INSIDE WASHINGTON: Profiting from failure
- Government business and finance
- Military technology
- Government contracts
- Industrial products and services
- Corporate news
- Defense contracts
- Armed forces
- Government and politics
- Aerospace and defense industry
- Military intelligence
- Military and defense
- Contracts and orders
- Corporate stock
- Government business and finance
INSIDE WASHINGTON: Profiting from failure
Oct. 27, 2014
WASHINGTON (AP) — The Army's $5 billion intelligence network has largely failed in its promise to make crucial data easily accessible to soldiers and analysts in the field. But for a select group of companies and individuals, the system has been a bonanza.
Designed to provide a common intelligence picture from the Pentagon to the farthest reaches of Afghanistan, the Distributed Common Ground System has proven crash-prone, unwieldy and "not survivable," in the words of one memorable 2012 testing report.
Meanwhile, the defense companies that designed and built it continue to win multi-million-dollar intelligence contracts. And a revolving door has spun between those and the military commands that continue to fund the system, records show.
Several people who worked in key roles in Army intelligence left for top jobs at those companies. In the world of government contracting, that's not illegal or entirely uncommon, but critics say it perpetuates a culture of failure.
"The Defense Department and the Army are not going with companies that have proven solutions," said GOP Rep. Duncan Hunter of California, a critic of DCGS-A who serves on the House Armed Services subcommittee on intelligence. "What they are going with are people who know government and the government acquisition process."
In one case, the revolving door spun the other way.
Russell Richardson, an engineer and businessman, made millions as a contractor while serving as an architect of the program. He later joined the Army intelligence command as a senior employee while continuing to own stock in a company doing work on DCGS-A.
Richardson acknowledged in an interview that his work as a consultant and contractor on DCGS-A and other Army intelligence programs has made him wealthy. He said troops' dissatisfaction is mainly a result of poor training in how to use the software.
Richardson was paid more than $13 million in 2011 after he helped sell a small military intelligence business, Potomac Fusion, to a larger intelligence contractor, according to his financial disclosure statement and information he provided. He also received stock valued at nearly $1 million in the buyer, Sotera Defense Solutions, he said, though he added that the stock later became worthless.
Both Potomac and Sotera defense had long counted their work on DCGS-A and related programs as an important source of revenue, records show.
Having signed a noncompete agreement with Sotera Defense, Richardson took a job as a senior civilian official with the U.S. Army Intelligence and Security Command, known as INSCOM, in June 2012. Among INSCOM's assignments was trying to improve DCGS-A. Army officials declined to disclose Richardson's salary but said the job paid between $120,800 and $181,500 a year.
Richardson, whose title was science adviser, said he wrote requirements for services that resulted in subcontracts for a variety of companies, including Sotera Defense. He continued to hold stock in Sotera Defense's holding company.
It was all perfectly legal, an Army spokesman said, because Richardson did not play a direct role in awarding the contracts to Sotera.
"Sotera performed work as a subcontractor, and the government is not permitted to interfere with contractor/sub-contractor relationships," Army spokesman Myron Young said in a statement.
The Army's inspector general investigated Richardson but took no action, according to a senior congressional aide who was not authorized to discuss the matter by name. Richardson confirmed that there had been an investigation and he said it found no wrongdoing.
Richardson said he acted properly, acknowledging a conflict of interest and removing himself from Sotera-related decisions. He left the Army in July to join a cybersecurity company headed by former National Security Agency chief Keith Alexander.
"I followed the rules," said Richardson. "I was the science adviser, not a contracting officer. From my point of view I was giving service back to the government."
Richardson took himself out of direct participation in Sotera contracts in 2012. In May, he went further, disqualifying himself from any involvement in any matter that touched the company.
Still, some critics see Richardson's seamless move from contractor to government decision-maker and back as problematic.
"He never should have held the job," said John Weiler, vice chairman of the IT Acquisition Advisory Council and a critic of military procurement. "He was a walking conflict of interest. He was in a position to influence all manner of things to the benefit of his former firm."
Richardson said he wielded no such influence, and in fact his position may have hurt Sotera by making Army contractors more cautious about awarding it work.
The Distributed Common Ground System was conceived a decade ago as a way to link the military's disparate sensors and databases, allowing troops to process and integrate intelligence from electronic intercepts, overhead imagery, spy reports and other sources. It combines a network of databases, sensors and hardware, accessible via laptops and work stations through its own operating system.
Each military service branch has its own version. The Army program is the largest, and its failures have been publicly documented.
"DCGS continues to be unstable, slow, not friendly and a major hindrance to operations," soldiers with the 130th Engineer Brigade said in a February memo.
The Army acknowledges the system's problems, but says a new version expected in the next few years will solve them. That work is expected to be put out for bids.
Richardson is not the only person involved with DCGS-A and related programs who has spun through the revolving door between government and industry.
Within two months of his March 2013 retirement as INSCOM's futures director, Timothy Hill joined Invertix Corp, which became part of Altamira Technologies Corp., as its director of intelligence strategies. In May 2013, Invertix Corp received a sole-source contract worth $33 million — later increased to $48 million — from INSCOM.
In an email exchange with The Associated Press, Hill, who left Invertix/Altamira earlier this year, said he was not involved in that contract or any other buying activity during his last year at INSCOM. He said he did not work on matters involving INSCOM while he was at the company.
"I have had NO contractual interaction with the Army or INSCOM since my retirement," Hill said.
Roberto "Andy" Andujar retired in 2010 as INSCOM's chief information officer. In October 2012, he helped Invertix win a contract with INSCOM so large that Invertix increased its full-time workforce by 20 percent. He did not respond to requests for comment.
Another major DCGS-A subcontractor, General Dynamics, hired Lynn Schnurr, an important backer of the system while she was chief information officer for Army intelligence. General Dynamics declined comment on behalf of the company and Schnurr.
Richardson knows government acquisition well. Potomac Fusion was the second of two companies he led and sold that were involved in the DCGS-A project.
He said he was brought into Potomac Fusion to improve the company's balance sheets for a sale. Potomac was advised by Chertoff Capital, the investment banking affiliate of a company founded by former Homeland Security Secretary Michael Chertoff that includes former CIA Director Michael Hayden and other former intelligence and security officials.
Richardson previously headed Object Sciences, a company of 133 employees that in 2004 won a three-year, $89 million prime contract to provide intelligence support for the Army intelligence command, including programs that led to DCGS-A.
In 2005, defense giant SAIC bought the company for an undisclosed sum. Richardson joined SAIC as an operations manager. SAIC is a major Army intelligence contractor.
When he became a government employee, Richardson said he spent much of his time working on a program called Red Disk, which was envisioned as a cloud computing component of DCGS-A. It was designed to allow troops all over the world to update and exchange information in real time on the same intelligence databases.
In one biography, Richardson was referred to as "Chief Architect for Cloud Technologies."
Red Disk was designed in response to an "urgent needs" request for cloud capability in Afghanistan, meaning it was paid for out of emergency war dollars. But it has never been fully deployed in Afghanistan, and now the Army is moving away from it as it seeks proposals for the next generation of DCGS-A, officials say.
DCGS-A still does not have a system-wide cloud capability that allows users to update files in a way that is available to everyone.
Meanwhile, the Army is investigating whether $93 million used for Red Disk was improperly spent and should not have come from emergency war funds. Richardson said he had nothing to do with such funding decisions.
Richardson rejects the criticisms of DCGS-A and Red Disk, and he has no apologies for the wealth he has reaped helping to build them. The taxpayers got a good deal for the millions they paid the two contracting firms he led and sold, he said.
"Absolutely, I think they've done very, very well by me," he said.