Pentagon’s ‘Black Budget’ Veils Contracting Shenanigans

December 11th, 2005 - by admin

David Wood / Newhouse News Service – 2005-12-11 23:47:47

WASHINGTON (December 11, 2005) โ€” Could a defense company stuff a Pentagon contract with enough overhead to hide bribes to a congressman?

Easy enough, say veteran Washington insiders. The Pentagon has tens of thousands of contracts to monitor and a shrinking force of auditors, making oversight difficult. What’s more, the super-secret part of the defense budget โ€” the classified, or “black” budget โ€” hides some $28 billion in spending. Government auditors and even senators have to get special clearance to see the details.

That is how Rep. Randy “Duke” Cunningham gained at least $2.4 million in favors from companies that held contracts with the Defense Department. The companies were not identified by name in the plea agreement reached with the California Republican and filed Monday in U.S. District Court in San Diego.

Cunningham, decorated for service as a Navy pilot during the Vietnam War, sat on the defense subcommittee of the House Appropriations Committee, where he shaped billions of dollars in defense spending. He resigned his seat Monday after acknowledging, “I broke the law, concealed my conduct and disgraced my office.”

It wasn’t defense auditors who caught Cunningham; it was investigators looking into his ownership of a luxury home, a yacht and other perks.
According to the plea agreement, Cunningham received the bribes in return for steering congressional appropriations “to the benefit” of the defense contractors in ways that were not “in the best interests of the country.”

Members of such influential congressional committees “have a lot of power and opportunity and are sitting in a place where a lot of money flows,” said Gordon Adams, director of security studies at George Washington University and a former White House budget director for national security.

In that environment, corruption goes undetected. “You’re never going to catch it every time,” Adams said.

That is particularly true of the dozens of programs embedded in the Pentagon’s “black budget” accounts hidden in the hundreds of pages of fine print that details defense appropriations legislation. Some of these accounts are labeled “classified activity.” Others are identified only by code names such as “Link Plumeria” and “Black Light,” two programs in the current defense budget.

Because of the required special clearances, the Pentagon and Congress “typically exercise less oversight” on these programs than ones detailed in the open, said Steven M. Kosiak of the Center for Strategic and Budgetary Assessments, a Washington think tank.
Kosiak estimates the size of the “black budget” at $28 billion, including $14.2 billion in purchases of hardware or services and $13.7 billion in classified research and development.

Both the House and Senate Appropriations Committtees have staffers cleared “to at least top secret,” said John Scofield, a spokesman for the House panel. He said Congress members and staffers can pore over classified documents in a secure facility shared with the congressional intelligence committees.

But Steven Aftergood, an expert on government secrecy at the Federation of American Scientists, a nonprofit research group in Washington, said the volume of classified budget material has increased while the number of people cleared to see it has not.
Classified budget programs “just don’t get the same level of oversight,” Aftergood said.

One of the companies linked to Cunningham in press reports is MZM Inc., a Washington-based firm that held several Pentagon contracts for classified programs related to intelligence collection and analysis in Iraq and information warfare, according to an analysis by the Center for Public Integrity, a non-partisan Washington investigations group.
MZM’s chief operating officer, Michael Woods, did not return phone calls asking for comment. At the Pentagon, spokeswoman Cheryl Irwin said it would be “inappropriate” to comment on the Cunningham case or the defense contracting process.

Pentagon contracts are supposed to be thoroughly checked by the 3,508 auditors of the Defense Contract Audit Agency, a work force that has shrunk by some 2,000 auditors over the past five years in Pentagon efficiency efforts, even as the volume of work has increased.
Terry Schneider, a senior DCAA official, said his agency does not audit “commercial” contracts of the type the Pentagon increasingly uses with companies, like MZM, that provide short-term services.

That’s a problem, said Beth Daley of the Project on Government Procurement, a non-partisan watchdog group. Using commercial contracts, Daley said, enables the Pentagon to escape from the restrictions of reform legislation like the Truth in Negotiations Act and the scrutiny of the Cost Accounting Standards Board, an independent federal agency. “There’s been a geometric increase in contracts, but the watchdog agencies, their resources and staffs are being cut,” Daley said.

The result can be more temptation. “There are huge opportunities here for politicians to tweak the system to their advantage,” said George Washington University’s Adams. “The smell of corruption is in the air.”

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