UH President Greenwood renews the UARC contract without public review or input

July 18, 2013 

Guerilla theater at UH UARC meeting - "I (heart) secrecy"

Exemplifying the secrecy and lack of accountability of the University of Hawaiʻi administration, outgoing President M.R.C. Greenwood renewed the Navy sponsored Applied Research Laboratory – UH (ARL-UH), also known as a University Affiliated Research Center (UARC), without public review or input.  When the Board of Regents initially approved the UARC in 2008, one condition was that the UARC would be reviewed after several years.  No report has been released. Despite diligent efforts by Beverly Keever to request public information from the Navy and UH, the University and the Navy have given her the runaround. With this “stealth” renewal, the Greenwood administration seems to  have thumbed its nose at all the concerned faculty, students and community members who have sought transparency and accountability for this classified navy research facility embedded within the university system.

Alia Wong of Civil Beat has been digging deeper into the UARC issue. She writes:

The release explains that the Navy last March threatened not to extend the agreement because the university wasn’t demonstrating a strong enough commitment to the contract. So UH last September hired a retired Navy admiral, Mike Vitale, to direct the lab.

The lab has conducted $7.9 million in unclassified research since the first contract was finalized in 2008, according to the press release. Just $196,000 of that research was sponsored by the Navy, suggesting that most of the research was conducted by other military agencies that under the contract can also utilize the lab.

The university has yet to explain those other studies.

It is worth revisiting the purpose of UARCs. During World War II, the government felt that it needed to enlist the essential competencies of several research universities to provide research to the government.  By establishing a “trusted relationship” with a university through these specially insulated laboratories, the government would be able to order research tasks of the UARC.  The research product was “owned” by the government and covered by the UARC’s blanket security classification.  Research conducted by the lab would not be peer reviewed because of its classified nature.  In exchange, the university received a steady flow of sole source (i.e. no-bid) contracts.  This is why there are so few UARCs such as Johns Hopkins Applied Physics Laboratory and Federally Funded Research and Development Centers (FFRDC) such as Sandia Labs.

UARCs are not supposed to be mere contracting vehicles to circumvent the normal competitive procurement process. Yet, the driving impetus behind Project Kai e‘e and the ARL-UH was the quest for a sole source, open ended funding arrangement for military research programs in Hawai‘i.  As Mun Won Chang (Fenton) stated in 2001 “fast/efficient streamlined contracting for DoD customers…IS THE MOST IMPORTANT CORE COMPETENCE…”[1] This idea was echoed by UH President McClain in January 2007: “the UARC contract is simply a master agreement….”[2]

Irregularities in the procedures for establishment of the UARC have raised concerns about the Navy’s failure to follow established federal acquisition regulations for the procurement of the UARC to UH.[3]  Neither the UH administration nor the Navy have provided a satisfactory explanation nor justification why the sole source procurement of the UARC to UH deviated from normal competition requirements for federal contracts.  Public notice of the UARC procurement came after two years of negotiations and planning had already taken place between UH, ONR and NAVSEA.

At the recommendation of RADM Cohen, Chief of Naval Research, in May 2003, NAVSEA conducted a Review and Justification for Establishing a University Affiliated Research Center (UARC) at University of Hawaii at Manoa (UHM), which concluded in May 2004.   Based on this document, on May 21, 2004, Gregg Hagedorn, the Acting Executive Director of NAVSEA recommended the establishment of the UARC with the concurrence of John Young, the Assistant Secretary of the Navy (Research, Development and Acquisition) on June 5, 2004.[4]

A string of congratulatory emails followed.  One message that appears to be from Hagedorn stated: “Excellent news. I hope [Director of Defense Research and Engineering] approval is soon… We are on a sucess [sic] oriented schedule to award the UARC contract.  Gregg”. Admiral Cohen, who was also copied on the message replied “Good, tks, pls let me know IF you need my help. Jay”[5]

In a letter dated July 8, 2004, Ronald Sega, Director of Defense Research and Engineering (DDR&E) wrote “I approve the request to designate the University of Hawaii at Manoa Applied Research Laboratory (UHM-ARL) as a University Affiliated Research Center (UARC).”[6]

A congressional notification memo addressed to Senator Inouye, Senator Akaka and Representative Abercrombie was prepared in anticipation of Sega’s approval.[7]  But according to Pete Brown at NAVSEA, Lieutenant Commander Leda Chong, from the Navy Office of Legislative Affairs made personal phone calls to the Hawaii Congressional delegation rather than send the letter. Brown wrote, “CDR Leda Chong had spoken with SEN Inouye’s staff on 12, July 04.”[8]

Procurement Irregularities

Federal Acquisition Regulations (FAR) require full and open competition for most types of federal procurement actions. This is to ensure the fairness, quality and cost effectiveness of goods and services acquired by the government.

The law allows for some exceptions to full and open competition when there is a compelling need or extenuating circumstances.  Federal law 10 U.S.C. 2304 (c)(3)(B) permits “other than full and open competition” when “it is necessary to award the contract to a particular source or sources in order …to establish or maintain an essential engineering, research, or development capability to be provided by an educational or other nonprofit institution or a federally funded research and development center”.  However, the procedures for establishing this type of relationship with the government usually require exhaustive steps to justify the need for and to select a sole source provider of “essential engineering, research, or development capability”.

University Affiliated Research Centers (UARCs) and their closely related cousins, Federally Funded Research and Development Centers (FFRDCs) are considered “trusted agents” of the federal government that have access to privileged information and receive sole source research grants and contracts within their designated “core competencies”.   Because of their uniquely close relationship to the federal government and access to information and funds, UARCs and FFRDCs also must observe strict guidelines to avoid organizational conflicts of interest.

In the mid-1990s, inappropriate contracting activity involving existing UARCs and FFRDCs led to a review of these programs and tighter restrictions.[9]  To prevent the abuse of sole source funding through UARCs and FFRDCs, the Department of Defense (DoD) promulgated its own rules for management of UARCs.[10] A “Discussion Paper” from the Directorate for Defense Research and Engineering (DDR&E) that was distributed by UH administrators to researchers at UH Manoa clearly laid out the guidelines and requirements for the establishment of a new UARC:

Sponsorship comes first, driven by Defense program needs…. The determination to establish a new UARC is therefore internal to DoD, independent of a University’s potential desire to establish a UARC.

On the process of establishing a new UARC, the “Discussion Paper” stated:

The sponsor(s) must define the long-term requirement (with funding expected to exceed $10 M annually), in the context of the core capabilities to be maintained by the UARC. These required capabilities must be approved through the Service Acquisition Executive (SAE) and forwarded to the Director of Defense Research and Engineering (DDR&E) for final approval to establish a new UARC. The sponsors should then solicit proposals from all interested Universities for establishing a new UARC to meet the approved core capability requirements. The selection process should follow established procurement procedures.[11]  [emphasis added]

Basically, a DoD sponsor of a new UARC must clearly define why it needs a UARC and what work (core competencies) will be required of the UARC. Then the sponsor should follow competitive procurement practices, soliciting proposals from all qualified and interested Universities, before awarding the UARC contract.  This is logical since once the UARC is established it would enjoy access to an indefinite amount of non-competed funding.

However, NAVSEA did not follow these guidelines or processes for procuring the UARC to UH.   Perhaps because the UH UARC was the first new UARC to be considered by the Navy in 60 years, reviewers of the proposal seemed to be making up the procedures.   In fact on the “coordination page” of the Review and Justification for Establishing a University Affiliated Research Center (UARC) at University of Hawaii at Manoa (UHM), a hand written note by Sophie Krasik, Assistant General Counsel dated June 4, 2004 stated:

Note: I haven’t been able to find any guidance on establishment of UARC’s (vice FFRDCs, for example) but the criteria used here are reasonable ones.[12]

The public has gotten contradictory accounts of the procurement process for the UARC.  In a hearing before the State Senate Committee on Higher Education in 2005, Syrmos testified that there had been a Broad Agency Announcement (BAA), a widely distributed competitive procurement announcement, for the UARC.  But when an audience member pointed out that there was no BAA, Syrmos corrected himself and said that it was a Request for Proposals (RFP) that was issued on September 24, 2004.  But this was also a false statement.

There was no competitive solicitation of any kind. After Sega approved the designation of UH Manoa – Applied Research Laboratory as a UARC, NAVSEA issued a Presolicitation Notice N00024-05-R-6234 dated September 24, 2004, which stated:

The Naval Sea System Command intends to award a sole source contract for up to 315 work years to establish and further solidify a strategic relationship for essential Engineering, Research, and Development capabilities at the Applied Research Laboratory, University of Hawaii at Manoa (ARL/UHM), 2500 Campus Road, Honolulu, HI 96822. [emphasis added]

In a public meeting on April 7, 2005, it was pointed out to UH administrators that other federal sponsors, including the Army and NASA used full and open competition in procurement of new UARCs.  Syrmos blithely dismissed the information: “The Navy runs the UARC office differently than the Army.”

According to Federal Acquisition Regulations (FAR) Subpart 6.3, federal sponsors seeking to use one of the listed exceptions to full and open competition are required to conduct a rigorous written justification. The FAR spells out at least twelve elements that must be part of a justification.

Obtained through FOIA, the May 2004 Review and Justification for Establishing a University Affiliated Research Center (UARC) at the University of Hawaii at Manoa (UHM) produced by NAVSEA and transmitted to the Director, Defense Research and Engineering on May 21, 2004, only addressed the question of whether or not NAVSEA had a legitimate need for a UARC at UH.  While it is debatable whether the document fulfilled even this requirement, the Review and Justification did not address the justification required under FAR for a non-competitive procurement.

In one set of the correspondences obtained through FOIA, NAVSEA officials apparently had difficulty mustering enough interest in a UARC at UH from other military branches.

[1].       Mun-Won Chang, A proposed concept for Pacific Research Laboratory (PRL), Federally Funded Research Laboratory, A Subsidiary of RCUH/University of HI and University of Alaska, August 30, 2001.

[2].   David McClain, “In the Hot Seat”, Honolulu Advertiser, January 25, 2007.

[3].       Eric Szarmes, “Re: Requirement for a Broad Agency Announcement for the NAVSEA Applied Research Laboratory UARC procurement”, Letter to Peter Englert with attachments. April 12, 2005. Eric Szarmes. “Re: Procurement for New UARCs”, Letter to Peter Englert with attachments. May 13, 2005.  Eric Seitz. Letter to Walter Kirimitsu, UH counsel.  April 25, 2005.

[4].  Gregg Hagedorn, Acting Executive Director, NAVSEA, “Recommendation for Establishing a University Affilitated Research Center at the University of Hawaii at Manoa”, letter to the Director of Defense Research and Engineering, via Assistant Secretary of the Navy (Research, Development and Acquisition), May 21, 2004, with attached Review and Justification for Establishing a University Affiliated Research Center (UARC) at University of Hawaii at Manoa (UHM), Naval Sea Systems Command University Affiliated Research Center Management Office (NAVSEA 106), May 2004.

[5].  “Recommendation for UARC at UHM”, a string of emails dated June 8 – 9, 2004, produced through FOIA request to NAVSEA from the computer of Antonia Stine.

[6].   Ronald M. Sega, “Subject: Designating the University of Hawaii at Manoa Applied Research Laboratory (UHM-ARL) as a University Affiliated Research Center (UARC)”, Memorandum for Executive Director, Naval Sea Systems Command, July 8, 2004.

[7].      Leda Chong, “Subj.: Establishment of University Affiliated Research Center”, Memorandum for Interested Members of Congress, unsent congressional notification memo.

[8].       Pete Brown, “RE: Recommendation for UARC at UHM – Status of Notifications”, email to Michael Mcgrath, August 19, 2004.

[9].       Government Accounting Office’s August 1996 Report on Issues Relating to the Management of Federally Funded R&D Centers, GAO/NSIAD-96-112, notes that “[the] DOD’s internal advisory group decided to include university-affiliated research centers [in May 1995] when reviewing FFRDCs due to the similar manner in which the organizations function.”

[10].       See Department of Defense University Affiliated Research Center (UARC) Management Plan, 1996.  Commander, Naval Sea Systems Command, University Affiliated Research Center (UARC) Memorandum, June 24, 2002.

[11].       U.S. Department of Defense, Directorate for Defense Research and Engineering (DDR&E) Discussion Paper, undated.

[12].       Gregg Hagedorn, Acting Executive Director, NAVSEA, “Recommendation for Establishing a University Affilitated Research Center at the University of Hawaii at Manoa”, letter to the Director of Defense Research and Engineering, via Assistant Secretary of the Navy (Research, Development and Acquisition), May 21, 2004, with attached Review and Justification for Establishing a University Affiliated Research Center (UARC) at University of Hawaii at Manoa (UHM), Naval Sea Systems Command University Affiliated Research Center Management Office (NAVSEA 106), May 2004.


Stop the secret renewal of UH classified naval research center!

July 16, 2013 

The University of Hawaiʻi is poised to renew a contract with the Navy to operate a controversial Navy sponsored University of Hawaiʻi Applied Research Laboratory, otherwise known as a University Affiliated Research Center (UARC).

The UARC was approved in 2008 despite fierce opposition and a civil disobedience campaign that culminated in a week-long occupation of the UH President McClain’s office. The UARC was intended to be a no-bid contracting pipeline for UH to receive military research contracts through the classified research center.


1. CONTACT UH PRESIDENT GREENWOOD ASAP and urge that she not renew the Applied Research Laboratory contract. Request that she instead refer the matter back to the Board of Regents and allow them to review a full accounting of the program and have a public discussion of its risks and liabilities.



  • Date: Thursday, July 18, 2013
  • Time: 9:00 a.m.
  • Place: University of Hawaiʻi Cancer Center Sullivan Conference Center 701 Ilalo Street Honolulu, Hawai‘i 96813
  • Public Comment Period (3rd item on the agenda): Individuals may orally testify on items on this agenda during the Public Comment Period. Please call the Board office prior to the meeting or notify the Secretary of the Board at the meeting site. Written testimony is also accepted. Testifiers are requested to limit their testimony to three (3) minutes.


Anticipating the expiration of the UARC contract, Keever sought out information about the contract and all task orders performed by UH for the Navy under the UARC through public information requests.  All she got was the runaround. In articles published in the Civil Beat and Hawaii Independent:

Not since the Vietnam War and other protests of 40 years ago had the Manoa campus seen anything like the furor that erupted in opposition to establishing a military research laboratory at the University of Hawaii.

Students and faculty sounded off with blowhorns at assemblies, hung banners from rooftops, held nighttime vigils at the UH President’s mansion and petitioned the Board of Regents at a marathon, six-hour hearing.  With backpacks and sleeping rolls, they swooped up the stairs of Bachman Hall, invaded the president’s office, and settled in for a six-day sit-in and sleep-in that garnered negative headlines around the globe and lured the nation’s leading academic newspaper to send its own staff reporter to the scene.

“The last time the U.S. Navy built a laboratory on a university campus, Franklin D. Roosevelt was president and the United States was a war with Axis powers,” Kelly Field reported to the Chronicle of Higher Education. “Sixty years later, as the nation battles terrorism and an insurgency in Iraq, the Navy is encountering fierce resistance at home over its plans to develop a laboratory here at the University of Hawaii-Manoa.”

When the UARC was proposed in 2004, there was strong opposition to the UARC led by a dynamic coalition of students, faculty and community that raised awareness, mobilized creative actions and occupied the UH President McClain’s office for a week. Kanaka Maoli students and faculty were at the head of efforts to oppose the UARC citing the threat this classified naval research lab posed to UH as a “Hawaiian place of learning”.   The UH Mānoa Faculty Senate, UH Mānoa undergraduate student association, and even the UH Mānoa Chancellor opposed the UARC.  But the UARC, intended to be a no-bid contracting pipeline to funnel military research funds to Hawaiʻi and military research facilities at the Pacific Missile Range Facility, was moved from the UH Mānoa Campus to the UH System level and eventually approved by the Board of Regents in 2008.


The UARC originated with an earlier secretive contract named “Project Kai eʻe”, which means tsunami in Hawaiian. Project Kai eʻe involved UH researchers, the Research Corporation of the University of Hawaiʻi (RCUH), the Office of Naval Research, several admirals and Senator Inouye.  It became the focus of a scandalous Naval Criminal Investigation Service (NCIS) investigation of possible fraud, abuse, and conflicts of interest.

Project Kai eʻe was intended to be a $50 million multi-faceted military research project awarded to RCUH to conduct military research based at the Pacific Missile Range Facility.  As RCUH Executive Director Harold Masumoto reported to the RCUH Board in October 4, 2001:

This may become a major project – about $50 million if funding comes through. As more of these types of projects become reality, there may be a need for a separate entity to manage them because of their focused objectives.

On December 4, 2001, Masumoto reported to the RCUH Board of Directors that:

RCUH was asked to submit a proposal and has done so for an ONR project with a potential price tag of $48 million over four years…A Phase 2 proposal may also be submitted. This project is basically in support of the Pacific Missile Range Facility on Kauai.

At the June 6, 2002 RCUH Board of Directors meeting, Masumoto reported:

Project Kaiee – We are still awaiting award of the contract. In the meantime, we will receive $800k of funding to get started (hiring an Executive Director and a Technical Director as well as some other support/technical personnel). The project will be incubated by RCUH. Plans at this time include evolving it into a UARC (University Affiliated Research Center).

RCUH was involved in providing services for the Navy funding agency as well as using this privileged information to submit the Project Kai eʻe bid.  This raised flags about conflicts of interest issues.   As a result Harold Masumoto moved several “services” contracts to the Pacific International Center for High Technology Research, a quasi-public corporation with historical ties to UH where he also held an executive position.

The NCIS reported that an Office of Naval Research program manager Mun Won Chang-Fenton and Admiral Paul Schultz:

planned to benefit from their NAVSAIRSYSCOM affiliation by orchestrating the award of a proposed contract, N00421-02-D-3151, to a company [they] were developing, Pacific Research Institute (PRI), also referred to as PROJECT KAIE’E’.

Project Kai eʻe or Pacific Research Institute (PRI) was awarded to RCUH at a reduced dollar amount.  It appears that the Executive Director position for the PRI was intended to be filled by Admiral Paul Schultz when he retired.  With the contract in hand, Masumoto posted a job announcement for the Executive Director of the PRI on the RCUH bulletin board for all of ten minutes. Schultz was the only applicant for the PRI Executive Director position.  He was offered the position but stopped short of accepting it.  Masumoto abruptly and inexplicably terminated the contract for the Pacific Research Institute/Project Kai eʻe and returned the money.  Why?
The minutes of the September 27, 2002 RCUH Board of Directors meeting contained only a terse and vague statement about its cancellation:
ONR Project – The proposal for Project Kaiee was withdrawn due to circumstances beyond our control. RCUH will pursue other avenues of funding for these types of projects.
It seems that the NCIS investigation was closing in and Masumoto and Schultz may have been tipped off.  Had Schultz accepted the job, it may have triggered more serious criminal charges. The NCIS investigation led to some disciplinary actions and setbacks for key players, but as one informant noted, “The Navy couldn’t prosecute Schultz and Fenton without implicating 4 Admirals and a State Senator.”
After the demise of PRI/Project Kai eʻe, Masumoto began in earnest to pitch the idea of a UARC to UH Administrators. On October 22, 2002, he reported to the RCUH Board of Directors:

UARC – We are also looking into the establishment of a University Affiliated Research Center and have discussed the matter with President Dobelle and UHM Chancellor Englert.

In a report to the RCUH Board of Directors on March 6, 2003, Vassilis Syrmos, who at the time was a UH professor of electrical engineering as well as RCUH’s Interim Director of Science and Technology, reported:

University Affiliated Research Center (UARC) – The proposal is 99% complete and the UHM approvals are in place to take it to next step which is for Admiral Cohen (Chief of Naval Research) to send it to NAVSEA to designate UHM as a UARC. It is hoped that the UARC will be in place by this summer. Because a UARC functions as a trusted agent of the government, it operates under sole source, multi-task delivery of contracts to perform work primarily for Navy sponsors…. Until UH changes its policy on classified research, such an activity has to be run through an organization like RCUH. Creating a separate 501(c)(3) type organization is another alternative.

The UARC first came to public attention in 2004, when UH faculty raised strong objections to classified military research at UH.  After several years of strong opposition the UH Board of Regents approved a five year contract with a commitment that no classified research would occur on the Mānoa campus and that there would be no classified research in the first three years of the contract.  Keever writes:

Now, fast-forwarding to five years later, Senator Inouye has passed on and on July 14, the UH’s contract expires with the U.S. Navy’s Sea Systems Command, its war-fighting, weapons-development arm.

Without discussion by or disclosure to the public, UH is set to sign a new contract with the Navy. “Because there are no planned changes to the contract other than the timeframe, this modification would be signed by the Vice President for Research with the approval of the President,” according to the response to my e-mail made by a representative of Lynne T. Waters, UH’s associate vice president for external affairs and university relations. UH is now selecting replacements for both the Vice President for Research and for the President.

Before UH administrators sign the new contract, however, the Board of Regents has been urged to have a designated UH administrator explain fully the amount, scope, costs, revenues, locations, outcomes of UH’s ARL-conducted research and the kinds of censorship placed on dissemination of all research results. The Board is scheduled to meet on July 18 at the UH Cancer Center in Kakaʻako.

Alia Wong of the Civil Beat wrote a follow up article exploring the secrecy surrounding the renewal of the UARC contract:

Kitty Lagareta, who chaired the Board of Regents between 2005 and 2007, said she and other regents approved the plan on strict conditions, including that none of the initial research be classified, and after long-drawn-out consultations with stakeholders.

She said regents also called for a review of the lab’s research after a few years.

“An agreement’s an agreement,” she said. “The university ohana as well as the public are probably deserving of some sort of a recap.”

Ian Lind writes:

The secret Navy laboratory set up by the University of Hawaii five years ago, which was sold as a way to tap into a lucrative stream of defense-related contracts, has instead turned into a money pit draining resources from the rest of the UH system.

Lind points out that with both the UH and the Navy failing to respond substantively to Keever’s public information requests amounts to another example of UH’s lack of transparency:

Does Hawaii’s public records law allow the university to fail to respond to a request for public records and instead punt to a third-party, especially when the third party then delays because it kicks the whole request back to UH? At best, it’s unclear.

At worst, it feels like this is another in a long series of examples of UH miserably failing the to live up to standards of transparency mouthed in public by the president and other top administrators.

Keever’s reporting suggests another question. If this secret lab failed to land significant amounts of work while Senator Inouye was alive and pushing for it, what are its odds of turning that around in the absence of his seniority and political clout? And that’s sidestepping the continued opposition on the Manoa campus to the whole project.

In any case, the UH administration really should be providing a relatively full accounting before committing resources for another contract period.

Both Keever and Wong have been unable to confirm whether the UARC would be discussed by the Board of Regents at its July 18 meeting.  The agenda does not list the UARC as a discussion item, but since the contract renewal is a delegated authority to UH President Greenwood, she could have it signed without going to any public discussion or Board decision-making. The public has a right to know the full accounting of the UARC.  Greenwood could refer the UARC renewal back to the Board of Regents for a full review and public hearing.  This seems to be the most ethical and politically wise option for her in order to avoid being saddled with another controversy at the end of her tenure, and to let the Board of Regents take the heat for whatever the fallout may be.



How much does the military economy cost Hawai’i?

June 18, 2011 


With much media hype, the Chamber of Commerce of Hawaii and the Hawaii Institute of Public Affairs (HIPA) coordinated the public release of a study of the military’s economic impact in Hawai’i by the RAND corporation, but the report said nothing really new or remarkable.   The Honolulu Star Advertiser reported:

The U.S. military pumped up to $12.2 billion into Hawaii in 2009 — or more than 18 percent of total spending in the islands, according to the first study of its kind in nearly 50 years, scheduled for release today.

The full-time equivalent of 91,000 to 101,000 employees worked for the military here between 2007 and 2009, representing 16 percent of the work force in the state, said the RAND National Defense Research Institute’s report, “How Much Does Military Spending Add to Hawaii’s Economy?”

The COCH represents Hawai’i’s business sector and had a hand in engineering the cession of Ke Awalau o Pu’uloa (Pearl Harbor) to the U.S. through the Treaty of Reciprocity with the Hawaiian Kingdom. It regularly hypes the military appropriations earmarked for Hawai’i and lobbies for continuous military expansion in Hawai’i.   HIPA, a purportedly non-partisan and independent local think-tank, has close ties to the Democratic party insiders.

Several years ago I suggested that HIPA do a study to document the true costs and impacts of the military in Hawai’i and help the public envision what different economic alternatives might look like.  But I guess that was too much to ask.  So instead we got another report reinforcing the military-corporate-political complex.

What is new about this study is that it was produced by the prestigious RAND corporation, a military sponsored research think tank.   While the RAND study compiled the most complete data available on various aspects of the military economy in Hawai’i, which is useful in and of itself, the report does not analyze the social, cultural and environmental costs of the military driven economic and social changes in Hawai’i.  Although the report does show which industries profit most from the military spending, it fails to analyze which communities pay the highest price in the form of lost land, cultural disintegration, violations of human rights to self-determination, environmental damage and other social impacts. In this regard, the RAND study fails in the same way all other economic reports on the military impact in Hawai’i fail to consider the high cost of so much military prosperity.   The RAND study does not ask whether so much military spending has had unintended and unacceptable negative impacts that may be harmful to a more sustainable and just economic future for Hawai’i.   That will have to be left to other more creative thinkers.

The most remarkable thing about this study is the very fact that the RAND corporation produced the report for the Office of the Secretary of Defense and in partnership with the COCH and HIPA.  Why is the public paying for a study to assist and bolster the corporations that benefit most from military spending in Hawai’i?  The Project On Government Oversight (POGO) thought this was unusual and wrote a critical piece on their website “Aloha! Pentagon Think Tank Uses Taxpayer Funds to Help Hawaii Chamber of Commerce”:

The report was produced by RAND’s National Defense Research Institute, a Federally Funded Research and Development Center (FFRDC), in cooperation with the Hawaii Institute of Public Affairs and the Chamber of Commerce of Hawaii, and was sponsored by the Office of the Secretary of Defense at the Pentagon–which is to say, taxpayers foot the bill.


The Chamber of Commerce of Hawaii Military Affairs Council and The Hawaii Institute For Public Affairs hosted a $35-a-ticket-event for the report co-sponsored by defense contractor BAE Systems yesterday. The question is, should taxpayers around the country be paying for research for the Hawaii Chamber of Commerce?

POGO investigator Mandy Smithberger also delved into recent problems with FFRDC’s:

FFRDCs like RAND typically produce research on larger strategic questions and issues, with the idea of producing high quality, unbiased analysis for Pentagon decision-makers. There have been conflict of interest problems in the past (some quite notable), but generally speaking, the Pentagon loves them, and the Pentagon’s head of Acquisition has encouraged using them more to increase efficiencies. RAND specifically has produced numerous reports on military budgets and defense spending, including a report on the impacts of defense spending on the civilian economy. But it appears that a report that is specific to the economy of one state is rare, if not unprecedented.


As the Pentagon and Congress continue to consider cost-cutting measures, it may be worth further scrutiny of how FFRDCs use taxpayer resources. The House’s version of the Defense Appropriations bill reduced FFRDC spending by $125 million and has prohibited creating new defense FFRDCs.

The issue of FFRDCs recalls the disastrous attempt to establish a similar type of federal research center at the University of Hawai’i (UH)Project Kai e’e, the code name of an initiative by military and UH officials to channel missile defense research monies through UH to establish a “Pacific Research Laboratory” were fraught with abuses and corruption and led to a naval criminal investigation of key players.  This did not stop the attempts to funnel non-competed military monies to businesses and researchers in Hawai’i via a University Affiliated Research Center (UARC), a type of classified Navy research center and another project called Hawaii Technology Development Venture (HTDV), a scheme to funnel public funds into venture capital for local firms to conduct research and development for the military.  DMZ-Hawai’i /Aloha ‘Aina and the Save UH/Stop UARC coalition waged a campaign over several years to stop this encroachment of military secrecy into a public university.  In the end, despite significant wins along the way by the Coalition, the UARC project was rammed through by the political powers, although only in a highly diminished form.

This brings us back to the question of why RAND is doing a study of the military economic impact in Hawai’i and why the Office of the Secretary of Defense commissioned it.   As Smithberger writes:

But did it take a RAND study to figure out that defense spending played a significant role in the state’s economy? The study confirms what many economists already suspected. Hawaii received $195.8 million in earmarks in the FY2010 Defense bill, according to Taxpayers for Common Sense’s earmark database–and wins more earmark dollars per capita than any other state (no doubt due in part to Hawaii Senator Daniel Inouye sitting on the Senate Appropriations Committee). Moreover, it’s not clear how this report serves national security interests, or why it had to be performed by RAND.

The report is an attempt by Hawai’i’s military, corporate and political players to shore up support for military spending at a time of shrinking budgets, growing opposition to the negative impacts of military activities and war fatigue.  In contrast to the rosy picture of the military painted by the COCH, the reality of Hawai’i’s military economy is more appropriately captured by the Honolulu Star Advertiser graphic of a toy soldier raising his bayonet to stab the Hawaiian islands – a form of assault.



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.

Researchers report that chemical weapons dumped at sea are corroding but have not yet released toxic contents

July 28, 2010 

University of Hawai’i researchers have concluded a three year research project to determine whether chemical munitions dumped at sea off O’ahu pose a threat to the health of humans or the environment.

Documents disclosed by the Army in 2007 reported that approximately 16,000 munitions containing 2,558 tons of chemical agents were dumped at three deep-water sites off Oahu.   The chemical agent included lewisite, mustard, cyanogen chloride and cyanide.

According to the Honolulu Star Advertiser article:

The School of Ocean Earth Science and Technology research for the U.S. Army reported that even the best-preserved munitions casings are deteriorating, but the observations and data collected “do not indicate any adverse impacts on ecological health” in the study area, known as HI-05, the university said.

Furthermore, the article reports:

The Pentagon does not plan to remove any of the chemical weapons because it said there is no data to indicate any of the dumped munitions pose a threat to human health or the environment.

The conclusion that there is no adverse impact on ecological health is misleading.   Most of the 2000 munitions identified by UH researchers were badly corroded but had not yet broken open to release their toxic contents.

The story on KHNL television was more qualified in reporting the safety of the munitions:

Findings show the World War II munitions buried at sea are still intact, but they are corroding, which means one day, they could leak chemicals into the ocean.

The Hawaii Independent provides more in-depth reporting on the study’s findings.

But the news media failed to mention the hidden story related to the funding for the research.   In 2007, politicians were quick to jump on the issue of the chemical munitions dumping because it was politically safe to criticize such an egregious example of the military’s poor environmental conduct while steering federal funding to Hawai’i to “study” the impacts.  Funding was funneled through the Indefinite Deliverable / Indefinite Quantity (IDIQ) Applied Research Laboratory contract, otherwise known as the controversial Navy University Affiliated Research Center (UARC).  In 2005, a coalition of students, faculty and community staged a campaign to stop the establishment of the classified Navy research center at the University of Hawai’i, which culminated in a week-long occupation of UH President David McClain’s office.   Despite overwhelming opposition, the UH Board of Regents approved the UARC, but the program had been severely diminished.

The Applied Research Laboratory has set up a contract vehicle, a pipeline for non-competed military contracts to be directed to UH research projects.    The UH researchers are now set up to seek future funding to study, but not necessarily clean up the toxic mess.

Protest at UH Challenges Intelligence Community Centers of Academic Excellence & CIA Campus Recruitment

February 12, 2010

Protest at the University of HI Challenges Intelligence Community Centers of Academic Excellence & CIA Campus Recruitment

2010-02-12 04:39

By Ann Wright

Hawaii activists protested on February 10, 2010, the University of Hawaii’s participation with U.S. intelligence agencies in a symposium on national security and called on students and faculty to remember the criminal track record of these agencies in torture, assassination, kidnapping and illegal prisons.

Protesters called on the University administration to reject any request by the federal government to create a National Intelligence Center of Academic Excellence (ICCAE, pronounced “icky”) at the University of Hawaii.

Government intelligence agencies, including the CIA, FBI, National Security Agency, Defense Intelligence Agency, and Homeland Security, have created in the past four years twenty-two Intelligence Community Centers for Academic Excellence on university campuses to provide “systematic long-term programs at universities and colleges to recruit and hire eligible talent for [intelligence community] agencies and components” and to “increase the [intelligence recruiting] pipeline of students.”

However, not only do the centers recruit, but they seem to provide a launching pad for undercover operations for those associated with the university centers. Stan Dei, the Assistant Director at the Intelligence Community Center for Academic Excellence at Trinity University in Washington, DC, was arrested in January, 2010 with three others for plotting to tamper with the telephone system in the New Orleans office of U.S. Senator from Louisiana Mary Landrieu.

According to an article on Raw Story titled “Landrieu phone plot: Men arrested have links to intelligence community,” Dai also was an undergraduate fellow at the Foundation for the Defense of the Democracies (FDD), a national security think tank in Washington, DC with conservative political figures and politicians, among them: former House speaker Newt Gingrich, Sen. Joe Lieberman, Weekly Standard editor William Kristol, Rep. Eric Cantor, former Bush official Richard Perle and columnist Charles Krauthammer on its advisory board.

The two day symposium on national security at the University of Hawaii is billed as a “discussion on the role of language and contemporary issues in Asia and in U.S. security issues with networking sessions for students to interact with Intelligence Community personnel and meet with potential employers.” Attendance at the conference was increased by providing students with breakfast and lunch each day and a gift card.

Asian and Pacific heritage students are the predominant groups at the University of Hawaii and undoubted the reason for the visit by Dr. Lenora Gant, the Director of all of the Intelligence Community Centers of Excellence. The symposium is co-hosted by the School of Pacific and Asian Studies with faculty members from the East-West Center, which is funded by the U.S. Department of State, and other University of Hawaii faculty members making presentations on language, cultural awareness and cyber challenges in national security along with presentations on “The 21st Century Intelligence Community Enterprise: Challenges and Opportunities” by CIA and other intelligence officials.

ICCAEs provide grants to universities to begin a “partnership between the Intelligence Community, colleges and universities to incorporate curriculum and related initiatives. The focus of this effort is to increase the pipeline of competitive applicants to attract, recruit and hire with an emphasis on women and racial/ethnic minorities with critical skills in core business and leadership areas.” (Public Law 108, 177, Section 319).

Once the Intelligence Centers are established on a campus, they use federal funds to provide a cash-strapped university with attractive facilities. At Norfolk State University, a new Video Teleconferencing Training Center was funded through grants from the Office of the Director for National Intelligence (ODNI) and Department of Education.

Outside the School of Korean Studies, the location for the symposium, long-time Hawaii activist Carolyn Hadfield, a coordinator for World Can’t Wait and staff member of Revolution Bookstore, reminded students and faculty going into the building that the CIA and other intelligence agencies had asked their employees to commit illegal actions on behalf of the presidential administrations — crimes of torture, assassination, kidnapping (extraordinary rendition), secret prisons and illegal eavesdropping and wiretapping.

Did they want to be employed by organizations that participate in these criminal actions?

Hadfield also reminded University of Hawaii Chancellor Virginia Hinshaw as she emerged from the conference hall, of the long confrontation to keep the University system out of the unpopular, but financially lucrative for the university, Department of Defense classified research business University Affiliated Research Center (UARC).

Hadfield told the University Chancellor that should they be considering bringing an Intelligence Community Center of Excellence to University of Hawaii, the university administration would face another battle.


About the Author: Ann Wright is a retired US Army Reserve Colonel and a former U.S. diplomat who resigned in March, 2003 in opposition to the war on Iraq. She served in as a US diplomat in Nicaragua, Grenada, Somalia, Uzbekistan, Kyrgyzstan, Sierra Leone, Micronesia, Afghanistan and Mongolia. She is the co-author of “Dissent: Voices of Conscience.” Wright has been arrested numerous times for her peaceful, non-violent protests against the wars in Iraq and Afghanistan, torture and other criminal actions by the government of the United States.

Defense Appropriations Bill benefits Inouye contributors

December 23, 2009 

This AP story published by the Honolulu Star Bulletin gives an update on military earmarks by Senator Inouye and the Hawai’i Congressional Delegation benefiting companies that gave to their campaigns.  Here’s the earlier report in the Honolulu Star Bulletin:

Looks like Oceanit made out with $9 million in earmarks in the new Defense Appropriations Bill.  As I described in an earlier post, Oceanit was one firm that was deeply implicated in the UARC / Project Kai ‘e’e scandal.


Defense bill benefits Inouye contributors

By Herbert A. Sample / Associated Press

POSTED: 01:30 a.m. HST, Dec 23, 2009

A new defense appropriations bill includes several targeted spending provisions championed by U.S. Sen. Daniel Inouye that will benefit companies whose officers have contributed to his re-election campaigns.

The 2010 defense appropriations act signed into law Monday by President Barack Obama contains 34 earmarks sponsored or co-sponsored by the Hawaii Democrat worth almost $180 million.

Inouye is chairman of the Senate Appropriations Committee and its defense subcommittee, a position that gives him enormous sway over all federal spending. He has won hundreds of earmarks over his 46 years in the Senate. He often characterizes his spending provisions as beneficial to Hawaii’s economy.

“By providing for their needs, the civilian community benefits from the research, development and construction that takes place,” he said in a statement.

Inouye and his staff have repeatedly refused to explain the justification behind earmarks slated for companies that have donated to his campaigns.

One of the senator’s targeted spending provisions will provide $2.2 million to Honolulu-based Pacific Marine to finance a half-scale model of its Captive Air Amphibious Transport. Its subsidiary Navatek Ltd. led a team that included the vehicle in a 2007 Navy competition for a new generation of seaborne transports. But the Navy rejected the team’s bid late that year.

The officers of Pacific Marine and Navatek have contributed $29,000 to Inouye since 1997, according to Federal Election Commission records. Steve Loui, Pacific Marine’s chief executive officer, gave $9,800 of that.

Other firms that will benefit from Inouye-backed earmarks also have donated to his campaign. Those include $9 million total for two earmarks for Honolulu-based Oceanit, whose employees have contributed $22,900 since 1997, and a $3.9 million earmark to Referentia Systems Inc. of Honolulu, whose officers have donated $17,200.

Oceanit is developing a network of telescopes to track objects in space; Referentia is trying to create 3-D images of battlegrounds.

The legislation also contains provisions sponsored or co-sponsored by the other three members of Hawaii’s congressional delegation, all Democrats.

Earmarks to Hawaii firms linked to U.S. Sen. Daniel Akaka include $4.5 million to Archinoetics LLC for a war fighter awareness system, $3.5 million to NovaSol for a reconnaissance system, and $2 million to Pukoa Scientific for a device that detects mobile targets.

Archinoetics employees have contributed $4,500 to Akaka’s campaigns in recent years, according to federal records; NovaSol officers have given $6,000; and Pukoa employees have donated $6,100.

One Pukoa officer also gave $4,600 to U.S. Rep. Neil Abercrombie, who co-sponsored its earmark with Akaka.

Abercrombie also teamed with Akaka to champion a $1.6 million earmark for Referentia Systems to evaluate corrosion-resistant coatings for military aircraft. Referentia employees have given the 10-term congressman $7,750 in campaign donations in recent years.

An earmark that U.S. Rep. Mazie Hirono sponsored would direct $3.5 million for an algae-based biofuel project to a team led by General Atomics and including two Hawaii-based companies. Federal records show no contributions to Hirono’s campaigns by the firms’ workers.

Updated article on Inouye’s earmarks and campaign contributors

November 9, 2009 

This is an updated version of an article that already ran.   In this article they also discuss Oceanit’s contributions to Inouye’s campaigns. Oceanit is one of the top beneficiaries of Inouye’s earmarks.  During the UARC/Project Kai ‘e’e scandal, the Naval Air Systems Command (NAVAIR) ordered (Task Order T-03-03-DSM012) the “technical services” of Anteon (a military technology contractor) to be provided to the  Mid-Pacific Branch Office (Honolulu) of the Office of Naval Research, another Navy research branch.  The Task Order was issued under a General Services Administration contract with Anteon Inc. (GS09K99BHD0001), a “worldwide MA-ID/IQ contract available for use by any federal government agency to acquire contractor services and support for information technology (IT) needs”.  In other words, the contract between the General Services Administration was an “Indefinite Deliverable/Indefinite Quantity” contract, basically an open ended expense account that allowed the government to bypass competitive procurement.  NAVAIR issued its task order under the GSA master contract.

In turn, Anteon subcontracted most of the work to three Hawai’i based entities: Oceanit Laboratories, the Research Corporation of the University of Hawai’i (RCUH), and the Pacific International Center for High Technology Research (PICHTR). So, the Anteon contract was just a pass through to avoid competition.  The subcontracts to Oceanit, RCUH and PICHTR may have also violated conflicts of interest because the personnel hired under the subcontracts were providing technical support for the Office of Naval Research at the same time they were helping RCUH prepare and submit a proposal to ONR.


Inouye’s earmarks go to his donors

By Herbert A. Sample / Associated Press

POSTED: 01:30 a.m. HST, Nov 09, 2009

A team led by a small Hawaii company was competing to design a new generation of military transport ships when Navy officials dropped it from contention in late 2007 because the team’s entry did not meet the Navy’s criteria.

Not all was lost for Navatek Ltd., however. The Honolulu firm had a powerful ally in Washington, D.C.: U.S. Sen. Daniel Inouye.

Since 1997, executives of Navatek and its parent firm, the privately owned Pacific Marine, have contributed more than $29,000 to Inouye’s campaign coffers, most of it since 2003.

And now the eight-term Hawaii Democrat is trying to direct $2.2 million in taxpayer money to the company to finance a model of an amphibious vehicle that the Navy rejected.

It is all part of a pattern for the powerful chairman of the Senate Appropriations Committee, the self-proclaimed “No. 1 earmarks guy” in the nation.

In the Senate version of the fiscal year 2010 defense appropriations bill, which Inouye was instrumental in drafting, he is sponsoring almost three dozen provisions that would spend more than $200 million on projects in Hawaii that the Pentagon generally does not want, an Associated Press analysis of federal election reports has found.

The contributions were contained in a Federal Election Commission database that dates back to 1976.

Of the $200 million, more than $25 million would flow to Hawaii-based firms whose employees have given more than $102,000 to his campaigns since 1997. An additional $33 million is intended for larger, more well-known companies, such as Boeing and Lockheed Martin, whose political action committees have contributed $114,000 to Inouye’s political war chest since 1997.

Such contributions are not illegal or uncommon. And Inouye has long been applauded in Hawaii for bringing federal dollars back home. But congressional watchdogs say the donations and earmarks are questionable.

“I think what that shows you is, at the very least, there’s the appearance of a quid pro quo between campaign contributions and then how decisions are made to allocate taxpayer resources,” said Mandy Smithberger, of the Project on Government Oversight, a nonpartisan watchdog group in Washington, D.C.

Inouye refused repeated interview requests, and his staff would not disclose how the earmarks were justified. In a brief statement he said congressional earmarks make up a tiny percentage of overall fed-eral spending and that his benefit military personnel, small businesses and Hawaii’s economy.

But many of Inouye’s earmarks exemplify how Congress targets spending, said Steve Ellis, of Taxpayers for Common Sense, another watchdog group. “Decisions are not being made on project merit, but on political muscle,” he said.

Last January, Inouye took over the Appropriations Committee. He also has long been either chairman of or a high-ranking Democrat on its defense subcommittee. At 85, Inouye is seeking a ninth six-year term next year.

During his 46 years in the Senate, he has sponsored hundreds of targeted provisions in every corner of federal spending. Such practices have been heav-ily criticized by Ellis and others as contributing to a “pay-to-play” culture in the nation’s capital.

Nonetheless, Inouye remains exultant about his role in the earmarking process.

“It may please you or it may not please you,” the senator told Hawaii island business leaders in August. “I’m the No. 1 earmarks guy in the U.S. Congress.”

No significant challengers have emerged to his re-election race next year. Still, Inouye raised more than $3.8 million and held more than $3 million in his war chest by Sept. 30, according to Federal Election Commission reports. Contributors flock to him in part because he chairs an influential congressional committee, said University of Hawaii political scientist Neal Milner.

Earlier this year, Inouye requested 46 earmarks worth nearly $331 million in the defense appropriations measure that his subcommittee handled, according to Taxpayers for Common Sense.

That was pared to 35 earmarks worth $207.5 million in the bill the full Senate passed recently, according to an Inouye news release. Two of those provisions, at $5 million apiece, are for Honolulu-based Oceanit:

» The High Accuracy Network Determination System is a “relatively low-cost” network of telescopes that give the Air Force more accurate space-tracking data, according to Inouye’s office.

» Multiple-Target Tracking Optical Sensor-Array Technology would improve data from missile defense systems. It would “fill a critical gap” in such technologies, documents say. The earmark was co-sponsored by U.S. Sen. Daniel Akaka.

Like virtually all earmarks, neither of Oceanit’s projects was included in budgets the White House submitted to Congress in recent years.

“It tells you it didn’t pass the smell test in the budget review and that the advocates are going through the back door into the defense budget,” said Winslow Wheeler, a former congressional aide who now is with the Center for Defense Information.

The AP analysis found the first donations from Oceanit officials were made in 1997. Since then they have given Inouye $26,700, including almost $11,000 from Chief Executive Patrick Sullivan, $9,000 from Chief Operating Officer Jan Sullivan and $3,900 from senior aerospace engineer Christopher Sullivan. It could not be determined whether the Sullivans are related.

Patrick Sullivan and Oceanit spokesman Ian Kitajima did not respond to requests for comment.

Navatek’s case is similar. Its team and three other groups of companies entered a mid-decade Office of Naval Research competition to develop a new concept in which seaborne transports deliver heavy combat vehicles. A component of the Navatek team’s entry was smaller vehicles called Captive Air Amphibious Transports.

Navatek’s team was dropped in late 2007 after the competition’s first phase because it failed to meet ONR’s criteria, said Richard Carlin, the agency’s director of sea warfare and weapons.

He said ONR remains interested in the company’s technology that allows boats to lift portions of their hulls above the water, and the firm was given a $600,000 research contract that ended last year.

Employees of Pacific Marine and Navatek have contributed $16,300 to Inouye since 1997, including $9,800 from Chief Executive Officer Steve Loui. Neither Loui nor Vice President Michael Schmicker responded to requests for comment.

Inouye’s $2.2 million request for Navatek would finance a half-scale model of its amphibious transport.

The eventual winner of the ONR competition also will build a scale model of the vessels it designed, Carlin said. But Navatek’s transports cannot re-enter the competition, he said.

His agency will manage Navatek’s earmark project if Congress tells it to, Carlin said. But he added, “We don’t support any earmarks. We support only the president’s budget.”

Tech start up gets quick earmarks

October 26, 2009 

This article from the Washington Post exposes another facet of the world of military contracts, congressional appropriations and earmarks.   Rep. Visclosky might have taken a few pointers from Senator Inouye.   Some of Inouye’s biggest earmarks are disguised as competitive contracts.  In these cases, the clear intent of the appropriation is to have the money go to an entity doing work in Hawai’i, but the company may not be named in the bill.  Instead, a very narrow criteria is inserted, making it a forgone conclusion that only the intended recipient can get the award.

Check out the Hawaii Technology Development Venture,  (HTDV) virtual earmark factory, the pet project of insider Harold Masumoto.  The money starts out in Congress as a ‘plus up’ project (added on to the DoD request) with narrow criteria to support start up tech companies with innovative projects of interest to the Navy.  In a rigged competition, the Office of Naval Research awards the contract to a non-profit entity created to stimulate high technology development in Hawai’i.   HTDV in turn awards venture capital to small Hawai’i-based tech firms that have projects applicable to Navy interests.  What’s interesting is that HTDV actually outsources the earmark process.  It leaves no Congressional fingerprints on the earmark.

There is often corruption in the process of making awards.  With Inspectors General underfunded and overworked, there is very little oversight and enforcement.    The Navy UARC/Project Kai’e’e was an example of this.  The Navy, Congressional appropriators and UH officials created a facade of competition, but extensive fraud was committed to ensure that the contracts went to the University of Hawai’i and its subcontractors.   With such powerful Congressional benefactors as Sen. Inouye and Senior Navy officials implicated, the criminal investigation was doomed from the start.


A congressman, a lobbying firm and a swift path to earmarks

Democrat supported funds for tech companies, many of which supported him

By Paul Kane and Carol D. Leonnig

Monday, October 26, 2009

It takes a while for most start-up companies to gain the confidence of a U.S. congressman and the promise of federal funds. But last year, a small Illinois company accomplished its goal in 16 days with the help of Rep. Peter J. Visclosky, a little-known Indiana Democrat who sits on the House committee that funds the Pentagon.

In rapid succession, the three-employee technology firm, NanoSonix, filed its incorporation papers in Skokie, Ill., and hired a Washington lobbying firm, K&L Gates, which boasted to clients of its close relationship with Visclosky. A week later, Visclosky wrote a letter of support for a $2.4 million earmark for NanoSonix from the House Appropriations Committee’s defense subcommittee.

“I understand how this can look from the outside,” NanoSonix chief executive Sean Murdock said in an interview, describing his company’s rush to get research funding to develop night-vision goggles. “My belief was we had to pursue government funding if this technology was going to see the light of day.”

Murdock’s company was not the only one to find a winning formula in pursuit of federal earmarks through Visclosky. The congressman sponsored or supported at least $44 million in earmarks in fiscal years 2008 and 2009 for more than 15 technology firms that had hired K&L Gates as lobbyists. None of the companies operated in Visclosky’s home state, but nearly all of them donated to Visclosky’s campaign just before or soon after receiving the promise of federal money.

K&L Gates used its relationship with Visclosky as a marketing tool, a document obtained by The Washington Post reveals. “We also have a very good relationship with Representative Peter Visclosky, chairman of the House Energy and Water appropriations subcommittee and third ranking member on the defense appropriations committee,” lobbyist Edward C. Olivares, a former Army Special Forces officer, wrote to a potential client in early 2007, soon after Democrats took control of the House. “We can ensure that Mr. Visclosky has visibility of this important project when funding is debated.”

Federal investigators are scrutinizing Visclosky’s earmarks and whether a member of his staff tried to raise campaign money by promising funding. The Post recently reported that the Justice Department probe is examining the role played by Visclosky’s recently departed chief of staff, Charles Brimmer, in negotiating with lobbyists and companies to solicit campaign donations. Brimmer’s attorney declined to comment.

The K&L connection

Much of the public focus in the investigation has been on PMA Group, a former lobbying powerhouse that won $299 million in earmarks in the past two years from the defense panel — $34 million of it directly from Visclosky. Visclosky’s pattern of help for K&L Gates clients has not been previously disclosed.

A Post review shows that the K&L Gates clients winning Visclosky’s support, along with their lobbyists and investors, donated almost $200,000 to Visclosky and an additional $130,000 to the House Democratic campaign committee since 2005. The donations often came in clusters, around the time Visclosky’s committee was crafting its annual earmarks, which are added to the budget by committee members and do not go through the competitive or approval processes required for most government contracts.

The earmarks helped the companies fund their nanotechnology and biotechnology research into making cheaper fuels, stronger concrete and faster semiconductors and also increased the likelihood of their success or sale. One venture capitalist, after helping steer almost $16,000 to Visclosky’s campaign, sold his fledgling company for nearly $20 million as the lawmaker endorsed a $2 million earmark for the company.

Both Visclosky and K&L Gates declined interview requests. Visclosky’s attorney, Reid Weingarten, said in an e-mail: “Congressman Visclosky proudly helped many companies doing innovative and important work receive federal funds. Some of these companies chose to support his campaigns with legal and public contributions. This is traditional, open and utterly normal activity on the Hill that is protected by our laws and Constitution.”

K&L Gates said in a statement that its actions were an aboveboard effort to get “cutting edge technology before key decision makers.”

“While Members of Congress may lawfully seek campaign contributions from our clients, and some of our clients have attended their fundraisers, we have always been clear that campaign contributions cannot be a condition for any appropriation or official action,” the statement said.

Over the past decade, the nanotechnology industry has generated ideas for improving everyday products by harnessing the power to measure materials in nanometers. By fashioning materials on the scale of atoms and molecules, the investors predicted, they could create blast-resistant cement, defect-free computers, even straighter-sailing golf balls.

The NanoBusiness Alliance, which is based in Skokie, was founded in 2002 by several scientists and a senior partner in Lux Capital in New York, and it aimed to help its members get research funding to turn their ideas into moneymakers. The alliance in 2003 hired the predecessor firm to K&L Gates, Preston Gates, which was then rebuilding its lobbying shop after the departure of rainmaker Jack Abramoff, who went to prison in a federal influence-peddling scandal. The firm became K&L Gates as part of a 2006 merger, and its lobbying revenue is on pace to hit nearly $20 million this year.

The firm signed clients at nanotechnology trade conferences and told them that it had found a committed supporter in Visclosky, who was then gaining seniority on the Appropriations subcommittee that controls the Pentagon budget.

According to an internal letter given to The Post by a potential client, K&L Gates hoped to share a cut of its clients’ earmark success. K&L’s Olivares offered a menu of pricing options, including a “success fee” in which the client would pay 7.5 percent of its earmark haul to K&L Gates, on top of a $6,500 monthly retainer.

‘To build a relationship’

Several firms said that signing K&L Gates helped them gain the access they had long been denied by federal agencies.

David Rosenberg, who founded Hycrete in New Jersey in 2005, said he hired K&L in August 2007 and has since paid the firm $190,000 to help obtain defense appropriations and other funds.

Rosenberg said he knocked on dozens of doors trying to get the Army Corps of Engineers to read data showing that his moisture-control additive would strengthen concrete structures. Success eluded him until K&L Gates made a presentation to Visclosky’s staff last year.

Rosenberg said K&L encouraged him to donate to Visclosky — “to build a relationship with a member of Congress.” Last year, Visclosky requested a $2 million Army earmark to evaluate Hycrete’s technology. The next month, Rosenberg and his colleagues donated $20,000 to Visclosky and the Democratic Congressional Campaign Committee.

“I’m a fan of earmarks,” Rosenberg said. “None of that would have happened without this funding — there was no light at the end of the tunnel.”

Genocea Biosciences, a Boston area vaccine maker founded in 2006 by Harvard professors David Sinclair and Darren Higgins, began a relationship with K&L Gates soon after it was formed, according to a spokesman. Lobbying reports show that K&L Gates began lobbying for the company in March 2007, and within weeks, company officials and investors gave $18,000 to Visclosky. It was the first time many of them had ever contributed to a federal politician, records show.

Visclosky then sought $2 million to help Genocea, which hoped to develop vaccines for chlamydia and bacterial meningitis. He later helped it secure an additional $1.6 million.

The earmarks helped the firm position itself financially. Earlier this year, it raised $23 million in private capital, largely from a GlaxoSmithKline fund, and is now positioned for sale, according to trade reports.

Sinclair, Genocea and Lux Capital declined to comment on their relationships with K&L or Visclosky. Lux, whose portfolio includes four other K&L Gates clients, said in a statement that it invests in companies that will provide “important breakthroughs.”

“Congress and the agencies of the federal government often serve a crucial support role in incubating emerging technologies,” the statement says.

Fledgling firm’s earmarks

The NanoSonix earmarks were unusual for such a fledgling company, and founder Murdock acknowledged in an interview that he moved hurriedly to protect future patents and obtain federal funds.

Over 16 days in March 2008, it started operations, hired the lobbying firm and won Visclosky’s help seeking $2.4 million for research to see whether a polymer might have improved night-vision goggles.

As Visclosky’s committee moved the earmark forward, Murdock, his wife and executives from the NanoBusiness Alliance wrote $21,700 in campaign checks to the congressman and the DCCC. Murdock said he could not recall whether K&L Gates suggested the donations.

The night-vision-goggle research has not begun yet. An Army spokesman said NanoSonix and the Army are still negotiating details.

“I’ve been trying to get NanoSonix off the ground for the past year and a half. It’s been a lot of tough sledding,” Murdock said.

Murdock said he hopes the Visclosky investigation will not present issues for his company. “I’m not enthusiastic about the way that looks that we got an earmark from a congressman for whom this has happened,” Murdock said. Visclosky stepped aside as chairman of the Appropriations energy panel in June after the Justice Department subpoenaed his office, his political committees and Brimmer for records. Brimmer resigned as chief of staff immediately.

Before the federal probe became public, nearly 30 percent of Visclosky’s earmarks — $63 million worth in 2008 and 2009 — were steered to firms outside Indiana. And nearly three-quarters of his campaign donations came from out of state, as well, most of it tied to firms requesting earmarks.

After the probe was public, Visclosky said he would only seek earmarks for nonprofits in his state, and his fundraising has subsequently dried up.

When asked in 2004 why Visclosky relied so heavily on out-of-state donations, Brimmer told Roll Call that it was because of the congressman’s popularity:

“Pete is a national legislator, and he has lots of friends in northwest Indiana but also around the country.”

Research editor Alice Crites contributed to this report.

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