Showing posts with label GAO. Show all posts
Showing posts with label GAO. Show all posts

June 26, 2008

Interesting news items today

Arab thinkers voice concern over US-Iraq security deal
Thu, 26 Jun 2008 04:45:40
Samer Dadaa, Press TV, Damascus

Bush, Talabani discuss US-Iraq security pact
Thu, 26 Jun 2008 04:03:44
Mike Kellerman, Press TV, Washington

Gerry Adams calls for Northern Ireland reunification
Thu, 26 Jun 2008 00:02:11
Roshan Mohammed Salih, Press TV, London

GAO report cites insufficient results in US 2007 military surge
Wed, 25 Jun 2008 23:30:10
Jihan Hafiz, Press TV, Washington

Israel closes Gaza crossings despite truce
Wed, 25 Jun 2008 21:49:21
Yousef Al-Helou, Pess TV, Gaza


June 06, 2008

ACLU update on the border fence

Something in the Water at the Heritage Foundation?

James Carafano has been blogging on the Heritage Foundation’s “The Foundry” this week on his trip to our southern border. Carafano has been mighty impressed with all the potential benefits of increased border security. Specifically, Carafano believes it will protect the environment, even though Defenders of Wildlife has warned that the erection of a border fence will have “serious and lasting” effects on wildlife, clean water and clean air in the region. He’s also convinced it will reduce human fatalities, even though over 200 people die on the border each year, mostly from exposure, while the rate of illegal immigration remains steady.

But today’s post is a real humdinger. Titled “Virtual Fences Can Help Make Real Good Neighbors,” it praises the rollout of “Project 28,” part of the Department of Homeland Security’s initiative to create a “virtual fence” of video surveillance, motion sensors and other nifty gadgets along 28 miles of the Arizona-Mexico border. But as the Government Accountability Office and The Washington Post reported in February, Project 28 has been an utter fiasco. None of the technology has worked, and DHS decided to scrap the pilot project (they are now trying again with newer, fancier equipment).

However, even if the technology had worked, it’s not clear the program would have. Residents of Arivaca, Ariz., an unincorporated town nearby on of Project 28’s video surveillance towers, complained that while DHS reported the tower’s field of vision was only about 10 miles, the agency had placed it right next to the town, which happens to be 12 miles from the border. The potential for the federal government to spy on American citizens was real; the impact on border security, not so much.

But forget the fact that Project 28 is a complete boondoggle for a moment (Carafano admits that in addition to suffering from “bad publicity,” nobody at DHS bothered to ask the Border Patrol what they actually needed). The virtual fence is also one of the largest government gravy trains out there, and the main beneficiary has been Boeing Corp. Boeing got the original contract to install Project 28, and despite its failure to build something that works for more that $860 million in taxpayer dollars, DHS keeps offering the company new contracts. Just last month, it was announced that Boeing would be asked to build on its “experience” with Project 28 to construct two new sections of virtual fence in Arizona and Michigan.

Now to return to our friends at Heritage: Why would a think tank that advocates for limited government, free enterprise and strong national defense support a program that is massively expensive to taxpayers, invades the privacy of local residents, and amounts to a handout to a company that has repeatedly failed to secure our borders? A massive buildup of surveillance technology at the border is the kind of cash cow that fiscal conservatives and civil libertarians should be united in opposing. We’re eagerly waiting to welcome our friends at Heritage to the right side of the (virtual) fence.

Comments:

  1. esb Says:

    Why would an American “civil liberties” group discuss an issue that doesn’t seem to have much to do with civil liberties? Would you consider, perhaps, instead of arguing for the “civil liberties” (I’m sure you would somehow explain that they do, indeed, exist) of people trying to illegally enter our country you could defend the 2nd Amendment from extinction?

  2. lokywoky Says:

    All this fence stuff is a bunch of crap. What is needed instead is good diplomacy, repeal and/or modifications in NAFTA to prohibit our subsidized agricultural megacorporations (Monsanto, etal) from dumping corn (especially GMO corn) on community markets. We need to help Mexico address its development issues, help them turn their economy around (using sustainable farming and recognizing that subsistence farming is not a dirty word), and make things better for the people there. If they could make a decent living - they would not come here for the most part. They are actually economic refugees.
    My son-in-law runs a day-labor firm in the south, he says 90% of his workers come here, stay for about 3-4 years - or long enough to save up about $25,000 (in addition to sending money home) and then return to their country of origin. That sum of money is enough to build a nice house (their standards) and provide enough income for their family to live satisfactorily for the rest of their lives.

    Man - we would be better off to just stand at the border and hand them the money - it would be cheaper and much more efficient than these stupid fences, the cost of the border patrol, the cost of the ICE and its raids and detention centers, etc etc etc.

    What a concept! Stop the problem at its source instead of trying to criminalize it on the back end.

March 22, 2008

Paul Craig Roberts: Bold and Clear - the Truth this week

Great article, good mind, great links, great thinking, super appreciated .. (plays well with others)

Yeah, how do the trooops get back. Stretched pretty thinly in terms of manpower, basics, growing ever thinner by the minute - and yet Dickie Cheney (totally deluded now) is over in Irak covering KBR's ass. Trying to redeem even a small sliver of dignity after the mess created. Yes, I KNOW that Cheney did not do it all by himself; he had plenty of help. But as strings puller on intel, surely surely even he would see what was coming down the turnpike .. just a real bozo to have around at the very end of empire.

The play is finito. just waiting for the shoes to finally get noticed . they have long since dropped and just await you noticing them on your bedroom rug .

THE END, or is it? Delusion can be REAL powerful for the JERKS who did all this. Willfully and BELIGERANTLY.

Now I shut up and you can read . . .

The Collapse Of American Power

By Paul Craig Roberts

21 March, 2008
Countercurrents.org

In his famous book, The Collapse of British Power (1972), Correlli Barnett reports that in the opening days of World War II Great Britain only had enough gold and foreign exchange to finance war expenditures for a few months. The British turned to the Americans to finance their ability to wage war. Barnett writes that this dependency signaled the end of British power.

From their inception, America’s 21st century wars against Afghanistan and Iraq have been red ink wars financed by foreigners, principally the Chinese and Japanese, who purchase the US Treasury bonds that the US government issues to finance its red ink budgets.

The Bush administration forecasts a $410 billion federal budget deficit for this year, an indication that, as the US saving rate is approximately zero, the US is not only dependent on foreigners to finance its wars but also dependent on foreigners to finance part of the US government’s domestic expenditures. Foreign borrowing is paying US government salaries--perhaps that of the President himself--or funding the expenditures of the various cabinet departments. Financially, the US is not an independent country.

The Bush administration’s $410 billion deficit forecast is based on the unrealistic assumption of 2.7% GDP growth in 2008, whereas in actual fact the US economy has fallen into a recession that could be severe. There will be no 2.7% growth, and the actual deficit will be substantially larger than $410 billion.

Just as the government’s budget is in disarray, so is the US dollar which continues to decline in value in relation to other currencies. The dollar is under pressure not only from budget deficits, but also from very large trade deficits and from inflation expectations resulting from the Federal Reserve’s effort to stabilize the very troubled financial system with large injections of liquidity.

A troubled currency and financial system and large budget and trade deficits do not present an attractive face to creditors. Yet Washington in its hubris seems to believe that the US can forever rely on the Chinese, Japanese and Saudis to finance America’s life beyond its means. Imagine the shock when the day arrives that a US Treasury auction of new debt instruments is not fully subscribed.

The US has squandered $500 billion dollars on a war that serves no American purpose. Moreover, the $500 billion is only the out-of-pocket costs. It does not include the replacement cost of the destroyed equipment, the future costs of care for veterans, the cost of the interests on the loans that have financed the war, or the lost US GDP from diverting scarce resources to war. Experts who are not part of the government’s spin machine estimate the cost of the Iraq war to be as much as $3 trillion.

The Republican candidate for President said he would be content to continue the war for 100 years. With what resources? When America’s creditors consider our behavior they see total fiscal irresponsibility. They see a deluded country that acts as if it is a privilege for foreigners to lend to it, and a deluded country that believes that foreigners will continue to accumulate US debt until the end of time.

The fact of the matter is that the US is bankrupt. David M. Walker, Comptroller General of the US and head of the Government Accountability Office, in his December 17, 2007, report to the US Congress on the financial statements of the US government noted that “the federal government did not maintain effective internal control over financial reporting (including safeguarding assets) and compliance with significant laws and regulations as of September 30, 2007.” In everyday language, the US government cannot pass an audit.

Moreover, the GAO report pointed out that the accrued liabilities of the federal government “totaled approximately $53 trillion as of September 30, 2007.” No funds have been set aside against this mind boggling liability.

Just so the reader understands, $53 trillion is $53,000 billion.

Frustrated by speaking to deaf ears, Walker recently resigned as head of the Government Accountability Office.

As of March 17, 2008, one Swiss franc is worth more than $1 dollar. In 1970, the exchange rate was 4.2 Swiss francs to the dollar. In 1970, $1 purchased 360 Japanese yen. Today $1 dollar purchases less than 100 yen.

If you were a creditor, would you want to hold debt in a currency that has such a poor record against the currency of a small island country that was nuked and defeated in WW II, or against a small landlocked European country that clings to its independence and is not a member of the EU?

Would you want to hold the debt of a country whose imports exceed its industrial production? According to the latest US statistics as reported in the February 28 issue of Manufacturing and Technology News, in 2007 imports were 14 percent of US GDP and US manufacturing comprised 12% of US GDP. A country whose imports exceed its industrial production cannot close its trade deficit by exporting more.

The dollar has even collapsed in value against the euro, the currency of a make-believe country that does not exist: the European Union. France, Germany, Italy, England and the other members of the EU still exist as sovereign nations. England even retains its own currency. Yet the euro hits new highs daily against the dollar.

Noam Chomsky recently wrote that America thinks that it owns the world. That is definitely the view of the neoconized Bush administration. But the fact of the matter is that the US owes the world. The US “superpower” cannot even finance its own domestic operations, much less its gratuitous wars except via the kindness of foreigners to lend it money that cannot be repaid.

The US will never repay the loans. The American economy has been devastated by offshoring, by foreign competition, and by the importation of foreigners on work visas, while it holds to a free trade ideology that benefits corporate fat cats and shareholders at the expense of American labor. The dollar is failing in its role as reserve currency and will soon be abandoned.

When the dollar ceases to be the reserve currency, the US will no longer be able to pay its bills by borrowing more from foreigners.

I sometimes wonder if the bankrupt “superpower” will be able to scrape together the resources to bring home the troops stationed in its hundreds of bases overseas, or whether they will just be abandoned.

Paul Craig Roberts paulcraigroberts@yahoo.com was Assistant Secretary of the Treasury during President Reagan’s first term. He was Associate Editor of the Wall Street Journal. He has held numerous academic appointments, including the William E. Simon Chair, Center for Strategic and International Studies, Georgetown University, and Senior Research Fellow, Hoover Institution, Stanford University. He was awarded the Legion of Honor by French President Francois Mitterrand.

March 12, 2008

Yes ,read this whole thing .. Carlyle and Booz Allen Hamilton

Carlyle Group May Buy Major CIA Contractor: Booz Allen Hamilton

by Tim Shorrock , Special to CorpWatch
March 8th, 2008


Cartoon by Khalil Bendib

The Carlyle Group, one of the world’s largest private equity funds, may soon acquire the $2 billion government contracting business of consulting giant Booz Allen Hamilton, one of the biggest suppliers of technology and personnel to the U.S. government’s spy agencies. Carlyle manages more than $75 billion in assets and has bought and sold a long string of military contractors since the early 1990s. But in recent years it has significantly reduced its investments in that industry. If it goes ahead with the widely reported plan to buy Booz Allen, it will re-emerge as the owner of one of America’s largest private intelligence armies.

Reports of a potential Carlyle acquisition of Booz Allen’s government unit began circulating among U.S. military contractors in December 2007, after Booz Allen’s senior partners and board members – a group of 300 vice presidents who own the privately-held firm – gathered at company headquarters in McLean, Virginia, for an extraordinary two-day meeting.

According to a December 15 letter to Booz Allen employees from CEO Ralph W. Shrader that was released by the firm, the vice presidents signed off on a “new strategic direction” that would involve separating the company’s commercial and government units and operating them as separate companies. That was widely seen, both inside and outside the company, as a sign that a sale of one or both of the units was imminent. Shrader said the company hoped to come to a resolution of the issues involved by March 31, 2008.

In January 2008, major newspapers – each quoting unnamed people close to the situation – reported that discussions between Booz Allen and Carlyle about the sale of the government unit were underway. According to the Wall Street Journal, the deal will be “centered on Booz Allen’s influence in defense and intelligence contracting. If an agreement is reached the sale price will likely be around $2 billion.”

Christopher Ullman, Carlyle’s chief spokesman, could neither confirm nor deny that a deal was in the works, and declined to comment to CorpWatch about the reports. Because of Carlyle’s long experience in the defense sector, he added, such companies “would be a priority for us when the price is right and it’s the right fit for us.” George Farrar, a Booz Allen spokesman, said his company “has refused to discuss particulars of any ongoing discussions” and would not comment beyond what Shrader wrote in his December 15 missive to Booz Allen’s workforce.

Who Is Booz Allen Hamilton?

In 2006, Booz Allen Hamilton, a privately held company based in McLean, Virginia, had a global staff of 18,000 and annual revenues of $3.7 billion. Its work for U.S. government agencies accounts for more than 50 percent of its business. Notably Booz Allen is a key adviser and prime contractor to all of the major U.S. intelligence agencies – the Central Intelligence Agency (CIA), the Defense Intelligence Agency (DIA), the National Geospatial-Intelligence Agency (NGA), the National Reconnaissance Office (NRO), the National Security Agency (NSA), and – as well as the Department of Homeland Security (DHS), the National Counterterrorism Center, the Department of Defense and most of the Pentagon’s combatant commands.

Shadow Intelligence Agency

Booz Allen prides itself on the long-term personal relationships it has forged between its personnel and their government clients. “We stay for a lifetime,” Mark J. Gerencser, the senior vice president in charge of Booz Allen’s government contracting division, remarked in 2006. A quick study of their biographies posted on Booz Allen’s Website suggests that this is indeed true – the senior management have shuttled back and forth between the company and the government for their entire lives.

As the director of Booz Allen’s U.S. government business, for example, Gerencser serves in “several broad-based roles,” including “representing industry” to the Office of the Secretary of Defense and the Joint Chiefs of Staff, which manage the Pentagon’s vast intelligence operations. He is also a member of Booz Allen’s leadership team that sets the strategic direction of the company, and has run many of the war games staged by Booz Allen for its government clients.

Just below him in the company’s intelligence hierarchy is Ken Wiegand, another senior vice president. Weigand came to Booz Allen in 1983 after working for a decade in Air Force intelligence, and now leads the firm’s work for national intelligence and law enforcement agencies and the Department of Homeland Security. His specialty, the Website says, includes imagery intelligence operations, which are managed by the NGA, one of Booz Allen’s most important clients.

Senior vice president Joseph W. Mahaffee, a veteran of naval intelligence, is the leader of Booz Allen’s Maryland procurement office business, which puts him in charge of the company’s contracts with the NSA in Fort Meade. He focuses on “meeting the Information Assurance mission objectives” of the NSA with various technology services, including systems engineering, software development and “advanced telecommunications analysis.”

Another key Booz Allen figure at the NSA is Marty Hill, who came to the company after a 35-year career in signals intelligence and electronic warfare and previously served as an expert on “information operations capabilities and policy” for Donald Rumsfeld’s Pentagon. He leads of team of 1,200 professionals engaged in all aspects of “signals intelligence” including technical analysis, systems development and operations.

Vice President Pamela Lentz is a former cryptology officer with the Navy and once worked as a program manager for TRW, one of the nation’s oldest intelligence contractors (it is now owned by Northrop Grumman). She is Booz Allen’s “client service officer” for the DIA and other military intelligence markets, which includes intelligence units within the Navy, Air Force, Army, the unified combatant commands and the undersecretary of defense for intelligence. Among other tasks, Lentz manages a 120-person Booz Allen team that supports the NRO, the Pentagon agency that manages the nation’s military spy satellites. She also runs a task force that supports human intelligence collection efforts at the DIA.

Vice President Laurene Gallo, a former intelligence analyst at the NSA, leads a Booz Allen “intelligence research and analysis” team that support several agencies, including the CIA, the DNI and the National Counterterrrorism Center. Vice President Richard Wilhelm, whose job at Booz Allen is to work with the CIA and the ODNI, came to the company after a long career in U.S. intelligence that included stints directing the Joint Intelligence Center for Iraq during Operation Desert Storm and the NSA’s first director of information warfare.

Vice President William Wansley, a former Army intelligence officer, leads a team of experts in “strategic and business planning” who support the CIA’s National Clandestine Service, the part of the CIA that conducts covert operations and recruits foreign spies, as well as the DNI. Another vice president Robert W. Noonan, a retired Army lieutenant general who once served as the Army’s deputy chief of staff for intelligence and the commanding general of the U.S. Army’s Intelligence and Security Command, is in charge of expanding Booz Allen’s military intelligence business within all the armed services, the combatant commands, the DIA and the Office of the Secretary of Defense.

It is each of these vice presidents who are poised to personally profit from a corporate takeover by the Carlyle Group.

On its website, Booz Allen describes its intelligence work as part of its broader expertise in information technology. “Whether dealing with homeland security, peacekeeping operations, or the battlefield, success depend on the ability to collect, safeguard, store, distribute, fuse, and share information – on getting the right information to the right place at the right time,” it says. “Our security professionals work in partnership with clients to develop capabilities … for protecting information and networks against cyber and physical threats.”

That has not always been the case: Booz Allen Hamilton was founded as a management consultancy in 1914 in Chicago by three businessmen whose surnames gave the firm its name. In 1940, after more than three decades of giving advice to top ranking companies in America’s manufacturing and service economy, such as Montgomery Ward, Goodyear Tire and the Illinois State Railroad, Booz Allen started working for the U.S. military, where its clients included the Army, the Navy, and, after the war, the Air Force and the Pentagon.

Its initial contracts with the Navy in 1940 set the pace for its military work: as a management consultant, Booz Allen helped the Navy restructure for World War II and permeated its ranks with contractors (“Each Navy bureau had a Booz rep,” Investors Daily reported in a 2005 profile of the firm). That relationship served as a template for Booz Allen’s later work in intelligence and national security where its personnel worked inside government agencies alongside public employees.

Since the late-1990s, Booz Allen has forged a particularly close relationship with the NSA, the spy agency that monitors global telephone, e-mail and Internet traffic for the U.S. military and political leaders, which hired Booz Allen as its chief outside consultant on Project Groundbreaker. This $4 billion project outsourced the NSA’s internal communications and networking systems to a consortium led by Computer Sciences Corporation (CSC) and the IT subsidiary of Northrop Grumman.

Today, among the many services Booz Allen provides to intelligence agencies, according to its Website, are war-gaming – simulated drills in which military and intelligence officials test their response to potential threats like terrorist attacks – as well as data-mining and analysis of imagery and intelligence picked up by U.S. spy satellites, the design of cryptographic, or code-breaking, systems (an NSA specialty) and “outsourcing/privatization strategy and planning.” The company’s 2007 annual report spells out several other areas of expertise, including “all source analysis,” an intelligence specialty managed by the CIA and the Office of the Director of National Intelligence (DNI) that draws on public sources of information, such as foreign newspapers and textbooks, to add texture to data gathered by spies and electronic surveillance.

According to the company’s annual report, Booz Allen is also working on one of the most important spy initiatives launched in recent years: the Cryptographic Modernization Program. Air Force General John C. Koziol, the commander of the Air Force Intelligence, Surveillance and Reconnaissance Agency, described this program as an attempt to combine a variety of intelligence technologies to pick up tell-tale signs of chemicals and other substances – into a single electronic package that can be used by combat and special operations commanders to track the enemy.

Booz Allen is a full partner in the project, according to General Koziol, an idea that has been “fully endorsed” by the Director of National Intelligence Michael McConnell, the nation’s spy chief – himself a Booz Allen alumnus (see box).

Revolving Door

To carry out its tasks at the intelligence agencies, Booz Allen has hired a dazzling array of former national security officials and foot-soldiers. In 2002, Information Week reported that Booz Allen had more than 1,000 former intelligence officers on its payroll. In 2007, as this reporter was researching a chapter about Booz Allen for his forthcoming book, he asked the company if it could confirm that number or provide a more accurate one, and received an e-mail reply from spokesman George Farrar: “It is certainly possible, but as a privately held corporation we consider that information to be proprietary and do not disclose.”

Buried deep on the company's Web site, however, a much larger number is confirmed in an explanation of a Booz Allen information technology contract with the DIA, which carries out intelligence for the Joint Chiefs of Staff and the Office of the Secretary of Defense. It stated that the Booz Allen team “employs more than 10,000 TS/SCI cleared personnel.” TS/SCI stands for top secret-sensitive compartmented intelligence, one of the highest possible security ratings, which would make Booz Allen one of the largest employers of cleared personnel in the United States.

Many of these former intelligence officers at Booz Allen, do the same jobs as they did for the government. For example, Keith Hall, a Booz Allen vice president initially worked in Army intelligence and on one of the congressional intelligence committees. In the early 1990s, he was hired by the CIA to manage budgets and policy development for then-Director of Central Intelligence Robert Gates. During that time, he played an instrumental role in creating the National Imagery and Mapping Agency, which was later renamed the National Geospatial-Intelligence Agency. During the Clinton administration, Hall was named Assistant Secretary of the Air Force for space programs and, simultaneously, director of the NRO, the agency that manages the nation’s military satellite program.

Now, as a Booz Allen executive, Hall leads a “strategic intelligence initiative” that integrates the company’s extensive contracting activities for the NRO and the NGA. Recently, one of his most important tasks involved chairing a 2005 homeland security study group that recommended a major expansion of information and data-sharing between U.S. spy agencies that work outside the country and domestic law enforcement, like the Federal Bureau of Investigation (FBI). “The study’s findings have become a road map for the government in making decisions related to critical information sharing in support of homeland security,” Booz Allen boasts in its 2007 annual report. (See our article, Domestic Spying, Inc.)

Who is the Carlyle Group?

The Carlyle Group is a private equity fund – a group of financial advisers that invests large sums of money from pension funds, large corporations, wealthy individuals and foreign banks into privately held companies in many different industries, and then run those companies until the market is right to sell them at a substantial profit. During the early years of the George W. Bush administration, it gained attention – and some notoriety – because of the large number of former high-ranking political figures it had attracted as advisers and managers. They included former President George H.W. Bush, former Secretary of State James Baker and former British Prime Minister John Major.

Shortly after the September 11, 2001, attacks on New York and Washington, Carlyle was in the news again when newspapers revealed that Osama Bin Laden’s family in Saudi Arabia – which owns one of the world’s largest construction companies – held a stake in the fund. The stake was quickly liquidated after the news broke.

Until the recent slowdown in the financial markets, the private equity industry, with over $160 billion under its control, was widely seen as one of the most important drivers of the global economy, pumping venture capital into high-tech startups and buy-out capital into corporate reorganizations worldwide. They are extremely active in Britain, where more than 20 percent of the private sector workforce is employed by companies that are, or have been, the targets of private equity investments. Business magazines credit them with breaking up some of America’s worst-run conglomerates and bringing competition to Japan’s highly regulated and incestuous banking industry.

“Private equity funds now wield much of the transformational power at the heart of the capitalist system,” The Economist magazine recently observed. In addition to Carlyle, which has more than $75 billion under management, industry leaders include the Blackstone Group ($30 billion), Bain Capital ($27 billion), Kohlberg, Kravis, Roberts & Co. ($26 billion) and Texas Pacific Group ($20 billion).

Carlyle, the largest of the funds, is best-known for owning large military contractors and aerospace contractors, such as United Defense Industries, the maker of the Bradley Fighting Vehicle and other weapons systems, which it sold to BAE Systems in 2004, and Vought Aircraft Industries, a major producer of structural assemblies for commercial, military and business aircraft, which it still holds. Other military contractors that have gone through Carlyle’s hands include EG&G, LTV Aerospace and Magnavox Electronic Systems.

During the 1990s, when it made most of these acquisitions, the fund was led by former Secretary of Defense Frank Carlucci, who served during the Carter administration as deputy director of the CIA. During his tenure, Carlyle bought and sold nearly a dozen companies active in the intelligence industry. They include BDM International, an influential company that, during the 1990s, provided some of the U.S. Army’s first contract interpreters and, through a subsidiary known as Vinnell Corporation, once trained the Saudi National Guard. It was eventually sold to Northrop Grumman and is now part of that company’s huge intelligence division.

U.S. Investigative Service, which Carlyle bought in 1996 and sold in 2007, is the largest provider of security investigations for employees and contractors hired by the Pentagon, the National Security Agency and other agencies, and in recent months has been training Iraqi police commandoes under contract to the Pentagon. (See CorpWatch coverage of USIS.)

Another spectacular acquisition was QinetiQ, the privatized arm of Britain’s military research corporation. It was acquired by Carlyle in 2003, sold in 2007, and recently emerged as one of the premiere U.S. intelligence contractors – after netting a $470 million profit for Carlyle. (See our article “QinetiQ goes Kinetic”.)

Carlyle, however, has divested itself of most of its military holdings. “In our current U.S. portfolio, there’s none,” Carlyle’s Ullman told CorpWatch. Today, most of its investments are concentrated in commercial industries, such as real estate and banking. During a few months’ span in 2006, for instance, Carlyle did a “manufacturing deal, an education deal, a consumer products deal, and buildings deal, and a financial services deal,” according to an account in the Washingtonian magazine. Its holdings are extensive and pervasive: every time you rent a car from Hertz, catch a quick breakfast at Dunkin’ Donuts or get ice-cream at Baskin-Robbins, you’re sending money to Carlyle.

A $2 billion acquisition of Booz Allen’s contracting business would therefore put Carlyle back in the big leagues of military contractors.
Other key executives who came to Booz Allen from the spy agencies include R. James Woolsey, the former director of the CIA, who was hired in 2003 to run Booz Allen’s “global resilience” division, which advises corporations on security issues, and Joan A. Dempsey, a career U.S. intelligence official and a former top aide to former CIA Director George Tenet, who was hired in 2005 as a Booz Allen vice president with responsibility to advise the DNI and other key intelligence agencies. (See box for list of other key corporate figures that previously worked in government intelligence agencies.)

It is these senior managers who would most likely benefit from a sale to Carlyle.

Unlike many of its competitors in the intelligence industry, Booz Allen is a privately held company whose shares are owned by its 300 vice presidents of whom “approximately 80 are in government support,” Booz Allen’s Farrar told CorpWatch. For these vice presidents, Carlyle’s infusion of capital, and its $2 billion buyout of their shares, will make them very rich men and women indeed. After all, $2 billion divided by 80 is $25 million; even if Booz Allen’s shares were divided equally, which is unlikely, that’s an astounding windfall for any executive.

Booz Allen CEO Ralph Shrader

The man most responsible for Booz Allen’s growth as an intelligence contractor is Ralph Shrader, who has been running the company as chairman and CEO since 1998. Shrader, an electrical engineer by training, came to Booz Allen in 1974 after serving at senior management levels of two prominent telecommunications companies – Western Union, where he was national director of advanced systems planning, and RCA, where he served in the company’s government communications system division. These positions prepared him well for his later work at Booz Allen as a consultant to the telecommunications industry. According to his official biography, he “led major assignments” for the industry as a Booz Allen consultant and was deeply involved in the company’s “landmark work for AT&T” when that company was broken up by the government.

In those assignments, Shrader may have been exposed to the telecommunications industry’s close ties to U.S. intelligence. During the years he worked for Western Union and RCA, those companies, along with ITT World Communications, were part of a secret surveillance program known as Minaret in which telecommunication companies, with the concurrence of a handful of high-ranking executives, handed over to the NSA information on all incoming and outgoing U.S. telephone calls and telegrams – an early version of the NSA’s warrantless surveillance program launched by the Bush administration after the September 11th attacks. Minaret, and the involvement of the private companies in NSA spying, was exposed by the congressional committees investigating intelligence abuse in the mid-1970s, and was the inspiration behind the 1978 Foreign Intelligence Surveillance Act (FISA), which set the rules – including the important requirement for warrants – for domestic surveillance of telephone traffic.

None of this is alluded to in Booz Allen’s official literature, of course; but Shrader, upon his appointment as CEO in 1998, mentioned in a rare press interview (with the Financial Times) that the most relevant background for his new position of chief executive was his experience working for telecommunications clients and doing classified military work for the U.S. government – “something of a Booz specialty,” the FT pointed out.

Booz Allen adds on its website that Shrader, as CEO, has also “led important programs for the U.S. National Communications System and the Defense Information Systems Agency,” two of the most important classified intelligence networks in use by the federal government. Under Shrader, Booz Allen also became the NSA’s most important outside consultant, culminating in its advisory role in Project Groundbreaker. That project, which awarded its first contracts in the summer of 2001, put Booz Allen in a prime position to capture NSA and other intelligence work in the aftermath of the September 11th attacks, when intelligence budgets, and NSA surveillance, increased substantially.

“War on Terror” Contracts


After September 11th, 2001, by Booz Allen’s own account, the firm helped the government reshape its spying capabilities to match the new era of counterinsurgencies and terrorist threats. “The nature of intelligence changed dramatically in the wake of 9/11,” Christopher Ling, a Booz Allen vice president, explains in the company’s most recent annual report. “An entire analytic production system geared to detect large-scale cold war adversarial capabilities was suddenly required to transform.” At Booz Allen, he added, “We are finding innovative ways to integrate intelligence and operations, enabled by advanced visualization and data management capabilities, which has allowed us to pioneer tactics, techniques, and procedures.”

In addition to serving as a prime contractor on Admiral John Poindexter’s controversial Total Information Awareness project (see box), Booz Allen was active on both the military and economic fronts on the “war on terror.” For the Pentagon, it helped develop the “blue force” tracking system that allows soldiers and commanders in Iraq and other battlegrounds the ability to electronically identify friendly troops. And in the weeks leading up to the invasion of Iraq, Booz Allen sponsored and organized several conferences aimed at helping U.S. corporations secure contracts in occupied Baghdad, with former CIA director Woolsey, one of the most ardent backers of the war, as a keynote speaker.

Michael McConnell

Booz Allen Hamilton’s most illustrious alumnus is Michael McConnell, the current Director of National Intelligence, the top spy job in the country, who epitomizes the term revolving door, spinning from government job to industry and back again.

McConnell was a senior Pentagon official during George Bush Senior’s administration and the first Gulf War, where he worked for Dick Cheney, then the Secretary of Defense, as the chief intelligence adviser to General Colin Powell, the chairman of the Joint Chiefs of Staff. Cheney was so impressed with McConnell’s work during the war that he appointed him to head the NSA in 1993 (he later intervened personally to convince McConnell to take the DNI job in 2007).

McConnell subsequently spent more than 10 years as a Booz Allen senior vice president in charge of the company’s extensive contracts in military intelligence and information operations for the Pentagon. In that job, his official biography states, McConnell provided intelligence support to "the U.S. Unified Combatant Commanders, the Director of National Intelligence Agencies, and the Military Service Intelligence Directors." That made him a close colleague of not only Donald Rumsfeld, who ran the Pentagon from 2001 to 2007, but of Vice President Cheney, who has served President Bush as a kind of intelligence godfather since the earliest days of the administration.

As Booz Allen’s chief intelligence liaison to the Pentagon, McConnell was at the center of action, both before and after the September 11 attacks. During the first six years of the Bush administration, Booz Allen’s contracts with the U.S. government rose dramatically, from $626,000 in 2000 to $1.6 billion in 2006. McConnell and his staff at Booz Allen were deeply involved in some of the Bush administration’s most controversial counterterrorism programs. They included the Pentagon’s infamous Total Information Awareness data-mining scheme run by former Navy Admiral John Poindexter, which was an attempt to collect information on potential terrorists in America from phone records, credit card receipts and other databases. (Congress cancelled the program over civil liberties concerns, but much of the work was transferred to the NSA, where Booz Allen continued to receive the contracts.)

In 2002, when the CIA launched a financial intelligence project to track terrorist financing with the secret cooperation of SWIFT, the Brussels-based international banking consortium, Booz Allen won a contract to serve as an “outside” auditor of the project.

In January 2007, McConnell resigned from Booz Allen after he was appointed by President George W. Bush to his current job. He now oversees all 16 U.S. intelligence agencies, and thus much of Booz Allen’s government business. (See this reporter's 2007 Salon article.)

Under Shrader’s leadership, Booz Allen played an instrumental role after September 11th in proselytizing for a greater corporate role in national and homeland security. This was important, the Booz Allen CEO said at a CEO summit he organized in 2002, because “business leaders cannot opt out of geopolitics and leave the job of security solely to government and the military.”

Deepening the corporate alliance with the Bush administration and its war on terror also had significant advantages for Booz Allen and its fellow corporations: on one hand, it drastically increased their contracts with military and intelligence agencies; and on the other, homeland security provided a convenient excuse for reducing government oversight and regulation. These dual interests were spelled out in unusual detail in 2004 by Richard Wilhelm, a former CIA and NSA officer who once served as national security adviser to former Vice President Al Gore and now leads Booz Allen’s business with the CIA and the Office of the DNI.

Speaking to a conference on information-sharing and counterterrorism, Wilhelm explained that the “right mix of policies” for business should include a wide range of “incentives” and “cooperative arrangements,” including “appropriate protections from Freedom of Information Act requirements and other unintended consequences of more open information sharing.” Government, he argued, should “help make the business case, and then sweeten it – because industry will share information when there is a business case to do so.” In other words, corporations were happy to participate in the exchange of information about terrorism and other security threats, but only if there were enough rewards. And for Booz Allen, those rewards have been sweet indeed, as a short list of their recent unclassified contracts attests. They include:

• A $6.3 million contract to provide research on 3-D facial recognition biometric software for the Information Assurance Technical Analysis Center at Offut Air Force Base in Nebraska, awarded in 2008.
• A $48 million contract with the U.S. Air Force to conduct research on “survivability and lethality implications” of an Air Force vehicle program, awarded in 2008.
• In a partnership with CACI International, EDS, Lockheed Martin, SAIC and SRA, the right to bid on $12.2 billion worth of contracts for telecom and IT services for the Defense Information Systems Agency (DISA), awarded in 2007.
• Participation in a consortium of seven companies that will bid on up to $20 billion worth of work in Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance – a mouthful of a term usually referred to as C4ISR – for the Army’s Communications Electronics Command, which is based in Fort Monmouth, New Jersey, awarded in 2006.
• A five-year, $25o million contract to provide “systems engineering technical assistance” to the Science and Technology Directorate of the Department of Homeland Security, signed in 2005.

Little Congressional Scrutiny?


In spite of its tremendous power as a contractor, Booz Allen has received very little criticism or even scrutiny from the U.S. Congress. In January 2007, the Senate had a rare opportunity to inquire about the company when it held hearings on Michael McConnell’s nomination as Director of National Intelligence (see box). Prior to the hearing, several senators said they would question McConnell about Booz Allen’s role as a contractor; but the hearing was a desultory affair, and few questions were asked of the new DNI about the high level of contracting among the spy agencies or the specific role of Booz Allen.

A month later, a Booz Allen contract with the Department of Homeland Security came under close scrutiny in the House. In February 2007, Henry Waxman, a Democratic Congressman from California, the chairman of the House Committee on Government Oversight and Reform, charged that Booz Allen had a significant conflict of interest over its contract to oversee an $8 billion contract with the DHS Secure Border Initiative known as SBI-Net. Under the contract, Boeing and other companies will build a “virtual fence” of cameras, radar and sensors that will transmit imagery and data to border patrol agents working along the U.S. borders with Canada and Mexico. (See CorpWatch's “Fencing the Border".)

The conflict arose, said Waxman, because Booz Allen had long-standing business partnerships with Boeing, the prime contractor for SBI-Net, and could therefore not provide objective oversight of the program. At the hearing, Waxman pointed out to DHS officials that they had hired 98 people to oversee the SBI-Net contract. “But the problem is that 65 of these people don’t work for the government. They work for the contractor,” he said. “You’re relying on them to do the function that a government ordinarily would do.” DHS officials responded that Booz Allen had been hired for advice, not for oversight.

Waxman’s criticism could be made of a myriad of contracts Booz Allen holds with intelligence agencies. At the NSA, for example, it has advised the agency about several contracts that involve companies that Booz Allen has close business ties with. That is also true at the NRO, the NGA and the CIA. So far, however, no reports of conflicts of interest have emerged from Congress, which in any case exercises little oversight over intelligence contracts.

In another damaging report issued in 2007, the General Accounting Office, the audit arm of the U.S. Congress, found that the Department of Homeland Security was spending nearly $16 billion a year on goods and services from the private sector, making it the third-largest employer of contractors in the federal government. Among the beneficiaries of DHS’ spending was Booz Allen Hamilton, which in 2006 was awarded a $43 million no-bid contract to provide services to the DHS intelligence unit. Upon reading the $16 billion DHS figures in the GAO report, Joseph Lieberman, an independent U.S. senator from Connecticut, angrily commented: “plainly put, we need to know who is in charge at DHS – its managers and workers, or the contractors.”

The Washington Post later found that Booz Allen’s no-bid intelligence contract with DHS had ballooned in value from $2 million in 2003 to over $30 million in 2006 – 15 times its original value. When DHS lawyers first examined the Booz Allen deal, the Post said, they found it was “grossly beyond the scope” of the original contract and had violated government procurement rules. An open competition was ordered by DHS lawyers, but delayed for a year. During that time, the Post said, “the payments to Booz Allen more than doubled again under a second no-bid arrangement, to $73 million.”

Union Protests

So far, the only public criticism of the potential Carlyle-Booz Allen deal has come from the Service Employees International Union (SEIU), one of the country’s largest labor unions. Last year, the union launched a blistering attack on Carlyle and the private equity industry in a widely distributed report called “Behind the Buyouts: Inside the World of Private Equity.” The gist of the report was that Carlyle, Kohlberg, Kravis, Roberts (KKR) and other large private equity funds were undermining the U.S. economy by avoiding taxes and creating “harsh consequences,” such as layoffs, for workers and communities. In late 2007, when Carlyle acquired the assets of Manor Care, a chain of nursing homes where the SEIU is trying to organize workers, the union stepped up its campaign.

Of Unions, Pension Funds and the Carlyle Group

The SEIU’s campaign material on the Carlyle Group, including a 40-page white paper on private equity issued last year, fails to mention a salient fact: that many SEIU members are affiliated with a pension fund that holds a significant stake in the Carlyle Group.

That fund is the California Public Employees Retirement System, the world’s largest public pension fund, often known as CalPERS. It has held a five percent stake in Carlyle’s core management group since 2000, and therefore profits every time Carlyle makes money from one of its investments. Many of the California state officials who sit on CalPERS boards are also members of the SEIU, although they officially only represent their employer, not the union.

In 2001, this reporter attended a meeting of the CalPERS investment board where Carlyle’s three founding managers appeared as witnesses. The public meeting took place at a time when Carlyle was a hot media topic because of its close ties to the Bush administration and its prominence as the nation’s 11th largest military contractor. Several SEIU officials attended the meeting, and the questioning of Carlyle was led by a CalPERS official who belonged to the SEIU. However, the investment board didn’t ask about Carlyle’s military industry investments, and instead posed a single, softball question about Carlyle’s views on the U.S. investment climate.

Asked why the SEIU hasn’t mentioned CalPERS’ stake in Carlyle in any of its literature, Stephen Lerner, the director of SEIU’s Private Equity Project, replied that the union didn’t start investigating the pension fund’s role in Carlyle until 2007.

Until then, “we never really thought about CalPERS’ investment in Carlyle,” he said. “Now that we’re digging in deeper, we’re raising lots of questions.” Under SEIU’s initiative, a California lawmaker has introduced legislation that would prohibit CalPERS from investing in private equity funds owned in part by overseas funds from countries that don’t “generally respect human rights.” According to an SEIU handout, the legislation “is only applicable to private equity firms in which sovereign wealth funds have an ownership stake,” such as Carlyle.

Carlyle’s Ullman responded that the legislation could hurt the people it is supposed to protect. California lawmakers “should consider the detrimental impact on California pensioners who have benefited greatly from CalPERS’ investment in, and ownership of, the Carlyle Group,” he told CorpWatch.

In January 2008, after rumors of a Carlyle takeover of Booz Allen surfaced in the press, SEIU issued a blistering press release denouncing the potential deal. The union’s criticism of the proposed acquisition didn’t focus on Booz Allen’s role in intelligence outsourcing but on Carlyle’s ties with the Mubadala Development fund of the Government of Abu Dhabi. In 2007, that fund paid $1.35 billion to buy a 7.5 percent ownership stake in Carlyle’s general partnership.

As a result of that investment, the SEIU charged, Carlyle was risking national security. “The potential for a Carlyle Group-Booz Allen buyout demands urgency on the part of lawmakers and regulators to examine the risks faced by the U.S. when foreign governments potentially have access to classified and other sensitive national security information through their stake in U.S. companies,” the union declared in a press release. In an interview with CorpWatch, Stephen Lerner, the director of SEIU’s Private Equity Project, said the union launched this nationalist campaign out of concern that classified information from Booz Allen could leak into the hands of the Abu Dhabi fund, thus compromising U.S. security interests.

“When you combine buyout firms, which have much less reporting requirements because they are private, with opaque sovereign wealth funds, you get a toxic stew of secrecy,” he said. Asked how or why Booz Allen executives might leak classified information to a foreign government, he replied: “The point is, you have no way of knowing if they would or wouldn’t.” He added that, while the SEIU has not taken a position on Booz Allen’s extensive role in intelligence outsourcing, the issue of “government jobs being done by private contractors” might emerge in the future for the union.

(The SEIU does not mention in its material that the California Public Employees Retirement System, the pension fund for California state retirees where the SEIU has significant influence, owns five percent of the Carlyle Group – see box.)

Carlyle’s Ullman, who recently discussed the union campaign with SEIU president Andrew Stern during a conference on private equity, rejected the SEIU’s claims. The charges that the Abu Dhabi investment could jeopardize national security “is really an obscene allegation,” he said. Ullman added that the Abu Dhabi fund was a “passive investor” in Carlyle and would have no role in the management of Carlyle companies. “Carlyle’s portfolio companies have a pristine track record in handling sensitive government data,” he said. “Giving top secret and classified data to foreign governments is known as treason, and is punishable by jail and worse. That would be a fairly strong impediment” to leaks.

In any case, there is virtually no evidence to suggest that any US intelligence contractor has leaked classified information, and it’s unlikely the union’s allegations will be a factor if the Carlyle Group does decide to acquire Booz Allen Hamilton.

Tim Shorrock’s book on the outsourcing of U.S. intelligence, Spies for Hire, will be published in May by Simon & Schuster.

February 17, 2008

- Public announcement GEAB N°22 (February 16, 2008) -



GEAB N°22 is available! Global systemic crisis / September 2008 - Phase of collapse of US real economy
According to LEAP/E2020, the end of the third quarter of 2008 will be marked by a new tipping point in the unfolding of the global systemic crisis. At that time indeed, the cumulated impact of the various sequences of the crisis (see table below) will reach its maximum strength and affect decisively the very heart of the systems concerned, on the frontline of which the United States, epicentre of the current crisis. In the United States, this new tipping point will translate into a collapse of the real economy, final socio-economic stage of the serial bursting of the housing and financial bubbles (1) and of the pursuance of the US dollar fall. The collapse of US real economy means the virtual freeze of the American economic machinery: private and public bankruptcies in large numbers, companies and public services closing down massively (2),...

A revealing harbinger: from March 2008 onward, the US government will cease to publish its economic indicators due to budget restrictions (3). Those who read the GEAB N°2 (02/2006) and included Alert certainly keep in mind our anticipation which connected the upcoming fall of the US dollar with the US Fed's decision to cease publishing the M3 indicator. This new decision is another clear sign that US leaders are now anticipating a very bleak economic outlook for their country.

Time perspective of the seven sequences of the impact phase of the global systemic crisis as anticipated since mid-2007 - Source LEAP/E2020, GEAB N°18 (10/2007)
Time perspective of the seven sequences of the impact phase of the global systemic crisis as anticipated since mid-2007 - Source LEAP/E2020, GEAB N°18 (10/2007)

In this 22nd issue of the GEAB, LEAP/E2020's experts try in particular to anticipate very specifically what will come out of the collapse of the US real economy for the United States themselves and for the other regions of the world. Meanwhile our team presents five sets of strategic and operational recommendations helping to protect oneself from the upcoming deterioration of the global systemic crisis.

On the occasion of the second anniversary of the publication of our famous “Global systemic crisis Alert” which toured the world in February 2006 (4), LEAP/E2020 wishes to remind that we are now resolutely stepping into an era with no historical precedent. Our researchers insisted on that many times in the last two years: any comparison with the previous crises of our modern economy would be fallacious. It is neither a “remake” of the 1929 crisis nor a repetition of the 1970s oil crises or 1987 stock market crisis. It is truly a global systemic crisis, that is to say a crisis affecting the entire planet and questioning the very foundations of the international system upon which the world was organised in the last decades.

According to LEAP/E2020, it is also instructive to observe that, two years after the release of this « Alert » which at the time generated both the interest of millions of readers worldwide and the condescending irony of most « experts » and « managers » of the economic and financial spheres, everyone is now convinced that a crisis is truly happening, that it is really global, and for most people already that it could indeed be systemic. However, it is always a repeated astonishment for our team to see the degree of incapacity of these same experts and managers in understanding the specific nature of the phenomenon currently unfolding. According to them, this crisis would only be a usual crisis but bigger. As a matter of fact that's how the financial media reflect the dominant interpretations of the ongoing crisis. According to our team, this approach is not only intellectually lazy (5), it is also morally guilty, because it has for a main consequence to prevent their readers (whether they are simple citizens, private investors or public or private organisation managers) from preparing for the upcoming shocks (6).

For this reason, in opposition to all what can be read in the mainstream media always eager to conceal the truth and serve the interests of those who rule them, LEAP/E2020 wishes to remind that it is first and foremost in the United States that the systemic crisis is taking an unprecedented shape (the « Very Great US Depression » as our team decided to call it in January 2007 (7)) because it is around this country, and this country alone, that the world got progressively organised after the second World War. The various issues of the GEAB extensively described this situation. In short, it appears to be useful to make clear that neither Europe nor Asia have a negative saving rate, a full-scale housing crisis throwing millions of citizens out of their homes, a free-falling currency, abysmal public and trade deficits, an economic recession and, on top of all this, a number of costly wars to finance.

Neither Asia nor Europe (or more precisely ‘nor the Eurozone') will suffer the roughest, the most sustainable and the most negative impact of the ongoing crisis; but the United States will, as well as all the countries/economies strongly linked to the US (what our experts have decided to call “the American risk”) (8). A “decoupling” is indeed taking place between the US economy and the other large regions of the world. But “decoupling” does not mean “independence” and it is clear that, as anticipated by LEAP/E2020 for many months, Asia and Europe will be affected by the crisis. But « decoupling » entails that the evolution of the US economy and of the other large regions of the world are no longer synchronised, that Asia and Europe are now moving along courses no longer determined by the US economy.

The global systemic crisis is in fact the beginning of an economic « decoupling » between the US and the rest of the world, knowing that the non « decoupled » economies will be dragged down the US negative spiral.

US Self-Employment in a Steep Downturn - Source Bureau of Labor Statistics / Merril Lynch (shaded region represents period of US recession)

US Self-Employment in a Steep Downturn - Source Bureau of Labor Statistics / Merril Lynch (shaded region represents period of US recession)

The cases of the housing (2006) and financial (2007) bubble-bursting are eloquent. Indeed, the large majority of operators (non-specialised in the concerned sector) discovered that « the party was over » a long time after the trend had reversed. During the entire reversal period (which usually lasts between 6 to 12 months at most), dominant stances kept repeating them that nothing was changing and that emerging worries had no reason to be; and later, that the problems would remain confined to the sector concerned and to the US only. All those who, in the US and elsewhere, listened to these arguments are bitterly regretful now that they are stuck with unmarketable houses (or about to be foreclosed) or now that they see the value of their assets crumble day after day (9).

Concerning stock markets, our team has anticipated since October 2007 that international stocks would plummet by 20 to 60 percent according to the region in the course of the year 2008. Today, we must re-evaluate our anticipations as we estimate that losses will be even greater than that. Indeed, on the one hand, stock markets have already lost between 10 and 20 percent since the beginning of the year (10), and, on the other hand, the collapse of the real economy in the US by the end of Summer 2008 will drag down all stock markets. According to LEAP/E2020, international stock markets will probably drop by 50 percent in average compared to 2007 (including in the emerging countries) (11).

This sort of re-evaluation is typical of the work of anticipation carried by LEAP/E2020. Month after month we try to distinguish which trends are growing and which are relenting in order to improve the accuracy of our evaluations. We do not strive to “be right” (12), not to “sell” or “promote” anything. We seek simply and without prejudice to describe in advance the consequences of the heavy trends at play in this 21st-century world, and to share with our readers what we think are the proper means to protect oneself from the most negative effects.

In this 22nd issue of the Global Europe Anticipation Bulletin, with the alert we sound about a collapse of US real economy from September 2008 onward, we are trying again to warn those concerned that this major event will generate many very severe socio-political troubles in the United States (13) whose economy is truly on a tumbling course (14), a situation extremely likely to entail very heavy consequences for the financial and monetary markets, and for the world's economy. We have not yet reached the heart of the crisis. According to LEAP/E2020, we will be there in the second semester of 2008.

----------
Notes:

(1) A very instructive film was recently nominated at the Sundance Film Festival: I.O.U.S.A., directed by Patrick Creadon. As it follows the journey of David Walker, US Comptroller General (and therefore responsible for controlling federal public spending), during a series of conferences on the state of public expenditures throughout the country, this film shows the very direct impact of the current crisis on American citizens and the United States. The release of this film illustrates the fact that, in just a few months time, this crisis left the mere circles of experts and boardrooms of financial institutions to enter into the daily life of the US citizens.

(2) In the past few days, the complete collapse of Municipal bonds (or « Munis ») illustrates the fact that the crisis is spreading to all the sectors of the US society. This collapse will freeze all public investment projects scheduled by local authorities in the US. It is one of the first big victims of the implosion of « bonds insurers » announced by LEAP/E2020 in the GEAB N°19. It also demonstrates the fact that large banks are now incapable of playing their role of financers of the country's economic activity. Sources: Financial Times, 02/13/2008 & Bloomberg, 02/14/2008

(3) Source: EconomicIndicators.Gov, Economics & Statistics Administration, US Department of Commerce

(4) See GEAB N°2, 02/15/2006

(5) The first reason that may prevent those « experts » to conceive the « unconceivable », is not a matter of intelligence but a « commercial » problem. Indeed it would compel them to review most of their intellectual principles (their work hypotheses) and their business base (their « clients » would not appreciate to learn that they were on the wrong track all these years).

(6) On this subject, it is worth noticing the very straightforward speech made by the head of the Bank of England, Mervyn King, who recently warned his fellow citizens that the current crisis would downgrade significantly their living standards. Unfortunately, no US leader, including among the Democrats, is able to produce such a speech, knowing that their fellow citizens are hit even harder than the British. Source: The Telegraph, 02/14/2008.

(7) See GEAB N°11, 01/15/2007.

(8) In this 22nd issue of the GEAB, the LEAP/E2020 team gives a set of recommendations helping investors to assess themselves the « American risk » of a country, sector or investment.

(9) The same goes for all those who chose to listen to similar arguments telling them, along the years 2006 and 2007, that it was impossible for the EURUSD exchange rate to go above 1.30, then 1.40, and now 1.50… while waiting 1.70 at the end of the year 2008.

(10) Only « dream merchants » can still imagine that stock markets could improve by the end of the year, while the crisis is speeding up.

(11) It is worth reminding that in January 2008, in just a month, global stock markets saw USD 5,200 billion-worth go up in smoke. Source: China Daily News, 02/10/2008

(12) Even if our anticipations undeniably proved to be right in the past two years concerning the global systemic crisis.

(13) See ‘Sequence 6 : 2nd quarter 2007 – 4th quarter 2009 : « Very Great Depression » in the US, social unrest and growing influence of the army on public management, GEAB N°18, 10/15/2007

(14) Predictions about the failure of dozens of US banks in the coming two years illustrate the scope of upcoming difficulties. Source: Reuters, 02/01/2008

Samedi 16 Février 2008


In the same category:

December 09, 2007

Another HORROR STORY; Future Combat Systems

More Donald Rumsfield CRAP.


I've posted just two resources below. There is plenty more on Rumsfield's crap if you do a Rumsfield entry in the search box on the blog!!

Turn off you TVs, pay attention!

Future Combat Systems: Point and Click War Machine

San Francisco Sentinel
December 6, 2007

A $200 billion plan to remake the largest war machine in history unfolds in one small way on a quiet country road in the Chihuahuan Desert.

Jack Hensley, one of a legion of contractors on the project, is hunkered in a slowly moving SUV, serving as target practice for a baby-faced soldier in a Humvee aiming a laser about 700 yards away. A moment later, another soldier in the Humvee punches commands into a computer transmitting data across an expanse of sand and mesquite to a site 2 1/2 miles away. On an actual battlefield, this is when a precision attack missile would be launched, killing Hensley almost instantly.

For soldiers in an experimental Army brigade at the sprawling Fort Bliss base, it’s the first day of field training on a new weapon called the Non-Line of Sight Launch System, or NLOS-LS, a box of rockets that can automatically change direction in midair and hit a moving target about 24 miles away. The Army says it has never had a weapon like it.

“It’s not the Spartans with the swords anymore,”
said Emmett Schaill, the brigade commander, peering into the desert-scape.

In the Army’s vision, the war of the future is increasingly combat by mouse clicks. It’s as networked as the Internet, as mobile as a cellphone, as intuitive as a video game. The Army has a name for this vision: Future Combat Systems, or FCS. The project involves creating a family of 14 weapons, drones, robots, sensors and hybrid-electric combat vehicles connected by a wireless network. It has turned into the most ambitious modernization of the Army since World War II and the most expensive Army weapons program ever, military officials say.

It’s also one of the most controversial. Even as some early versions of these weapons make their way onto the battlefields of Iraq and Afghanistan,members of Congress, government investigators and military observers question whether the Defense Department has set the stage for one of its biggest and costliest failures. At risk, they say, are billions of taxpayer dollars spent on exotic technology that may never come to fruition, leaving the Army little time and few resources to prepare for new threats.

Future Combat Systems “has some serious problems,” said Neil Abercrombie (D-Hawaii), chairman of the House air and land forces subcommittee. “Since its inception, costs have gone up dramatically while promised capability has steadily diminished. … And now, with the Army’s badly degraded state of readiness from nearly five years of continuous combat in Iraq, I don’t see how the Army can afford to rebuild itself and pay for the FCS program as it stands today.”

To hear the military tell it, there’s a hint of Buck Rogers in the program, including an unmanned craft that can hover like a flying saucer between buildings and detect danger. The idea of Future Combat Systems is to create a lighter, faster force that can react better to tomorrow’s unpredictable foes.

The last time the Army tried anything so far-reaching was more than half a century ago when it introduced mechanized forces, moving soldiers en masse by machine rather than by foot, say Army program officials. “We are pushing the edge of technology,” said Lt. Gen. Stephen M. Speakes, a leader of the Army’s modernization efforts.

Others say the Army has pushed too far. The Government Accountability Office (GAO) and the Congressional Budget Office (CBO) have questioned the cost and management of Future Combat Systems. In the midst of such questions, Army officials confirmed that they are planning to change the project’s name. They said it’s not because of its troubles but because the future is now. (no, they're changing it because that is how coverups and lack of transparency is DONE. The alphabet soup tracking is enormously time consuming and things fascist then just proceed, SNAFU! I KNOW.)

The Army is playing catch-up, adopting the advances of the Internet and wireless technology for next-generation warfare.

“We’re slightly lagging, but we’re essentially doing the same thing they’re doing on the commercial side,”
said Scott Davis, the Army’s Future Combat Systems deputy program manager.

The project originated in part in 1995 when Maj. Gen. Robert H. Scales, Jr., now retired, launched a series of war games. As director of the Army After Next project, his job was to divine the nature of war a quarter century hence. So Scales assembled a team of about 700, including members of the Army, Air Force, Marines, the CIA and civilian scientists, who warred over the next two years in a huge simulation center at the U.S. Army War College in Carlisle, Pennsylvania.

“The Army had never done it - they thought I was off my rocker,”
he said.

The blue team represented the Americans. The red were the Iranians, who in one scenario captured Riyadh, Saudia Arabia, and began executing the royal Saudi family on live television. That drew the blue team into the streets of Riyadh, which, choked with heavy armor, became a bloody mess. Scales, building on earlier military research, realized that the United States needed a lighter, highly mobile force.

He called it the “Aha moment.”

Then a fiasco hastened the Army’s commitment to modernize. In 1999, the Army was bogged down in muddy logistics as it sought to move Apache helicopters into Albania so they could be used in the Kosovo war. They didn’t make it before the fight ended, an embarrassment that prompted Army Chief of Staff Eric K. Shinseki to declare that the service needed to get lighter and faster - quickly.

A Sprawling Program

Today, the Army program involves more than 550 contractors and subcontractors in 41 states and 220 congressional districts, a wide dispersal of Defense Department funds that generates political goodwill, military observers said. “When a program gets to a certain size, in the billions, it employs so many people in so many districts you can’t kill it,” said a congressional staffer and former Army officer, who spoke on condition of anonymity because of the sensitivity of the ongoing review of the program.

“It’s kind of like the Titanic. How do you move it five degrees?”

The big program is being tested in the biggest of places - Fort Bliss, which is larger than Rhode Island. In some ways, the base feels like fictional Mayberry, sprinkled with little houses, neat lawns and holiday lights. Here, the Army assembled about 1,000 soldiers, called the Army Evaluation Task Force, or AETF, this summer to test Future Combat Systems, the first time it dedicated a brigade solely to evaluate new weapons and devices, service officials say. About two-thirds were chosen because of their combat experience in Iraq and Afghanistan. The brigade commander was handpicked as well. It isn’t just that Schaill looks the part - a broad-shouldered military man with speckles of gray in his crew cut. He served as deputy commander of a brigade in Iraq using Strykers, giving him experience with lighter, faster combat vehicles.

Schaill also experienced getting shot in Iraq. In January 2005, while he was visiting local police in a castle in the northern city of Tall Afar, a car bomb detonated nearby. When he stepped out to find out what happened, he found himself in a firefight with insurgents. Just as he cocked his right arm to fire his M4 carbine, a bullet ripped through his right wrist and biceps. He came home with about 30 stitches and a bullet fragment in his arm. He also returned with an abiding sense that things would’ve turned out better had he had the benefit of surveillance from an unmanned aerial vehicle, or UAV. “I would’ve much preferred to fly a UAV up there,” he said.

Soldiers call it the “beer keg” or the “scrubbing bubble” from the old television commercial for the bathroom cleaning product. The UAV, a remote-controlled hovering craft built by Honeywell that weighs 29 pounds, is one of the more gee-whiz devices to emerge from Future Combat Systems.

The drone, essentially a cylinder on legs, uses a rotary fan to fly like a helicopter and comes with infrared night vision. The military has been using about 50 of an early version of the UAV for less than a year to identify improvised explosive devices, or IEDs, in Iraq, officials said. . The device isn’t equipped with a protective shield, so someone could simply knock it down with a rock or bullet. But Rickey E. Smith, a retired colonel who now heads the Washington office of the Army Capabilities Integration Center, or ARCIC, which oversees the experimental brigade, said, “Would you rather have the bad guy shoot at that or at a soldier?”

A similar idea - to protect the soldier - is helping to drive the development of a robot called a Small Unmanned Ground Vehicle, or SUGV, 1,200 of an early version which is being used in Iraq and Afghanistan, officials said. Built by iRobot, it weighs less than 30 pounds, runs on rubber tracks and features a long, flexible neck with a camera and sensors perched on top. Soldiers, reared on video games, persuaded developers to let them use controllers similar to Microsoft’s Xbox to remotely navigate the robots in caves, tunnels and sewers, where they have defused thousands of IEDs. Soldiers have become so enamored of the robot that they’ve nicknamed it “Johnny,” given its resemblance to the robot in the “Short Circuit” movies.

The Army isn’t as far along with the software that will connect the drones, robots and weapons in a network. The software development is an “unprecedented undertaking,” the largest in Defense Department history, according to a March report by the GAO, Congress’s investigative arm. In 2003, when the project began, the Army estimated it would need 33.7 million lines of code; it’s now 63.8 million.

But John Morrocco, a spokesman for Boeing, which is developing key parts of the software, said a third of the code has been delivered.

Another problem is that the Army is giving itself only a dozen years from the time of the program’s official launch to field a brigade with eight manned combat vehicles linked with six unmanned vehicles, drones, robots and sensors involving about 50 critical technologies, said Paul L. Francis, the GAO’s director of acquisition and sourcing management. “We’ve never done a tank in five years,” he said. That alone could take 10 to 15 years, involving about five critical technologies, he said.

According to Defense Department best practices, the Army should not have launched Future Combat Systems until critical technologies were more mature, the GAO said. “We’re not saying they’re not making progress,” Francis said. But he added, “They’re getting to the point they should’ve been in 2003.”

Dennis A. Muilenburg, Boeing’s program manager on Future Combat Systems, disagreed.

“The technologies are maturing right on track,”
he said.

The Army has miscalculated some basic assumptions, according to congressional investigators. For instance, Future Combat Systems originally called for its new manned ground vehicle to weigh less than 20 tons so one could be transported in a C-130 aircraft, which is small enough to land on a makeshift airfield, making for quicker deployment. But the combat vehicle needs more heavy armor to protect soldiers, and now the design calls for between 27 and 30 tons, which means that it will have to be transported by the larger C-17, developers said. As a result, Future Combat Systems has failed in its goal to be able to deploy an Army unit overseas substantially faster than it can now, according to the Congressional Budget Office, which studied the program on behalf of a congressional subcommittee.

“We disagree” with that assessment, said the Army’s Smith, citing a recent internal military analysis in which a Future Combat Systems brigade could deploy from the United States to the Middle East 24 percent faster than a current heavy brigade.

The GAO also points to potential risks in the Army’s close collaboration with its lead contractors, Boeing and SAIC. As the Lead Systems Integrators, or LSI, the two contractors are more involved in influencing the Army program requirements, solutions and testing than usual, the GAO said. The Army opted to give the two contractors so much authority because it didn’t have the resources, flexibility or technical expertise to oversee such a far-flung program, the GAO said. But the military “runs the risk of being less able to provide oversight compared with an arms-length relationship,” the agency said.

Boeing’s Muilenburg disputed that, saying,

“The Army is in charge of the program, the Army has oversight of the program, and we work for the Army.”
He also said that with Boeing and SAIC’s centralized approach, the Army is saving money because the companies are consolidating management and overhead.

A Huge Investment

Savings notwithstanding, Future Combat Systems is “by far the biggest single investment the Army is planning to make during the next 20 years,” the Congressional Budget Office said. The program will take up about half of the Army’s procurement budget in 2015 and stay at about that level over the next decade, leaving little money for other weapons and equipment, according to a 2006 study by the office.

“The Army has some huge long-term budget problems,”
said Steven M. Kosiak, vice president of budget studies at the Center for Strategic & Budgetary Assessments, a defense think tank. The question isn’t so much how the government will pay for the conflicts in Iraq and Afghanistan now, he said. That’s being covered by supplemental budgets. The issue is how the Army will afford Future Combat Systems at the same time it’s grappling with the cost of adding 65,000 troops and covering rising health care and compensation expenses.
“Can you really afford to equip and upgrade the rest of the Army?”
Kosiak said.

Davis, the Army official, said the program would not take up nearly half of the Army’s procurement budget when it begins full production in about eight years. What’s more, the Army said that the project represents only a fraction of its overall budget over the next five years.

Estimating how much the entire program will cost remains a complicated question. “Which way do you want it?” Davis asked.

The Army said the overall program will cost $124 billion. That’s $162 billion when inflation is factored in, it said. It noted that the program has suffered hundreds of millions in budget cuts and that it will save money, employing technology that will reduce the support personnel in a brigade and developing a hybrid-electric combat vehicle, based on a common chassis, that will increase fuel efficiency and lower maintenance costs.

Meanwhile, independent estimates from the office of the Secretary of Defense put the program at between $203 billion and $234 billion. The GAO said the cost has increased 79 percent, to $163.7 billion, from $91.4 billion, its original estimate in 2003. The Army said costs rose in part because it “increased the size and scope of the program to accelerate the delivery of capabilities to frontline troops.”

The GAO expects costs to rise. Congress has set 2009 to decide whether to continue pursuing the ambitious program. But Brig. Gen. James Terry, who oversees doctrine and training for Future Combat Systems at Fort Bliss, said there is no turning back.

“We have to head toward the future,”
he said, adding,
“I think the train left the station a couple of years ago.”


Resource list:
http://www.carlisle.army.mil/usawc/Parameters/a-index.htm

Originally appeared in the Washington Post here

Of interest, see this link



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