Author Archives: rosecoveredglasses

About rosecoveredglasses

2 Tours in US Army Vietnam. Retired from 36 Years in the Defense Industrial Complex after working on 25 major weapons systems, many of which are in use today in the Middle East. Volunteer MicroMentor. I specialize in Small, Veteran-owned, Minority-Owned and Woman-Owned Businesses beginning work for the Federal Government. MicroMentor is a non-profit organization offering free assistance to small business in business planning, operations, marketing and other aspects of starting and successfully operating a small enterprise. You can set up a case with me at MicroMentor by going to: http://www.micromentor.org/ key words: "Federal Government Contracting"

Neutrality Matters

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Net Neutrality CNN dot com

Image:  CNN.com

“WIRED”

“In a time when there are too few companies with too much power – we need net neutrality now more than ever.

Getting rid of Title II would lead to even more centralization, handing more power to the largest Internet companies while stifling competition and innovation.

Next month, Amazon, Netflix, and dozens of other companies and organizations will host a “day of action” aimed at saving net neutrality as we know it. The Federal Communications Commission, meanwhile, is on the verge of revoking its own authority to enforce net neutrality rules, and the country’s biggest telecommunications companies are cheering along. The future of the internet is on the line here, but it’s easy to be cynical about the conflict: What does it matter which set of giant corporations controls the internet?

Under the current net neutrality rules, broadband providers like Comcast and Charter, and wireless providers like AT&T and Verizon, can’t block or slow down your access to lawful content, nor can they create so-called “fast lanes” for content providers who are willing to pay extra. In other words, your internet provider can’t slow your Amazon Prime Video stream to a crawl so you’ll keep your Comcast cable plan, and your mobile carrier can’t stop you from using Microsoft’s Skype instead of your own Verizon cell phone minutes.

If the Trump administration gets its way and abolishes net neutrality, those broadband providers could privilege some content providers over others (for a price, of course). The broadband industry says it supports net neutrality in theory but opposes the FCC’s reclassification of internet providers as utility-like “Title II” providers, and that consumers have nothing to worry about. But it’s hard not to worry given that without Title II classification, the FCC wouldn’t actually be able to enforce its net neutrality rules. It might be less alarming if the internet were a level playing field with free and fair competition. But it’s not. At all.

If you want to search for anything online, you’ve got to go through Google or maybe Microsoft’s Bing. The updates your Facebook friends share are filtered through the company’s algorithms. The mobile apps you can find in your phone’s app store are selected by either Apple or Google. If you’re like most online shoppers, you’re mostly buying products sold by Amazon and its partners. Even with the current net neutrality laws there’s not enough competition—without them, there will be even less, which could stifle the growth and innovation that fuels the digital economy.

Fast lanes or other types of network discrimination could have a big impact on the countless independent websites and apps that already exist, many of which would have to cough up extra money to compete with the bigger competitors to reach audiences. Consider the examples of Netflix, Skype, and YouTube, all of which came of age during the mid-2000s when the FCC’s first net neutrality rules were in place. Had broadband providers been able to block videos streaming and internet-based phone calls in the early days, these companies may have seen their growth blocked by larger companies with deeper pockets. Instead, net neutrality rules allowed them to find their audiences and become the giants they are today, and without net neutrality, they could even potentially become the very start-up-killers that would’ve slowed or stopped their own earlier growth. Getting rid of net neutrality all but ensures that the next generation of internet companies won’t be able to compete with the internet giants.

The end of net neutrality could also have ranging implications for consumers. Amazon, Netflix, YouTube, and a handful of other services may dominate the online video market, but without net neutrality, broadband providers might try to make it more expensive to access popular streaming sites in an attempt to keep customers paying for expensive television packages. “[Net neutrality] protects consumers from having the cost of internet go up because they have to pay for fast lane tolls,” says Chris Lewis, vice president of the advocacy group Public Knowledge.

Lewis also points out that there are a few other consumer friendly protections in the FCC’s net neutrality rules. For example, the FCC rules require internet service providers to disclose information about the speed of their services, helping you find out whether you’re getting your money’s worth. They also force broadband providers to allow you to connect any device you like to your internet connection, so that your provider can’t force you to use a specific type of WiFi router, or tell you which Internet of Things gadgets you can or can’t use.

“The Internet is as awesome and diverse as it is thanks to the basic guiding principle of net neutrality,” says Evan Greer, campaign director for Fight for the Future, one of the main organizers of the net neutrality day of action, which will take place on July 12 and try to raise awareness about net neutrality across the web.”

https://www.wired.com/story/why-net-neutrality-matters-even-in-the-age-of-oligopoly/

Half of Industrial Control Systems Suffered Cyber Attack Last Year

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Cyber Attacks

The National Institute of Standards and Technology’s industrial control security testbed. (Photo Credit: NIST)

“FIFTH DOMAIN CYBER”

“Data gathered comes from 359 industrial cyber security practitioners in 21 countries that completed online surveys between February 2017 and April 2017.

One-in-five respondents experienced two incidents within the 12-month window.

Threats to industrial control systems are becoming increasingly widespread, according to a new survey from cyber security firm Kaspersky Lab and Business Advantage that found over half of the companies sampled reporting at least one cyberattack in the last 12 months.

The top observed threat remains conventional malware, which played a part in 53 percent of actual incidents, followed by targeted attacks, such as spear phishing to more sophisticated advanced persistent threats. The top perceived threats are  third-party supply chain/partners and sabotage/intentional damage from other external sources.

This has led three-in-four companies to expect a cyber attack to happen to them, though 83 percent feel prepared to combat an incident.

Organizations might not be as ready as they believe themselves to be, however, considering the fact that the anti-malware solutions already implemented by 67 percent of respondents still allowed for so many incidents.

Increasing the frequency of issuing patches/updates could contribute to protection from incidents like the WannaCry pandemic, but the increased attack surface and access granted to external parties by growing enterprises complicates matters.

Therefore, risk management is being recognized as a growing priority, but finding properly trained staff and reliable external partners to implement cyber security tops the challenges of companies that acknowledge financial loss is shown to decrease in organizations that have security awareness programs for staff, contractors and partners.

Looking at the survey’s findings, the top risk factors appear to be the access of external parties, a lack of compliance with industry/government regulations and the use of wireless connections. This has led companies to express support for some level of mandatory reporting and governance to help bring about more transparency to help develop frameworks to address the risks.

Some factors that appear to help mitigate threats include documented cybersecurity programs being set in place; regular security assessments/audits being conducted; vulnerability scans and patch deployments happening biweekly at minimum; unidirectional gateways being installed between control systems and the rest of the network; anti-malware solutions being installed for industrial endpoints; industrial anomaly detection tools, intrusion detection and intrusion prevention tools being used; and staff and contractors being given regular security awareness training.”

The entire survey can be accessed by filling in a form on the Kaspersky blog.

Letting Government Contractors Pick Their Own Auditors is a Bad Idea

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Hand in Jar istockphoto by Getty

Image: istock photo by Getty

“THE PROJECT ON GOVERNMENT OVERSIGHT”

“The law in question is the 2017 National Defense Authorization Act (NDAA) passed late last year.

When it comes to contract auditing, giving audit responsibilities to a company working directly for a contractor hampers the government’s ability to negotiate good deals for taxpayers.

Section 820 of the law states that “contractors with the Department of Defense may present, and the Defense Contract Audit Agency shall accept without performing additional audits, a summary of audit findings prepared by a commercial auditor” of contractors’ indirect costs (with some exceptions). This section is scheduled to go into effect on October 1, 2018.

Last year, in annual legislation setting defense policy, Congress gave military contractors the authority to hire their own auditors to review the bills those contractors send to the government. For decades, the Pentagon’s own Defense Contract Audit Agency (DCAA) has helped government contracting officials negotiate better deals by examining a contractor’s charges. But last year’s legislation, which goes into effect next year, diminishes the DCAA’s oversight authority to the detriment of taxpayers.

The topic was broached in an important, but under-the-radar Congressional oversight hearing in April.

Most of the hearing centered on the cost of government versus private auditors, with two conflicting tales being told. But a bigger issue went largely unaddressed: whether allowing contractors to pick their own auditors creates inherent conflicts of interest since the auditors would be in the position of serving contractors—their client—rather than taxpayers. There is a reasonable fear that these private sector auditors, in an effort to keep their client happy and win repeat business, would be reluctant to disclose to the government that the contractor is overcharging taxpayers.

New legislation pending before Congress would rescind Section 820, but it would also allow “contractors to engage commercial auditors to perform incurred cost audits,” according to a Department of Defense (DoD) analysis. The analysis also states that the new provision creates “several unintended consequences that will negatively impact the Department and industry.” The DoD opposes both Section 820 and the new Congressional language. The DoD’s proposed alternative keeps the power to conduct these audits in DCAA’s hands with an option allowing the government (rather than the contractors) to hire private sector auditors on a case-by-case basis. After analyzing the issue, POGO supports the Department’s proposed alternative.

DCAA’s Role

DCAA is responsible for auditing the financial side of certain defense contracts to “ensure that warfighters get what they need at fair and reasonable prices,” according to  its website. DCAA looks for whether contractor costs are “allowable, allocable, and reasonable,” and it performs other audits to ensure contractors have adequate business and accounting systems and adhere to federal cost and accounting principles. DCAA’s report for fiscal year 2016 notes that it audited $287 billion in contract costs that year. These audits are not usually intended to uncover fraud, although DCAA sometimes finds indicators of criminal activity and participates in law enforcement investigations.

What Are “Indirect Costs” and Why Do They Matter?

Contractors charge the government for two types of costs: direct costs that specifically relate to the contract, such as labor and materials, and indirect costs that exist apart from specific work on the contract, such as the rent a contractor pays for its office or fringe benefits for employees.

But there’s nothing fringe about these costs. Within incurred cost audits, indirect costs make up the majority of all questioned costs, according to DCAA Director Anita Bales. Because they are less clear-cut than direct audits, audits of indirect costs can be contentious—especially when auditors want more access to contractor information than the contractor is willing to provide—and quite technical. For instance, contractors are allowed to charge the government for indirect costs associated with litigation under some circumstances, but not in other situations. Contractors can easily pad their profits at taxpayers’ expense if these costs are not carefully examined.

An example of indirect cost overbilling made the news in February 2016 when the Justice Department announced that Centerra Services International (formerly known as Wackenhut Services LLC) agreed to pay $7.4 million to resolve a whistleblower lawsuit alleging the company had defrauded taxpayers. According to the Justice Department, Centerra double billed its labor costs while providing firefighting services on a military base in Iraq. The government alleged Centerra “inflated its labor costs by billing the salaries of certain managers as direct costs under the subcontract, when those salaries had already been charged as indirect costs.”

The Centerra case isn’t a one-off. In 2015, a DCAA audit questioned $14.6 million in costs that a contractor charged the government, according to a DoD Inspector General report to Congress. The vast majority—$14 million—involved wrongly billed indirect costs.

Lessons from the Recent Past

We don’t have to look very far back in history to see that allowing profit-motivated companies to hire their own profit-motivated auditors can lead to problems.

The Enron scandal showed that accountants and auditors aren’t immune from conflicts of interest. “Obviously the history of Enron and the financial crisis suggest we have to be very careful in this situation,” Representative Seth Moulton (D-MA), Ranking Member of the House Armed Services Oversight and Investigations Subcommittee said during his opening statement at the April hearing. Arthur Andersen, Enron’s auditor, had conflicts of interest. It was simultaneously employed as internal and external auditor, meaning that the supposedly independent external auditor could cover up the inaccuracies of the internal audit team.

More recently, during the fallout of the Great Recession, the government required banks to conduct mortgage foreclosure reviews. Banks were allowed to hire for those reviews their own “independent consultants” who proved to be not so independent. The New York Department of Financial Services (NYDFS) punished several of these consultants, including Promontory Financial Group, Deloitte, and PricewaterhouseCoopers, for “misconduct, violations of law, and lack of autonomy.” Settlements generally included multi-million dollar fines and temporary bans from consulting.

“A consultant’s allegiance too often goes to the client that pays the bills,” former NYDFS General Counsel Daniel Alter wrote in a 2015 piece for American Banker. Laws like Sarbanes-Oxley, which create criminal liability for misrepresenting financial statements, have helped to prevent future Enrons by balancing that pressure. However, criminal liability doesn’t apply to other types of financial reporting, such as the consulting work done in the aftermath of the housing crisis and the proposed contract audits.

Counting the Costs  

At the April Congressional hearing, DCAA Director Anita Bales testified that third-party auditors would cost an estimated 30 percent more than DCAA auditors. David Berteau, President and CEO of the Professional Services Council, a contractor lobbying group, countered in his testimony that when civilian agencies have used private auditors, they have in some cases paid significantly less than they used to pay DCAA.

Bales’ claim that DCAA auditors were 30 percent cheaper was based on a comparison of hourly billing rates, according to emails provided to POGO through the Freedom Of Information Act (FOIA). Berteau and other employees of the Professional Services Council did not respond to emails requesting evidence supporting their claims.

Other members of the federal auditing community have told POGO that the comparison of auditing costs is not clear cut. DCAA has more specialized experience and might charge lower costs per auditor hour, but they may also take longer to conduct audits (which may be a good thing in the long run, as more thorough audits may save even more money). Pricing for private auditors can also vary widely from company to company and even year to year, making a comprehensive analysis difficult.

And although cost was the most-discussed factor at the hearing, it isn’t the only factor that needs to be examined. A federal source, not authorized to speak on the record, who is familiar with both DCAA and private contract audits for civilian agencies said the work of private auditors still has to be closely checked, even when they are hired directly by the government. Both last year’s NDAA and a recent proposal for this year’s NDAA prohibit DCAA from examining the work of private auditors before accepting the results.

There is also concern over how the records generated by private auditors would be handled: Will they be subject to FOIA? How would the discovery of potential fraud be handled? Would private sector audits be incorporated into the DCAA’s “Management Information System” that tracks audit data so that auditors can spot trends and look at the bigger picture?

What About Incurred Costs?

New Congressional language would rescind Section 820 but would allow contractors to hire auditors to audit incurred costs. The argument for this is DCAA’s lower rate of return when it audits incurred costs. However, DCAA’s other auditing work with the same contractor and on the same contracts benefits from its incurred cost audits, and vice-versa. For instance, DCAA conducts audits of contractors’ billing, accounts, and internal control systems. The insights DCAA gains from those audits assists DCAA when it audits a contractor’s incurred costs. According to a DoD analysis of the impacts of the recently proposed legislation, keeping incurred cost audits in the hands of DCAA:

…allows for the continuation of many initiatives that DCAA has put in place to more efficiently and effectively perform audits (e.g., the use of the low risk sampling process, the coordination of subcontract assist audits, and the process for obtaining and determining adequacy of incurred cost proposals). Without one group coordinating the need for commercial auditors, the Department will lose many of these efficiencies and will lose adequate oversight over the complete incurred cost audit process. [emphasis added]

One of the primary motivations for the new Congressional language on incurred cost audits is DCAA’s incurred cost audit backlog, which was relatively large until a few years ago and has recently become more manageable according to DCAA’s most recent annual report. The agency said it was on track to eliminate the backlog by next year, although with the hiring freeze it may have to re-evaluate that goal. Regardless of whether the backlog is eliminated one or three or even five years from now, Congress is proposing a rather drastic solution to a problem that is no longer drastic itself.

This is not a backyard experiment with few consequences for failure. Billions of taxpayer dollars are on the line every year. While DCAA has room for improvement, privatizing the agency’s work would most likely make it harder to crack down on contractor overbilling.

Given the large risks and the unclear benefits or privatizing contract audits, Section 820 should be repealed. If DCAA needs a temporary boost, it should be given authority to hire more staff on a temporary basis, or perhaps even hire private sector auditors on a short-term basis. The Defense Department proposes the latter, calling it “much more effective” while ensuring “that a function that is inherently governmental in nature continues to be performed by Government auditors when feasible, but allows for the use of commercial auditors when necessary to address incurred cost backlog.”

POGO does not often agree with the Defense Department, but its proposal makes sense. Let’s learn from our past mistakes rather than repeat them.”

http://www.pogo.org/blog/2017/06/letting-contractors-pick-own-auditors-bad-idea.html

Veterans Administration Has $1 Billion Unexpected Funding Shortfall

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VA Budget Shortfall httpdelmarvapublicradio.net

Image: delmarvapublicradio.net

“THE ARIZONA REPUBLIC”

“Under repeated questioning, VA Secretary David Shulkin acknowledged the department may need emergency funds.

The Department of Veterans Affairs was scolded by both parties over its budget Wednesday as lawmakers scurried to find a fix to an unexpected shortfall of more than $1 billion that would threaten medical care for thousands of veterans in the coming months.

“We would like to work with you,” Shulkin told a Senate appropriations panel. “We need to do this quickly.”

At the hearing, lawmakers pressed Shulkin about the department’s financial management after it significantly underestimated costs for its Choice program, which offers veterans federally paid medical care outside the VA. Several questioned Shulkin’s claim that the VA can fill the budget gap simply by shifting funds — without an emergency infusion of new money — without hurting veterans’ care.

“The department’s stewardship of funds is the real issue at hand,” said Sen. Jerry Moran, R-Kan., chair of the Appropriations panel overseeing the VA. He faulted VA for a “precarious situation” requiring a congressional bailout.

Shulkin cited unexpectedly high demand for Choice and defended President Donald Trump’s 2018 budget request as adequate, but allowed that more money may be needed.

“On financial projections, we have to do better,” he said. “We do not want to see veterans impacted at all by our inability to manage budgets.”

Shulkin made the surprise revelation last week, urgently asking Congress for help. He said VA needed legal authority to shift money from other VA programs.

His disclosure came just weeks after lawmakers were still being assured that Choice was under budget, with $1.1 billion estimated to be left over on Aug. 7. Shulkin now says that money will dry up by mid-August. He cited excessive use of Choice beyond its original intent of using private doctors only when veterans must wait more than 30 days for a VA appointment or drive more than 40 miles to a facility.

Skeptical senators on Wednesday signaled they may need to move forward on a financial bailout.

In a letter Wednesday to the VA, Moran joined three other GOP senators, including John McCain, in demanding more detailed information from VA on what fix is needed.

“Unless Congress appropriates emergency funding to continue the Veterans Choice Program, hundreds of thousands of veterans who now rely on the Choice Card will be sent back to a VA that cannot effectively manage or coordinate their care,” the senators said. “We cannot send our veterans back to the pre-scandal days in which veterans were subjected to unacceptable wait-times.”

VA is already instructing its medical centers to limit the number of veterans sent to private doctors. Some veterans were being sent to Defense Department hospitals, VA facilities located farther away, or other alternative locations “when care is not offered in VA.” It also was asking field offices to hold off on spending for certain medical equipment to help cover costs.

Congressional Democrats on VA oversight committees have also sharply criticized the proposed 2018 budget. Shulkin, for instance, says he intends to tap other parts of the VA budget to cover the shortfall, including $620 million in carryover money that had been designated for use in the next fiscal year beginning Oct. 1.

The budget proposal also seeks to cover rising costs of Choice in part by reducing disability benefits for thousands of veterans once they reach retirement age, drawing an outcry from major veterans’ organizations who said veterans heavily rely on the payments.

Shulkin has since backed off the plan to reduce disability benefits but has not indicated what other areas may be cut.

Sen. Patty Murray, D-Wash., told Shulkin that it sure sounded like VA needed money.

“You’re defending this budget, but your job is to defend veterans,” she said. “It seems to me if the administration makes the request, it will be better served.”

The VA’s faulty budget estimates were a primary reason that Congress passed legislation in March to extend the Choice program beyond its Aug. 7 expiration date until the money ran out, which VA said would happen early next year. At the bill-signing ceremony with veterans’ groups, Trump said the legislation would ensure veterans will continue to be able to see “the doctor of their choice.”

The department is now more closely restricting use of Choice to its 30-day, 40-mile requirements.

The unexpectedly high Choice costs are also raising questions about the amount of money needed in future years as VA seeks to expand the program.

Earlier this month, Shulkin described the outlines of an overhaul, dubbed Veterans CARE, which would replace Choice and its 30-day, 40-mile restrictions to give veterans even wider access to private doctors. He is asking Congress to approve that plan by this fall.”

http://www.azcentral.com/story/news/nation/2017/06/22/veterans-affairs-facing-1-billion-shortfall-because-unexpected-choice-program-costs/418787001/

 

Generals and Admirals Need Checks and Balances Too

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ASSOCIATION OF UNITED STATES ARMY”  By Lt. Col. Joe Doty, USA Retired and Maj. Gen. Rich Long, USA Retired

“Without question, most past and present top officers are some of the finest, most competent, values-based and selfless officers our nation can produce.

But they, like us all, are human, flawed, and we all need a healthy dose of oversight and accountability.

Some generals have made the news lately for behaviors that violate the professional ethic. Although this trend seems new or current, it isn’t. Thomas E. Ricks, a well-published author on defense matters, wrote “General Failure” in the November 2012 issue of The Atlantic and in the same year published a book, The Generals: American Military Command from World War II to Today, on the same topic. His critique focused on a perceived lack of accountability in our armed forces at the general-officer level.

In June 2008, Lt. Col. Robert Bateman wrote “Cause for Relief: Why Presidents No Longer Fire Generals” in Armed Forces Journal. And in May 2007, then-Lt. Col. Paul Yingling wrote his (in)famous “A Failure in Generalship,” also in Armed Forces Journal. Our national security advisor, Lt. Gen. H.R. McMaster, in 1997 wrote Dereliction of Duty: Lyndon Johnson, Robert McNamara, the Joint Chiefs of Staff, and the Lies that Led to Vietnam. The book talks about failures at our highest officer and political levels up to and during the Vietnam War.

Generals are human beings and as such we need to be honest and frank about human behavior and human frailty. Nobody is perfect. So it seems to be an appropriate question: How is the system working in terms of oversight and accountability for general officers?

Recently we’ve had an admiral caught up in the “Fat Leonard” scandal; a former aide to the secretary of defense, Maj. Gen. Ronald Lewis, was relieved of his duties due to transgressions; and Maj. Gen. David Haight was forced to retire due to questionable professional behavior. At some point, we must ask ourselves whether there is a more effective system of checks and balances that can mitigate some of these issues. Lastly, and perhaps most egregiously, there is the case of former Brig. Gen. Jeffrey Sinclair, who pleaded guilty to adultery, maltreatment of a subordinate, engaging in improper relations and several other charges. Who was providing oversight of him or holding him accountable for his actions?

Don Snider, an expert in the study of the Army profession, notes that professions like the military are self-policing. Other unique aspects of professions (such as law and medicine) include that they:

  • Provide a necessary service to the country.
  • Have a shared ethic.
  • Have a unique expert knowledge.
  • Develop their own members.

Our military takes each of these aspects of being a profession seriously. As the most senior representatives of a self-policing profession, our general officers should be the standard-bearers and set the example for the rest of the force—and for the country—in their personal and professional lives.

They should also know how to self-police. Assuming there is real self-policing of generals, either by someone or a group, would it be helpful to make the policing process more transparent? Would making public the specific (and anonymous) examples of how generals are holding themselves accountable be an appropriate service to the nation?

At the risk of oversimplifying this self-policing and oversight challenge, is a general’s immediate supervisor responsible for policing and holding accountable his or her subordinate? Is the four-star responsible for the three-star? Is the two-star responsible for the one-star? Here, it is important to note that the concept of chain of command is ingrained in the DNA of every service member. It is part of the professional ethic. And the construct of chain of command has a built-in concept and understanding of responsibility and accountability, which does not cease once someone is promoted to general rank.

DoD inspectors general certainly play a role in oversight and accountability, but it’s a role initiated after an allegation has been made. IG investigators are not involved in the day-to-day business of general officers. How do we get more proactive and ahead of the allegations?

At the top levels, trust is sacrosanct. Theoretically, our promotion and selection system has selected those who need little or no oversight. However, the promotion and selection system is only as good as people can make it, and there will be bad apples. It can be argued that officers at this level need more or closer oversight due to their strategic responsibilities and the potential for national or international embarrassment. The Gen. David Petraeus affair could serve as an example.

Mathematically and statistically, it is safe to assume there are bad apples among general officers. The military’s selection and promotion system is run by human beings, so it must have flaws and make mistakes. Is it realistic to think every general never does anything wrong? This violates common and reasoned sense. There are just over 300 generals in the active Army and about 650 in the Total Army. The fact that only one or two get in trouble each year is pretty good and perhaps surprising, but because of the sacred nature of their duties, even one-tenth of a percent is too high. Again, the need for oversight and accountability.

In terms of the human dimension and understanding of this topic, there are basic psychological processes at work. One can be called the Bathsheba Syndrome or “the dark side of success,” which suggests absolute power corrupts absolutely or that enormous success can be an antecedent to ethical failure. There are numerous historical examples of this: Tiger Woods and Richard Nixon come to mind. As such, it can easily be argued that because of their success, top officers need more oversight and accountability.

Expectancy theory is taught in most basic psychology courses and suggests people behave in ways they are expected to behave. Officers who attain the rank of general are the best of the best and are expected to be that way—almost flawless—and in some cases, may think they are flawless (as their evaluation reports state) and therefore think they can get away with anything. Unhinged or unbalanced ambition and/or unhealthy narcissism are recipes for disaster.

There is a difference between an officer who knows they should be and deserve to be a general, and one who may be a bit surprised and humbled to obtain the rank. This difference may be cognitively and emotionally subtle at the individual level, but can be profound in how it plays out. Again, an argument for more structured oversight and accountability.

It is the nature of life in the military to cover for each other. Loyalty to and taking care of your buddies and comrades in arms is part of the professional ethic. These bonds are emotional and powerful, as they must be due to the nature of the profession. But to what extreme? When are the times when this loyalty does not and should not apply?

The answer is: when one’s actions are unethical, against the law or will hurt the effectiveness of the organization. Importantly, a subordinate’s loyalty to a general-level officer is often exponentially magnified due to the rank, position power, referent power and expert power of the general. Hence, loyalty at this level may be impervious to and blind to wrongdoing. Asking or expecting a subordinate to call out a possible transgression by a superior officer can, unfortunately, be a career-ender for the subordinate. Is it realistic to think people in and around Sinclair over the course of his career never suspected anything nefarious was going on?

A recommended solution to this challenge is for DoD to require colonels selected as executive officers for generals to attend the IG course and have as part of their duties a formal responsibility of reporting and answering outside the chain of command and to certify, under oath, that they are not aware of malfeasance or issues that must be addressed. Other duties could include:

  • Challenging the general’s assumptions and thinking.
  • Attempting to find blind spots in the general’s personality and thinking.
  • Asking lots of “why” questions.
  • Providing candid and blunt feedback and assessments.

We also recommend that DoD increase its education and developmental opportunities in terms of helping officers increase their emotional intelligence, specifically in terms of self-awareness and self-management. Emotional intelligence is a leadership skill that can be taught, learned and increased over time. Individuals with high levels of emotional intelligence are less vulnerable to self-delusion, burnout, and personal and professional indiscretions.

Our purpose here is not to poke anyone in the eye or throw stones. Our focus is on organizational improvement and learning. “

GENERALS NEED CHECKS AND BALANCES TOO

 

 

Industry/Pentagon Revolving Door Featured in Deputy Secretary of Defense Confirmation

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Industry Pentagon Revolving Door

“BREAKING DEFENSE”

“Mr. Shanahan, you’re not making me happy,” the chairman said. “You just ducked basically every question Sen. Fischer asked you.”

After Nebraska Senator Deb Fischer tried to elicit the nominee’s position on how to respond to Russian violations of the Intermediate Nuclear Forces (INF) treaty, McCain stepped in.

McCain’s biggest objection to Shanahan, however, was the nominee’s 31 years at America’s second largest defense contractor, Boeing. (Only Lockheed Martin sells more to the Pentagon. And Sen. McCain, thanks to the long-running scandal over Boeing’s former tanker deal, is believed to harbor a deep suspicion of Boeing’s conduct).

“Not a good beginning. Not a good beginning,” Senate Armed Services chairman John McCain told the administration’s nominee for deputy secretary of defense this morning. “Do not do that again, Mr. Shanahan, or I will not take your name up for a vote before this committee. Am I perfectly clear?”

“Very clear,” said Patrick Shanahan, enduring a rocky confirmation hearing for the No. 2 position in the Pentagon, which remains unusually short on senior officials. Other senators at the hearing asked Shanahan about Pentagon procurement, especially about nurturing innovation, continuing the Third Off Strategy for high-tech weapons, and starting the Pentagon’s long-awaited audit this fall. But McCain repeatedly took the mike to berate the Trump nominee for non-answers on Russia and for potential conflicts of interest after his 31 years at Boeing.

In that initial exchange, Shanahan’s specific offense was giving a vague non-answer in his written testimony to the committee’s question on whether he supported providing “lethal defensive weapons” to Ukraine. In the hearing, ironically, when McCain asked Shanahan to clarify, he stated his support for arming the Ukrainians so swiftly and unequivocally that the irascible but aging senator seemed momentarily thrown before returning to the attack.

“I want to move forward as quickly as I can with your nomination,” McCain told Shanahan at the hearing’s end, “(but) I am concerned. 90 percent of defense spending is in the hands of five corporations, of which you represent one. I have to have confidence that the fox is not going to be put back into the henhouse.”

“Mr. Shanahan, I think you’re a fine man; you have an outstanding record; (but) take a look at your responses that you sent to this committee,” McCain said. “Some of them were less than specific, at least one of them (was) almost insulting.”

Citing US casualties in Afghanistan, Ukrainian casualties against Russian-backed separatists, and the US shoot-down of a Syrian jet, McCain made it clear he wants clear answers on administration policy — and if the committee doesn’t get them, it will find answers of its own as it works on the annual defense policy bill.

“I want some answers, I want some straightforward answers, (and) if they don’t give us a strategy from the people that I admire most, we’re going to put a strategy in,” McCain warned. “I want to work with this administration, I want to work with this president, I want to work with the new secretary of defense, — who I happen to be one of the most ardent admirers of — but I have to tell you, in a couple of weeks, we’re going to mark-up up the defense authorization bill….The president has two choices: Either give us a strategy or we will put a strategy that we develop into the defense authorization bill.”

“Somehow over the last several years, this committee seems to have been treated as sort of a rubber stamp,” McCain concluded. “That’s not what the Constitution of the United States says. The Constitution of the United States says that the Senate would provide advice and consent.”

http://breakingdefense.com/2017/06/mccain-hammers-depsecdef-nominee-shanahan-on-russia-boeing/

Limits Placed on Congressional Oversight

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Oversight Limitis Shutterstock

Image:  Shutterstock

“THE PROJECT ON GOVERNMENT OVERSIGHT” By Peter Tyler

“In May, a legally binding opinion by the Justice Department’s Office of Legal Counsel (OLC) was made public, stating that individual Members of Congress “do not have the authority to conduct oversight” of the executive branch.

[ They are]  only entitled to “voluntary cooperation” with their requests for information.

However, individual Members of Congress play a critical role in conducting a lot of important oversight. If agencies follow the OLC opinion, it would diminish Congress’s oversight power.

As pointed out in a previous Project On Government Oversight blog, the OLC opinion builds on a harmful and long-standing executive branch policy that diminishes congressional oversight authority, with what appears to be a troubling new twist. And Congress has rightly excoriated the executive branch for this new policy—most notably in a letter from Senator Chuck Grassley (R-IA)—defending its Constitutional duty and responsibility to oversee the executive branch.

The OLC opinion (Authority of Individual Members of Congress to Conduct Oversight of the Executive Branch) dangerously asserts that only committee or subcommittee chairmen have Constitutional authority to conduct oversight, and, accordingly, to make requests for, and be official recipients of, information from the executive branch. It argues that the Constitution does not authorize individual Members of Congress—including committee ranking minority members—to conduct oversight, since they are not “endowed with the full power of Congress” in the form of a chair appointment. As a result, the requests for information by Members who are not Chairs, would not be “properly considered” as an oversight request, because they do not “trigger any obligation to accommodate congressional needs and [are] not legally enforceable.”

Oddly and detrimentally, the opinion puts oversight requests from individual Members of Congress (and even other committee members and the Ranking Members) as less important than information requests from the public. Such requests may (or may not) be answered at the discretion of the executive branch, wrenching away Members’ Constitutional prerogative to exercise oversight as a separate but equal branch of government. The opinion’s de facto result would be to increase and centralize the power of the executive branch—which is primarily made up of appointed bureaucrats, not elected representatives.

One key difference between this new OLC opinion and previous Justice Department guidance from 1984 is that the new opinion asserts that, “Whether it is appropriate to respond to requests from individual members will depend on the circumstances.” (Emphasis added) The Justice Department’s 1984 guidance states, “if the [Congressional] request is not an official committee or subcommittee request, then the agency should process it as a request from ‘any person’ under the FOIA.” The difference is subtle, but important. Previously, the executive branch’s policy was to treat requests for information from individual Members of Congress as a Freedom of Information Act (FOIA) request. Now, according to OLC, agencies have discretion to not respond to Congress at all, depending “on the circumstances.”

How have agency officials responded to the new OLC opinion? Public statements by federal agencies have varied.

Last week, in an appearance before the House Committee on Transportation and Infrastructure, Transportation Secretary Elaine L. Chao responded to a question regarding information requests from Congress by saying that “I will do everything I can, but it’s up to the White House on what they want to do. It’s up to the White House and this administration. I’m not in charge of that.” Homeland Security Secretary John Kelly said at a different hearing, “Regardless of who the letter comes from—and it doesn’t have to just come from a ranking member or chairman—we’ll respond to any congressional inquiry.”

Members of Congress from both political parties are criticizing OLC’s opinion.

Representative Jason Chaffetz (R-UT), Chairman of the House Committee on Oversight and Government Reform, publically opposed the policy, calling it “dangerous and unsustainable.” Likewise, Senator Claire McCaskill (D-MO) condemned the policy, assuring “I’ll punch above my weight on this if this administration thinks it can withhold information.” Senators Rob Portman (R-OH), Tom Carper (D-DE), and Heidi Heitkamp (D-ND) all offered criticism, with Senator Portman reflecting on his time as budget director in the George W. Bush administration: “I found dealing with Congress frustrating, but I felt it was my responsibility to deal with Congress, it’s the way the founders set things up.”

The strongest criticism is coming from Senator Chuck Grassley (R-IA), Chairman of the powerful Senate Judiciary Committee, who wrote to President Trump urging him to encourage executive-branch cooperation with Congressional oversight, and requesting that the White House rescind the opinion. Senator Grassley has long conducted robust Congressional oversight as an individual Member of Congress, Ranking Member, and Chair. His letter is a thorough criticism of the OLC opinion, pointing out the major flaws and citing case law and long-held Congressional practices in equal measure. Senator Grassley argues that, “Every member of Congress is a constitutional officer…. This applies obviously regardless of whether they are in the majority or the minority at the moment and regardless of whether they are in a leadership position on a particular committee. Thus, all members need accurate information from the Executive Branch in order to carry out their Constitutional function to make informed decisions on all sorts of legislative issues covering a vast array of complex matters across our massive federal government.”

Senator Grassley makes an important reference to the DC Circuit Court of Appeals case Murphy v. Department of the Army, which concluded that “[i]t would be an inappropriate intrusion into the legislative sphere for the courts to decide without congressional direction that, for example, only the chairman of a committee shall be regarded as the official voice of the Congress for purposes of receiving such information, as distinguished from its ranking minority member, other committee members, or other members of the Congress.” He further notes that it would be even more inappropriate for the executive branch to determine how Congress does its job. The implication is that the OLC’s opinion threatens our constitutionally mandated system of checks and balances.

The OLC opinion emphasizes the ability of committee chairs to legally compel information from the executive branch via subpoena as evidence of their “authorization” to conduct oversight. However, as Senator Grassley put it, “that’s just not how it works.” He describes that, “[t]he vast majority of information Congress obtains, even through a Chairman’s requests, is obtained voluntarily, not by compulsion,” and the subpoena is “a last resort.”

Senator Grassley draws attention to the fact that many requests for information from Members of Congress are not partisan in nature, and that a partisan response from the executive branch to these requests “discourages bipartisanship, decreases transparency, and diminishes the crucial role of the American people’s elected representatives.” He ends by noting that the OLC opinion “obstructs what ought to be the natural flow of information between agencies and the committees, which frustrates the Constitutional function of legislating.”

The good news is that the OLC opinion does not have to represent the final word of the Administration. President Trump should recognize the rights and duties of Congress to oversee the executive branch, and tell OLC to rescind the opinion.  Equally important, Congressional leadership should be unified in demanding that the executive branch provide information critical to Congress’s Constitutional obligations.”

http://www.pogo.org/blog/2017/06/limits-placed-on-congressional-oversight.html

By: Peter Tyler
Investigator, POGO

Peter Tyler is an investigator for the Project On Government Oversight. Peter’s areas of expertise are Congressional Oversight, Federal spending accountability, Inspectors General.

Are You Prepared for a Contract Cancellation?

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Image:  nbmcwd.com

 

“WASHINGTON TECHNOLOGY”  By Darrell Hineman, Brian Courtney

“The possibility of a contract termination should be incorporated into every government contractor’s business continuity plan.

Implementing safeguards and procedures designed to mitigate the risk of a termination will limit the impact it has on your organization’s operations.

Preparing for the possibility of a contract termination is a defensive strategy that contractors should undertake now. Here are three key steps you should consider immediately:

  1. Plan ahead. Never consider your contract as “termination-proof.”
  2. Fully understand the contract termination process
  3. Learn how to calculate and submit your Request for Equitable Adjustment or settlement proposal.

The possibility of a contract termination should be incorporated into every government contractor’s business continuity plan. Implementing safeguards and procedures designed to mitigate the risk of a termination will limit the impact it has on your organization’s operations. Ask yourself, “Does my organization have procedures in place to deal with cure notices, customer complaints, and quality issues? What about monitoring subcontractors?”

If you are still reading this article, you probably are not as well prepared for a contract termination as you should be. Most contract terminations have a root cause and are not solely due to the government no longer requiring the items or services.

Here are some common contract termination causes and how to prevent them:

Failure to immediately address government concerns

Whether a complaint or “suggestion” is received verbally or in writing from the government, there should be a process in place to respond immediately. Often, we hear from clients that their program personnel were in the process of addressing a government issue (but apparently not in real-time). Now, they are dealing with a cure notice for many items to be corrected in two weeks.

Incorporate the handling and response to government communications and complaints/concerns into your program management policy and procedures. All complaints/concerns should be documented and tracked from the initial problem to the eventual solutions.

Regular communication with the government is also critical in staying ahead of potential contract issues and preventing a termination. The contractor program manager should routinely relay project status to the government in writing – even if not required under the contract terms. We recommend weekly communications but, depending on the project, monthly communications may suffice.

Failure to evaluate change orders for potential effect on cost or schedule

Sometimes, trying to fully please the client can actually lead to a termination. A contractor has only 30 days from the date of receipt of a written order to assert its right to an adjustment. Often, accepting changes without evaluating the impact on scope, cost, and/or schedule can lead to project delays and cost overruns. These may ultimately result in missed delivery/performance dates.

As a preventative measure, create a standard procedure to evaluate the impact of any change request on the scope, cost, and/or schedule of a project. Share this required procedure with the customer: “Yes, we can make changes, but we first need to evaluate the scope, cost, and schedule to identify any project impacts.”

Subcontractor performance issues

Many contractors focus on complying with the requirement to issue subcontracts and neglect their associated responsibility for managing subcontractors under FAR 42.202(e)(2), Assignment of Contract Administration. Prime contractors often assume, without oversight or verification, that their subcontractors will meet prescribed performance and deliverable requirements.

When a subcontractor fails to deliver, the prime contractor is ultimately responsible for addressing the issue, or may face termination. Therefore, you should ensure that you flow down the proper terms and conditions to your subcontractors, including the prime contract termination clauses and deliverable dates.

Another step we recommend is to create a post-award subcontract administration procedure to address the risk. Ensure that adequate and comprehensive subcontractor oversight is built in to your procurement and project management processes. Any issue that can affect contract performance/delivery must be escalated quickly for resolution.

Bidding on unprofitable work

Today, when lowest price, technically acceptable typically beats out best value (though recent legislation directs more limited use of LPTA procurements), contractors often estimate their cost to fit the price they want to bid and what they think the government is willing to pay. Instead, you should be focusing on the actual cost required to address the government’s mission-stated requirements.

Even though you may know that the “price to win” is too low to perform the work adequately, the proposal development organization might not want to deviate from that winning number.

To avoid bidding on unprofitable work, you should develop a comprehensive estimating manual and system so that your estimated costs are based on real costs/prices currently in the marketplace. As part of this, build and encourage a corporate culture that incentivizes employees for more profitable work as opposed to contract wins exclusively.

As no contract is termination proof, the key is to always be prepared and have a defense strategy in place at all times.”

About the Authors

Darrell Hineman is the director of the government compliance group at the accounting, tax and advisory firm CohnReznick LLP. https://www.cohnreznick.com/industries/government-contracting

Brian Courtney is a senior manager at the accounting, tax and advisory firm CohnReznick LLP. https://www.cohnreznick.com/industries/government-contracting

https://washingtontechnology.com/articles/2017/06/09/insights-contractor-termination.aspx

 

For more information on the types of contract terminations, preparing for them and managing them, please see the article linked below:

http://www.smalltofeds.com/2011/08/federal-government-contract.html

GAO: “Late Means Late for Contract Proposals”

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Image: National Defense Magazine

“NATIONAL DEFENSE MAGAZINE” By By Julia Lippman and Jason Workmaster

“GAO’s opinion should serve as a warning to contractors that a late proposal will not be considered.

Especially with the use of electronic submission processes, a matter of seconds can be the difference between a timely and late proposal.

The Government Accountability Office on Feb. 27 reiterated its long standing rule that, when it comes to proposal submissions, “late” means “late.”

GAO addressed a protest filed by Tele-Consultants Inc. in connection with a request for proposals issued by Naval Sea Systems Command. TCI’s protest argued that its proposal was improperly rejected by the agency for being submitted after the deadline.

Under the request for proposals, the Navy sought support services for the Naval Undersea Warfare Center through the issuance of a task order to a small business holder of the SeaPort-e multiple award indefinite-delivery/indefinite-quantity contract. The solicitation was issued Sept. 28, 2016 and proposals were to be submitted electronically through the SeaPort-e portal by Nov. 8 at 2:00 p.m. eastern time. The solicitation required compliance with the proposal submission instructions outlined in the SeaPort-e multiple award contract and the SeaPort Vendor Portal User Guide.

In using the portal, contractors were required to designate an “authorized user” who could confirm the intent to engage in a legally binding action, such as submitting a proposal. When a contractor was ready to submit its proposal, its authorized user was required to use the “submit signed proposal” button. The portal would then generate a confirmation prompt that would require the user to confirm his or her intent to electronically sign and submit the proposal.

The portal was set up so that contractors could store their proposals on the contractor side of the portal prior to submitting their proposal.

The agency received three proposals by the deadline. TCI’s proposal was not among them. Rather, TCI’s proposal remained in its draft form on the contractor side of the portal because it had not engaged the submit button.

Based on a review of the server logs, the agency determined that TCI’s representatives had unsuccessfully tried to engage the button 23 and 34 seconds after the proposal deadline. TCI reached out to the contracting officer by phone and email stating that the proposal button had not allowed it to submit its proposal but that “TCI’s proposal was timely submitted and it was intended to be binding on TCI.”

TCI received an email that evening from the SeaPort-e portal that noted that, “[a]n event for which you created a draft proposal has closed without you completing the final submission process. As a result, the draft will not be considered.” There was no indication that the portal had experienced any technical malfunction that would have prevented TCI from timely submitting its proposal.

TCI argued that its proposal should not have been rejected because, even though it did not receive notice that its proposal was timely submitted, its proposal was, in fact, submitted on time. Additionally, TCI argued that, even if its proposal was late, it was in the government’s control and was, thus, subject to the exception set forth in FAR 15.208. Under FAR 15.208, proposals that are submitted after the deadline are late unless, among other exceptions, there is evidence that the proposal “was received at the government installation designated for receipt of proposals and was under the government’s control prior to the time set for receipt of proposals[.]”

TCI argued that the archival lock on proposal files was acceptable evidence to establish that its proposal was received at the government installation designated for receipt of proposals and was under the government’s control prior to the time set for receipt of proposals.

The agency responded that TCI’s failure to engage the button meant that TCI had failed to submit its proposal either on time or after the deadline. The agency explained that proposals were not added to the government side of the portal until the submit button was selected. Thus, TCI’s proposal was never received by the government or under the government’s control. The agency also proffered that it could not know if TCI meant to be legally bound by its proposal in light of its failure to engage the button.

Although noting that it was not clear that FAR 15.208 even applied to this FAR Part 16 procurement, GAO nevertheless agreed with the agency and found that TCI failed to submit its proposal. GAO reiterated the well-established rule that an offeror is responsible for delivering its proposal to the designated place by the designated time and that an agency is not required to consider a proposal when there is no evidence that it was “actually received” by the agency.

GAO found that there was no evidence that TCI had actually submitted its proposal to the agency as the electronic submission of a legally binding offer was not completed. TCI did not dispute that it tried to use the submit button after the 2:00 p.m. EST deadline. And TCI never engaged the button even though it tried to do so. TCI’s failure to engage the button meant that it had never submitted a legally binding proposal. GAO concluded that it had “no basis to challenge the agency’s decision that it had not received, and could not consider, TCI’s draft proposal.”

Contractors should take extra care when submitting a proposal electronically to ensure that all proper submittal steps for the submission of a legally binding proposal have been completed well before a proposal deadline.

Additionally, a proposal stored on a government portal may not be sufficient to establish it was in the government’s control.”

Jason N. Workmaster is of counsel and Julia Lippman is an associate in the government contracts practice at Covington & Burling LLP.

http://www.nationaldefensemagazine.org/articles/2017/6/15/late-means-late-for-contract-proposals

 

 

U.S. Army Is Growing By Thousands of Soldiers

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(Photo Credit: Markus Rauchenberger/Army)

“ARMY TIMES”

“The Army has used a suite of force-shaping measures and incentives to retain and recruit enough soldiers to bring the force back to over a million.

[Measures] including five-figure enlistment and retention bonuses, as well as major opportunities for National Guard and Army Reserve soldiers to go active.

The Army is on track to reach its end strength goal of 1,018,000 soldiers by the end of September, and that will mean enough manpower to fill holes in existing combat units, save some units from planned deactivations, and man some new ones.

Units throughout the Army will feel the benefit of adding 28,000 troops to the active and reserve components, according to a Thursday release from the Army, reversing a drawdown that had planned for just 980,000 soldiers this year.

“These force structure gains facilitated by the FY17 end strength increase have begun, but some will take several years to achieve full operational capability,” said Brig. Gen. Brian J. Mennes, director of the Force Management Division, in the release. “Implementation of these decisions, without sacrificing readiness or modernization, is dependent upon receiving future appropriations commensurate with the authorized end strength.”

The Army has used a suite of force-shaping measures and incentives to retain and recruit enough soldiers to bring the force back to over a million, including five-figure enlistment and retention bonuses, as well as major opportunities for National Guard and Army Reserve soldiers to go active.

In addition to filling existing manning gaps in brigade combat teams, the release said, the plus-up will save several units that were slated for deactivation. They are:

  • 4th Infantry Brigade Combat Team (Airborne), 25th Infantry Division, based Joint Base Elmendorf-Richardson, Alaska.
  • 18th Military Police Brigade Headquarters based in Grafenwoehr, Germany.
  • 206th Military Intelligence Battalion at Fort Hood, Texas.
  • 61st Maintenance Company at Camp Stanley, South Korea.
  • 2nd Combat Aviation Brigade at Camp Red Cloud, South Korea.

Soldiers retained during the end strength build up also could end up joining the recently announced Security Force Assistance Brigades and their training school, as well as an aviation training brigade at Fort Hood.

More soldiers will also help with the Army’s increased manning in Europe.

The Army is planning to station the following units overseas, according to the release.

  • A field artillery brigade headquarters with an organic brigade support battalion headquarters, a signal company and a Multiple Launch Rocket System battalion (MLRS).
  • Two MLRS battalions with two forward support companies.
  • A short range air defense battalion.
  • A theater movement control element.
  • A petroleum support company.
  • An ammunition platoon.

Further, the Army plans to convert an infantry brigade to an armored brigade and add 1,300 new staff to Training and Doctrine Command, in an attempt to increase training and recruiting capacity, the release said.

“The end strength increase will augment deploying units, and units on high readiness status, with additional soldiers to increase Army readiness and enable us to continue to protect the nation,” Mennes said.”

https://www.armytimes.com/articles/the-army-is-growing-by-thousands-of-soldiers-heres-where-theyre-going-to-go