Defense contractor Paragon Dynamics Inc. has agreed to pay $1.15 million to settle allegations that it improperly obtained bid and proposal information for National Reconnaissance Office contracts, federal prosecutors announced Tuesday.
Paragon Dynamics, a software research and development firm based in Aurora, Colo., allegedly obtained bid and proposal information from competitor Raytheon Corp. in fiscal 2009, while Raytheon was competing on National Reconnaissance Office contracts, the U.S. Attorney for the District of Colorado said in the news release. The NRO is in charge of designing, launching and maintaining America’s intelligence satellites.
A Paragon Dynamics employee with access to a Raytheon facility in Aurora allegedly used his access to obtain entire drafts of Raytheon’s proposals for two separate contracts, according to information from the Colorado U.S. Attorney’s office. The employee allegedly faxed part of a proposal to the president of Paragon Dynamics, who sent the information to another corporation that Paragon Dynamics was teaming with in a competition to win the NRO contract, according to the government’s claims.
“When companies cheat in the bidding process for government contracts by stealing the work of their competitors, they face strict penalties,” said John Walsh, U.S. Attorney for the District of Colorado. “Corporate espionage erodes the trust we have in our public procurement system, and the Department of Justice will hold cheaters accountable for their actions.”
As part of the agreement, NRO’s inspector general reached a corporate integrity agreement with Paragon Dynamics, according to the news release. Paragon Dynamics was awarded $3 million in defense contracts in 2012, according to data from the Federal Procurement Data System.
You can argue about the effectiveness of the United States’ national security classification program, but there’s no disputing one point: Keeping secrets costs money—lots of it.
Last year, executive branch agencies shelled out an estimated $11.4 billion on classified information systems and other facets of the program, according to an annual report released this week by the Information Security Oversight Office, a branch of the National Archives and Records Administration.
That’s up 12 percent–or $1.2 billion–from 2010, and more than double the figure from a decade ago. The actual tab to taxpayers is likely much higher, because the report doesn’t include spending by the CIA, the National Reconnaissance Office and four other agencies that do almost all of their work in secret. Their estimates are provided in a classified addendum to the public portion of the report.
ISOO doesn’t speculate on possible reasons behind last year’s double-digit percentage increase, but one obvious suspect is the government’s response to the massive WikiLeaks breach, which became known starting in mid-2010. Spending on “protection and maintenance for classified information systems,” for example, shot up 20 percent last year to $5.65 billion. The cost of physical security also ballooned by more than 20 percent to $1.74 billion. Interestingly, though, estimated agency spending on personnel security dropped 10 percent to about $1.4 billion.
As of today, the Information Security Oversight Office has a new director in the person of John P. Fitzpatrick, a former top security official at the Office of the Director of National Intelligence.
ISOO, part of the National Archives and Records Administration, is a small but critical cog in oversight of the government’s security classification system. The agency has also been charged with bringing order to the mishmash of agency approaches for handling controlled unclassified information.
“A strong advocate for information sharing and protection, he has demonstrated his ability to lead and oversee change both within and beyond the intelligence community throughout his career,” Archivist David Ferriero told NARA staff in announcing Fitzpatrick’s appointment. The announcement was posted on the Secrecy News blog of the Federation of American Scientists, where Steven Aftergood wrote that Fitzpatrick is taking over at “at a particularly crucial moment in secrecy policy.”
Fitzpatrick succeeds William Bosanko, who was promoted in March; William Cira, ISOO associate director for classification management, has been filling in.
Fitzpatrick formerly served as assistant deputy director of National Intelligence for Security at ODNI and previously headed the agency’s special security center, according to his official bio. He has also worked at the CIA and the National Reconnaissance Office.
A Senior Executive Service member, Fitzpatrick has a bachelor’s degree in economics and psychology from the College of William and Mary.