Businessman, officials spar over withdrawn contract

Probe of failed border surveillance contract could lead to administrative or criminal charges.

An embattled homeland security contractor on Thursday testified before Congress that his company did no wrong, while the government inspector that exposed the alleged misconduct stood by his findings.

The inspector general offices at the General Services Administration and the Homeland Security Department and the FBI are investigating potential wrongdoing by L-3 Communications and government officials. The probe could lead to administrative or criminal charges.

"We delivered pretty much what the border patrol requested," Joseph Saponaro, president of L-3 Communications, insisted on Thursday.

But Joel Gallay, GSA's deputy inspector general, said the agency still backs its findings, despite the company's refutation. "We stand by our report," he said. Gallay declined to say when the government would conclude its investigation.

The House Homeland Security Management, Integration and Oversight Subcommittee held the hearing to address how the alleged mismanagement occurred, as the department readies to sign a contract for a more extensive and expensive border-surveillance program.

The contract in question dates to 1998, when the former Immigration and Naturalization Service hired the International Microwave Corp. to install cameras on poles along the Mexican and Canadian borders. L-3 Communications acquired IMC, and the contract, in 2003.

GSA's inspector general report in 2004 claimed that tens of millions of dollars were wasted under the deal because the company overcharged for its equipment and installation costs, and government officials allowed the contractor to install faulty equipment. GSA said the government paid L-3 Communications a total of $234 million for an incomplete and inadequate job.

Saponaro refuted that accusation, saying his company billed the government for $150 million for services rendered and the government has yet to pay $50 million of the tab. The controversy prompted the government in September 2004 to terminate the L-3 Communications contract.

Alabama Republican Mike Rogers, chairman of the subcommittee, asked Saponaro to justify why it would cost more than $400,000 per site to install 60-foot poles with seven to 10 cameras when each camera ranges in price from $35,000 to $45,500. The company installed the equipment at 246 locations along the borders.

Saponaro testified that extensive labor costs were incurred and said he would provide an itemized receipt for a site. He added that the contract is "not money that's gone down the drain." Saponaro said the department can integrate the lofted cameras with a new, expanded version of the program, which will include sensors and analytic technology.

Bennie Thompson, ranking Democrat on the full House Homeland Security panel, criticized the department's decision to expand the program and change the name from the Integrated Surveillance Intelligence System (ISIS) to the American Shield Initiative. "It's not enough to change the name; we have to change the practices," he insisted.

Thompson and other Democrats decried the Homeland Security Department for not testifying about its role in the scandal and for pouring more money into the program next year. The House recently passed legislation that would give the department $51 million for the initiative in fiscal 2006. The initiative is expected to cost $2.5 billion.