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NRO: No Biz For Conflicted Companies

By Colin Clark Thursday, September 3rd, 2009 6:15 pm
Posted in Intelligence, Policy, Space

Less than a month after President Obama signed the Weapons Systems Acquisition Reform Act into law, the National Reconnaissance Office acted with almost blinding speed and issued a memo detailing its adamant stand against the possible appearance of any corporate conflicts of interest.

The memo, which was sent to us after our story appeared on how space manufacturing companies are being forced to sell advisory companies that do business with the intelligence community, lays out very detailed instructions for companies hoping to do business with the maker and operator of the nation’s spy satellites.

The memo describes the agency’s hammer quite clearly. Any company that does not comply with the conflict of interest requirements: “will also be prohibited from bidding on or participating in any NRO contract to supply the system(s), or any major component thereof, or from serving as a subcontractor, vendor or consultant to the system supplier or major component supplier or major component suppliers on any system related to the work while in a non-conflicted status.”

Our initial story contained strong denunciations of the NRO’s actions — and the legislation from which it derived. A “government official” responded to the story and offered this cogent and reasonable defense of the NRO’s actions.

“I don’t care how many ‘firewalls’ a company puts up to mitigate OCI, the fact remains TASC provides advice on the cost, schedule & performance of developmental contractors such as Northrop Grumman. It is particularly disconcerting when going through a source selection and we need the advice of a particular subject matter expert but we can’t turn to him because the company he works for is owned by one of the potential bidders,” the official said. “This is a good thing and not a bad thing. The sky is not falling as a result and the other companies mentioned above will absorb contracts and employees as a result. There will be no perception of conflict and I don’t have to kick my subject matter experts out of the room during a crucial time in a review.”

The official also addressed the industrial base issue raised by Loren Thompson in the other story, who argued that the number of companies possessing the unique knowledge of reconnaissance and signals intelligence satellites is so small that the conflict of interest requirements may result in even fewer companies able to help the government as it acquires these highly complex and unique systems. The government official said this base remains “robust and there are companies whose core capability is being a SETA and not a developmental contractor, companies such as Scitor, IAI, SRS Mantech as well as FFRDCs such as SEI, Aerospace & MITRE.”

Keith Masback, president of the US Geospatial Intelligence Foundation and a former senior official at the National Geospatial Intelligence Agency, said the NRO’s action would probably be “disruptive” in the short term but that the spy agency, which has come under withering attack for incompetence and being too close to its industrial partners in recent years, should be lauded for taking congressional direction seriously and addressing ethical concerns. In the long run, Masback said it would not harm the agency’s ability to build and operate satellites and would probably be beneficial in the long run.

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	JohnJay September 6th, 2009 at 4:03 pm As this story plays out, it will be interesting to see how well the government sticks to the new laws. Not just the NRO, but the entire government. If anybody believes that it is good for the writer and keeper of requirements, to be owned by the same company as the bidder, they are sorely mistaken. SETA’s and FFRDC’s play a key role in assisting the government, and there are enough of those types of companies out there to keep an industrial base to prevent any kind of monopoly.
	ReconTeam September 6th, 2009 at 10:35 pm I see the government is trying fix our acquisition problem on the companies side of the deal, but what about on their own end? Changing requirements, administrative mistakes, funding errors, and so forth. I hope they are going about this the right way. If everything ends up being canceled due to relatively minor problems than nothing will have been accomplished.
	JohnJay September 7th, 2009 at 12:18 pm And ReconTeam, that is probably the bigger part of the problem than the OCI issues. Oh by the way, adding all those government acquisitions specialists won’t help the problem either.
	ReconTeam September 7th, 2009 at 2:24 pm Government “acquisitions specialists.” I can picture it now. A bunch of bureaucrats saying to the services that “you don’t want to buy this stuff, we don’t think you need it.”
	DJL September 24th, 2009 at 10:34 am The root problem is lack of technically competent gov’t personnel. Some young NRO COTR is set up so that he/she has no choice but to rely on a SETA/FFRDC to tell them what to do. The older govies move frequently and are usually more worried about internal gov’t programmatics and politics. The other problem is laziness. At least up until a few years ago (if not still going on), Lockheed Martin/Systems Integration was referred to within the IMINT directorate simply as “The SI” with the capital letters implied. People getting Lockheed paychecks were viewed as “trusted agents” and were “inside the wire” at IMINT HQ helping the gov’t decide that, lo and behold, why buy one Lockheed product when you can buy two? They were basically viewed (and may still be) within the unofficial heirarchy as follows: –first Gov’t (AF or CIA or Navy) –then FFRDC (AEROSPACE) –next, slightly under “Circle-A” came “The” SI (Lockheed, “firewalled” of course) –and then finally, of course, the lowly SETA (Scitor, etc). BTW: more than once members of the SI were caught passing info to the production side of the company. The rare SPO directors that refused to allow SI personnel within their program were viewed askance. (Luckily I was in such a SPO) I was always amused at the great pains taken to give the appearance of dealing with OCI (financial disclosure forms, training, etc), while the world’s largest defense contractor was sitting right next to the govies in HQ, often making (I’m sorry, “drafting”) your decision briefs for you, and overall just helping the govies decide which multi-$B program to buy. The arcane gov’t hiring system, lower salaries (for engineers), and the lack of ability for the gov’t to fire deadbeat employees make the reliance on FFRDC/SETAs a done deal. (Look at the screaming over NSPS…) As a final symptom, just go ask any NRO contracting officer and I’m sure she’ll tell you how many times that she’s had to lecture multiple young (and not so young) gov’t program managers on not letting the SETA contractor write their own statements of work. PS: they do it anyway. There, that was therapeutic…thanks for listening!