The Pentagon's premiere research arm, Darpa, awarded a substantial contract to a company co-founded by the agency's director and currently run by her father.
In a document dated Jan. 28, 2010, Darpa announced it was giving a $400,000 contract to RedXDefense. It's a Maryland firm that specializes in explosives detection -- and has unusually close ties with Darpa and its current chief.
RedXDefense was co-founded in 2005 by Regina Dugan -- who, since July 2009, has served as director of Darpa. Her father, Vince, currently serves as RedXDefense's Chief Executive Officer. Her uncle, John, is on the company's strategic advisory board. On the surface, those family connections give the deal between Darpa and RedXDefense the appearance of a potential conflict of interest. The story was first reported by AllGov.
Darpa insists that the company didn't receive any special treatment, however. "At no time did Dr. Dugan participate in any dealings between the Agency and RedXDefense related to the contract," Darpa spokesman Eric Mazzacone e-mails Danger Room. But he didn't answer questions about whether the contract was awarded competitively or what the criteria were for giving RedXDefense its $400,000.
Upon becoming Darpa director, Mazzacone says, Dugan "recused herself" from any business dealings between the agency and her family's company, preventing her from "personally and substantially participating in RedXDefense matters." That recusal complies with department-wide ethics rules to ensure that "no potential performer is advantaged over another because of relationships with Darpa personnel." When Danger Room asked if Dugan retains any stake in RedXDefense, Mazzacone invited us to "submit a FOIA [Freedom of Information Act] request for Dr. Dugan's financial disclosure report."
According to Mazzacone, the Darpa's general counsel reviewed the RedXDefense contract and found "no merit" to any suspicion of impropriety or conflict of interest. In general, Darpa's decisions to award contracts get made several bureaucratic levels below the director, Mazzacone says.
Darpa spends about $3 billion annually on blue sky science and technology projects for the Pentagon, handing out hundreds of contracts per year to corporate, government, and university researchers. Despite the enormous number of efforts, agency insiders say, Dugan keeps close tabs on Darpa's myriad research programs. (Although she's less of a micro-manager than her legendarily hands-on predecessor, Tony Tether.) Every new call for research, or "Broad Agency Announcement," has to be personally approved by Dugan, for instance.
The BAA that led to RedXDefense's contract was broader than most, covering everything from nanotechnology to "operational neuroscience." Eventually, a dozen defense contractors and academic labs received funds for their proposals.
RedXDefense did not respond to multiple requests to comment for this story. But government ethics watchdogs raised an eyebrow at RedXDefense's deal with Darpa. "Dugan is a perfect example of why the revolving door needs greater scrutiny," says Nick Schwellenbach of the Project on Government Oversight. "While we don't know if Dugan did anything wrong, the facts we do know don't inspire confidence."
One of the Obama administration's first acts in office was to enact ethics guidelines to restrict top officials from doing business with their former companies or working on the same issues. Some senior defense officials have received waivers from guidelines, including Deputy Defense Secretary William Lynn and Zachary Lemnioses, the Pentagon's director of research and engineering. No waiver has been posted for Dugan on the website of the Office of Government Ethics.
But Mazzacone says it's both typical and required for Darpa employees -- "from program managers to the Director" -- to recuse themselves from matters involving companies they used to have ties with before arriving at the agency. "These policies and practices are in place so that qualified people can come to government service and to ensure that all organizations have access to fair and open competition; neither favored nor disfavored," he says.
Dugan is still listed as President and CEO on the website of Dugan Ventures, an investment firm she founded with her father and his identical twin, John. (That's an illustration from the company's site, above.) The Dugan Ventures site also boasts of her previous stint with Darpa, as a program manager from 1996 to 2000. During that time, she led the agency's "Dog's Nose Program," an attempt to suss out the explosives inside land mines with the accuracy of a canine snout. (Bomb detection still aspires to such heights.) RedXDefense's leading product is the XPak G2, a handheld bomb finder that uses a home-brewed fluorescent detection ink to find trace particles of explosives used in a variety of bombs, including the elusive ammonium nitrate and urea nitrate explosives manufactured by Afghan insurgents.
But as AllGov writes, the deal is "just a bit questionable" given Dugan's history with the company. And surprisingly, the rules would seem to allow for such questionable awards. According to the Broad Agency Announcement's contract guidelines concerning conflicts of interest, the "Darpa Program Manager" and "any other individuals chosen to evalsuate the proposal or participate in the review and selection process" fall under the scrutiny of the government to ensure they're not financially benefiting from their decisions. But it doesn't say anything about their bosses undergoing similar scrutiny.
*Photos: Virginia Tech; Dugan Ventures
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