Congressman Howard Berman (CA28) :: Press Release :: Berman and Grassley Release GAO Study Containing Dramatic New Revelations About Potential Missile Defense Testing Fraud

Washington, D.C. - Congressman Howard L. Berman (D-CA) and Senator Chuck Grassley (R-IA) today released a major General Accounting Office (GAO) study that they commissioned to review the allegations of fraud raised by Dr. Nira Schwartz, former senior staff engineer at TRW, in her False Claims Act lawsuit against contractors involved in the multi-billion dollar National Missile Defense (NMD) program. The GAO’s findings cast serious doubt on claims made by TRW, Boeing and numerous Defense Department officials who stated that early flight tests, costing $100 million each, successfully demonstrated warhead-decoy discrimination capability.

The many revelations contained within the GAO report include:

“I commend Dr. Schwartz for having the courage to blow the whistle on what she believes is fraud in our National Missile Defense Program,” Berman said. “I am hopeful that this report will prove useful to the courts in resolving her qui tam case.”

“I am also hopeful that the report will help Congress and the Executive branch weed out existing fraud, craft policy to prevent future fraud, and ensure that any National Missile Defense system will actually work,” Berman continued. “It is imperative that the American people are protected against financial fraud as well as incoming missiles.”

Senator Grassley added, “Whistleblowers go public under often adverse circumstances. They contribute enormously to the public good. In this instance, Dr. Schwartz blew the whistle in good faith and deserves protection. She raised a number of important points about the defense contractor's technology and its challenges. Her disclosures appear to have sparked changes and improvements in a program that's vital to national security. The value of the information she brought to light should be recognized by the courts and our government."

Although the GAO study leaves many questions unanswered, Congressman Berman praised the GAO for its thorough review of an incredibly complex web of scientific issues. He singled out GAO technical advisor Subrata Ghoshroy for special praise and credited his technical expertise and tenaciousness as the main reason why GAO successfully figured out the fundamental problem with the flight test – the sensor’s failure to cool adequately and take precise measurements.

Congressman Berman and Senator Grassley are the principal House and Senate sponsors of the 1986 False Claims Act amendments and have a long history of working together to fight fraud. To date, the qui tam provisions of their amendments have resulted in cases that have returned over $3 billion to the federal Treasury. If the alleged fraud in Dr. Schwartz’s case is proven in court, it could result in the largest whistle blower case in history.

Given Congressman Berman’s recent call for a separate GAO investigation into the questionable circumstances that surrounded the awarding of the EKV subcontract to Raytheon over Boeing (see New York Times article published on 2/9/02) and given the very strong similarities between the Boeing and the Raytheon discrimination technologies that Dr. Schwartz has alleged, the issues raised in this study have a direct impact on the current missile defense program.

QUESTIONS and ANSWERS

1. The GAO says that the contractors disclosed key results and limitations from the IFT-1A.
Does this mean there was no fraud as alleged by Dr. Schwartz?

In my original request letter to GAO, I asked them to determine if the contractors falsified any test data or computer algorithm results. Unfortunately the GAO chose not to answer this question directly.

Instead they constructed a timeline for when certain disclosures were made. The GAO relied heavily on undocumented claims by a project official who conveniently remembers that a meeting took place in late August where problems were disclosed in constructing this timeline. However GAO cited no supporting information about who attended, where the meeting took place, or the actual date of this meeting. Even if such a meeting took place, if the information was never communicated up the chain of command, it is of no real consequence on the issue of fraud. The fact that none of these disclosures were included in the formal August 1997 60 day report overshadows and cast serious doubt on any claims that the contractor tried to communicate all of the problems with the IFT-1A test results. This report was issued within days of when the August 97 briefing apparently took place.

Even the oral briefing which apparently took place on December 11, 1997 cited in the GAO report were also poorly documented. It is important to note that this meeting took place after, and most likely as a direct result of, Dr. Schwartz raising her allegations of fraud. Dr. Schwartz’s raising of these issues is documented in various letters that predate the un-documented oral briefings and via legal documents filed with the Court on December 3, 1997.

2. Mr. Berman, your press release says that the GAO report made dramatic new revelations.
Could you please elaborate on them?

First, GAO must get credit for “cracking the code” and unraveling the core reason why the missile tests had so many problems. Many knowledgeable and smart people have looked at the problems associated with the computer algorithms, but the GAO figured out that root cause of these problems were caused by the sensor that is the eye of the missile defense system. If you can’t see well, you can’t pick out the real target from the decoys. Boeing had downplayed its sensor problem and claimed the test was “highly successful” and that the sensor had performed excellently and until now this was accepted at “face value.”

Furthermore, we don’t know if the contractor’s computer analysis was accurate, faulty, or a complete fabrication because there has been, amazingly enough, no independent verification of their claims. We are spending billions of dollars in building a missile defense system. It is incomprehensible that BMDO could not have spent a few thousand more dollars for the Nichols Research Corporation to have finished their verification, especially given the serious allegations of fraud made by Dr. Schwartz.

The GAO study illustrates the value of independent scientific analysis in carrying out Congressional oversight. GAO should get credit for mobilizing its internal resources as well seeking out outside expertise, such as the Utah State University.

3. The New York Times and others have reported about your recent request to GAO to investigate if there was any impropriety in the way Raytheon was selected to build the so-called exoatmospheric kill vehicle, which intercepts an enemy missile? What are your concerns?

Let me first give credit to GAO for bringing this matter to my attention. They found that Boeing chose Raytheon abruptly after the second NMD flight test IFT-2, even though the original plan to down-select was to take place after the fourth test and they reported information to me which seemed to confirm an allegation made by Bradley Graham in his book “Hit to Kill” which cited a “grave ethical violation” that caused Raytheon to win the contest by default. I am concerned about what I understand is a widespread concern about Raytheon’s technology shortcomings. I am deeply troubled by the notion that major decisions impacting American lives and hundreds of millions of dollars may have been made for the wrong reasons.

4. What does this GAO study indicate about the effectiveness of the 1986 False Claims Act amendments which you well known for having sponsored?

I am pleased that qui tam suits have helped the U.S. government recover billions of dollars, taxpayers’ money. However, the law is only as effective as the weakest link in the forces that implement it. The findings of this study underscore the need for beefing up independent scientific resources and personnel available to the Department of Justice when it needs to analyze complex scientific cases such as this one. It was clear from the GAO report that the DOJ relied principally on DOD experts when it reviewed Dr. Schwartz’s allegations. Unfortunately, GAO found that the reviews conducted by the so-called independent teams were critically flawed. But, it was virtually impossible for the DOJ attorneys to recognize this given their limited scientific expertise.

5. Mr. Berman, many people who are familiar with the missile defense program say that by focusing on an early flight-test you are beating a dead horse, especially because the Boeing EKV that was tested in IFT-1A is no longer part of the program. Could you give us your rationale?

There are three major reasons. First, I believe if there are serious allegations of fraud, they must be thoroughly investigated. Revealing fraud has intrinsic value, as it serves to make those who commit fraud accountable and to deter others from committing future acts of fraud. GAO is often the last stop for the taxpayer to get an independent investigation. Second, the currently used technology is alleged to be very similar to the technology used in IFT-1A . And third, given the concerns I have raised about the problems with the downselect process and the ironic conclusion that the Boeing EKV may have actually been a better choice (despite the problems of IFT-1A), it is not inconceivable that the Pentagon may revisit the Boeing-TRW technology as it proceeds toward developing the next generation EKV.

6. What are your main concerns with the GAO report?

A. The GAO did not draw a bright line between the disclosures that were given verbally and those that were documented and communicated formally through written reports. I am especially disappointed in GAO’s inclusion of the so-called December 11, 1997 briefing in Table 1 of its report on par with the other written reports. It gives the impression that it is a documented fact, when it may not be so. Since GAO could not document who attended meetings such as the one in late August 1997 and the one in December 1997, they have unnecessarily opened up their report to criticism by relying on them so extensively.

B. I am displeased with the way the GAO responded to my original question about whether the expert panels employed to review Dr. Schwartz’s allegations were independent or unbiased. They failed completely to shed any light whatsoever on this question. Instead, and over my objections, GAO chose to include only boilerplate language about how requirements in the Federal Acquisition Regulation (FAR) were sufficient to ensure independence. The GAO chose to limit their answer to my question to an extremely narrow look at the technical definition of a “conflict of interest” under the FAR.

Also, GAO did not evaluate the allegations of bias against the Nichols Research Corporation even though they were made by an investigator from the Pentagon’s own Inspector General’s office. On the contrary, GAO appears to have given tremendous credibility to statements made by one or more Nichols officials.

C. I was concerned by the fact that the GAO highlighted an opinion by program officials who felt an early flight test like the IFT-1A was not significant when it is in direct contradiction to public pronouncements from BMDO officials. For example, General Kadish in his testimony before the House Armed Services Committee on June 22, 2000 said this about the early flight tests:“We threw a giant eye chart up there in space before each of the EKV’s in order to evaluate their vision. We wanted to test more than just whether each could see the big ‘E’ on that chart, so we included more objects within the field of view so we could determine how refined the vision of each EKV was... the NMD team evaluated EKV performance on the basis of their ability to collect target data to validate our discrimination capability.”

D. Also, I have a problem with the GAO making a big distinction between claims made about meeting “government requirements” versus claims made about meeting “Boeing requirements.” If the purpose of the test was to evaluate the system’s performance and Boeing, as the lead systems integrator, was hired to make such an evaluation, then claims made about satisfying either of these requirements are indeed extremely important and relevant.

E. I did not like the fact that the GAO included a statement by the contractor which is utterly incredulous without appropriately discrediting it first. The statement reads, “A team member told us its use of Boeing- and TRW-provided data was appropriate because the former TRW employee had not alleged that the contractors tampered with the raw test data or used inappropriate reference data.” (page 30)

This statement by the Boeing-TRW team is obviously a poor attempt at making an excuse for the POET’s failure to verify the authenticity of the data provided by the contractors. Inclusion of such a statement in the report hurts GAO’s credibility because they known firsthand of her allegations about tampering with data and analysis – it is the subject of their very report.

7. How and why did you get involved with Dr. Schwartz’s allegations to begin with?

Two years ago, without an appointment, Los Angeles resident Dr. Nira Schwartz showed up at my district office because she knew of my involvement with the false claims act. Fortunately, she met with my District Director who happened to have previously served as my Defense LA in Washington and had enough experience with Defense issues to make some sense of her allegations. After several follow up meetings, she convinced him, and he in turn convinced me, that this issue warranted our investigation. After making numerous calls and conducting our own “mini-investigation” the mystery only deepened and our questions expanded. We knew, at that point, that we needed top scientific and technical experts to investigate certain key questions. Consequently, I enlisted the help of my qui tam partner Senator Chuck Grassley and the two of us requested this GAO study. For the past two years my staff has worked very closely with the GAO in this investigation.