Nominee's ties to TSA contractors raise ethics concerns

By Chris Strohm

March 16, 2010

Several companies identified as business partners and clients by a security firm founded by President Obama's choice to head the Transportation Security Administration are major contractors with the agency, according to government records, news releases and other documents.

The McLean, Va.-based firm, Harding Security Associates, has had a formal "mentor-protege" relationship with SAIC, which has part of a $500 million contract to modernize TSA's operations. The firm also has worked with L-3 Communications, which has a $164 million contract to supply whole-body passenger screening devices to airports nationwide.

Last week, Obama announced the nomination of retired Army Maj. Gen. Robert Harding to head TSA, describing him as a 33-year Army veteran, former operations director at the Defense Intelligence Agency and founder in 2003 of Harding Security, which he sold last July.

On Monday, in response to questions from CongressDaily, the White House said Harding would recuse himself from all matters relating to any Harding Security clients for a year. But the White House said that the yearlong period would end in July, the anniversary of the sale of Harding Security.

An administration official said applying the one-year rule from July 2009 to July 2010 was consistent with a long-standing ethics policy that predates the Obama administration.

The announcement superseded a statement the White House issued last week when questions first surfaced over possible conflicts of interest. Its initial statement said Harding would recuse himself for two years from any matters involving two companies he personally provided services to while at Harding Security: SRA International Inc. and Northrop Grumman Corp.

"These pledge recusals and the shorter-term recusals for other clients that end in July 2010 will not impair his ability to effectively carry out his duties as TSA administrator," an administration official said Monday.

A review of Harding Security's business activities by CongressDaily showed that of 21 companies listed on the firm's Web site as its "clients and partners," several firms, including Lockheed Martin Corp., L-3 Communications, SAIC, CACI, QinetiQ and General Dynamics Corp., have done business with TSA.

It remains unclear what, if any, personal role Harding played with those partners and clients, but he led a relatively small company. The firm employed "more than 400 professionals," while Harding was its CEO, the White House said. It also was designated by the Small Business Administration as a small disadvantaged, minority- and service disabled veteran-owned firm.

Government ethics experts said Harding's background should be carefully vetted to ensure he would not have a conflict of interest in overseeing contracts to those companies as TSA administrator.

"This is where you come into the risk," said Jan Baran, a partner at Wiley Rein LLP who advises clients on government ethics. "It requires some more facts and also an understanding of how he ran his business in order to evaluate the credibility of his representations."

Danielle Brian, executive director of the Project on Government Oversight, added: "It definitely is raising red flags and we're definitely going to be watching it."

A spokeswoman for Senate Homeland Security and Governmental Affairs Committee Chairman Joe Lieberman, I-Conn., who is vetting Harding, said nothing the committee has learned about Harding raises a concern.

"He has been forthcoming about his business clients and has assured the committee that he will follow all laws and administration policies regarding recusal where possible conflicts of interest might arise," she said.

Since its founding, Harding Security has specialized in contract work with U.S. intelligence and defense agencies. In a 2008 defense and intelligence industry career guide, the company said, "Our vision is to become the premier government contractor for counterintelligence, human intelligence, homeland security and [Measurement and Signature Intelligence]/Biometric solutions to support our country's fight against terrorism."

Under auspices of the Defense Department, Harding Security signed a three-year mentoring relationship with the much larger SAIC in March 2006, according to an SAIC news release. An SAIC executive said his firm "needs good teammates that share our values," while Harding indicated having had a close relationship with SAIC.

"We've been fortunate to work with SAIC on a number of contracts," Harding said in the release.

Lockheed Martin is the prime contractor for the Transportation Worker Identification Credential program, an effort worth tens of millions of dollars that requires port workers to have identification badges with fingerprints.

Lockheed Martin and SAIC were not able to comment for this story at press time.

A spokeswoman for CACI confirmed that the company has Harding Security as a business partner, but not on "any TSA work."

"The work is primarily classified so we cannot discuss it," she said.

At L-3 Communications, a spokeswoman said one of the firm's units assigned two subject matter experts to Harding Security several years ago to support an intelligence project.

In February, Harding joined the board of directors of a new private equity fund called FedCap Partners LLC. According to the company's Web site, Harding resigned on March 5 because of his nomination.

Leslee Belluchie, co-founder of the fund, said the group had not made any investments. She could not rule out that the fund might invest in companies that contract with TSA, but said there would not be any favoritism.

"We will not be able to leverage Bob in any way, shape or form because of that. That would not be right. We wouldn't do that and I'm sure he wouldn't do that," she said.

Harding Security officials declined to comment for this story, with one company official saying Robert Harding had instructed the firm to not comment.

Richard H.P. Sia contributed to this report.


By Chris Strohm

March 16, 2010

http://www.govexec.com/defense/2010/03/nominees-ties-to-tsa-contractors-raise-ethics-concerns/31059/