In This Issue: 1 Checks and Balances Needed for NSA 2 Director’s Letter 3 Security Screening Flaws 4 Another Unneeded Multi-Billion Dollar Nuclear Facility 4 Meet POGO’s New Staff 5 SEC Fixes a Loophole 5 Pentagon Changing Course on Flawed Ship? 6 Planned Giving

PROJECT ONGOVERNMENT OVERSIGHT

Exposing Corruption. Exploring Solutions. www.POGO.org

November 2013: Vol. 17, Issue 3

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Checks and Balances Needed for NSA Surveillance Programs

The American government spying on Americans; spying on our allies; turning over American communications to other nations; breaking down

privacy safeguards on the Internet and in our Constitution—all of these things now have our attention because of intelligence contractor Edward Snowden’s whistleblower disclosures. Snowden’s disclosures have peeled back a system of secret law that has long been in need of more checks and balances. Congress has finally awakened to challenge national security claims that have kept them and the American people in the dark about our intelligence activities, including domestic surveillance. There have been at least a dozen hearings and a few dozen bills introduced to wrestle with the revelations about NSA activities.

POGO has been working with allies to support reforms ranging from more checks and balances in the legal framework for intelligence activities to better whistleblower protections for the national security and intelligence community workforce. As we go to press, there are at least two pieces of legislation that include our recommendations.

The first is a bill introduced by Senator Patrick Leahy (D-VT), Chairman of the Senate Judiciary Committee, and Representative Jim Sensenbrenner (R-WI), one of the original authors of the USA PATRIOT Act. The USA FREEDOM Act, supported by an impressive coalition of more than one hundred bipartisan lawmakers, ends bulk collection of domestic records, curbs secret law, increases transparency, improves oversight and accountability, and provides safeguards for civil liberties and other rights.

The Senate Select Committee on Intelligence has also attached whistleblower protections to its authorization bill. The reform, championed by Senators Susan Collins (R-ME) and Ron Wyden (D-OR), would provide for the first time specific statutory protections for those who hold security clearances and have access to classified information. These protections are similar to those the Senate passed last year, only to be blocked by House Intelligence Committee Chairman Mike Rogers (R-MI). We hope that given the recent high-profile leaks of classified information, Chairman Rogers will reconsider his position and make it safe to use legal channels to disclose waste, fraud, and abuse in our intelligence activities.

We are also working with other Members of Congress, the Obama Administration, and the Privacy and Civil Liberties Board to advance meaningful reform to better balance national security with liberty and accountability. To keep up on the ever-changing landscape of the post-Snowden reform efforts, please visit POGO’s blog. ■

Dear Friends,

As I write this, the government has just reopened. The crisis we experienced was largely created by some in Congress who used anti-government rhetoric and tactics. We at POGO are not anti-government. While we’re often critical of how government does its business, we hold the core belief that there is a potential for good, accountable government.

Now that the immediate crisis has passed, and the government is back up and running, we are still faced with a profound systemic problem: How do we get our government to fulfill its potential?

The answer clearly begins with “we the people.” It is pitiful that the Capital—the whole country, in fact—is so brutally and uncivilly divided over the role and activities of government. Are NSA surveillance activities making us safer, or are they simply violating the civil liberties of our allies and our own citizens? Are drones effectively targeting terrorists, or are they killing civilians and fueling future enemies? What about the role of government in financial regulation, the regulation of energy resources, or the regulation of commerce? What should that role be? Equally problematic is that, regardless of which side one comes down on, facts are no longer just facts. If they don’t fit one’s political frame, the facts are obstacles to be ignored or twisted by those who don’t like them.

Our politicians are frankly acting largely like we do. They ridicule the other party. They only talk to each other and appear on television or radio shows that mirror their side. Can you blame them, really? That is what their constituents apparently want. The people electing these politicians (that’s us) are limiting our worlds to the safe comfort zones of the familiar.

It has been made clear by the past few elections, however, that about half the country doesn’t agree with us. Does the “other side” really not have one single valid point? Rhetoric aside, how reasonable is it to dismiss nearly 158 million people as crazy? There is a least some value in what they are saying, and we need to learn to listen to them.

It strikes me as unlikely that Washington will change until we acknowledge that the gridlock is our own fault. It is, therefore, in

Letter from the Executive Director

StaffDanielle Brian, Executive DirectorScott Amey, General CounselAngela Canterbury, Director of Public PolicyPaul Chassy, Ph.D., J.D., InvestigatorJohn Crewdson, Senior InvestigatorLydia Dennett, Research AssociateDanni Downing, Editor & COTS DirectorAbby Evans, Donor Relations ManagerNed Feder, M.D., Staff ScientistAndre Francisco, Online ProducerNeil Gordon, InvestigatorDavid Hilzenrath, Editor-in-ChiefLynn Mandell, Finance ManagerJohanna Mingos, Data SpecialistJoe Newman, Director of CommunicationsChris Pabon, Director of DevelopmentEthan Rosenkranz, National Security Policy AnalystKeith Rutter, Chief Operations Officer & CFOPam Rutter, Web ManagerMichael Smallberg, InvestigatorMia Steinle, InvestigatorPeter Stockton, Senior InvestigatorWinslow Wheeler, Director of the CDI Straus Military Reform Project Adam Zagorin, Journalist-in-ResidenceChristine Anderson, Public Policy FellowAvery Kleinman, Beth Daley Impact FellowJamie Neikrie, Intern

Board of DirectorsDavid Hunter, ChairLisa Baumgartner Bonds, Vice ChairDina Rasor, Treasurer

Ryan AlexanderHenry BantaDavid BurnhamMichael CavalloStacy Donohue (Observer)Charles HamelJanine JaquetMorton MintzNithi VivatratAnne Zill

2 ■ Vol. 17, Issue 3

(cont.)

Vol. 17, Issue 3 ■ 3

Letter (continued from page 2)

our power to break that gridlock. Please stop and think for a moment. Is there someone in your life with whom you disagree on nearly everything? But they are a family member, an old classmate, a neighbor, and you still love them despite their politics. If you can use that common ground to begin a respectful conversation about one of the issues where you don’t agree, you are taking the first step to fixing Washington. By having that conversation, you might learn to hear with a more open mind what those other people are actually saying: Why do they hate X? Why does Y scare them? That awareness could help make the discussions you enter into with acquaintances at social functions, with friends on your Facebook page, or even with a stranger on an airplane, a little less combative. And you will be more likely to persuade that person to listen to your views as well. With these baby steps, you will help to create a sea change in our culture that will eventually ripple over to Washington, DC. I used to think emphasizing the need for civility in public discourse was a silly luxury. Now I believe it is an urgently needed condition for preserving our democracy.

I know this sounds idealistic. And I welcome your suggestions on how to get our government functioning again. But I believe deeply that we all need to stop complaining and to actually do something to fix our broken system. In the meantime, we at POGO are going to keep pushing for an accountable, effective, open, and ethical federal government that represents all of us.

Best Wishes,

Danielle Brian, Executive Director

Serious Flaws in Security Screening Processes

In a sad coincidence, on the same day the Pentagon’s Inspector General released an audit report slamming a Navy security screening program, a contractor employee named Aaron

Alexis went on a shooting rampage at the Washington Navy Yard killing 12 people. The report found that flaws in the Navy Commercial Access Control System (NCACS) screening program enabled 52 convicted felons to get unescorted access to Navy facilities, and put military and civilian personnel at an increased security risk. NCACS is administered by a contractor, a security services company called Eid Passport. Eid Passport’s background checks failed to catch applicants’ past convictions for serious crimes, including “indecent liberties with a child.” The program also imposed millions of dollars in extra costs on taxpayers and lacked proper oversight. Meanwhile, Eid Passport, which boasts retired military brass and a former Cabinet secretary on its board of directors, earns millions of dollars in fees from security credentials issued to applicants who may have been inadequately screened. The screening problems do not stop at NCACS or Eid Passport. The background check for Aaron Alexis was handled by another contractor—U.S. Investigations Services (USIS), which also performed the background check on surveillance program whistleblower Edward Snowden. USIS is the leading contract provider of federal background checks, receiving more than $3 billion from taxpayers since fiscal year 2000. USIS has a more checkered history than Eid Passport. In recent years, several USIS employees have been convicted or pleaded guilty to falsifying background checks, and a federal grand jury is currently weighing whether to bring fraud charges against the whole company. The Office of Personnel Management’s Inspector General also launched a criminal probe of USIS. In addition, USIS has been hit with lawsuits filed by former employees who claim they were forced to work off the clock and during unpaid breaks in order to keep up with the company’s demanding pace for background investigations. After 9/11, when national security hiring surged, the government hired companies like Eid Passport and USIS to handle the equally surging volume of background investigations. The Snowden and Alexis incidents have galvanized efforts to improve federal security screening procedures. They also forced a re-examination of the growing number of federal and contractor employees with clearances and the role contractors should play in the background check process. ■

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Vol. 17, Issue 3 ■ 4

The Uranium Processing Facility—Just Stop Digging

The Department of Energy (DOE) and the National Nuclear Security Administration (NNSA) have a long history of

mismanaging major nuclear construction projects, but the proposed Uranium Processing Facility (UPF) at Y-12 National Security Complex just might be the worst. The UPF would replace several uranium operations buildings at Y-12. But POGO recently released a report on the UPF program, Uranium Processing Facility: When You’re in a Hole, Just Stop Digging, which found that the program is rife with problems. First, it was sold to Congress in 2005 with a price tag of $600 million and a completion date of 2018. But budget constraints, design screw-ups, and abysmal contractor management have sent the cost skyrocketing to between $6.5 billion and $11.6 billion with a fully operational date sometime in 2038. In addition, the UPF’s current design leaves the facility significantly more difficult for the Y-12 guard force to protect. This is particularly troubling since the Y-12 guard force has had recent problems with security at the site, including a nun and two peace-activist colleagues breaching the security perimeter and reaching the uranium storage building. But the most troubling thing about the UPF project is that it may not even be necessary. Nuclear experts have questioned whether the facility will be able to contribute to NNSA’s nuclear stockpile and stewardship mission because it has been so significantly delayed. Furthermore, evidence suggests that existing facilities at Y-12 and elsewhere could take on the facility’s mission. For instance, the Pantex Plant in Texas is already performing similar work and has the capacity to execute some of the uranium work currently done at Y-12. Additionally, evidence suggests that the existing uranium operations buildings at Y-12 are not as decrepit as the NNSA would have Congress and the public believe.

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A depiction of the proposed Uranium Processing Facility.

Despite all this, alternative, cost-saving solutions have not been thoroughly explored by the NNSA. The UPF is an unnecessary hole into which we have already sunk far too many taxpayer dollars. It’s time for the NNSA to just stop digging. ■

POGO Welcomes Two New Additions

POGO is pleased to welcome a new member to our staff: Ethan Rosenkranz, a national security and defense expert. He’ll be working

as POGO’s national security policy analyst. In that role, he’ll help develop national security and defense-related policy recommendations, disseminate and publicize investigatory findings, advocate reforms to the media, public, and Congress, and contribute to POGO investigations. Before joining POGO, Ethan spent four years on Capitol Hill, during which he helped draft two alternative budget resolutions, both of which incorporated significant savings in Pentagon spending, and handled Science and Technology Committee work. Ethan also worked on a diverse portfolio of congressional issues and has extensive experience drafting Floor amendments on specific weapons systems. Most recently, Ethan worked for the Project on Defense Alternatives as the executive editor of the Reset Defense Bulletin, a weekly newsletter covering the defense budget and Congress. POGO is also happy to announce our second Beth Daley Fellow, Avery Kleinman. Avery writes content for POGO’s blog, assists in the production of podcasts and videos, drafts press releases, and promotes POGO through the strategic use of social media. Avery graduated in 2013 from the University of North Carolina at Chapel Hill’s School of Journalism and Mass Communication, where she studied audio and video production. She also spent a year at Northwestern University’s Medill School of Journalism. Avery has interned at two NPR member stations: she produced segments for the daily interview program at one, and worked in the News department writing stories for the web and air at the other. She has also contributed to various online publications where she wrote a weekly news column summing up the week’s events for a college-aged audience. The Beth Daley Impact Fund Fellowship was created to honor the legacy of Beth Daley, a longtime POGO employee who left a lasting imprint on the organization. ■

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Vol. 17, Issue 3 ■ 5

Littoral Combat Ship: Is the Pentagon Finally Changing Course?

For the past two years, POGO has uncovered serious problems with the Littoral Combat Ship (LCS), a new type of Navy vessel designed to patrol

coastal waters. Working with whistleblowers, POGO brought to light numerous issues, including a flawed design, failed equipment, construction deficiencies, and a lack of survivability in combat situations. Besides these issues, the LCS has experienced enormous cost growth since its inception, with its per-unit cost increasing by more than fifty percent since its original cost estimate. Still, the Navy has so far stood by this program. Earlier this year, Vice Admiral Richard Hunt, the head of a special council assigned to assess the LCS, went so far as to suggest that the Navy may effectively double the size of the program. However, the Pentagon may be having other thoughts. After months of denying reality, the Pentagon has finally begun to smell the coffee. It is now in the process of preparing two budget requests for the coming fiscal year: one that accedes to the automatic spending cuts of sequestration and another that continues with the status quo. In the former, more austere budget request, the office of the Secretary of Defense will reportedly recommend ending procurement of the LCS after current contracts are completed. Fortunately, it appears the Pentagon is finally willing to make tough decisions in a difficult budget environment. Between 1998 and 2010, the Pentagon’s budget more than doubled in size, which allowed senior military and civilian leaders to escape making tough choices. They were, for instance, able to purchase two different variants of the LCS—even though the Navy knew that one vessel outperformed the other. Not anymore. Whether the Navy likes it or not, fiscal pressures and a declining Pentagon budget will force it to rethink the LCS program. Ending procurement after current contracts are up and getting on track for an alternative that is both cheaper and more effective offers a prudent course. ■

POGO Supports Closure of Revolving Door Loophole

The Securities and Exchange Commission (SEC) is closing a loophole that allowed certain employees to lobby the agency immediately after leaving.

POGO highlighted the ethics loophole in a February report on the revolving door, and recommended longer timeout periods for employees who come from or return to Wall Street. SEC records obtained by POGO show how just one former litigator took advantage of the loophole, disclosing within months of leaving that he would be representing Merrill Lynch in more than 17 enforcement cases and other matters pending before the agency. Now, as a result of the rule change, SEC alumni who made more than $155,440 a year will have to wait at least one year before they can represent clients before the agency. This is the standard “cooling-off” period that requires people leaving senior positions at other federal agencies to sit on the bench for one year before lobbying their former colleagues on official business. The SEC had obtained permission from the Office of Government Ethics to exempt various senior employees from the one-year prohibition. SEC officials argued that the agency needed the exemptions in order to recruit talented employees. In a January 2011 report, the SEC Office of Inspector General criticized the loophole however, concluding that it had “enabled some SEC employees who are highly compensated and who hold prominent positions to evade the ban, despite [the fact] that they are the type of employees the ban was intended to cover.” The rule change, expected to take effect in early 2014, puts the SEC “on an even footing with...peer regulators and adds an additional layer of protection against even the appearance of impropriety when former employees take on new jobs,” according to an internal August 21, 2013, SEC ethics memo. The announcement raised the hackles of some industry lawyers who served at the SEC. But one former agency attorney, Amy Greer, told POGO she supports the rule change. “Anything the agency can do to further engender the public’s trust, I think, is valuable,” she said. POGO supports the closure of this unnecessary loophole, and urges the SEC and other agencies to take additional steps to mitigate the worst effects of the revolving door. ■

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