US: Homeland Security Inc.: Company Ties Not Always Noted in U.S. Security Push

When the storm erupted several months ago over plans by a United Arab Emirates-based company to take over management of a half-dozen American port terminals, one voice resonated in Washington.

Stephen E. Flynn, a retired Coast Guard commander who is a senior fellow at the Council on Foreign Relations, repeatedly told lawmakers and reporters that domestic ports were so vulnerable that terrorists could easily sneak a radioactive device into something as innocuous as a shipment of sneakers. And he offered a solution: a cargo inspection system in Hong Kong that scans every container, instead of the fraction now checked in the United States.

"The top priority should be working with the overseas terminal operators and putting in place a system that is being piloted in Hong Kong," Mr. Flynn told a House panel in March. "We have to view every container as a Trojan horse."

Homeland Security Department officials and lawmakers had been aware of the innovative port security approach in Hong Kong, but they had been reluctant to embrace it, convinced that screening every container at a port would be impractical. Mr. Flynn's forceful advocacy has changed that view.

But as Democrats and Republicans rushed to act on his advice, one fact usually remained in the background: From 2003 until 2005, he was a paid consultant to the Science Applications International Corporation, or S.A.I.C., the San Diego company that manufactured the system and could make hundreds of millions of dollars if its port security solution is adopted worldwide.

In one Congressional appearance this year, Mr. Flynn had acknowledged some involvement in the Hong Kong project, saying, "I've been a leader of the side putting it together." Four publications this year also mentioned his ties to the company.

But in most of his public comments this year - in at least three television interviews, two other appearances before Congress, opinion pieces in The New York Times and Far Eastern Economic Review and in nearly two dozen newspaper or magazine articles - Mr. Flynn's connection to S.A.I.C. was not noted. Even Homeland Security Secretary Michael Chertoff, who was briefed by Mr. Flynn during a tour of the Hong Kong port, said he did not initially know of Mr. Flynn's involvement with the company.

In a recent interview, Mr. Flynn said that in news interviews and Congressional testimony he had been an advocate for better screening at ports and never endorsed S.A.I.C.'s products specifically. He declined to disclose how much he was paid by the company, but said it represented less than 5 percent of his annual income.

"If S.A.I.C. sold millions or billions of dollars of equipment, I don't make anything," Mr. Flynn added, saying that he sometimes worked for the company as little as one day a month. "I am willing to champion it because I think it will make a qualitative difference in improving container security."

From Public to Private

As a growing number of Department of Homeland Security employees exit the agency, the practice of former officials joining prestigious research or academic institutions while working on behalf of for-profit companies is not uncommon in Washington.

C. Stewart Verdery Jr., the former assistant secretary for border and transportation policy, frequently testifies before Congress, identifying himself as an adjunct fellow at the Center for Strategic and International Studies in Washington and a partner at a lobbying firm. Among other clients, he represents Lockheed Martin, the giant military and domestic security contractor, which is now competing for an estimated $2 billion Homeland Security Department border security deal.

Richard A. Falkenrath, the former White House deputy homeland security adviser, is a senior fellow at Brookings Institution. He has a second job as a managing director at Civitas Group, which advises corporations and investors on the domestic security market.

And Frank J. Cilluffo, a former special assistant to President Bush on domestic security matters, also straddles both worlds. He delivers his views to Congress as the director of the Homeland Security Policy Institute at George Washington University while serving as a partner for a Virginia consulting firm whose clients include the Saflink Corporation, a maker of identity confirmation software to combat terrorism.

Mr. Cilluffo, Mr. Falkenrath and Mr. Verdery said they worked to make sure there were no conflicts between their various roles. "I never would let the two collide in any way, shape or form," Mr. Cilluffo said.

Mr. Flynn's reputation for integrity in his field is unrivaled, several industry representatives said, adding that he would never advocate for something he did not believe in, regardless of any consulting deal.

Lisa Shields, a spokeswoman for the Council on Foreign Relations in New York, said the institution recently examined Mr. Flynn's work for S.A.I.C. and concluded that he "has abided by all council rules and the conflict of interest policy."

But Michael Greenberger, director of the Center for Health and Homeland Security at the University of Maryland and a professor of law, said that academics who consult for companies in their area of expertise risked compromising their impartiality. At a minimum, they should always disclose the relationship, even if it has ended.

"Discovering this involvement after the fact is more troublesome than if you were more upfront in disclosing it," Mr. Greenberger said.

Mr. Flynn, 45, joined the efforts to help S.A.I.C. devise new domestic security products in April 2002, less than a month after he retired from the Coast Guard, a division of the Department of Homeland Security, and was appointed to an endowed chair for national security studies at the Council on Foreign Relations. He was paid to participate in a company brainstorming session on port security devices.

The Coast Guard commander was a natural choice for S.A.I.C., which has spent $4.5 million on lobbyists since 2001 and whose political action committee and employees donated another $1 million in the last federal election cycle, much of it to lawmakers who oversee domestic security matters.

With a doctorate from Tufts University in international politics and vast knowledge of port security matters, Mr. Flynn was well known in the field and routinely was called upon by top Homeland Security Department officials for his advice.

In scholarly articles published before and after the 2001 attacks, he repeatedly warned that the nation needed to move quickly to better secure the roughly 25,000 ship containers that arrive in the United States each day. S.A.I.C. had come up with an approach that it was convinced could do just that, piecing together two types of inspection devices - one that checked containers for radioactive objects and a second, X-ray-like machine that could identify dense objects, which might be a radioactive material the first machine missed because a terrorist tried to shield the weapon with lead.

The potential market for such an integrated system was enormous. Scanning all the cargo in Hong Kong would require about 50 of these systems, said Terry G. Gibson, an S.A.I.C. vice president leading the sales effort. At $2.5 million per system, the total cost would be $125 million, Mr. Gibson said.

If Congress demanded that all United States-bound cargo undergo such a check, the market worldwide could reach 1,000 to 2,000 systems, or $2.5 billion to $5 billion in sales, he said, a cost that would be paid by port terminal operators, not necessarily governments.

"Reducing the risk of a weapon of mass destruction being shipped into the United States, that is what this is about," Mr. Gibson said, acknowledging: "We want to make money. We want to sell our devices."

Operating the system could cost even more: ports would have to set aside space for suspicious cargo to be double-checked, and hundreds of inspectors would have to be hired to review the scanner images.

S.A.I.C. is not the only manufacturer of such machines, but it was the first to integrate the technologies and it had the only device, one company official said, that could efficiently scan a container as it passes through a major port on a truck at a speed fast enough to avoid bottlenecks.

But some security experts have questioned S.A.I.C.'s plan, given the high costs and often cloudy images the X-ray-like machine produces.

"Overinvesting in countering one tactic when terrorists could easily employ another is dangerously myopic," said James Jay Carafano, a senior research fellow at the Heritage Foundation, a conservative research group, who has not served as a consultant to private sector companies in the domestic security field.

Many unknowns also remained, as even though hundreds of thousands of images of ship containers passing through Hong Kong were collected, no one was actually examining them to look for weapons since the S.A.I.C.-backed effort was a demonstration project, not a fully operation security system.

Mr. Flynn himself had once had his own doubts, writing in a January 2002 article in Foreign Affairs magazine that "even with the assistance of new high-tech sensors, inspectors have nowhere near the amount of time, space or manpower to inspect all the cargo arriving."

But Mr. Flynn said he was prepared to be proven wrong. He signed a contract to be a part-time consultant for the company in 2003 and soon set up a series of meetings with senior domestic security officials, including Tom Ridge, then the secretary of homeland security.

A New Era of Contractors

The decision to sign up with S.A.I.C., Mr. Flynn said Sunday, was compelled by the government's post-9/11 reliance on contractors to conceive of and put in place antiterrorism initiatives, tasks that in an earlier era might have been handled by civil servants. It is part of the reason, he said, so many former department executives are taking jobs with contractors.

Mr. Flynn said he urged Mr. Ridge to send a team to Hong Kong to evaluate the company's project and if impressed, to "agree to meet with the C.E.O.'s of the world's largest marine terminal operators to discuss a timetable for their deploying" the system globally, according to a written summary of the October 2004 briefing for Mr. Ridge. The summary identified Mr. Flynn as a fellow at the Council on Foreign Relations and made no mention of his role as a paid S.A.I.C. consultant, although Mr. Flynn said it was something he acknowledged verbally.

He also said he routinely informed officials about his relationship with the company. Staff members for Senator Charles E. Schumer, Democrat of New York, and Senator Norm Coleman, Republican of Minnesota, both said Mr. Flynn disclosed this past work before briefing the senators on the project.

But Robert C. Bonner, the former commissioner of Customs and Border Protection, who had the most regular contact with Mr. Flynn, said he could not remember being told of the relationship.

Representative Jerrold Nadler, Democrat of New York, the leading proponent in the House of Mr. Flynn's port security plan, said he had not been told of his ties to the company.

An academic paper Mr. Flynn co-wrote in 2005 with a Stanford professor that evaluated the S.A.I.C. approach also made no mention of his ties to the company. After being asked about the matter last week, Lawrence M. Wein, the co-author, said he and Mr. Flynn had decided to add a disclosure of the prior consulting work before publishing it in an industry journal.

Project Gets Final Push

Mr. Flynn's consulting contract with S.A.I.C. ended in 2005, he said. But in February 2006, when news broke of the plan by DP World of Dubai to manage American port terminals, his phone started to ring with calls from reporters. Mr. Flynn said he saw this as an opportunity - given that he had already ended the consulting deal - to give an important final push to the Hong Kong pilot project, which he feared the Homeland Security Department, despite his initial efforts, was about to let end without any federal endorsement.

"It was clear that the pilot was going to end prematurely without any substantive consideration by the U.S. government of its potential," he said. "I decided that I would need to become the pilot's leading champion."

Soon, Mr. Flynn's endorsement of the Hong Kong screening approach began to be picked up by others.

"Port security under the Bush administration is full of holes," Representative Nancy Pelosi of California, the House minority leader, said at a news conference. "One hundred percent of the cargo containers going into a terminal in Hong Kong are inspected, while only about 5 percent of the containers entering the United States are screened. Who thinks that's a good idea?"

By April, with Democrats and Republicans citing Mr. Flynn, a Senate panel passed a bill that would mandate "as soon as practicable and possible" that any container headed to the United States undergo an inspection with an S.A.I.C.-like system. The House passed a measure ordering tests of the technology.

While Congress has not yet reached a consensus on the language, domestic security officials say they are already seriously considering more universal scanning of cargo. In April, Mr. Chertoff, the homeland security secretary, toured the Hong Kong terminals where the S.A.I.C. system was being tested, and discussed the technology with Mr. Flynn immediately afterward.

Mr. Chertoff said he had not been aware when he was invited to visit the port that Mr. Flynn had been working with S.A.I.C., though Mr. Flynn said department officials had been told. Though Mr. Chertoff said he would now give Mr. Flynn's endorsement less weight, he added that his agency was moving ahead with the idea.

"I think it is something we are going to want to take to the next stage," Mr. Chertoff said.

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