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Intelligence Center, Contractor MZM on Cozy Terms

By Walter Pincus
Washington Post Staff Writer
Sunday, July 17, 2005

Two months after MZM Inc. was given its first order in October 2002 to perform services for the Army's National Ground Intelligence Center (NGIC), the company hired the son of the center's senior civilian official, Executive Director William S. Rich Jr., according to present and former intelligence center employees.

MZM's initial task was to perform a seven-week, $194,000 analysis of "FIRES," a computer program concept to collect blueprints of facilities worldwide to create an intelligence database, according to material provided by the Pentagon.

William Scott Rich III became involved in the FIRES program soon after he was hired in December 2002, and MZM received multimillion-dollar orders to continue work on FIRES and other programs.

The senior Rich "was not involved in matters concerning MZM's work at the NGIC except in the normal way of the executive director's responsibility to oversee all the programs run at the facility," according to a statement by Deborah Parker, chief of public affairs for the Army Intelligence and Security Command, which oversees the NGIC.

When the younger Rich was hired by MZM, "in line with joint ethics regulations, [Rich senior] was required to inform his superiors and recuse himself from dealing with the [MZM] company," Parker's statement said. Parker did not provide the date Rich recused himself.

The elder Rich was not the only NGIC senior manager with a relative at MZM. The wife of Robert Canar, until last month the center's longtime chief of staff, was employed as a secretary at MZM.

When the senior Rich resigned from the NGIC in September 2003, he joined MZM as a senior executive vice president for intelligence. "The circumstances of Mr. Rich's employment with MZM were thoroughly reviewed by Army officials," according to Parker, and "no evidence of impropriety was found."

The Ethics in Government Act barred Rich, as a senior manager, from having dealings with the NGIC for one year after his employment by MZM.

Over the past three years, Rich was joined at MZM by at least 15 former intelligence center colleagues -- analysts and administrative personnel hired, in some cases, to work on the same projects they dealt with as government employees, according to present and former NGIC staffers. "After contract awards, many people were hired away from NGIC at a higher salary, only to return to work on the same programs," according to one contract employee working at the NGIC who spoke on the condition of anonymity in order to keep his job.

The Ethics in Government Act's standards differ for executives, managers and workers who leave government employment and take up the same work as a private contractor. But agency leaders once engaged in awarding contracts are barred from then seeking contracts from the same agency.

If a former intelligence center's employee recruited an ex-colleague on behalf of a private contractor such as MZM, the recruiter's status and rank would be factors in determining whether an ethics violation had occurred.

Neither the senior Rich nor his son have responded to telephone calls and e-mails from The Washington Post. MZM did not respond to repeated requests for comment.

The NGIC is a critical Army intelligence center with a staff of 900, three-quarters of whom are civilian scientists, engineers and intelligence analysts. The other one-quarter are active military.

Most NGIC employees work at a relatively new facility near Charlottesville, where they produce the Army's primary intelligence analyses of foreign armies, their force structures and capabilities. Others conduct scientific and technical studies on foreign weapons and technologies.

The NGIC, which is facing an inquiry by the director of national intelligence for its prewar mistakes in analyzing Iraq's weapons programs, has been drawn into the federal investigations of MZM, according to Army and Justice Department spokesmen.

The NGIC was criticized in March by the Silberman-Robb presidential commission for "gross failure" in its analysis of Iraqi arms. The commission said the center was "completely wrong" when it found in September 2002 that the aluminum tubes Iraq was purchasing were "highly unlikely" to be used for rocket motor cases.

That inaccurate finding bolstered a CIA contention that the tubes were meant for nuclear centrifuges and were evidence that Iraqi President Saddam Hussein was reconstituting a nuclear weapons program. Two NGIC analysts who produced the inaccurate finding have received annual performance awards each year since 2002. Officials said the bonuses were for their overall activities.

Gen. Michael V. Hayden, the deputy director of national intelligence, told reporters June 29 that his office would conduct its own inquiry into the Silberman-Robb finding.

When Parker, the center spokeswoman, was asked last week about Rich, his son and NGIC personnel going to work for MZM or MZM employees working at the NGIC, she said in a statement that "due to the ongoing investigation on MZM, we must refer all questions concerning MZM, its employees and activities" to the Justice Department.

The MZM investigation is being carried out by the FBI, the Defense Criminal Investigative Service, the Internal Revenue Service and the U.S. attorney's offices in the District of Columbia and San Diego, according to one law enforcement official. That official would not say where the intelligence center may fit in.

The agency also is in managerial turmoil. Earlier this month, Rich's replacement as NGIC executive director, H. Allan Boyd, decided to return to Iowa, citing personal economic problems after less than a year in the job. Former chief of staff Canar has been reassigned to handle personnel and facilities issues relating to base realignment and closure issues. Col. Dalton Jones, the NGIC's military commander, having put in the traditional two-year tour, was replaced on June 30 by Col. John Chiu. Because the center's executive directorate is a Senior Executive Service post, whoever succeeds Boyd will outrank Chiu.

The federal investigations involving the NGIC and MZM are part of an inquiry that began last month into the relationship between the company's founder, Mitchell J. Wade, and Rep. Randy "Duke" Cunningham (R-Calif.). California newspapers reported last month that Wade bought Cunningham's home near San Diego in 2003 for what appears to be $700,000 more than it was worth, and that Cunningham lived rent-free for more than a year on Wade's 42-foot yacht while in Washington.

Wade has stepped down, and the company is considering options, including a sale.

The Pentagon three weeks ago cut off new work on MZM's main contract, under which the NGIC work was performed, saying it no longer was considered competitively awarded. MZM over the past three years has done more than $160 million in defense contracting work.

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