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Volume 18, Number 21, May 19, 2004
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Ottawa's Military Computer Scam Solution Stinks!
It started out as Information Technology (IT) support contracts enduring from FY 2000/2001 through FY 2002/2003, issued to what is now Hewlett-Packard Canada Co. (HP Canada) by the Government of Canada on behalf of the Department of National Defence (DND).
Since then it has become a befuddling muddle of bafflegab to dodge explaining how C$156 million in taxpayer cash was stolen.
Hewlett-Packard's position seems rocky given that it owns and inherits contractual obligations. It is a ripe candidate for the 'fall-guy' role in an amazing cover-up. It must now pay back money it billed DND and subsequently paid to phantom subcontractors DND told HP to pay.
Even as at least one fired DND employee is basking in the sunny Turks and Caicos, seemingly impervious to prosecution, the government implies Hewlett-Packard is to blame for everything. Hewlett-Packard appears to be accepting that blame with caveats, perhaps to allow the continuance of its substantial Canadian business prospects and to save the federal government from further bad press over persistent news of alleged pervasive contract fraud. Giving the appearance of compensating HP for being the 'fall-guy', DND says that HP "remains a valued IT supplier to the Canadian government" according to a brief DND statement issued late Friday. This is worthy of skepticism.
DND-assigned sub-contractors to Hewlett-Packard (Canada) Co. (a.k.a.: HP Canada) were involved. Some may not even exist as real working entities.
Because even lower level IT-support requires access and control authority over some system resources, some work legitimately needs a shroud of security. Intentionally that shroud within DND was exploited to block oversight--a colossal breach of security from the inside. Astoundingly the work appears to be simple Web content building and server maintenance, work that many of today's Canadian High School graduates can perform well.
HP Canada did not know what work the sub-contractors it was forced to compensate were doing. How on earth HP Canada's operations-control regime would allow this to occur in the first place is something it must grapple with as the Government of Canada requests it to open fully its books. HP claims there is no "evidence that HP employees derived any improper benefit from the scheme".
Clearly it should be said that too much was tolerated by this company perhaps fearing the ruffling of big-client (the entire federal government) feathers. No whistle blowers emerged over the multi-year contract period.
When Hewlett-Packard asked DND about the nature of work performed by these contractors it was required to compensate, HP says it was told "that the work was confidential and in the interest of national security", HP was not entitled to this information. These tasks have recently been taken from HP and assigned to The Baxter Group, a web site builder. This is not top secret work. Moreover, HP had been the prime contractor after it took over Compaq and at some point in time, the DND surely must have given its contractor some specific instructions about the job of work to be performed. The alleged DND claim that HP didn't have security clearance is absurdly Monty Pythonish.
Behind the apparently vulnerable wall of bogus DND security (obscurity?), without proper oversight, and exactly as one would expect from such an incompetent layering of disconnected hierarchy, something went catastrophically wrong. Were DND-embedded crooks running the HP Canada contracts? What more rot exists at the core?
Emerging is evidence of a "complex scheme designed to exploit both parties through contracts inherited with HP's merger with Compaq Computer Corp", said the mother of all lame excuses, a brief Department of National Defence news release dated 14 May 2004.
About its Compaq merger, Hewlett-Packard said in its October 2003 annual Form 10-k statement filed under U.S. Securities regulations, "During fiscal 2003, we made substantial progress toward completing the integration of our acquisition of Compaq Computer Corporation, which we closed during May 2002."
On page 16 of the report, Hewlett-Packard revealed the conflict saying that, "The Government of Canada is conducting cost audits of certain contracts between Public Works and Government Services Canada and each of Compaq Canada Corp. and Hewlett-Packard (Canada) Co. relating to services provided to the Canadian Department of National Defence. Compaq Canada Corp. was combined with Hewlett-Packard (Canada) Co. following the acquisition of Compaq by HP."
"The cost audits began, following a notice from the Government of Canada dated August 1, 2003. The Government of Canada has indicated that it believes it may have been overcharged under the contracts, that it may not have received value for certain items billed under the contracts, or both. It has requested supporting documentation for certain invoices submitted by HP in connection with this audit. Pending completion of its audit, the Government of Canada has declined to pay outstanding receivables (C$49m) under the contracts at this time. HP is cooperating fully with the audit and has conducted its own inquiry into the contracts."
"Public Works and Government Services Canada"--the federal government's buyer for all departments, a sort of contract clearing house--had blown the whistle on something it saw as fishy. Unbeknownst to these supply and services contract overseers at the time, who apparently were on the ball, the only malfeasance yet evidenced was not within the contractor (HP) but within its DND client. In short, the Canadian government complained to Hewlett-Packard about wrongfulness that had actually occurred within the government's own DND department. It appears that Hewlett-Packard deserves credit for exposing a rat, not blame for the whole mess.
Hewlett-Packard released a statement mid-March 2004 about its own internal investigation which "revealed the potential that an employee of DND and others unknown to HP engaged in fraudulent activity", it believed HP Canada had unknowingly been duped into some wrongful billing practices. HP Canada's words were indignant and while maintaining the corporations' innocence it promised to investigate fully.
Meanwhile Ottawa's misleading action in the March 2004 'hissing' match was a threat of court action against HP.
"HP is concerned that it has been exposed to potentially fraudulent activities," HP Canada said. "That HP was misled in this matter, for the personal profit of others, is not acceptable."
"Whomever did these deeds betrayed not just their peers but Canada [as a whole]," insists one industry executive.
Surely greed in this instance obviates all loyalties. The perpetrators' alleged actions must have compromised the nation's security to some degree if in fact DND's assertion is true that " the work was...in the interest of national security". The alleged fraud artist(s) would have subjugated oversight vulnerabilities while exploiting trust under a veil of bogus security.
The upshot of a little-noticed "fix" is that the Canadian taxpayer gets its money back. Nicely done, HP.
The dark side of this solution is DND's lack of accountability and wide-open gaps in subcontractor oversight. Look at the dozens of second-tier "sponsorship" contracts exposed by Auditor General Sheila Fraser wherein monies were repeatedly paid to pals without the return of goods or services. In the midst of this does DND arrogantly imply that its behaviour is normal?
There is another problem. The mentality within DND has been for over a decade somewhat backwards in the IT arena.
Anything to do with computers has a certain dark mystique to many Canadians over the age of 21. DND is no exception and is collectively intimidated by its own computer people. A strong argument could be made to say that an 'IT-aware' DND would be doing its own system support and maintenance. Hiring outside Level 4 support contractors to train and update DND technicians and engineers is likely a better option than the apparently unsupervised activities of current subcontractors.
It would be nice to hear from DND about:
Nevertheless, without any elements of our 'wish list', DND and Hewlett-Packard are working it out and Canadians can be glad that funds are promised to the public purse in an amount close to the known theft.
Hewlett-Packard (HP Canada) will repay C$146 Million "an amount determined by both parties to be appropriate upon investigation"to the Department of National Defence.
The government says it will "take appropriate steps, including (civil?) action in the courts to recover these funds from the individuals and companies involved in the scheme". It doesn't prosecute criminals?
News last week of this cash-restitution is a breathe of fresh air in an otherwise stinky Ottawa environment recently fraught with allegations of government corruption wherein the taxpayer has not seen one recovered dime. At least the taxpayers get some of their money back if these promises are kept.
Too bad we are left with a tainted Department of National Defence.
The serving men and women of the Canadian Forces deserve better service and greater accountability than what is delivered by this Department of National Defence.
Micheal O'Brien, Editor
U.S. DoD Conducting Pentagon WMD Drill
A large-scale chemical, biological, radiological, and nuclear training exercise will be held at the Pentagon today, May 19, from 10 a.m. to 2 p.m. EDT.
The exercise, called "Gallant Fox II," will be staged near the heating and refrigeration plant on the Pentagon Reservation. The purpose of this training event is to enable the Pentagon Force Protection Agency (PFPA), and its federal, state, and local training partners to exercise emergency response units in a duty-day, real world scenario. It will provide valuable training for PFPA to better serve occupants of the Pentagon.
There will not be an evacuation of the Pentagon during the exercise. Only pre-designated workforce employees will conduct an internal assembly as part of the exercise.
Canada to Assist Restoration of Mesopotamian Marshes in Iraq
According to Aileen Carroll, Canada's Minister for International Cooperation, Canada will help Iraq to restore an important and environmentally sensitive region in southern Iraq, in partnership with the University of Waterloo.
U.S. Full Tilt For June 30 Iraq Hand-Over
The U.S. government is taking steps to be ready for the transition of sovereignty to Iraq on June 30, government officials told the Senate Foreign Relations Committee today.
Deputy Defense Secretary Paul Wolfowitz and Deputy Secretary of State Richard Armitage said their departments are doing what they can to prepare for life after the Coalition Provisional Authority goes away.
Armitage said the coalition has all the authority it needs to continue operating in Iraq under U.N. Security Council Resolution 1511. Still, he said, the United States wants to move as rapidly as possible in getting a new U.N. Security Council Resolution regarding Iraq.
He said U.S. diplomats have met with Security Council countries and other allies and have taken their concerns under consideration. Many countries have indicated they would participate in a U.N.-sponsored force in Iraq. The United States "does not have a piece of paper to put forward," Armitage said. Instead America will await the outcome of U.N. special envoy Lakhdar Brahimi's consultations in Iraq before submitting a proposed new resolution. Brahimi is the U.N. secretary-general's special advisor for Iraq.
Armitage said newly confirmed U.S. Ambassador to Iraq John Negroponte will not report to Baghdad for some time after June 30. He said this is to signal that Negroponte is not Coalition Administrator Paul Bremer's successor, and that his posting is the beginning of a new relationship between sovereign countries. "We want to make clear occupation is over and sovereignty belongs to Iraqis," Armitage said.
Negroponte's absence does not mean the State Department will not have strong leadership at the new "super embassy" in Baghdad, Armitage said. Jim Jeffries has been named the embassy's deputy chief of mission. He is a decorated Vietnam War combat veteran. Armitage said Jeffries "not only talks the talk, but has walked the walk," and that he will be able to relate and communicate with coalition military leaders.
Armitage stressed that the process really has already started. Eleven of the 25 Iraqi ministries are autonomous right now, with two more joining those ranks this week. "That means their ministers make all the decisions, prepare the budgets, are responsible for the programs, etc.," he said.
Wolfowitz told the senators that U.S. service members have accomplished amazing things already in Iraq. He said that as the coalition prepares to return sovereignty, the military work is not done. "The enemy that was defeated in major combat a year ago continues to sow death and destruction in the effort to prevent the emergence of a new Iraq," Wolfowitz said. "They and their terrorist allies from inside and outside Iraq understand that real defeat for them will come when Iraqis achieve the ability to govern themselves in freedom and to provide for the security of their own country."
The secretary said the enemy realizes the next 18 months will be so critical to them "because that is the time it will take to stand up Iraqi security forces that are fully trained, equipped and organized." That is also when Iraqis will elect a representative Iraqi government after 40 years of tyranny and abuse, he said.
Canadian Troops in Afghanistan Get a Few Laughs
A talented and diverse group of Canadian artists are slated to entertain Canadian Forces members during the Op ATHENA Show Tour in Afghanistan scheduled from now to June.
DoD Fixes Guantanamo Detainee Rights Criticisms
U.S. Deputy Secretary of Defense Paul Wolfowitz has issued an order establishing administrative review procedures for enemy combatants captured in the Afghan theater and detained by the Department of Defense at Guantanamo Bay, Cuba. The new procedures will provide an annual review of each enemy combatant. The order is effective immediately.
Under this order, each enemy combatant will have a formal opportunity to appear in person before a board of three military officers and explain why he believes that he should be released. He will be provided a military officer to assist him in his appearance. In addition, the review board will accept written information from the family and national government of the enemy combatant. Based on all of this information, as well as submissions by other U.S. government agencies, the board will assess the current threat posed by the detainee, then recommend to a high-level Defense of Department official whether the enemy combatant should remain in detention. The DoD official, who will be selected by the secretary of defense, then will decide whether the enemy combatant should remain in detention.
The release of enemy combatants prior to the end of a war is a significant departure from past U.S. wartime practices. Enemy combatants are detained for a very practical reason: to prevent them from returning to the fight. That's why the law of war permits their detention until the end of an armed conflict. Although the global war on terror is real and ongoing, DoD has decided as a matter of policy to institute these review procedures. This process will assist DoD in fulfilling its commitment to ensure that no one is detained any longer than is warranted.
Canadian Government To Clean Contaminated Sites
Canadian Forces base Suffield , Alberta and Canadian Forces Base Greenwood in Nova Scotia are the subjects of a recently announced plan to clean up environmental remediation. The goal is to remove human health and environmental threats from contaminants.
The federal government will invest $175 million for action to help remediate 57 priority contaminated sites across Canada under federal responsibility. This is a prelude to the larger commitment of more than $3.5 billion in long-term funding, announced in Budget 2004, to remediate contaminated sites on federal lands.
Minister of the Environment David Anderson made the announcement at the Harvey Barracks site in Calgary , a former Canadian Forces Base, which is one of 10 urban sites that has been designated high-priority for remediation under the Federal Contaminated Sites Accelerated Action Plan . The Government of Canada is also working with 47 rural and northern communities across Canada to reduce the human health and environmental threats from contaminants.
"As the largest property owner in the country, the Government of Canada has a responsibility to ensure that past contamination of sites under federal responsibility are addressed, and that human health and the environment is protected for all Canadians," said Minister Anderson. "We are demonstrating our commitment to communities across the country by remediating these contaminated sites for the benefit of future generations".
"The remediation of Harvey Barracks is a good example of how federal investment can directly benefit the quality of life of urban residents," said the Honourable David Pratt, Minister of National Defence. "The environmental remediation of the former CFB Calgary has been a success, not only from a remediation perspective, but also because the project has led to the development of new technology and expertise for both the Department of National Defence and the Tsuu T'ina Nation."
Through the accelerated program announced in the 2003 federal budget, between April 2003 and March 2005, 47 priority sites in rural and northern Canada will receive more than $126 million in funding through the accelerated program. This includes the Faro Mine in Yukon, the Colomac Mine in the Northwest Territories, various Distant Early Warning line sites, Resolution Island, the Suffield Canadian Forces base in Alberta and Canadian Forces Base Greenwood in Nova Scotia.
Nerve Agent Sarin in Araqi Roadside Munition
A roadside bomb containing the nerve agent sarin, a substance Saddam Hussein's regime insisted it had destroyed more than a decade ago, exploded near a U.S. military convoy traveling near Baghdad, coalition officials said Monday.
The makeshift bomb had a detonator prepared by someone who apparently expected an HE (high explosive) charge in the 155mm artillery round and not a binary nerve gas combiner which failed to function fully leaving most of its independent chemicals within their separate containers.
Army Brigadier General Mark Kimmitt, deputy operations director for Multinational Force Iraq, told reporters in Baghdad a U.S. convoy found the 155-millimeter artillery round rigged as an improvised explosive device. The round detonated before the explosive ordnance team could render it inert, Kimmitt said, spewing a small amount of sarin gas.
The release caused two soldiers to be treated for only "minor exposure," Kimmitt said, and the surrounding area needed no additional decontamination.
Kimmitt said whoever rigged the device, likely from old regime stockpiles, probably did not realize that it contained the deadly nerve agent sarin.
The effect of the explosion was minimal because the agent was used in a roadside bomb rather than being fired by an artillery piece, Kimmitt said.
The type of round used, a "binary chemical projectile," has two chambers that keep the chemical components inside separate until they are fired by an artillery piece, Kimmitt explained. After firing, the rotation of the artillery shell in flight causes the barrier between the two substances to mix, creating sarin. The device releases the agent when it lands and explodes.
However, when the round is used in an improvised explosive device, Kimmitt said, the chemicals don't properly mix, so they produce only "very, very small traces" of sarin gas. "When you rig it as an IED, it just blows up and you have minor amounts (of the chemical) going in different directions," he said. "It's virtually ineffective as a chemical weapon."
Kimmitt said the incident does not pose a continuing threat. He said he would leave it to the Iraqi Survey Group to determine if the incident gives credence to charges that Saddam Hussein had weapons of mass destruction.
"The former regime had declared all such rounds destroyed before the 1991 Gulf War," Kimmitt added.
U.S. Brigade in S. Korea Reassigned to Iraq
About 3,600 members of the 2nd Brigade of the 2nd Infantry Division will deploy to Iraq from the Republic of Korea, Defense Department officials confirmed today.
ATA Airlines' Latest 737 Hits the Record Books
Boeing made history last Friday with its 'Next-Generation' 737 family reaching 1,500 airplanes.
The milestone delivery -- a 737-800 to Indianapolis-based ATA Airlines, Inc. -- occurred six years after Southwest Airlines received the first Next-Generation 737. The Next-Generation 737 family bested by four years the previous record holder, Boeing's family of Classic 737-300s, -400s and -500s.
To put that statistic in perspective, Boeing's 727 and Airbus's A320 are the only other jetliners to have deliveries of at least 1,500 airplanes. The A320 family, competitor to the 737, reached the 1,500 mark after 13 years while the 727 did so in 16 years.
More than just aviation trivia, the milestone Boeing 737-800 delivery represents good, solid business for the North American aerospace industries. For air carrier's the world over it represents proof of designed-in benefits like low operating and maintenance costs, advanced Heads-Up and Vertical Situation display technology not available on competing models
"This is a testament to the Next-Generation 737's efficiency and reliability; the confidence and trust the world's airlines have in it; and the efforts of our employees who design, build and support the 737 every day," said Carolyn Corvi, Boeing 737/757 programs vice president and general manager.
Vice President, Marketing, Randy Baseler, added, "We know better than any other airplane company what airlines and passengers want. That's why the 737 is history's best-selling passenger airplane and why the 7E7 (Boeing's new 8,500 nautical mile-range ultra-efficient jetliner) will set a whole new standard for passenger comfort and airplane efficiency."
Overall, Boeing has received orders for more than 5,390 737s. At any given time, more than 1,200 737s are flying, and a 737 takes off or lands somewhere in the world every 5.3 seconds.
To date, Boeing has delivered almost 15,000 jetliners. More than 12,000 remain in the world's jet inventory.
Study Shows Passengers Prefer Smaller Aircraft
International air travelers overwhelmingly prefer being on 250-seat airplanes to 550-seat airplanes, whether flying non-stop or on connecting flights, a Harris Interactive® study of more than 900 long-distance fliers found.
Harris Interactive surveyed travelers from Tokyo, Hong Kong, and the United Kingdom who had recently taken at least one international flight of eight or more hours. Boeing commissioned the study to determine the aircraft preferences of these fliers.
"We presented respondents with real-life air travel scenarios to better understand the attitudes and feelings that led to their choices," said Dr. David Bakken, senior vice president of Marketing Sciences, Harris Interactive. "What we found was that travelers taking very long flights generally prefer the more convenient and flexible experience provided by smaller planes."
In each region, Harris polled equal numbers of Premium Class Business, Economy Business, and Economy Leisure travelers. Some key findings include:
These overall results are also reflected in the individual results for the regions and the traveler classes surveyed. As the table below shows, the preference for smaller planes tends to be somewhat more pronounced among passengers who fly economy class; and, the preference increases for all classes when they are asked to choose between a non-stop flight on a smaller plane or a one-stop/connecting trip on a larger plane.
"The consistency and strength of these results across all markets and classes of travelers provides further proof that passengers want to fly in smaller airplanes that take them non-stop to where they want to go, when they want to go," said Randy Baseler, vice president -- Marketing at Boeing Commercial Airplanes. "Our product strategy is designed to do just that, design and build airplanes that carry passengers non-stop, point-to-point, with more frequency choices -- in other words, where they want, when they want."
This survey is based on 913 interviews conducted in the United Kingdom, Tokyo, and Hong Kong with international travelers (aged 18 and over) who had taken at least one recent eight-hour or longer flight. Interviews were conducted between November 2003 and February 2004 using a two-stage methodology. Respondents were first screened and qualified by telephone or via in-person interviews and then they completed an online survey at home/work or at a central interviewing location.
In theory, with probability samples of this size, one could say with 95 percent certainty that the results have a statistical precision of ±3.3 percentage points for the overall sample and ±5.6 percentage points for each city of what they would be if the entire air-traveling population for those regions had been polled with complete accuracy.
About Harris Interactive®
Harris Interactive (http://www.harrisinteractive.com) is a worldwide market research and consulting firm best known for The Harris Poll®, and for pioneering the Internet method to conduct scientifically accurate market research. Headquartered in Rochester, New York, Harris Interactive combines proprietary methodologies and technology with expertise in predictive, custom and strategic research. The Company conducts international research from its U.S. offices and through wholly owned subsidiaries -- London-based HI Europe (http://www.hieurope.com), Paris-based Novatris and Tokyo-based Harris Interactive Japan -- as well as through the Harris Interactive Global Network of independent market- and opinion-research firms.
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