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Whistleblower: Boeing Put Classified Information at Risk

Pentagon Watchdog Backs Up Retaliation Claim

By NICK SCHWELLENBACH
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A report by the Department of Defense Inspector General concluded that the Defense Security Service whistleblower was retaliated against and that his concerns about Boeing were reasonable. Click here to view an annotated version of the report. 

A previously nonpublic Defense Department (DoD) Inspector General (IG) report obtained by POGO raises questions about the government's effectiveness in overseeing the security of classified material in the hands of defense contractors.

The DoD IG report centers on one government agent's quest to find the truth about the storage of classified information at Boeing—the second largest defense contractor—and the retaliation that the agent said he endured as a result. The DoD IG report raises questions about how well the Boeing Company is protecting classified weapons design information in its possession.

The vast outsourcing of many of the nation’s most classified defense projects to government contractors creates unique problems because the information is out of the government’s hands. Enter the Defense Security Service, the little-known U.S. agency tasked with ensuring that contractors—for the military services and dozens of federal agencies—properly safeguard classified information in their possession.

The threat to these assets is very real. Foreign attempts to illegally gain access to sensitive or classified information more than doubled from fiscal years 2009 to 2010, according to the latest annual counterintelligence trend analysis by the Defense Security Service.

As attempted incidents of cyber mayhem are on the rise, the role of the Defense Security Service as the key overseer of the nation’s most delicate security secrets is more important than ever. However, the Service has for years come under fire from congressional investigators and the Pentagon’s Inspector General for its lackluster oversight of contractors.

In 2002, Robert Conley, an industrial security specialist with the Defense Security Service, began to investigate what he believed was an illegal “classified technology library” in Boeing’s secretive Phantom Works division that was in alleged violation of regulations on protection of classified information.

Conley alleged to the DoD IG that after he continued to raise concerns about the problems he found at Boeing, his supervisors retaliated against him and publicly humiliated him. The April 2011 report by the DoD IG Civilian Reprisal Investigations unit substantiated Conley’s allegation that Defense Security Service management reprised against him. One act of reprisal, for example, “was significant because it resulted in loss of prestige, loss of opportunity for promotion, and loss of complex and challenging work.” The report also determined that “Mr. Conley's belief, in 2002, that Boeing was illegally transferring classified technology was reasonable.”

As outlined in the IG report, Conley’s investigation of Boeing began when he was wrapping up a subcontract the firm had with General Dynamics on a Marine Corps vehicle program involving “low-observable and counter-low-observable advanced technology”; in other words, highly classified ways of avoiding enemy detection or detecting potentially stealthy enemies. The program was a special access program. Special access programs are among the most highly secretive programs in the federal government and require special security measures.

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Boeing's Phantom Works division works on some of the company's most advanced and sensitive projects for the U.S. government. The X-45A, pictured here, is a concept demonstrator for the next generation of unmanned combat aircraft. Photo via Flickr user JohnE777 (link). 

The Marine Corps official responsible for the program’s security, Randall Kelly, asked Conley to ensure that Boeing returned all relevant classified materials it had received in order to carry out its duties. Conley and Kelly performed an inspection and “discovered that pieces of classified material were missing,” according to the IG report obtained by POGO, and Conley opened an administrative inquiry into the matter. “As a result of this inquiry, Mr. Conley stated that he discovered the missing classified material in other SAP [special access program] compartments,” the IG report noted.

More significantly, the report states that Conley said he “discovered the existence of a classified technology library ‘that had grown in scope beyond the legal bounds’” imposed by the Air Force, which originally created the library. For roughly the next three months, Conley investigated what Boeing was doing by interviewing Boeing employees and examining documents.

“Extreme Risk”

According to the IG report, one Boeing employee told Conley in a sworn statement that there was “a covert technology library maintained by Boeing.” The employee told Pentagon criminal investigators that the Secretary of the Air Force for Acquisition and Management had sanctioned the library; however, according to reprisal investigators, she also told the criminal investigators that in the past she had said the program involved “stealing technology from Government customers.” Later, criminal investigations did not substantiate allegations of theft.

Conley completed a first draft of his report on the administrative inquiry in May 2002. His conclusions were modest, but suggested that it was possible Boeing was changing the labeling on classified documents or technology, potentially, for example, by removing a “Top Secret” marking on a document that required it. “DSS could make no assessment of the potential for covert improper technology transfer practices,” his draft stated in its conclusion, but “if improper technology transfer practices have included the remarking or the mis-marking of documentation or hardware,” then he said that experts would be required for further examination.

In a later interview with IG reprisal investigators, Conley said that what Boeing had been doing placed “advanced technologies and information at extreme risk.” According to Conley, this happened due to Boeing’s “systemic failure of following the proper DOD processes for the safeguarding and handling of compartmented information.”

DSS Senior Management Waters Down Conley’s Report

Conley’s draft made its way to Defense Security Service headquarters, but was returned to him at least twice. Each time, “there was a direction to remove supporting evidence/documentation,” according to a transcript of a 2010 IG retaliation investigator interview with Conley.

“My concern was that in removing that documentation, they were removing the supporting evidence,” Conley told reprisal investigators with the IG’s office. That evidence, according to Conley, “supported my finding that there was systemic and serious problems” within Boeing’s Phantom Works.

According to the interview transcript, Conley said the upshot of these changes, was “reducing a very serious administrative inquiry that should have gone on for consideration for potential civil and/or criminal follow up, to nothing more than minor administrative findings.”

The final report, which Conley refused to sign, was reduced from his original twelve pages to three.

“Mr. Conley's belief, in 2002, that Boeing was illegally transferring classified technology was reasonable.”

First Round of Retaliation?

Despite aggressive editing of his report by the Defense Security Service’s senior management, Conley thought the issues were serious enough to flag them to the regional official responsible for counterintelligence sometime in late 2002 or early 2003, according to an IG timeline of Conley’s case.

During this time, he told investigators he began to “experience a dramatic increase in workload,” according to the IG reprisal investigators’ report.

Conley was also unexpectedly called back from an assignment in Alaska to attend a meeting in California.

“I was stood up in front of all my peers in an all-hands meeting of Special Access Program Personnel, and stripped...of all of my Special Programs,” Conley told IG investigators, according to a transcript.

“It was incredibly humiliating,” Conley said of the episode.

Conley told the IG reprisal investigators that he believed the increase in workload and the removal of responsibilities were retaliation for his continued pursuit of the Boeing matter.

However, the IG reprisal office declined to evaluate whether the removal of responsibilities was retaliatory in nature because these events were too far in the past, the IG report stated.

Going Outside His Agency: Work with Hesitant Investigators Triggers Reprisal? 

It was mere months later that Conley left the Defense Security Service to work as a counterintelligence and security specialist at the U.S. Commerce Department.

In parallel with his own administrative inquiry, Conley had informed criminal investigators in the Navy Department about Boeing’s activities in February 2002.

As Conley explained to DoD IG investigators, in 2005, Kelly and Conley decided they still had to try to do something about what they believed was continuing to transpire at Boeing. They went to other criminal investigators in the Seattle office of the Defense Criminal Investigative Service, which is the criminal investigative arm of the Department of Defense Office of Inspector General.

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Senator Maria Cantwell (D-WA).

When that effort went nowhere, the two turned to Congress, first approaching Republican Senator John McCain of Arizona, who directed the pair to Conley’s own Senator, Maria Cantwell, a Democrat of Washington state.

The involvement of Congress may have sparked action from Defense Criminal Investigative Service. Soon after Conley and Kelly’s allegations reached Congress, a special agent with the Service contacted Conley and took a sworn statement from him in early 2006.

Then, in February 2008, the Defense Security Service rehired Conley to perform essentially the same job he had half a decade prior, according to the IG reprisal investigators.

According to the investigators’ timeline, in September 2008, Conley, “lodged a complaint against DSS and the Boeing company,” claiming that he had been a victim of professional reprisal. On Sept. 18, 2008, Conley’s immediate supervisor was told to remove Conley from his oversight responsibilities of Boeing—the action that later led IG reprisal investigators to conclude that Conley was the victim of agency reprisal for whistleblowing.

Meanwhile, the Defense Criminal Investigative Service conducted an investigation into Boeing. Conley regularly pursued status updates on the investigation via Cantwell’s office, which in turn provided him with what appeared to be brief generic form letters from the IG stating the investigation was still open. 

One source in the Defense Criminal Investigative Service, who spoke on the condition of anonymity because the source was not authorized to discuss the matter, told POGO that the source's review of the case in the agency’s database showed that it did not seem very active when it was still open.

Finally, in late 2009, the agency closed the investigation.

The result? A Nov. 19, 2009, letter to Sen. Cantwell from the DoD IG says the Defense Criminal Investigative Service investigation could not substantiate allegations that Boeing was involved in the theft of government-owned classified material or that Conley was the victim of reprisal. 

POGO filed Freedom of Information Act requests for the Defense Criminal Investigative Service and Naval Criminal Investigative Service reports of investigation last year, but has received only interim responses acknowledging that the agencies received our requests.

Ultimately, IG reprisal investigators came to a different conclusion than did the IG’s criminal investigators. In their 2011 report, the reprisal investigators substantiated the allegations that Conley was reprised against. They clearly established that the removal of Conley’s oversight responsibilities was directly tied to his communication with DCIS about problems he was encountering with his investigation into Boeing. At least three Defense Security Service management officials told the IG reprisal investigators as much:

Mr. Whitecotton [Conley’s supervisor] testified that he ordered Mr. Conley’s removal from Boeing based on Mr. Conley’s past work performance. However, this rationale is contradicted by testimony from Mr. Lawhorn, [name redacted] and Mr. Hellman. Therefore, we concluded that Mr. Conley was removed from Boeing because of the information he provided to DCIS.

The IG reprisal investigators determined that the decision to remove Conley from his oversight of Boeing was not done in consultation with DSS ethics regulations or with involvement of the DSS general counsel.

Boeing declined to comment on the IG reprisal investigators’ findings. “The Boeing Company does not comment on non-public government reports,” a Boeing spokeswoman for Phantom Works told POGO in an email.

DSS was similarly tight-lipped. In response to a POGO query about Conley and Kelly’s allegations against Boeing and DSS, a DSS spokesperson replied, “DSS does not publicly disclose the results of its security reviews of individual cleared facilities or the results of administrative inquiries as this discloses security vulnerabilities that may be exploited.”

“In regard to the IG report you reference, DSS has reviewed the report and the DSS Director has taken all appropriate action within his authority to address this issue,” she added, referring to the reprisal taken against Conley.

However, according to DoD IG data from April 23, 2012, shared with Congress and viewed by POGO, the DoD IG lists Conley's case as “Pending Follow-Up Action”—which seems to contradict the DSS spokesperson’s statement.

DSS: A Long Record of Lapses

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This isn't the first time questions have been raised about the Defense Security Service (image via DSS).

The episode involving Conley, Kelly, and Boeing offers an unusual glimpse into an agency that, despite its important mission, has largely flown under the radar of the public. But this isn’t to say there hasn’t been criticism of the Defense Security Service.  

In 2004 and 2005, the Government Accountability Office (GAO), Congress’s investigative arm, issued reports that criticized DSS’s ability to ensure that contractors were protecting classified information.

A copy of suggested talking points for a speech given by Stanley Sims, the current DSS director, was obtained by POGO last year. According to the suggested talking points, DSS has “been remiss in our fundamental oversight responsibilities to the Department and the U.S. Government.” Among the deficiencies detailed by the suggested talking points: contractors incorrectly processed security violations.

Critics ranging from the DoD IG to the House Armed Services Committee and Republican Sen. Charles Grassley of Iowa have raised questions about DSS’s protection of classified information. In 2008, then-DSS Director Kathleen Watson claimed that when she began her tenure, DSS was “broken across the board.” In a 2009 letter to then-Defense Secretary Robert Gates, Grassley said he was “worried that there are continuing problems with the Defense Security Service and its role in safeguarding our nation’s top secret or sensitive weapons design information and making sure that kind of information doesn’t fall into the wrong hands.”

Other DSS Probes Into Boeing Raise Questions

As for Boeing, one might readily dismiss Conley and Kelly’s allegations based on the fact that criminal investigations by two agencies—the Naval and Defense Criminal Investigative Services—did not support their allegations. But subsequent DSS administrative inquiries launched into classified technology transfer practices within Phantom Works program give these allegations some credence.

DSS opened one administrative inquiry into Phantom Works in 2008, according to a DSS response to a POGO Freedom of Information Act (FOIA) request. Another DSS probe was launched in 2011, POGO has learned. In total, at least three such investigations conducted by three different DSS agents based out of the agency’s Seattle field office have taken place since 2002—all related to Boeing’s handling of classified defense information. An unknown number of security violations occurred in 2009 and 2010, according to the DSS FOIA response. The exact number of violations in both years was redacted.

The IG reprisal investigation report states that reprisal investigators “determined Mr. Conley’s belief in 2006, that Boeing engaged in illegal activity was reasonable.” Furthermore, “testimony from Mr. Conley’s co-workers and supervisors supported the reasonableness of his allegations.”

Given the reasonableness of Conley’s concern and the high stakes of his allegations, the public deserves to know more about what Boeing, which makes tens of billions of dollars in federal contracts each year, is doing to adequately protect classified information.

It's also just as important that Congress examine how DSS, an obscure but vital federal agency, is doing its job protecting our nation’s most sensitive secrets. If an employee like Conley faces retaliation for just trying to do that job, how can American taxpayers have confidence in the agency?

Nick Schwellenbach is a contributing investigator for POGO.