BUB: Contractors

This evening's BUB isn't great news for contractors.

BAE is paying out some serious coin in criminal fines.

BAE Systems will admit two criminal charges and pay fines of £286m to settle US and UK probes into the firm.
It will hand over more than £250m to the US, which accused BAE of "wilfully misleading" it over payments made as the firm tried to win contracts.
The defence group will pay about £30m in the UK - a record criminal corporate fine - for separate wrongdoings.
The firm said the pleas did not relate to accusations of corruption or bribery but that it "regretted" shortcomings.
BBC business editor Robert Peston said that pleading guilty to criminal charges in Britain and the US was "a serious embarrassment" to BAE, the UK's largest manufacturer.

The history of the affair:

- The biggest probe into BAE focused on a £43bn contract to supply more than 100 fighter jets to Saudi Arabia. The deal began in 1985 but a National Audit Office investigation was suppressed in 1992
- The SFO launched an investigation in 2004 into the allegations - including claims BAE was running a "slush fund" that offered sweeteners to Saudi royals and their intermediaries in return for lucrative contracts
- This was dropped two years later amid political pressure from the UK and Saudi Arabia. BAE always denied any wrongdoing
- In June 2007, BAE said it was being investigated by the US authorities over deals with Saudi Arabia
- In July 2008, BAE pledged to implement recommendations from an independent review into its conduct
- The SFO began new probes into whether BAE had used corruption to win contracts from countries including Tanzania, the Czech Republic and South Africa. Last year it asked the Attorney General to prosecute BAE as the sides could not agree what the firm would admit or the fine to be paid

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A North Carolina Congressman is trying to apply contractor oversight standards to non-DoD agencies, such as State/Justice, patterned after the new oversight laws for military contractors.

U.S. Rep. David Price has introduced legislation that would allow the United States to investigate and prosecute serious crimes conducted overseas by private contractors working for the State Department and other non-military government agencies.

The legislation expands on the Military Extraterritorial Jurisdiction Act, which provides similar criminal jurisdiction over members of the Armed Forces and Department of Defense employees and contractors. Such jurisdiction doesn't exist for private contractors working for non-military agencies.

Price, a Chapel Hill Democrat, became concerned about the gap in part after the shooting of 17 Iraqi civilians in 2007 by Blackwater guards working for the State Department. Charges against five Blackwater guards were dropped in December. Blackwater, now known as Xe, is based in Moyock.

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It's not all bad, though, as Lockheed wants to drop a load of weapons and warships to India.

Lockheed Martin Corp, the world's biggest aerospace company, is keen to supply India with fighters, ships, helicopters and missile system and Indian defence sources said a potential deal could be worth nearly $20 billion over five years.
"We are looking to supply frigates, air defence systems, helicopters. There is a huge horizon to expand," Roger Rose, chief executive of Lockheed's Indian operations, said on Monday.
The U.S. company will also buy equipment worth $300 million from Indian firms for six military planes it is manufacturing for India, he said.

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Are contractors moving more into the nation-building space?

Last week, it was announced that DynCorp – a major private security firm - had acquired Casals Associates, an international development company. Last year, L-3, the sixth largest defense contractor in the US, bought International Resources Group, which “provides specialized management, policy and training support to U.S. government agencies and international development organizations.” Why are defense and security contractors buying into international development this way? And what does it mean for American foreign assistance?

By: Brant