Government Probes at Least 7 Defense Contracts for Charities

By Robert O'Harrow Jr.
Washington Post Staff Writer
Saturday, June 7, 2008

The federal investigation of contracting arrangements between the Pentagon and tax-exempt defense firms in Pennsylvania includes multiple deals that go as far back as 2002 and involve more money than was previously known, according to documents obtained by The Washington Post.

The FBI and the Pentagon's Defense Criminal Investigative Service issued subpoenas two months ago seeking information about a small intelligence firm called Commonwealth Research Institute, or CRI, and its parent company, Concurrent Technologies. Both firms are registered nonprofit charities based in Johnstown, Pa.

Concurrent was established two decades ago and has almost $250 million a year in revenue. Most of its research, program management and other work is for the Pentagon. It also has received more than $226 million in congressionally directed funding known as earmarks in recent years. CRI is a little-known subsidiary with a handful of employees, several of them working as intelligence consultants to the military.

One focus of the investigation is the Air Force's office for security, counterintelligence and special program oversight, which used CRI to hire help for technical studies and research support. Investigators retrieved computers and contracting records from that office to see whether work was properly awarded, according to people familiar with the investigation who spoke on condition of anonymity.

The federal subpoenas demanded information about at least seven contracts, according to documents and those sources. Contracting documents obtained by The Post show that four of the contracts, worth up to $130 million, were awarded to Concurrent over several weeks in May and June 2002. Investigators also are examining a Concurrent deal in 2006 that was worth up to $45 million.

Investigators also want to know about two CRI deals, one from 2003 worth up to $10 million and another awarded without competition in 2006 that is worth up to $45 million.

The contracts called on the firms to do an array of work, including intelligence consulting, engineering and research. The CRI contracts directed the company to serve as a "technical liaison" between the Air Force and a variety of agencies, including the CIA, the Defense Intelligence Agency and the National Security Agency. It also was supposed to provide program-management consultants who could work on "planning, budgeting, coordination."

The Concurrent contracts with the Air Force called for research-and-development work, systems engineering and support, and project management support, the contracting documents show. One involves intelligence work for potentially an array of agencies, also including the CIA, the DIA and the NSA. Another requires Concurrent to work on "advanced distributed learning and program support" for the undersecretary of defense for personnel and readiness. Another of the contracts, for research and development, was with the Navy.

"Our work as a prime contractor has provided significant value to the Air Force and other government agencies," Concurrent spokesman Patrick Dorton said. "We are proud of our track record and work closely with government officials to both meet the needs of the warfighter and comply with the rules and requirements of the contracting process."

All seven contracts were issued by the Department of the Interior's National Business Center office in Fort Huachuca, Ariz. The Pentagon has used that center for billions of dollars in purchases in recent years, though audits have found that the center often awarded contracts without competition or checks to determine whether prices were reasonable. One audit in late 2006 found that the center "routinely violated rules designed to protect U.S. Government interests."

The federal investigation follows an article in the Post that detailed how the Air Force arranged for CRI to use the 2006 contract to pay $26,788 to Charles D. Riechers, a senior civilian official who was awaiting White House confirmation of his nomination as principal deputy assistant secretary for acquisition.

In an interview last year, Riechers and other Air Force officials told The Post that he was hired temporarily through CRI's contract. But Riechers said he did no work directly for the organization and instead focused on Air Force projects that had nothing to do with CRI. The Air Force official said Riechers was retained under an arrangement that is widely used in the Pentagon because he had special talents to help on research, development and modernization programs.

Carl M. Levin (D-Mich.), chairman of the Senate Armed Services Committee, asked the Pentagon for details about the arrangement, and an internal inquiry was launched. In October, Riechers was found dead in an apparent suicide. The Defense Department inspector general's office has acknowledged that it is also examining the relationship between the Air Force and CRI.

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