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Paul Blumenthal: Regulations Lead to Lobbying Surge by the For-Profit College Industry

March 10, 2011

This week the for-profit college industry hosts its annual Hill Day , where students and industry representatives come to Washington to talk to their representatives and lobby for industry priorities. The lobbying conference comes as the industry finds itself fighting on all fronts to block a proposed rule meant to rein in what many are calling bad practices by the industry. This fight has spurred the highest lobbying spending by the industry in its nascent history. In 2010 the for-profit college industry spent $7.57 million on lobbying, almost three times as much as it spent in 2009. The industry also doled out over $1.3 million in campaign contributions over the 2010 election cycle. The subject of the lobbying fight is a proposed rule by the Department of Education aimed at stemming a growing student debt and default problem in the industry. The new rules aim to mitigate a growing default and debt problem among for-profit college students. For-profit schools account for approximately 12 percent of all higher education students and they receive 25 percent of all Federal Pell Grants, while accounting for 44 percent of all student loan defaults. Investigations by the GAO , the Los Angeles Times , and the Senate Committee on Health, Education, Labor, & Pensions (HELP) uncovered practices in the industry that indicated an emphasis on acquiring new students while ignoring the progress of those who have already been accepted to the schools. (These practices were uncovered in a 60 Minutes investigation in 2005 .) This policy led to huge rates student dropouts and loan defaults. Meanwhile, the schools reaped profits from the government loans each new student received. The rules , as proposed so far, label an institution eligible for federal funding as having “at least 45% of their former students paying down the principal on their federal loans; or their graduates will have a debt-to-earnings ratio of less than 20% of discretionary income or 8% of total income.” Programs that would lose funding “will have less than 35% of their former students paying down the principal on their federal loans; and their graduates will have a debt-to-earnings ratio above 30% of discretionary income and 12% of total income.” The Department of Education is set to release the final rules soon. The Association of Private Sector Colleges and Universities (APSCU), the industry’s advocacy and lobbying arm, officially states , “The Department’s proposal will deny access by shuttering programs and putting millions of students out of higher education. That’s a bad deal for all concerned.” Two weeks ago the fight came to a vote in Congress when, in an amendment to the Continuing Resolution to fund the government, the House of Representatives voted to deny funds for the enforcement of the Department of Education’s rules on for-profit colleges on gainful employment. The vote was 289-136. Ninety-two of those voting received contributions from the industry. The sixty-one lawmakers who received contributions and voted yes received more than twice as much ($8,263), on average, as the forty who received contributions and voted no ($4,035). Letters of Opposition Before the House even brought this issue to a vote, a smaller group of congressmen protested the proposed rules by sending letters to the Department of Education to state their objections. Twenty-three of the thirty-five lawmakers signing these letters received contributions from the industry, which accounted for over a quarter of all contributions made by the industry in the 2010 cycle. On average these twenty-three lawmakers received $16,756 from the industry. Last year ProPublica examined the contributions to members signing protest letters over the education rules. This report looked only at contributions made in 2010 (not the cycle) and found that contributions from the industry skyrocketed to these members after the first letter was sent on March 22, 2010 and were often clustered around dates when the letters were sent. More than ninety percent of industry contributions to letter signatories in 2010 came on or after the date, March 22 , that the first letter was sent. A further examination shows executives and employees of for-profits clustering their contributions along with industry political action committees (PAC). Campaign finance records show thirty-five contributions totaling $40,500 to Reps. Buck McKeon and John Kline from executives, employees, and political action committees of Corinthian Colleges, Education Management Corp., and the Keiser University system reported on May 28, 2010. The two Republican congressmen each held the position of ranking member of the Education & Labor Committee in 2010; Kline is currently the chairman of the committee. McKeon and Kline had already signed a letter in opposition to the rule on March 22 . Kline had also signed another letter on April 30 . The congressmen are the top two recipients of for-profit college money among those who signed letters oppose the new rules receiving $99,750 and $71,500 respectively. Another letter signatory who received clustered contributions is Rep. Donald Payne. On July 19 Payne cosigned a letter to the Department of Education opposing the rules. This came after having signed onto two other letters on March 22 and April 30 . From the month preceding the July 19 letter , Payne received sixteen contributions totaling $18,500 from ten different for-profit college organizations. This spurt of contributions accounted for all but $3,000 of Payne’s haul from the for-profit industry. Payne would sign a fourth letter on September 8, a date on which he also reports receiving a $1,000 contribution from Bridgepoint Education. Rep. Alcee Hastings signed his name to more letters than any other congressman. Hastings received seven contributions totaling $7,400 over the course of one week in April. This occurred in between Hastings signing a letter on March 22 and a second letter on April 30 . According to Hastings’ publicly available schedule the congressman met with representatives from Education Management Corporation the week after receiving these contributions. (None of the contributions to Hastings came from Education Management.) These letters were part of a larger grassroots lobbying campaign by the for-profit college industry that included swamping the Department of Education with comments opposing the proposed rules. The rules ultimately received over 90,000 comments, many of them coming in bulk submissions from both opponents and supporters of the rules. Grassroots Lobbying Every time that Congress revisits the Lobbying Disclosure Act of 1995 the topic of grassroots lobbying disclosure emerges and is soundly defeated. In 1995 Sen. Carl Levin, leading the lobbying disclosure push, called for disclosure of efforts to stimulate the public to lobby the government and in 2007 Sens. Russ Feingold and Barack Obama did the same. The reason for these efforts to enhance disclosure around these activities relate not just to their effectiveness, but to the potential for fraudulent or deceptive practices. Much of the for-profit college industry’s grassroots efforts have revolved around a letter writing campaign by students and faculty to demand that the comment period for the rules remain open beyond the proposed closing date and that the proposal be rescinded. A massive deluge of letters succeeded in getting the Department of Education to extend the comment period. A ThinkProgress * investigation revealed that some of the letters sent in opposition to the rules appeared to repeat numerous times, “[A]n Art Institute student “Alicia Laury” signed over 74 identical letters about her opposition to regulations on the for-profit college industry. Other names, with the same copy and paste letter opposing reform, appear dozens of times.” The industry also created a student organization , which is helping to organize this week’s lobbying blitz, known as Students for Academic Choice, hired lobbyist Lanny Davis to create the lobbying and advocacy organization Coalition for Educational Success, and is now using a fish mascot to make their message go viral on the Internet. The viral Internet marketing campaign proposes a mascot, the Fighting Salmon , for the for-profit industry. The Facebook fan page for this part of the campaign already has over 42,000 fans. While the grassroots lobbying effort is in full force during this week’s lobbying day, the inside Washington lobbying team assembled by the industry has been on the ground in increasing numbers over the past year. Lobbying Team The for-profit industry put together a large lobbying force over the year. Lobbying expenses ballooned from $1 million in the first quarter of 2010 to $3.25 million in the fourth quarter. Over the course of the year, the industry employed 158 lobbyists from thirty-seven firms and in-house operations. Seventy-one percent of these lobbyists had previous government experience and twelve were former members of Congress. The former lawmakers included former congressmen Dick Gephardt, Bud Cramer, Al Wynn, Vic Fazio, Toby Moffett, Henry Bonilla, and former Sen. Tim Hutchison. The lobbying firms include some of the most prestigious and well-connected in Washington including The Podesta Group, Akin Gump et al, Heather Podesta & Associates, Brownstein Hyatt et al, and Ogilvy Government Relations. A number of these lobbyists were scheduled to speak at the Hill Day events this week including Moffett, Fazio, Hutchison, and Bonilla. *ThinkProgress is a part of the Center for American Progress, which has run a campaign in support of the “gainful employment” rules.

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Laura J. Steinberg: For-Profits Unprofitable for GI’s: Why Taxpayers Should Prohibit Use of Post 9-11 GI Bill Funding on ‘For-Profit’ Education

March 10, 2011

Since October 2009, Syracuse University — with support from the National Science Foundation — has been studying veterans’ educational aspirations, with emphasis on technical fields and engineering. We have created the most comprehensive national dataset on servicepersons’ educational goals and needs. The Post 9/11 GI Bill is the largest expansion of veterans’ benefits since the original post-World War II 1944 GI Bill. The 1944 bill helped make the United States a global technological powerhouse and superpower, delivered us our “greatest generation,” and by its end in 1956, educated 8 million of 16 million veterans, resulting in 14 Nobel Prize winners, 91,000 scientists, 67,000 doctors, 450,000 engineers, and countless others. Although the Post 9/11 GI Bill is an investment in veterans, we as a nation reap the benefits. Our interviews with active duty servicemembers and veterans have revealed many things: First, they are anxious about becoming students again, about whether their peers — the average college student fresh out of high school — can relate to their commitment to country. Second, they desire “military friendly” campuses, a cohort of veterans to relate to the hardships of being a student while being a spouse, a parent, recovering from PTSD, or making the transition back to civilian life. Third, the hostile response to veterans during recent campus debates over reinstalling ROTC programs has not inspired their confidence. As a result, servicemembers often ask us, “Should I use my GI Bill educational benefits at for-profit, on-line schools?” We think the for-profit model can be problematic for several reasons: First, “for-profit educational management companies” use ad hoc credentialing strategies to gain market share. Second, ‘for-profit’ credits may not be eligible for transfer to regionally accredited schools (most traditional universities and colleges). And third, ‘for profit’ degrees may carry a lower market value than their nonprofit equivalents. Nonetheless, many service-members report that their first choice is to attend a ‘for-profit,’ a finding confirmed by a recent U.S. Senate Health, Education, Labor and Pensions Committee Report showing that nearly 30 percent of students using the GI Bill are attending ‘for-profits’. Meanwhile, mounting evidence shows that although for-profit education may produce high returns for shareholders, it can subject students to increased risk of loan default, unethical recruitment practices, and higher degree costs and attrition rates. And what about the implications for the nation? In 2010, the Department of Veterans Affairs spent $697 million on tuition at public universities and $640 million at for-profits, yet funded 203,790 students at public schools compared to 76,746 at ‘for-profits.’ The Senate Report also notes that government education benefits received by 20 for-profits increased from $66.6 million in 2006 to $521.2 million in 2010 – an increase of 683 percent. If the expansion of military benefits has made veterans targets for for-profits seeking to satisfy investor demands, the future U.S. economy, driven by a well-educated labor force, stands to suffer from collateral damage. It is noteworthy that no for-profit has managed to launch an accredited engineering program. From the veteran perspective we have heard two views. On the one hand, veterans feel “taken advantage of” by for-profits and wary of the online programs they offer. The whole point of college, said one veteran, is to “interact with fellow students, engage with people of different backgrounds, take tests under pressure, experience the intangibles of personal growth and maturation that occur in a campus setting.” This view sees for-profits as “making veteran isolation worse, not better.” Alternatively we have heard, “my biggest gripe about the GI Bill is that I work full time, own two houses, am divorced, have two children, and have a job that requires a lot of traveling, so I’m basically forced into online courses, and the most I can do is 6 credits per semester.” This view explains: “with the new GI Bill, I don’t get the same housing entitlements, and I’m really not sure about the quality of these [for-profit] degrees.” Clearly, credible university-based online degree programs need to be made available to veterans. Given current U.S. fiscal constraints, we must ensure that we are getting the most out of our investments. Not only do we need to seriously reconsider whether for-profits give us the greatest return on our investment in the GI Bill, but whether they provide the quality education that our veterans deserve. The burden of Iraq and Afghanistan rests on less than 1 percent of our nation, cementing a divide between servicemember and society. The Post 9/11 GI Bill is one of our best means to ensure a strong economy and healthy middle class, while providing opportunities for citizens committed to public service. It would be a shame to allow for-profits to siphon off that potential, only to line their pockets at the expense of America’s future best and brightest, and for the sake of providing a service which at best further isolates our veterans from their society and at worst undercuts the next generation of Nobel Prize winners, scholars, scientists, doctors, inventors, and engineers.

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Scott Walker Proposes Union Compromise In E-Mails

March 8, 2011

MADISON, Wis. — Wisconsin Gov. Scott Walker has offered to keep certain collective bargaining rights in place for state workers in a proposed compromise aimed at ending a nearly three-week standoff with absent Senate Democrats, according to e-mails released Tuesday by his office. The e-mails, some dated as recently as Sunday, show a softened stance in Walker’s talks with the 14 Democrats who fled to Illinois to block a vote on his original proposal that would strip nearly all collective bargaining rights for public workers and force concessions amounting to an average 8 percent pay cut. Under the compromise floated by Walker and detailed in the e-mails, workers would be able to continue bargaining over their salaries with no limit, a change from his original plan that banned negotiated salary increases beyond inflation. He also proposed compromises allowing collective bargaining to stay in place on mandatory overtime, performance bonuses, hazardous duty pay and classroom size for teachers. Increased contributions for health insurance and pension, projected to save the state $330 million by mid-2013, would remain. The unions and Democrats have agreed to those concessions to help balance a projected $3.6 billion budget shortfall. Sen. Bob Jauch, one of the 14 AWOL Democrats, said he hoped the compromise would serve as a blueprint for future negotiations. But he and Sen. Tim Cullen, who were both working with Walker’s administration, said the latest offer was inadequate. The e-mails show that Jauch had wanted even more items to be subject to bargaining that Walker seeks to eliminate, including sick leave and vacation pay. “I consider the lines of communication still open,” Cullen said Tuesday. “Whether there’s going to be any communicating, remains to be seen. These things ebb and flow.” Walker has repeatedly said that he would not budge on the key parts of the bill that’s been stymied in the Senate after Democrats left 19 days ago. Since then, the pressure to deal has increased as protests reached as large as 80,000 people, polls show the public want a compromise and recall efforts were launched against 16 senators, including eight Republicans. Some of the items in Walker’s compromise plan could only be bargained if both sides agree to take them up. Workplace safety would be subjected to bargaining regardless. Walker also proposed allowing collective bargaining agreements to last up to two years, instead of the one-year limit in his original proposal. Unions would only have to vote to remain in existence every three years, instead of annually as Walker initially proposed. Additionally, University of Wisconsin Hospital and Clinics Authority employees would not lose all union bargaining rights and the Legislature’s budget committee would have to vote to approve any changes to Medicaid programs sought by Walker’s administration. Under the original bill, the Department of Health Services could make cuts and other changes to programs benefiting the poor, elderly and disabled without requiring a hearing or vote by the legislative committee. Senate Republicans spent hours going over the compromise plan Tuesday morning in a closed-door meeting, Majority Leader Scott Fitzgerald said. He acknowledged that pressure was increasing on the senators, saying the recall efforts launched against eight Republicans was “on everybody’s minds.” “Everybody’s obviously receiving a lot of pressure,” Fitzgerald said. “I had people on my front porch before I left this morning.” He didn’t say whether Senate Republicans agreed with the concessions Walker proposed on Sunday said support for the underlying bill remained strong. “We’re rock solid, we’re fine,” he said.

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Jan. Housing Starts Up 14.6% To 596,000

February 16, 2011

WASHINGTON – New construction of U.S. houses rose to its highest level in four months in January, the Commerce Department estimated Wednesday. Starts rose 14.6% in January to a seasonally adjusted 596,000 annualized units, stronger than the 520,000 pace expected by economists surveyed by MarketWatch. This is the highest level of starts since September. Building permits, a leading indicator of housing construction, fell 10.4% to a seasonally adjusted annual rate of 562,000. This follows a 15.3% jump in permits in December as builders rushed to avoid building code changes in several key states including California. Copyright

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IRS Takes 100,500 SF in Northeast DC

February 16, 2011

The U.S. General Services Administration inked a 100,500-square-foot, 10-year deal for the Internal Revenue Service in Union Square in Washington, DC. The well-known division of the U.S. Treasury Department is scheduled to occupy three floors at 999 N. Capitol St. NE in January of next year. The IRS’ Criminal Investigation Division currently occupies 103,120 square feet at 1750 Pennsylvania Ave. NW in the central business district, according to…

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Kathleen E. Christensen: The False Choice: A Flexible Job or a Good Job?

February 13, 2011

Workplace flexibility: eighty percent of American employees say they want it, nearly half of job seekers rate it as a higher priority than salary, and thousands of companies have embraced it as an efficient way to keep employees happy and boost business productivity. But despite all this, there is still a widespread misconception that workplace flexibility is only appropriate to a certain type of job. A simple job, the thinking goes, can be accomplished by someone working off-site, or working non-traditional hours, or sharing a job with another part-time employee; but “serious jobs” still require rigid, traditional work schedules and set-ups. This line of thinking is epitomized by the dilemma facing a worker who wrote into The Wall Street Journal ‘s Ask The Juggle this week: The reader, a working mother, has an opportunity to step into a new job with her current employer that would allow her to work from home one or two days a week. The new job would give her flexibility to spend more time with her two young children….The problem is, the job isn’t that exciting, and she is overqualified for it. Taking it also wouldn’t help her resume much in any future job search… It’s not just working moms, but employees of all stripes who face this quandary: to take the flexible job or the good job? But it raises a more important question: why is this employee–clearly talented enough to hold a challenging position–only offered flexibility if she takes a worse job? Instead, why can’t she and her employer work together to find a way to make the job she has more flexible? The answer, of course, is that making a challenging job flexible is, well…challenging. But it’s not impossible. The pioneering employers who have won Alfred P. Sloan Awards for Business Excellence in Workplace Flexibility have shown that there are many different routes to workplace flexibility . Innovation in other countries has shown that even doctors, lawyers and business leaders stand to benefit from increased flexibility . As Sue Shellenbarger said in her thoughtful response to this reader, “most jobs require some sacrifices. Trade-offs like this are what make the juggle such a nonstop challenge. The right answer is different for everyone.” Perhaps working form home twice a week isn’t possible with this woman’s job. But maybe it is possible to shift when the work is done so that a spouse or other family member can be home when this mother is at work. Maybe it’s possible to let her share the job with another talented employee. Or maybe this mother and her employee need to come up with a completely new way to match this job with her life. The point is that every job, no matter how demanding or challenging, can be tweaked to make it more flexible. And, a wide array of research has shown that workers across the spectrum are more efficient when they have flexibility over how, when and where their work gets done. Perhaps the biggest misconception about workplace flexibility is that it means working less. It doesn’t. I have seen many examples of employees who get more work done when given flexibility in when, where and how they do their work. This isn’t about decreasing the number of hours someone works or giving them fewer responsibilities. It’s about customizing a job so that it fits with a life. Oftentimes this even means the employee works more. Almost always it means that they work better, are more engaged with their job, and less likely to leave the company. We need to move past this outdated image of a good worker as someone who has no life or family issues distracting them from work. A good worker is someone who figures out how to fit their job with their life and family responsibilities so that they are not distracted from either. Because of the many benefits it offers to both employees and employers, workplace flexibility is now included in the Department of Labor’s definition of a “good job.” Every business should make it possible for each employee to sit down with their manager and figure out how to make their job fit with their life. If they take the time to do this, they’ll end up with more productive employees and more efficient businesses. No talented employee should have to answer the question, “do I want a good job or do I want a flexible job?” Instead, each of us should be asking, “how do I make my good job a flexible job?”

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For-Profit College Students Face Financial Woes

February 4, 2011

A quarter of all federal student loan borrowers at for-profit colleges defaulted on their loans within three years of beginning to repay them–more than twice the rate of their counterparts at non-profit institutions, according to new data released today by the Department of Education. In addition, students taking out loans at for-profit schools were responsible for nearly half of all federal student loan defaults within the three-year timeframe, even though students enrolled at such institutions made up less than 15 percent of college students nationwide. The findings released by the Department of Education come as the for-profit college sector faces heightened public scrutiny over questionable outcomes for students, many of whom leave the schools with debts they cannot repay. Average tuition at for-profit schools is nearly twice that of the in-state tuition at four-year public colleges, and more than five times the average tuition at community colleges, according to a Senate report released last year. The data released today is essentially a snapshot in time: The Department of Education analyzed students whose loans began coming due between October 2007 and September 2008, and tracked those students through last September. Overall, nearly 14 percent of students analyzed at all colleges nationwide went into default within the three years. But the numbers are particularly noteworthy for the for-profit sector, which at 25 percent had the highest default rate of any segment in higher education. Public non-profit schools had about 11 percent of borrowers defaulting in the three-year window, while students at private non-profit schools defaulted at a rate of less than eight percent. Though there is flexibility in repayment plans, federal student loans are among the most difficult debts to discharge. In most cases, the debt persists even after someone declares bankruptcy. Student loan default rates are a key factor in a college’s eligibility for federal student aid dollars. In the case of for-profit colleges, access to higher education grants and loans is essential to the industry’s survival. Many for-profit schools derive upwards of 80 percent of revenue from federal student aid. The three-year rates released by the Department of Education today won’t have a direct impact on student aid eligibility, but the same data in coming years will figure heavily into whether schools could face restricted access to higher education grants and loans. Currently, schools are graded on a two-year timescale for student loan defaults. Schools that have more than 25 percent of borrowers going into default within two years could face sanctions and limitations to federal student aid dollars. But Congress changed the rules in 2008, requiring an additional year of analysis to better gauge students’ ability to repay their loans. There have been concerns in Congress and among student advocates that some for-profit schools actively managed their default rates by placing students into loan deferment plans or other agreements that prevented defaults until the two-year window had passed. Comparing the two-year default data to the three-year default data sheds some light on how much one year can change the statistics. For the for-profit sector, the two-year student loan default rate was 11.6 percent, but by adding one more year of analysis, the default rate ballooned to 25 percent. The shift in defaults from the two-year to the three-year window was much less drastic at non-profit colleges. Public non-profit schools increased from a six percent two-year default rate to a 10.8 percent three-year default rate; private non-profit schools went from a two-year rate of four percent to a three-year rate of 7.6 percent. “You would expect the three-year default rates to be somewhat higher because students have a longer period of time in which to default,” said a Department of Education official who discussed the default data with reporters before it was officially released. “But if the three-year rate seems disproportionately high compared to other sectors, then that may be a sign that institutions in that sector or a particular institution is managing its default rate aggressively.” Schools are still officially transitioning from the two-year window to the three-year window in measuring loan defaults. The first year in which a college could be sanctioned based on the three-year loan data is 2014. Schools must have more than 30 percent of students default on loans within the three-year timeframe, in three consecutive years, to be restricted from federal student aid.

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Obama Urged To Back Regulations On For-Profit Colleges

January 27, 2011

As the Department of Education gets closer to finalizing regulations that would hold for-profit colleges accountable for saddling students with debts they cannot repay, a wide array of civil rights, student advocacy and consumer groups wrote a letter to Obama on Wednesday urging him to immediately move forward with the proposed rule. The letter comes in the midst of an intense lobbying and advertising campaign run by the for-profit education sector, which is waging an assault on the so-called “gainful employment” regulations being considered by the federal government. The rules are proposed as a consumer protection measure, aimed at cracking down on schools that leave students unable to repay student loan debts given the low-wage jobs they tend to secure after graduation. The for-profit sector includes a broad swath of schools, from University of Phoenix and DeVry University to more specialized schools such as Le Cordon Bleu College of Culinary Arts. “Federal financial aid shouldn’t go to career education programs that consistently leave students buried in debt they cannot repay,” reads the letter, signed by 38 groups , including the National Consumer Law Center, the National Association for the Advancement of Colored People and the National Council of La Raza. The stakes for the for-profit colleges are huge: Many of the publicly-traded corporations that own such institutions derive more than 85 percent of their revenues from federal student aid dollars. By not meeting the criteria of the new rules, schools could be banned from tapping into federal student aid or be forced to disclose the high average debt burdens to prospective students. The Coalition for Educational Success, an industry lobbying group, argued on Monday that the proposed rules were “onerous” and contrary to the president’s pledge to a government-wide review of federal regulations. Advertisements put out by the industry in recent months have suggested that the government is trying to prevent low-income students from getting an education. “The ‘gainful employment’ rule will deny over two million students the opportunity to go to college,” declares one recent ad from the Association of Private Sector Colleges and Universities, another major industry lobbying group. The for-profit sector has also argued that the rules will prevent access for minority and low-income students who they say are not well-served by traditional schools. One of the groups signing the letter, the National Council of La Raza, a Latino civil rights organization, disputes the notion that the rules are in any way discriminatory. “We do think that if these rules are approved by the administration, Latinos will have a place to go,” said Raul Gonzalez, the group’s legislative director. “One of the issues we’re working on is just trying to reduce the amount of debt that Latinos have. There is evidence that some folks are leaving with a lot of debt, and without a marketable skill.” Other civil rights organizations, including the National Urban League, have come down on the side of the for-profit industry. Supporters of the rule describe it as a rational and relatively lenient measure, after a Government Accountability Office investigation found that recruiters at some for-profit colleges were deceiving new students and overstating the benefits of their programs. Students enrolled at for-profit colleges make up only 12 percent of college students nationwide, yet the sector takes in nearly a quarter of federal student aid dollars and accounts for 43 percent of student loan defaults, according to a recent analysis from the Education Trust, a student advocacy group. Students at for-profit colleges typically carry an average of $14,000 in debt–almost twice as much as students at non-profit colleges, according to the Department of Education. Specifically, the proposed rules would hold for-profit schools (and some non-profit career schools of two years or less) accountable for two measures of debt: whether students are able to repay their loans on time, and whether students have an excessive burden of debt compared to their income after graduation. There are several scenarios that would allow schools to remain fully eligible, meaning full access to federal student aid and no requirement to disclose student debt burdens. To remain fully eligible for student aid dollars, schools would have to show that at least 35 percent of former students are paying down the principal on their student loans (meaning interest, plus at least $1 per billing cycle) or that student debt is less than 20 percent of a graduate’s discretionary income. In another scenario, a program could remain eligible if at least 45 percent of former students are paying down the principal on student loans, regardless of graduates’ debt-to-income ratio. In order to fully lose out on federal student aid, a program would need to have less than 35 percent of its students paying down student loans, and most graduates would need to be saddled with debt more than 12 percent of their total income and 30 percent of their discretionary income. Schools would not be subject to penalties until the 2012-13 school year. The Department of Education is expected to finalize the regulations within the next few months. An exact date has not been determined.

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U.S. Point Man On Sanctions Leaving At Critical Time

January 24, 2011

The point man for the Obama administration’s financial wars on Iran, North Korea and al Qaeda, Stuart Levey, has decided to leave his senior U.S. Treasury Department post at what is turning out to be a particularly critical time. Mr. Levey’s departure will leave President Barack Obama without the principal architect of Washington’s economic-sanctions campaign against Tehran, just as that campaign is likely to be ramped up following the breakdown of talks among Iran, the U.S. and a bloc of global powers on Saturday.

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Should Foreclosed Borrowers Be Able To Rent Their Old Homes?

January 20, 2011

This post has been updated On Wednesday, the New York Times published an op-ed by the former mayor of Greenport, N.Y., David E. Kapell, with a powerful suggestion for helping struggling homeowners and fixing the mortgage crisis. But according to officials at Treasury and the Department of Housing and Urban Development, the idea won’t be in the works any time soon, if ever. The program proposed by Kapell, also referred to as the “Right to Rent” suggests instead of booting homeowners facing foreclosure out onto the street, they should be allowed to stay in their houses — as renters. The program, proposed by economist Dean Baker, poses the question: If structured bankruptcy was possible for the American automobile industry and those big banks, why not American homeowners? Kapell lays out how it would work: The borrower would lose ownership of his home, but be allowed to remain as a tenant paying fair rent for a reasonable period after foreclosure, with the requirement that he cooperate in the foreclosure. He’d pay fair market rents as published by the federal government, ensuring a clear, national standard. If the borrower couldn’t afford to pay market rent, existing federal rent-subsidy programs could be extended to help tide him over. He concludes with a plea to the administration: “Congress has done a good job of saving big business with structured bankruptcy plans. Now it must to use the same tool to save American homeowners.” At the moment, though, it’s unclear whether or not a “right-to-rent” plan has enough support in Washington. “While we continue to review this concept, we have found several challenges that we believe would limit this type of assistance from making any significant impact in the market,” David Stevens, Federal Housing Administration Commissioner, wrote in an email. “Although we are not currently pursuing this option, the Obama Administration continues to work toward reforming the housing finance system and the mortgage servicing system in a way that puts consumers first and helps keep more Americans in their homes.” The Obama administration’s signature anti-foreclosure effort — HAMP — has been roundly regarded as a failure. As the Huffington Post reported last October: “Far from helping at-risk homeowners, the Home Affordable Modification Program has actually made some homeowners worse off, according to the Special Inspector General for the Troubled Asset Relief Program — also known as the Wall Street bailout. The Treasury Department set aside $50 billion from TARP, plus another $25 billion from taxpayer-owned Fannie Mae and Freddie Mac, to give mortgage servicers thousand-dollar incentives to reduce monthly mortgage payments by modifying eligible homeowners’ loans. But more people have been bounced from the program than have been helped by it.” “Treasury supports alternatives that provide a graceful exit for homeowers who have experienced a hardship and cannot continue to support their mortgage,” U.S. Treasury Department spokeswoman Andrea Risotto wrote in an email, citing programs such as “the Home Affordable Foreclosure Alternatives (HAFA) Program which provides options for homeowners looking for a short sale or deed-in-lieu of foreclosure.” Risotto wouldn’t say what she thought of the “right-to-rent” program in particular, noting only that while the Treasury supports helping struggling homeowners, “we need to stop short of saying we would support this in particular given that we don’t have enough information one way or the other.” A senior administration official listed several key obstacles to right-to-rent: concerns about the landlord role that banks would be required to play, difficult accounting implications, and the payment gap between the mortgage payments and rent imposed through the settlement process. In short, it’s unclear who would take the losses in such a program. The official also mentioned the potential moral hazard involved where borrowers might chose to get out of debt because they know they would be able to stay in their homes. But as Kapell wrote, this last excuse is tired: “Any effort to help homeowners by forgiving some of their loans is said to create a moral hazard, rendering it politically toxic. But without help, homeowners continue to struggle, foreclosures continue to mount and the housing industry continues to drag down the economy.” Correction: a previous version of this post mistated Risotto’s words. She was referring to HASA, the Home Affordable Foreclosure Alternatives Program which provides options for homeowners looking for a short sale or deed-in-lieu of foreclosure, instead of HAMP, the Home Affordable Modification Program which is set up to help eligible home owners with loan modifications on their home mortgage debt

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Top Venture Capitalist To Head Ohio Jobs Panel — For $1 Salary

January 7, 2011

COLUMBUS, Ohio — Gov.-elect John Kasich chose a prominent Silicon Valley venture capitalist Friday to launch his new private economic development effort – and the high-paid executive has agreed to do the job for a dollar. Mark Kvamme, a partner at Sequoia Capital in Menlo Park, Calif., will serve as interim state development director, Kasich said during an event at Ohio State University’s Fisher College of Business. Kasich announced during his successful 2010 campaign against Democratic Gov. Ted Strickland last year that he would create the private, nonprofit JobsOhio board to oversee state economic development efforts. Kasich, a Republican former congressman, Fox News commentator and Lehman Brothers managing director, succeeds Strickland on Monday. The new governor envisions replacing the Ohio Department of Development with a 12-member board that would include executives, industry experts and entrepreneurs appointed by the governor. He has said not all the agency’s more than 400 employees would lose their jobs. Kvamme said about some employees would move to JobsOhio, while others will go to other state agencies. “And some won’t go anywhere,” Kasich added. “The simple fact of the matter is is that if people don’t do their job, they’re not going to be there. And we also at the same time want to have our own team.” Kvamme said Indiana has a similar hybrid model. Kvamme will serve as interim director of the Development Department during the process, probably for about six months. Under the JobsOhio plan, the department would lose its role as lead economic development agency of the state once the new board is in place. In an interview with The Columbus Dispatch, Kasich said he expects Kvamme to land a seat on the board after the transition. “The Silicon Valley is coming to Ohio,” Kasich said Friday. “He will lift our game.” Kvamme and Kasich are longtime friends. The two worked together when Kasich was at Lehman Brothers, but they met in Washington, D.C., the governor-elect said. Kasich said Kvamme’s job will include sorting out tax incentive and job creation programs and determining which are most effective. Some of the department’s current programs, such as weatherization, will be moved to other agencies, Kasich said. Kvamme acknowledged at the news conference that he knows very little about public policy, but said he looks forward to learning that aspect of the job quickly. Details of the transition to the JobsOhio model will need to be approved by the Republican-led Legislature. Kvamme joined Sequoia Capital in 1999, according to the Board of Directors biographies on social-networking site LinkedIn. He was chairman of USWeb/CKS and chairman and CEO of CKS Group before the merger with USWeb. Earlier in his career, he served as a director of international marketing for Wyse Technology and as president and CEO of International Solutions. He was also a founding member of Apple France. Kvamme has a bachelor’s degree in French economics and literature from the University of California at Berkeley.

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David Isenberg: Outsourcing War and Peace: Part 1

January 7, 2011

It’s a new year so it’s time for a new book on private military contractors. Out later this month is Outsourcing War and Peace: Preserving Public Values in a World of Privatized Foreign Affairs by Laura A. Dickinson. She is a law professor at Arizona State University. I’m in the process of writing a review and don’t want to give anything away but there is a lot of useful information here. So with the permission of her publisher, Yale University Press, I am going to post three excerpts from the book. Here is the first part. Privatization of Defense Department Operations It was not until the presidency of Bill Clinton that privatization began to penetrate deeply into the corridors of the Pentagon and other foreign policy agencies. Through the reinventing government program of Vice President Al Gore, the Clinton administration accelerated the privatization pace across all governmental sectors. But what is significant for our purposes is that in this period the foreign policy sector was also part of the privatization trend. At the DOD, Secretary William Cohen was a key figure. Caught between escalating price tags for weapons systems and political pressure to cut costs in the post-Cold War era without weakening the military’s capabilities, Secretary Cohen turned to the private sector for advice. During the summer of 1997 he assembled a committee that included leading executives from private industry to offer their wisdom about the road ahead. Cohen then proceeded to pursue a reform path that aimed to modernize defense by embracing the rhetoric, practices, and methodologies of American businesses.39 This embrace is perhaps most apparent in his Defense Reform Initiative, which he launched in the fall of 1997 as an effort to “aggressively apply to the Department those business practices that American industry has successfully used to become leaner and more flexible in order to remain competitive.” The four pillars of the initiative included the following practices: “(1) reengineer by adopting the best private sector business practices in defense support activities; (2) consolidate organizations to remove redundancy and move program management out of corporate headquarters and back to the field; (3) compete many more functions now being performed in-house, which will improve quality, cut costs, and make the Department more responsive; and (4) eliminate excess infrastructure.” To further these goals, Secretary Cohen proposed reductions of 33 percent in the number of employees in the Office of the Secretary of Defense, 29 percent in the Joint Staff, 10 percent in military headquarters, 21 percent in defense agencies, and 36 percent in departmental field activities. He also sought to make at least thirty thousand DOD positions subject to competition with the private sector each year for five years, outsourcing those that the private sector could perform better–dwarfing any previous outsourcing efforts. Thus, he sought to implement the troika of practices that had become the buzzwords of American industry in the 1980s and 1990s: downsize, compete, and outsource. While Secretary Cohen cut many civilian employees, Pentagon officials downsized troops and closed military bases, replacing uniformed soldiers with contractors for certain support roles. In the words of one senior DOD official, “The peace dividend requirement forced us to downsize. We had to reduce Army divisions from 18 to 10. But we didn’t cut all types of troops proportionally. We didn’t want to take the risk on the combat side. We took the risk on the support side. In 1991 we had 56 combat brigades. We cut the number down to 46. But if we had taken I down proportionally, we would have taken it down to 36.” Thus, the Pentagon increasingly came to rely on contractors to supply food, build bases, deliver latrines, and perform other support roles. Yet, at the same time, DOD cut its acquisitions staff by 38 percent. As a senior DOD official later noted, “Where we screwed up was not to cut the guys who buy the tanks and the big equipment; instead, we cut the guys who do nuts, bolts, supplies and so on–these were the guys who we were going to need as we turned more and more to service contractors. Thus, at the very moment that the military was turning increasingly to contractors to provide support services to troops, the Pentagon, under pressure from Congress, cut back severely on the acquisitions workforce that would become increasingly necessary to manage those contractors. Yet such cuts were politically much easier to make because, as Steven Schooner has argued, there is no natural political constituency for the acquisitions workforce.

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Robert Gibbs: Larry Summers Replacement Could Come Mid-January

December 26, 2010

WASHINGTON — Don’t look for any big changes in President Barack Obama’s Cabinet as the new year gets under way. The president’s press secretary, Robert Gibbs, tells CNN’s “State of the Union” that he doesn’t expect any major shuffling to take place in the Cabinet. Gibbs says that there’s much work yet to be done at the Treasury Department to implement financial reform and at the Health and Human Services Department to implement health care reform. He calls the president’s team “very talented.” Obama’s top economic adviser, Lawrence Summers, had been expected to depart the administration last fall. Gibbs says he thinks Obama will name Summers’ replacement a week or two after the new Congress convenes. CNN’s interview with Gibbs aired Sunday.

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Inktel Direct Hires Jennifer Novik as New Director of Human Capital

December 21, 2010

Human Resources Veteran to Lead Inktel’s Award-Winning Human Capital Department

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David Isenberg: Will the Real Hillary Clinton Please Step Forward?

December 18, 2010

It appears that the old Hillary Clinton, the one who ran for president of the United States has managed to travel forward in time and merge with the current Hillary Clinton, the one who is Secretary of State. For those who don’t remember, the old Clinton vowed to ban the use of private security contractors. As perennial PMC critic Jeremy Scahill of The Nation reported back in July, “”These private security contractors have been reckless and have compromised our mission in Iraq,” Clinton said in February 2008. “The time to show these contractors the door is long past due.” Clinton was one of only two senators to sponsor legislation to ban these companies. Scahill was upset that Clinton had since moderated her views and that she was “presiding over what is shaping up to be a radical expansion of a private, US-funded paramilitary force that will operate in Iraq for the foreseeable future–the very type of force Clinton once claimed she opposed.” But on Wednesday the State Department and the US Agency for International Development (AID) unveiled the much-awaited Quadrennial Diplomacy and Development Review entitled ” Leading Through Civilian Power .” The report seeks to put some distance between State and the private sector. • Fundamentally change our management approach by turning to the expertise of other federal agencies where appropriate –before engaging private contractors. This will help all federal agencies build lasting relationships with foreign counterparts and reduce our reliance on contractors. (p. vi ) As obligations in the frontline states expanded and overall staffing levels stagnated, the State Department and USAID increasingly came to rely on outside contractors to supplement their ranks. While grants and contracts do have certain benefits, we need to restore government capacity and expertise in mission critical areas. We will: • Create a more balanced workforce to ensure we have the appropriate mix of direct-hire personnel and contractors, so the U.S. government has the capacity to set priorities, make policy decisions, and properly oversee grants and contracts. • Leverage the experience and expertise of other agencies with the skills to advance U.S. objectives, before turning to outside contractors. • Ensure that our approach to procurement advances America’s development objectives and saves money by fostering more competition for our contracts and using host-country businesses and NGOs where possible. ( p. xvii) More specifically, State will enter into interagency agreements, consistent with existing law, to draw on the skills, expertise and personnel of other federal agencies before turning to private contractors where State determines that building in-house government capability or promoting bilateral working relationships furthers our foreign policy priorities. ( p. 33) In particular, given the national security implications of security sector assistance, State will look first to the Department of Justice, the Department of Defense, and the Department of Homeland Security to implement State programs involving counterterrorism capacity building, foreign law enforcement, or strengthening justice and interior ministries. State and USAID will similarly look to the Department of Health and Human Services to build on existing long-term relationships with ministries of health in partner countries. State will use private contractors for non-governmental functions when other agencies lack appropriate skills or are otherwise unwilling or unable to provide the services needed in an effective manner. In the long-term, partnering with and building on the assets of other agencies will offer net policy gains to the U.S. government and reduce overall program implementation costs. This is a significant departure from current practice, one that we believe will save money, improve the U.S. government’s ability to advance American interests, and strengthen State’s engagement across the interagency. (p. 34) While those recommendations are for State they also apply to AID. USAID must expand its human resource talent to include more experts in evaluation, planning, resource management, and research. And it must rebalance its workforce to build internal capacity, reduce its dependency on contractors, improve oversight and accountability, and expand engagement with other development stakeholders. (p. 108) And although there is more, let me finish with this quote; particularly relevant, given the perennial contractor claims of cost-effectiveness over their public sector counterparts: In-source positions more appropriately performed by direct-hire personnel. Creating a more balanced workforce at State and USAID is necessary to ensure that both agencies are supported, not supplanted by contractors. To this end, State will build on the results of its Office of Management and Budget pilot projects, which developed a framework that will be replicated in other bureaus within the Department. The framework identifies which functions are inherently governmental, critical, or essential to the mission of each organization. In our pilots conducted within two select offices from one regional and one functional bureau, we identified nearly a quarter of the contractor workforce performing work that was closely associated with inherently governmental or mission-critical functions. We also found that another 10 percent should be in-sourced for cost efficiencies. The average estimated cost savings in these pilots was $33,000 per position.

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Stocks Are Surging Since Announcement Of Fed’s Plan

December 17, 2010

Is the Fed’s latest gamble working? The stock market’s 17% rise since Federal Reserve chairman Ben Bernanke announced his plans for a second round of quantitative easing in late August has sparked further speculation that the economy may be on its way to recovery. Bernanke’s push to reinvigorate the economy through a massive, $600 billion series of government debt purchases has been met with mixed responses. Though the move (dubbed QE2, for quantitative easing) is meant to boost employment and lower interest rates, others fear the possibility that it will instead fuel inflation. As its doubled its pre-crisis balance sheet to more than $2.3 trillion , the Fed’s low interest rates and debt-buying programs have done much to enrich corporate coffers. But the program’s effect on the larger economy is less clear. Still, the stock market has surged. This week, the S&P rose to its highest level since September 2008, hitting 1,242.87, which has prompted optimism in some analysts. “The market has positive momentum and it really has been a momentum story since late August,” said Katie Stockton, the chief market technician at MKM Partners , an institutional equity research, sales and trading firm. Stockton noted that her estimate for the S&P’s next high was 1315, if momentum continued. However, the rise in interest rates since QE2 was unveiled has others less convinced. It’s not clear, for one, whether or not the stock market’s rise is due to merely to sentiment — or an economy that’s actually on the mend. “It provides some support to growth,” said Dean Baker, the co-director of the Center for Economic and Policy Research , of quantitative easing. “The recent runup has been slightly more positive news.” But Baker did not take the recent stock market climb to be a major positive indicator for the economy. “There’s always a fair degree of indeterminacy of where the market should be,” he said. “The market is relatively low level in the scheme of things.” Holiday spending, however, is up, a sign that consumers may be ready to spend again. A spokesperson for the National Retail Federation predicted that there will be a 3.3% growth in retail sector this November and December. Further, a survey of leading economic indicators by the Conference Board , a private industry group, rose by 1.1 percent, its highest rate in eight months. “The U.S. economy is showing some sparks of life in late 2010,” said Ken Goldstein, an economist at The Conference Board. Yet despite positive trends in the stock market and spending, unemployment numbers remain high. The nationwide unemployment rate rose to 9.8 percent from 9.6 percent in November, according to the Department of Labor .

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U.S. Identifies Best Places For Solar Projects

December 16, 2010

LOS ANGELES — A draft plan identifying prime areas for solar energy projects on public lands in the Southwest was released Thursday by the Interior Department in an effort to speed up development. The draft identifies 24 so-called solar energy zones in California, Nevada, Colorado, Utah, New Mexico and Arizona that have the highest potential for solar development with the fewest environmental impacts. The plan announced during a conference call in Washington, D.C., also proposes to open an additional 21 million acres of land to potential solar development. “The steps taken today help ensure that the United States will lead the world in energy technologies critical for meeting our energy goals and for sustaining economic growth,” said Henry Kelly, principal deputy assistant secretary for energy efficiency and renewable energy with the Department of Energy. Federal officials said there will be a 90-day public comment period and a series of public meetings in the Southwest, as well as Washington. The final report, which aims to reduce conflicts and delays later in the process, will be released in 2011, according to Interior Secretary Ken Salazar. The solar industry welcomed the draft report, which had been in the works since 2008. “This announcement builds on the solar industry’s momentum over the past year surpassing all of last year’s growth through the third quarter, as well as the approval of the first eight utility-scale solar projects on public lands,” said Rhone Resch, the head of the Solar Energy Industries Association. “To put this in perspective, 74,000 permits were issued for oil and gas drilling on public lands over the past twenty years.” Congress in 2005 gave the Interior Department a goal to approve 10,000 megawatts, or about 5 million homes’ worth during peak hours, of renewable energy on public lands by 2015. Although the Bureau of Land Management opened federally owned lands in 2005 to solar development, an examination of records and interviews of officials by The Associated Press showed the program operated a first-come, first-served leasing system that quickly overwhelmed its small staff. The system also enabled companies, regardless of solar industry experience, to squat on land without any real plans to develop it. Increasing the approval of solar projects has been a key goal for the Obama administration. The Interior Department identified 14 of the most promising solar projects on federally owned land on a list to be fast-tracked. Federal officials predict that solar projects could one day contribute up to 24,000 megawatts of electricity – enough to keep 16 million homes powered at peak use. Conservationists poring over the draft report’s estimated 10,000 pages said they are pleased the federal government is finally outlining a program to more quickly approve good solar projects. The Department of Energy on Thursday also announced efforts to fund up to $50 million to test and demonstrate cutting-edge solar technologies. Many environmentalists, like Alex Daue, renewable energy coordinator at The Wilderness Society, however, said they are concerned about the proposal to open additional acreage beyond the vetted zones. “The opportunity here is to speed responsible development and limit impact,” he said. “Why not focus on areas with the best chance of success and the least environmental impact?”

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Angela Haines: The Next Best Thing

December 14, 2010

Early dreams for a new business took root during the agonizing ten months Army Captain Dawn Halfaker spent recovering from over 20 operations she endured when she was severely injured in Iraq. She had spent five months in Baquba, in the volatile province of Diyalah as a Platoon Leader, charged with training an Iraqi police force. Shortly after midnight in June, 2004, Dawn rolled out in a convoy of 4 humvees on a reconnaissance patrol when her vehicle was hit by a barrage of small arms fire and rocket-propelled grenades. One grenade pierced the engine of Dawn’s vehicle before it burst immediately next to her, leaving her right arm hanging by a piece of skin and a few tendons. Dazed and covered with blood, Dawn still managed to order the driver to flee before lapsing into a coma that lasted twelve days. She awoke as a patient in Walter Reed Army Medical Center in terrible shape: besides burns and lacerations, Dawn suffered 5 broken ribs, a shattered shoulder blade and a deadly infection that almost took her life, and eventually led to the amputation of her right arm. For her heroism, she was awarded a Purple Heart and a Bronze Star. During her recovery, as Dawn began to realize the military career she had desperately wanted since the first day she entered the United States Military Academy at West Point was over, she worried about “losing a sense of purpose.”: I really loved what I was doing. To me the military was a dream job with so much of my life and my identity wrapped up in it. So I was fiercely determined to stay connected to the fellow soldiers I had left behind on the battlefield. Like a good soldier, she switched into survival mode and began to plan the outlines of a consulting business to help the military to seek out new technologies that could save lives or at least lessen injuries, a career path she calls “the next best thing.” After working out of her basement for a year, Dawn landed a contract with the Department of Defense, specifically the Defense Advanced Projects Research Agency, where she led projects researching various technologies ranging from nanotechnology that could make lighter weight body armor to advanced medical devices, such as creating miniature ventilators for use directly in the battlefield to help prevent brain damage from serious injuries. When she began to see the growth potential for her consulting business, Dawn headed back to school to acquire an M.A. in Security Studies from Georgetown University. Her company, Halfaker and Associates, was officially launched in 2006. Located in Arlington, Va, the company provides help with security policy, physical security management services for military bases, administrative and technical support and training. Currently Halfaker and Associates has over 120 employees. For 2010, it expects to post revenues of more than $15 million from services provided to over 20 major clients, mostly governmental agencies. Her biggest client remains the Department of Defense for which her team is currently analyzing how the intelligence data gathered from a variety of sources affects the army and its decision makers as they develop policies and strategies. Another major client is the Department of Homeland Security for which the Halfaker and Associates team offers solutions in the areas of force protection, antiterrorism, emergency management and chemical, biological, radiological, nuclear, and high yield explosive (CBRN) defense. Soon after Dawn launched her business, the economy began to slide. One consequence was that “we got a whole new slew of competitors who began to chase lucrative government contracts for the first time since their former clients were slashing budgets because of the recession.” Her solution was “to continue to seek out exceptional talent so we can offer our clients the best services possible.” As part of her plans for long term growth, 31-year old Dawn Halfaker plans to adopt her company services to the needs of commercial clients for whom she sees rising demand in all areas of security; she also offers in depth capabilities in information technology solutions to help clients with a variety of business problems from website designs to software integration to data management. Currently she spends most of her time on strategic planning and maintaining essential relationships by planning quarterly visits to the sites of her twenty most active programs. She also attends industry events because “you can’t get new business if you don’t put yourself out there.” Recently, Dawn was selected as one of the winners in the 2010 Winning Women program, sponsored by Ernst and Young . Her reward was participation in a 5-day strategic growth forum that brought together 1700 business leaders in Palm Spring in early November. The experience, she said, “made me realized I was pigeon-holed; the blinders were removed as I began to see that there are opportunities everywhere. I developed a much better understanding of how to access the resources I need; it also gave me the ability to understand how to navigate the obstacles we face as I look at my strategic plan for growth.” She also loved the networking with the other winning women which “became the kind of sorority I never had at West Point.” Since the growth forum coincided with Veteran’s Day, Dawn was unexpectedly invited to the stage by the forum leaders to share her combat story. The audience responded with a standing ovation in honor of her courage and determination to accomplish her “next best thing”: running a successful company.

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David Isenberg: PMC to Pentagon, Just Trust Us

December 13, 2010

It’s time for another check on private military contractor accountability. And I’m not talking about a critique from some liberal watchdog group or think tank. Rather, let’s look at the most recent semiannual report from the Department of Defense Inspector General . It covers the period from April 1 to September 30, 2010. We might recall that if anybody wants private military contractors to be a success it is the Pentagon. After all, it formally acknowledges PMC to be an integral part of the Total Force, along with active duty military, reservists and National Guardsman, and federal civilians. So, with that in mind, it is clear that even the Pentagon doesn’t think things are rosy. In the very beginning the IG report notes: Our efforts save billions of dollars, but more importantly, our efforts save lives. Examples of identified savings for the Department include: • Returning $303 million to the government as a result of criminal and civil judgments relating to investigations. … • Reporting on electrical safety issues in Afghanistan, which identified potential dangers to our warfighters. Now, given the enormity of the American military empire and its near total reliance on contractors to provide everything from toilet paper to nuclear weapons one would inevitably expect more than a little fraud waste and abuse, even in the best run system. And whatever else one might call the U.S. Department of Defense “best run” is not the phrase that will ever be among your top ten list. Still, according to the report there are more than a little contracting shenanigans. And the Pentagon still has a workforce that is not up to the job. The executive summary states “The DoD acquisition and contracting community is tasked daily to manage an increasing Defense budget while relying on a less experienced and inadequately trained workforce that has not kept pace. While DoD has made progress to increase the acquisition workforce, we continue to identify deficiencies in contract administration and oversight.” And what are some of those deficiencies? The Air Force Center for Engineering and the Environment had no assurance that the contractors were working efficiently and effectively and AFCEE paid for $24.3 million in labor costs that were not part of contracts reviewed by DoD IG. AFCEE contracting and program officials did not perform adequate contract oversight for work performed on the six task orders we reviewed valued at $120.8 million. Officials did not adequately monitor the title II (quality assurance and oversight services) contractors working in Southwest Asia and did not adequately review invoices because the title II contracting officer’s representatives did not conduct site visits to Southwest Asia and, according to the contracting officer, there were not enough personnel to review invoices. Army contracting and DoD program officials did not properly award and administer the 18 time and material contracts and task orders for work performed in Southwest Asia. Contracting and program officials awarded contracts and task orders with invalid sole-source justifications or unfair competition, did not negotiate reasonable prices, and did not justify their use of the T&M contract type. These conditions occurred because contracting and program officials ignored acquisition regulations. In addition, contracting and program officials did not perform adequate contractor surveillance for the 18 contracts and task orders because of inadequate organization and planning by the Army officials responsible for contractor oversight. DoD IG identified potential monetary benefits for the government of $3.6 million. Okay, I know what you are thinking. $3.6 million is chump change; who cares? Let’s look just at SW Asia, meaning Iraq and Afghanistan. As of September 30 the DoD IG was operating at its highest level having more than 50 personnel deployed in Iraq, Afghanistan, Kuwait, and Qatar on six to 12-month rotations. In addition, there are also teams of auditors, agents, inspectors, and engineers constantly entering and exiting the region on temporary duty assignments. The DoD IG currently has approximately 30 auditors and evaluators and 20 special agents deployed to Southwest Asia in support of Overseas Contingency Operations audit, investigative, and inspection efforts. During this reporting period, DoD IG issued 29 audit reports relating to challenges identified in Overseas Contingency Operations including identifying $100.7 million of either potential monetary benefits or questioned use of taxpayer funds. DoD IG identified weaknesses in contracting administration and oversight as well as improvements required in financial management supporting overseas contingency operations. And then there was this priceless gem. “In addition, we found the DoD relied on the contractor to monitor themselves for over $815 million in support to the MRAP program.” Let’s call it the Joe Isuzu approach to contracting, as in contractors saying just trust us. Considering MRAPs are Mine Resistant Ambush Protected armored fighting vehicles designed for the U.S. Army and United States Marine Corps with of goal of surviving IED attacks and ambushes one would hope that, if only to avoid needless deaths of American servicemen, the government might not want to operate on the honor system. But wait, I can hear people say that I’m just focusing on the past. Aren’t things better now? You be the judge. As of September 30, 2010, DCIS [Defense Criminal Investigative Service] had a total of 241 open investigations related to Overseas Contingency Operations. Sixty-eight percent of those investigations are related to bribery and financial crimes. Eleven percent of the investigations are related to theft, eight percent are kickback investigations, and seven percent are product substitution investigations. The above is just the barest smattering from the report. As it is 124 pages long there is a lot more. Take a peek and see how private military contractors are helping to keep, in a purported cost-effective fashion, U.S. military forces the ” best supported, supplied military in any military operation in history “; at least according to some PMC advocates.

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Jennifer Openshaw: Don’t Let the Student Loan Crisis Kill Families

November 23, 2010

Everyone’s been talking about the mortgage crisis that continues to wreak havoc on families. But have you focused on the next looming crisis? I’m talking about student loans. Executives of America’s largest for-profit colleges recently convened in our nation’s capital to address the issue, and our own students are telling me how their friends still can’t get a job. They’re staying at home as a result, but the bigger issue is paying the college loan bill. As students take on more debt — $14,000 on average for those earning just associate degrees at the for-profits — the default rates are growing. Some $275 billion in loans made to students at for-profit colleges will default over the next 10 years. In fact, these for-profit universities represent 10% of all university students, yet they account for 43% of all student-loan defaults, according to the Department of Education. So, the question is, how can we prevent the high default rate from leading to a repeat of the mortgage crisis and further wreaking havoc on America’s families? Job creation: our duty We have a duty to help families make the right college decision, starting in high school. If a student wants to become, say, a doctor or a dancer, do they have the financial wherewithal to carry the debt to get there? What will salaries be when they graduate? What are their chances of achieving that salary? And, will they be earning enough to live and finance the debt? What about the “what if’s” — the ambiguities of career, cost of living, and life in general? It’s like health insurance: if you’re not directly or immediately paying for the doctor, you’re not sensitive to the costs. In fact, you don’t even question the charges because insurance will cover them. Similarly, even as college costs skyrocket, many young students and families don’t even think about it. Worry about it later, when the bill comes due. But thinking about it now is an exercise that every teen and family should go through as they embark on the expensive proposition of a college education. It’s an exercise, however, that many parents are simply not equipped to do on their own. Ideally, this should be a job conducted with the help of a guidance counselor. But the problem there is another huge shortfall. Schools typically have just one guidance counselor per 1,000 students, according to Public Agenda, and already only spend about 38 minutes on average directing their future. Rethinking loan standards Second, just as lenders have been motivated to modify mortgages and re-think lending standards, so too must we re-think our student loan policies. The truth today, as Steve Eisman, hedge-fund manager and star of Michael Lewis’ The Big Short , put it: “If you can breathe, you can get a loan.” One might argue that tighter lending standards should be in place, an easy solution and one now embraced by mortgage lenders. Problem is, the pendulum has swung so far the other way that even creditworthy families, my own included, have found it next to impossible to take advantage of lower interest rates, which would put them on a better financial footing long-term. It’s an increasingly common paradox: the banks are so concerned about your ability to pay that you can’t even refinance a loan to make yourself more able to pay. We need to have the right lending standards and payment incentives. For instance, I remember taking out a loan as I was financing my own way through college. What I discovered after moving in with relatives and buying a used car was that I no longer needed some of the loan money for which I qualified. I opted to skip the additional debt in favor of financial freedom, but not so many others would. Years later, in fact, I saw my peers in business school using their college-loan money to engage in online stock trading. As Rishma Naqvi in the student-loan office at the University of California at Los Angeles told me, a student can use “any remaining loan funds left (after tuition is paid) as they please, for whatever expenses — rent, food, books. There’s no way to monitor that.” Incentives for faster loan payback and new restrictions on the use of funds should be considered. Couldn’t that be good for the borrowers, federal coffers, and lenders? Regardless, let’s not forget that, unlike mortgages, America’s investment in education yields a far greater return: not just from income and sales taxes and other contributions, but by helping America become more competitive globally. Finally, it’s in our best interests to work with borrowers, not against them. During a television interview with Fox’s Neil Cavuto in 2008, I called for lenders to modify existing loans, well before it was in vogue. The banks were being penny-wise and pound-foolish, I argued. The same is true of student loans. While loan forgiveness and forbearance programs may help relieve some of the financial burden temporarily, a review of these policies in light of the job market would make sense. It’s important that borrowers understand their responsibility to repay. But it’s also up to us to make repayment possible — both through job creation and an affordable education. In the end, we as taxpayers win in two ways: funding for future loans and continued self-esteem among borrowers as they search for jobs. The financial crisis was an opportunity to re-examine and modify lending practices. But we’re still learning from it. As leaders in education convene to wrestle with student default rates and their own reputations, we need to be sure policy leaders embrace the topic — not only to prevent bailouts by the government, but to arm students and families with the right skills and education to compete in today’s global economy. Jennifer Openshaw is an adjunct professor in personal finance at New York University, chief executive of Family Financial Network and founder of SuperFutures , which helps teens build the skills to succeed in a new economy. You can reach her on Twitter @superfutures or on Facebook

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WATCH: Treasury Admits It Hasn’t Fined Banks For Failing To Modify Mortgages

November 18, 2010

A top Treasury department official said Thursday that the government has still not imposed any fines on banks that do not comply with the Obama administration’s mortgage modification program. In testimony before a House Financial Services subcommittee, Phyllis Caldwell, chief of Treasury’s Homeownership Preservation Office, said her department has pursued “non-monetary remedies” but has not actually imposed any fines on banks for not complying with the administration’s flagship $50 billion foreclosure prevention program. Even in the midst of a growing controversy over allegedly fraudulent foreclosure paperwork, Treasury has not imposed any penalties on banks. By many estimates, the Home Affordable Modification Program, which was launched last year, has been a failure. Although about 1.5 million borrowers were encouraged to sign up during its first year, 40 percent of those were kicked out of the program after initiating “trial” modifications, HuffPost’s Shahien Nasiripour and Arthur Delaney reported. The program was intended to help up to 4 million homeowners avoid foreclosure. In his latest report to Congress, the special inspector general for TARP Neil Barofsky said the mortgage-modification program can actually cause borrowers to go into foreclosure, due to extra fees that can accumulate on modified loans. The Government Accountability Office reported in March and in June not only that Treasury has not levied any fines on mortgage companies, but also that it hasn’t even finalized guidelines for doing so. After bank officials admitted that they had employed people who approved foreclosure documents without reading them, big banks including JPMorgan Chase and Bank of America last month temporarily halted their foreclosures. A Federal task force is investigating whether there has been criminal activity in the mortgage industry, and Bank of America faces a Federal racketeering lawsuit over its allegedly shoddy paperwork. Still, Treasury has not yet punished these banks in any significant way. “To date we have not gone back to take back incentives that have already been paid, but we have pursued many of the non-monetary remedies, including further actions and evaluations, and re-evaluations,” Caldwell told Rep. Maxine Waters (D-Calif.), chair of the subcommittee on Housing and Community Opportunity, after Waters repeatedly asked her if she had “levied any penalties or sanctions.” Caldwell emphasized that her department has required mortgage servicers, the companies that collect mortgage payments, to alter the way they carry out the HAMP process. But Waters was not impressed. “You’ve required them to do some things. You’ve asked them to change some of their procedures, et cetera,” Waters said. “There have been no monetary penalties, from what I’m hearing from you.” Lawmakers criticized the mortgage-modification program throughout the hearing, with none of them coming to Treasury’s defense. WATCH below:

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Lloyd Chapman: Pentagon to Review 21 Year Old Test Program

November 17, 2010

After it was recently announced that several members of Congress requested that the Government Accountability Office (GAO) investigate the Pentagon’s Comprehensive Subcontracting Plan Test Program (CSPTP), the Department of Defense (DoD) stated that it would be conducting its own evaluation and study of the program, which should be concluded within approximately a year. To date, this 21 year old “test program” has never been evaluated by the Pentagon to determine if the program is working or meeting any of its intended goals. The original, and continually stated, purpose of the program is to increase subcontracting opportunities available to small businesses under federal contracts awarded to 14 large prime contractors. In reality, the CSPTP has dramatically reduced the amount of subcontracting opportunities available to small businesses while at the same time eradicating accountability and oversight measures. This has been achieved by abolishing specific subcontracting reports prime contractors must normally submit, regarding the volume of subcontracting dollars awarded to small businesses. The CSPTP has also been harmful by eliminating penalties for non-compliance with mandated small business subcontracting goals. The GAO may launch an investigation into the program in the near future. The American Small Business League (ASBL) believes that the GAO will find that over the last 21 years, the nation’s largest prime defense contractors have been allowed to circumvent federal law that requires a minimum of 23 percent of all federal contracting and subcontracting dollars be spent with small businesses. The ASBL believes the real purpose of the CSPTP is to allow large contractors to avoid paying liquidated damages for non-compliance with their small business subcontracting goals, as required under subpart 11.5 of the Federal Acquisition Regulation (FAR) . In order to help place the CSPTP, and the money involved into context, defense spending alone accounts for approximately 70 percent of the federal government’s entire acquisition budget, as it is officially reported, which does not include funding for “black” projects and intelligence operations. For fiscal year (FY) 2009, DoD spent over $311 billion, officially, contracting out for goods and services. Out of that $311 billion, the 14 large defense contractors that participate in the CSPTP received over $55 billion in contracts from DoD. This means that one of every six dollars spent by DoD during FY 2009 was spent with one of the participants of in the CSPTP. I find it laughable that this program has been in place for 21 years, and now the Pentagon has finally decided to evaluate this “test program,” only after it was announced that Congress has requested the GAO to conduct an independent evaluation of the program. The program is up for renewal for another 4 years in the National Defense Authorization Act for Fiscal Year 2011 currently in the Senate. If it is renewed, the program will have been in place for a quarter-century without ever being evaluated. The ASBL estimates that over the life of the CSPTP, small businesses have been cheated out of more than $1 trillion dollars in missed subcontracting opportunities as a direct result of the program. The ASBL is also preparing to file an injunction against the Pentagon to force a halt to the continuation of the program.

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Michael Kanellos: An Irritating Trend: Green Ingrates

November 16, 2010

There are essentially two approaches to government stimulus programs. One, you can refuse to participate in these programs on the grounds that subsidies distort the market and lead ultimately to economic inefficiency. Two, you can take the money with the realization that it pushes you into a murky realm where free market fundamentals, regulation and social policy intermingle. But there’s certainly one thing you can’t do. You can’t ask and/or obtain stimulus funds AND complain that these programs are futile, expensive and doomed. Unfortunately, it doesn’t stop people from trying. T.J. Rodgers, the CEO of Cypress Semiconductor, helped revive the solar in the U.S. by investing in SunPower . He was also an early investor in Bloom Energy, a fuel cell developer. Both companies rely heavily on subsides. Nonetheless, Rodgers–a committed libertarian–regularly complains about government regulation, R&D funding and subsides. He wore tri-cornered hats to public rallies years before it became a fashion statement. He only gets away with it because 1) he’s actually a lot of fun and 2) recognizes how subsidies can play a role in jumpstarting an industry. Others are not so jolly. Mark Mills, a founding partner of Digital Power Capital and a former adviser to Reagan, is the latest example. Last week in Forbes , Mills penned an article titled ” Clean Energy Driven Job Growth is a Return to the Stone Age ” that argues that green jobs largely represent a step backward in America’s economic development. The problem is that these jobs are centered around construction, not breakthrough industries like manufacturing was in the 1920s or computing in the 1980s, Mills argues. A significant part of his ire is directed at Brightsource Energy, which is building a 370 megawatt solar thermal plant in the Mojave in part through federal loans. “Why in the world would anyone want the energy sector, in whatever form it might take, to be the engine of American employment recovery? Sure, at one time in history (and today in subsistence cultures) nearly 100% of employment was anchored in fuel jobs: food for humans and their animals, and fuel for heat and cooking. That, thankfully, isn’t the case anymore,” he wrote. “There are few seers who can see the next epicenter. I doubt it’s in the Mojave Desert.” Fair enough, but here’s the quandary: Mills’ firm invested in a company called Infinia that wants to build solar power plants. In fact, Infinia has received over $12 million in grants from the Department of Energy. Senator Maria Cantwell visited in late 2008 to extol how federal tax credits allowed the company to expand manufacturing space and create green manufacturing jobs. There are differences between Brightsource and Infinia. Brightsource’s underlying technology shows more commercial promise according to some analysts, which partly explains why it has obtained more money from investors and the government. Infinia also isn’t one of those wacky outfits trying to build an epicenter in California’s Mojave. It wants to erect plants in Arizona. But Mills doesn’t stop there. Another one of his companies is International Battery , which hopes to make large-format lithium ion batteries to help balance the output from solar and wind farms. In 2009, it tried, but failed, to obtain a multimillion dollar grant from the Department of Energy to expand manufacturing. “We weren’t the only ones having the thought that the government was interested in filling the funding gap – it may be that they’ll still do it,” said chairman Mark Mills in 2009 .”The DOE has to address whether or not they are concerned that emerging technologies will mature…We hope that the DOE decides that there may be follow-on to help entrepreneurs.” In Forbes, Mills wrote “But for matters of national policy and understanding where America is and must go for economic growth and employment? Please, don’t put us back on the (wind, or solar) farm.” Like Rodgers, Mills is actually an intriguing character in person. He once explained to me how advances in computing have been a boon to energy efficiency. If Google had to make do with vacuum tube computers, a single data center would soak up as much power as Manhattan , he told me. He also is putting money into ventures that could one day become self-sustaining, game-changing names in biofuels and green electronics. But if you’re going to ask for taxpayer handouts, we’d all appreciate a little more gratitude.

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Lloyd Chapman: Commerce Department & SBA Merger Could Cost Small Business Billions

November 16, 2010

On November 10, the Obama Administration’s National Commission on Fiscal Responsibility and Reform shocked the small business community with the preliminary recommendation that the Small Business Administration (SBA) be absorbed by the U.S. Department of Commerce. The recommendation came as part of a plan that would cut federal spending by $200 billion through 2015. The Small Business Administration (SBA) is the only federal agency to assist America’s chief job creators, its 27 million small businesses. According to the U.S. Census Bureau , small businesses are responsible for more than 90 percent of all net new jobs, 50.2 percent of the non-farm private sector workforce, 50 percent of the gross domestic product (GDP) and 90 percent of exports and innovations. As early as November 2008, American Small Business League (ASBL) President Lloyd Chapman predicted that the Obama Administration would attempt to close the SBA by merging it with the Commerce Department . “Based upon the extremely low priority that Obama has placed upon small business issues, it would not surprise me if he tried to completely close the Small Business Administration by combining it with the United States Department of Commerce,” Chapman stated. According to the commission chairs, combining the SBA with the Commerce Department, and shaving its combined budget by 10 percent would save a paltry $1 billion by 2015. However, the ASBL maintains that any savings resulting from a merger would be minuscule and fiscally insignificant in comparison to the staggering damage it would do to the middle class. The savings are especially insignificant when compared to $23 billion in Iraq contracts reported as, “Lost, Stolen, or unaccounted for,” by the BBC in 2008 . Trying to save money by combining the SBA with the U.S. Department of Commerce is laughable. Not only would combining the SBA with the Department of Commerce save a minuscule amount of money, but it would also do irreparable damage to the nation’s middle class economy. I have been predicting that the Obama Administration would try to do this for a long time. This is not a move to save money. This is a move to try to allow large corporations to keep billions in federal small business contracts. Here we are in the worst economic downturn in 80 years. We should be doing everything we can to help small businesses, not destroy the one federal agency designed to help them.

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Florida Mom Faces Charges After Allegedly Selling Baby To Buy Car

November 9, 2010

(By Jane Sutton and Cynthia Otserman)-A Florida woman was charged with trying to sell her infant son in order to pay for a new car, police said on Tuesday. The baby’s grandmother brokered the deal and initially demanded $75,000 but agreed to cut the price to $30,000 when told the prospective buyer could not get a bank loan, the Florida Department of Law Enforcement (FDLE) said. The mother of the eight-week-old boy, Stephanie Bigbee Fleming, 22, of Bradenton, Florida, was to receive $9,000 of the proceeds, the FDLE said. “Fleming planned to purchase a new vehicle from the money received,” an FDLE spokeswoman said. Fleming also needed money to pay court costs for an unrelated probation violation, the arrest documents said. Fleming was arrested on Tuesday. The grandmother, Patty Bigbee, 45, was arrested last week with her boyfriend Lawrence Works, 42, both of Holly Hill, Florida. All three were charged with the illegal sale of a child, and Bigbee was also charged with communications fraud, the department said. The arrest report said Bigbee offered to sell the baby to a female relative in October, explaining she had been caring for her grandchild but “was not mother material.” The relative alerted police and worked with them during the negotiations. Bigbee and Works were arrested when they collected a $30,000 cashier’s check and handed over the baby to an undercover agent in a Daytona Beach parking lot, police said. The baby remains in state custody. (Reporting by Jane Sutton; Editing by Cynthia Otserman) Copyright 2010 Thomson Reuters. Click for Restrictions .

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For-Profit College Shares Tumble

November 4, 2010

NEW YORK — Shares of for-profit schools dove Thursday after a seemingly routine program review by the Department of Education reawakened fears of greater oversight – and lower profits – in the sector. Several analysts also sounded warnings, concerned about their ability to sign up new students and access government-backed financial aid due to increased scrutiny. Apollo Group Inc., which owns the University of Phoenix, the country’s largest for-profit higher education chain, said on Thursday that the DOE is launching a review of how Phoenix administers federal financial aid. The announcement comes not even five months after the conclusion of another review which cost the school $1.8 million in repayments. The new review will cover the period from the 2009-2010 aid year up to the present. Program reviews are fairly common, and the launch of a review doesn’t mean a school has violated financial aid rules. Yet back-to-back reviews in the past would have unusual, said UBS analyst Ariel Sokol. “The perception perhaps has been that the DOE.has been asleep at the wheel” regarding oversight of the schools, he said. “In that context, it’s not surprising.” A Government Accountability Office report in August found misleading recruitment practices at 15 schools, which the DOE said it could use to act upon. Such reviews could result in fines or restricted access to government-backed financial aid, which makes up the bulk of the schools’ revenues. The University of Phoenix program review “is the initial evidence of an increased enforcement regime” at the Education Department, said Signal Hill analyst Trace Urdan in a research note. Critics claim the schools are not helping students find better jobs and say enrollment counselors sign up many who are unprepared for higher education. When students drop out, they are still stuck paying back their student loans – unless they default, and then the bill goes to the taxpayers. Defaults on student loans, most of which are supplied by the government, have been rising throughout the recession. One DOE proposal is called a “gainful employment” rule that could limit schools’ access to federal financial aid if graduates’ debt levels are too high or too few students repay loans. It was supposed to be announced by Nov. 1, but intense lobbying from the for-profit sector helped delay finalization until 2011. The DOE held a public hearing on the rule Thursday. School chains, including Apollo, have been warning investors that they expect student enrollments to drop as they accommodate new rules. Apollo shares tumbled $2.91, or 7.6 percent, to $35.56 in afternoon trading. Shares of Corinthian Colleges Inc. fell more than 11 percent, hitting a new 52-week low, after a downgrade from UBS. The company said that it may have to raise tuition or risk violating government rules on how much of its revenue can come federal financial aid. It also expects a big drop in new student enrollments. DeVry Inc. shares dropped 4 percent, while Grand Canyon Education Inc., which was downgraded by Baird, fell nearly 6 percent. ITT Educational Services Inc. fell more than 3 percent, as did American Public Education Inc. Bridgepoint Education Inc., Capella Education Co., Strayer Education Inc., Career Education Corp. and the Washington Post Co., which owns the Kaplan school chain, all had share declines of 2 percent to 3 percent. Education Management Corp. shares bucked the trend after a better-than-expected earnings report, rising $1.22, or 10.5 percent, to $12.95. (This version corrects misspelling of analyst name.)

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Brigid O’Farrell: Women Want to Work Construction. Let’s Help Them Get Jobs.

November 4, 2010

After the crash, the downturn was dubbed a “mancession.” As the meme continues to circulate, the Roosevelt Institute’s New Deal 2.0 blog asked leading thinkers to help sort fact from fiction. Are men suffering more than women in a weak economy? Is Washington doing enough to address female unemployment? How do we ensure a jobs agenda that’s fair and equitable? In the final part of the series, ” The Myth of the Mancession? Women & the Jobs Crisis “, Brigid O’Farrell calls for a full employment policy that benefits women ready to work in non-traditional trades. In this Great Recession, there is no question that the construction industry has been hard hit. Unemployment for construction occupations was almost 20% last year and reached a record 26% in February 2010, according to the U. S. Department of Labor . But is the laid-off electrician who was earning $856 a week, and is likely a union member with health benefits, suffering more than the home health aid still earning $430 a week, with no benefits and no union? Are men in the higher-paying construction industry suffering more than women in the lower-paying health care sector or women who are more likely to be single parents and living in poverty ? Who is suffering more, however, is the wrong question. Everyone but the very rich are suffering in this recession. In the 21st century, the federal government needs to have both a short-term stimulus program and a long-term economic plan that supports creating good jobs and decent wages for all workers without discrimination based on gender or race. It needs to have a jobs agenda that is fair and equitable. Government policies should not support one group of workers at the expense of others. Stimulus money going to the depressed infrastructure industry needs to create jobs that are equally accessible to men and women, minorities and non-minorities. Stimulus money in the new green energy industry should create jobs and actively recruit workers regardless of gender and race and not reinforce discrimination prohibited by law. Let’s focus more closely on women in the predominantly male, blue collar world of construction trades. Yes, there are women in these jobs. It is important to note that according to the Department of Labor in 2005 , before the recession began, only slightly fewer women had joined the construction trades, about 274,000, than had become lawyers, 290,000. There were slightly more tradeswomen than women physicians, 268,000. Women, however, had become 30% of lawyers and 32% of doctors, but fewer than 5% of the electricians, plumbers or bricklayers. Despite three decades of equal employment policies, job training programs, and thousands of women showing that they are interested in and capable of performing this work, the jobs remain segregated and the women who are there are joining the unemployment lines. Tradeswomen and researchers have identified many of the barriers to women’s employment in skilled trades, including the socialization of young girls, employer discrimination in hiring and promotion, male coworker and union hostility, and lack of enforcement by government regulators. There is also evidence to support the kinds of outreach and training programs, as well as organizational changes, that are needed to recruit more women, end hostile workplace environments and sexual harassment (which can be life threatening in these jobs), reform employer personnel systems, and engage unions and employers in positive changes for hiring, training, promoting, and retaining women. These programs begin with vigorous enforcement of the laws, especially Executive Order 11246 , which is under the jurisdiction of the Department of Labor and prohibits gender discrimination by government contractors. The Office of Federal Contract Compliance Programs (OFCCP) established the first goals for women in apprenticeship and skilled trades in 1978. The Obama administration and Congress have undertaken several initiatives to address gender segregation in construction trades while increasing employment. Earlier this year, Secretary of Labor Hilda Solis met with tradeswomen, advocates, and researchers to discuss the barriers and successes for women in the trades. Patricia Shiu, director of the OFCCP, and Sara Manzano-Diaz, director of the Women’s Bureau, have held hearings around the country. The Engineering News-Record reports that Shiu’s office, which enforces the executive order, is reevaluating what “good-fair effort” means, and she declared that, “In order for the numbers to change, we have to be willing and able to enforce the laws that we implement, and we are.” There are no goals set for women and minorities to receive infrastructure jobs under the American Recovery and Reinvestment Act. But the stimulus program does include $20 million for grants in transportation and technology training and includes supportive services for women, minorities, and other disadvantaged groups. The Women’s Bureau has again awarded over one million dollars in grants for outreach and training for women in apprenticeship and nontraditional occupations, the WANTO program . Congressman Jared Polis, from Colorado, has introduced H.R. 4830 , the Women & Workforce Investment for Nontraditional Jobs Act. This Women WIN Act would authorize up to $100 million for recruiting, training, and retraining women in nontraditional jobs and establish a national commission to hold hearings and make policy recommendations. Are these actions enough? Not yet. Policies and programs need to be supported with budgets and staff who implement rewards and penalties. It is too early to measure the effects of new initiatives or to predict the outcome of proposed legislation, but the movement is in the right direction. Hard economic times are not a reason to deny women the right to jobs they have shown they are interested in, that they are fully capable of performing, that they need to support their families, and that they have been denied access to in the past because of their gender. Government money must be spent without discrimination against women or people of color. While it is well known that the Roosevelt Administration didn’t solve the problems of employment discrimination, in 1948 Eleanor Roosevelt was instrumental in providing a human rights framework for achieving equality in the workplace. Written while she was chair of the United Nations Human Rights Commission, the Universal Declaration of Human Rights specifies in article 23 that everyone has a right to a decent job, fair working conditions, a living wage, no discrimination, protection from unemployment, and a voice at work. Perhaps we should put more effort into achieving a full employment policy under a human rights framework, instead of arguing about who is suffering more in a recession and how to divide limited resources in ways that reinforce gender stereotypes. Cross-posted from New Deal 2.0 .

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Art Levine: Will GOP Victory Gut OSHA and Kill More Workers On the Job?

October 29, 2010

Heading into the final weekend of getting out the vote before the mid-terms, advocates of workplace safety are raising alarms about the prospect of even more deaths and injuries on the job if the Republicans gain control of either the House or Senate. That’s because OSHA and other, still-underfunded workplace protections will become Republican and corporate targets. Ironically, though, amid all the misery spawned by the recession, there is one silver lining that has emerged, according to the Labor Department’s Bureau of Labor Statistics: a sharp drop in workplace injuries and deaths due to accidents. As the BLS dryly noted when it first reported this phenomenon in August, Economic factors played a major role in the fatal work injury decrease in

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Potential AIG Bailout Loss Was Concealed By Treasury, Federal Auditor Says

October 26, 2010

The U.S. Treasury concealed $40 billion in likely taxpayer losses on the bailout of American International Group (AIG.N), the New York Times said, citing a report by Neil Barofsky, the special inspector general for the Troubled Asset Relief Program. “In our view, this is a significant failure in their transparency,” Barofsky said in an interview with the New York Times. Early this month, the Treasury changed its usual valuation methods and issued a report saying that U.S. taxpayers would ultimately lose just $5 billion on the AIG investment, the paper said. The Treasury had previously maintained a conservative estimate that it would lose $45 billion on the bailout of AIG. However, on Monday, a Treasury official disputed Barofsky’s conclusions, saying the department appropriately used different methods for different purposes, the Times said. The official told the newspaper that the smaller loss was a projection of future events and the larger one was the result of an audit, which includes only realized gains and losses. The Treasury will include more information about the AIG investment when it issues its own audited financial statement in November, which may likely report taxpayer losses of more than $5 billion, according to the paper. The Treasury department and the office of the Special Inspector General for TARP could not immediately be reached for comment by Reuters outside regular U.S. business hours. (Reporting by Sakthi Prasad in Bangalore) Copyright 2010 Thomson Reuters. Click for Restrictions .

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Lanny Davis: Let’s Stick to the Facts on For-Profit Colleges Regulations

October 25, 2010

As I wrote on September 23 in this space, the Department of Education’s (DOE) attempt to put more stringent regulations on for-profit colleges is an example of good intentions gone awry. Rather than expanding college opportunities and fighting fraud, the proposed new “gainful employment” (“GE”) rules would instead limit college access especially for minority students, raise taxpayer costs, and create new obstacles for employers eager to hire qualified workers. The new rules target only for-profit institutions, a relatively small section of higher education. And for reasons not explained by the DOE, it has made no effort at all to hold public and private non-profit colleges to any similar standard for student debt and repayment limitations and job placement outcomes — particularly puzzling since these schools are subsidized by tens of billions of dollars of direct federal and state grants and are the beneficiaries of the largest share of federally-backed student loans. Even so, there remains a problem in the debate on this important issue that is fundamental — and that is respect for the difference between ideology and facts. To put it bluntly and to paraphrase a well-known pundit, those who criticize for-profit schools are “entitled to their own opinions, but not their own facts.” In this spirit, I challenge three important “assertions of fact” by proponents of these regulations, including leaders at the DOE as well as some Democrats in the U.S. Senate, that are false or misleading, or both. First: Repayment Rates — Asserted fact: that the regulations are needed because the “profit” in the for-profit colleges yields lower repayment rates than at non-profit and public colleges. Actual fact: Repayment rates are a result of the demographic and socio-economic status of the students who take out the loans, not the tax status of the colleges they attend. See, e.g., independent study by Mark Kantrowitz, an independent financial aid professional (found here) and Professor Jonathan Guryan, Ph.D, a professor in economics at Northwestern University, whose comments to this effect regarding the proposed gainful employment regulations were submitted to the DOE (found here). Mr. Kantrowitz’s data leads to especially troubling conclusions for those who are concerned about low-income and minority students: that the more minority students are in a college, the more they are likely to fail one or both of the two tests in the GE regulations — debt-to earnings and repayment rates. No wonder so many members of the Democratic Congressional Black Caucus have written letters of concern to DOE Secretary Arne Duncan, as well as many other leaders of minority communities who have expressed the same concerns, such as Rev. Jesse Jackson, and Rev. Al Sharpton, regarding these regulations as currently drafted and support serious changes before final issuance. Isn’t it troubling (at least to fellow liberal Democrats, such as myself) that a progressive Democratic administration seems indifferent or determined to go full steam ahead and ignore a disparate racial and economic effect of these regulations on a core Democratic Party base — minorities and lower income people who comprise most of the for-profit colleges students adversely affected by these proposed regulations? And just before an election day when the president and Democratic Party leaders are seeking a large turnout from that base? Second: Cost to Taxpayers — Asserted facts: Critics assert that regulations are needed because for-profits cost federal tax payers too much money each year. DOE uses the number26.5 billion as the latest total annual “federal aid.” Senator Harkin repeatedly uses the number24 billion. Both are false and misleading. Actual fact: The data proves that public colleges and private not-for-profit colleges cost taxpayers substantially more money per student at four-year colleges than for-profit colleges. (See recent analysis by noted economists Dr. Robert Shapiro and Dr. Nam Pham, available here.) A recent analysis by Charles River Associates concluded that career colleges cost the taxpayers25,000 less per graduate than community colleges or other public two-year institutions. With $20 billion in annual student loans to students attending for-profit colleges, the DOE’s own data calculates that the projected cost of student loan defaults at these for-profit colleges — net of recoveries after defaults – is about one percent to be written off as entirely non-collectible, or less than $200 million – not the $26.5 billion or $24 billion misleadingly cited by the DOE and Senator Harkin, respectively. Third: Inferior Job Placement – Critics assert that for-profit schools have dismal graduation and job placement rates, leaving students with large debts and bleak earnings potential, as compared to private not-for-profits and public colleges. Actual fact – For-profit college graduation rates at two year institutions exceed 55 percent, significantly higher than those at community colleges. Yet no mention was made of that fact during the much-touted White House meeting focusing just on community colleges, which totally omitted any reference to for-profit colleges and the predominantly low-income and minority students they serve. For-profit schools have produced millions of success stories, helping students prepare for and find new jobs, advance their careers and earn higher pay. Graduates find jobs in a wide range of high-demand professions as nurses and health care aides, computer professionals and programmers, chefs and retail managers, solar and wind energy technicians. If Senator Harkin wanted to hold 10 hearings, he could fill the HELP Committee panels with real people telling those real success stories. Instead, not one single career college student was allowed to appear to tell a single success story at a single HELP Committee hearing on this issue. As I wrote in this space several weeks ago, there is a vague and uneasy aroma of elitist double standards going on here. The Harvard or Stanford students majoring in ancient history or anthropology, with difficulty finding jobs in those fields, would be unaffected by these proposed regulations. Yet a minority or low-income student training to be a health care assistant or computer technician or chef would face two new debt and repayment rate tests that could have adverse effect on the institutions under the Department’s rules. Why is there such a distinction? Am I wrong in seeing a double standard here? Why can’t Secretary Duncan fix the rule to eliminate its unintended but clearly discriminatory impacts? And why not apply any final rule to all schools — even, if necessary, by seeking additional congressional authority to do so to ensure evenhandedness? Why not treat the low-income, full-time working parent studying at night at a for-profit college in a two-year program to be a medical assistant the same as a full-time Yale student majoring in philosophy? By relying on problematic facts, the Department of Education has created a problematic policy. Before finalizing any new rules, it should first finalize its facts. The proposed rules need to be fixed to mitigate their effect on low income and minority students and to apply them across the board — to for-profit colleges as well as non-profit and public colleges. Certainly there should be no last minute rush to put into effect by November 1 even a portion of the gainful employment regulations, such as those applicable to new programs, without full review. To do so would be contrary to the spirit if not the letter of the commitment the Secretary made to take into account the more than 90,000 comments made about the gainful employment regulations. It would smack of a rush-to-regulate not becoming and not justified. One thing we should all agree on — it’s time for Secretary Duncan to put the amber light on and be sure, no matter what, to base such far-reaching regulations on the facts, and only the facts. Mr. Davis, a former special counsel to President Clinton in 1996-98, is a Washington D.C. principal at the firm of Lanny J. Davis & Associates and is a public spokesperson and registered paid lobbyist on behalf of the “Coalition for Educational Success,” a group of 72 for-profit colleges in 37 states with more than 200,000 students. He is the author of “Scandal: How ‘Gotcha’ Politics Is Destroying America” (Palgrave MacMillan, 2006).

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Parsons Appoints Loose as Senior Vice President and Installations & Environment Division Manager

October 25, 2010

PASADENA, CA–(Marketwire – October 25, 2010) –  Parsons announces the appointment of Vice Admiral (VADM) Michael K. “Mike” Loose, United States Navy (ret.), as Senior Vice President and Manager of the Installations & Environment (I&E) Division for its Infrastructure & Technology group. In this role, Mr. Loose will be responsible for overseeing Parsons’ work with federal government clients, including the Department of Defense and all military services, the General Services Administration, and other agencies at cabinet level and below. I&E’s markets and services encompass the full life cycle of natural and built environments.

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David Isenberg: Qarmat Ali AND KBR, Redux

October 23, 2010

Holy KBR, Batman. Will this fiendish clown prince of corporate cupidity ever cease and desist? Excellent question, Boy Wonder. I fear that as long as there is a U.S. taxpayer supported government LOGCAP program to be plundered KBR will always be with us. Well, okay, Adam West never really had that exchange with Burt Ward. And, after my post yesterday on KBR I really didn’t intend to write on KBR again. But that was before I saw today’s press release from the Senate Democratic Policy Committee. Follow up report is delayed: DORGAN: DOD IG REPORT CONFIRMS PENTAGON DROPPED THE BALL ON CHEMICAL EXPOSURE OF U.S. TROOPS IN IRAQ (WASHINGTON, D.C.) — U.S. Senator Byron Dorgan (D-ND) said Friday a preliminary report of an investigation by the Department of Defense Inspector General confirms that the Pentagon dropped the ball in responding to the exposure of hundreds of U.S. troops to a deadly chemical in Iraq. Those failures left some exposed soldiers unaware that they had been exposed to the deadly chemical and without follow up health monitoring and treatment. Monitoring tests performed on other soldiers who were informed of their exposure were so inadequate that the agency that performed them now admits they have a “low level of confidence” in those tests. A second and more detailed Inspector General’s report, originally scheduled to be released this month, has now been moved back to the end of the year, a development Dorgan said he finds “disappointing.” The Senate Armed Services Committee and Dorgan requested IG investigations after he chaired hearings by the Senate Democratic Policy Committee (DPC), in June 2008 and August 2009. The hearings revealed that troops from Indiana, Oregon, South Carolina, and West Virginia were exposed to sodium dichromate, a known and highly potent carcinogen at the Qarmat Ali water treatment facility in Iraq. The DPC hearings revealed multiple failures by the contractor, KBR, and the Army’s failure to adequately monitor, test, and notify soldiers who may have been exposed of the health risks they may now face. The IG is releasing two reports on its investigation, The first report was released in September. The second, expected to be a more detailed response to specific DPC concerns, was originally slated for release by late October. But the Department of Defense Inspector General now states a draft of that report won’t be available until the end of the year. The first report provides no indication — seven years after the exposure – that the Army ever notified seven soldiers from the Army’s Third Infantry Division who secured the Qarmat Ali facility during hostilities that they had been exposed. It also confirms that the Army’s assessment of the health risks associated with exposure to sodium dichromate for soldiers at Qarmat Ali are not very reliable. In fact, the organization that performed these assessments, the U.S. Army Center for Health Promotion and Preventative Medicine (CHPPM), now says it has a “low level of confidence” in its test results for the overwhelming majority of those exposed. Equally troubling, Dorgan said, is the report’s finding that the Department of Defense is refusing to provide information to Congress about the incident, because of a lawsuit to which it is not a party. “I am very concerned about the findings we now have, and I am disappointed in the delayed release of Part II of this report. The IG’s investigation and its findings are very important to the lives of U.S. soldiers and workers who were at the site. Details and definitive findings will help us ensure accountability for this exposure and flawed follow up, but even more importantly, they will help ensure that all exposed soldiers receive appropriate notice and medical attention,” Dorgan said. Note that the second report is to report findings relating to Army and DoD contractor actions taken at the Qarmat Ali facility in 2003. To see video of Sen. Dorgan commenting on this click here . Though, to be fair, what happened at Qarmat Ali is not to be entirely blamed on KBR. As Sen. Dorgan’s press released aptly puts it the Pentagon dropped the ball, and more than once. In fact its performance was so campy that it might have well played a villain on the original Batman series. Hmmm, the possibilities are infinite: Cesar Romero as Donald Rumsfeld; Paul Wolfowitz as the Riddler, and Dick Cheney as King Tut.

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Electronic Control Security, Inc. Announces $650,000 in New Orders

October 21, 2010

CLIFTON, NJ–(Marketwire – October 21, 2010) –  Electronic Control Security, Inc. ( OTCBB : EKCS ) (ECSI), a leading provider of a broad line of electronic security system technologies to the government and private sectors, announced it has received $650,000 in additional orders on projects for the Department of Defense and nuclear power stations in the U.S. and southeast Asia. Based on the Company’s recent performance and projections, the Company has hired additional personnel to maintain and maximize its efforts during this time.

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Video: Discover’s Offereins Sees Opportunity on Antitrust Case: Video

October 7, 2010

Oct. 7 (Bloomberg) — Diane Offereins, president of payment services at Discover Financial Services, talks about the outlook for the credit-card company and the implications of the U.S. Justice Department’s settlement of an antitrust complaint with Visa Inc. and Mastercard Inc. Offereins, speaking with Margaret Brennan on Bloomberg Television’s “InBusiness,” also discusses consumer spending habits. (Source: Bloomberg)

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Video: Boies Says U.S. Lawsuit Against AmEx `Doesn’t Fit’ Facts: Video

October 4, 2010

Oct. 4 (Bloomberg) — David Boies, chairman of Boies Schiller & Flexner LLP, talks about the U.S. Justice Department’s antitrust lawsuit against American Express Co. American Express vowed to fight the lawsuit while Visa Inc. and MasterCard Inc. reached a settlement with the government. AmEx is hiring Boies to handle its defense. Boies talks with Pimm Fox on Bloomberg Television’s “Taking Stock.” (Source: Bloomberg)

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3 Largest Credit Card Companies Sued By Government For ‘Anticompetitive Rules’

October 4, 2010

WASHINGTON — The Justice Department on Monday sued the three largest U.S. credit card companies for anticompetitive practices and reached a proposed settlement with two of them, MasterCard and Visa. “We want to put more money in consumers’ pockets, and by eliminating credit card companies’ anticompetitive rules, we will accomplish exactly that,” Attorney General Eric Holder told an afternoon news conference. “The companies put merchants and their customers in a no-win situation” and “consumers are being held hostage.” In papers filed in federal court in Brooklyn, the department and various state attorneys general sued all three companies, saying they were attempting to insulate themselves from competition. At the same time, the Justice Department filed a settlement it has reached with Visa and MasterCard. Court approval of such settlements is usually a formality. Under the settlement, Visa and MasterCard agree not to prohibit merchants from offering customers discounts or rebates for using a particular kind of card. Visa and MasterCard also must allow merchants to express preferences for the use of a low-cost card within a network or other form of payment. The lawsuit says the card companies are impeding merchants from promoting the use of competing credit or charge cards with lower acceptance fees. Each time consumers use a credit card to make a purchase, the merchant must pay a fee. Such fees brought in $35 billion last year to the three credit card companies and their affiliated banks. “We’re partway there” with the proposed agreement with Visa and MasterCard, Assistant Attorney General Christine Varney, head of the department’s antitrust division, told the news conference. “We remain open” to seek a settlement with American Express,” Varney added. Shares of American Express closed at $39.05, down more than 6 percent; Mastercard ended at $222.64 down less than 1 percentage point, and Visa was down for the day at $73.24, losing less than a quarter percentage point. Joining the lawsuit were state attorneys general from Maryland, Connecticut, Iowa, Michigan, Missouri, Ohio and Texas.

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Video: Tecce Says Amex Has `Drawn Line in Sand’ Over Card Suit: Video

October 4, 2010

Oct. 4 (Bloomberg) — Fred Tecce, a lawyer at McShea Tecce and a former U.S. attorney, discusses the settlement reached by Visa Inc. and MasterCard Inc. with the U.S. Justice Department to resolve a two-year probe over their restrictions on merchants. Tecce, speaking with Carol Massar and Matt Miller on Bloomberg Television’s “StreetSmart,” also discusses American Express Co.’s vow to fight the government’s antitrust lawsuit. (Source: Bloomberg)

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BP May Have Violated U.S. Sanctions On Trade With Iran, Says Government Audit

October 4, 2010

This story has been updated BP is one of 16 international companies that may have violated U.S. sanctions against selling gas to Iran, according to a new report by the Government Accountability Office. Under the Comprehensive Iran Sanctions, Accountability and Divestment Act (CISADA) signed by President Obama in July 2010, companies or individuals that sell refined petroleum products to Iran in excess of $1 million during a year are subject to three or more out of a possible nine sanctions. Investigators at the GAO claim that BP sold the petroleum between January 1, 2009 and June 30, 2010, based on open sources, which includes trade publications and company statements. Though the GAO examined sales before the signing of the updated sanctions in July 2010, the report “highlights open source information that, following further investigation by the State Department, could contribute to the identification of persons of firms whose activities may be sanctionable under ISA [Iran Sanctions Act of 1996], as amended by CISADA.” Yet BP notified GAO that it stopped selling gasoline to Iran in October 2008 and maintains that information that reported “BP sold gasoline to Iran in 2009 or 2010 was inaccurate,” according to the report. The GAO stands by its research, emphasizing that “we required multiple corroborating sources of information for every entry in our tables of firms reported to have sold refined petroleum products to Iran at any time during the period between January 1, 2009, and June 30, 2010.” BP stopped selling gas to Iran in the second half of 2009, reported Time magazine in June. But it remains one of the most active Western oil companies engaged in energy projects in Iran — through a joint venture with Swiss-based NaftIran: In the last five years, BP has begun extracting around 4 million cubic meters per day of natural gas from a field in Britain’s North Sea in a 50-50 joint venture with Iran, worth $1 million a day at June 15, 2010 spot prices. And BP operates one of the world’s largest gas fields in Azerbaijan in a joint venture with Iran and other foreign oil companies, producing 8 billion cubic meters of gas per year, worth up to a reported $2.4 billion per year. BP was one of three companies, along with France’s Total and United Arab Emirates’ Emirates National Oil Company, which are reported to have sold gas to Iran and to have U.S. government contracts. According to the GAO, BP has almost $2.2 billion in contracts with the U.S. government, largely with the Department of Defense for the purchase of jet and turbine fuel. Firms that are reported to have sold gas to Iran in the 2009-2010 period “with no indication that they have stopped sales” include Emirates National Oil Company, Singapore’s Hin Leong Trading, China’s ChinaOil, Unipec and Zhuhai Zhenrong. BP did not return a call for comment in time for publication. READ the GAO report: d10967r

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Chamber Of Commerce, Labor Department Partner To Find Gigs For Vets

October 2, 2010

The U.S. Chamber of Commerce and the Department of Labor announced a joint effort on Friday to assist members of the military transitioning to the civilian workplace, a difficult adjustment made harder by the sagging economy. One in five young veterans of the Iraq and Afghanistan wars – many of whom served in both – are unemployed. The partnership was announced at a press conference at the U.S. Chamber’s headquarters in Washington, across the street from the White House. The project is a massive attempt at networking: State directors from DOL’s Veterans’ Employment and Training Service will connect, using the Chamber’s network, with hundreds of employers and CEOs to pitch them on why and how to hire a veteran. “Yesterday, our employment representatives met with one employer at a time,” assistant secretary for veterans’ employment and training Ray Jefferson told HuffPost Friday. “Today, thanks to the launch of this pilot, we will be able to meet with hundreds of employers at once.” The project will focus on 14 states and build on an ongoing collaboration to encourage the hiring of disabled vets. The DOL is statutorily obligated to assist vets in finding work. Lt. Col. Christian Johnson, a fellow at the U.S. Chamber, is spearheading the vets program for the business organization. “When you think about it, there’s no other labor force, if you will, that comes with the experience that veterans do, whether it’s leadership, communication, working under stress. It doesn’t get any better than that,” he told HuffPost. “A lot of it is just helping educate employers out there.” The alliance is an unusual one: The Chamber has promised to spend tens of millions of dollars in 2010 to defeat Democratic candidates in the midterms and the White House has been harshly critical of the Chamber for working with Republicans to block its agenda in Congress. The two haven’t cooperated in a major way since the stimulus passed in the first weeks of the administration. A Labor Department aide said that the government will work directly with state and local chambers of commerce, which are less politically charged than the national organization. The public sector currently pulls much of the weight when it comes to hiring vets. According to DOL data , nearly 1 in 3 vets with a service-connected disability worked in the public sector; 1 in 5 is employed by the federal government. Deputy Secretary of Labor Seth Harris said that finding work for vets is the least the nation can do. “They put themselves in harm’s way for us. Now it’s our turn to fight for them,” said Harris. “When our young men and women return from serving their country, their country must stand ready to serve them in return. With this program, the Department of Labor and the U.S. Chamber of Commerce are partnering to do just that.”

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EPA Fines BP $15 Million For Clean Air Violations

September 30, 2010

HOUSTON — The U.S. Environmental Protection Agency and the Department of Justice fined BP PLC $15 million on Thursday for Clean Air Act violations at its Texas City refinery, adding to the oil company’s troubles as it struggles to clean up the damage caused by its massive Gulf of Mexico oil spill. The fine, the largest civil Clean Air Act penalty given to a U.S. facility, resulted from a settlement between the EPA and BP and is subject to court approval. BP’s Texas City refinery, the company’s largest in the United States, was also fined $87 million by the U.S. Occupational Safety and Health Administration for problems found there after a March 2005 explosion killed 15 people and injured about 170 others. More recently, the Texas attorney general and the EPA launched an investigation into a 40-day benzene leak at the facility. The latest violations resulted from three incidents in 2004 and 2005 that forced Texas City residents to remain indoors while thousands of pounds of flammable and toxic pollutants were released into the air. The settlement also deals with allegations that BP had failed to identify all the regulated air pollutants used at the facility in the plans it submitted to the EPA. BP said in a statement that no injuries or serious illnesses resulted from the leak and two fires mentioned in the settlement. The deal helps BP reduce risks should similar events occur in the future, the statement said. The company also said it has incorporated lessons learned from these events into its training and has expanded its reporting to the EPA. “These are key elements of process safety management and have significantly improved at Texas City over the past several years,” the company said in its statement. Cynthia Giles, an EPA official, said BP has a three-year deadline to make significant changes at the facility and will be required to continually report to the EPA about what is going on there because the agency is “continuing to closely scrutinize this facility.” While the refinery is old and complex, it is not in worse condition than any other. No new refinery has been built in the United States for at least 30 years. Yet the Texas City facility has had more problems than most others, with federal agencies recovering more than $130 million in fines from BP for problems at the plant. In addition, BP pleaded guilty to a criminal violation at the plant related to the 2005 explosion, which “tells you how serious problems are at this facility,” Giles added. “The settlement requires BP to change the way they do business at their Texas City facility,” she said. Ignacia Moreno, an assistant attorney general in the Justice Department’s Environment and Natural Resources division, said the Clean Air Act was designed to prevent fatal accidents and to “penalize companies with poor practices that cause harmful air pollution.” “This settlement reflects the serious nature of the fires and releases of hazardous air pollutants that occurred at BP’s Texas City refinery,” Moreno said.

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Video: Taxpayers Help Prudential to Profit From Slain Soldiers: Video

September 30, 2010

Sept. 30 (Bloomberg) — When Prudential Financial Inc. invests the death benefits owed to survivors of soldiers killed in battle, the money comes from a source with deep pockets: the U.S. government. After a U.S. soldier dies in combat — including the more than 4,000 service members who have been killed in Iraq and Afghanistan — the Department of Veterans Affairs sends Prudential the full amount of each family’s life insurance coverage, usually $400,000. Bloomberg’s Monica Bertran reports. (Source: Bloomberg)

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Al Franken: Foreclosure Paperwork Scandal Shows Need To Strengthen HAMP

September 23, 2010

The revelation that massive numbers of foreclosures may be tainted by bogus paperwork from mortgage servicers is further evidence that the Obama administration’s anti-foreclosure efforts need a pro-homeowner boost, says Sen. Al Franken (D-Minn.). “Millions of families are losing their homes in the current housing crisis so I’m outraged when I hear stories that show how broken the mortgage services industry is,” said Franken in a statement to HuffPost. “The actions of Ally Financial are just another example of why we need to strengthen the Home Affordable Modification Program.” Ally Financial, the nation’s fourth-largest home lender, halted evictions in 23 states this week after it was revealed that a document processor signed off on thousands upon thousands of foreclosure documents every week without verifying any of the information in the paperwork. The story of the Home Affordable Modification Program, known as HAMP, has been a story of bogus paperwork ever since the program launched in 2009. President Obama said that the program would “enable as many as three to four million homeowners to modify the terms of their mortgages to avoid foreclosure.” Treasury Department officials now shy from that pledge as fewer homeowners have been given “permanent” five-year modifications as have been booted from the program. Unsatisfied homeowners say that their servicers constantly ask them to re-send documents they should already have on file. To address that problem, Franken proposed creating an Office of the Homeowner Advocate within the Treasury Department, similar to the IRS Office of the Taxpayer Advocate. “I’m pushing to establish an Office of the Homeowner Advocate at the Department of Treasury that would assist borrowers in the HAMP program who believe their mortgage servicer is breaking the rules,” said Franken. “Right now, these families have nowhere to turn when wrongly denied from the assistance program or when they encounter difficulties in navigating an incredibly complicated system of avoiding foreclosure.” Franken’s proposal is currently tucked into a “tax extenders” bill facing an uncertain path through the Senate. Consumer advocates say the bogus paperwork problem is industry-wide, not just at Ally Financial (formerly known as GMAC). “This has been a story we’ve been looking at for the last couple years. GMAC’s not the only one by any shred of the imagination,” said Ira Rheingold, director of the National Association of Consumer Advocates. “This is a system that’s broken. It is a product of the way the mortgage industry was built…. It’s the result of creating a marketplace of a voluminous amount of mortgages. They want it computerized, creating these massive scales, and so if they can get away with reducing costs, then they do it.”

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David Isenberg: When Doing More With Less Is Not A Good Idea

September 21, 2010

The Commission on Wartime Contracting in Iraq and Afghanistan always does good work so its recent hearing, held Sep. 16, on ” The Contingency Acquisition Workforce: What is needed and how do we get there? ” merits reading, if only to better understand the state of governmental oversight of contractors. Let’s go straight to the prepared statements. From the opening statement of CWC Co-Chairman Christopher Shays: When you consider that the Department of Defense spent $384 billion on contracts in 2009 more than double the level of 2001 while its organic acquisition workforce actually declined, you are forced to suspect that opportunities for waste, fraud, and abuse have multiplied. Many acquisition outrages could be avoided or at least mitigated by a more effective federal acquisition workforce in general. Our focus at this hearing, however, is more specifically the contingency acquisition workforce. That bureaucratic-sounding phrase simply means that we are talking about the federal civilian and military folks who define requirements, procure goods and services, manage contracts, and provide oversight and accountability in support of contingency operations. … What may be the simplest aspect of the acquisition workforce sheer numbers is already receiving attention. The DoD Strategic Human Capital Plan Update published in April 2010 describes initiatives intended to add 20,000 Defense acquisition personnel by 2015. That would bring the department’s total acquisition workforce to 147,000. That is a laudable increase, but one that would still lag the growth in acquisition activity and only slightly exceed the personnel count of 1998. Since that DoD plan update was released, Secretary of Defense Gates has spoken forcefully to his department on the need to recognize looming pressures on DoD appropriations and to achieve $100 billion of savings over the next five years. To his credit, Secretary Gates said he will not look to the acquisition workforce for cutbacks. But adequate funding will undoubtedly remain a challenge. The defense acquisition workforce currently stands at about 133,000 people, about 11 percent military and 89 percent civilian. That sounds like a lot of people until you notice that DoD also deals with 1.4 million active-duty, 846,000 Guard and Reserve, and 752,000 civilian personnel in non- acquisition jobs. So the DoD acquisition workforce is only about 4 percent of all the people connected with the department. And nobody disagrees that we need more of them especially since more effective acquisition can produce some of the savings that Secretary Gates demands. … Here’s the bottom line. The U.S. military has often stated that “Money is a weapons system,” and has invoked that statement to emphasize the importance of good stewardship of taxpayer funds. Without a fully trained and operational acquisition workforce, however, our money will be a weapons system turned against us in the form of waste, fraud, and abuse that erodes morale, undermines missions, and betrays taxpayers. That is why the Commission considers this hearing so important. Statement of Jacques S. Gansler, Ph.D. University of Maryland. Gansler chaired the Commission on Army Acquisition and Program Management in Expeditionary Operations, released in October 2007, popularly known as the Gansler report, which was scathing in its critique of U.S. Army acquisition and management programs, including contracting problems plaguing Operation Iraqi Freedom and Operation Enduring Freedom. In 2007, our Commission recommended an increase in Army contracting personnel authorizations, both military and civilian. We recommended an increase of just under 2,000 people, which is a 38 percent increase, relative to the total people currently in the Army contracting career field, but only 70 percent of the 1990 levels, despite the increased workload that today’s professionals face. (In 1990, the Army had approximately 10,000 people in contracting. The Army lowered this level to 5,500 following the Congressional mandate to reduce the acquisition workforce, and has remained relatively constant since then. Yet, both the number of contract actions (workload) and the dollar value of procurements (an indicator of complexity) have dramatically increased in the past decade.) Three years later, in April 2010, the Army testified to the Wartime Commission that it has a five-year plan to grow Army contracting by 1,650 positions. Our Commission understands that growing the acquisition workforce cannot be accomplished overnight, but the pace at which the Army has approached this challenge makes acquisition appear to be of precarious value to the organization. While the Army is taking positive steps to grow its contracting personnel, it is not clear that there is sufficient momentum to make this timely. The Army is the DoD “Executive Agent” for contracting in Iraq and Afghanistan. For the first time since the creation of a theater contracting command, an Army General Officer, Brigadier General Camille Nichols, is leading the command, which was previously led by the other Services first by the Air Force with a 2-Star General, then by the Navy with a 1-Star Admiral. But even with BG Nichols in place, the Army is unable to fill military or civilian contracting billets, in either quantity or qualifications, in her Joint Manning Document. As of today, both the Air Force and Navy have been able to staff 100 percent of their respective contracting command staffing requirements, whereas the Army has only met 80 percent of its personnel commitment (after its commitment was reduced to reflect the Army’s inability to staff Army positions). This continues to create a strain on the other Services, particularly the Air Force. Further, in accordance with its Section 849 report to Congress, the Army is to assume responsibility for contingency contract administration services in 2012, to ensure the acknowledged need for contract administration in theater occurs. Due to resource shortfalls, the Army subsequently determined its resources would not be ready for this mission until 2015. This means that DCMA continues to bear an Army load, straining its own mission. I cannot help but view these resourcing struggles in direct relationship to the unfilled General Officer positions, particularly that on the Army staff. Army contracting is still under civilian leadership, which, while exemplary, is not at the table with military officers making mission decisions. As we stated in our report, if the Army is serious about its commitment to support the expeditionary mission, it must channel more Soldiers to the contracting field, and they must do so rapidly and at an earlier point in their military careers. A further concern about Army resource readiness is the immediate and ongoing need for contracting officer’s representatives (CORs) for contract oversight. While the Department has done much to train and pre-identify CORs, the challenge of rapid unit turnover and mission change to stability operations, with its concomitant troop withdrawal, makes CORs an ongoing area of concern. Although tactical units are now out of Iraq, contracts remain. And with those withdrawing troops went technical expertise to oversee contract performance. Among the solutions being explored, we trust that the Department is examining the role the reserve component might play in providing continuity and professionalism. The importance of contract administration cannot be overstated – and we need a cadre of professionals to give it the attention it deserves. Statement of Daniel I. Gordon Administrator, for Federal Procurement Policy Office of Management and Budget: From 2001 to 2008, contract spending more than doubled to over 500 billion dollars, while the size of the acquisition workforce – both civilian and defense – remained relatively flat. This inattention to the workforce resulted in increased use of high-risk contracting practices and insufficient focus on contract management, as well as the especially troubling phenomenon of agency dependence on contractors to support the acquisition function. … Reducing Risk — Between FY 2000 and FY 2008, spending on high-risk contracts increased significantly, at least in part as a result of having an insufficient workforce to develop clear requirements, conduct rigorous market research, and structure contracts to promote competition. During that timeframe: — Contracts awarded without competition increased from $73 billion to $173 billion, and procurements that were open to competition, but generated only one bid, also increased from $14 billion to $67 billion. Spending on cost-reimbursement contracts increased from $71 billion to $135 billion, while spending on time and material (T&M) and labor hour (LH) contracts increased from $8 billion to $29 billion. Statement of Mark D. Shackelford Military Deputy, Office of the Assistant Secretary of the Air Force for Acquisition The Air Force Contracting career field is stretched beyond its limits and our personnel, whether deployed or remaining at home station, are experiencing the strains over an extended period of time. The Air Force is filling the Department of Defense’s wartime contracting mission by providing more than 80 percent of the joint contingency contracting individual augmentees. As a result, our contracting personnel are currently at a 1:1 dwell, meaning they are deployed for six months and stationed at home for six months. This 1:1 dwell rate is the highest operational tempo in the Air Force, and the contracting contingency personnel have sustained this rate since 2008 after being formally re-postured. The Office of the Secretary of Defense, Defense Policy and Procurement (OSD (DPAP)) determined fair share allocations for contingency contracting officers to be 29 percent Air Force, 57 percent Army, 6 percent Navy, and 8 percent Marine Corps. If the Air Force continues at this current level of contingency support, we risk overstressing our military contracting workforce, and will experience retention problems that will negatively impact mission stability at home station and our ability to support U.S. Central Command (CENTCOM) missions. The bottom line is that the government has hired more auditors in the three years since the Gansler report came out. Yet it needs to hire more, a lot more. That would help explain, as the Washington Post reported yesterday, why the Army is planning over the next five years to move in house more than 4,000 acquisition jobs that are currently performed by contractors as part of a larger effort to bolster its buying workforce, service officials said last week.

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Leo W. Gerard: China’s Currency Manipulation: Flipping Off America

September 16, 2010

China is disrespecting America. The Asian giant is an international trade outlaw, and U.S. manufacturers and workers are its crime victims. China illegally subsidizes its export industries and unlawfully manipulates its currency. That kills U.S. industry and destroys U.S. jobs. Earlier this year, the Obama administration asked China nicely to allow its currency value to float up naturally on international markets. On June 19, China said it would . And then it didn’t . That’s flipping the bird at America. Before China’s June 19 promise, bipartisan groups of lawmakers in the U.S. House and Senate proposed legislation that would force the U.S. Treasury Department to even the score and to call China out for what it is: a currency manipulator. Hearings on the bills are being conducted this week. Pass the legislation. It’s time for America to flip the bird back. Negotiation and threats have failed to produce a sustained, substantial currency float by China. Now, the Chinese currency, the renminbi, is undervalued by as much as 40 percent, a figure accepted by conservatives like C. Fred Bergsten of the Peterson Institute for International Economics . Even the International Monetary Fund managing director said the currency is undervalued. China simply denied it. In March, the Chinese premier, Wen Jiabao, said he did not believe the renminbi was undervalued. That’s flipping off the world. It works like this: China prints renminbi to buy billions of U.S. dollars, which makes them appear more desired and valuable, and the renminbi, by contrast, less valuable. That undervaluation of the renminbi acts as a subsidy for Chinese exports, artificially making them as much as 40 percent cheaper when sold in the U.S. Conversely, it acts as a tax of as much as 40 percent on American-made goods sold in China. This dynamic contributed significantly to the rise of manufacturing in China. Earlier this year, China surged past Japan to become the world’s second-largest economy. And it contributes significantly to America’s massive trade deficit. The gap in July was $42.8 billion, more than half of which — $25.9 billion — was a result of trade with one country – China. China’s rapid economic growth has ended poverty for millions of its workers. Here in the United States, however, China’s flouting of international trade law is destroying the lives of millions of workers. The Economic Policy Institute estimates that 2.4 million American jobs have been lost or displaced since 2001 as a result of the trade deficit with China. American workers celebrate their Chinese counterparts’ improved quality of life, but they condemn the government of China for accomplishing that with beggar-thy-neighbor trade practices. Earlier this year, it briefly looked like threats would prompt China to act. In March, a bipartisan coalition of U.S. Senators introduced legislation specifying the factors necessary to label a country as a currency manipulator and detailing American reprisals. And in April, the Treasury Department delayed its report identifying countries that manipulate currency rates, suggesting that it was ready to take on China. China appeared to respond to that pressure in June. It announced it would allow the renminbi to float toward its real value on the open market. The Treasury Department backed off, omitting China from its list of currency manipulators in July. China then permitted the value of the renminbi to rise less than one percent . One percent. When it’s as much as 40 percent undervalued. That’s flipping the bird at America. Big time. Still, America didn’t react. On Aug. 25, the Commerce Department announced 14 new measures to crack down on trade violations, such as ending certain exemptions from duties. It did not, however, mention currency manipulation. Dan DiMicco, CEO at Nucor Corp., the largest U.S. steelmaker, said the 14 measures are important, but the problem with China won’t be resolved until the United States takes on currency undervaluation. Here’s what he said : “As long as we continue to let them get away with it, they’ll keep doing it.” Six days later, in a trade case filed by the U.S. Aluminum Extrusions Fair Trade Committee, a coalition of domestic manufacturers of aluminum extrusions and the USW, the Commerce Department again squirmed out of dealing with currency manipulation. Commerce imposed import duties on Chinese aluminum companies because China unfairly subsidized $514 million in aluminum exports to the U.S. in 2009. But Commerce refused to investigate the Fair Trade Committee’s evidence that China’s currency manipulation functions as an additional illegal export subsidy. Sen. Chuck Schumer of New York, a sponsor of currency manipulation legislation, said afterward: “The Commerce Department made its finding while still managing to ignore the elephant in the room, which is China’s currency manipulation.” Commerce and Treasury have decided the proper response to China flipping off America is averting their eyes. See no evil. Yesterday Japan followed China’s lead. It bought dollars and sold yen, decreasing the value of yen and increasing the value of dollars. This, the New York Times explained , was “a bid to protect its export-led economy.” That’s exactly what China is doing. It’s a very public show of contempt for international regulations and for American citizens. Normally, Americans don’t respond passively to contempt. Be normal, America.

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Lloyd Chapman: Department of Homeland Security Sued Over Data on Lockheed Contract

September 15, 2010

The Department of Homeland Security is being sued by the American Small Business League (ASBL) for refusing to release subcontracting data on a contract awarded to Lockheed Martin. The ASBL filed suit in United States District Court, Northern District of California today. The case was filed after the Department of Homeland Security (DHS) repeatedly refused to respond to a Freedom of Information Act request for individual subcontracting reports (ISR) and summary subcontracting reports (SSR) on a prime contract awarded to Lockheed Martin. The ASBL believes the information contained in the reports may show Lockheed Martin and the Department of Homeland Security may have cooperated in an effort to circumvent federal law which requires 23 percent of all federal contracts to be awarded to small businesses. The ASBL is gathering information on several major government prime contractors in preparation for litigation that may include cases filed under the False Claims Act and Section 16(d) of the Small Business Act. ASBL has won a series of Freedom of Information Act (FOIA) cases against the federal government. Some of the information obtained by the ASBL indicates the federal government diverted small business contracts to Lockheed Martin and hundreds of other Fortune 1000 firms. The Obama Administration is currently awarding small business contracts to firms such as Boeing, Raytheon, L-3 Communications, British Aerospace (BAE), Northrop Grumman, and Dell Computer . The ASBL currently has six lawsuits pending against the federal government and plans to file at least six more cases in federal court before the end of the year. “We can always tell how damaging the information we have requested is based on how hard the government fights to withhold it. This looks like we might have uncovered some very damaging information, since the 9th Circuit Court of Appeals has already ruled that this information is releasable in a case I won 20 years ago,” ASBL President Lloyd Chapman said. “The Obama Administration has no hope of winning. My guess is they are stalling for time to modify the data before they are forced to release it. President Obama promised to have the most transparent administration in history , but under his administration we have been forced to go to federal court to obtain the most basic information on small business contracting programs. It makes you wonder what they’re trying to hide.”

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Mars, IBM & USDA Successfully Map Chocolate Genome

September 15, 2010

Two competing studies have unlocked the cacao tree’s complete genome, which could yield a stable supply of chocolate beans and could one day lead to tastier, more nutritious candy bars. Mars, the company behind M&Ms and Milky Way, spent $10 million on a project, which also involved the U.S. Agriculture Department and computer megalith IBM, to produce the Cacao Genome Database. As of today, the genome map will be available on the Web, free of cost, for interested readers, scientists and chocolate manufacturers. But the announcement from that consortium is expected to be met by a similar one from Hershey, which worked with the French government and Pennsylvania State University to create its own version of the cacao tree genome.

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