Open Letter to Secretary Ashton Carter

Corruption running rampant in Greene County

The Honorable Ashton B. Carter
Under Secretary of Defense for Acquisition, Technology and Logistics3010 Defense PentagonWashington, DC 20301-3010

 

September 24, 2010

Subject: Your Memorandum for Acquisition Professionals, dated 28 June 2010

Dear Under Secretary Carter,

            Thank you for the invitation to comment on subject memo, “Better Buying Power: Mandate for Restoring Affordability and Productivity in Defense Spending.”  Except for a less-than-ambitious 2-3% expectation for reducing funding for unneeded or low priority overhead (read fraud, waste, abuse, corruption) in the way the Pentagon does business, I couldn’t agree more with your latest initiative to “support our forces at war on an urgent basis” and advance Secretary Gate’s mandate to be “respectful of the American taxpayer at a time of economic and fiscal distress.”  Right or wrong, the U.S. has committed its citizens to finance an expensive interventionist foreign policy which cannot be sustained without (1) bankrupting the U.S. economy or (2) drastically reducing wasteful, unneeded, and at times corrupt defense spending. 

            To help put this in perspective, according to the Stockholm International Peace Research Institute (SIPRI), U.S. defense spending in 2009 exceeded $663 billion, which was more than the next 19 countries combined, only one of which is our adversary.  Furthermore, as you state in your memo, the money spent annually on overhead alone (salaries and benefits for military personnel and civilian employees, and on buildings and facilities within which they work) totals approximately $300 billion which in 2009 exceeded total defense spending by the next four countries, i.e., China, the United Kingdom, France and the Russian Federation.  On top of that we paid nearly $400 billion to the private sector on products and services.  This will probably collapse the U.S. economy in the very near future, and 2-3% savings from unneeded and low-priority overhead will not be sufficient to rescue the U.S. taxpayer.  To be sure, individual citizens can have no impact at the macro level, but one thing we can do is report on fraud, waste, abuse and corruption at the local level.  That is my objective in writing today.  I have three specific examples that I believe add little value, if any at all to warfighter support; (1) the 2003 BRAC Initiative agreement between Greene County (OH) and the Dayton Development Coalition, (2) Nextedge Research Park and (3) TPI Composites.  You may agree that wasteful, abusive and corrupt practices like these occur all day, every day around the U.S.

TPI Composites

            On the promise of jobs to his district, in 2005 Congressman Dave Hobson (7th District, Ohio), secured a $4.5 million earmark for TPI Composites to develop an Army vehicle similar to the Humvee, but with lighter materials.  Lobbyist Juliet Pacquing collected $60,000 from TPI Composites.  Her husband, Kevin Cook was Hobson’s top staffer for the House Appropriations subcommittee on Energy and Water.  For nearly seven months after the Springfield (OH) plant closed in March 2009, Mr. Hobson and his successor, Steve Austria, took credit for up to 100 jobs at that facility.  That claim may have helped Mr. Hobson and Mr. Austria raise campaign cash, but if those jobs exist at all they now do so at TPI Composites facilities in China, Mexico, Rhode Island or Iowa.  (Sources: Springfield News Sun, Mar 18, 2009, and USA Today, October 16, 2006).  Regardless of the success of the Humvee upgrade program, there is a strong argument that the $4.5 million earmark to TPI Composites was purely political and fraught with inefficiencies, not the least of which is the recurring overhead on a vacant production facility at 2145 Airpark Drive in Springfield subsidized by the U.S taxpayer.

BRAC Initiative Agreement

            In 2003, without competition Greene County (OH) Commissioners signed a $1.9 million agreement with the Dayton Development Coalition to advocate for jobs at Wright Patterson AFB for the 2005 BRAC.  Nearly half of that ($900,000) was a loan (interest paid by Greene County taxpayers) to be used as matching funds for state funding.  I personally requested public documents related to the Agreement, and when denied full disclosure, filed suit with the Greene County Common Pleas court to force the Greene County Commissioners to release related documents (Case No. 2009 CV 0305).  The Court dismissed my case on a procedural technicality, but less that 24 hours later advised that I could review 26 boxes of documents at my discretion and convenience.  In the course of my review, I found evidence of bid-rigging, misappropriation of funds, evidence tampering and obstruction of justice.  Furthermore, I learned that in 2005, the last full year of the Agreement, the Dayton Development Coalition paid their CEO and President more than $285,000.  This is more than the Vice-President of the United States and about twice what the Governor of Ohio earns, despite having a span of control of less than 30 employees.  In any case, after two records review sessions I was contacted by representatives of the FBI, DoD Inspector General and Ohio State Auditor who took custody of the records and asked me to continue to work with them as an informant without pay.  I agreed, and during the course of my research, confirmed that Nextedge Development Corporation was and still today is a 501(c) (6) front company controlled by 501(c) (3) Turner Foundation created to launder local, state and federal grants to the benefit of elected and appointed officials, and their special interest advocates. (Source: Nextedge Development Corporation IRS Form 990 tax returns, 2005-2009).  According to my FBI contact, this information was reported to the Dayton U.S. Attorney’s office and may or may not have been presented before a grand jury. 

Nextedge Development Corporation

            Nextedge began operations in 2005 when they received local, state and federal government subsidies to purchase 205 acres of farmland to the east of Springfield (OH) from Wellington Square, LLC for $4.7 million, or $23,000 per acre.  At that time, the average cost of farmland in Ohio was slightly more than $3000 per acre.  At the time of purchase, both Nextedge and Wellington Square were entities operating under the direct control of the Turner Foundation, a 501(c) (3) non-profit organization headquartered in Springfield, Ohio.  In 2008 Nextedge collected $136,800.08 in total revenue, but paid their Executive Director $121,671 for working 20 hours per week, and also more than $177,000 for non-employee services including Mrs. Steve Austria, allegedly through EFA (Eileen F. Austria) Solutions, LLC.  (Sources: Nextedge 2008 IRS Form 990, http://foundationcenter.org/findfunders/990finder/ and Ohio Secretary of State website)  A shallow dive into Nextedge IRS Form 990’s (2005-2009) available as open source intelligence reveals ubiquitous false and misleading statements that are clearly designed to conceal or at best misdirect past and current involvement in Nextedge by congressmen Dave Hobson and Steve Austria.

            It’s tragic that except for the alleged fraud, waste, abuse and corruption that may be under investigation by the FBI and Dayton U.S. Attorney, the TPI Composites-related earmarks and 501(c) organizations like the Dayton Development Coalition, the Turner Foundation and Nextedge Development Corporation may be perfectly legal, despite their obvious lack of value to the warfighter or the taxpayer.  However, there is one aspect of this investigation that clearly violates federal campaign finance law, and that would be Congressman Austria’s failure to disclose Mrs. Austria’s employment with Nextedge and his association with the Dayton Development Coalition on his Financial Disclosure Statement (Form B) filed on March 15, 2008.

            You may ask, “How is all this related to cutting unneeded and low priority overhead?”  One straightforward explanation lies in the “fungibility” of money, or the concept that money is a commodity whose individual units are capable of mutual substitution.  For example, the local, state and federal tax dollars that funded the TPI Composites earmark and 501(c) organizations like Turner Foundation, Nextedge and the Dayton Development Coalition are fungible in the sense that they can be equally substituted between national defense and political corruption.  There’s compelling evidence that the three examples described above came down overwhelmingly on the side of the latter.

Summary

            With over 22 years on active duty and eight more as a government support contractor I have seen the best and worst of Department of Defense acquisition.  As Commander, Air Force Plant Representative Office in Burbank, CA during the production of the F-117 Nighthawk and sustainment of U-2 and SR-71 reconnaissance aircraft, I became very familiar with high value-added acquisition programs.  However, as a former KC-135 tanker aircraft commander I understand the tragic, decade-long failure of our acquisition process to replace our aging air-refueling capability.  The only way we can correct the latter is for Congress, the Department of Defense and private industry to cast aside the notion that requirements are driven by the next election, next promotion and next quarterly financial statement.  As Secretary Gates has directed, we must abandon inefficient practices accumulated in a period of budget growth and learn to manage defense dollars that is “respectful of the American taxpayer at a time of economic and fiscal distress.” 

            Thank you again for the invitation to provide my input on this very important national security issue. 

 

Respectfully,

 

                                                                        State of Ohio

                                                                        County of Greene

 

John Mitchel                                                            Subscribed and sworn before me on this _____ day

Lt Col, USAF (Ret)                                                of _______________, 2010.

(937) 427-8442                                                                                               

mitch07ohio@sbcglobal.net                                                                                                                                                                                                                                                      ___________

                                                                                                                  Notary Public      


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