Thursday, October 7, 2010
Top Secret America
For examples of government tech contracts see IBM's contracts for the supercomputers at national labs Los Alamos, Lawrence Livermore and Argonne. My focus is information technology, you could also look into the big weapon systems contracts like the F22 and F35. Some of the supercomputer contracts are at least partially managed by the National Security Agency. IBM system S (50 million estimate) was developed substantially by money from the NSA, called distillery internally. One might speculate that IBM was interested in getting the NSA hooked on IBM proprietary software in order to extract much more revenue in the future, this is a very common strategy in the software industry, basically get them hooked on your crack and you have a great future revenue stream. Note that IBM was founded on a government contract for the tabulating machines to compute the 1890 census. Oracle has substantial contracts at the National Security Agency (NSA). Oracle was founded on a CIA contract in 1977. Sun Microsystems (bought by Oracle) was founded to commercialize two DARPA funded projects which turned into the solaris operating system (based on darpa's BSD project which is also at the heart of Apple's OSX) and the SUN project. In fact much of Silicon valley was built by the DOD post world war two. Currently, silicon valley is facing a major crisis as the engine of its growth, Moore's law, is petering out (some comments on the issue by Gordon Moore, co founder of Intel and the Moore of Moore's law). Cray computer's MTA/XMT line was substantially funded by NSA contracts over a 20 year period and is a machine built without a purpose. The vast majority of U.S. tech jobs that are truly open to U.S. citizens (not fraudulently targeted at cheaper H1-B visa holders) are controlled by defense contracts or other federal contracts. Often times these contracts have very little to do with performance and more to do with corruption, with a revolving door policy at the pentegan and DOD (80% of retiring 3 and 4 star generals 2004-2008 got lucrative contractor jobs, in particular check out the revolving door man Mike McConnell) that is similar to the regulatory capture in the U.S. financial sector. Classifying a contract so that it is not open to public scrutiny is a very common way to cover up corruption. See the NPR piece on the 20 million the military spent on bogus contracts with Dennis Montgomery for what he claimed was software that could decode hidden terrorist communication, no one has spent time in jail as a result of this fraud. While I worked at the NSA I witnessed similar abuse. For instance I was at some of the meetings discussing the vivomind project (1-2 million estimate) which was clearly bogus, in the meetings there was substantial misrepresentation of fact, false claims of having won contracts from oil companies. There were also rumors at the NSA that one of the major reasons for the failure of the future combat systems program which cost tens of billions of dollars was the NSA demanding the use of specialized cryptographic equipment so that favored contractors would share in the very lucrative contracts, unfortunately their products were nearly unusable. The future combat systems program was eventually canceled, the primary contractors were Boeing and SAIC. Also see how the "Justice" department handled Thomas Drake whistlblowing about mismanagment at the NSA. For other examples of fraud in defense contracting see the BAE bribery case (billions), Frontline's black money episode, Boeing Air Force tanker fraud (billions), Halliburton-KBR bribery(6 billion), Siemens bribery case(billions), SAIC Trailblazer contract fraud(1 billion), SAIC's FBI information system fraud(170 million), SAIC New York City CityTime fraud(700 million). Lots of fraud with basically no accountability and this is likely just the tip of the defense department fraud iceberg. The trailblazer project demonstrates that the federal government has willfully neglected to learn that a very competitive information system can be built very cost effectively using commodity hardware and open source software, lessons taught by google, facebook etc. The reason the Federal government refuses to learn this lesson is the power of the contractor ecosystem in federal government contracts, basically regulatory capture which is what Obama's outgoing Chief Information Officer (CIO) has indicated. CIO Vivek Kundra complained of "an IT cartel," (IBM, SAIC, Booze Allen, Oracle), Kundra managed $80 billion in federal IT annual spending. Kundra said the reason the federal system "defied logic" is partly due to how funding is allocated. The "cartel" gamed the system. Kundra also noted "that true value lies at the intersection of multiple data sets." The information sharing problem in the federal government has been noted before, for example in the 9-11 commission report. Better information management and information sharing could improve fraud detection in the defense industry as well as fraud detection in the U.S. financial sector.
Posted by Erik Bird at 12:44 PM