.Oakland’s Surveillance Contractor Has a History of Fraud

The multibillion-dollar company hired to build a citywide surveillance system also has a record of supplying weapons and training to anti-democratic governments around the world.

Last month, the Oakland City Council approved a controversial $2 million deal to continue construction on the Domain Awareness Center (DAC) — a surveillance hub for the Port of Oakland that has mushroomed into a citywide system. Civil libertarians and numerous Oakland residents oppose the DAC, especially its breadth, contending that it will infringe on people’s privacy rights and could be used to target political protesters. But councilmembers claim that Oakland needs the system to reduce crime, and that it would be irresponsible not to take advantage of the federal funds that are paying for DAC. And now, at least one high-ranking city official is saying the DAC could be used to control political demonstrations. Citing more than thirty protests in recent years, Renee Domingo, Oakland’s director of Emergency Services, wrote in an industry publication earlier this month that “Oakland’s long history of civil discourse and protest adds to the need” for the surveillance center.

But Oakland’s massive surveillance project is also controversial because the influential defense contractor selected to build it — Science Applications International Corporation (SAIC) — has a long, troubling track record. In recent years, SAIC has been accused of defrauding municipal governments, bribing foreign officials, and delivering shoddy products. And when the company does deliver the goods at cost and on time, it’s often for militarized projects linked to human rights abuses. Among SAIC’s recent contracts: training the Egyptian military, operating drones used to kill foreign citizens, building and operating portions of the NSA’s internet spying system used on Americans, and more.

It’s unclear if Oakland’s mayor, city council, or city administrator vetted the company before approving the DAC contract. Nothing in the Oakland Public Safety Committee meeting records, nor the meetings of the full council, indicate that the city looked into SAIC’s record before handing over millions in federal grant dollars. In an interview last month, neither of the two city officials in charge of the DAC — Domingo and Ahsan Baig, the city’s information technology manager — were aware of SAIC’s past record of fraud, cost overruns, and failed projects.

Councilman Dan Kalb said he also wasn’t aware of SAIC’s record with other cities or its various military and Department of Homeland Security contracts. “The administration made the decision as to which contractor to go with,” Kalb said, referring to City Administrator Deanna Santana’s office. “Apparently, last year the council gave the administration the authority to work with the port to decide on the contractor.” Other members of the council did not respond to a request for comment.

SAIC is one of the titans of the military and intelligence industries, dubbed “Washington’s $8 Billion Shadow” by Vanity Fair investigative reporters Don Bartlett and James Steele (the company has a $5.3 billion market capitalization today). Founded in 1969 by John Robert Beyster — the former head of the particle accelerator physics department of General Atomics, another major weapons manufacturing company — SAIC was based in San Diego until 2007. The company moved its headquarters to Reston, Virginia during the George W. Bush administration to be closer to its two biggest clients: the Pentagon and the rapidly growing Department of Homeland Security. SAIC has received $36 billion in federal contracts since 2001, with $23 billion, or 63 percent of this total, coming from the US military.

Several of the company’s executives also have been awarded high-level government jobs in the past decade. SAIC is “the classic revolving-door company,” said Tim Shorrock, author of Spies for Hire: The Secret World of Intelligence Outsourcing, and one of the nation’s leading experts on defense and intelligence contractors such as SAIC. “It’s an old-boy network and that’s how they keep going,” Shorrock said of SAIC’s ability to continue winning lucrative government contracts despite multiple serious allegations — and admissions — of fraud. “They use their influence to cut a deal.”

Oakland’s decision to pay SAIC $2 million to work on DAC also could help fuel the growth of such surveillance systems nationwide. “Once you start welcoming in these large contractors, you create a lobbying interest for these programs,” said Bruce Schneier, a privacy expert who has been critical of outsourcing. Lobbying interests, Schneier added, “distort democracy,” because they generate self-serving rationales to keep ineffective programs going.

Although contracting directly with cities is not SAIC’s biggest line of business, the company made headlines last decade when it defrauded New York City of hundreds of millions of dollars. In the late 1990s, New York began a program to transition tens of thousands of municipal employees from paper punch cards to digital palm scanners, ostensibly to counter fraud. Dubbed CityTime, the project’s initial budget was $68 million. But after SAIC acquired the company that had won the competitive bidding process for the work, CityTime’s cost mushroomed to more than $740 million in ten years. The city official responsible for overseeing CityTime had once worked for a SAIC subcontractor, and yet was allowed to stay on the project by the city’s Conflict of Interest Board.

Probes by the New York City Department of Investigation and US Attorney for the Southern District of New York revealed that SAIC employees had set up an intricate network of cost inflation and kickbacks. Letitia James, a city councilwoman from Brooklyn, recalled chairing budget committee hearings about the program. SAIC’s contract, said James, “kept getting renewed without any competition or oversight,” a byproduct of the cozy relations maintained by many employees of SAIC and their subcontractors, who had worked previously for the city.

“There was a culture in the [New York Mayor Michael] Bloomberg administration — the private sector knows best — that was really difficult to penetrate,” said James. “It was incredibly difficult for this administration to understand that CityTime was a runaway train and that there was no one in the driver’s seat.” SAIC was making millions, however, and kept the contract alive.

Federal prosecutors eventually filed charges against eleven former SAIC employees, and in 2012, the firm agreed to pay a $500 million settlement. The CityTime scandal was the largest case of municipal fraud in New York City’s history. SAIC has since been flagged in New York’s database of city vendors, and faces a difficult uphill battle to win contracts there in the future.

But CityTime was not an isolated incident of SAIC failing to deliver on a major government contract. In 2000, the firm won a lucrative agreement to upgrade the FBI’s Virtual Casefile System, also known as Trilogy. A 2006 Washington Post investigation exposed the project as a catastrophic failure, thanks to “poor conception and muddled execution.” Yet SAIC still pocketed $100 million from the project.

SAIC was also responsible for a failed multibillion-dollar intelligence system project for the National Security Agency called Trailblazer that was junked in 2006 and characterized as one of the worst intelligence failures in US history. An investigation by Shorrock for The Nation magazine about the Obama administration’s war on whistleblowers delved into the lives of four NSA employees who drew attention to Trailblazer’s inoperability — and SAIC’s wrongdoing — and were targeted in leak investigations as a result.

Civil libertarians have described Oakland’s DAC as suffering from mission creep, a process by which a project morphs to encompass activities beyond its original justification. That seems to be the case with other urban spy systems built by SAIC as well. In 2004, the Greek government hired the company to blanket Athens with more than 1,000 cameras and sensors, as well as other surveillance and communications gadgets for the police to use during the Olympics.

“The SAIC surveillance system was considered by the Greek governments, under the US Embassy’s blessing, a long-term security investment, and a panacea to be used for post-Games security purposes against terrorism and crime,” said Minas Samatas, a professor at the University of Crete and an expert on surveillance. “That future promise, regardless of its credibility, was necessary to justify its outrageous cost.” The total cost was several hundred million dollars, although a full accounting is difficult because of various layers of waste and enormous cost overruns that SAIC claimed were the Greek government’s fault.

A permanent citywide surveillance system is extremely controversial in Athens. “This was perceived as a threat to hard-won political liberties in Greece,” Samatas said, referring to the era after a neo-Fascist military junta had ruled Greece from 1967 to 1974 and had received US aid and weapons that were used on the Greek people. “After the [2004] Games, these cameras were used to monitor not only traffic, but also rallies and demonstrations,” Samatas told us.

But SAIC’s Greek surveillance system hasn’t worked as planned. Samatas said only a fraction of the cameras installed actually provide footage, and that the communications networks simply never worked. “Fraud was involved,” explained Samatas, who points to bribes and other questionable practices used by the joint venture between Germany’s Siemens Corporation and SAIC to obtain the original contract. Even so, last year SAIC convinced an international arbiter to order Greece to pay $52 million to SAIC for money the company says it lost on the project.

SAIC also is involved in supplying weapons and training to anti-democratic governments around the world. The Egyptian coup of July 3 was carried out by soldiers who received training under a $46 million SAIC contract. For fifteen years SAIC has been working with the Egyptian military, under the US Army’s watch, to ready Egyptian soldiers for combat under a program called the “Egyptian Combat Training Center,” according to a US Army spokesperson. The Army told us that the most recent work order was finalized in 2011, requiring SAIC to provide “player units, detectors, and other equipment to facilitate force-on-force live training.

“SAIC is responsible to develop, deliver, install and test the system in Egypt,” and company employees “train the Egyptians on the use of the equipment,” said Robert Gomez, assistant project manager for foreign military sales at the US Army Program Executive Office for Simulation, Training, and Instrumentation. Over the last month, the Egyptian military has killed hundreds of protesters, mainly those who oppose the coup against the country’s elected president.

SAIC is also training Saudi Arabia’s security forces. In 2009, the US military awarded SAIC a multimillion-dollar contract to establish the “Saudi War College” and to “assist in preparing and educating Saudi leaders to face domestic and global challenges,” according to a company press release. The Saudi royal family is a religious dictatorship known for financially supporting anti-democratic regimes across the Middle East. The Saudi monarchy strongly supported the recent Egyptian military coup and violent repression of protests.

“Saudi Arabia has not experienced the kind of popular protests that have occurred elsewhere in the Middle East and North Africa in recent years,” according to Freedom House, an organization that tracks political freedoms around the world. “Saudi activists used social media to call for a ‘Day of Rage’ to be held in March 2011. However, authorities dispatched security personnel across the country as preemptive measures, and large protests failed to materialize.” SAIC is currently hiring dozens of instructors to train Saudi military personnel at the country’s War College.

SAIC’s employees are also literally killing people. SAIC is one of the contractors involved in the Air Force and CIA’s drone-assassination missions. According to a 2011 Los Angeles Times report, SAIC’s employees “work in the so-called kill chain before Hellfire missiles are launched.” The kill chain refers to the group of military personnel and contractors who help analyze video from drones, direct the vehicles, and conduct airstrikes. SAIC employees work at Air Force bases in Clovis, New Mexico, near Las Vegas, and at Fort Walton Beach, Florida — centers of the US military’s drone operations, according to job postings on SAIC’s website.

The company is at the center of the recently revealed mosaic of NSA spy operations, many of which gather data on US residents. The company is the main contractor for the XKeyscore system, which allows the federal government and its contractors like SAIC to collect and sift through data revealing “nearly everything a user does on the Internet,” according to reports in the Guardian newspaper, which broke the story.

Increasingly militarized US border operations is another profit center for SAIC. The company provided engineering services to the Department of Homeland Security to build a sixty-mile-long wall along the US-Mexico border. For the Coast Guard, SAIC developed a biometric database used to track immigrants in the Caribbean. SAIC’s technology includes a camera used to photograph the faces of detained immigrants. Their “facial captures” are stored in a database, and software is used to biometrically identify detainees, most of who are Haitians and Dominicans.

The common thread in SAIC’s business ventures is the company’s ability to turn a profit, no matter how shoddy the end product. “Part of the contracting ethos is that you never really solve the problem you just keep pouring money into it,” explained Shorrock. “If you never complete it, that’s good,” he said, referring to the fact that profit streams will keep flowing in for companies like SAIC.


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