In This Issue: 1 CDI Joins POGO 2 Director’s Letter 3 Reining in Service Contractors 3 Filling IG Vacancies 4 Leaky Ship 4 Exposing Mishandling of Whistleblower Cases 5 New Staff 5 Secret Rulemaking 6 Casino Night a Success

The Center for Defense Information Joins POGO

In 1971, retired military officers founded an organization to analyze military matters, inform decision-makers and the public, and influence policy—an event that sounds almost like a yearly occurrence

around this town. But, this time, it was a truly independent group of admirals and generals who created the organization. Admirals Gene La Rocque and Eugene Carroll called it the Center for Defense Information (CDI), and it became an alternative voice to what they believed was a Pentagon that was pushing self-serving data and analysis at decision-makers.

They took no money from defense contractors or the government, and they published fact-based research and policy advice that put basic national security needs front and center. What set CDI apart from typical DC think tanks was that it was led by conscientious military officers—retired generals, admirals, colonels, majors, captains—who were challenging ill-informed conventional wisdom and self-interested defense contractor disinformation rather than promoting it. And they did so in ways unconventional for a non-profit: through America’s Defense Monitor, weekly public affairs television programming, and one of DC’s earliest websites, CDI supplemented its frequent newsletters and monographs to reach beyond the mainstream media into people’s homes.

For over four decades, CDI has evolved, as all healthy organizations do. Although the original admirals and generals are no longer at the helm, their maverick spirit of loyal dissent lives on. Former CDI people are scattered throughout journalism and defense analysis. From challenging the need to exceed Cold War spending levels to challenging ill-advised military interventions to questioning unaffordable, under-performing weapon systems, CDI has been at the forefront of independent research on the central issues in defense policy. Most recently, veteran Capitol Hill staffer and GAO assistant director Winslow Wheeler has directed CDI’s Straus Military Reform Project, conducting research and providing analysis that speaks, even if occasionally disrespectfully, truth to power. This May, POGO was proud to welcome Winslow and the magnificent CDI legacy into our family. You will begin to see his writings in POGO’s newsletter, and if you are a POGO blog reader, you are already familiar with his take-no-prisoners style. CDI and POGO have always shared a passion for exposing hypocrisy and challenging nonsense in the Pentagon, White House, and Congress. Now we will be doing it together, and we couldn’t be more pleased! Look for CDI’s work on a new section of POGO.org in the near future as we continue that important legacy. ■

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Exposing Corruption. Exploring Solutions. www.POGO.org

July 2012: Vol. 16, Issue 2

Winslow Wheeler

Dear Friends,

Even if you aren’t living or working in Washington, you are well aware of the impending November elections. We at POGO are getting ready in our own way.

Many of you are new to POGO, joining our good government army over the past year. We know you are busy, and simply don’t have time to watch C-SPAN all day long, so we see it as part of our job to pay close attention to what is happening inside the Beltway for you, and to let you know when it is time to act. We make it easy for you to have your voice heard and to have an impact because we have an automated system that ensures your letters go to the right people in DC, whether they are the Chairman and Ranking Member of a Committee, your Members of Congress, or the head of an agency or Department. And thousands of you have done this, taking action through our email update list and letting policymakers know what you think about an upcoming vote or policy decision. (If you aren’t getting these notices, jump on POGO.org and sign up!)

The actions we have been asking you to take have been directed to the people inside Washington. But now, during election season, it is time to take on these politicians on your home turf. We are in the process of narrowing down the hundreds of issues we tackle to focus on the most straightforward and urgent good government reforms we believe anyone elected to office must make. We know closing the revolving door between public service and the regulated industries will be on the list, as well as making policymakers’ calendars of meetings with lobbyists available to the public—but there will be others. We will be getting this list out to you in the next few months so that you can raise these good government reforms with candidates and incumbents alike. You can go to Town Halls, debates, and other election venues and ask the candidates questions about these issues and what they will do about them; you can write to your local papers about the issues and the answers the candidates give; you can even write on politicians’ Facebook walls or ask them about the issues on Twitter.

We are hoping to inject a dose of serious discussion into the “silly season,” and you can help make that happen. So stay tuned—you’ll be hearing from us soon!

Best,

Danielle Brian, POGO Executive Director

Letter from the Executive Director

StaffDanielle Brian, Executive DirectorScott Amey, General CounselAngela Canterbury, Director of Public PolicyPaul Chassy, Ph.D., J.D., InvestigatorJohn Crewdson, Senior InvestigatorLydia Dennett, ResearcherDanni Downing, Editor & COTS DirectorAbby Evans, Development AssociateNed Feder, M.D., Staff ScientistAndre Francisco, Online ProducerBen Freeman, InvestigatorNeil Gordon, InvestigatorDavid Hilzenrath, Editor-in-ChiefJulie Koh, Finance ManagerJohanna Mingos, Data SpecialistJoe Newman, Director of CommunicationsChris Pabon, Director of DevelopmentKeith Rutter, Chief Operations Officer & CFOPam Rutter, Web ManagerMichael Smallberg, InvestigatorMia Steinle, InvestigatorPeter Stockton, Senior Investigator Adam Zagorin, Journalist-in-ResidenceLydia Dennett, ResearcherSuzie Dershowitz, Public Policy FellowDana Liebelson, Beth Daley Impact FellowAndrea Acosta, InternKemari Alston, InternCaroline Chevat, InternSuzie Dershowitz, InternJared Dura, InternMelanie Kaufman, InternAsha Merz, InternMary Peng, InternAndrew Wyner, Intern

Board of DirectorsDavid Hunter, ChairLisa Baumgartner Bonds, Vice ChairDina Rasor, Treasurer

Ryan AlexanderHenry BantaDavid BurnhamMichael CavalloStacy Donohue (Observer)Charles HamelJanine JaquetMorton MintzNithi VivatratAnne Zill

2 ■ Vol. 16, Issue 2

Vol. 16, Issue 2 ■ 3

Reining in Service Contractors

On March 26, Representative Maurice Hinchey (D-NY) and 130 other House Members sent a letter to Secretary of Defense Leon Panetta, criticizing the Pentagon’s growing reliance on service contractors. This is an unusually large

number of signatories to one letter, demonstrating significant congressional support. The Representatives targeted the Department of Defense’s “Efficiency Initiative,” which claims to cut costs by, among other things, capping the civilian workforce at 2010 levels, but imposes no comparable constraints on private contractors.

The letter argued that outsourcing civilian jobs to service contractors may actually be costing the federal government more while providing less accountability to the public. The Representatives recommend conducting formal cost comparisons, improving service contract inventories, and insourcing inherently governmental work. POGO couldn’t agree more.

These recommendations echo POGO’s findings in our Bad Business report which found that, on average, service contractors cost taxpayers nearly twice as much as in-house employees for comparable work. According to federal employment statistics, the number of contractor employees in the federal workforce is now estimated to be over 7 million, nearly four times the number of federal employees.

Two myths of service contracting have supported this trend. The first is that contractors are not part of “big government.” Actually, contractors are paid with taxpayer dollars, working in government offices to achieve government missions—very much a part of the government. The second myth is that the private sector is always more cost-efficient. In reality, long-term service contracts remove government flexibility and generally result in cost inefficiencies rather than savings over the lifetime of the contract.

On April 25, Senators Sherrod Brown (D-OH), Kirsten Gillibrand (D-NY), and 24 other Senators sent a similar letter to Secretary Panetta mirroring the House recommendations. Support from both Chambers of Congress for greater service contract oversight conveys the message POGO has long advocated: slashing the federal employee workforce while ramping up the use of expensive service contractors will lead to waste, mismanagement, and bigger government. ■

Some IG Vacancies Filled

In February, POGO created the “Where Are All the Watchdogs?” webpage to track Inspector General (IG) vacancies in federal agencies. At the time of

release, there were twelve vacancies, some of which had been open for years. Since POGO began drawing attention to the issue, four IG positions have been filled, bringing the number of vacancies down to eight.

On March 29, the Senate confirmed Christy Romero as the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), which oversees the federal government’s bailout program. Romero was acting deputy SIGTARP and has been on the staff since 2009. On the same day, Michael Horowitz was confirmed as the IG for the Department of Justice (DOJ). Horowitz had previously been a DOJ official and federal prosecutor.

On May 23, John Sopko was appointed the Special Inspector General for Afghanistan Reconstruction. Sopko was most recently a partner at the Akin Gump law firm, and before that worked as the Chief Oversight Counsel for the House Committee on Energy and Commerce.

And at the end of June, the Senate confirmed Deborah Jeffrey as the Corporation for National and Community Service IG. Jeffrey was previously a partner at the Zuckerman Spaeder law firm.

Inspectors General play a crucial role in government oversight. For example, in 2004 the CIA IG released a report on “enhanced interrogation techniques”—widely considered torture—that caused the then-CIA Director George Tenet to suspend the program immediately. In 2011, Stuart Bowen, the Special Inspector General for Iraq Reconstruction, led an audit and found $6.6 billion in cash that U.S. defense officials had been unable to account for.

While the government has taken important steps forward, it has much more to accomplish. There are still eight vacancies, including that of the State Department IG, which has been vacant for over four years. Without these watchdogs, oversight of the executive branch suffers and rampant fraud, waste, and other misconduct will continue unchecked. ■

Service contractors are paid with taxpayer dollars, working in government offices to achieve government missions—very much a part of the government.

PHOTO BY CURTIS GREGORY PERRY

Vol. 16, Issue 2 ■ 4

POGO Works to Stop Navy from Throwing Taxpayer Dollars at Leaky Ship

In April, POGO released Navy documents revealing serious cracking, corrosion, and engine problems with Lockheed Martin’s variant of the Littoral Combat Ship

(LCS). Our findings were soon picked up by media outlets across the country.

This ship is supposed to be the cheetah of Navy ships: fast and agile, with the flexibility to both engage in surface combat with modern-day pirates, and take down submarines and mines. There are two variants of the LCS: one built by a team led by General Dynamics costing over $345 million per ship; and the other built by a team led by Lockheed Martin costing over $357 million per ship.

Although the General Dynamics LCS has some problems with corrosion, the Lockheed Martin variant could barely make it out of the harbor in the past year. At one point, according to documents POGO obtained, the ship was involved in counter-drug trafficking operations when the electricity on the entire ship went out, leaving it temporarily adrift.

On April 23, POGO sent a letter to the Senate and House Armed Services Committees recommending that this expensive and severely flawed LCS variant be eliminated. In response, Representative Duncan Hunter (R-CA) amended the National Defense Authorization Act, “demanding that the Navy ‘fess up to Congress on problems with its Littoral Combat Ship,’” according to AOL Defense. The House is now requiring the Government Accountability Office to conduct a full investigation into the ship’s problems.

Meanwhile, POGO is continuing its own investigation, penning rebuttals to the Navy, working with LCS whistleblowers, speaking about the ship’s problems at the CATO Institute, and meeting with the Under Secretary of the Navy. The Navy may be willing to go down with the ship, but we don’t think it should bring taxpayer dollars with it. ■

Internal Report Details Gross Mishandling of Military Whistleblower Reprisal Cases

The Pentagon never had a sterling reputation for handling military whistleblowers’ allegations of retaliation. In May, that reputation became even more tarnished,

when POGO unearthed a May 2011 internal DoD Inspector General (IG) review that documented gross mishandling of whistleblower reprisal cases within the IG’s Military Reprisal Investigations unit (MRI). The internal IG review disagreed with MRI’s decision to close a case in over half of the 156 cases they evaluated from fiscal year 2010.

Among the many reasons the review team disagreed with MRI’s original findings was that the team had a broader view of what constituted an unfavorable personnel action against an individual. For example, the review team noted that it considered early redeployment or issuance of letters of counseling to be potential forms of retaliation, yet MRI did not. The review team also believed MRI did not collect enough documentation and didn’t always follow up with complainants. In one example, the review team reported that the “Complainant stated in his complaint he was deployed and having connectivity problems, yet this was closed after sending only a single email requesting documents.”

We owe military whistleblowers every possible opportunity to safely expose wrongdoing, and this report shows that the system has let them down.

We’re not the only ones up in arms. In an April 2012 letter to the Pentagon’s Acting Inspector General, Senator Charles Grassley (R-IA) wrote that “Heads must roll,” and that “the root cause problems identified in this report must be addressed and resolved immediately.”

POGO echoes Senator Grassley’s calls for accountability and reform. MRI merged with another office to form the Whistleblower Reprisal Investigations unit last year, but that doesn’t mean the Pentagon has resolved the issues exposed by the internal review. It’s imperative that whistleblowers be assured that allegations of reprisal will be taken seriously. ■

Crack #17 was an 18.62-inch crack along a weld that helps bond the steel hull to the ship’s aluminum deckhouse. Crack #15 was an 8.5-inch crack along the same weld. Image from the Navy’s Crack Monitoring Survey During Rough Water Trials Period #2.

PHOTO COURTESY OF DREW COFFMAN

Vol. 16, Issue 2 ■ 5

POGO Alerts Obama About Secrecy in Government Rulemaking

In March, POGO brought an important issue to President Obama’s attention: rulemaking agencies and the Office of Information and Regulatory Affairs

(OIRA)—the office responsible for reviewing federal regulations that protect public health and safety—are failing to uphold transparency requirements laid out in an Executive Order (EO).

This EO, issued by President Bill Clinton in 1993, requires OIRA to publicly disclose all documents exchanged between it and the rulemaking agencies during the crafting of new regulations. President Obama reaffirmed the EO last year.

Unfortunately, government officials are failing to heed the EO’s requirements, and as a result may be substantially harming the public interest.

For example, OIRA apparently weakened a final rule on disclosure of conflicts of interest held by researchers who receive funding from the National Institutes of Health. This could harm the public interest if, say, the public doesn’t know that a researcher with ties to a drug company is writing the safety label for that company’s drug. In this case, the public can’t be sure what happened—because relevant documents concerning this rule were not publicly disclosed. POGO has been unable to obtain them through the Freedom of Information Act.

POGO sent a letter to President Obama about this issue in March, but isn’t the only one to point out that OIRA’s disregard of the EO is hurting the public. The Government Accountability Office issued a report back in 2003 that also found OIRA was failing to uphold the transparency requirements.

POGO Staff Scientist Dr. Ned Feder says it’s time for OIRA to stop operating behind closed doors. “The officials violating the Executive Order are saying in essence: ‘We know what is best for the American public, and we do not have to explain it,’” said Dr. Feder. “Special interests may benefit from this secrecy, but the public suffers.” ■

Meet POGO’s New Staffers

David Hilzenrath has joined POGO as editor-in-chief. David comes to us from The Washington Post, where he wrote extensively about the intersection of business and government. He

reported on the financial crisis, the regulation of the financial industry, and the Securities and Exchange Commission, including the policing of Wall Street. He has probed subjects as diverse as the finances of presidential candidates, offshore banking and money-laundering, executive compensation, and the Deepwater Horizon disaster. He has written about corporate scandals from Enron to Fannie Mae, Freddie Mac, Bernie Madoff, and MF Global. His reporting on systemic conflicts of interest in the auditing of Corporate America helped provide a roadmap for reform. His honors include the Morton Mintz Award for Investigative Reporting (named for the longtime POGO Board member).

John Crewdson has joined POGO as a senior investigator. Prior to that, John worked as a journalist for over 40 years, first at The New York Times where he won a Pulitzer Prize for national reporting, at the Chicago Tribune, and at Bloomberg News. For the Times, he provided the first account of the Nixon White House’s illegal wiretapping of 17 journalists and members of the National Security Council staff. His stories on the CIA’s use of journalists to gather intelligence led to the CIA’s prohibition of such practices. While at the Tribune, his exclusive report on fraud in a major breast cancer trial led the National Cancer Institute to create a new division devoted to monitoring clinical trials. His report on inadequate medical equipment aboard airliners led major commercial airlines to carry portable defibrillators, credited with saving many lives thus far. John garnered numerous awards while at both publications. At Bloomberg, John led a team of reporters that produced a ground-breaking report on the impact of the Supreme Court’s decision in the Citizens United case. That story won the National Press Foundation’s Dirksen Award for Distinguished Reporting of Congress and the National Press Club’s Lee Walczak Award for Political Analysis.

For more on David and John, visit pogo.org/press-room/staff-experts.html. ■

John Crewdson

David Hilzenrath

IMAGE COURTESY OF OPENSOURCEWAY, VIA FLICKR.

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POGO’s First Casino Night FundraiserPOGO hosted its very first Casino Night on June 1, 2012. All money raised during the event will support a fellowship in the name of our departed friend and colleague, Beth Daley, who was such a big part of POGO’s success over the last decade. In spite of the torrential rains and faulty metro service, over 70 people made it to POGO’s offices for a rousing good time trying their luck at poker, blackjack, craps, and roulette! The raffle prizes included gift certificates to popular DC restaurants Oyamel, Rasika, Tabard Inn, and Founding Farmers.

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