A $191 Million Question

Army official meets pretty private contractor at a conference in Hawai’i. They become intimate friends.  Confidential Army information is shared with the contractor. Her company wins a big contract. Whistleblower triggers and investigation, but nothing happens.  Whistleblower gets investigated and run out of town.  This story bears a striking resemblance to the Project Kai e’e/ UARC scandal.

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A $191 Million Question

How a relationship between an Army official and a private contractor led to allegations of collusion and impropriety

By Robert O’Harrow Jr.
Washington Post Staff Writer
Friday, August 7, 2009

He called her Princess. She called him Bubba. They got together whenever they could, sailing on the Chesapeake Bay, traveling to business conferences, taking long walks. They exchanged e-mails night and day.

“You been sleepin??” George Raymond wrote to Catherine Campbell in September 2005.

“I slept some,” she wrote back. “Just got out of the shower.”

“Oh boy,” he wrote.

Theirs was a cozy relationship, and they worked in a world where such cozy relationships are officially frowned upon. Raymond, now 61, was the director of a technology program for the U.S. Army, and Campbell, now 47, was a favored contractor. As they grew close, the lines between their public duties and private lives blurred, drawing them into a morass of ethical and legal allegations surrounding government contracts worth up to $191 million.

SLUG: INV/ARMY DATE: Downloaded E-mail 6/8/2009 CREDIT: Courtesy of Army AL&T Online CAPTION: The man on the left is George “Chip” Raymond. The woman standing to his left is Catherine “Katy” Campbell. The man seated is unidentified. StaffPhoto imported to Merlin on Mon Jun 8 16:35:02 2009 camera works  Photo Credit: Richard Mattox — Army AL&T Online Magazine Photo

The tale of their four-year relationship is an allegory for the chronic problems afflicting the government’s $532 billion procurement system. Reforms a decade ago, intended to make the system more efficient and entrepreneurial, had unintended consequences: insufficient oversight, conflicts of interest, unprecedented outsourcing and an endlessly revolving door that leads government officials into the offices of contractors.

It also shows how accountability for contracting misdeeds at the Pentagon can be hard to come by, even when a whistleblower comes forward.

An internal Army inquiry last year found evidence that Raymond passed on confidential and sensitive government information to Campbell and allowed a firm she worked for to help write the terms of a contract, giving it an unfair advantage. The Army also concluded that Raymond was involved in the award of a contract worth up to $185 million to giant BearingPoint after Campbell went to work there, in a manner that created “at least an appearance of impropriety.”

An official recommended that evidence be referred to the Army economic crimes unit at Fort Belvoir for “further investigation into possible criminal violations.” But before that happened last summer, Raymond retired with full benefits, his reputation and top-secret clearance intact. He took a top job as an Army contractor at the giant Computer Sciences Corp. — with references and recommendations from Army colleagues.

Raymond acknowledged in an interview that he had a close relationship with Campbell, but said the two were not lovers and neither he nor Campbell profited from their relationship. Campbell did not return repeated phone calls.

Raymond also said he was a product of the decade-old federal procurement philosophy that encourages close collaboration with contractors.

“Nobody ever pointed out that what I was doing was wrong,” Raymond said. “I was never counseled.”

Launching a Relationship

They met in the spring of 2004 amid the booths of a military technology conference in Hawaii.

Stocky and affable, “Chip” Raymond was a married, retired Army major. For almost two decades, he had worked his way up through a series of civilian Army jobs to become the director of a start-up technology center at Fort Belvoir, a part of the communications and electronics command known as CECOM.

Katy Campbell was a gregarious single mom who had moved up through a variety of jobs, including health plan enrollment specialist, telecom account executive and physician liaison at a health-care company.

She had landed a new job a few months earlier at a Northern Virginia technology contractor called Enterprise Integration Inc., and was quickly promoted from office manager to “corporate liaison.”

Hours after a mutual friend introduced them, Raymond and Campbell joined others on a rented 30-foot sailboat, an outing that launched their relationship. “She was not a sailor,” Raymond would say later, “but she became one.”

Later that year, Campbell introduced Raymond to her boss at EII. The firm was soon awarded a six-month, no-bid contract to support Raymond’s center, which came to be known as the Enterprise Solutions Competency Center. In the end, the contract was worth almost $600,000.

As Beltway contractors go, EII was small, operating out of a suite of offices in a brick-and-glass building in suburban Alexandria. Started by two George Mason University professors, it had about 50 employees and advised the government on the arcane business of building and managing intricate computer networks. Company leaders promoted Campbell the year before to see whether she could parlay her people skills into new contracts through Raymond’s program at Fort Belvoir.

Campbell’s work included networking throughout the Army — sometimes at conference booths — and producing publications and educational material for Raymond’s center. She and Raymond met regularly at EII’s Alexandria offices for lunch. For exercise, they made a ritual of walking through the woodsy, rolling hills around the Fort Belvoir golf course. They also continued sailing together on the weekends, plying the Chesapeake Bay on a 40-foot Catalina 400 sailboat called Sea Eagle.

The boat was owned by a senior vice president at BearingPoint named Miles McNamee, a close friend of Raymond from their days working together for the Army in the mid-1990s.

About half of the weekend sailors were government workers — from the Army, Navy, Energy Department and other agencies — and about half were contractors.

Everyone brought their own sandwiches and shared coolers stocked with soda and other drinks, while helping to crew the boat, Raymond recalled. Federal rules generally prohibit officials from accepting gifts like boat rides from contractors. But members of the sailing group thought they could avoid conflicts of interest. “It is an unwritten kind of rule that when you’re sailing, you’re sailing,” Raymond said. “You don’t talk business. You don’t make deals.”

The close ties were typical, Raymond said, in part because of the overhaul of the procurement system more than a decade ago. The ambitious plan was intended to encourage agencies to operate in a more entrepreneurial way in order to reap a windfall from the “peace dividend” after the Cold War. The reforms included massive cuts to the Pentagon’s procurement workforce and a far greater reliance on private contractors.

“The lines that were originally drawn . . . Those lines started to blur and partnerships were formed,” Raymond said. “It goes on all the time. There’s nothing wrong with it, in my view. It was the way it was supposed to work.”

McNamee, now at KPMG, declined repeated requests to discuss his ties with Raymond and the social constellation that formed around the Sea Eagle, which Raymond said McNamee sold last year. Such boats sell used for $100,000 to $200,000.

“I have cooperated fully with investigations in 2007 on this matter while at BearingPoint,” McNamee said in a statement. “And I’m comfortable I acted in a professional manner in accordance with BearingPoint’s contracting practices.”

‘Eyes Only’

By the middle of 2005, Chip Raymond and Katy Campbell had gone from close professional colleagues to close personal friends.

“Why are you awake at 0100?” she asked in an e-mail.

“Been waiting for your e-mails. You fell off the earth. Busy day??”

“You need to stop being cranky and get some sleep.”

“You’re being mean to me,” he said. “Phooey.”

Their e-mails also touched on business. In June 2005, Raymond sent Campbell one containing “procurement sensitive information” — the government’s cost estimates for a new support contract.

“Eyes only . . . this is the breakout,” he wrote at the top of the e-mail.

“Danke,” she responded.

Federal law prohibits government officials from sharing confidential cost estimates and other sensitive procurement information with contractors.

As his center prepared to issue a request for bids on the new contract, Raymond allegedly allowed EII to help shape the terms by contributing to what is known as the statement of work, according to Army documents. Federal acquisition regulations prohibit such arrangements when the firm that writes the statement also wins the contract. EII officials denied knowing anything about the passing of the cost estimates or the shaping of the statement of work.

In an interview with The Washington Post, Raymond acknowledged passing on the information to Campbell, but said it was only part of a “tutorial” to help her understand the procurement system. He initially denied allowing EII to write the statement, then conceded he might have. “Under the pressures of setting up the operation quickly, I could have said, ‘Show me a statement,’ ” he said. “If I did it, it was wrong.”

Raymond said it is common practice for contractors to bolster their chances of winning a deal by providing information that helps to shape statements of work. “It happens all the time . . . They disguise it as a white paper,” he said.

Raymond said the intent is to make the system work better. “There’s this concept of doing the right thing and doing the best thing,” he said. “Sometimes you have to make a choice for the best thing.”

In another e-mail to Campbell that referred to the support contract, Raymond wrote, “ITS OUR BABY. You and me.” An Army investigator later said “content contained in the emails allude to collusion” between the two. In an interview, Raymond said the line was taken out of context and merely showed their shared desire to bolster the center.

In December 2005, EII won the one-year support contract with the possibility of two one-year extensions, altogether worth up to $6 million.

‘The Game Around This Town’

In February 2006, Raymond was invited to attend a conference on Army business at Oracle’s headquarters in Redwood Shores, Calif. He asked organizers to allow Campbell to accompany him. A few days after the Oracle conference, Campbell traveled with Raymond again to another technology conference, this one at the Doral Golf Resort and Spa in Miami.

By now, Campbell’s supervisors at EII had grown concerned about the personal nature of her relationship with Raymond. They also thought her work at Raymond’s center was not generating enough business.

The “frequent lunches, sailing trips, repeated evening visits by Mr. Raymond to EII’s office to see Ms. Campbell, and their coordinated travel together — created at least the appearance of a conflict of interest,” EII president Thomas Gulledge later said in a statement to an Army official.

Gulledge hired a contracting lawyer to train Campbell and other employees on their legal and ethical responsibilities. Campbell was told she no longer would be working with Raymond and the center. The change did not sit well with her or Raymond. Campbell would later say people at EII had made sexually suggestive remarks.

According to EII, Raymond issued a threat.

“At the time, Mr. Raymond told my partner, Dr. Sommer, that if Ms. Campbell left EII, then EII would be done working with CECOM,” Gulledge said in his statement.

Campbell resigned from EII in late March. Raymond signed a stop-work order on EII’s contract in mid-May.

Raymond later told The Post he ran out of money for the contract. “There was no retribution or vindictiveness,” he said.

Lynn M. Lovell, an Army official later assigned to investigate the relationship, noted that Raymond said “he should have cancelled the contract” after he had heard Campbell say that she also had been sexually harassed at EII.

“His statements reflect personal motivation; motivation that is not in the interests of the government,” Lovell concluded in a report.

For months in mid-2006, Campbell was unemployed. She resurfaced in Raymond’s professional world that fall.

On Nov. 9, her résumé was included in a BearingPoint proposal for another technology support contract at Raymond’s center, even though she later said in a sworn statement that she did not begin working at BearingPoint until Dec. 4. McNamee, Raymond’s friend at BearingPoint and Campbell’s sailing patron, later said he passed on her résumé to another company official but was not responsible for her hiring.

Raymond said the inclusion of Campbell’s résumé in the proposal was “not a big deal” and did not have an undue bearing on the contract award.

“The game around this town is you put résumés of people who are well known,” Raymond said. “It didn’t influence anything at all.”

In BearingPoint’s proposal, which was addressed directly to Raymond, Campbell was listed as part of the “leadership team,” second only to McNamee.

Although McNamee signed the proposal — and his résumé was the first presented as part of the project team — he later said he had nothing to do with it. He told one Army official “that he signed the forwarding letter but that he never saw nor read the proposal.”

For his part, Raymond told the same official he “never opened nor read the proposal,” but instead forwarded it to another official “and therefore did not realize that Mr. McNamee addressed the letter to him and that his résumé was included.”

This contract was much larger than the others, worth up to $185 million. It included some services that had been covered under the old EII contract.

The new contract made use of a separate government contracting channel at the National Institutes of Health, which allowed preapproved contractors to compete for work that government agencies deemed necessary.

BearingPoint was among the companies approved, but EII was not. Raymond later said he chose the NIH at the request of program managers who oversaw Army medical information systems.

When questioned about the deal, an Army spokesman recently said Raymond’s office “may not have followed proper administrative procedures” in using the NIH.

In any case, BearingPoint won the contract on Dec. 1, 2006, after a “selecting board” of Army officials recommended the firm. All four board members worked closely with Raymond, who was also the official responsible for endorsing any decision before it took effect.

In his interview, Raymond downplayed his role in the decision. “You either agree or disagree with the recommendation,” he said. “In most cases, you agree.”

Pressure to Investigate

Although Campbell had just begun at BearingPoint, she was not finished with EII. In January 2007, she filed a lawsuit against the firm in Fairfax County Circuit Court.

She said that she “was subjected to abusive, inappropriate, and humiliating treatment,” including remarks that “had a clear sexual undertone.” In a sworn statement, she said that Gulledge once made rude remarks about her breasts and another colleague read a Viagra ad aloud.

Campbell also asserted that the company owed her about $60,000 in “incentive payments” for her work. EII officials said the allegations were baseless. A judge threw out most of the allegations and a jury eventually ruled against Campbell on the rest.

While the case was pending, EII officials went straight at Raymond. The company requested details about the BearingPoint deal and subpoenaed Raymond to answer questions about Campbell.

Raymond referred the matters to the legal team at Fort Belvoir. The case was assigned to a new civilian attorney named Barbara Strong, who had joined the office only weeks before.

Strong, now 57, is a dogged former state government lawyer who is married to a retired investigator for the Internal Revenue Service. After graduating from Catholic University law school, she worked as an assistant Maryland attorney general for eight years before going to work for the Army in 2006.

In June 2007, she asked Raymond about Campbell and EII. He said Gulledge had seemed to imply that Raymond was sleeping with Campbell, asking whether she was “any good.” Gulledge later said his question related to her work performance. Raymond told Strong that he and Campbell were the best of friends and sailing companions. But he told Strong they were not lovers, according to documents she prepared.

Raymond introduced Strong to Campbell and the two women talked privately for an hour. Then Strong spoke to an EII attorney, who asked whether Raymond had retaliated against the firm by cutting off its funding.

The more Strong learned, she later recalled, the more problematic the relationship seemed. She urged Raymond to hire a private attorney to deal with any civil or criminal exposure he might have. He took her advice.

She also told Raymond he needed to quit sailing on McNamee’s Sea Eagle to avoid a possible conflict of interest.

Raymond reluctantly agreed in another e-mail: “I have been sailing with this group for a very long time and actually work the boat. Don’t know if that helps, but Miles and I have been friends since Army days . . . he is in a very different part of Bearing Point [sic]. I would hate to stop doing what I love to do and where I go to escape all discussion of business. We never talk work.”

A short time later, Raymond suggested in an e-mail that the Army might seek to retaliate against EII for pressing the Campbell matter, pulling their security clearances and suspending their contracts. “It may take some wind out of their sails,” he wrote.

That was too much for Strong. Without telling Raymond, she urged her Army colleagues in the legal office to forward the case to the Army’s CID, the criminal investigation command.

Strong’s advocacy was met with skepticism, but her superiors allowed her to brief their boss, Col. Thomas Loper, the chief of CECOM’s software engineering center, who initially seemed unconvinced.

“The situation was extremely delicate because Ms. Strong was recommending an investigation of one of COL Loper’s top employees,” John Metcalf, Strong’s direct supervisor, later wrote in a sworn statement.

After a two-hour discussion with Strong and Metcalf, Loper agreed to conduct an “Article 15-6 investigation,” or a fact-finding inquiry one step below a criminal probe.

They assigned the job to Hermann J. Spitzer, a civilian Army physicist who had nearly no experience as an investigator.

Sworn Statements

By his own account, Spitzer was an unlikely choice to run the 15-6. The closest he had come to such a task was years earlier when he was asked to look into a petty theft.

Spitzer, now 73, came to the United States from Germany as a student, was married and became a U.S. citizen. In four decades with the Army, he rose through the civilian ranks to head the “night vision” research labs at Fort Belvoir.

His first thought was to decline the assignment from the legal team. “I said, ‘Why should I do that? I’m not an investigator,’ ” Spitzer said in an interview with The Post. “I really did think I should not do it. They really coerced me into it.”

Strong, for her part, questioned whether Spitzer was up to the task. In early August 2007, she traveled to Fort Monmouth, N.J., to share new evidence about the ties among Raymond, Campbell and McNamee and to push for a more aggressive investigation. She met with Paul Harris, the legal adviser for Spitzer’s investigation, and Robert Russo, a contracting law attorney.

While reviewing documents, Harris and Russo urged her not to answer a written question that Spitzer had given her for “a review of the facts” that she had recently gathered, according to legal papers she filed later.

“Essentially, Mr. Russo suggested that Ms. Strong perjure herself, and expressed his view that there was nothing unusual about the apparent steering of a contract by military personnel to their friends within the defense community,” Strong said in documents later filed with the federal Merit Systems Protection Board.

In sworn statements, Harris and Russo strongly denied Strong’s account. “I never suggested that she ‘turn a blind eye’ to anything or that she ‘perjure’ herself,” Russo said.

“Furthermore,” he said, “I never stated nor implied that ‘there was nothing unusual about the apparent steering of a contract by military personnel to their friends within the defense contract community.’ No such issue was ever discussed.”

But Harris’s sworn statement seemed to confirm Strong’s account that she was told that her evidence was lacking. “Mr. Russo shared with Ms. Strong that the particular documents she pointed to did not reveal anything unusual in the contracting arena,” Harris said.

Still, Harris added that he and Russo were not trying to block Strong but were merely attempting to prevent her from interfering with what Spitzer was doing.

“At no time did Mr. Russo or I ever suggest, recommend, and tell Ms. Strong to lie, conceal, cover-up, or otherwise prevent [Spitzer] from conducting a fair and impartial AR 15-6 investigation,” Harris said.

At least one member of the legal office accepted Strong’s assertions about the importance of what she had turned up. “Ms. Strong quickly picked up on the fact that the [BearingPoint] contract award appeared laced with irregularities and indicia of fraud,” Metcalf, her supervisor, later said in a sworn statement.

Strong speculated in a recent interview that the legal office might not have wanted an aggressive investigation because it might not have properly reviewed the contracts. In a recent statement, a civilian Army spokesman said the legal office apparently did not do the reviews. “There’s no known record of a legal review of the contracts,” spokesman Lenny Gatto said.

He said the Army personnel involved would not be made available for interviews because the matter is still under review almost a year after the evidence was handed over to Army criminal investigators.

‘I Did Something Wrong’

As he gathered material, Spitzer became convinced that Raymond and Campbell had done nothing wrong, except to give the wrong impression.

Spitzer relied heavily on the statements by Raymond, Campbell and McNamee. “I’m not an investigator,” he said in an interview. “I’m not a judge who could force these people to tell the truth.”

He ultimately found no problems with the contracts, no undue influence, no cheating.

“Their friendship may be or may have been somewhat unorthodox, but there is no evidence of an inappropriate relationship, sexual or otherwise,” he eventually wrote in a report. “Both have been described as competent and consummate professionals.”

He did recommend ethics counseling for Raymond regarding the use of McNamee’s boat.

Around the time he submitted his report, in November 2007, Spitzer contacted Raymond and offered his support. “I told him if he needs help in court, I’m going to retire in a couple of weeks. I will speak out for you,” Spitzer said in an interview.

Spitzer’s final report did not refer to the key “Eyes only” e-mail in which Raymond shared confidential procurement information with Campbell. In an interview, Spitzer said he did not recall seeing the e-mail. “I got a couple hundred e-mail,” he said. “You get dizzy after a half-hour . . . I didn’t see anything.”

In early December 2007, an Army colonel rejected Spitzer’s report without remarks. An Army spokesman later said the investigation was deemed insufficient.

“Many of his findings and recommendations were unsupported by the evidence developed, and there were a number of serious issues that he failed to investigate,” Gatto said in a recent statement.

In March 2008, Loper ordered another probe, this time by a contracting specialist named Lynn M. Lovell. Loper sharply narrowed the focus to two e-mails Raymond and Campbell had exchanged.

One was the “Eyes only” note that Raymond sent to Campbell containing cost estimates for a contract with EII. Another was a personal communication. Left unaddressed would be the far more valuable BearingPoint contract.

Lovell submitted her findings in May, concluding that the “Eyes only” e-mail appeared to violate the federal Procurement Integrity Act. A conviction can result in five years in prison. She recommended Raymond’s removal and the criminal investigation, which began last fall.

In July, Raymond was notified of his proposed removal. The next month, the Army issued a “Notice of Decision to Remove.” By then, he had received a number of calls from Army officials, alternately pressing him to leave and offering support. Among those calling was Loper.

“Tom Loper called up and said, ‘I’ve got some really bad news for you,’ ” Raymond recalled.

Raymond chose to retire before he could be removed.

He called his missteps “a human mistake.”

“I did something wrong,” he said. “I gave an acquisition sensitive document to a contractor, Katy Campbell. It was wrong of me to do that.”

Raymond said “Katy was as innocent as the day is long.” He said he was “set up” by Army colleagues jealous of his success.

“If I were to do it again . . . everything would be extremely by the book,” he said. “No partnerships. No friendships.”

Shortly before he left the Army, Raymond began talks with Computer Sciences Corp., one of the contractors he had worked with. He had the apparent support of some senior Army officials — including then-deputy undersecretary Thomas E. Kelly III — who Raymond cited as references in his résumé.

In an interview, Kelly said he did not recall Raymond’s request for a reference and did not know about evidence turned up by the internal 15-6 inquiry because it is confidential.

Raymond has also received recommendations from Army officials, including Col. Loper, who after accepting the findings on Raymond in August went on to praise him in December, saying in an online recommendation that his talents have “served the Army and this country well.”

Loper did not return phone calls. Army spokesman Gatto said that Loper, now in Afghanistan, believed that “even though Mr. Raymond had made a serious mistake, he had made numerous very positive contributions to the Army.”

But Gatto said no one in Loper’s chain of command was aware that he had written the endorsement. “It in no way reflects the official position of the department,” Gatto said. “The Army is evaluating what corrective action might be appropriate.”

In a statement, a spokesperson for Computer Sciences Corp., now called CSC, said the company followed proper procedures in hiring Raymond, who provided documents showing that he was free of conflicts of interests. The company said in statement it “has not seen, heard nor been made aware of any of the allegations.”

Raymond did not respond to requests to discuss the circumstances of his hiring.

Campbell is still an Army contractor, working for Deloitte, which recently acquired BearingPoint. A Deloitte spokesman said, “It would be inappropriate for us to comment. Katy Campbell declined to comment.”

No Kudos for Speaking Up

Barbara Strong got no kudos for spurring the investigation. Instead, she was investigated herself, for reasons the Army said were unrelated to her role in the Raymond matter.

In May 2008 she lost her title as a team leader following alleged missteps with Army clients. One of her supervisors, Vince Buonocore, who was based at Fort Monmouth, said that Strong “had demonstrated that she needed closer supervision,” documents show.

Her previous direct supervisor, John Metcalf, would later disagree in court papers. “I found Ms. Strong’s behavior, conduct and demeanor in the office and with clients to be entirely appropriate,” he said. “Ms. Strong appeared to fit in well with and get along with other members of the office, including her fellow attorneys.”

But Metcalf had retired on April 30 and was no longer around to defend Strong.

Her new supervisors asserted that she was not collegial, disobeyed orders and spoke to a senior Army official in a rude manner. When Strong was “counseled,” the Army lawyers noted, she “smirked and chuckled,” and then began “mimicking being gagged.”

She felt she was being set up. Strong, who has temporal lobe epilepsy, worried she might have a seizure from the stress. On July 1, she had a grand mal seizure at work and was taken to Dewitt Army Community Hospital, where she suffered another seizure. She had a third seizure a few days later.

On Aug. 13, with Strong out of the office following her seizures, the Army filed papers proposing her removal. The next day, the Army issued a termination notice for Raymond. Strong got her final notice two months later.

In December, she filed an appeal to the Merit Systems Protection Board, an appeals systems for civil servants, claiming among other things that she was retaliated against for her “disclosures of apparent fraud in connection with the award of a $185 million defense contract, and of attempts by Army personnel to cover-up that apparent fraud.”

Army officials questioned whether Strong qualified as a whistleblower under federal law, but in the end they settled the case earlier this year without admitting wrongdoing, paying her $115,000.

Researcher Madonna Lebling contributed to this report.

Source: http://www.washingtonpost.com/wp-dyn/content/article/2009/08/06/AR2009080603918_pf.html