WaPo : Protest Leads Army to Reconsider Big Contract

Protest Leads Army to Reconsider Big Contract

By Dana Hedgpeth | Washington Post Staff Writer | October 31, 2007

One of the biggest military contracts to house, feed and provide other services to U.S. military troops in Iraq, Afghanistan and Kuwait may be canceled and renegotiated after the Government Accountability Office said yesterday that it upheld a protest from two teams that lost the bid.

The $150 billion contract, known as the Logistics Civil Augmentation Program, or LOGCAP IV, spans 10 years and was awarded in June to three companies -- Fluor Intercontinental of Greenville, S.C., DynCorp International of Fort Worth and KBR of Houston.

Two losing teams, Contingency Management Group and IAP Worldwide Services, filed protests in July questioning the award of the contract. Both teams alleged that the bids were evaluated improperly by the Army Sustainment Command and "argued that the agency's evaluation of proposals was unreasonable," according to a statement released by the GAO.

The GAO agreed, saying it found problems with how Fluor and KBR were evaluated in various areas.

"We found that the Army violated procurement law or regulations to the detriment of the protesting companies," said Dan Gordon, a lawyer for the GAO. "Those two companies might have had a chance of winning the LOGCAP contract if the Army had acted properly."

Gordon said the GAO has recommended that the bidding process not start over entirely with new bidders, but rather that the Army "go back to the stage of negotiations. . . . We're recommending they reopen discussions and then request revised proposals from all companies and evaluate those proposals and then make a new decision of who should get the contract. The question is whether it is going to be the same three winners."

The lucrative contract is considered one of the biggest deals in the contracting services industry. It has ballooned in value from $2 billion when it was first awarded in 1992 to $23 billion under the most recent LOGCAP III contract.

KBR, the former contracting arm of Halliburton, won the current logistics contract in 2001.

Since then the contract has come under scrutiny by members of Congress, who alleged that KBR won because Vice President Cheney had been Halliburton's chief executive.

Government auditors turned up more than $1 billion in questionable costs, pushing the Army to make a change in how it awarded the contract. Instead of going to one company, the Army awarded the contract to three. Each company's part of the contract is worth up to $5 billion a year and can be extended for up to nine more years.

In the LOGCAP IV contract, the bids were judged on past performance, management, technical capabilities and cost.

The GAO said the Army's evaluation of Fluor's technical proposal was "unreasonable and evidenced unequal treatment." In KBR's case, the GAO said, the Army "misunderstood" part of the company's technical proposal, and it accused the Army of failing to evaluate comments the Defense Contract Audit Agency had made concerning KBR's business systems. The two-page statement released by the GAO made no comment on DynCorp.

Contingency Management Group's team is made up of AECOM Government Services, the Shaw Group and PAE Government Services. IAP is the lead contractor on its team, which includes Blackwater Worldwide, CACI and Lockheed Martin.

Heather Browne, a spokeswoman for KBR, said the company was "disappointed with the GAO's decision" and believed it had provided "unmatched" service to U.S. troops. KBR has requested that the GAO reconsider its decision.

WaPo : Ex-Attorney General Says Politics Drove Federal Prosecution

Ex-Attorney General Says Politics Drove Federal Prosecution

House Panel Evaluating Justice Dept.

By Dan Eggen | Washington Post Staff Writer | October 24, 2007

Richard L. Thornburgh, who served as attorney general under Presidents Ronald Reagan and George H.W. Bush, accused the Justice Department yesterday of prosecuting a prominent Pennsylvania Democrat for political reasons, one of a series of cases singled out by House Democrats as examples of alleged GOP meddling at the Justice Department.

Thornburgh, who served as attorney general from 1988 to 1991 and whose law firm represents Cyril Wecht, a nationally known coroner from Pittsburgh, testified yesterday that Wecht had been indicted for mail fraud and a "hodgepodge" of other charges by overzealous prosecutors keen on pleasing political appointees in Washington.

"He has always been a contentious, outspoken, highly critical and highly visible Democratic figure in western Pennsylvania," Thornburgh told the House Judiciary Committee. "In other words, he would qualify as an ideal target for a Republican U.S. attorney trying to curry favor with a department which demonstrated that if you play by its rules, you will advance."

Thornburgh also said that Wecht "was not the only apparent political prosecution in western Pennsylvania," pointing to three high-profile cases of other local Democrats brought by U.S. Attorney Mary Beth Buchanan of Pittsburgh.

The testimony came as part of a special hearing focused on alleged political prosecutions of Democrats by the Justice Department, which has come under intense criticism from Congress this year for the controversial firings of nine U.S. attorneys and for its role in setting aggressive detention and interrogation policies.

The hearing also was held as the Senate is considering whether to approve the nomination of former federal judge Michael B. Mukasey as attorney general to succeed Alberto R. Gonzales, who resigned in August in the wake of the uproar over the prosecutor firings and other controversies.

In another case highlighted yesterday, Democrats alleged that Alabama Republicans pushed for the prosecution of former governor Don Siegelman, who is serving an 88-month sentence after being convicted on corruption charges.

Justice Department officials strongly object to claims that local Democratic politicians have been unfairly singled out for prosecution, pointing to criminal cases against former lobbyist Jack Abramoff, former congressman Randy "Duke" Cunningham (Calif.) and other prominent Republicans.

"It has been -- and remains -- the practice of the department to investigate and prosecute individuals who violate federal law without regard to their political affiliation," said Justice spokesman Peter Carr.

The administration and GOP lawmakers also sharply criticized a study highlighted yesterday by Democrats, that, based on newspaper and Internet reports, suggests a 5 to 1 ratio of Democrats to Republicans targeted for investigation by the Bush administration.

In the Pittsburgh case, Wecht was indicted on 84 charges related to allegations that he misused his public office as coroner for private gain. The charges include an alleged agreement to provide a local university with unclaimed cadavers from the county morgue in exchange for his private use of lab space.

Thornburgh, who was a two-term Pennsylvania governor before he became attorney general, was particularly critical of Buchanan, who has served in a series of senior Justice Department positions and was close to Gonzales's inner circle.

"The citizens of the United States must have confidence that the department is conducting itself in a fair and impartial" manner, "without actual political influence or the appearance of political influence," Thornburgh testified. "Unfortunately, that may no longer be the case."

Buchanan said in a statement issued through the Justice Department yesterday that the case against Wecht was "based solely on the facts and the law." She said it was "unfortunate" that Thornburgh aired his criticism in Congress rather than in the courts.

"Every investigation and prosecution is overseen by career prosecutors and experienced agents who analyze evidence from a law enforcement, not a partisan, perspective," Buchanan said.

In the Alabama case, Siegelman was convicted last year of accepting $500,000 from the chief executive of HealthSouth, Richard M. Scrushy, in exchange for appointing Scrushy to a state hospital board. Siegelman won election as governor in 1998 but was narrowly defeated in 2002 by Republican Bob Riley, who still holds the seat.

A GOP lawyer from Alabama, Jill Simpson, has told House Judiciary Committee investigators that a key Republican strategist in that state told her that former presidential adviser Karl Rove had pushed to bring corruption charges against Siegelman. Simpson also has alleged that Bob Riley's son, Rob, boasted about a Republican judge who would "hang Don Siegelman," according to an affidavit released by the Judiciary Committee.

Rob Riley and others named by Simpson have denied the allegations. Bush administration officials also have rejected Simpson's account, and the White House has said Rove had no involvement in the case. Louis V. Franklin Sr., the acting U.S. attorney for the Middle District of Alabama in the Siegelman case, says that Siegelman was under investigation prior to the alleged conversations recounted by Simpson.

G. Douglas Jones, a former Siegelman lawyer who served as U.S. attorney in Birmingham during the Clinton administration, testified yesterday that federal prosecutors assured him in 2004 that charges against Siegelman were unlikely -- but the case was revived later that year during a "top-to-bottom review" ordered by Justice Department officials in Washington.

"The charges that we were told had been 'written off' were obviously now back on the table, and for the first time it appeared that agents were not investigating any allegations of a crime but were now fishing around for anything they could find against an individual," Jones said.

Franklin and other career prosecutors in Alabama say they were not pressured by the White House or Justice Department political appointees in the case.

Staff researcher Julie Tate contributed to this report.

NYT : Companies Seeking Immunity Donate to Senator

Companies Seeking Immunity Donate to Senator

By ERIC LICHTBLAU and SCOTT SHANE | October 23, 2007

WASHINGTON, Oct. 22 — Executives at the two biggest phone companies contributed more than $42,000 in political donations to Senator John D. Rockefeller IV this year while seeking his support for legal immunity for businesses participating in National Security Agency eavesdropping.

The surge in contributions came from a Who’s Who of executives at the companies, AT&T and Verizon, starting with the chief executives and including at least 50 executives and lawyers at the two utilities, according to campaign finance reports.

The money came primarily from a fund-raiser that Verizon held for Mr. Rockefeller in March in New York and another that AT&T sponsored for him in May in San Antonio.

Mr. Rockefeller, chairman of the Senate Intelligence Committee, emerged last week as the most important supporter of immunity in devising a compromise plan with Senate Republicans and the Bush administration.

A measure approved by the intelligence panel on Thursday would add restrictions on the eavesdropping and extend retroactive immunity to carriers that participated in it. President Bush secretly approved the program after the Sept. 11 attacks.

Mr. Rockefeller’s office said Monday that the sharp increases in contributions from the telecommunications executives had no influence on his support for the immunity provision.

“Any suggestion that Senator Rockefeller would make policy decisions based on campaign contributions is patently false,” Wendy Morigi, a spokeswoman for him, said. “He made his decision to support limited immunity based on the Intelligence Committee’s careful review of the situation and our national security interests.”

AT&T and Verizon have been lobbying hard to insulate themselves from suits over their reported roles in the security agency program by gaining legal immunity from Congress. The effort included meetings with Mr. Rockefeller and other members of the intelligence panels, officials said.

The companies face suits from customers who say their privacy was violated. Administration officials say they worry that the suits, pending before the United States Court of Appeals for the Ninth Circuit, could bankrupt the utilities.

House Democrats have balked at the immunity, refusing to include it in a bill they drew up and saying they would not even consider it unless the administration produced long-sought documents on the origins of the program.

Mr. Rockefeller received little in the way of contributions from AT&T or Verizon executives before this year, reporting $4,050 from 2002 through 2006. From last March to June, he collected a total of $42,850 from executives at the two companies. The increase was first reported by the online journal Wired, using data compiled by the Web site OpenSecrets.org.

Neither Mr. Rockefeller’s predecessor as committee chairman or his House counterpart received increases in contributions from the phone companies, records show. But industry executives have given significant contributions to a number of other Washington politicians, including two presidential contenders, Senators Hillary Rodham Clinton and John McCain.

A spokeswoman for AT&T, Claudia B. Jones, said contributions from its executives related to Mr. Rockefeller’s role on the Senate Commerce Committee, not immunity or other questions before the Intelligence Committee.

“Many AT&T executives work with the leaders of both the House and Senate Commerce Committees on a daily basis and have come to know them over the years,” Ms. Jones said.

She added that although industry executives and politicians might not always agree, it is “commonplace for AT&T employees to regularly and voluntarily participate in the political process with their own funds.”

Ms. Morigi, in Mr. Rockefeller’s office, said the senator had had numerous meetings with his aides about immunity for a year and came to believe that the carriers needed legal protection to ensure cooperation on national security operations.

On other questions, she said, he has disagreed with the industry. Ms. Morigi pointed to his sponsorship of a separate bill to give cellphone subscribers more protections in their contracts. That bill, unlike the immunity provision, has been vigorously opposed by the industry.

She also said that the increased contributions from industry executives reflected a record fund-raising year for Mr. Rockefeller and that his contributions from many sectors had “skyrocketed.”

Mr. Rockefeller is up for re-election next year. No opponents have declared their intention to try and unseat him.

The senator has raised $3.1 million this year, in part through 107 campaign events, according to his office. He has promised not to use any of his personal fortune to finance his campaign.

“The idea that John Rockefeller could be bought is kind of ridiculous,” said Matt Bennett, vice president for Third Way, a moderate Democratic policy group that has supported immunity for the phone carriers.

“That these companies are going to focus their lobbying efforts where their business interests are is no revelation,” Mr. Bennett said. “That’s the standard Washington way of doing business. But you’re not going to buy a Rockefeller.”

Meredith McGehee, policy director for the Campaign Legal Center, a group promoting stricter campaign finance laws, said contributions like those to Mr. Rockefeller created an appearance problem that “corrode public confidence” in the political system.

“We have so many examples like this of people on relevant committees receiving these contributions from people who are under their jurisdictions,” Ms. McGehee said. “It’s sad to say, but it is pretty much business as usual in Washington. And it shows why so many Americans just shake their heads over the way Washington works.”

Kitty Bennett contributed research.

NYT : Accused Firm Keeps Giving to Democrats

Accused Firm Keeps Giving to Democrats

By MIKE McINTIRE | October 18, 2007

Over the years, as it became Exhibit A for critics of shareholders’ class action lawsuits, the law firm of Milberg Weiss often enjoyed the support of Democrats who called the suits an invaluable weapon in the universal conflict between big business and the little guy.

The Democrats, in turn, enjoyed the support of Milberg Weiss and its partners, who together have contributed more than $7 million to the party’s candidates since the 1980s.

Last year, the firm was indicted on federal charges of fraud and bribery. But the political partnership has not been entirely severed. Since the indictment, 26 Democrats around the country, including four presidential candidates, have accepted $150,000 in campaign contributions from people connected to Milberg Weiss, according to state and federal campaign finance records. And some Democrats have taken public actions that potentially helped the firm or its former partners.

The recent contributors include current and former Milberg partners who had either been indicted or were widely reported to be facing potential criminal problems when they wrote their checks. One, William S. Lerach, was a fund-raiser for John Edwards’s presidential campaign until his guilty plea last month. Melvyn I. Weiss, a founder of the firm, gave the maximum $4,600 to Senator Hillary Rodham Clinton of New York in June. Other firm members contributed to the presidential campaigns of Senators Barack Obama of Illinois and Joseph R. Biden Jr. of Delaware.

Milberg Weiss reaped billions of dollars in legal fees over four decades as the acknowledged king of class action lawsuits, which accused executives of misleading investors with erroneous financial statements or some other fraud. According to the indictment, the New York-based firm ran a “racketeering enterprise” that collected a quarter billion dollars in 250 cases in which people were paid secret kickbacks for serving as plaintiffs.

The law firm has denied the charges.

The reluctance of Democrats to shut off the cash spigot, even in the face of scandal, underscores how the pressure to raise money creates marriages of political interests that can be difficult to break up. Fred Wertheimer, a longtime advocate of campaign finance reform, called it the “natural outcome of a system where huge amounts of private contributions are raised and spent, and the political parties turn to groups with interests in government to feed the spending machine.”

In the current campaign, the race for cash has led to several embarrassments for the Democrats, including the indictment of a trial lawyer, Geoffrey Fieger, who was accused of using straw donors to make illegal contributions to Mr. Edwards’s 2004 presidential campaign, and the arrest of Norman Hsu, a businessman accused of fraud who raised hundreds of thousands of dollars for Mrs. Clinton.

In addition to the kickback charges in the Milberg Weiss case, federal agents have investigated accusations that the firm funneled campaign contributions through plaintiffs and expert witnesses in the 1990s, said two lawyers familiar with the inquiry. The guilty plea entered by Mr. Lerach hinted at that, but it also specified that prosecutors would not pursue campaign finance violations, in exchange for Mr. Lerach’s admission that he had conspired to obstruct justice by concealing the kickbacks.

Beyond campaign contributions, Milberg Weiss became deeply ingrained in the financial firmament of the Democratic Party in other ways. Members of the firm gave $500,000 toward construction of a new Democratic National Committee headquarters, and some became partners in a private investment venture with several prominent Democrats. They included former Senator Robert G. Torricelli of New Jersey, who is a fund-raiser for Mrs. Clinton, and Leonard Barrack, a Philadelphia trial lawyer who was once the national fund-raising chairman for the Democratic Party.

Along the way, as Milberg Weiss’s brass-knuckles legal strategy made it a target for Republicans advocating limits on class action suits, it usually could count on Democrats in Washington to protect its interests. After federal prosecutors indicted the firm in May 2006, four Democratic congressmen issued a joint statement, posted on Milberg Weiss’s Web site, accusing the Bush administration of persecuting lawyers who take on big businesses.

The statement, signed by Representatives Gary L. Ackerman, Carolyn McCarthy and Charles B. Rangel, all of New York, and Robert Wexler of Florida, contained several passages that appear to be lifted directly from a “class action press kit” distributed by a national trial lawyers group. All but Mr. Wexler have received campaign contributions from Milberg Weiss partners.

More recently, Mr. Edwards, a trial lawyer who became wealthy pursing personal injury cases, joined labor unions and consumer groups last May in pressing securities regulators to intervene in a lawsuit against banks brought by Mr. Lerach on behalf of Enron investors. His campaign said Mr. Edwards’s actions had nothing to do with Mr. Lerach, and were consistent with the candidate’s longstanding defense of working people.

Still, Mr. Edwards’s willingness to be seen doing anything that could benefit Mr. Lerach, and allowing him to raise money, provided fodder for critics. At the time the Edwards campaign took on Mr. Lerach as a fund-raiser, it was already widely reported that Mr. Lerach, who left Milberg Weiss in 2004, was one of the unnamed co-conspirators cited in court documents related to the firm’s indictment.

In all, Mr. Edwards collected about $16,000 from people connected to Milberg Weiss, including Mr. Lerach and two other former Milberg Weiss lawyers who had joined him at his new firm, Patrick J. Coughlin and Keith F. Park. Federal authorities agreed not to prosecute them as part of the plea deal with Mr. Lerach. (Mr. Lerach also raised $64,000 for Mr. Edwards from members of his new firm who were not named in the Milberg case.)

“With Edwards, he has associated himself with people in his campaign that don’t represent the face that even the trial lawyers want to put forward to the country,” said Walter K. Olson, a fellow at the Manhattan Institute, a conservative research group, who has written extensively on the American legal system.

Eric Schultz, a spokesman for the Edwards campaign, said that it had given Mr. Lerach’s $4,600 personal contribution to charity and that “should anyone else be found guilty of wrongdoing, we will donate their contributions to charity as well.”

“The bottom line is, the system is far from perfect,” Mr. Schultz said. “The influence of money in politics has gotten out of control. That’s why John Edwards has decided to play by the rules that were designed to ensure fairness in the election process by capping his campaign spending and seeking public financing.”

John W. Keker, a lawyer for Mr. Lerach, declined to comment on his client’s guilty plea.

A spokesman for Mrs. Clinton said her presidential campaign did not intend to return the contribution from Mr. Weiss. A spokesman for the Obama campaign, whose Milberg Weiss contributions came from lawyers not directly involved in the kickback scandal, declined to comment.

In a statement denying the charges in the indictment, Milberg Weiss, which continues to operate, said: “The indictment is unprecedented and unfair, and the firm intends to vigorously defend itself against the charges. We are confident that we will be fully vindicated.”

The indictment of Milberg Weiss was a stunning turnabout for the firm, which has recovered $45 billion for clients since it was founded in 1965.

Its approach was controversial. The moment a publicly traded company’s stock dropped, Milberg Weiss would enlist a shareholder as a plaintiff and rush to court with a lawsuit. Usually, the sued company would end up settling rather than risk going to trial.

Milberg Weiss’s supporters gave it credit for enforcing accountability in the boardroom. Critics, however, accused the firm of economic terrorism, and with the Republican takeover of Congress in 1994 a business-backed movement took hold to change securities laws to make it harder to bring shareholder lawsuits.

The firm found a friend in President Bill Clinton, who, a few days after being seen chatting and shaking hands with Mr. Lerach at a White House dinner in 1995, vetoed legislation that clamped down on class action suits. Congress overrode the veto, but the image remained of a close relationship between the president and Mr. Lerach, a Lincoln Bedroom guest during the Clinton presidency who donated more than $100,000 to Mr. Clinton’s presidential library.

Beginning in 2000, federal investigators began looking into Milberg Weiss’s litigation practices, particularly its uncanny ability to beat other firms in the race to be named lead counsel in large class action suits, thereby ensuring itself a larger percentage of fees. By last year, two people had pleaded guilty to accepting kickbacks from Milberg Weiss in return for being on call to serve as plaintiffs in more than 100 lawsuits; an expert witness used by the firm was implicated in the fraud; and two partners, Steven G. Schulman and David J. Bershad, had been indicted.

Both Mr. Schulman and Mr. Bershad have since pleaded guilty. Late last month, Mr. Lerach also pleaded guilty, leaving Mr. Weiss as the only named partner facing criminal charges.

The case has taken a toll not only on the lawyers involved, but also on the firm’s name plate. After Mr. Lerach left to form his own practice in San Diego, his old firm dropped his name, becoming Milberg Weiss Bershad & Schulman. Two resignations and guilty pleas later, it is now simply Milberg Weiss.

NYT : The Caveat Emptor Commission

The Caveat Emptor Commission

Editorial | October 10, 2007

Most consumers still believe that if a product is on the shelf of a reliable store like Home Depot, somebody has tested it and proved it safe. At the least, they assume they would have heard about any dangers, the way they know about toxic substances in Chinese toys and toothpaste. But as Eric Lipton reported in The Times this week, that can be a dangerous assumption to make.

One harrowing example of a hazardous product is Stand ’n Seal, a spray designed to waterproof tiles and then “evaporate harmlessly.” At least two people died and 80 were sickened or hospitalized after using it in 2005. Yet more than two years after such reactions were reported to the manufacturer, to the stores that carried the product and to the federal government, some cans of the hazardous spray were still being sold to unwitting customers.

The federal watchdog designated to protect buyers from this sort of danger is the Consumer Product Safety Commission, or what is left of it. Under the Bush administration’s ideological drive to weaken agencies that regulate business, the commission has been “hollowed out,” in the favorite Washington phrase, to less than half its former strength. Its staff, which was 978 strong in its heyday, now numbers only 401. It has outdated laboratory equipment, and in another sign of neglect, the Bush administration has failed for months to appoint one of the commissioners.

The Stand ’n Seal case makes it clear that the safety commission is increasingly unable to protect consumers quickly. Since no premarket testing is required, companies are allowed to decide whether their own products are safe. They are required to report possible hazards or problems within 24 hours to the commission. In the case of Stand ’n Seal, it took three months from the time the company first received an alarming report of how its product affected customers until the commission finally issued a formal recall. Even after the recall, some of the cans were still on shelves as late as spring 2007.

Consumers deserve better. There needs to be a more effective way to report when there are problems with a product, and the commission should be required to make the complaints available to the public as they come in. Once the commission decides on a recall, the company should be required to advertise to let consumers know. The commission should also be able to levy bigger fines on manufacturers, and selling these goods should be illegal.

Congress has finally begun to recognize that the Consumer Product Safety Commission is yet another federal agency that has been stripped of its powers to protect the public. Senator Mark Pryor, Democrat of Arkansas, is among those pushing to rebuild the agency, a few million dollars at a time. He, and others in Congress, should keep pushing. When greed or inefficiency trumps safety, consumers need a muscular Consumer Product Safety Commission to fight back.

WaPo : Air Force Arranged No-Work Contract

Air Force Arranged No-Work Contract

Experts Question Official's Deal With Nonprofit

By Robert O'Harrow Jr. | Washington Post Staff Writer | October 1, 2007

While waiting to be confirmed by the White House for a top civilian post at the Air Force last year, Charles D. Riechers was out of work and wanted a paycheck. So the Air Force helped arrange a job through an intelligence contractor that required him to do no work for the company, according to documents and interviews.

For two months, Riechers held the title of senior technical adviser and received about $13,400 a month at Commonwealth Research Institute, or CRI, a nonprofit firm in Johnstown, Pa., according to his resume. But during that time he actually worked for Sue C. Payton, assistant Air Force secretary for acquisition, on projects that had nothing to do with CRI, he said.

Riechers said in an interview that his interactions with Commonwealth Research were limited largely to a Christmas party, where he said he met company officials for the first time.

"I really didn't do anything for CRI," said Riechers, now principal deputy assistant secretary for acquisition. "I got a paycheck from them."

Riechers's job highlights the Pentagon's ties with Commonwealth Research and its corporate parent, which has in recent years received hundreds of millions of dollars worth of grants and contracts from the military, and more than $100 million in earmarks from lawmakers.

Commonwealth Research and its parent company, Concurrent Technologies, are registered with the Internal Revenue Service as tax-exempt charities, even though their primary work is for the Pentagon and other government agencies. In a recent report Concurrent, also based in Johnstown, Pa., said it was among the Defense Department's top 200 contractors, with a focus on intelligence, surveillance, force readiness and advanced materials.

Concurrent's top three executives each earn an average of $462,000. The company reported lobbying expenditures of $302,000 for the year ending in June 2006, more than double what it spent on lobbying four years earlier.

Concurrent and its subsidiaries receive grants and contracts for an eclectic variety of other activities, including support of faith-based initiatives and specialized welding work. Last year, Commonwealth Research got a $45 million sole-source arrangement to provide reports to the National Security Agency, CIA and other intelligence agencies.

IRS rules allow charitable organizations to engage in a wide range of activities, including services for the federal government. Commonwealth Research's president, Frank W. Cooper, said the company qualifies as a charity because it provides services both locally and to the federal government. He said it also serves as an educational institution.

But Marcus Owens, former director of the exempt organizations division at the IRS, said Concurrent and Commonwealth Research appear to be "providing the sorts of services that are commonly provided by business organizations like Boeing and Lockheed Martin and others, and not charities."

"There are a lot of businesses doing this kind of stuff that are paying taxes," said Owens, a partner at Caplin & Drysdale law firm. "It makes me wonder what the charitable purpose is here."

Specialists in federal contracting law said Commonwealth Research's arrangement with Riechers may have violated regulations governing how the Air Force is permitted to hire and use contractors, including a prohibition on certain uses of consultants to augment the federal workforce. The prohibition is designed in part to ensure that employees in sensitive government jobs serve the public and not corporate or other outside interests.

"It's a seriously questionable arrangement to have him on the payroll not even pretending to do assigned and properly monitored work," said Charles Tiefer, a contracting law professor at the University of Baltimore Law School. "The principal deputy assistant secretary for acquisition and management should not be making himself into a glaring example of what not to do with acquisition and management."

In an interview, Cooper acknowledged that he hired Riechers at the request of the Air Force. Cooper said he did not know precisely what Riechers did for the government, saying he did not ask because he assumed such information was available only on a "need-to-know" basis.

Contrary to Riechers's account, Cooper said they had met once at the Pentagon before Riechers was hired to be a part of a studies-and-analysis program at the company. "It was not just a make-work-type task," Cooper said.

Riechers was paid a total of $26,788 as part of the contract to provide research to the Pentagon, CIA and other intelligence agencies. In a statement, Riechers said he had no problem accepting the pay because Commonwealth Research is a nonprofit organization "that had an established relationship" with the military service. Riechers said he has not made any decisions relating to Commonwealth Research contracts since his appointment.

"We needed some way to kind of gap me," Riechers said about the temporary job.

The Air Force defended the arrangement, saying Riechers was well qualified to perform the work.

"While Mr. Riechers's appointment was pending, the Air Force identified an opportunity to gain immediately from Mr. Riechers's expertise under a preexisting contract and open task order with Commonwealth Research," the Air Force said.

Commonwealth Research was created a decade ago. In documents filed with the IRS, the firm describes itself as "a national resource committed to assisting industry and government achieve world-class competitiveness."

Documents show Commonwealth Research apparently had no revenue for several years. That changed in 2004, when it reported revenue of almost $633,000. The company reported receiving government funding totaling $3.2 million in fiscal 2006. At least two-thirds of that came from the Air Force, according to Daniel R. DeVos, chief executive of Concurrent and chairman of Commonwealth Research.

Commonwealth Research has about 20 employees who DeVos said are involved in "very specialized work for DoD and the intelligence community." Cooper, the Commonwealth Research president, said about eight of those employees are interns or students hired to save the government money.

Commonwealth Research is one of eight Concurrent subsidiaries, documents show. That includes at least four other tax-exempt organizations and three for-profit firms.

Concurrent reported more than $248 million in revenue for fiscal 2006 -- almost triple the amount a decade ago. About $213 million of that total came from "government contributions (grants)," according to tax documents. The company said much of its revenue comes in the form of fully competed contract awards.

Edward J. Sheehan Jr., a senior vice president and chief financial officer, said the IRS approved Concurrent's charitable status because the company "lessens the burden on governance" and helps "the federal government and American industry to perform more effectively through the use of emerging technologies."

A leading patron of Concurrent in Congress is Rep. John P. Murtha (D-Pa.), who represents the district where the company is based. Murtha, chairman of the House Appropriations defense subcommittee, announced the creation of the company in 1987.

Murtha recently arranged $10 million in earmarks for the company for fiscal 2008, according to records compiled by Taxpayers for Common Sense, a nonpartisan watchdog group. One $3 million earmark is for an Air Force project.

Through a spokesman, Murtha said he has no financial ties to Concurrent. Murtha said the company's "quality work and research has resulted in improved equipment for our troops. Their competitive price has saved taxpayers money, and they continue to deliver on-time results."

Riechers is a decorated Air Force officer who retired in 2002. He joined SRI International, another nonprofit firm, as a senior technical adviser. From December 2002 to November 2006, he worked in a variety of Pentagon jobs while being paid by SRI International. In November, Riechers was nominated to be a senior acquisition official, taking the title last held by Darleen A. Druyun. She was sent to prison in 2004 after she left the Air Force for negotiating a job with Boeing while she worked for the government and for favoring the company in several procurement decisions.

At the time of his appointment, Riechers's job with SRI International ended.

Riechers worked for Commonwealth Research from Nov. 27 to Jan. 25. He was appointed to his federal post on Jan. 26 and "received an ethics briefing from Air Force lawyers the same day," said an Air Force statement.

Assistant Secretary Payton said in a statement that the Air Force needed someone who could meet "a unique set of requirements." He is now responsible for research, development and modernization programs at the Air Force worth more than $30 billion a year, according to his biography.

"The Air Force needs his skills, and we need him as the principal deputy to the assistant secretary of the Air Force for acquisition as we continue to acquire the next generation of weapon systems in a transparent and impartial manner," Payton said.

Steve Schooner, co-director of the Government Procurement Law Program at George Washington University, said the Air Force's use of Commonwealth Research to pay Riechers "seems to make a mockery of any number of fundamental public procurement laws and policies."

"It's not transparent, it's not competitive," he said, "and no one seems accountable for the process or the outcome."

Reuters : Pentagon probes missing weapons and contract fraud

Pentagon probes missing weapons and contract fraud

By Kristin Roberts | August 29, 2007

WASHINGTON (Reuters) - The Pentagon's independent watchdog has launched a probe into the military's inability to account for weapons in Iraq after reports that Kurdish militants were using U.S. arms to attack Turkey, the Defense Department said on Wednesday.

Pentagon spokesman Geoff Morrell said the department's inspector general will go to Iraq next week with an 18-member assessment team to investigate the problem.

"Since January, the inspector general's office has been thoroughly investigating reports of unaccounted-for weapons as well as allegations of arms ending up in the wrong hands," Morrell said.

"Secretary Gates, who since May has twice received lengthy briefings on the progress of the probe, is deeply troubled by the reports and the allegations."

Turkey, an important ally for Washington in the Muslim world, has repeatedly said the U.S. government has not done enough to clamp down on Kurdish militants based in northern Iraq. In July, Turkey's ambassador said Kurdish leaders were diverting weapons meant for local Iraqi security forces to the outlawed Kurdistan Workers Party (PKK) militants.

Morrell said he did not know if evidence existed to show U.S. weapons were being used by insurgents in Iraq.

"It is unclear, and that's why there's an investigation taking place."

CONTRACTING PROBES

Separately, the Army has launched two investigations into possible fraud involving thousands of contracts for services in Iraq and Kuwait after 20 civilian and military Army employees were indicted on charges that included bribery.

The scope of the fraud remains unknown, but Army Secretary Pete Geren called the problem significant.

More than 18,000 contracts valued at about $3 billion have been awarded by the Army to support the Iraq war since 2003. As of August 28, there were 76 ongoing criminal investigations involving possible contract fraud, the Army said.

A U.S. Army major, his wife and sister were indicted this month in a suspected scheme to accept $9.6 million in exchange for contracts for bottled water and other goods and services for troops in Kuwait and Iraq.

An Army captain also has been charged with accepting a $50,000 bribe to steer military contracts in Iraq, according to prosecutors.

"The reports suggest that we've got serious issues in this area, particularly coming out of the Kuwait contracting community," Geren told reporters. "I don't know how to describe the scale, but it's significant."

The first Army investigation will examine the overall contracting organization, which Army officials say lacks the resources needed to handle the sharp rise in contracts following the start of the Iraq war. A commission appointed to investigate the operation will deliver a report in 45 days.

The Army also charged a new task force with examining all 18,000 contracts awarded by its contracting office in Kuwait. Most of those covered support services at Army facilities in Kuwait, like laundry and dining services.

© Reuters 2007. All rights reserved.

NYT : A Congressman’s $10 Million Gift for Road Is Rebuffed

A Congressman’s $10 Million Gift for Road Is Rebuffed

By DAVID D. KIRKPATRICK | August 18, 2007

WASHINGTON, Aug. 17 — It is not often that a local government tries to turn down $10 million in federal construction money.

But then it is not every day that an Alaska congressman surprises a Florida community with the gift of a highway interchange that just happens to abut the property of a major political fund-raiser.

The money for the interchange was the work of Representative Don Young, the Alaska Republican who was chairman of the transportation committee before the last election.

Officials of Lee County considered the project a low priority, environmental groups opposed it and the Republican congressman from the district never asked for it.

But the interchange, on Interstate 75 at a place called Coconut Road, would be a boon to Daniel J. Aronoff, a Michigan real estate developer with adjacent property who helped raise $40,000 in donations to Mr. Young at a fund-raiser in the region shortly before Mr. Young inserted an earmark for the project in a transportation bill.

The connections were too much for the Lee County Metropolitan Planning Organization, said Carla Johnston, its chairwoman and a Democrat.

On Friday, the members of the organization voted overwhelmingly to return the money in the hope that Congress would let them spend it elsewhere in the county.

Adding to the intrigue, a researcher commissioned by Ms. Johnston said Mr. Young had added the earmark for the interchange to a transportation bill after both chambers of Congress had approved it, at a time Congressional aides were cleaning up the bill for President Bush’s signature.

“People were really highly outraged at the process,” Ms. Johnston said. “It was a classic end run.”

A spokeswoman for Mr. Young did not return calls for comment.

A spokeswoman for Mr. Aronoff, the developer and fund-raiser, defended the project, saying a study had determined a need for the interchange in a building plan years ago, partly to help with hurricane evaluations.

“Unfortunately, the real story is getting lost in this funding debate,” the spokeswoman, Elizabeth Hirst, said.