http://www.azcentral.com/news/articles/0305airforce0305.html
Air Force chief tied to steering of contract Tempe company protested deal
Robert Anglen The Arizona Republic Mar. 5, 2006 12:00 AM
The highest-ranking officer in the U.S. Air Force pushed a $49 million publicity project for the Thunderbirds air show that is now being investigated by federal regulators.
Documents obtained by The Arizona Republic show that Air Force Chief of Staff Gen. T. Michael Moseley and other high-ranking officials were involved in steering the contract toward a Pennsylvania company whose senior partners included a recently retired four-star Air Force general.
Strategic Message Solutions won the contract through a public bidding process, although its bid was $25 million higher than a competing proposal.
But months before the Air Force publicly sought proposals for the work, documents show, top-ranking officials, including Moseley, tried to "sole-source" the contract to SMS without putting it out for bid.
The Air Force canceled the SMS contract last month after a Tempe company that competed for the bid filed a protest alleging that SMS was given "an unfair and unethical advantage" because of its connections to high-ranking officers. It also accused the company of "egregiously overcharging the United States government for services."
SMS President Ed Shipley denies it won the bid improperly and said it was the most qualified to perform the work.
Last Monday, SMS sued the Air Force and the Tempe firm, demanding that the contract be restored.
But the lawsuit also claims that Shipley was promised the job by the most senior members of the Air Force, including Moseley.
Moseley did not respond to requests for an interview or address questions submitted in writing about his involvement in the SMS contract.
Shipley said he was "unequivocally selected" by Moseley last March, about four months before the Air Force put the contract up for bid. At the time, Shipley said he was asked: "how much, how soon."
"Gen. Moseley immediately procured $8.5 million . . . to fund this revolutionary, unique project," Shipley said in a U.S. District Court lawsuit. "Gen. Moseley's support of Shipley was echoed by Maj. Gen. (Stephen) Goldfein and the Thunderbird commander, Lt. Col. Michael Chandler."
Shipley's claims are bolstered by documents that show Moseley and other commanders started seeking ways to contract with SMS amid growing concerns over who should pay for the work and whether the contract could legally be awarded without going out for bid.
"I know he thinks that because (Moseley) liked the idea and told the (financial management) guys to go and find the $$ that it is a done deal," an Air Force official said in a memo. "It is just never as simple as the good folks on the E Ring make it sound."
The E-Ring refers to a part of the Pentagon. Moseley is the senior uniformed official in the Air Force and a member of the Joint Chiefs of Staff. He oversees 710,000 military and civilian forces.
The contract to SMS occurred at a time when the Air Force was facing budget cutbacks.
The contract called for SMS to create an elaborate video promotion called "Thundervision" to accompany the Thunderbirds aerobatic performances at air shows across the country.
Air Force spokesman Capt. David Small said that a review of the contract led officials to take corrective action and cancel the agreement.
He also said the civilian head of the Air Force, Secretary Michael Wynne, who reports directly to the Secretary of Defense, has called for an independent review by the Pentagon's investigative arm.
"The (Air Force secretary) referred this matter to the Department of Defense Office of Inspector General," Small said in a statement to The Republic.
SRO Media and Video West Inc. of Tempe questioned the impartiality of the bidding process in its protest over the contract. SRO produces and stages concerts, festivals and theater events around the world. Its protest was filed with the Government Accountability Office.
SRO raised issues of conflict of interest involving SMS principals, who were "either former Air Force personnel or have privileged relationships with the Thunderbirds."
SRO also said SMS was created for the sole purpose of winning the bid, without the physical facilities needed to fulfill the contract or the financial and work history required by the government.
The protest pointed to Gen. Hal Hornburg, who oversaw the Thunderbirds as commander of the Air Combat Command and joined SMS only months after his retirement from the Air Force last January.
"The role of Gen. Hal M. Hornburg . . . may represent a violation of post-employment restrictions," SRO said in its protest, which added that Hornburg's name appeared on a patent and trademark application for Thundervision last June.
The protest also said that in 2004 Hornburg asked Shipley to coordinate a new sound and music production for the Thunderbirds.
Hornburg could not be reached for comment.
Conflict-of-interest laws prohibit federal employees from taking money or jobs from companies doing business with their agency. Generally, laws require government employees to wait at least a year before profiting from outside work with the agency they left.
Capt. Small said the laws apply to Hornburg, but "the application of those laws and regulations in individual cases is very fact-specific and are reviewed on a case-by-case basis."
SMS denied any conflict. In Shipley's lawsuit, he said Air Force commanders, including Moseley, knew all along that Hornburg would be part of his team. He said that Hornburg went through a one-year "cooling off" period before beginning his work with Thundervision and received no compensation during that time.
In its protest, SRO raised doubts about SMS' background. It said references that SMS submitted as proof of the company's ability was for work done before SMS was formed in March 2005.
In the contract, the Air Force required that companies must have a three-year work history to be considered.
Contacted by phone last week, Shipley referred all questions about Thundervision to his lawsuit.
Shipley, who ran a direct television-marketing company for 20 years, has become a fixture at air shows, performing aerobatics in vintage World War II and Korean fighter aircraft. He also was named an honorary Thunderbird.
In his suit, Shipley said he has more experience working with the Air Force than other bidders for the job. He came up with the original concept for Thundervision in 1998, which he then called Operation Thunderbolt, he said.
"The (Air Force) should present a live, network-quality, content-based storytelling broadcast of the Thunderbird airshow . . . via large-screen, 'Jumbotron'-type television screens," the suit said.
Shipley said he has repeatedly helped improve the Thunderbird air shows, including developing a soundtrack that was "wildly successful" and "won rave reviews" in 2004. In 2005, Air Force commanders asked Shipley to demonstrate Thundervision, which is when, he said, they tapped him for the job.
Shipley claims the Air Force canceled the SMS contract because lower-ranking members of the Air Force want to hijack Thundervision. He said military personnel want to use his concepts without paying for them.
Shipley said Air Force staffers forced his company to engage in a competitive-bidding process even after Moseley selected SMS for the job.
He said the bid was a ruse by unnamed Air Force personnel and SRO who wanted to strip him of his idea.
Capt. Small said Friday that the Air Force would not comment on the allegations. But he said the Air Force had every right to cancel the contract.
"The contract was terminated for the convenience of the government, a right included in every Air Force contract," he said.
Small said the Air Force wanted to "obtain creative proposals on how best to showcase the Air Force Thunderbirds." The Thunderbirds was formed in 1953 as a way to demonstrate the latest advancements in fighter technology.
The Thunderbirds' Web site says that when they fly in their signature diamond formation, their planes are between 18 inches and 3 feet apart. They average nearly 70 demonstrations a year at air shows.
The Air Force would not address questions about whether a $49 million video promotion of the Thunderbirds was necessary.
Thunderbirds personnel at Nellis Air Force Base, where the squadron is headquartered, indicated they did not seek the additional promotion or request funding for it. Documents obtained by The Republic show that some Air Force departments refused to fund the concept before it was put out for bid.
Among those was Air Education and Training Command, which in May rejected paying for Thundervision on the grounds that it would not help recruitment efforts.
At the same time, other Air Force departments were raising questions about the propriety of sole-sourcing the job to SMS. Documents show officials were concerned about whether such a deal would pass muster.
Thunderbirds Public Affairs Officer Capt. Angela Johnson referred questions about Thundervision to the Secretary of the Air Force.
"We are not the ones who wanted the contract," she said in a recent phone interview, adding: "It's a great opportunity for the program."
Reach the reporter at robert.anglen@arizonarepublic.com or (602) 444-8694.