FORMER LUFTHANSA SUBSIDIARY CEO PLEADS GUILTY TO FOREIGN BRIBERY CHARGES

FROM:  U.S. DEPARTMENT OF JUSTICE 

Thursday, July 24, 2014

Former Chief Executive Officer of Lufthansa Subsidiary BizJet Pleads Guilty to Foreign Bribery Charges

The former president and chief executive officer of BizJet International Sales and Support Inc., a U.S.-based subsidiary of Lufthansa Technik AG with headquarters in Tulsa, Oklahoma, that provides aircraft maintenance, repair and overhaul services, pleaded guilty today for his participation in a scheme to pay bribes to foreign government officials.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Danny C. Williams Sr., of the Northern District of Oklahoma and Assistant Director in Charge Valerie Parlave of the FBI’s Washington Field Office made the announcement.

“The former CEO of BizJet, Bernd Kowalewski, has become the third and most senior Bizjet executive to plead guilty to bribing officials in Mexico and Panama to get contracts for aircraft services,” said Assistant Attorney General Caldwell.  “While Kowalewski and his fellow executives referred to the corrupt payments as ‘commissions’ and ‘incentives,’ they were bribes, plain and simple.  Though he was living abroad when the charges were unsealed, the reach of the law extends beyond U.S. borders, resulting in Kowalewski’s arrest in Amsterdam and his appearance in court today in the United States.  Today’s guilty plea is an example of our continued determination to hold corporate executives responsible for criminal wrongdoing whenever the evidence allows.”

“I commend the investigators and prosecutors who worked together across borders and jurisdictions to vigorously enforce the Foreign Corrupt Practices Act,” said U.S. Attorney Williams.  “Partnership is a necessity in all investigations. By forging and strengthening international partnerships to combat bribery, the Department of Justice is advancing its efforts to prevent crime and to protect citizens.”

Bernd Kowalewski, 57, the former President and CEO of BizJet, pleaded guilty today in federal court in Tulsa, Oklahoma, to conspiracy to violate the Foreign Corrupt Practices Act (FCPA) and a substantive violation of the FCPA in connection with a scheme to pay bribes to officials in Mexico and Panama in exchange for those officials’ assistance in securing contracts for BizJet to perform aircraft maintenance, repair and overhaul services.

Kowalewski was arrested on a provisional arrest warrant by authorities in Amsterdam on March 13, 2014, and waived extradition on June 20, 2014.   Kowalewski is the third BizJet executive to plead guilty in this case.   Peter DuBois, the former Vice President of Sales and Marketing, pleaded guilty on Jan. 5, 2012, to conspiracy to violate the FCPA and a substantive violation of the FCPA and Neal Uhl, the former Vice President of Finance, pleaded guilty on Jan. 5, 2012, to conspiracy to violate the FCPA.   Jald Jensen, the former sales manager at BizJet, has been indicted for conspiracy as well as substantive FCPA violations and money laundering and is believed to be living abroad.   Charges were unsealed against the four defendants on April 5, 2013.

According to court filings, Kowalewski and his co-conspirators paid bribes directly to foreign officials to secure aircraft maintenance repair and overhaul contracts, and in some instances, the defendants funneled bribes to foreign officials through a shell company owned and operated by Jensen.   The shell company, Avionica International & Associates Inc., operated under the pretense of providing aircraft maintenance brokerage services but in reality laundered money related to BizJet’s bribery scheme.   Bribes were paid to officials employed by the Mexican Policia Federal Preventiva, the Mexican Coordinacion General de Transportes Aereos Presidenciales, the air fleet for the Gobierno del Estado de Sinaloa, the air fleet for the Gobierno del Estado de Sonora and the Republica de Panama Autoridad Aeronautica Civil.

Further according to court filings, the co-conspirators discussed in e-mail correspondence and at corporate meetings the need to pay bribes, which they referred to internally as “commissions” or “incentives,” to officials employed by the foreign government agencies in order to secure the contracts.   At one meeting, for example, in response to a question about who the decision-maker was at a particular customer organization, DuBois stated that a director of maintenance or chief pilot was normally responsible for decisions on where an aircraft went for maintenance work.   Kowalewski then responded by explaining that the directors of maintenance and chief pilots in the past received “commissions” of $3,000 to $5,000 but were now demanding $30,000 to $40,000 in “commissions.”   Similarly, in e-mail correspondence between Uhl, DuBois, Kowalewski, and several others, Uhl responded to a question about BizJet’s financial outlook if “incentives” paid to brokers, directors of maintenance, or chief pilots continued to increase industry wide, stating that they would “work to build these fees into the revenue as much as possible.   We must remain competitive in this respect to maintain and gain market share.”

On March 14, 2012, the department announced that it had entered into a deferred prosecution agreement with BizJet, requiring that BizJet pay an $11.8 million monetary penalty to resolve charges related to the corrupt conduct.   That agreement acknowledged BizJet’s voluntary disclosure, extraordinary cooperation, and extensive remediation in this case.   In addition, the department announced on March 14, 2012, that BizJet’s indirect parent company, Lufthansa Technik AG, entered into an agreement with the department in which the department agreed not to prosecute Lufthansa Technik provided that Lufthansa Technik satisfies its obligations under the agreement for a period of three years.

This case is being investigated by the FBI’s Washington Field Office with substantial assistance form the Oklahoma Field Office.   The department has worked closely with its law enforcement counterparts in Amsterdam, Mexico and Panama, and has received significant assistance from Germany and Uruguay.   The Criminal Division’s Office of International Affairs has also provided assistance.   This case is being prosecuted by Assistant Chief Daniel S. Kahn and Trial Attorney David Fuhr of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Kevin Leitch of the Northern District of Oklahoma.

SECRETARY KERRY'S STATEMENT ON MERIAM ISHAG AND FAMILY'S ARRIVAL IN ROME

FROM:  U.S. STATE DEPARTMENT 

On Meriam Ishag and Family

Press Statement

John Kerry

Secretary of State

Washington, DC

July 25, 2014

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Around the world, supporters of religious freedom celebrate the arrival of Meriam Ishag and her family in Rome. I am grateful to the Government of Italy for its role in working with the Government of Sudan to enable Ms. Ishag and her family to depart Sudan.

I want to acknowledge the many individuals in the United States and the international community who expressed their concern at Ms. Ishag’s plight. Their concerns were our cause. I am especially proud that our diplomatic efforts through the U.S. Embassy in Khartoum helped secure Ms. Ishag’s and her family’s release. The United States will continue to be an unwavering advocate for the right to freedom of religion worldwide.

I extend my personal best wishes to Ms. Ishag and her family as they rebuild their lives and restore hope for a future where all people can live their faiths fully and freely.

U.S. CONGRATULATES PEOPLE OF LIBERIA ON THEIR INDEPENDENCE DAY

FROM:  U.S. STATE DEPARTMENT 

Liberia National Day

Press Statement

John Kerry

Secretary of State

Washington, DC

July 25, 2014

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On behalf of President Obama and all Americans, I congratulate the people of Liberia as you observe 167 years of independence on July 26.

Liberia and the United States share a special bond dating back to the first days of your republic. Centuries later, that bond is stronger than ever. We remain dedicated to working with you to consolidate peace and reconciliation, support economic development, and strengthen democratic institutions.

Next month, President Obama will host 50 African heads of state – including your own president, Ellen Sirleaf – at the African Leaders Conference in Washington, D.C. We will discuss the interests the United States shares with the entire African continent.
The United States believes that Africa’s future and the future of the globe are intertwined. You are at the center of two great promises of the 21^st century: tapping the economic potential of all people and making an AIDS-free generation a reality. Achieving these goals is not just important for Liberia; it’s critical for all of Africa and the globe.

Together, we will work toward an ever brighter future marked by economic prosperity, dignity, and stability for all Liberians. On this day of celebration and reflection, I extend my best wishes to the people of Liberia.

U.S. CONGRATULATES PEOPLE OF THE REPUBLIC OF MALDIVES ON THEIR INDEPENDENCE DAY

FROM:  U.S. STATE DEPARTMENT 

Maldives Independence Day Message

Press Statement

John Kerry

Secretary of State

Washington, DC

July 25, 2014

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On behalf of President Obama and the people of the United States, I congratulate the people of the Republic of Maldives on the 49th anniversary of your independence on July 26.
The United States stands with Maldives as you work to strengthen your young democracy and bring prosperity to all your citizens.

As an island nation, you know better than anyone what it means to live on the frontlines of our changing climate, a challenge the United States is committed to fighting alongside of you. We look forward to further cultivating our partnership by tackling pressing global issues like climate change and maritime security in the Indian Ocean.

On your Independence Day, I wish peace and good fortune to all Maldivians.

U.S. DEFENSE DEPARTMENT CONTRACTS FOR JULY 25, 2014

FROM:  U.S. DEFENSE DEPARTMENT 

CONTRACTS

ARMY

Newt Marine Service,* Dubuque, Iowa (W9128F-14-D-0025); Western Contracting Corp.,* Sioux City, Iowa (W9128F-14-D-0026); Commercial Contractors Equipment, Inc.,* Lincoln, Nebraska (W9128F-14-D-0027); and Arrowhead Contracting Inc.,* Lenexa, Kansas (W9128F-14-D-0028), were awarded a $49,000,000 firm-fixed-price, multiple award task order contract for the Missouri River recovery program from Fort Peck Dam, Montana, to Kansas City, Kansas. Funding and work location will be determined with each order, with a completion date of July 25, 2019. Bids were solicited via the Internet with seven received. U.S. Army Corps of Engineers, Omaha, Nebraska, is the contracting activity.

Persistent Systems, LLC, New York, New York, was awarded a $49,000,000 cost-plus-fixed-fee, indefinite-delivery/indefinite-quantity, incrementally funded contract for the Program Manager for Special Programs program office for analysis and support, research and development, procurement and production, sustainment and training. Funding and work location will be determined with each order, with a completion date of July 25, 2019. One bid was solicited with one received. Army Contracting Command, Natick, Massachusetts, is the contracting activity (W911QY-14-D-0016).

Navistar Defense, Lisle, Illinois, was awarded a $27,597,040 modification (P0001) to contract W56HZV-12-G-0006 to acquire mine-resistant, ambush-protected hardware kits to upgrade MaxxPro Dash and long-wheel base ambulances to their final configuration. Other procurement funds (Army) for fiscal 2012($14,551,571) and fiscal 2014 ($7,191,511) were obligated at the time of the award. Estimated completion date is May 30, 2015. Work will be performed at Lisle, Illinois. Army Contracting Command, Warren, Michigan, is the contracting activity.

Lakeview Center Inc., Pensacola, Florida was awarded a $10,280,538 modification (P00015) to contract W9124D-10-D-0031 for dining facility/cook support. Funding and work location will be determined with each order. Estimated completion date is Aug. 31, 2015. Army Contracting Command, Joint Base Lewis-McChord, Ft. Lewis, Washington is the contracting activity.

UPDATE: Bay Electric Co., Inc.,* Newport News, Virginia (W912DY-14-D-0035); BITHENERGY, Inc.,* Baltimore, Maryland (W912DY-14-D-0064); Bright Light Federal LLC,* Littleton, Colorado (W912DY-14-D-0065); Ecoplexus,* San Francisco, California (W912DY-14-D-0066); Essex Construction, LLC,* Upper Marlboro, Maryland (W912DY-14-D-0067); Indian Energy LLC,* Newport Beach, California (W912DY-14-D-0068); Infinity Development Partners, LLC,* New Braunfels, Texas (W912DY-14-D-0069); Legatus6 LLC,* Chevy Chase, Maryland (W912DY-14-D-0070); Scatec Solar North America,* Inc., Sausalito, California

(W912DY-14-D-0072); SunLight General Capital LLC,* New York, New York (W912DY-14-D-0073); and Third Sun Solar, LLC,* Athens, Ohio (W912DY-14-D-0074), are being added as awardees the Solar technology category of power awards under solicitation W912DY-11-R-0036. These companies, as well as those previously announced will share a maximum $7,000,000,000 firm-fixed-price, indefinite-delivery/indefinite-quantity contract for use in competing and awarding power purchase agreements for solar technology. Funding and work location will be determined with each order. Bids were solicited via the Internet with 114 received. U.S. Army Corps of Engineers, Huntsville, Alabama, is the contracting activity.

NAVY

AMSEC LLC, Virginia Beach, Virginia (N00024-14-D-4402); CDI Marine Co. LLC, Virginia Beach, Virginia (N00024-14-D-4416); and Q.E.D. Systems Inc., Virginia Beach, Virginia (N00024-14-D-4417) are each being awarded a cost-plus-fixed-fee/cost-only, indefinite-delivery/indefinite-quantity, multiple award contract for the procurement of material kitting and technical and logistical support services required to support modernization requirements for USS Blue Ridge (LCC 19) and USS Mount Whitney (LCC 20) under the LCC 19 Class Extended Service Life Program. Contractors will provide advance planning efforts associated with shipchecks, drawings, and engineering; and marine maintenance and installation. The maximum dollar amount that may be awarded under all three contracts combined is $96,800,000. At time of award, AMSEC LLC will be awarded a $1,219,966 delivery order; and CDI and Q.E.D. will each be awarded a $10,000 delivery order. Work is anticipated to be performed in Virginia Beach, Virginia (55 percent); Yokosuka, Japan (19.5 percent); Puget Sound, Washington (15 percent); and Gaeta, Italy (10.5 percent), and is expected to be completed by July 2019. Fiscal 2014 operations and maintenance (Navy) in the amount of $1,239,966 will be obligated at the time of award, and will expire at the end of the current fiscal year. This contract was competitively procured via the Federal Business Opportunities website, with three offers received. The Naval Sea Systems Command, Washington, District of Columbia, is the contracting activity.
Camber Corp., Huntsville, Alabama (N00244-13-D-0015); Deloitte Consulting LLP, Alexandria, Virginia (N00244-13-D-0016); General Dynamics Information Technology, Inc., Needham, Massachusetts (N00244-13-D-0017); Mission Essential Personnel, LLC, Columbus, Ohio (N00244-13-D-0018); and Vose Technical Systems General, Tacoma, Washington (N00244-13-D-0019), are being awarded modifications under previously awarded multiple award contracts to exercise option year one to provide technical/professional support, and related tailored administrative services for the Center for Civil Military Relations inside and outside the continental United States. The maximum contract value for option year one for all five contracts combined is $56,384,558. These five contractors will compete for task orders under the terms and conditions of the awarded contracts. The required work will be performed at multiple locations as specified in the contract, including Army Active, Reserve and National Guard posts in the United States (10 percent); Monterey, California (8 percent); Kailua, Hawaii (1 percent); Tampa, Florida (1 percent), and various locations outside the continental United States equaling 1 percent or lower (80 percent). Work is expected to be completed by July 31, 2015. This announcement identifies potential contract Foreign Military Sale efforts. The only known potential countries where performance may occur are Egypt, Indonesia, Lebanon, Singapore, and Saudi Arabia, and combined, would equate to less than two percent of the total effort. No funding will be obligated with the exercise of the option, and therefore none of the funding will expire before the end of the current fiscal year. Funding will be provided on individual task orders issued against the contracts during the period of the option. The contracts were competitively procured via the Navy Electronic Commerce Online and the Federal Business Opportunities websites, with five offers received in response to these solicitations. NAVSUP, Fleet Logistics Center, San Diego, California, is the contracting activity.

L-3 Chesapeake Sciences Corp.,* Millersville, Maryland, is being awarded a $17,772,601 cost-plus-fixed-fee, firm-fixed-price contract for the design, development, production and test of two thin line compact towed arrays, 10 test assets, engineering service hours and provisioning item order spares. This effort is the result of Small Business Innovation Research topic number N05-125, Compact Towed Sonar Array. Thin line compact towed array provides the U.S. Naval Fleet with the next generation of array technology to address reliability and maintain mission operational capability. The thin line compact towed array is a reliability improvement array that incorporates compact towed array telemetry while maintaining TB-29A acoustic performance. Work will be performed in Millersville, Maryland (50 percent); Ashaway, Rhode Island (25 percent); and Liverpool, New York (25 percent), and is expected to be completed by January 2016. Fiscal 2011 and 2012 shipbuilding and conversion (Navy) funding in the amount of $12,201,219 will be obligated at time of award and will not expire at the end of the current fiscal year. This contract was not competitively procured in accordance with of FAR 6.302-5. The Naval Sea Systems Command, Washington, District of Columbia, is the contracting activity (N00024-14-C-6233).
Sonalysts, Inc., Waterford, Massachusetts (N66604-14-D-231A); AMSEC, LLC, Virginia Beach, Virginia (N66604-14-D-231B); Delex Systems, Inc., Herndon, Virginia (N66604-14-D-231C); and URS Federal Services, Inc., Arlington, Virginia (N66604-14-D-231D), are being awarded a 60-month, firm-fixed-price, indefinite-delivery/indefinite-quantity, multiple award task order contract; aggregate not-to-exceed amount for these multiple award contracts combined is $8,997,500, to produce interactive multimedia instruction courseware modules for the Naval Sea Systems Command’s on-board and schoolhouse training programs for all subject matter areas of submarine operations and procedures. The four contractors will have the opportunity to bid on each individual task order. Work will be performed at the following locations: Virginia Beach, Virginia (24 percent); Herndon, Virginia (24 percent); Arlington, Virginia (24 percent): Waterford, Massachusetts (24 percent); and Groton, Connecticut (4 percent). Work is expected to be completed by July 2019. Fiscal 2014 operations and maintenance (Navy) contract funds in the amount of $334,950 will be obligated at the time of award and will expire at the end of the current fiscal year. These contracts were solicited unrestricted via the Federal Business Opportunities website, with eight offers received. The Naval Undersea Warfare Center Division Newport, Newport, Rhode Island, is the contracting activity.

DEFENSE LOGISTICS AGENCY

Science Application International Corp., Fairfield, New Jersey, has been awarded a maximum $32,000,000 firm-fixed-price, prime vendor bridge contract for maintenance, repair and operations for the Southeast Zone 1 region. This contract was a sole-source acquisition. Location of performance is New Jersey, with an Oct. 31, 2014, performance completion date. Using military services are Army, Navy, Air Force, Marine Corps and federal civilian agencies. Type of appropriation is fiscal 2014 through fiscal 2015 defense working capital funds. The contracting activity is the Defense Logistics Agency Troop Support, Philadelphia, Pennsylvania (SPE8E3-14-D-0900).

SupplyCore Inc., Rockford, Illinois, has been awarded a maximum $8,000,000 firm-fixed-price, prime vendor bridge contract for maintenance, repair and operations for the Southeast Zone 2 region. This contract was a sole-source acquisition. Location of performance is Illinois, with an Oct. 31, 2014 performance completion date. Using military services are Army, Navy, Air Force, Marine Corps and federal civilian agencies. Type of appropriation is fiscal 2014 through fiscal 2015 defense working capital funds. The contracting activity is the Defense Logistics Agency Troop Support, Philadelphia, Pennsylvania (SPE8E3-14-D-0901).

AIR FORCE

White Mountain Construction, LLC, Palmer, Alaska, has been awarded an estimated $20,000,000 firm-fixed-price, indefinite-delivery/indefinite-quantity modification (P00003) to FA5000-12-D-0005 for a broad range of maintenance, repair and minor construction work. This modification provides for the exercise of the second option year. Work will be performed at Anchorage, Alaska, and is expected to be completed by July 24, 2015. Fiscal 2014 and 2015 operations and maintenance funds will be obligated on individual delivery orders. The 673d Contracting Squadron/LGCA, Joint Base Elmendorf-Richardson, Alaska, is the contracting activity.
SBH Services, Inc., Anchorage, Alaska, has been awarded an estimated $20,000,000 firm-fixed-price, indefinite-delivery/indefinite-quantity modification (P00003) to FA5000-12-D-0006 for a broad range of maintenance, repair and minor construction work. This modification provides for the exercise of the second option year. Work will be performed at Anchorage, Alaska, and is expected to be completed by July 24, 2015. Fiscal 2014 and 2015 operations and maintenance funds will be obligated on individual delivery orders. The 673d Contracting Squadron/LGCA, Joint Base Elmendorf-Richardson, Alaska, is the contracting activity.

ASRC Civil Construction, LLC, Anchorage, Alaska, has been awarded an estimated $20,000,000 firm-fixed-price, indefinite-delivery/indefinite-quantity modification (P00003) to FA5000-12-D-0007 for a broad range of maintenance, repair and minor construction work. This modification provides for the exercise of the second option year. Work will be performed at Anchorage, Alaska, and is expected to be completed by July 24, 2015. Fiscal 2014 and 2015 operations and maintenance funds will be obligated on individual delivery orders. The 673d Contracting Squadron/LGCA, Joint Base Elmendorf-Richardson, Alaska, is the contracting activity.

Bristol Design Build Services, LLC, Anchorage, Alaska, has been awarded an estimated $20,000,000 firm-fixed-price, indefinite-delivery/indefinite-quantity modification (P00003) to FA5000-12-D-0008 for a broad range of maintenance, repair and minor construction work. This modification provides for the exercise of the second option year. Work will be performed at Anchorage, Alaska, and is expected to be completed by July 24, 2015. Fiscal 2014 and 2015 operations and maintenance funds will be obligated on individual delivery orders. The 673d Contracting Squadron/LGCA, Joint Base Elmendorf-Richardson, Alaska, is the contracting activity.

Frawner Corp., Anchorage, Alaska, has been awarded an estimated $20,000,000 firm-fixed-price, indefinite-delivery/indefinite-quantity modification (P00003) to FA5000-12-D-0009 for a broad range of maintenance, repair and minor construction work. This modification provides for the exercise of the second option year. Work will be performed at Anchorage, Alaska, and is expected to be completed by July 24, 2015. Fiscal 2014 and 2015 operations and maintenance funds will be obligated on individual delivery orders. The 673d Contracting Squadron/LGCA, Joint Base Elmendorf-Richardson, Alaska, is the contracting activity.

Alutiiq Diversified Services, LLC, Anchorage, Alaska, has been awarded an estimated $20,000,000 firm-fixed-price, indefinite-delivery/indefinite-quantity modification (P00003) to FA5000-12-D-0010 for a broad range of maintenance, repair and minor construction work. This modification provides for the exercise of the second option year. Work will be performed at Anchorage, Alaska, and is expected to be completed by July 24, 2015. Fiscal 2014 and 2015 operations and maintenance funds will be obligated on individual delivery orders. The 673d Contracting Squadron/LGCA, Joint Base Elmendorf-Richardson, Alaska, is the contracting activity.

Georgia Tech Applied Research Corp., Atlanta, Georgia, has been awarded a $19,802,305 delivery order (0245) on the SENSIAC indefinite-delivery/indefinite-quantity, cost-plus-fixed-fee, sole-source (HC1047-05-D-4000) for NAVAIR Engineering and Analysis Support. SENSIAC will work to improve and enhance airborne, ground and naval electronic detection, protection and guidance devices. The work will be performed at Atlanta, Georgia, and various naval facilities, and is expected to be completed by Dec. 6, 2015. Fiscal 2014 Navy research, development, test and evaluation funds in the amount of $550,000 are being obligated at time of award. Air Force Installation Contracting Agency/KD, Offutt Air Force Base, Nebraska, is the contracting activity.
Exelis, Inc., Colorado Springs, Colorado, has been awarded a $13,143,582 modification (P00520) to Fl9628-02-C-0010 for Systems Engineering and Sustainment Integrator (SENSOR) fiscal year 2014 system sustainment contract line number 1022 extension project. The total cumulative face value of the contract is $1,446,978,935. The contract modification is for product line management, system engineering, system repairs (including emergency site visits for immediate repairs); acquisition, repair and qualification of spare parts; preventative maintenance inspections; radome maintenance, supply management, plans, roadmaps and sustainability assessments; program management reviews; reports, vendor maintenance agreements/software licenses and logistic support review brochures; requirements definition, analysis and modeling/software modeling/risk reduction; software integration lab operations/maintenance, mission assurance, configuration/data management, technical order management, proposal development, engineering studies and analysis, system performance metrics collection, and obsolescence/sustainability analysis reports. Work will be performed at Colorado Springs, Colorado, and is expected to be completed by Dec. 31, 2014. Fiscal 2014 operations and maintenance funds in the amount of $13,143,582 are being obligated at time of award. Air Force Life Cycle Management Center/HBQK, Peterson Air Force Base, Colorado, is the contracting activity.

General Atomics Aeronautical Systems, Inc. Poway, California, has been awarded a $12,648,312 firm-fixed-price contract for the United Kingdom MQ-9 spare parts and support equipment effort. Work will be performed in Poway, California, and is expected to be completed March 31, 2015. This award is the result of a sole-source acquisition. This contract is 100 percent foreign military sales for the United Kingdom and $12,648,312 in foreign military sales funds will be obligated at time of awards. Air Force Life Cycle Management Center/WIIK, Medium Altitude Unmanned Aircraft Systems, Wright-Patterson Air Force Base, Ohio, is the contracting activity (FA8620-10-G-3038 0096).

B3H Corp., Shalimar, Florida, has been awarded a $7,069,922 modification (0003) to FA4890-12-D-0014-SK02 for English language instructors and an English language training program using Defense Language Institute English Language Center courseware, methodology and processes. The total cumulative face value of the contract is $20,326,840. This modification provides for the exercise of the second option year; no option years remain. Work will be performed in Saudi Arabia, and at King Abdul Aziz Air Base, Dhahran, and is expected to be completed by Jan. 31, 2016. This contract is 100 percent foreign military sales for the Saudi Arabia. Foreign military sales funds in the amount of $7,069,922 are being obligated at time of award. The 338 Specialized Contracting Squadron/PKB, Joint Base San Antonio, Randolph Air Force Base, Texas, is the contracting activity.
*Small business

SECRETARY KERRY SAYS SOUTH SUDAN FACES WIDESPREAD STARVATION

FROM:  U.S. STATE DEPARTMENT  

John Kerry

Secretary of State

Washington, DC

July 25, 2014

South Sudan now faces the worst food security crisis in the world. Violence has forced over 1.5 million people from their homes since mid-December, while more than 50,000 children under the age of five are at risk of dying from malnutrition this year. This is not a crisis caused by drought or flood: it is a calamity created by conflict. Unless the fighting ends and a peace agreement is concluded, the number of those at risk of starvation -- now as many as 3.9 million people, fully one-third of the population – will reach even more catastrophic levels.

South Sudan's leaders need to make choices and they need to make them now if they're going to pull their country back from the brink of famine. In the last months, I've traveled to Juba and Ethiopia to press on the cease-fire. I've had call after call with both leaders in South Sudan, pressing them to work closely with regional partners in support of mediation efforts. The United States has spoken out against ongoing fighting, obstruction of humanitarian access and failures to resolve the conflict.

But in the end, the leaders have to make decisions. President Salva Kiir and former Vice President Riek Machar share responsibility for triggering this man-made crisis and they share responsibility for ending it. I call on them to end the fighting immediately and negotiate in good faith under the auspices of the Intergovernmental Authority on Development.

The Government of South Sudan and the opposition must put the safety and wellbeing of the South Sudanese people first by immediately implementing the Cessation of Hostilities Agreement, ensuring the security of humanitarian workers and goods, and dismantling unofficial checkpoints that impede the delivery of aid. International and South Sudanese humanitarian workers have saved lives at great personal risk. They must be able to do their jobs without the threat of violence, informal “taxation” or other arbitrary impediments.

The United States remains committed to the people of South Sudan and has provided more than $456 million in humanitarian aid this year alone. We call on fellow donor countries to make additional contributions. The people of South Sudan deserve the opportunity to begin rebuilding their country, and to develop the national and local institutions they need to put South Sudan on a path towards stability.

U.S. NATIONAL GUARD BATTLE FIRES IN NORTHWEST

FROM:  U.S. DEFENSE DEPARTMENT
Right:  An Oregon Army National Guard CH-47 Chinook helicopter returns to the Madras Airport after successfully dumping water on a target area in the Logging Unit fire west of Madras, Ore., July 20, 2014. Two CH-47 Chinook helicopters and two HH-60M Black Hawk helicopters of the Oregon Army National Guard arrived at the Madras Airport the day before to assist local authorities in suppressing the wildfire west of Madras. U.S. Army photo by Staff Sgt. Jason Van Mourik  
Guardsmen Help to Battle Northwest Blazes

By Army Staff Sgt. Darron Salzer and Army Sgt. 1st Class Jon Soucy
National Guard Bureau

ARLINGTON, Va., July 22, 2014 – Aircrews from the Wyoming Air National Guard’s 153rd Airlift Wing, who fly C-130 Hercules aircraft equipped with the Modular Airborne Firefighting System, are among the latest National Guard members to join in the response to wildfires in Oregon and Washington state.
The aircrews from the 153rd AW join Guard members from four states in assisting state and local authorities with quelling wildfires raging since lightning strikes ignited the blazes July 14. This also marks the first activation of MAFFS aircraft in the 2014 wildfire season.

“We’ve been activated to ensure the [U.S.] Forest Service has enough aerial assets to fight fires in Oregon, Washington and other regional states,” said Air Force Lt. Col. Todd Davis, commander of the Wyoming Air Guard’s 153rd Aircraft Maintenance Squadron.

The crews from the 153rd AW flew to Idaho from their home station in Wyoming to Gowen Field, near Boise, where they will be able to support firefighting efforts in Washington and Oregon.

“They provide a surge capability to civilian air tankers,” said Deirdre Forster, of the Wyoming National Guard. “They can drop fire retardant or water onto fires and they were relocated to Boise to [decrease] response time.”

Members of the Washington National Guard began responding July 16 with UH-60 Black Hawk and CH-47 Chinook helicopters, and members of the Oregon National Guard began responding with Black Hawk and Chinook aircraft to wildfires in that state July 18, National Guard Command Center officials said.

The Montana Army National Guard also has sent aircrews and CH-47 helicopters to assist with firefighting efforts in Washington.

“Our neighbors needed help,” said Air Force Lt. Col. Tim Crowe, with the Montana National Guard. “Just like Colorado did last year with the floods and we sent down an engineering unit to help with their natural disaster, we work with Washington as well.”

The wildfire response mission remains ongoing, and is projected to last for several weeks.

“We don’t have a timeline at this point,” Crowe said. “We sent out this first [aircrew and helicopters], and depending on the mission and the requirements, we’ll make adjustments as we move forward.”

The fires in Washington have burned through more than 300,000 acres and destroyed about 150 homes, according to reports. Meanwhile, fires in Oregon have burned roughly 530,000 acres.

Anticipated cooler temperatures and rains in the coming days may help in the effort, officials said, but Guard members stand ready to provide further assistance if needed.

“It’s what the National Guard is about -- helping each other out when disaster strikes,” Crowe said.

HHS TOUTS 10.3 MILLION NEWLY COVERED WITH HEALTH CARE

FROM:  DEPARTMENT OF HEALTH AND HUMAN SERVICES 

New Study: 10.3 million gained health coverage during the Marketplace’s first annual open enrollment period

Health and Human Services Secretary Sylvia M. Burwell announced today the release of a new study, published in the New England Journal of Medicine, estimating that 10.3 million uninsured adults gained health care coverage following the first open enrollment period in the Health Insurance Marketplace. The report examines trends in insurance before and after the open enrollment period and finds greater gains among those states that expanded their Medicaid programs under the Affordable Care Act.

“We are committed to providing every American with access to quality, affordable health services and this study reaffirms that the Affordable Care Act has set us on a path toward achieving that goal,” said Secretary Burwell. “This study also reaffirms that expanding Medicaid under the Affordable Care Act is important for coverage, as well as a good deal for states. To date, 26 states plus D.C. have moved forward with Medicaid expansion. We’re hopeful remaining states will come on board and we look forward to working closely with them.”

According to the authors’ findings, the uninsured rate for adults ages 18 to 64 fell from 21 percent in September 2013 to 16.3 percent in April 2014. After taking into account economic factors and pre-existing trends, this corresponded to a 5.2 percentage-point change, or 10.3 million adults gaining coverage. The decline in the uninsured was significant for all age, race/ethnicity, and gender groups, with the largest changes occurring among Latinos, blacks, and adults ages 18-34 – groups the Administration targeted for outreach during open enrollment.

Coverage gains were concentrated among low-income adults in states expanding Medicaid and among individuals in the income range eligible for Marketplace subsidies. The study finds a 5.1 percentage point reduction in the uninsured rate associated with Medicaid expansion, while in states that have not expanded their Medicaid programs, the change in the uninsured rate among low-income adult populations was not statistically significant.

Today’s study also looks at access to care, and finds that within the first six months of gaining coverage, more adults (approximately 4.4 million) reported having a personal doctor and fewer (approximately 5.3 million) experienced difficulties paying for medical care.

Today’s study does not include data from before 2012, as coverage was changing rapidly during this period. This means the results do not include the more than 3 million young adults who gained health insurance coverage through their parents’ plans.

The analysis builds on previous studies by reviewing a larger sample size and taking into account changes in the economy and pre-existing trends in insurance coverage. Using survey data from the Gallup-Healthways Well-Being Index for January 1, 2012, through June 30, 2014, the authors analyzed changes in the uninsured rate over time. This is also the first study to associate reductions in the uninsured rate with state-level statistics on enrollment in the Marketplaces and Medicaid under the Affordable Care Act, as described in HHS enrollment reports, and to assess the impact of the improved coverage on access to care.

HHS TOUTS $ 9 BILLION PREMIUM SAVINGS RESULTING FROM AFFORDABLE CARE ACT

FROM:  U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES 

Consumers have saved a total of $9 billion on premiums

Health care law will return to families an average refund of $80 each this year

Health and Human Services Secretary Sylvia M. Burwell announced today that consumers have saved a total of $9 billion on their health insurance premiums since 2011 as a result of the Affordable Care Act.

Created through the law, the 80/20 rule, also known as the Medical Loss Ratio (MLR) rule, requires insurers to spend at least 80 percent of premium dollars on patient care and quality improvement activities.  If insurers spend an excessive amount on profits and red tape, they owe a refund back to consumers.

“We are pleased that the Affordable Care Act continues to provide Americans better value for their premium dollars,” said Secretary Burwell.  “We are continuing our work on building a sustainable long-term system, and provisions such as the 80/20 rule are providing Americans with immediate savings and helping to bring transparency and accountability to the insurance market over the long term.”

An HHS report released today shows that last year alone, consumers nationwide saved $3.8 billion up front on their premiums as insurance companies operated more efficiently.  Additionally, consumers nationwide will save $330 million in refunds, with 6.8 million consumers due to receive an average refund benefit of $80 per family.  This standard and other Affordable Care Act standards contributed to consumers saving approximately $4.1 billion on premiums in 2013, for a total of $9 billion in savings since the MLR program’s inception.

The report shows that since the rule took effect, more insurers year over year are meeting the 80/20 standard by spending more of the premium dollars they collect on patient care and quality, and not red tape and bonuses.

If an insurer did not spend enough premium dollars on patient care and quality improvement, they must pay refunds to consumers in one of the following ways:

a refund check in the mail;
a lump-sum reimbursement to the same account that was used to pay the premium;
a reduction in their future premiums; or
if the consumer bought insurance through their employer, their employer must provide one of the above options, or apply the refund in another manner that benefits its employees, such as more generous benefits.

The 80/20 rule, along with other standards such as the required review of proposed premium increases, is one of many reforms created under the health law helping to slow premium growth and moderate premium rates.  Combined with the savings consumers are receiving from tax credits on the Marketplace and the new market reforms, including the prohibition of pre-existing condition exclusions and charging women more for insurance than men, the 80/20 rule helps ensure every American has access to quality, affordable health insurance.

AN EXTENDED-RELEASE OXYCODONE WITH ABUSE-DETERRENT PROPERTIES APPROVED BY FDA

FROM:  U.S. FOOD AND DRUG ADMINISTRATION 

FDA approves new extended-release oxycodone with abuse-deterrent properties

July 23, 2014

Today, the U.S. Food and Drug Administration approved Targiniq ER (oxycodone hydrochloride and naloxone hydrochloride extended-release tablets), an extended-release/long-acting (ER/LA) opioid analgesic to treat pain severe enough to require daily, around-the-clock, long-term opioid treatment and for which alternative treatment options are inadequate. Targiniq ER is the second ER/LA opioid analgesic with FDA-approved labeling describing the product’s abuse-deterrent properties consistentwith the FDA’s 2013 draft guidance for industry, Abuse-Deterrent Opioids – Evaluation and Labeling.

Targiniq ER has properties that are expected to deter, but not totally prevent, abuse of the drug by snorting and injection. When crushed and snorted, or crushed, dissolved and injected, the naloxone in Targiniq ER blocks the euphoric effects of oxycodone, making it less liked by abusers than oxycodone alone. Naloxone is a medication that is commonly used to reverse the effects of opioid overdose. Targiniq ER can still be abused, including when taken orally (by mouth), which is currently the most common way oxycodone is abused. It is important to note that taking too much Targiniq ER for purposes of abuse or by accident, can cause an overdose that can result in death.

"The FDA is committed to combatting the misuse and abuse of all opioids, and the development of opioids that are harder to abuse is needed in order to help address the public health crisis of prescription drug abuse in the U.S.,” said Sharon Hertz, M.D., deputy director of the Division of Anesthesia, Analgesia and Addiction Products in the FDA’s Center for Drug Evaluation and Research. “Encouraging the development of opioids with abuse-deterrent properties is just one component of a broader approach to reducing abuse and misuse, and will better enable the FDA to balance addressing this problem with meeting the needs of the millions of people in this country suffering from pain.”

Targiniq ER is not approved, and should not be used, for as-needed pain relief. Given Targiniq ER’s risks for abuse, misuse and addiction, it should only be prescribed to people for whom alternative treatment options are ineffective, not tolerated or would be otherwise inadequate to provide sufficient pain management.

The safety and effectiveness of Targiniq ER was evaluated in a clinical trial of 601 people with chronic low back pain. The safety database supporting approval included treatment of more than 3,000 people with Targiniq ER. Data from in vitro (in a laboratory) and in vivo (testing with people) abuse liability studies demonstrated the abuse deterrent features of Targiniq ER as they relate to certain types of abuse (snorting, injecting). The most common side effects of Targiniq ER are nausea and vomiting.

The FDA is requiring postmarketing studies of Targiniq ER, to assess the serious risks of misuse, abuse, increased sensitivity to pain (hyperalgesia), addiction, overdose, and death associated with long term use beyond 12 weeks. The FDA is also requiring postmarketing studies to further assess the effects of the abuse-deterrent features on the risk for abuse of Targiniq ER.

In addition, Targiniq ER is part of the ER/LA Opioid Analgesics Risk Evaluation and Mitigation Strategy (REMS), which requires companies to make available to health care professionals educational programs on how to safely prescribe ER/LA opioid analgesics and to provide Medication Guides and patient counseling documents containing information on the safe use, storage, and disposal of ER/LA opioids.

Targiniq ER is manufactured by Stamford-based Purdue Pharma L.P.

The FDA, an agency within the U.S. Department of Health and Human Services, protects the public health by assuring the safety, effectiveness, and security of human and veterinary drugs, vaccines and other biological products for human use, and medical devices. The agency also is responsible for the safety and security of our nation’s food supply, cosmetics, dietary supplements, products that give off electronic radiation, and for regulating tobacco products.

MORGAN STANLEY TO PAY $275 MILLION SETTLING CHARGES OF MISLEADING INVESTORS IN RMBS CASE

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION

The Securities and Exchange Commission charged three Morgan Stanley entities with misleading investors in a pair of residential mortgage-backed securities (RMBS) securitizations that the firms underwrote, sponsored, and issued.

Morgan Stanley agreed to settle the charges by paying $275 million to be returned to harmed investors.

In an asset-backed securities offering, federal regulations under the securities laws require the disclosure of delinquency information for the mortgage loans serving as collateral.  An SEC investigation found that Morgan Stanley misrepresented the current or historical delinquency status of mortgage loans underlying two subprime RMBS securitizations that came against a backdrop of rising borrower delinquencies and unprecedented distress in the subprime market.

“The delinquency status of mortgage loans in an RMBS securitization is vital information to investors because those loans are the primary source of funds by which they potentially can recover and profit from their investments,” said Michael Osnato, chief of the SEC Enforcement Division’s Complex Financial Instruments Unit.  “Morgan Stanley understated the number of delinquent loans behind these securitizations during a critical juncture of the financial crisis and denied investors the full extent of the facts necessary to make informed investment decisions.”

According to the SEC’s order instituting a settled administrative proceeding against Morgan Stanley & Co. LLC, Morgan Stanley ABS Capital I Inc., and Morgan Stanley Mortgage Capital Holdings LLC, these securitizations were collateralized by mortgage loans with an aggregate principal value balance of more than $2.5 billion.  They were the last subprime RMBS that Morgan Stanley sponsored, issued, and underwrote.  The offerings themselves were called Morgan Stanley ABS Capital I Inc. Trust 2007-NC4 and Morgan Capital I Inc. Trust 2007-HE7.

The SEC’s order finds that offering documents for the securitizations stated that less than 1 percent of each pool’s aggregate principal balance was more than 30 days but less than 60 days delinquent as of each securitization’s cut-off date.  With the exception of these loans, Morgan Stanley represented as of each securitization’s closing date that no payment under any mortgage loan was more than 30 days delinquent at any time since origination.  On the contrary, approximately 17 percent of the loans in the HE7 securitization had been delinquent at some point since origination, and in the NC4 securitization approximately 4.5 percent of the loans were currently delinquent rather than the disclosed 1 percent.

According to the SEC’s order, for the HE7 securitization, Morgan Stanley had a chart showing that approximately 17 percent of the loans had been delinquent at some point since origination, and Morgan Stanley also used information about payments made after the cut-off date to determine the loans disclosed as delinquent as of the cut-off date.  By using the later payment data, Morgan Stanley misreported 46 fewer loans as currently delinquent, leading the firm to disclose that less than 1 percent of the loans were delinquent.  The NC4 securitization did not close until the month after the cut-off date, so Morgan Stanley received updated payment information at that time. This information showed that approximately 4.5 percent of the loans had become delinquent.  Yet despite the delayed closing and a representation that extended the delinquency representation to the closing, Morgan Stanley did not disclose or remove the additional delinquent loans and instead continued with the 1 percent figure.

The SEC charged Morgan Stanley with violations of Sections 17(a)(2) and (3) of the Securities Act of 1933.  Without admitting or denying the allegations, the firm agreed to the entry of an order that requires a payment of $160,627,852 in disgorgement, $17,995,437 in prejudgment interest, and a $96,376,711 penalty.  The order notes that a Fair Fund is being created for the disgorgement, interest, and penalties paid in this case for the purpose of returning money to investors who were harmed in these securitizations.

The SEC’s investigation was conducted by Andrew Sporkin, Jeffrey Weiss, Creola Kelly, Melissa Lessenberry, and Delmer Raibourn in the Complex Financial Instruments Unit with assistance from Kyle DeYoung of the trial unit and Eugene Canjels in the Division of Economic and Risk Analysis.  The SEC appreciates the assistance of the federal-state Residential Mortgage-Backed Securities Working Group.

FTC CONTINUES FIGHT AGAINST BUSINESSES INVOLVED WITH OFFERING PHONY MORTGAGE RELIEF

FROM:  U.S. FEDERAL TRADE COMMISSION 

Federal and State Agencies Stop Phony Mortgage Relief Schemes

FTC Brings Six Actions Against Scams That Allegedly Preyed on Homeowners with Operation Mis-Modification

The Federal Trade Commission has taken action against six mortgage relief operations charging that defendants preyed on distressed homeowners by misrepresenting that they typically could lower homeowners’ mortgage payments and interest rates or prevent foreclosure, and illegally charging advance fees. In each case, the FTC has sought an order stopping the illegal practices and freezing the defendants’ assets pending the outcome of the litigation.

The FTC’s actions are part of a joint federal and state enforcement sweep, Operation Mis-Modification, with the Consumer Financial Protection Bureau, which brought charges against three other mortgage relief operations, as well as 15 state attorneys general and other state agencies, which announced 32 similar actions.

“Mortgage relief schemes like these target people who are already having financial problems and, all too often, inflict even further harm on them,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “We’re determined to stop operations that illegally charge up-front mortgage relief fees or make empty mortgage relief promises.”

In today’s announced actions, the FTC has charged the defendants in each operation with violating the FTC Act and the Mortgage Assistance Relief Services (MARS) Rule, now known as Regulation O.  The Rule bans mortgage foreclosure rescue and loan modification services from collecting fees until homeowners have a written offer from their lender or servicer that they deem acceptable.

Including the six cases announced today, the FTC has brought 48 actions against companies peddling fraudulent mortgage relief schemes since 2008.  These law enforcement actions have helped tens of thousands of consumers who were victims of these scams, and have prevented tens of thousands more from becoming victims.

Danielson Law Group. The FTC has alleged that these Utah-based defendants touted a success rate that exceeded 90 percent and enticed consumers to pay hefty advance fees ranging from $500 to $3,900 – falsely promising that attorneys would negotiate loan modifications with substantially reduced mortgage payments using their special relationships with lenders or mortgage analysis reports produced by a proprietary software program. The defendants also urged homeowners to stop paying their lenders, and falsely promised full refunds if they did not obtain a loan modification, according to the FTC.

At the request of the FTC, a U.S. district court temporarily halted the operation, which allegedly took more than $35 million from distressed homeowners, and some of the defendants have stipulated to preliminary injunction with an asset freeze.

FMC Counseling Services, Inc. The FTC has alleged that from at least February 2011, this Fort Lauderdale, Fla.-based operation made false claims that it was affiliated with the federal government’s Making Home Affordable assistance program, and that it would renegotiate consumers’ mortgages, reducing them by several hundred dollars. Deceptively using the Federal Deposit Insurance Corporation’s logo and doing business as the “Federal Debt Commission,” the “Federal Mortgage Marketplace,” and the “Federal Assistance Program,” the defendants promised consumers their mortgage modifications would be completed quickly or that they could provide free mortgage refinancing.  The defendants also told consumers to cease communications with their lenders, and to turn over their mortgage payments while refinancing was pending.  Collecting more than $600,000 in payments from hundreds of consumers, the defendants did nothing for consumers and failed to apply any funds received from consumers to their existing mortgages. As a result, many consumers lost their homes as well as their mortgage payments.  

At the request of the FTC, a U.S. district court temporarily halted the operation, and then entered a preliminary injunction with an asset freeze against all defendants.

Lanier Law. The FTC has alleged that from at least 2011, this Jacksonville, Fla.-based operation typically told consumers that they would get a loan modification or that their chances of getting one was 85 percent to 100 percent. The defendants typically collected an upfront fee of $1,000 to $4,000, or an ongoing monthly fee of $500 or more. In some cases, according to the FTC, they also told consumers not to pay their mortgages while their supposed loan modifications were pending, and that they would conduct an audit of consumers’ mortgage documents to find errors or fraud committed by the lender.

In addition to charging the Lanier defendants with violating the FTC Act and the Mortgage Assistance Relief Services Rule, the FTC also charged them with violating the Do Not Call Rule by calling consumers who were on the Do Not Call list, and by failing to buy the Do Not Call Registry in any state where they operated.

At the request of the FTC, a U.S. district court judge ordered the Defendants to stop making misrepresentations about loan modifications and froze defendants’ assets to preserve the possibility of providing redress to consumers.

Mortgage Relief Advocates. The FTC has alleged that from at least August 2010, this California-based operation sold fraudulent mortgage assistance services on its websites and through telemarketing. The defendants tout their supposedly good relationships with lenders, and falsely claim their “forensic” loan audits will uncover violations in the Truth in Lending Act in 80 percent of the loans reviewed, and that these supposed violations can be used as leverage in modifying mortgage loans and reversing foreclosures, according to the complaint. Charging an up-front fee of $1,000 to $3,200, the defendants are alleged to have rarely provided the promised mortgage relief. The FTC has requested that the court enter a temporary restraining order.

Home Relief Foundation. The FTC has alleged that from approximately October 2010 to December 2013, this Austin, Texas-based operation preyed on financially distressed homeowners nationwide by making false promises that because of their affiliation with attorneys, their affiliation with a government program, their knowledge of the industry, and their relationships with mortgage lenders, Home Relief Foundation would be able to lower consumers’ interest rates and monthly mortgage payments.  The defendants also allegedly told consumers to stop paying their mortgages – without disclosing that if they did so, consumers could face bankruptcy, risk losing their homes, or damage their credit ratings.  Charging advance fees ranging from $500 to $4,000, the defendants collected more than $500,000 during the course of their operation, according to the complaint.  

The defendants marketed their services mainly through websites they controlled, including homerelieffoundation.org, ghardinlaw.com, and patlonglaw.com.

At the request of the FTC, a U.S. district court judge ordered the Defendants to stop making misrepresentations about loan modifications and froze defendants’ assets.

CD Capital Investments. The FTC has alleged that from mid-2011, this Southern California-based operation often promised consumers would receive mortgage relief services within two to four months, and often claimed affiliation with the Obama Administration’s “Making Home Affordable Program,” with some other government entity, or with the consumer’s lender or servicer. They told some consumers they would receive a lower fixed-interest rate, a reduction in their mortgage payment, or a reduction in the principal balance of their mortgages, according to the complaint.

Telling consumers that lenders or servicers would not foreclose on their homes if they were in the process of obtaining a loan modification, and urging some not to pay their monthly mortgage payments or communicate with their lender or servicer, the defendants collected at over $1 million in revenues – by charging up-front fees of $495, supposedly to “process” the consumer’s application, and monthly fees that averaged about $399, for what they called “post application monitoring,” the FTC alleged.

Typically, consumers found that instead of getting mortgage relief, the defendants did not submit a loan modification application on their behalf, or the application was denied. Many consumers found themselves seriously delinquent and facing foreclosure, according to the complaint.   The FTC will seek a preliminary injunction to halt defendants’ practices during the pendency of the litigation.

For consumer information about avoiding mortgage and foreclosure rescue scams, see Home Loans.

The Danielson Law Group complaint names as defendants Philip Danielson, LLC, doing business as Danielson Law Group and DLG Legal; Foundation Business Solutions, LLC, , doing business as emerchant, LLC, and Full Biz Solutions; Linden Financial Group, LLC; Acutus Law, P.C., formerly known as Danielson Silva Attorneys at Law, P.C.; Direct Results Solutions, LLC; Strata G Solutions, LLC; Philip J. Danielson; Tony D. Norton; Sean J. Coberly; Tanya Hawkins, also known as Tonya L. Hawkins; and Chad E. VanSickle. The complaint also names April D. Norton as a relief defendant. The FMC Counseling Services, Inc. complaint names as defendants Jonathan L. Herbert and the six companies he controls: FMC Counseling Services, Inc., FMC Review Corporation, FMC Consultants Group, Inc., FDC Assoc Group Inc, FDC Business, Inc., and NDR Group, Inc. The Lanier Law complaint names as defendants Michael W. Lanier and the companies he controlled: Lanier Law, LLC, Fortress Law Group, LLC, Surety Law Group, LLP, and Liberty & Trust Law Group of Florida, LLC. The Mortgage Relief Advocates complaint names as defendants Mortgage Relief Advocates, LLC, National Forensic Loan Audit Servicers, LLC, Evertree LLC, Keystone Real Estate, LLC, Pablo Rodriguez, and Michael Rodriguez. The Home Relief Foundation complaint names as defendants John DiCristofalo, his wife Amanda DiCristofalo, and the company they controlled, Home Relief Foundation, Inc. The CD Capital Investments complaint names defendants CD Capital Investments, LLC, CD Capital, LLC, GDS Information Services, Inc, Christian D. Quezada, Mireya Duenas, and Gabriel Drews Stewart.

The Commission vote authorizing the staff to file the complaints and seek additional relief against defendants in all six cases was 5-0. The FTC filed the Danielson Law Group complaint and request for a Temporary Restraining Order (“TRO”) and Preliminary Injunction in the U.S. District Court for the District of Nevada.  On June 23, 2014, the court granted the FTC’s request for the TRO, and on July 3, 3014, some of the defendants stipulated to a Preliminary Injunction. The FTC filed the FMC Counseling Services, Inc. complaint and request for a TRO and a Preliminary Injunction in the U.S. District Court for the Southern District of Florida.  On July 7, 2014, the court granted the FTC’s request for a TRO.  On July 17, 2014, the court granted the FTC’s request for a Preliminary Injunction. The FTC filed the Lanier Law complaint and request for a TRO and a Preliminary Injunction in the U.S. District Court for the Middle District of Florida. On July 8, 2014, the court granted the FTC’s request for the TRO. The FTC filed the Mortgage Relief Advocates complaint and request for a TRO and a Preliminary Injunction in the U.S. District Court for the Central District of California. The FTC filed the Home Relief Foundation complaint and request for a Preliminary Injunction in the U.S. District Court for the Western District of Texas. On July 18, 2014, the court granted the FTC’s request for a Preliminary Injunction.  The FTC filed the CD Capital Investments complaint in the U.S. District Court for the Central District of California.

NOTE:  The Commission files a complaint when it has “reason to believe” that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest.  The complaint is not a finding or ruling that the defendant has actually violated the law.  The cases will be decided by the court.      

PLASTICS AND COCONUTS: MATERIALS FOR HOMES AND AUTOMOBILES

FROM:  NATIONAL SCIENCE FOUNDATION 

Transforming waste in order to transform people's lives

Essentium Materials converts coconut husk fibers into materials for cars and homes

When Elisa Teipel, and her collaborators began their research several years ago, their goal was to take an agricultural waste product of little value--in this case, fibers extracted from coconut husks--and turn it into an environmentally-friendly, valuable commodity.

Equally important, Teipel, along with colleagues Ryan Vano, husband Blake Teipel, and Matt Kirby wanted the project to help the local economies where they obtained the raw materials.

Today their new company, the College Station, Texas-based Essentium Materials, is turning out automotive trunk liners, load floors (battery pack covers in electric cars), and living wall planters, among other things, with technology they developed that produces a composite material made of coconut husks combined with recycled plastics.

The result is greener and cost neutral, as well as stronger and stiffer, than the traditional all-synthetic plastic fibers, and with natural anti-microbial properties due to a high lignin content.

"The coolest part is seeing something that was once just waste become a new resource," Teipel says. "Also, it is benefitting both the environment and the communities in developing nations where the coconuts are grown."

The researchers estimate that replacing synthetic polyester fibers with coconut husk fibers, known as coir, will reduce petroleum consumption by 2-4 million barrels and carbon dioxide emissions by 450,000 tons annually.

Also, the improved performance and lower weight of these materials will lead to cost savings through increased fuel economy, saving up to 3 million gallons of gasoline per year in the United States, according to Teipel.

Ninety-five percent of the 50 billion coconuts grown worldwide are owned by 10 million coconut farmers whose average income is less than $2 a day, she says. Moreover, about 85 percent of the coconut husks currently create pollution when they are treated like trash. "The successful adoption of these new composite materials within North American markets would in many cases double the annual income for these farmers," she says.

Essentium's work is supported by a $1,018,475 grant from the National Science Foundation (NSF) through its small business innovation research program (SBIR) in the directorate for engineering.

"Projects that use waste materials as a feedstock to create value-added products are a perfect fit for NSF SBIR because we look to support entrepreneurs who can 'do good by doing well,"' says Ben Schrag, the project's program director at NSF. "We believe that small businesses with innovative technology hold the key to solving many of the broader societal and environmental problems faced by the country and the world.

"New material concepts that incorporate waste materials are also becoming increasingly attractive to many consumers and businesses," he adds. "This is creating significant opportunities for shrewd and dedicated technologists and entrepreneurs."

The idea to use coconut husk material originated about seven years ago when Teipel was in graduate school.

"We were really interested in seeing how we could help people in other parts of the world with economic development work," she says. "Initially, we were looking in Papua New Guinea. A former professor of mine, Walter Bradley, who has since retired from Baylor University, suggested we look at available materials and what we could do with them, initially to produce electricity.

"Coconut was one of the most readily available materials that farmers and people in the community had access to," she adds. "So we took a look and wondered whether coconut was a viable engineering material, and what we could do with it."

At the time, farmers harvested coconuts only to produce coconut milk and coconut oil, while the husks and fiber were considered waste. Yet the students believed they could take the fibers and convert them into a usable product while "elevating both the dignity of the people and the dignity of the resources," she says.

It was a process of trial and error to develop the material in the lab, then try it in a production setting. "The initial phase of the research was to try to understand the inherent properties of these waste materials to determine viable applications," Teipel says. "We discovered that coconut fiber, for example, is a large, stiff fiber with a very high elongation (25-40 percent), making it a natural choice for molded automotive products."

The team then worked with several manufacturing companies to develop different material blends and densities, testing out material blends, such as experimenting with different binder fibers, and processing techniques. "During the commercial development phase, it was important to ensure that these materials with natural content could pass the strict automotive standards such as odor and flammability in order to be approved for use in vehicles," she says.

Today Essentium works in the Philippines with local community development groups to extract the fibers from the husks and shells, work conducted close to the plants where the coconut milk and meat processing occurs.

The fibers are separated from the husk then packed and shipped to the United States where they are combined with other fibers, often recycled and reclaimed fibers, and turned into a material that resembles felt. This nonwoven felt can then be molded or formed into parts that can go into a vehicle.

"The coconut fiber nonwoven material, the first product from the EssenTex™ line, was launched in the Ford Focus Electric vehicle in the load floor," Teipel says. "There are other parts that should be released in the next 12 months. Outside of automotive, the EssenTex™ line has found a home as a moisture mat absorber in the BrightGreen living wall planter available at Williams Sonoma and Home Depot nation-wide."

Essentium also has coconut waste products from the coconut shell in a bio-recycled part on the Ford F-250 Super Duty, and in a kitchen cutting board called "Coco-poly" available at Bed, Bath & Beyond, she adds.

"Our company was built from the idea that you can turn waste into resource," she says. "New materials provide opportunities for engineering applications worldwide and more importantly for farmers abroad waste can be new found treasure.

"As materials people, we understand the importance of selecting and developing the right materials for the job, and recognize that there are many waste streams that can be utilized to create new and better materials and products that have more benefits than just better performance," she adds. "Ultimately, our company is about transforming waste in order to transform people's lives. We want our engineering decisions to improve people's lives and make the world a better place."

-- Marlene Cimons, National Science Foundation
Investigators
Elisa Teipel
David Greer
Frederik Karssenberg
Related Institutions/Organizations
Essentium Materials LLC

MESSAGE TO CONGRESS REGARDING U.S.-GREAT BRITAIN COOPERATION REGARDING USES OF ATOMIC ENERGY FOR DEFENSE

FROM:  THE WHITE HOUSE 

Message to the Congress -- Amendment Between the United States and the United Kingdom of Great Britain and Northern Ireland

TO THE CONGRESS OF THE UNITED STATES:

I am pleased to transmit to the Congress, pursuant to section 123 d. of the Atomic Energy Act of 1954, as amended, the text of an amendment (the "Amendment") to the Agreement Between the Government of the United States of America and the Government of the United Kingdom of Great Britain and Northern Ireland for Cooperation on the Uses of Atomic Energy for Mutual Defense Purposes of July 3, 1958, as amended (the "1958 Agreement").  I am also pleased to transmit my written approval, authorization, and determination concerning the Amendment.  The joint unclassified letter submitted to me by the Secretaries of Defense and Energy providing a summary position on the unclassified portions of the Amendment is also enclosed. The joint classified letter and classified portions of the Amendment are being transmitted separately via appropriate channels.

The Amendment extends for 10 years (until December 31, 2024), provisions of the 1958 Agreement that permit the transfer between the United States and the United Kingdom of classified information concerning atomic weapons; nuclear technology and controlled nuclear information; material and equipment for the development of defense plans; training of personnel; evaluation of potential enemy capability; development of delivery systems; and the research, development, and design of military reactors.  Additional revisions to portions of the Amendment and Annexes have been made to ensure consistency with current United States and United Kingdom policies and practice regarding nuclear threat reduction, naval nuclear propulsion, and personnel security.

In my judgment, the Amendment meets all statutory requirements.  The United Kingdom intends to continue to maintain viable nuclear forces into the foreseeable future. Based on our previous close cooperation, and the fact that the United Kingdom continues to commit its nuclear forces to the North Atlantic Treaty Organization, I have concluded it is in the United States national interest to continue to assist the United Kingdom in maintaining a credible nuclear deterrent.

I have approved the Amendment, authorized its execution, and urge that the Congress give it favorable consideration.

BARACK OBAMA

U.S. DEFENSE DEPARTMENT CONTRACTS FOR JULY 24, 2014

FROM:  U.S. DEFENSE DEPARTMENT 

CONTRACTS

DEFENSE THREAT REDUCTION AGENCY

Cubic Applications, Inc., San Diego, California, was awarded a maximum $500,000,000 indefinite-delivery/indefinite-quantity contract for J3/7 chemical, biological, radiological, nuclear, and high-yield explosive (CBRNE) exercise, training, capability assessment and capacity development support services. This contract provides for support services to DTRA's Building Partnerships Divisions and functions in the daily performance and execution of the Building Partnership mission. Work will be performed at various locations, with an expected completion date of July 2024. Funding will be obligated at the task order level. This contract was a competitive acquisition, and five offers were received. The Defense Threat Reduction Agency, Fort Belvoir, Virginia, is the contracting activity (HDTRA1-14-D-0013).

NAVY

Lockheed Martin Mission Systems and Training, Moorestown, New Jersey, is being awarded a $40,662,000 not-to-exceed contract for the production of one multi-mission signal processor equipment set, ballistic missile defense 4.0.2 equipment, and Aegis Weapon System upgraded equipment to support fielding Aegis modernization capabilities to the fleet. Work will be performed in Moorestown, New Jersey (57.8 percent); Clearwater, Florida (41.5 percent); and Owego, New York (0.7 percent), and is expected to be completed by March 2016. Fiscal 2014 other procurement (Navy) and fiscal 2014 defense procurement contract funds in the amount of $20,331,000 will be obligated at time of award and will not expire at the end of the current fiscal year. This contract was not competitively procured pursuant to 10 U.S. C. 2304(c)(1), as implemented by FAR 6.302-1. The Naval Sea Systems Command, Washington, District of Columbia, is the contracting activity (N00024-14-C-5106).

Bechtel Plant Machinery Inc., Monroeville, Pennsylvania, is being awarded a $39,437,949 cost-plus-fixed-fee modification to a previously awarded contract (N00024-12-C-2106) for naval nuclear propulsion components. Work will be performed in Monroeville, Pennsylvania (99 percent), and Schenectady, New York (1 percent). No completion date or additional information is provided on Naval Nuclear Propulsion Program contracts. Fiscal 2014 other procurement (Navy) contract funds in the amount of $39,437,949 will be obligated at time of award and will not expire at the end of the current fiscal year. The Naval Sea Systems Command, Washington, District of Columbia, is the contracting activity.
L-3 Communications Corp., Arlington, Texas, is being awarded a $14,089,284 modification to a firm-fixed-price delivery order issued previously against Basic Ordering Agreement N61340-12-G-0001. This modification provides for footprint reduction/storage area network to update existing architecture for the F/A-18E/F and EA-18G aircraft. The update reduces Tactical Operational Flight Trainer (TOFT) host/instructor operator station hardware, centralizes software storage, provides expandable software storage for future TOFT enhancements, allows for multiple software configurations, and updates all analog Mission Management System (MMS) video output to digital supporting future improvements to MMS displays. Work will be performed in Lemoore, California (20 percent); Miramar, California (20 percent); Whidbey, Washington (15 percent); Oceana, Virginia (15 percent); China Lake, California (10 percent); Arlington, Texas (10 percent); and Atsugi, Japan (10 percent), and is expected to be completed in June 2016. Fiscal 2014 aircraft procurement (Navy) contract funds in the amount of $14,089,284 will be obligated at time of award, none of which will expire at the end of the current fiscal year. The Naval Air Warfare Center Training Systems Division, Orlando, Florida, is the contracting activity.

The Boeing Co., Jacksonville, Florida, is being awarded a $7,695,945 firm-fixed-price, cost-plus-fixed-fee modification to a previously awarded indefinite-delivery/indefinite-quantity contract (N00019-14-D-0001) for additional fiscal 2014 depot-level service life extension/remanufacturing activities, including associated maintenance support and sustainment capabilities, in support of the F/A18 A-F aircraft. Work will be performed in St. Louis, Missouri (61 percent), and Jacksonville, Florida (39 percent), and is expected to be completed in July 2015. No funds are being obligated at time of award; funds will be obligated on individual delivery orders as they are issued. The Naval Air Systems Command, Patuxent River, Maryland, is the contracting activity.

ARMY

Southeastern Archaeological Research Inc.,* Newberry, Florida (W9126G-14-D-0036); R. Christopher Goodwin & Associates, Inc.,* New Orleans, Louisiana (W9126G-14-D-0037); and Panamerican Consultants, Inc.,* Tuscaloosa, Alabama (W9126G-14-D-0038), were awarded a $20,000,000 firm-fixed price, indefinite-delivery/indefinite-quantity multiple award task order contract for military and civil works cultural resources compliance programs in the United States and territories with an estimated completion date of July 22, 2017. Bids were solicited via the Internet with 12 received. Funding and work location will be determined with each order. U.S. Army Corps of Engineers, Fort Worth, Texas, is the contracting activity.

Kongsberg Defence & Aerospace, Kongsberg, Norway was awarded a $10,680,000 modification (P00114) to contract W15QKN-12-C-0103 to exercise an option on contract W15QKN-12-C-0103 for depot support of the Commonly Remotely Operated Weapon Station (CROWS). Fiscal 2014 operations and maintenance (Army) funds in the amount of $10,680,000 were obligated at the time of the award. Estimated completion date is Aug. 16, 2017. Work will be performed in Johnstown, Pennsylvania. Army Contracting Command, Picatinny Arsenal, New Jersey is the contracting activity.

DEFENSE LOGISTICS AGENCY

McRae Industries, Inc., ** Mount Gilead, North Carolina, has been awarded a maximum $14,393,768 modification (P00103) exercising the second option period on a one-year base contract (SPM1C1-12-D-1057), with four one-year option periods. This is a firm-fixed-price contract for Army hot weather combat boots. Location of performance is North Carolina with a July 28, 2015, performance completion date. Using military services are Army and Marine Corps. Type of appropriation is fiscal 2014 defense working capital funds. The contracting activity is the Defense Logistics Agency Troop Support, Philadelphia, Pennsylvania.

AIR FORCE

Telephonics Corp., Communications & Integrated Systems Division, Farmingdale, New York, has been awarded a $13,254,403 firm-fixed-price contract for the Enhanced Mode S-FAA Radar, Enhanced Mode 5 Radar, and procurement of long lead material and all other hardware support activities. Work will be performed primarily at Farmingdale, New York, and is expected to be completed by Nov. 20, 2017. This award is the result of a sole source acquisition and one offer was received. NATO agency funds in the amount of $13,254,403 will be obligated at time of award. Air Force Life Cycle Management Center/HBSKI, Hanscom Air Force Base, Massachusetts, is the contracting activity (FA8730-14-C-0014).
*Small business

**In-HUBZone business

U.S. DOD OFFICIAL TELLS CONGRESS IRAQ MUST DEAL WITH EXTREMIST THREAT

FROM:  U.S. DEFENSE DEPARTMENT 

Iraq Must Do Its Heavy Lifting, Pentagon Official Says

By Terri Moon Cronk

DoD News, Defense Media Activity

WASHINGTON, July 23, 2014 – Though the United States must protect its people and is helping Iraq to face the threat posed by the extremist group Islamic State of Iraq and the Levant, it is up to Iraq to do the heavy lifting, a senior Defense Department official said today.

Elissa Slotkin, performing the duties of the principal deputy undersecretary of defense for policy, told the House Foreign Affairs Committee that the United States has a vital national security interest to ensure Iraq and other countries don’t become safe havens for terrorists who could threaten the U.S. homeland, its citizens or interests abroad, or its partners and allies.

The immediate goals are to protect American people and property in Iraq, gain a better understanding of how the United States might train, advise and assist Iraqi security forces as necessary, and expand the nation’s understanding of ISIL intelligence, Slotkin said.

All three factors are critical, she said, to any future U.S. strategy involving Iraq, and the nation has three measures in the strategy:

-- The United States added forces to protect its people in Iraq. “The safety of U.S. citizens and personnel throughout Iraq is our highest priority,” Slotkin said, adding that DoD is meeting all requests from the State Department for extra security for the U.S. Embassy and the airport.

-- Defense Secretary Chuck Hagel ordered the amphibious transport ship USS Mesa Verde into the Arabian Gulf. “Its presence adds to the other naval ships there, such as the aircraft carrier USS George H.W. Bush and provides the president with additional options to protect American citizens and interests,” she said.

-- Intelligence, surveillance and reconnaissance assets are part of the U.S. ramping-up effort. “We’ve significantly surged ISR capabilities into Iraq, [to] over 50 sorties a day, compared to one a month in previous months,” Slotkin added.

“We are now capable of around-the-clock coverage of Iraq, and have been focusing particularly on ISIL-controlled territory and around Baghdad,” she said.
The small teams of 300 U.S. military advisors in Iraq are assessing and evaluating how the United States might potentially help Iraqi security forces, Slotkin said.
Hagel and Army Gen. Martin E. Dempsey, Joint Chiefs of Staff chairman, received the draft assessment from U.S. Central Command last week, she told the panel.
“Department leaders are taking a deliberate approach and reviewing this lengthy assessment,” Slotkin said, adding that the assessments will be used to make recommendations to the president.

“Additional assessment work continues in and around Baghdad with respect to the developing situation on the ground,” she added.

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SEC ADOPTS AMENDMENTS TO RULES THAT GOVERN MONEY MARKET MUTUAL FUNDS

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION 

The Securities and Exchange Commission adopted amendments to the rules that govern money market mutual funds.  The amendments make structural and operational reforms to address risks of investor runs in money market funds, while preserving the benefits of the funds.

Today’s rules build upon the reforms adopted by the Commission in March 2010 that were designed to reduce the interest rate, credit and liquidity risks of money market fund portfolios.  When the Commission adopted the 2010 amendments, it recognized that the 2008 financial crisis raised questions of whether more fundamental changes to money market funds might be warranted.

The new rules require a floating net asset value (NAV) for institutional prime money market funds, which allows the daily share prices of these funds to fluctuate along with changes in the market-based value of fund assets and provide non-government money market fund boards new tools – liquidity fees and redemption gates – to address runs.

“Today’s reforms fundamentally change the way that money market funds operate.  They will reduce the risk of runs in money market funds and provide important new tools that will help further protect investors and the financial system,” said SEC Chair Mary Jo White.  “Together, this strong reform package will make our markets more resilient and enhance transparency and fairness of these products for America’s investors.”

With a floating NAV, institutional prime money market funds (including institutional municipal money market funds) are required to value their portfolio securities using market-based factors and sell and redeem shares based on a floating NAV.  These funds no longer will be allowed to use the special pricing and valuation conventions that currently permit them to maintain a constant share price of $1.00.  With liquidity fees and redemption gates, money market fund boards have the ability to impose fees and gates during periods of stress.  The final rules also include enhanced diversification, disclosure and stress testing requirements, as well as updated reporting by money market funds and private funds that operate like money market funds.

The final rules provide a two-year transition period to enable both funds and investors time to fully adjust their systems, operations and investing practices.

Norm Champ, director of the SEC’s Division of Investment Management, said, “Today’s adoption of final money market fund reforms represents a significant additional step to address a key area of systemic risk identified during the financial crisis.  These reforms are important both to investors who use money market funds as a cash management vehicle and to the corporations, financial institutions, municipalities and others that use them as a source of short-term funding.”

The SEC today also issued a related notice proposing exemptions from certain confirmation requirements for transactions effected in shares of floating NAV money market funds.  Additionally, the SEC re-proposed amendments to the Commission’s money market fund rules and Form N-MFP to address provisions that reference credit ratings.  The re-proposed amendments would implement section 939A of the Dodd-Frank Wall Street and Consumer Protection Act of 2010, which requires the Commission to review its rules that use credit ratings as an assessment of credit-worthiness, and replace those credit-rating references with other appropriate standards.

The rules adopted today will be effective 60 days after their publication in the Federal Register, and the re-proposal will have a 60-day public comment period following its publication in the Federal Register.

U.S. ARMY GEN. VIA SAYS SPENDING CUTS CUMULATIVE IMPACT AFFECTS READINESS

FROM:  U.S. DEPARTMENT OF DEFENSE 

Sequestration Chips Away at Readiness, General Says

By Army Sgt. 1st Class Tyrone C. Marshall Jr.

DoD News, Defense Media Activity

WASHINGTON, July 23, 2014 – The effects of sequestration spending cuts may seem overstated, but their cumulative impact affects the military’s readiness and its ability to respond to future contingencies, the commander of U.S. Army Materiel Command said here today.

Army Gen. Dennis L. Via discussed how the budgeting mechanism influences decisions and affects national defense for the Army and Defense Department at large during a meeting with the Defense Writers Group.

“Sometimes, there can be an impression that it’s overstated and [a question of] what the impact of sequestration will be,” Via said. But as the military emerges from 13 years of war and has to reset its equipment while downsizing force levels, the question of impact is a cumulative effect over time, he added.
“The impact is to our readiness and ability to be able to respond to future contingencies,” Via said.

Via said some “plus-ups” of funding in fiscal years 2014 and 2015 have mitigated some of the effects, but he noted that sequestration returns in fiscal 2016 at a time when the Army is trying to reset the force.

“We have to implement all of those cuts and have to reduce the force to, potentially, [420,000 soldiers],” he said. “That has significant risk to the nation.”
Looking around the world today, Via said, no one can say where the next contingency will be.

“But we know there’ll be another contingency,” he added.

And depending on what the future brings, the general said, the Army must be prepared “to conduct forces to meet the requirements -- whatever that level of force is.”

While that isn’t his decision, Via said, when the decision has been made to commit forces, “we have to make sure that they’re ready and prepared to go and accomplish their mission.

“They have to have the equipment, so we have to reset and get it back in their hands,” he continued. “We have to have the materiel available to surge if an event goes beyond what we think would be an initial [push].”

It’s also necessary to ensure that forces are postured to be expeditionary-capable, the general said, despite becoming more home-station-based, and to have power-projection platforms to push forces forward.

And with sequestration and the general budget uncertainty, readiness “continues to have us go up and down,” Via said.

“In readiness you have to maintain … what we call a band of excellence. You have to remain and operate in that band so that when you’re called upon … you can do so in a matter of days,” he said.

“The longer sequestration impacts and your readiness declines, it’s just like your car when you sit it out and you don’t drive it for a few months,” the general said. Using that idle vehicle as a metaphor for readiness, he explained how the lack of readiness can be felt.

“For three months, you can start it up and probably be OK,” Via said. “If you let it sit for nine months, all of a sudden the seals go, the tires, other challenges happen, and before you know it, you have an automobile you can’t drive.

“And that’s what happens to readiness when we’re talking about aviation [and] other platforms,” he continued. “Sequestration has what I call a constant chipping away at readiness. At some point, you get down to a point where it’s no longer affordable, and you have ‘have’ and ‘have-not’ units.”

When called upon to deploy, the general said, the “have-not” units cannot deploy, and if they do, they are not prepared.

“We don’t ever want to be in a position where we’re sending America’s sons and daughters into harm’s way not ready to accomplish their mission,” Via said.
“So I think when our chief of staff of the Army and secretary of the Army talk about that if we get down to a certain level -- that [420,000],” he explained, “you’ve got to understand that’s not 420,000 [soldiers] ready to support operations.”

A large portion of that, Via said -- 70,000 to 80,000 soldiers who are recruiters or otherwise serve in what he called a “generating force” -- as well as many tens of thousands in the recruiting pipeline and in training, take a big bite out of the 420,000-soldier Army.

“Before you know it, you’re down to 200,000 [soldiers]. … Are they going to be ready to meet for contingency?” he asked.

Looking at the number of contingencies happening around the world today and where soldiers are forward-stationed, Via noted the Army provides about 40 percent of the enabling capabilities of every combatant command.

“What do I mean by that?” he asked. “Communications networks, port opening, theater opening, airfield opening, theater intelligence, medical, pre-positioned stocks, logistics and support and contracting -- the Army does that,” Via said.
So with decisions forced by sequestration and having to “reduce, reduce and reduce,” the general said, then the culminating effects on the force, over time, become apparent.

“That’s where I worry about sequestration,” Via said. “At the end of the day, the Army’s primary mission is to prevent conflict, shape the operational environment, and if committed, win decisively.” That’s true whether it’s in a kinetic fight or during humanitarian assistance disaster relief efforts, he added.

“We want to be able to respond, because that’s the reputation … and security of the country,” Via said. “So when we look at that, sequestration impacts significantly our ability to prevent conflict.”

Conflict is prevented, he said, by having ready forces and equipment around the world that can respond very, very quickly.

“Sequestration, over time, will continue to cut at that readiness,” Via said. “The concern is … over a period of time, it’ll be that car we’re talking about that you just left for a period of time. You think it’s OK until you go out to start it and it doesn’t start. Where are you then? That’s where we don’t want to be.”