suit that he complained to the company’s management and the Nuclear Regulatory Commission about serious safety problems with the protective coatings used in the plant’s cooling system.

He was fired May 22, 2004 - two days after he complained to the NRC and the company, the suit says.
Browns Ferry spokesman Jason Huffine Friday referred all questions about the lawsuit to NRC spokesman Ken Clark in Atlanta and to Stone and Webster. Telephone calls to those offices Friday by The News Courier were not returned.

“It’s really hard for us to comment on something like that,” Huffine said. “I really can’t speak for them.”

According to the suit, TVA removed Stone & Webster from the coatings project after Speegle was fired and hired another contractor to redo the work that led to the complaint.

The NRC later cited Stone & Webster for improper coatings work at Browns Ferry, according to the suit.

The suit follows Speegle’s whistleblower complaint filed with the U.S. Department of Labor after his firing.

In a statement, Speegle’s attorney, David J. Marshall of Washington, D.C., said people who live near the nuclear plant “rely on the workers there to blow the whistle on safety violations, and I’m confident that they want to see James Speegle vindicated for doing the right thing.”

At the time of the firing, Stone & Webster was under pressure to complete a $1.8 billion overhaul of the Unit 1 reactor at Browns Ferry, according to Marshall.

Unit 1, which had been shut down in 1985 due to safety concerns, was restarted in May after being off line for 22 years. It is one of three reactors at the north Alabama plant.
Copyright © 1999-2006 cnhi, inc.

With all of the information being posted which shows runaway contractors, fraud and corruption in contracts and in contract oversight and management, particularly in the area of defense contracts, it is interesting to note that currently, the Oversight of such contracts is under the purvey of The Defense Security Service (formerly Defense Investigative Service) who’s employees have the charge of fulfilling their agencies assigned mission to “protect classified information and technology in the hands of industry.” It would appear that DSS is broken and that this critical mission is no longer being accomplished. I checked with someone who had access to the laws and policies and found out the following:
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The National Industrial Security Program (NISP)

“DoD 5220.22-M, Chapter 1, Para. 1-101- Authority

The NISP was established by Executive Order 12829. The Secretary of Defense (SecDef) has been designated Executive Agent for the NISP by the President.

While the SecDef serves as the Executive Agent for inspecting and monitoring contractors, practical day-to-day administration of the program has been, and continues to be, the purvey of the Defense Security Service (DSS).

One of the responsibilities of the DSS is the administration of the Facility Clearance (FCL) program of defense contractors. DoD 5220.22-M, Chapter 2, Para. 2-102- Eligibility Requirements, Sub Para. c. stipulates “The company must have a reputation for integrity and lawful conduct in its business dealings.”

So why isn’t the Secretary of Defense and the Defense Security Service enforcing this requirement? They have the authority to revoke a defense contractor’s facility clearance and participation in the NISP until that contractor comes into compliance. It appears to be used very selectively on small defense contractors, but never as a compliance tool in large defense contractor transgressions.”
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So, current law does provide legal means to enforce expectations, policies, and laws regarding the actions of defense contractors, but the expectations, policies, and laws are not being enforced. In fact, over less than a decade, it has become decidedly out of control. It appears that Congress is going to have to stand up and take this to the mat, or it will never be wrestled back into control. It would appear the following must be done:

1. Corruption within and connected to the Executive, Judicial, and Legislative Branches must be confronted and routed.

2. Government Agencies must also be audited, removing first appointed managers who are either not doing the job required, or who are actively thwarting the employee’s efforts to do the oversight work ethically. This will include on an agency by agency basis, determining which employees are a part of the problem and those who may be paralyzed victims of the corruption and the corrupted managers and/or coworkers.

3. Congressional intervention into defense contractor influence pedaling and lobbying, must be accomplished and violations of current laws stopped.

4. The Government needs to step up to its role as the governing authority. Far too often contractors, defense contractors in particular have much too much influence into decisions that should be inherently governmental decisions. This is not to say that defense contractors should not have input into the process. However the final determination of policy needs to squarely rest on the shoulders of government.

5. Government employees who have oversight responsibilities must be uncompromised and independent of pressures either directly or indirectly applied from defense contractors or corrupted employees or managers within the government who are “owned” by those contractors.

6. The defense contracting community is its own best advocate. It does not need government workers or agencies advocating on its behalf. The government should not be trying to be the “friend” of industry. In business dealings, the government and industry, must maintain appropriate separation because of the legal oversight responsibility government has. There are currently laws and policies, which have been in place a long time to assure that the lines between contractor and oversight authority are clear and clean. However, those policies have in some cases been corrupted, and in others ignored, and in all cases where problems are evident have not been enforced.

Will all of this be easy? No, although the path that must be taken is clear. The heaviest weight in responsibility at this time, due to the level of corruption and dysfunction in the Executive and Judicial branches, falls squarely on the shoulders of the Legislative Branch. The Senate and House must stand up and do the right thing for our country.

VM
9-9-07

GAO Sustains 2nd Protest Over Rescue Helicopter Contract

(from Pogo.org, 9-8-07)

Yesterday, Lockheed Martin and Sikorsky prevailed for the second time in protesting the Air Force’s handling of the contentious $15 billion CSAR-X search and rescue helicopter contract. POGO has been closely observing a growing series of questions which plague the contract including internal emails which may reveal the Air Force intends to continue steering the contract to current winner Boeing, and questions whether Boeing's helicopter meets contract requirements for such issues as downwash brownout and deployability. Here’s the Government Accountability Office’s statement which is not yet on line.

NationalMonitor.org
July/August 2002 - VOLUME 23 - NUMBER 7&8

C o r p o r a t e R e f o r m A f t e r E n r o n

The Dormant
Power of the Purse
The Failure of the Government to Use
its Purchasing Power to Promote
Corporate Compliance with the Law
By Seth Morris

The U.S. government is the world's largest consumer. It spends more than $200 billion annually on goods and services, for everything from jet fighters to food services.

The Federal Acquisition Regulation (FAR) prescribes that these taxpayer dollars only be awarded to "responsible" contractors that have a satisfactory record of "integrity and business ethics," but frequently this regulation is honored in the breach.

The top 43 contractors of fiscal year 1999 received over 45 percent of all contract dollars awarded that year. In a year-long investigation, the Project on Government Oversight (POGO) compiled administrative, civil and criminal violations and alleged violations for these companies, using a wide variety of sources, and including cases and settlements where a company was found to be a responsible party, as defined under the Superfund legislation, for the cleanup of hazardous substances at Superfund sites. (Alleged misconduct here includes government claims against a company resulting in a consent decree or other settlement without admission of guilt or wrongdoing; it does not include allegations which did not result in such final agreements. In all, the investigation documents over 400 instances of misconduct and alleged misconduct committed by these contractors.

POGO found that, since 1990, fine/penalty, restitution, settlement and Superfund clean-up costs for the 43 top contractors totaled approximately $3.4 billion. Sixteen of the 43 contractors have been convicted of a total of 28 criminal violations; four of the top 10 have at least two criminal convictions. Only one of the 43 contractors has been suspended or debarred from doing business with the government. This suspension action, against General Electric's Aircraft Division, lasted only five days after the company pled guilty to diverting millions of dollars from the U.S. Foreign Military Aid Program to finance the sale of F-16 engines to Israel.

These findings almost certainly understate the extent of contractor misconduct, both because there is no comprehensive centralized database of corporate crime and misconduct, and because the government has in the last decade become much less aggressive in enforcing laws and regulations. Criminal enforcement of administrative referrals for federal procurement fraud, for example, fell from over 306 referrals in 1992 to only 102 in 1998. Prosecutions fell as well, with 36 percent of referrals prosecuted in 1992 and only 28 percent prosecuted in 1998, according to data compiled by the Transactional Records Access Clearinghouse (TRAC) at Syracuse University. The number of referrals for civil actions from federal agencies to the Department of Justice fell from over 35,000 in 1992 to only 6,324 in 1999, according to TRAC.

The Department of Housing and Urban Development referred 2,945 civil enforcement actions to the Department of Justice in fiscal year 1995, but only 69 in fiscal year 1999. The Department of Defense referred 489 civil enforcement actions to the Department of Justice in fiscal year 1995, but only 98 in fiscal year 1999.

Rolling back Responsibility
In July 1999, the Clinton administration proposed a "contractor responsibility" rule to address the issue of lawbreakers receiving federal contracts. The rule would have:

·required contracting officers to consider a prospective contractor's business record when awarding a contract;
·clarified that one element of a "satisfactory record of integrity and business ethics," according to the FAR, is compliance with the law; and
·required contractors to certify if they had been convicted of any felonies within the past three years, or had any felony charges currently pending against them, or had otherwise been found liable in a civil proceeding.

The proposed rule met with strident corporate opposition. "This rule gave government agents blanket discretion to blacklist federal contractors based on subjective and arbitrary notions of satisfactory compliance with any federal, state or even foreign law," says Randy Johnson, U.S. Chamber of Commerce vice president for labor, immigration and employee benefits.

Elaine Guth of the Manufacturers Alliance/MAPI, echoed this line, arguing that the rule was "overreaching, unconstitutional and failed to give due process to contractors."

As a result of intense lobbying by the business industry, the contractor responsibility rule had only a fleeting existence. Finally adopted by the Clinton administration on its last day in office, January 19, 2001, it was temporarily suspended by the Bush administration on January 20, suspended again on January 31, and then permanently repealed on December 27, 2001 [see "Controlling Corporate Scofflaws or Blacklisting?" Multinational Monitor, July/August 1999 and "Defending Contractor Irresponsibility," Multinational Monitor, May 2001.]

Bigger and Badder
Although public interest groups welcomed the contractor responsibility rule, current regulations provide the government with the needed authority to deny contracts to lawbreaking companies, even without the rule. This authority is lodged in both the general federal acquisition regulations, and in specific procurement and agency rules which authorize government officials to put irresponsible companies on a list of entities ineligible to receive government contracts.

The federal government annually takes suspension and debarment actions against hundreds of contractors and individuals. Some of these actions are taken against contractors for reasons other than a criminal conviction or civil judgment, such as civil settlements or default on a student loan. The one thing that these hundreds of suspension and debarment actions have in common is that they are almost always taken against small contractors.

Large contractors enjoy an unfair advantage over smaller contractors in navigating the federal government's suspension and debarment system. Larger contractors have the financial means, plus high-priced attorneys, that enable them to avoid suspension and debarment.

"Many of these large companies which continue to violate ethical and criminal laws possess the legal manpower and expertise to avoid serious penalties," says Rep. Albert Wynn, D-Maryland. "It is my concern that while these companies continue to contract with the federal government, small businesses who lack the funds and the ëlegal eagles' are put at a disadvantage when competing for federal contracts." Many of the largest federal government contractors have a record of repeat misconduct and alleged misconduct, yet the government continues to award them billions of dollars in contracts. The top 10 repeat offenders identified through POGO's investigation covering the period since 1990 are: General Electric, with 63 instances of misconduct and alleged misconduct and fines, penalties, restitution, settlements and clean-up costs totaling $982,859,555; Lockheed Martin with 63 instances of misconduct or alleged misconduct and $231,872,404 in payments; Boeing, 36 and $357,973,000; Raytheon, 24 and $128,652,919; Northrop Grumman, 21 and $87,876,581; Fluor, 19 and $70,016,614; United Technologies, 18 and $214,836,860; TRW, 16 and $389,484,000; AT&T, 14 and $16,090,000; and Unisys, 12 and $182,245,692 in payments.

On rare occasions, the federal government does suspend large contractors. The Navy suspended General Dynamics twice in 1985 for procurement fraud. The first suspension lasted five months and the second lasted two months. Also in 1985, the Air Force suspended General Electric for five months as a result of procurement fraud.

But inaction is the norm. A few years after GE's five month suspension, the Defense Department established an office specifically to handle GE violations because the Pentagon believed General Electric was violating laws at such a high rate. At the request of the Department of Defense Inspector General, the Philadelphia Remedies Unit was established within the Defense Contract Management Agency's Mid-Atlantic District on June 1, 1990. During the three-year existence of this unit, 163 investigative and 147 administrative matters were resolved, resulting in the government recovering a total of $221.7 million from General Electric on noncompliance matters.

Regarding suspension and debarment, the Unit's report states: "None of the recommendations made for action against a corporate entity of the General Electric Company were approved by the debarring officials at DLA [Defense Logistics Agency] or the Army who reviewed these recommendations. In the only matter involving a GE entity which resulted in administrative action, the DLA debarring official issued a suspension against the Aircraft Engine Group and lifted it five days later. The result of these efforts make it fairly clear that, at least in the case of the General Electric Company and probably other major contractors, administrative action is not a threatening remedy."

The report concluded, "Without a real possibility of the issuance of administrative action, the government loses an important remedial tool to force compliance."

The Administrative Agreement Out
A major problem in enforcement of contractor responsibility and debarment rules is that, especially in the defense sector, the government frequently relies on a single contractor, or just a few contractors, to provide big ticket items such as major weapons systems. A wave of corporate mergers in the defense industry over the past 10 years -- supported by the Pentagon -- has exacerbated the situation. As a result, procurement officials often find themselves constrained by the fact that the government is wholly reliant on certain companies for specific projects.

The contractors' preferred alternative to suspension or debarment is an administrative agreement. The goal of these agreements is to change the corporate culture of a company, to make it a responsible and ethical company, through implementation of a corporate ethics program.

There is reason to doubt whether these agreements foster ethical behavior, however. For instance, in January 1995, Lockheed Martin pled guilty to bribing an Egyptian official. In addition to paying a $24.8 million fine, Lockheed Martin entered an administrative agreement with the Air Force. Since implementing the agreement, Lockheed Martin and its subsidiaries have been accused of at least eight violations -- related to procurement fraud, environmental pollution, employment discrimination, shareholder fraud, nuclear safety violations and violations of the Arms Export Control Act -- and have paid approximately $7 million in fines/penalties and settlements.

Similarly, Litton Industries paid $82 million to settle allegations of procurement fraud and entered into an administrative agreement with the Navy in January of 1995. Since implementing the 1995 agreement, two Litton subsidiaries pled guilty to two criminal violations for making false statements and paid approximately $17.8 million in fines.

Despite these examples suggesting that administrative agreements do not adequately protect the government's interests, the government tends to rely on these agreements as the preferred tool to deal with large contractors.

An alternative approach to deter companies from breaking the law is to actually suspend and debar them. The leverage of the federal government's enormous buying power can be used both to protect taxpayers from unethical corporations whose record suggests they are likely to deliver shoddy goods and services, mistreat workers or defraud the government, and to serve the broader public policy goal of instilling respect for the law among large corporations. States and local governments can take similar measures, with similar impact.

There are few administrative difficulties in pursuing such a course. The challenge is only one of generating sufficient political will.

Creating a centralized database of information on corporate misconduct would enable federal procurement officials to make informed contracting decisions, and enable debarment officials to make informed suspension and debarment decisions as well.

To ensure procurement officers and debarment officials are fully informed, contractors should be required to disclose current suspensions or debarments, litigation initiated against them on either the federal or state level in the past three years, and any administrative agreements they are currently implementing.

Armed with adequate information, debarment officials should use suspension and debarment actions equally against large and small contractors.

And to ensure the even-handed and more rigorous application of relevant regulations, suspension or debarment should be mandatory for a contractor who is criminally convicted or has had a major civil judgment rendered against it more than once in a three-year period.

Seth Morris is a research assistant with the Project on Government Oversight.
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Crime And Not So Much Punishment

The following are examples of instances of defense contractor misconduct and alleged misconduct that did not result in suspension, debarment or denial of contracts:

2000: Lockheed Martin was charged with 30 violations of the Arms Export Control Act and the International Traffic in Arms Regulations, for transferring space launch assistance technologies to China. Lockheed Martin paid a civil penalty of $13 million.

2000: Boeing was charged with 110 violations regarding the Arms Export Control Act and the International Traffic in Arms Regulations, for the export of munitions and defense articles (i.e., technical data) exported to Australia, Singapore, Malaysia, Turkey, Spain and Italy. Boeing paid a civil penalty of $4.2 million.

1998: IBM East Europe/Asia Ltd. pled guilty to violations of the International Emergency Economic Powers Act and Export Administration regulations relating to the unlawful export of computers to a Russian nuclear weapons laboratory. The company paid an $8.5 million criminal fine.

1998: Boeing was charged with 207 violations of the Arms Export Control Act and the International Traffic in Arms Regulations for allegedly exporting defense articles to Russia, Ukraine and Norway. The company paid a $10 million civil penalty.

1993: An Army Blackhawk helicopter crash killed Colonel William Densberger, Colonel Robert Kelly, Specialist Gary Rhodes, Jr. and Major General Jarrett Robertson and seriously injured two others. Sikorsky Aircraft had found serious controllability problems with asymmetric fuel, but had failed to warn the Army. United Technologies, the parent company of Sikorsky Aircraft, paid a $22 million verdict to the families of the deceased and to survivors of the crash.

1988, 1991, 1993: Three Army Chinook helicopter accidents resulted in five deaths and two injuries. Boeing allegedly placed defective gears in the helicopters and then sold the aircraft to the Army. On August 3, 2000, Boeing agreed to pay the government $54 million in a settlement agreement in connection with the allegations.

1990: An Army Blackhawk helicopter crashed, allegedly due to fractured lock washers in the helicopter's tail rotor assembly. Five soldiers died and eight were injured. Sikorsky Aircraft, a subsidiary of United Technologies, paid a $9.74 million civil settlement and took steps to prevent similar accidents in 1,500 Army, Navy and Air Force aircraft containing the same lock washers. Contractors charged with serious violations of the law commonly state in their financial reports that their current litigation troubles in no way will have a material effect upon their company. Large contractors are able to make this statement with confidence because so few large contractors have ever been suspended from government work, even if criminally convicted of breaking the law. For example:

1996: Archer Daniels Midland (ADM) pled guilty for its role in two international conspiracies to fix prices to eliminate competition and allocate sales in the lysine and citric acid markets worldwide, and paid a $100 million fine. In fiscal year 1997, ADM was awarded $98 million in federal contracts.

1995: Lockheed Martin pled guilty to violating the Foreign Corrupt Practices Act for paying bribes to officials of the Egyptian Government. In fiscal year 1996, Lockheed Martin was awarded $19.8 billion in federal contracts.

1995: Beech Aircraft, a subsidiary of Raytheon, pled guilty to cost/labor mischarges on a federal contract. In fiscal year 1996, Raytheon was awarded $3.7 billion in federal contracts.

1995: Lucas Western, a subsidiary of TRW, pled guilty to 37 felony counts of making false certifications to the Department of Defense. In fiscal year 1996, TRW was awarded $1.5 billion in federal contracts. -- S.M.