Hawaii fights release of details on drone contracts

January 29, 2011 

Jim Dooley wrote an interesting article on about the proposed use of aerial drones to monitor harbors in Hawai’i as part of no-bid contracts awarded to Hawaiya Technologies.  Hawaiya is a military technology company owned by Paul Schultz. Schultz, formerly a Rear Admiral and commander of a fleet stationed in Okinawa, was demoted to captain when he retired from the Navy. He had come under investigation for allegations of adultery and fraud tied to a Navy research contracts scandal at the University of Hawai’i and the Pacific Missile Range Facility.

While in the Navy, the married Schultz allegedly had an affair with an Office of Naval Research program manager Mun Won Chang Fenton who helped to steer research funds and technology to Schultz’s ships outside of normal procurement channels.  Fenton later awarded several grants to University of Hawai’i professors for research related to missile defense systems.  She directed the UH researchers to hire technical personnel under the grant. These “directed hires” took their orders from Chang Fenton. Chang Fenton directed these personnel to write a large net-centric warfare technology contract proposal under the auspices of the Research Corporation of the University of Hawai’i (RCUH) and submit the proposal to Navy research programs that Chang Fenton helped to manage.  The Navy awarded RCUH a contract for its proposal named “Project Kai e’e”, to establish a military Pacific Research Center to serve as a conduit for federal military high technology funding.

Naval Criminal Investigation Service (NCIS) documents and other sources allege that the Schultz and Chang Fenton tried to use government funds to create jobs for themselves in the new Pacific Research Center.   The job announcement for Executive Director of the Pacific Research Center was posted on the bulletin board in the RCUH office for a few minutes.  After Schultz submitted his application the job announcement was taken down.  RCUH staff were directed by Chang Fenton to rate the applicant favorably.  Schultz was offered the job, but he never formally accepted it.  RCUH Executive Director Harold Masumoto suddenly sent a letter to the Office of Naval Research canceling the contract award.

Naval investigators were closing in. My theory is that someone may have tipped off Schultz and his co-conspirators, sending them scurrying for cover.

The Project Kai e’e scandal morphed into the proposed University Affiliated Research Center (UARC), a military classified research lab that met fierce protest by students, faculty and community groups in 2004 – 2006.  The really interesting part of the this sordid tale is that the various projects were earmarks from Senator Inouye.  Sources familiar with the scandal told me that the investigation went nowhere because it could have implicated four admirals and a senator.

As Dooley’s article suggests, Schultz seems to have found a new niche in the homeland security gold-rush.  But the proposed use of unmanned aerial drones to monitor harbors raises many issues of civil liberties, safety and propriety.   The contracts were awarded without any bidding.  The plans for aerial drones are proceeding without approval from the Federal Aviation Administration.  And details about the project are being kept from the public.

Could the no-bid contract have been awarded via Aina Kai, a Native Hawaiian Organization (NHO) established by Schultz and Chang Fenton (who are now married) in partnership with former Hawai’i governor John Waihe’e?  NHOs are given special preferences for federal contracting to receive contract awards without competition and without a limit on the size of the award.

High stakes government funding, exotic and dangerous military technologies and secrecy are a recipe for corruption.   The tsunami of military spending that was unleashed in the wake of the 9/11 attacks have brought with it a flood of corruption. Such is life in the military-industrial-political complex.


Hawaii fights release of details on drone contracts

Posted on January 28, 2011

BY JIM DOOLEY — The state and a private contractor are installing extensive new security and surveillance measures at harbors and shorelines that include planned use of unmanned aerial drones, according to public records.

Neither the contractor nor state officials have applied to the Federal Aviation Administration for necessary permission to deploy the unmanned aerial vehicles in civilian air space here.

Repeated requests for details about the plans and their status made to the state and its contractor have not been answered for more than a month.

Paul Schultz, chief executive of Hawaiya Technologies, the company installing the new security measures, refused to discuss his company’s shoreline security plans in general or the use of UAV’s in particular.

“You can go find out your story on your own,” Schultz said.

“This is not a friendly story,” Schultz continued. ”You’re coming after me. You can come after me by yourself. But don’t call me looking for information.”

State Department of Transportation and harbors division personnel did not respond to repeated requests for comment submitted by email, telephone and in-person since late last year.

Glenn Okimoto, nominated by Gov. Neil Abercrombie as director of the Transportation Department, and his harbors division deputy director, Randy Grune, have said a department response was being prepared.

Okimoto was head of the harbors division in 2007 and personally recommended award of the original $1.46 million non-bid Honolulu harbor security contract to Hawaiya Technologies, according to state purchasing records.

Some $1 million of the contract is paid with federal grant money and the remainder comes from the state.

Grune said three weeks ago the department was still researching “technical issues” about non-bid security contracts awarded to Hawaiya.

The UAV’s are described as an anti-terrorism tool in documents describing new security measures at Honolulu and Kalaeloa Harbors on Oahu under a 2009 contract awarded to Hawaiya Technologies.

Another non-bid contract award worth nearly $1 million to Hawaiya is planned for Kahului harbor on Maui and the contractor has proposed installing the same system on Kauai and the Big Island.

The jobs would include use of UAV’s to conduct surveillance flights in the congested skies above state harbors, which abut two international airports, a general aviation airfield and Hickam Air Force Base.

The drones can’t fly without an FAA “certificate of authorization” and the state has not applied for one, said Ian Gregor, FAA spokesman.

The drones cost $75,000 each, according to purchasing records posted at the state procurement office website.

The type of drones – there are many different designs being marketed now – and the number to be purchased are details that the state has redacted from contracting files.

Only two civilian government agencies in the country – one in Texas and one in Kansas – have applied for and received necessary certifications for use of the drones, which must be operated by licensed pilots from ground control stations, said Gregor.

The Texas aircraft would be used to patrol remote sections of the Mexican border and the Kansas drones would be flown at a UAV testing and training facility 30 miles outside of Wichita.

The FAA requires that civilian-operated airborne drones must also be tracked by either a ground spotter vehicle or a manned chase plane.

The American Civil Liberties Union has expressed concern about invasion of privacy issues raised by use of surveillance drones in other states and is monitoring the Hawaii plans.

“Use of ‘Unmanned Aerial Vehicles’ or ‘drones’ by law enforcement has a vast potential for abuse,” sad Daniel Gluck, senior staff attorney for ACLU Hawaii.


Native Hawaiian-Owned Companies and the Militarization of Hawai’i

December 27, 2010 

Jim Dooley wrote a revealing article for the Hawaii Reporter on the growth of Native Hawaiian Owned Companies (NHO) since the passage of legislation that gave them special preferences in federal contracting.  Under special provisions for Native American, Alaska Natives and Native Hawaiians, these NHOs can get no-bid, unlimited sized contract awards, nearly all of it related to military funding.   Here’s an excerpt:

A handful of Native Hawaiian-owned companies used federal contracting preferences authored by U.S. Sen. Daniel Inouye, D-HI, to land some $500 million in non-bid or reduced competition government work since 2005, according to federal purchasing records.

Officials, employees and partners of many of the same companies donated nearly $100,000 during the same period to the Inouye election campaign and $100,000 more to other members of Hawaii’s congressional delegation, files of the Federal Election Commission show.

Much of the contract work involved installation of computer and communications systems for the armed services. A wide range of other jobs have been performed, including security guard work, explosive ordinance disposal and even provision of mental health professionals for treatment of U.S. Marines at Camp Lejeune in North Carolina.

The article gives several specific examples of NHOs, including those associated with the Council for Native Hawaiian Advancement and their military contracting programs.

A note on the source: the Hawaii Reporter is a conservative-right news outlet that has opposed programs for Native Hawaiians, Hawaiian sovereignty in any form or federal spending on social programs.   DMZ-Hawai’i / Aloha ‘Aina usually disagrees with the editorial stances of the Hawaii Reporter on many of these issues. However, while our reasons may differ, we do agree with them on this point, that the public must be wary of the rise of NHOs in the context of corruption and lack of accountability in military pork barrel spending.  In our view, this system of NHO military contracting has increased Native Hawaiian dependency on and participation in a corrupt military-industrial complex.  In that way, NHOs promote the increasing militarization of Hawai’i.

In a perverse twist, Ken Conklin, known for his extreme anti-Native Hawaiian views, wrote a follow up editorial heavily drawing on original research by Hawaiian sovereignty activist and journalist Keala Kelly that lays out connections between NHOs, Alaska Native Corporations and leading proponents of the Native Hawaiian federal recognition bill.

Paul S. Schultz and Mun Won Chang (Fenton), a husband-wife team and two central figures in the Project Kai e’e/ Navy UARC scandal - a federal contracts fiasco involving the Navy, several high tech research programs at the Pacific Missile Range Facility, University of Hawai’i researchers and administrators and congressional earmarks by Senator Inouye – have recently turned up in the NHO fray.   It seems they have teamed up with former Governor John Waihe’e to form a NHO as a way to cash in on the Native Hawaiian military contracting bonanza. Their new entity is called Aina Kai Environmental.  But since neither Schultz nor Chang appear to have Native Hawaiian ancestry, Aina Kai with a Native Hawaiian principal appears to be a front for its partner company Hawaiya Technologies to access NHO for Super 8(a) contracts.

Recently the Army created a Native Hawaiian Advisory Council to counter community resistance to Army expansion plans. An example of how the military is using NHO contracting preferences to co-opt Native Hawaiians is a recent workshop sponsored by the Army Native Hawaiian Advisory Council to promote NHO military contracting opportunities.

The rise of “Tea Party” politics and the turning political tide in Washington D.C. may signal an end to the era of unbridled military earmarks in Hawai’i, at least temporarily.  The Honolulu Star Advertiser reports that “141 Hawaii earmarks worth $321 million were in the omnibus 2011 spending bill that recently died in the Senate.”  This could be an opportunity to imagine and work for more peaceful, just and sustainable economic alternatives for Hawai’i.

Navy Criminal Investigation files related to Project Kai e’e / UH Applied Research Laboratory now posted online

August 23, 2010 

The DMZ-Hawai’i / Aloha ‘Aina website has posted documents obtained through the Freedom of Information Act (FOIA) from the Naval Criminal Investigation Service (NCIS). The documents are from the NCIS investigation of alleged fraud, abuse and mismanagement of government grants and contracts and involving the University of Hawai’i  / Research Corporation of the University of Hawai’i (RCUH) and the Office of Naval Resarch.

Earmarked funds appropriated by Senator Inouye went to Navy research and development programs in Hawai’i.  Some of these funds went to University of Hawai’i research faculty for programs related to missile defense and network centric warfare programs based at the Pacific Missile Range Facility.   However, the program manager for the Office of Naval Research (the branch that awards grants and contracts related to the research and development projects in Hawai’i) was having an affair with a Navy admiral. They apparently planned to establish a multifaceted research facility administratively housed at the Research Corporation of the University of Hawai’i as a vehicle for federal funds to bypass the competitive contracting system. There were conflicts of interest.   Funds were improperly moved between accounts.   The plans were eventually aborted after investigators closed in.   But the earmarked funding was redirected to other UH research projects funded by the Navy.  And some of the energy and funding was redirected into the Navy University Affiliated Research Center (UARC)/ Applied Research Laboratory as well as the Hawaii Technology Development Venture, a publicly funded venture capital program awarded by earmarked funding to the Pacific International Center for High Technology Research (PICHTR), another front for funneling military dollars to companies in Hawai’i.

The criminal investigation files from the Navy have been posted online. However many have redactions.   The report “The Dirty Secret About UARC” can help to orient the reader. However, the report has not yet been updated to include new information brought to light by the NCIS documents.

Campaign cash, earmarks and corruption

March 6, 2010 

There has been increased scrutiny of earmarks and campaign contributions by companies that received earmarks and their lobbyists.  Military contractors are among the biggest beneficiaries of earmarks.   Why hasn’t someone investigated the earmarks related to Hawai’i politicians?   Senator Inouye consistently proclaims that he is the “King of Pork”.  His earmarks have been linked to some very questionable programs.

Naval Criminal Investigation Service investigated allegations of fraud and conflicts of interest related to Inouye-earmarked military research programs such as Cooperative Engagement Capability Pre-Planned Product improvement (CECP3I), Modular Command Center  (MCC) / Modular Mobile Command and Control (M2C2), UESA radar, and Tactical Component Network (TCN).  These projects were part of a scheme to establish a military research center run through the Research Corporation of the University of Hawai’i and based at the Pacific Missile Range Facility on Kaua’i, which went by various names including Project Kai e’e and Pacific Research Institute.   Office of Naval Research program director Mun Won Chang Fenton was involved in the awarding of earmark-funded projects, including MCC, TCN, UESA and the Pacific Resarch Institute proposals.  At the same time, she was involved in creating the Project Kai e’e / Pacific Research Institute proposal submitted via the Research Corporation of the University of Hawaii (RCUH) to her own funding program.  According to NCIS reports, she helped to orchestrate the award of contract N00421-02-D-3151 to RCUH to establish the Pacific Research Institute (PRI).  She then got Navy-directed grant employees of RCUH to favorably review the PRI Executive Director job application of Paul S. Schultz, a Navy admiral she allegedly had an affair with and is now married to.  The funding was turned down by RCUH Executive Director Harold Masumoto at the last moment.  Schultz was offered the PRI Executive Director position but never accepted.  It was as if someone with inside knowledge of the investigation had tipped them off.  No conviction ensued.  The investigation wrapped up and was shelved by the Navy.   Chang Fenton continued to work for the Navy, but it is unclear if she was ever disciplined for her actions.  Schultz retired at the reduced rank of captain and heads up a tech company in Hawai’i called Hawaiya, which continues to receive military and homeland security contracts, including a number of earmarks.   Ah, politics, Hawai’i style.


In e-mails, lobbyists perceive ties between campaign cash, earmarks

By Carol D. Leonnig
Washington Post Staff Writer
Saturday, March 6, 2010; A03

Lobbyists and corporate officials talked bluntly in e-mail exchanges about connections between making generous campaign donations and securing federal funds through members of an important House Appropriations subcommittee, according to not-yet-public documents reviewed by ethics investigators.

In summer 2007, for example, senior executives at a small McLean defense firm tried to figure out which of them would buy a ticket to a wine-tasting fundraiser for Rep. James P. Moran Jr. (D-Va.), a member of the Appropriations subcommittee on defense. At the time, the company sought help from Moran’s office in securing contracts through special earmarks added to the defense bill.

In an e-mail exchange, one senior officer said he didn’t understand why he had to attend the fundraiser when he didn’t even drink wine.

“You don’t have to drink,” Innovative Concepts’ chief technology officer, Andrew Feldstein, shot back in an e-mail. “You just have to pay.”

“LOL,” responded the other officer.

The fundraiser was hosted by the PMA Group, a powerful lobbying firm whose unusual success in obtaining “earmarked” contracts from members of the military subcommittee was a key focus of a recent House ethics investigation.

Moran raked in $91,900 in campaign checks to his personal campaign and leadership PAC that day. He secured an $800,000 earmark for Innovative Concepts in the 2008 defense appropriations bill.

The e-mails were among the documents reviewed by congressional ethics investigators over the past nine months in a wide-ranging earmarks probe. The investigation ended last week when the House ethics committee issued a report exonerating all seven members under scrutiny. The Washington Post gained access to some of those internal records.

Moran spokeswoman Emily Blout said the congressman “has no control over communications among lobbyists or with their clients regarding any false perceptions they might be operating under.”

An investigation by the Office of Congressional Ethics uncovered dozens of examples of lobbyists and corporate officers expressing their belief that donations would help them. The OCE declined to share or discuss the documents reviewed by The Post. An OCE spokesman said such records would not be made public unless they directly linked donations with lawmakers’ official acts.

(The OCE had recommended clearing five of the members and continuing to investigate two others, Reps. Peter J. Visclosky [D-Ind.] and Todd Tiahrt [R-Kan.]. The more senior House ethics panel cleared all seven.)

“These are hard-nosed business people,” said Sarah Dufendach of Common Cause. “They are used to getting value for their dollar. The reason they keep investing their money this way is because over and over again it’s proven to work for them.”

Feldstein, who is now a semi-retired consultant to Innovative Concepts, said in an interview that campaign donations help a company become a “known face” with influential lawmakers. “Those events are really mingling events. It’s unfortunate you have to pay for them, but that’s the way it is,” said Feldstein, who gave to the Moran campaign.

When PMA lobbyists talked to defense clients, they often urged them to give to powerful members of the Appropriations subcommittee — and occasionally reminded the clients about earmarks won or being sought from those lawmakers.

Inside the Arlington County-based defense firm Argon ST, Gabrielle Carruth, a former staffer to the late Rep. John P. Murtha, worked as the company’s chief lobbyist. She urged Argon executives to donate corporate and personal money to Murtha — the panel’s chairman — and mentioned earmarks in her pitch.

“As a company, Congress helped us out with 29.6 million dollars of enhancements, most coming from Mr. Murtha. He was having one last fundraiser at the Army and Navy club Tuesday. I really could use your help with a contribution,” Carruth wrote in a September 2008 e-mail to a colleague.

Murtha (D-Pa.), who had been dubbed the King of Pork by his critics, was interviewed by investigators and told them that he didn’t make any connections to donations when requesting earmarks for companies. Murtha said his staff made earmark decisions, which he usually rubber-stamped.

But some company officials chafed at the steady stream of donations that their lobbyists and others urged them to make.

“Tell me again: Why do I have to go a Joyce Murtha breast cancer charity event?” asked one senior defense company official.

In considering making a $20,000 company donation to Visclosky, one executive asked for a justification.

The firm’s vice president mentioned Visclosky’s past earmark support at a time when the company was seeking more help from the congressman. “That’s what each of the companies working with PMA and Visclosky have been asked to contribute,” the executive wrote. “We have gotten 10M in adds from him.”

Lobbyists and lawmakers’ staff members were also direct at times about the donation totals.

Carruth, when writing to Moran’s campaign staff about a fundraiser the company was hosting for the lawmaker, asked the finance director of Moran’s Virginia Leadership PAC how much Moran was seeking in donations. Carruth now works in government affairs for Lockheed and, through the company’s press office, declined to comment.

“So what is expected of Argon as host?” Carruth wrote.

“Jim was expecting 10K,” Hannah Margetich wrote back.