Pentagon Agency's Contracts Reviewed

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By Walter Pincus
Washington Post Staff Writer
Friday, March 3, 2006

Federal investigators are looking into contracts awarded by the Pentagon's newest and fastest-growing intelligence agency, the Counterintelligence Field Activity, which has spent more than $1 billion, mostly for outsourced services, since its establishment in late 2002, according to administration and congressional sources.

The review is an outgrowth of the continuing investigation that resulted in charges against Randy "Duke" Cunningham (R-Calif.), who resigned from Congress in November and is scheduled to be sentenced today after pleading guilty to tax evasion and conspiracy to take $2.4 million in bribes.

In pre-sentencing documents filed this week, prosecutors said that in fiscal 2003 legislation, Cunningham set aside, or earmarked, $6.3 million for work to be done "to benefit" CIFA shortly after the agency was created. The contract went to MZM Inc., a company run by Mitchell J. Wade, who recently pleaded guilty to conspiring to bribe Cunningham.

Also this week, prosecutors released a letter dated Feb. 24, 2004, from Cunningham to CIFA Director David A. Burtt II, in which the former member of the House defense appropriations subcommittee and the House Permanent Select Committee on Intelligence thanked the CIFA staff for supporting another multimillion-dollar program that involved MZM.

CIFA, whose exact size and budget remain secret, was established in September 2002 to coordinate policy and oversee the counterintelligence activities of units within the military services and Pentagon agencies. In the past three years, it has grown to become an analytic and operational organization with nine directorates and widening authority focused primarily on protecting defense facilities and personnel from terrorist attacks. The agency was criticized after it was revealed in December that a database it managed held information on Americans who were peacefully protesting the war in Iraq at defense facilities and recruiting offices.

Officials said CIFA's contracting is under review by federal prosecutors as they continue to investigate the Cunningham corruption case, and by Defense Department officials. Pentagon officials declined to discuss CIFA's connections to the inquiry. "There is an ongoing review by appropriate organizations within the Department, and it would be premature to discuss any possible outcomes of that review," said a statement provided yesterday by Cmdr. Gregory Hicks, a Defense Department public affairs officer who also serves as CIFA's spokesman.

Burtt has said that about 70 percent of CIFA's funding is contracted out and that his agency may soon absorb the Defense Security Service, the Pentagon outfit that monitors handling of classified government information by contractors.

CIFA has had a connection to MZM dating to its formation, said congressional and administration sources who spoke on the condition of anonymity because of the ongoing investigations. Burtt, who was a deputy assistant secretary of defense for counterintelligence at the time of the Sept. 11, 2001, attacks, developed the concept for CIFA.

A consultant to Burtt on the CIFA project was retired Lt. Gen. James C. King, who joined MZM after retiring in late 2001 as director of the Pentagon-based National Imagery and Mapping Agency. In August 2005, investment firm Veritas Capital bought MZM and changed its name to Athena Innovative Solutions Inc. King, who replaced Wade as president of MZM in June 2005, has remained president of Athena. A spokesman for Athena said yesterday that neither King nor the company would comment on MZM or matters under investigation.

In late 2002, Cunningham made the contract for Wade's company, MZM, one of "his top priorities" in the defense appropriations bill, according to the prosecutors' pre-sentencing filing. After Congress approved the money, Wade told unnamed Defense Department officials they had to "work something up" that would provide a "real benefit to CIFA," according to the prosecutors' documents.

The resultant program saw more than $6 million spent for a mass data storage system supposedly for CIFA that, according to the prosecutorial document, included almost $5.4 million in profit for MZM and a subcontractor. "Adding insult to injury," the prosecutors wrote, "the final system sold to the government was never installed (as it was incompatible with CIFA's network system) and remains in storage in Arlington, Va."

In January 2004, Cunningham sought about $16.15 million to be added to the defense authorization bill for a CIFA "collaboration center." A month later, Cunningham wrote Burtt his thank you note about the center, adding: "I wish to endorse and support MZM, Inc.'s work." He concluded, "As the Collaboration Center is completed, I hope to help you inaugurate the center as I did at the inception of CIFA." Defense spokesman Hicks said he was unaware of a CIFA collaboration center.


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