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Kathleen Louise dePass Press Agent/Publicist .360.288.2652

Triste cosa es no tener amigos, pero más triste ha de ser no tener enemigos porque quién no

tenga enemigos señal es de que no tiene talento que haga sombra, ni carácter que impresione, ni

valor temido, ni honra de la que se murmure, ni bienes que se le codicien, ni cosa alguna que se

le envidie. A sad thing it is to not have friends, but even sadder must it be not having any

enemies; that a man should have no enemies is a sign that he has no talent to outshine others,

nor character that inspires, nor valor that is feared, nor honor to be rumored, nor goods to be

coveted, nor anything to be envied. -Jose Marti

From the desk of Craig B Hulet? Inside:

Robinson said it’s interesting to observe that such powers are playing tough with a tiny nation

like Cyprus, while bigger nations with worse economies, such as Italy and Spain, have not been

attacked in the same way. But he said the plans are drastic.

“This is nuclear war on the banking [industry],” Robinson observed. Some analysts point out

that in the U.S., government is already “taxing” Americans’ bank accounts by other, less

obvious and more long-term means than the naked cash-grab playing out in Cyprus.

For instance, interest rates in the U.S. are near zero, so depositors are not getting paid for the

use of their funds, effectively “loaning” their hard-earned money to banks. Then, thanks to

inflation, their deposits become worth progressively less and less.

The real-world inflation rate – as measured by the actual rise in prices of essentials, including

food and fuel – is far higher in the U.S. than the official 2 percent. But even using the 2 percent

figure, over the next few years the buying power of American depositors’ bank accounts will be

just as diminished as that of Cyprus bank-account holders.

A single-page March 22, 1950 memo by Guy Hottel, special agent in charge

of the Washington Field Office, regarding UFOs is the most viewed

document in the FBI Vault, our online repository of public records.

UFOs or No?

The Guy Hottel Memo

03/25/13

It’s the most popular file in the FBI Vault—our high-tech electronic reading room housing

various Bureau records released under the Freedom of Information Act. Over the past two years,

this file has been viewed nearly a million times. Yet, it is only a single page, relaying an

unconfirmed report that the FBI never even followed up on.

The file in question is a memo dated March 22, 1950—63 years ago last week. It was authored

by Guy Hottel, then head of our field office in Washington, D.C. (see sidebar below for a brief

biography). Like all memos to FBI Headquarters at that time, it was addressed to Director J.

Edgar Hoover and recorded and indexed in FBI records.

The subject of the memo was anything but ordinary. It related a story told to one of our

agents by a third party who said an Air Force investigator had reported that three “flying

saucers” were recovered in New Mexico. The memo provided the following detail:

“They [the saucers] were described as being circular in shape with

raised centers, approximately 50 feet in diameter. Each one was

occupied by three bodies of human shape but only three feet tall,

dressed in metallic cloth of a very fine texture. Each body was

bandaged in a manner similar to the blackout suits used by speed fliers

and test pilots.”

After relaying an informant’s claim that the saucers had been found because the government’s

“high-powered radar” in the area had interfered with “the controlling mechanism of the saucers,”

the memo ends simply by saying that “[n]o further evaluation was attempted” concerning the

matter by the FBI agent.

That might have been the end of this

particular story, just another informational

dead end in the FBI files. But when we

launched the Vault in April 2011, some

media outlets noticed the Hottel memo and

erroneously reported that the FBI had

posted proof of a UFO crash at Roswell,

New Mexico and the recovery of wreckage

and alien corpses. The resulting stories

went viral, and traffic to the new Vault

soared.

So what’s the real story? A few facts to

keep in mind:

First, the Hottel memo isn’t new. It was

first released publicly in the late 1970s and

had been posted on the FBI website for

several years prior to the launch of the

Vault.

Second, the Hottel memo is dated nearly

three years after the infamous events in

Roswell in July 1947. There is no reason to

Guy Hottel Biography

Guy L. Hottel was born around 1902. He

was a graduate of George Washington

University in Washington, D.C., where he

was a star football player. He was later

inducted into the university’s athletic hall of

fame. He entered the FBI as a special agent

in 1934. In December 1936, he was named

acting head of the FBI’s Washington Field

Office; he was appointed special agent in

charge the following May and served until

March 1941. Hottel was re-appointed special

agent in charge in February 1943 and served

until 1951, when he took a position in the

Identification Division. He retired in 1955.

Hottel was married three times and had two

sons. Following his FBI career, Hottel served

as executive secretary of the Horseman’s

Benevolent Association. He died in June

1990.

believe the two are connected. The FBI file on Roswell (another popular page) is posted

elsewhere on the Vault.

Third, as noted in an earlier story, the FBI has only occasionally been involved in investigating

reports of UFOs and extraterrestrials. For a few years after the Roswell incident, Director Hoover

did order his agents—at the request of the Air Force—to verify any UFO sightings. That practice

ended in July 1950, four months after the Hottel memo, suggesting that our Washington Field

Office didn’t think enough of that flying saucer story to look into it.

Finally, the Hottel memo does not prove the existence of UFOs; it is simply a second- or third-

hand claim that we never investigated. Some people believe the memo repeats a hoax that was

circulating at that time, but the Bureau’s files have no information to verify that theory.

Sorry, no smoking gun on UFOs. The mystery remains…

List Released With 132 Names Who Pulled Cyprus Deposits Ahead Of "Confiscation Day"

Submitted by Tyler Durden on 04/01/2013

With every passing day, it becomes clearer and clearer the Cyprus deposit confiscation "news"

was the most unsurprising outcome for the nation's financial system and was known by virtually

everyone on the ground days and weeks in advance: first it was disclosed that Russians had been

pulling their money, then it was suggested the president himself had made sure some €21

million of his family's money was parked safely in London, then we showed a massive surge in

Cyprus deposit outflows in February, and now the latest news is that a list of 132 companies and

individuals has emerged who withdrew their €-denominated deposits in the two weeks from

March 1 to March 15, among which the previously noted company Loutsios & Sons which is

alleged to have ties with the current Cypriot president Anastasiadis.

From Sigma:

Money transfers made within 15 days, namely from 1 until March 15. On Friday, March 15, had

met the Eurogroup, which officially decided to impose a tax on deposits by companies and

individuals in all financial institutions in Cyprus.

These 132 companies and individuals have withdrawn all deposits in euros, dollars and rubles,

which were transferred to other banks outside Cyprus.

The disclosure of the list, which shows that the outflow of deposits from local banks other

financial institutions outside Cyprus became massively raises suspicion that some had inside

information about the decisions taken by the other 16 eurozone countries in exchange for

financing deficits of the economy.

In listings, and the company is Loutsios & Sons Ltd, which carried 21 million deposit in a UK

bank, while the owner of the company is alleged to have family ties with the President of the

Republic, Nikos Anastasiadis.

The first column are names of companies and individuals in the second record of the amounts

withdrawn in the third column refers to the amount withdrawn in the same currency, the

currency in the fourth and the fifth and last column refers to the date of transfer.

So, ironically enough, in answer to our question from last week, "So Who Knew", the answer

appears to be everyone.

They took millions from Cyprus to escape the "haircut"

31/03/2013 23:24

Four pages with the names of some 132 companies and individuals who withdrew the bulk of

their deposits in euros, dollars and rubles kept in local banks reveals protothema.gr.

Transfers of money totaling causes vertigo made within 15 days, namely the period from 1st

until March 15, 2013. On Friday, March 15 at the Eurogroup meeting which decided formally

levy, as has been called the "haircut", on deposits of companies and individuals in all banks in

Cyprus. These 132 companies and individuals seem to have "inside" information about

impending single taxation of deposits in Cypriot banks so it proved as the elements contained

in lists, in most cases, they withdrew all their deposits in Euro, dollars and rubles, which

moved to other banks outside Cyprus, which apparently considered a "safe harbor."

The disclosure of the list, which shows that the outflow of deposits from local banks other

financial institutions outside Cyprus became massively creates reasonable suspicion that some

had inside information about the decisions taken by the other 16 eurozone countries in

exchange for funding deficits of the economy.

Apart from the huge moral issue raised, the government of Nikos Anastasiadis is heavily

exposed, since in some cases, those who took huge funds from abroad are relatives of the

President of the Republic, as the company Loutsios & Sons ltd owned by father of groom

Nikos Anastasiadis, who three days before the decision to "haircut" deposits transferred to a

British bank 21 million euros!

Read the lists with the names of all companies and individuals who withdrew their deposits

from Cyprus during the period from 1st until March 15.

The first column are names of companies and individuals in the second record of the amounts

withdrawn in the third column refers to the account balance of the People, the currency in the

fourth and the fifth and last column refers to the date of transfer.

It Can Happen Here: The Bank Confiscation Scheme for US and UK Depositors

By Ellen Brown

Global Research, March 29, 2013

Confiscating the customer deposits in Cyprus banks, it seems, was not a one-off, desperate idea of

a few Eurozone “troika” officials scrambling to salvage their balance sheets. A joint paper by the

US Federal Deposit Insurance Corporation and the Bank of England dated December 10, 2012,

shows that these plans have been long in the making; that they originated with the G20 Financial

Stability Board in Basel, Switzerland (discussed earlier here); and that the result will be to deliver

clear title to the banks of depositor funds.

New Zealand has a similar directive, discussed in my last article here, indicating that this isn’t just

an emergency measure for troubled Eurozone countries. New Zealand’s Voxy reported on March

19th:

The National Government [is] pushing a Cyprus-style solution to bank failure in New Zealand

which will see small depositors lose some of their savings to fund big bank bailouts . . . .

Open Bank Resolution (OBR) is Finance Minister Bill English’s favoured option dealing with a

major bank failure. If a bank fails under OBR, all depositors will have their savings reduced

overnight to fund the bank’s bail out.

Can They Do That?

Although few depositors realize it, legally the bank owns the depositor’s funds as soon as they are

put in the bank. Our money becomes the bank’s, and we become unsecured creditors holding IOUs

or promises to pay. (See here and here.) But until now the bank has been obligated to pay the

money back on demand in the form of cash. Under the FDIC-BOE plan, our IOUs will be

converted into “bank equity.” The bank will get the money and we will get stock in the bank. With

any luck we may be able to sell the stock to someone else, but when and at what price? Most

people keep a deposit account so they can have ready cash to pay the bills.

The 15-page FDIC-BOE document is called “Resolving Globally Active, Systemically Important,

Financial Institutions.” It begins by explaining that the 2008 banking crisis has made it clear that

some other way besides taxpayer bailouts is needed to maintain “financial stability.” Evidently

anticipating that the next financial collapse will be on a grander scale than either the taxpayers or

Congress is willing to underwrite, the authors state:

An efficient path for returning the sound operations of the G-SIFI to the private sector would be

provided by exchanging or converting a sufficient amount of the unsecured debt from the original

creditors of the failed company [meaning the depositors] into equity [or stock]. In the U.S., the

new equity would become capital in one or more newly formed operating entities. In the U.K., the

same approach could be used, or the equity could be used to recapitalize the failing financial

company itself—thus, the highest layer of surviving bailed-in creditors would become the owners

of the resolved firm. In either country, the new equity holders would take on the corresponding

risk of being shareholders in a financial institution.

No exception is indicated for “insured deposits” in the U.S., meaning those under $250,000, the

deposits we thought were protected by FDIC insurance. This can hardly be an oversight, since it

is the FDIC that is issuing the directive. The FDIC is an insurance company funded by premiums

paid by private banks. The directive is called a “resolution process,” defined elsewhere as a plan

that “would be triggered in the event of the failure of an insurer . . . .” The only mention of “insured

deposits” is in connection with existing UK legislation, which the FDIC-BOE directive goes on to

say is inadequate, implying that it needs to be modified or overridden.

An Imminent Risk

If our IOUs are converted to bank stock, they will no longer be subject to insurance protection but

will be “at risk” and vulnerable to being wiped out, just as the Lehman Brothers shareholders were

in 2008. That this dire scenario could actually materialize was underscored by Yves Smith in a

March 19th post titled When You Weren’t Looking, Democrat Bank Stooges Launch Bills to

Permit Bailouts, Deregulate Derivatives. She writes:

In the US, depositors have actually been put in a worse position than Cyprus deposit-holders, at

least if they are at the big banks that play in the derivatives casino. The regulators have turned a

blind eye as banks use their depositaries to fund derivatives exposures. And as bad as that is, the

depositors, unlike their Cypriot confreres, aren’t even senior creditors. Remember Lehman? When

the investment bank failed, unsecured creditors (and remember, depositors are unsecured creditors)

got eight cents on the dollar. One big reason was that derivatives counterparties require collateral

for any exposures, meaning they are secured creditors. The 2005 bankruptcy reforms made

derivatives counterparties senior to unsecured lenders.

One might wonder why the posting of collateral by a derivative counterparty, at some percentage

of full exposure, makes the creditor “secured,” while the depositor who puts up 100 cents on the

dollar is “unsecured.” But moving on – Smith writes:

Lehman had only two itty bitty banking subsidiaries, and to my knowledge, was not gathering

retail deposits. But as readers may recall, Bank of America moved most of its derivatives from its

Merrill Lynch operation [to] its depositary in late 2011.

Its “depositary” is the arm of the bank that takes deposits; and at B of A, that means lots and lots

of deposits. The deposits are now subject to being wiped out by a major derivatives loss. How bad

could that be? Smith quotes Bloomberg:

. . . Bank of America’s holding company . . . held almost $75 trillion of derivatives at the end of

June . . . .

That compares with JPMorgan’s deposit-taking entity, JPMorgan Chase Bank NA, which

contained 99 percent of the New York-based firm’s $79 trillion of notional derivatives, the OCC

data show.

$75 trillion and $79 trillion in derivatives! These two mega-banks alone hold more in notional

derivatives each than the entire global GDP (at $70 trillion). The “notional value” of derivatives

is not the same as cash at risk, but according to a cross-post on Smith’s site:

By at least one estimate, in 2010 there was a total of $12 trillion in cash tied up (at risk) in

derivatives . . . .

$12 trillion is close to the US GDP. Smith goes on:

. . . Remember the effect of the 2005 bankruptcy law revisions: derivatives counterparties are first

in line, they get to grab assets first and leave everyone else to scramble for crumbs. . . . Lehman

failed over a weekend after JP Morgan grabbed collateral.

But it’s even worse than that. During the savings & loan crisis, the FDIC did not have enough in

deposit insurance receipts to pay for the Resolution Trust Corporation wind-down vehicle. It had

to get more funding from Congress. This move paves the way for another TARP-style shakedown

of taxpayers, this time to save depositors.

Perhaps, but Congress has already been burned and is liable to balk a second time. Section 716 of

the Dodd-Frank Act specifically prohibits public support for speculative derivatives activities. And

in the Eurozone, while the European Stability Mechanism committed Eurozone countries to bail

out failed banks, they are apparently having second thoughts there as well. On March 25th, Dutch

Finance Minister Jeroen Dijsselbloem, who played a leading role in imposing the deposit

confiscation plan on Cyprus, told reporters that it would be the template for any future bank

bailouts, and that “the aim is for the ESM never to have to be used.”

That explains the need for the FDIC-BOE resolution. If the anticipated enabling legislation is

passed, the FDIC will no longer need to protect depositor funds; it can just confiscate them.

Worse Than a Tax

An FDIC confiscation of deposits to recapitalize the banks is far different from a simple tax on

taxpayers to pay government expenses. The government’s debt is at least arguably the people’s

debt, since the government is there to provide services for the people. But when the banks get into

trouble with their derivative schemes, they are not serving depositors, who are not getting a cut of

the profits. Taking depositor funds is simply theft.

What should be done is to raise FDIC insurance premiums and make the banks pay to keep their

depositors whole, but premiums are already high; and the FDIC, like other government regulatory

agencies, is subject to regulatory capture. Deposit insurance has failed, and so has the private

banking system that has depended on it for the trust that makes banking work.

The Cyprus haircut on depositors was called a “wealth tax” and was written off by commentators

as “deserved,” because much of the money in Cypriot accounts belongs to foreign oligarchs, tax

dodgers and money launderers. But if that template is applied in the US, it will be a tax on the poor

and middle class. Wealthy Americans don’t keep most of their money in bank accounts. They

keep it in the stock market, in real estate, in over-the-counter derivatives, in gold and silver, and

so forth.

Are you safe, then, if your money is in gold and silver? Apparently not – if it’s stored in a safety

deposit box in the bank. Homeland Security has reportedly told banks that it has authority to seize

the contents of safety deposit boxes without a warrant when it’s a matter of “national security,”

which a major bank crisis no doubt will be.

The Swedish Alternative: Nationalize the Banks

Another alternative was considered but rejected by President Obama in 2009: nationalize mega-

banks that fail. In a February 2009 article titled “Are Uninsured Bank Depositors in Danger?“,

Felix Salmon discussed a newsletter by Asia-based investment strategist Christopher Wood, in

which Wood wrote:

It is . . . amazing that Obama does not understand the political appeal of the nationalization option.

. . . [D]espite this latest setback nationalization of the banks is coming sooner or later because the

realities of the situation will demand it. The result will be shareholders wiped out and bondholders

forced to take debt-for-equity swaps, if not hopefully depositors.

On whether depositors could indeed be forced to become equity holders, Salmon commented:

It’s worth remembering that depositors are unsecured creditors of any bank; usually, indeed,

they’re by far the largest class of unsecured creditors.

President Obama acknowledged that bank nationalization had worked in Sweden, and that the

course pursued by the US Fed had not worked in Japan, which wound up instead in a “lost

decade.” But Obama opted for the Japanese approach because, according to Ed Harrison,

“Americans will not tolerate nationalization.”

But that was four years ago. When Americans realize that the alternative is to have their ready

cash transformed into “bank stock” of questionable marketability, moving failed mega-banks into

the public sector may start to have more appeal.

Ellen Brown is an attorney, chairman of the Public Banking Institute, and the author of eleven

books, including Web of Debt: The Shocking Truth About Our Money System and How We Can

Break Free. Her websites are webofdebt.com and ellenbrown.com. For details of the June 2013

Public Banking Institute conference in San Rafael, California, see here.

The Cyprus Bank Battle: The Long-planned Deposit Confiscation Scheme

A Safe and a Shotgun or Public Sector Banks?

By Ellen Brown

Global Research, March 22, 2013

“If these worries become really serious, . . . [s]mall savers will take their money out of banks and

resort to household safes and a shotgun.” — Martin Hutchinson on the attempted EU raid on

private deposits in Cyprus banks

The deposit confiscation scheme has long been in the making. US depositors could be next …

On Tuesday, March 19, the national legislature of Cyprus overwhelmingly rejected a proposed

levy on bank deposits as a condition for a European bailout. Reuters called it “a stunning setback

for the 17-nation currency bloc,” but it was a stunning victory for democracy. As Reuters quoted

one 65-year-old pensioner, “The voice of the people was heard.”

The EU had warned that it would withhold €10 billion in bailout loans, and the European Central

Bank (ECB) had threatened to end emergency lending assistance for distressed Cypriot banks,

unless depositors – including small savers – shared the cost of the rescue. In the deal rejected by

the legislature, a one-time levy on depositors would be required in return for a bailout of the

banking system. Deposits below €100,000 would be subject to a 6.75% levy or “haircut”, while

those over €100,000 would have been subject to a 9.99% “fine.”

The move was bold, but the battle isn’t over yet. The EU has now given Cyprus until Monday to

raise the billions of euros it needs to clinch an international bailout or face the threatened collapse

of its financial system and likely exit from the euro currency zone.

The Long-planned Confiscation Scheme

The deal pushed by the “troika” – the EU, ECB and IMF – has been characterized as a one-off

event devised as an emergency measure in this one extreme case. But the confiscation plan has

long been in the making, and it isn’t limited to Cyprus.

In a September 2011 article in the Bulletin of the Reserve Bank of New Zealand titled “A Primer

on Open Bank Resolution,” Kevin Hoskin and Ian Woolford discussed a very similar haircut plan

that had been in the works, they said, since the 1997 Asian financial crisis. The article referenced

recommendations made in 2010 and 2011 by the Basel Committee of the Bank for International

Settlements, the “central bankers’ central bank” in Switzerland.

The purpose of the plan, called the Open Bank Resolution (OBR) , is to deal with bank failures

when they have become so expensive that governments are no longer willing to bail out the lenders.

The authors wrote that the primary objectives of OBR are to:

ensure that, as far as possible, any losses are ultimately borne by the bank’s shareholders

and creditors . . . .

The spectrum of “creditors” is defined to include depositors:

At one end of the spectrum, there are large international financial institutions that invest in debt

issued by the bank (commonly referred to as wholesale funding). At the other end of the spectrum,

are customers with cheque and savings accounts and term deposits.

Most people would be surprised to learn that they are legally considered “creditors” of their banks

rather than customers who have trusted the bank with their money for safekeeping, but that seems

to be the case. According to Wikipedia:

In most legal systems, . . . the funds deposited are no longer the property of the customer. The

funds become the property of the bank, and the customer in turn receives an asset called a deposit

account (a checking or savings account). That deposit account is a liability of the bank on the

bank’s books and on its balance sheet. Because the bank is authorized by law to make loans up to

a multiple of its reserves, the bank’s reserves on hand to satisfy payment of deposit liabilities

amounts to only a fraction of the total which the bank is obligated to pay in satisfaction of its

demand deposits.

The bank gets the money. The depositor becomes only a creditor with an IOU. The bank is not

required to keep the deposits available for withdrawal but can lend them out, keeping only a

“fraction” on reserve, following accepted fractional reserve banking principles. When too many

creditors come for their money at once, the result can be a run on the banks and bank failure.

The New Zealand OBR said the creditors had all enjoyed a return on their investments and had

freely accepted the risk, but most people would be surprised to learn that too. What return do you

get from a bank on a deposit account these days? And isn’t your deposit protected against risk by

FDIC deposit insurance?

Not anymore, apparently. As Martin Hutchinson observed in Money Morning, “if governments

can just seize deposits by means of a ‘tax’ then deposit insurance is worth absolutely zippo.”

The Real Profiteers Get Off Scot-Free

Felix Salmon wrote in Reuters of the Cyprus confiscation:

Meanwhile, people who deserve to lose money here, won’t. If you lent money to Cyprus’s banks

by buying their debt rather than by depositing money, you will suffer no losses at all. And if you

lent money to the insolvent Cypriot government, then you too will be paid off at 100 cents on the

euro. . . .

The big winner here is the ECB, which has extended a lot of credit to dubiously-solvent Cypriot

banks and which is taking no losses at all.

It is the ECB that can most afford to take the hit, because it has the power to print euros. It could

simply create the money to bail out the Cyprus banks and take no loss at all. But imposing austerity

on the people is apparently part of the plan. Salmon writes:

From a drily technocratic perspective, this move can be seen as simply being part of a standard

Euro-austerity program: the EU wants tax hikes and spending cuts, and this is a kind of tax . . . .

The big losers are working-class Cypriots, whose elected government has proved powerless . . . .

The Eurozone has always had a democratic deficit: monetary union was imposed by the elite on

unthankful and unwilling citizens. Now the citizens are revolting: just look at Beppe Grillo.

But that was before the Cyprus government stood up for the depositors and refused to go along

with the plan, in what will be a stunning victory for democracy if they can hold their ground.

It CAN Happen Here

Cyprus is a small island, of little apparent significance. But one day, the bold move of its legislators

may be compared to the Battle of Marathon, the pivotal moment in European history when their

Greek forebears fended off the Persians, allowing classical Greek civilization to flourish. The

current battle on this tiny island has taken on global significance. If the technocrat bankers can

push through their confiscation scheme there, precedent will be established for doing it elsewhere

when bank bailouts become prohibitive for governments.

That situation could be looming even now in the United States. As Gretchen Morgenson warned

in a recent article on the 307-page Senate report detailing last year’s $6.2 billion trading fiasco at

JPMorganChase: “Be afraid.” The report resoundingly disproves the premise that the Dodd-Frank

legislation has made our system safe from the reckless banking activities that brought the economy

to its knees in 2008. Writes Morgenson:

JPMorgan . . . Is the largest derivatives dealer in the world. Trillions of dollars in such instruments

sit on its and other big banks’ balance sheets. The ease with which the bank hid losses and fiddled

with valuations should be a major concern to investors.

Pam Martens observed in a March 18th article that JPMorgan was gambling in the stock market

with depositor funds. She writes, “trading stocks with customers’ savings deposits – that truly has

the ring of the excesses of 1929 . . . .”

The large institutional banks not only could fail; they are likely to fail. When the derivative scheme

collapses and the US government refuses a bailout, JPMorgan could be giving its depositors’

accounts sizeable “haircuts” along guidelines established by the BIS and Reserve Bank of New

Zealand.

Time for Some Public Sector Banks?

The bold moves of the Cypriots and such firebrand political activists as Italy’s Grillo are not the

only bulwarks against bankster confiscation. While the credit crisis is strangling the Western

banking system, the BRIC countries – Brazil, Russia, India and China – have sailed through largely

unscathed. According to a May 2010 article in The Economist, what has allowed them to escape

are their strong and stable publicly-owned banks.

Professor Kurt von Mettenheim of the Sao Paulo Business School of Brazil writes, “The credit

policies of BRIC government banks help explain why these countries experienced shorter and

milder economic downturns during 2007-2008.” Government banks countered the effects of the

financial crisis by providing counter-cyclical credit and greater client confidence.

Russia is an Eastern European country that weathered the credit crisis although being very close

to the Eurozone. According to a March 2010 article in Forbes:

As in other countries, the [2008] crisis prompted the state to take on a greater role in the banking

system. State-owned systemic banks . . . have been used to carry out anticrisis measures, such as

driving growth in lending (however limited) and supporting private institutions.

In the 1998 Asian crisis, many Russians who had put all their savings in private banks lost

everything; and the credit crisis of 2008 has reinforced their distrust of private banks. Russian

businesses as well as individuals have turned to their government-owned banks as the more

trustworthy alternative. As a result, state-owned banks are expected to continue dominating the

Russian banking industry for the foreseeable future.

The entire Eurozone conundrum is unnecessary. It is the result of too little money in a system in

which the money supply is fixed, and the Eurozone governments and their central banks cannot

issue their own currencies. There are insufficient euros to pay principal plus interest in a pyramid

scheme in which only the principal is injected by the banks that create money as “bank credit” on

their books. A central bank with the power to issue money could remedy that systemic flaw, by

injecting the liquidity needed to jumpstart the economy and turn back the tide of austerity choking

the people.

The push to confiscate the savings of hard-working Cypriot citizens is a shot across the bow for

every working person in the world, a wake-up call to the perils of a system in which tiny cadres of

elites call the shots and the rest of us pay the price. When we finally pull back the veils of power

to expose the men pulling the levers in an age-old game they devised, we will see that prosperity

is indeed possible for all.

For more on the public bank solution and for details of the June 2013 Public Banking Institute

conference in San Rafael, California, see here.

Ellen Brown is an attorney, chairman of the Public Banking Institute, and the author of eleven

books, including Web of Debt: The Shocking Truth About Our Money System and How We Can

Break Free. Her websites are webofdebt.com and ellenbrown.com.

US: Bank Consolidation Continues U.S. Bank acquires two California banks

The U.S. Bank has taken over the banking operations, including all deposits and virtually all assets,

of two financial institutions in Southern California, authorities confirmed on Saturday.

The two institutions are Downey Savings and Loan Association and PFF Bank & Trust of Rancho

Cucamonga, both based in Newport Beach near Los Angeles.

U.S. Bank’s parent company U.S. Bancorp said the takeover took place Friday night in a

transaction facilitated by the Federal Deposit Insurance Corp (FDIC).

“The timing of this transaction could not be better, as we have just completed the highly successful

integration of our Mellon 1stBusiness Bank acquisition in Los Angeles and Orange County,” said

Joseph M. Otting, vice chairman of commercial banking and U.S. Bancorp’s Western U.S. senior

executive.

“With the addition of the Downey Savings & Loan and PFF Bank & Trust branch locations, we

continue to widen our distribution network in our growing California and Arizona markets,” he

said.

The banks are the 21st and 22nd to fail in the nation this year, and the fourth and fifth banks to

close in California, according to the FDIC.

The combined 213 branches of the two organizations will reopen as branches of U.S. Bank under

their normal business hours, including those with Saturday hours.

Customers will automatically become depositors of U.S. Bank, and their accounts will continue to

be insured by the FDIC, which stressed that depositors will be able to access their money over the

weekend by writing checks or using ATM or debit cards.

Downey Savings’ branches are in Southern California, the Bay Area and Central California, with

the exception of five locations in Arizona. PFF’s branches are in eastern Los Angeles, northern

Orange, San Bernardino and Riverside counties.

U.S. Bank acquires 12.8 billion dollars of assets and assumes 11.3 billion dollars of liabilities,

including 9.7 billion dollars of deposits, of Downey Savings & Loan; and 3.7 billion dollars in

assets and 3.5 billion dollars of liabilities, including 2.4 billion dollars of deposits, of PFF Bank &

Trust.

As part of the transactions, U.S. Bank said it has agreed to assume the first 1.5 billion and 100

million dollars of expected losses on the assets of Downey Savings & Loan and PFF Bank & Trust,

respectively.

Any losses in excess of those amounts will be subject to a loss-sharing agreement with the FDIC.

Under the agreement, U.S. Bank will also implement a loan modification program similar to the

one the FDIC announced in August stemming from the failure of another California bank, the

IndyMac Bank.

Prior to the takeover, U.S. Bank, the sixth-largest commercial bank in the United States, operated

2,556 banking offices nationwide, including 353 in California.

WHY TEXAS WANTS ITS GOLD BACK FROM THE FEDS

More security 'in the event of a national or international financial crisis'

Published: 5 days ago

GARTH KANT

“The eyes of Texas are upon you” goes the song, but right now those eyes seem to be squarely

focused on the financial crisis in Cyprus.

Texas Gov. Rick Perry is supporting a bill that would return the state’s $1 billion in gold reserves

currently stored by the Federal Reserve at a vault in New York to the state.

The sponsor of the bill, State Rep. Giovanni Capriglione, R-Southlake, told the Texas Tribune,

“For us to have our own gold, a lot of the runs on the bank and those types of things, they happen

because people are worried that there’s nothing there to back it up.”

Bank runs were the great fear in the Mediterranean-island country of Cyprus today, as banks

reopened for the first time since March 16, while the European Union imposed unprecedented

austerity measures on the nation, including confiscating money in bank accounts. WND reported

on March 18 the concerns that the crisis could spread to the U.S. financial system.

Capriglione said his bill is, “not about putting Texas on its own gold standard, [but instead will]

give the state a reputation as being more financially secure in the event of a national or

international financial crisis.”

“If we own it,” Perry told Glenn Beck last week, “I will suggest to you that that’s not someone

else’s determination whether we can take possession of it back or not.”

Capriglione’s bill would establish the Texas Bullion Depository to hold the gold.

“We don’t want just the certificates. We want our gold. And if you’re the state of Texas, you

should be able to get your gold,” said Capriglione.

However, he concedes transporting $1 billion worth of gold bars would be impractical, so he

suggests selling the gold and repurchasing it in Texas.

The bill might get bipartisan support. State Sen. Rodney Ellis, D-Houston, called the bill “an

interesting concept” and wants to consult financial experts on its merits.

That bipartisan support may stem from the severity of the crisis in Europe and fears it could

spread here.

Cyprus fell into turmoil while the government and European financial leaders hammered out a

$13 billion emergency assistance package to keep the nation’s banks from collapsing.

Cypriots were outraged and took to the streets to protest an unprecedented plan to impose a

confiscatory tax on all bank accounts.

Depositors with more than 100,000 euros, or about $130,000, would get 9.9 percent immediately

deducted from their accounts. Smaller deposits would suffer a deduction of 6.75 percent.

Following the protests, the plan to confiscate money from the smaller accounts was rejected by

Cyprus’ parliament.

Banks in Cyprus reopened today with a 300-euro ($383) daily limit on withdrawals and

restrictions on transfers to accounts outside the country. Customers were orderly, though they

faced lines of 15-20 people.

This is the first time since the introduction of the euro that a European country has prevented

bank depositors from having full access to their own cash.

The European Union said in a statement today the restrictions on access to money will be lifted

as soon as possible.

The heavily indebted government of Cyprus is still planning to raise as much as $8.3 billion with

its “one-time” tax on bank accounts of more than 100,000 euros, to satisfy the bailout demands

of the EU.

The Cyprus crisis has sparked a surge in an alternative currency that exists only in cyberspace.

The trading value of a digital cash called “bitcoins” has soared, increasing by 20 percent on one

U.S. currency exchange in just the last week.

“Incremental demand for bitcoin is coming from the geographic areas most affected by the

Cypriot financial crisis – individuals in countries like Greece or Spain, worried that they will be

next to feel the threat of deposit taxes,” said Nicholas Colas, chief market strategist at

ConvergEx.

“This is a clear sign that people are looking for alternative ways to get their money out of the

country,” said Christopher Vecchio, currency analyst at DailyFX.

Even though some economists say Cyprus is a special case and the “contagion” of taxing bank

accounts is unlikely to spread, until now bank accounts worldwide, no matter how dire the

government’s financial woes, have been held sacrosanct.

Now the government in at least one nation is poised to simply take money out of depositors’

accounts. That’s a first.

Could it happen in the U.S.?

Some experts say probably not – at least not in the same way as in Cyprus.

Economist, speaker and author Jerry Robinson, who runs Follow the Money Daily and is a

featured columnist at WND, assessed the crisis in Cyprus.

“It has a lot to do with politics, Angela Merkel’s reelection bid and also a few others trying to

stay in power,” he said.

Robinson said it’s interesting to observe that such powers are playing tough with a tiny nation

like Cyprus, while bigger nations with worse economies, such as Italy and Spain, have not been

attacked in the same way.

But he said the plans are drastic.

“This is nuclear war on the banking [industry],” Robinson observed.

Some analysts point out that in the U.S., government is already “taxing” Americans’ bank

accounts by other, less obvious and more long-term means than the naked cash-grab playing out

in Cyprus.

For instance, interest rates in the U.S. are near zero, so depositors are not getting paid for the use

of their funds, effectively “loaning” their hard-earned money to banks. Then, thanks to inflation,

their deposits become worth progressively less and less.

The real-world inflation rate – as measured by the actual rise in prices of essentials, including

food and fuel – is far higher in the U.S. than the official 2 percent. But even using the 2 percent

figure, over the next few years the buying power of American depositors’ bank accounts will be

just as diminished as that of Cyprus bank-account holders.

But this new and unsettling form of “tax” is not the only concern. The immediate concern for

many is that the crisis in Cyprus will spread, causing bank runs in other troubled European

Union countries such as Greece, Italy, Spain and Portugal. A European financial crisis of that

magnitude would undoubtedly hurt the U.S. economy.

Most American depositors take comfort in the fact that their savings accounts in banks and credit

unions are federally guaranteed up $250,000. However, those government funds are designed to

bail out very infrequent bank failures. They in no way could cover all depositors’ accounts in the

case of a widespread run on U.S. banks, as is occurring now in Cyprus.

Respected hard-money proponent James Turk says bank runs in Europe are a wake-up call to all

bank depositors around the world.

“Bank insurance means nothing these days when bureaucrats and politicians are looking for

wealth to grab,” Turk said.

“To me this proposed bailout is outright theft, and theft cannot be justified, but the central

planners are trying to do that anyway,” he added.

“The events in Cyprus are obviously a scary message that the Greeks, Spaniards, Italians and

others are taking seriously, because they see that their money in the bank is at risk, too. But the

less obvious message is that all money in banks is at risk. Not only are bank assets impaired, but

all the banks are interlinked because they lend to one another and own a lot of debt of insolvent

countries,” concluded Turk.

Cyprus is particularly vulnerable to instability in the banking sector. The country’s banking

assets are about eight times the size of the economy. And foreign investors hold almost half of

the 70 billion euros deposited in Cyprus. Moody’s estimates $19 billion of those deposits are

owned by Russian corporations. Many suspect the Russian mafia uses banks in Cyprus to

launder money.

When the Cyrpus crisis erupted, the U.S. Treasury Department issued a statement, reading, “The

Treasury Department is monitoring the situation in Cyprus closely, and Secretary Jacob Lew has

been speaking with his European counterparts. It is important that Cyprus and its euro-area

partners work to resolve the situation in a way that is responsible and fair and ensures financial

stability.”"

But the damage may be already done to confidence in the European banking system. This is the

first time a national bailout has proposed to impose losses on bank depositors. Some call that a

dangerous precedent.

Read more at http://www.wnd.com/2013/03/why-texas-wants-its-gold-back-from-the-

feds/#pgTOpItsux8PHqBK.99

DEPARTMENT OF HOMELAND SECURITY LATEST TO HIGHLIGHT FLAWED

LOGIC OF CUOMO GUN GRAB

Posted by Greg Ball on Thursday, January 24th, 2013

Personal Defense Weapons Solicitation

Solicitation Number: HSCEMS-12-R-00011

Agency: Department of Homeland Security

Office: Immigration & Customs Enforcement

Location: ICE-OAQ-MS

It may not take ‘10 bullets to kill a deer’, but… an unloaded AR-15 protected a household

Brewster, N.Y. – 1/24/2013 – The Department of Homeland Security is the latest to find

Governor Cuomo’s anti-Second Amendment agenda is at odds with reality. A report by Steve

McGough of RadioViceOnline.com cites a General Service Administration (GSA) request for

proposal (RFP) on behalf of the Department of Homeland Security and member components

such as Immigration and Customs Enforcement (ICE) seeking over 7,000 AR-15’s and matching

30 round clips.

The RFP describes these weapons as “personal defense weapons” and states they are “suitable

for personal defense use in close quarters.” Governor Cuomo in his recently passed “SAFE Act”

has banned these very same modern sporting rifles and clips the federal government finds to be

“personal defense weapons.”

This federal government rebuke of Cuomo comes just hours after news broke that two students

from Rochester lives were evidently saved by an AR-15 as armed intruders entered their home.

The very same personal defense weapon Cuomo plans to take out of law abiding gun owners

hands protected two of New York’s best and brightest.

Senator Greg Ball (Patterson – R, C, I) Chairman of the Senate Homeland Security Committee

said, “Now the Department of Homeland Security even agrees that these modern sporting

firearms, made illegal by Governor Cuomo, are suitable for self defense. On top of that, a recent

story reports that two RIT students who were legal gun owners were protected by an AR-15. The

story may have had a very tragic ending, had Governor Cuomo’s anti-self defense bill been in

full effect. If the story is accurate, their legal ownership of this modern sporting rifle evidently

saved their lives. While Cuomo says ‘it doesn’t take 10 bullets to kill a deer’, it evidently only

took an unloaded AR-15 to protect a household. Luckily these criminals struck before Governor

Cuomo’s gun grab was fully unleashed.”

Personal Defense Weapons Solicitation

Solicitation Number: HSCEMS-12-R-00011

Agency: Department of Homeland Security

Office: Immigration & Customs Enforcement

Location: ICE-OAQ-MS

Notice Details

Packages

Interested Vendors List

Keywords: search

Items 1-12 of 12

Last Name

First Name

Contractor

Business

Types

NAICS

Codes

Erwin Frank

Infusion Funding - Contract

Financing Solutions

accountsreceivablefactoring.m

e

60 Crescent Bend Allendale,

NJ 07401 US

Email:

ferwin@infusionfunding.com

Phone: 201-477-8710

Bailey David

TELUDYNE TECH

INDUSTRIES, INC.

1018 S BATESVILLE RD

GREER, SC 296504586 USA

Email:

david@teludynetech.com

Phone: 864-334-5300

For-Profit

Organization,

Veteran

Owned

Business,

Manufacturer

of Goods,

Contracts and

Grants

332995,

541990

Chicoine Dick

ARES, INC.

818 FRONT STREET PORT

CLINTON, OH 434520000

USA

Email:

dick.chicoine@aresinc.net

Phone: 4196568049

For-Profit

Organization,

Manufacturer

of Goods,

Contracts and

Grants

332510,

332710,

332721,

332994,

541690,

541712

Last Name

First Name

Contractor

Business

Types

NAICS

Codes

Cuellar Justin

ACHILLEAN SOLUTIONS

INTERNATIONAL LLC

2514 WYOMING BLVD NE

ALBUQUERQUE, NM

871121028 USA

Email:

achilleansolutions@gmail.com

Phone: 5053750302

Minority-

Owned

business, Self-

Certified

Small

Disadvantaged

Business, For-

Profit

Organization,

Veteran

Owned

Business,

Limited

Liability

Company,

Hispanic

American

Owned,

Contracts and

Grants

512110,

541611,

541612,

541614,

541990,

561210,

561611,

561612,

611430,

611699,

611710

Gray Thomas

TROY INDUSTRIES, INC.

151 CAPITAL DR WEST

SPRINGFIELD, MA

010891420 USA

Email: tom@troyind.com

Phone: 4137884288

For-Profit

Organization,

Manufacturer

of Goods,

Contracts and

Grants, S

Corporation

314991,

326199,

332510,

332710,

332721,

332993,

332995,

332994,

333314,

541330

Messina Chris BARRETT FIREARMS

MFG, INC.

For-Profit

Organization,

332992,

332994

Last Name

First Name

Contractor

Business

Types

NAICS

Codes

5926 MILLER LANE

CHRISTIANA, TN

370375612 USA

Email: chrism@barrett.net

Phone: 6156910555

Manufacturer

of Goods,

Contracts and

Grants, S

Corporation

O'Donnell Kent

BLACKSHEEP TRAINING

LLC

3111 N MESA DR

FARMINGTON, NM

874014032 USA

Email: swat505_8@msn.com

Phone: 5053246698

Minority-

Owned

business, For-

Profit

Organization,

Economically

Disadvantaged

Women-

Owned Small

Business,

Women-

Owned Small

Business,

Woman-

Owned

Business,

Veteran

Owned

Business,

Limited

Liability

Company,

Native

American

Owned,

Contracts and

Grants

423450,

611519,

921150,

922120

Last Name

First Name

Contractor

Business

Types

NAICS

Codes

Ochsner Hon.

OCHSNER GROUP, LLC,

THE

5321 WALDO DR

ALEXANDRIA, VA

223155575 USA

Email:

opps@ochsnergroup.com

Phone: 7032006502

Self-Certified

Small

Disadvantaged

Business, For-

Profit

Organization,

Veteran

Owned

Business,

Limited

Liability

Company,

Service

Disabled

Veteran

Owned,

Contracts and

Grants

221119,

236116,

236117,

236210,

237110,

237990,

238220,

238290,

311223,

311225,

325199,

327999,

332312,

332710,

332992,

332993,

332995,

332994,

333618,

334513,

336611,

423430,

423450,

424210,

441221,

488390,

493120,

515111,

515210,

518210,

541330,

541512,

541513,

541611,

Last Name

First Name

Contractor

Business

Types

NAICS

Codes

541614,

541690,

541712,

561210,

561499,

561611,

561612,

561621,

611699,

928110

RAMIREZ DAVID

MATERIAL

INTEGRATION, INC.

839 ROCKY MOUNTAIN

CT VALRICO, FL 335949313

USA

Email: ssdavidss@live.com

Phone: 5614247859

Minority-

Owned

business, For-

Profit

Organization,

Veteran

Owned

Business,

Hispanic

American

Owned,

Service

Disabled

Veteran

Owned,

Contracts and

Grants

211111,

211112,

212111,

212112,

212113,

212210,

212221,

212222,

212231,

212234,

212291,

212299,

212311,

212312,

212313,

Reilly Frank

FRANK REILLY

GAO Bid Protest Attorney,

Government Procurement Law

Teaming Agreements & GSA

Schedule Help

Last Name

First Name

Contractor

Business

Types

NAICS

Codes

www.frankvreilly.com

Fort Lauderdale, FL 33334 US

Email:

frank@frankvreilly.com

Phone: 561-400-0072

Webb Peter

FNH USA, LLC

7918 Jones Branch Dr Mclean,

VA 22102 US

Email: peterw@fnhusa.com

Phone: 7032881292

For-Profit

Organization,

Manufacturer

of Goods

Wright Leonard

WRIGHT'S INTERESTS

LLC

5215 N O'CONNOR BLVD

SUITE 200 IRVING, TX

750393732 USA

Email:

wrightsinterests@gmail.com

Phone: 9729877072

Minority-

Owned

business, For-

Profit

Organization,

Limited

Liability

Company,

Black

American

Owned,

Contracts and

Grants

332993,

332994,

423910,

423990,

813319

Items 1-12 of 12

Source:

Original Story: http://radioviceonline.com/department-of-homeland-security-sport-rifle-ar-15-

suitable-for-personal-defense/

RFP: https://www.fbo.gov/?s=opportunity&mode=form&id=d791b6aa0fd9d3d8833b2efa083000

33&tab=core&_cview=0

13WHAM on RIT Students: http://www.13wham.com/news/local/story/Homeowners-Scare-Off-

Burglars/7yaLSXAvCUGBkwgAZpGO4g.cspx

For more information please contact Joe Bachmeier at (845) 200 9716.

Why are AR-15′s ‘Personal Defense’ Weapons for the DHS but ‘Assault Rifles’ for

Citizens?

Posted on January 30, 2013 by Gillian

Activist Post | January 29 2013

“We are fast approaching the stage of ultimate inversion: the stage where government is free to

do as it pleases, while the citizens may act only by permission.” - Ayn Rand

Why are fully-automatic AR-15s with 30-round magazines and hollow-point bullets called

‘personal defense’ weapons when the Department of Homeland Security purchases them, but

semi-auto AR-15s are assault rifles in the hands of citizens?

DHS Orders 7000 AR-15s – Wiki Image

The Department of Homeland Security filed a purchase bid this past June titled “Personal

Defense Weapons Solicitation”. It is combined bid for 5.56x45mm NATO ammunition and

“select-fire firearm suitable for personal defense.”

Increasingly the government is giving itself privileges that they are taking away from citizens.

This is becoming most obvious in regards to gun rights, but it’s becoming a widespread abuse of

power across all aspects of society. The government is supposed to derive its authority from the

people not the other way around.

Ron Paul recently addressed this exact topic proposing the simple solution: ”Anything the

government assumes they have a right to do to us, we should assume we have a right to do that to

them.”

If we are to be a nation of, by and for the people where the government has no rights that aren’t

afforded to citizens, then this assumption may be the check on government overreach that’s so

desperately needed.

By the way, the DHS is only authorized to work within the U.S. borders, so who do they plan to

use these weapons on?

Watch the brief video below covering a bit more detail on the DHS purchase order:

Solicitation Number:

HSCEMS-12-R-00011

Notice Type:

Combined Synopsis/Solicitation

Synopsis:

Added: Jun 07, 2012 11:47 am

This announcement is being placed in accordance with the Federal Acquisition Regulation

(FAR) paragraph 5.207.  It is a combined synopsis/solicitation for commercial

items.  5.56x45mm NATO, select-fire firearm suitable for personal defense.  This

announcement constitutes the only solicitation and proposals are being requested.  See

attachments for complete details.

Please consult the list of document viewers if you cannot open a file.

(Draft)

Posted Date:

June 7, 2012

SF-30(PDW).pdf (90.92 Kb)

Description: Standard Form 30

Section B(PDW)2.pdf (149.56 Kb)

Description: Section B - Supplies or Services and Prices/Costs

Section C(PDW)ver 7.pdf (246.13 Kb)

Description: Section C - Description/Specifications/Statement of Work

Section D(PDW)2.pdf (123.10 Kb)

Description: Section D - Packaging and Marking

Section E(PDW).pdf (122.45 Kb)

Description: Section E - Inspection and Acceptance

Section F(PDW).pdf (126.32 Kb)

Description: Section F - Deliveries or Performance

Section G(PDW).doc (37.50 Kb)

Description: Section G - Contract Administration Data

Section H(PDW).pdf (143.20 Kb)

Description: Section H - Special Contract Requirements

Section I(PDW).pdf (159.43 Kb)

Description: Section I - Contract Clauses

Section J(PDW).pdf (137.83 Kb)

Description: Section J - List of Documents, Exhibits, and Other Attachments

Attachment J-1 - Past Performance Questionnairesl.do... (48.00 Kb)

Download/View Attachment J-1 - Past Performance Questionnairesl.doc

Description: Attachment J-1 Past Performance Questionnaire

Section K(PDW).doc (40.00 Kb)

Description: Section K - Representations, Certifications, and Other Statements of Offerors or

Respondents

Section L(PDW).pdf (177.28 Kb)

Description: Section L - Instructions, Conditions, and Notices to Offerors

Section M(PDW)2.pdf (162.39 Kb)

Description: Section M - Evaluation Factors for Award

Contracting Office Address:

801 I Street, NW, Suite 910,

Washington, District of Columbia 20536-0001

United States

Place of Performance:

801 I Street NW

Washington, District of Columbia 20536

United States

Primary Point of Contact.:

Troy T. Teachey

troy.teachey@ice.dhs.gov

Phone: 2027322592

Department of Homeland Security: Sport rifle (AR-15) “suitable for personal defense” (Updates)

Posted by Steve McGough on January 15, 2013 at 8:28 am | Share via e-mail

The United States Department of Homeland Security has stated a rifle chambered in 5.56 NATO

(compatible with .223) with a magazine capacity of 30 rounds is “suitable for personal defense

use in close quarters…”

Well smack me up-side the head. First, a hat tip to Breitbart’s Awr Hawkins who pointed us to a

posted General Services Administration (GSA) business opportunity solicitation posted and

updated last summer. Basically, the site posts a request for proposal (RFP) for personal defense

weapons for the Immigration and Customs Enforcement (ICE) division of the Department of

Homeland Security (DHS).

Welcome to all the new vistors! I hope you’ll take the opportunity to check out posts we have on

gun control and other topics. We honestly think there is a great amount of untapped

information you can use as you stand up for your 2nd Amendment rights. Click Here for a

listing of our gun control articles. Check out the radio show too – weekdays from 9 a.m. to noon

ET.

This RFP is not for the traditional armed forces. This solicitation is specific to law enforcement

who almost exclusively work within and along the borders of the United States. Certainly the

threats ICE officers may be subject to are the same exact threats law-abiding residents could be

subject to.

Section C of solicitation number HSCEMS-12-R-00011 is pretty specific. Here is a direct link to

the Section C PDF (246KB). My emphasis in bold. Notice the term assault weapon or assault

rifle is not used anywhere in the document. The “assault weapon” terminology is only used for

non-LEOs and non-military who own those firearms.

The scope of this contract is to provide a total of up to 7,000 5.56x45mm North Atlantic Treaty

Organization (NATO) personal defense weapons (PDW) throughout the life of this contract to

numerous Department of Homeland Security components. …

In paragraph 3.1 under requirements and testing standards we read…

DHS and its components have a requirement for a 5.56x45mm NATO, select-fire firearm

suitable for personal defense use in close quarters and/or when maximum concealment is

required.

Isn’t that inconvenient for the gun control politicians? In requirement paragraph 3.9.10, they find

a need for a 30-round magazine.

The action shall be capable of accepting all standard NATO STANAG 20 and 30 round M16

magazines (NSN 1005-00-921-5004) and Magpul 30 round PMAG (NSN 1005-01-576-5159).

The magazine well shall be designed to allow easy insertion of a magazine.

In paragraph 3.21.2, they again specify the requirement for a 30-round magazine.

The magazine shall have a capacity to hold thirty (30) 5.56x45mm NATO rounds.

If you did not catch the interesting part in one of the quoted sentences above, let me point it out

to you. The personal defense weapon should be select-fire capable.

DHS and its components have a requirement for a 5.56x45mm NATO, select-fire firearm

suitable for personal defense use in close quarters…

The action shall be select-fire (capable of semi-automatic and automatic fire).

From the Fire Control Section, paragraph 3.10.1.

The fire control selector shall have three positions; safe, semi-automatic, and automatic. The

selector shall have positions which are clearly labeled for the mode of fire.

This formal DHS RFP – which is specific concerning requirements – clearly indicates a select-

fire rifle is appropriate for personal defense in close quarters. If it is appropriate for law

enforcement, why is it not appropriate for civilian use? (Select-fire/automatic capable weapons

are generally not used in situations where you need accuracy; like for home defense.)

As mentioned before, citizens and gun owners have compromised during the last 75 years

including making access to automatic fire rifles extremely restricted to the point you can not

buy a new one from any gun dealer or manufacture. We have compromised enough.

The National Firearms Act of 1934, the Federal Firearms Act of 1938, the Gun Control Act of

1968, the creation of the ATF in 1972, the Law Enforcement Act Protection Act of 1986,

the Gun-Free Schools Act of 1990, the Brady Handgun Violence Prevention Act of 1994,

the Assault Weapon Ban of 1994, and the Protection of Lawful Commerce in Arms Act of

2005 were all federal laws designed to restrict the ownership of specific firearm categories,

restrict ownership in general, or make us “more safe.” Of course, state laws have also been

implemented as a compromise. The permit process in many states includes high fees, required

training, multi-page applications, interviews with officers, interviews with law enforcement

administrators, officers visiting your neighbors, yearly reviews, and finger printing in booking

rooms among other requirements.

And again…

Why a semi-automatic rifle a good choice for home defense…

Here is a list of valid reasons, in no particular order.

1. You can mount a light, red dot sight and/or a laser to the rifle to make it easy to used and

aim during the day or night.

2. They have a reasonable recoil, making the gun - for many users – easier to shoot as

compared to a defense-caliber shotgun or pistol.

3. They can be customized to “fit” a variety of body types and shooting styles. They can be

configured and adjusted for different shooting distances (less than 5 yards to more than

200 yards).

4. The .223/5.56 self-defense round is appropriate for use within a home, even in an urban

environment. Ballistic experts have found rounds from these calibers “dump energy”

quickly and break apart or begin to tumble after penetrating the first barrier. Will rifle

rounds go through walls? You bet. Will pistol calibers like 9mm, .40 and .45 go through

walls? You bet. Will shotgun rounds go through walls? You bet. That said, there is

significant evidence the .223/5.56 self-defense rounds penetrate no more than, and often

less than traditional handgun calibers and many shotgun rounds.

5. A rifle is much more capable of stopping a threat as compared to a pistol.

6. Semi-automatic rifles are more accurate than a pistol or shotgun.

7. Ammunition is (normally) readily available and (normally) priced within reason. Present

time excluded.

8. You can buy high-capacity magazines for many semi-automatic rifles. In a self-defense

situation, you want to avoid manipulating the weapon at all except for pulling the trigger

straight back. Law enforcement and civilians do not favor high-capacity magazines so

they can shoot more rounds, they favor them so they can manipulate their weapon

less. If reloading is needed, it is possible but let’s be completely honest, in many self

defense situations, ten rounds may not be enough.

Update: Since this post is getting a fair number of visitors, I want to point out I did not state

select-fire rifles set to full auto is one of the reasons it’s a good choice for home defense. Many

people who have commented completely ignored my list of compromises gun owners have

made since the late 1930s. My point is .. that’s enough.

Update 2: Yes, I realize law enforcement – as compared to the regular military – are civilians.

Even if they work for ICE, DEA, Border Patrol or ATF, they are civilians … it’s just a way for

me to identify the difference. I guess I could have used “regular people” instead of “civilians,”

but LEOs are regular people too.

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1.0 SCOPE The scope of this contract is to provide a total of up to 7,000 5.56x45mm North

Atlantic Treaty Organization (NATO) personal defense weapons (PDW) throughout the life of

this contract to numerous Department of Homeland Security components. This Statement of

Work delineates performance criteria and testing to be used for the evaluation of the firearm.

2.0 APPLICABLE DOCUMENTS 2.1 General. This Statement of Work lists all performance

requirements for the acquisition of a DHS 5.56x45mm NATO personal defense weapon. 2.2

Government Documents. The following documents form a part of this document to the extent

specified herein: MIL-STD-810G: Department of Defense Test Method Standard for

Environmental Engineering Considerations and Laboratory Tests MIL-STD-1913:

Dimensioning of Accessory Mounting Rail for Small Arms Weapons

2.3 Non-Government publications. The following documents form a part of this document to

the extent specified herein: ANSI/SAAMI Z299.4-1992: Voluntary Industry Performance

Standards for Pressure & Velocity of Centerfire Rifle Sporting Ammunition for the Use of

Commercial Manufacturers Sporting Arms and Ammunition Manufacturer’s Institute (SAAMI)

555 Danbury Road Wilton, CT 06897

ANSI/ASQ Z1.4-2008: Sampling Procedures and Tables for Inspection by Attributes

American Society for Quality 600 North Plankinton Avenue Milwaukee, Wisconsin 53203

ISO 9001:2008, Quality Management Systems Requirements International Organization for

Standardization 1, rue de Varembe, Case postale 56 CH-1211 Geneva 20, Switzerland (Non-

Governmental standards and other publications are normally available from the organizations

that prepare or distribute the documents. These documents may also be available in or through

libraries, Internet search, or other informational services). 2.4 Order of Precedence. In the event

of a conflict between the text of this Statement of Work and the references cited herein, this

solicitation/contract takes precedence.

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3.0 REQUIREMENTS AND TESTING STANDARDS 3.1 General. DHS and its components

have a requirement for a 5.56x45mm NATO, select-fire firearm suitable for personal defense use

in close quarters and/or when maximum concealment is required. Only one specific

nomenclature firearm from each Contractor shall be submitted for solicitation testing and

considered for contract award. 3.2 Testing. The specifications that are subject to testing

under this contract are set forth in Table I, Requirements Verification Test Matrix on page 4.

The National Firearms and Tactical Training Unit (NFTTU) will conduct all testing; however,

NFTTU reserves the right to use an outside laboratory to conduct performance verification if it

deems necessary. The awardee or awardees of the subject contract agrees to allow DHS to

release testing data of their firearm samples to Federal agencies, Military, and law enforcement.

Release of this data will be on a case-by-case basis and will only be forwarded after receipt of a

request on official agency or department letterhead. Requests to DHS will state that the

“Information is requested for official use only and will not be disseminated outside the

requesting agency (i.e. Federal agencies, etc.) or department. 3.2.1 Solicitation Test. The

solicitation testing will verify that initial firearm samples supplied by each competing Contractor

meet the minimum requirements of this SOW. Contractor’s samples will then be rated on their

ability to surpass all performance parameters in Table I, Requirements Verification Test Matrix,

on page 4. Those performance characteristics listed under Basic Compliance criteria shall be

certified by the Contractor, and/or evaluated by Non- Destructive Inspection (NDI) conducted by

the NFTTU. Major performance characteristics are requirements that will be ascertained by

functional testing of the firearms. Testing may be halted for any sample (and the associated

samples rejected) if a firearm fails any Basic Compliance or Major requirement (as determined

by NFTTU). Testing will be halted for any sample (and the associated samples rejected) if a

firearm from that Contractor exhibits hazardous and/or unsafe attributes (as determined by

NFTTU). All solicitation samples from awardee of the subject contract will become property of

DHS/ICE NFTTU upon receipt and will not be returned. Samples from the unsuccessful offerors

will be returned. 3.2.2 First Article Test (FAT). The specifications annotated for FAT in Table I

will be verified for First Article samples received under the contract. All FAT samples must

meet the requirements set forth in this solicitation and exhibit performance that is comparable to

what was demonstrated during solicitation testing for all requirements during FAT. The

Government reserves the right to decrease the amount of testing it performs under the FAT

regime. All samples submitted pursuant to FAT will become property of DHS/ICE NFTTU

upon receipt and will not be returned. The Government may invoke its right to demand the

Contractor conduct a FAT for the following conditions: a. First twelve production samples after

solicitation. b. Design change of the firearm or components. c. Design change of manufacturer's

production process and/or equipment. d. Relocation of manufacturer’s production facility. e.

Major firearm quality defects, recalls, and/or any other substandard performance issues.

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f. Manufacturer changes supplier of critical components (barrel, receiver, internal mechanism

parts that affect firing). g. A production lapse of six months or more. The Government will be

responsible for conducting a FAT if it is invoked for condition "a". The Contractor will be

responsible (under Government supervision) for conducting the FAT for all other conditions and

will be responsible for all associated expenses to include testing, shipping costs,

administrative/processing costs, and any other expenses associated with FAT and/or firearm

quality issues. 3.2.3 Limited Technical Inspection (LTI). The specifications annotated for LTI in

Table I will be verified for each production sample received during the duration of the contract.

All contract production samples must meet the requirements set forth in this solicitation and

exhibit performance that is comparable to what was exhibited during solicitation testing for all

requirements during LTI. The Government reserves the right to increase the amount of testing it

performs under the LTI regime up to the full amount of testing set forth in the “Solicitation”

column. The Government also reserves the right to decrease the amount of testing it performs

under the LTI regime. Firearms will be inspected in their entirety for general compliance. 3.2.4

Retest FAT. Any retest of FAT requested by the Contractor will be at the Contractor’s expense.

ICE reserves the right to send representatives to observe the retest if testing is performed at the

Contractor’s location.

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Table I: Requirements Verification Test Matrix

Performance Characteristic

Requirement Paragraph

Test Method

Solicitation FAT LTI

Basic Compliance

Quality System 3.3 4.2 X X Sample Size 3.5 4.3 X X Documentation 3.6 4.4 X X

Supplemental Items 3.7 4.5 X X Action/Mechanism 3.9 4.6 X X X Fire Control Selector 3.10

4.7 X X X Trigger 3.11 4.8 X X Overall Length 3.12 4.9 X X Weight 3.13 4.10 X X Barrel

3.14 4.11 X X Caliber 3.15 4.12 X X X Pistol Grip 3.16 4.13 X X X Buttstock 3.17 4.14 X X X

Forend 3.18 4.15 X X X Sling Attachments 3.19 4.16 X X X Finish 3.20 4.17 X X X Magazine

3.21 4.18 X X X Sights 3.22 4.19 X X X

Major

Reliability 3.24 4.20 X X Durability 3.25 4.21 X X High Temperature 3.26 4.22 X X Low

Temperature 3.27 4.23 X X Salt Water Immersion 3.28 4.24 X X Sand & Dust 3.29 4.25 X X

Parts Interchange 3.30 4.26 X X Drop Test 3.31 4.27 X X Accuracy 3.32 4.28 X X

3.3 Quality Management System (QMS). The manufacturer shall have a QMS in place that

enables the organization to identify, measure, control and improve key manufacturing processes.

3.3.1 Quality Control (QC)/Quality Assurance (QA). The Contractor shall provide a current

QC/QA process synopsis including examples of their quality plans for the manufacturing of DHS

firearms with their solicitation sample. Submission of a complete copy of the manufacturer’s

Quality Manual or a copy of the manufacturer’s ISO certification would fulfill this requirement.

3.4 Warranty. 3.4.1 The Contractor shall warrant the firearm for at least one (1) year from the

date of delivery of the firearm to the Government. The manufacturer shall repair or replace

firearms due to defects in material or workmanship. 3.4.2 During the period of the warranty, the

Government will ship defective item (s) back to the manufacturer’s facility for repair or

replacement. The Contractor shall be responsible for all return shipping charges. 3.5 Sample

Size. 3.5.1 Solicitation Test. The sample size for the solicitation submittal shall be twelve (12)

firearms and ten (10) magazines per firearm.

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3.5.2 First Article Test (FAT). The sample size for the FAT submittal shall be twelve (12)

firearms and ten (10) magazines per firearm. NOTE: Samples shall be delivered to: NFTTU, 320

East Chestnut Avenue, Altoona, Pennsylvania 16601. 3.6 Documentation. The following

documentation shall be supplied with each firearm model submitted for solicitation (unless

otherwise noted): - Technical proposal containing the following (supplied with solicitation only):

- Company profile for the Contractor - Description of manufacturing facilities and capabilities of

the manufacturer - Description of proposed firearm (product data sheet) - Operators/User’s

Manual (one per firearm) - Technical Package - Parts list detailing all firearms components

nomenclature - An exploded view drawing detailing the assembly of the firearm parts. -

Engineering drawing package for all firearm components. The drawing package of awardee of

the subject contract will be retained by the Government for source control through the contract

period of performance and returned to the Contractor at the conclusion of the contract. Drawings

submitted by unsuccessful offerors will be returned with the solicitation firearm samples. All

engineering drawing package material will be treated as confidential and proprietary items.

Drawing package shall be submitted as an electronic copy on disc. - Maintenance procedures

detailing a preventative maintenance regiment for replacement or adjustment of parts and

recommended solvents and lubricants. This will be the basis for the Contractor to determine the

quantity of spare parts to supply with the firearm samples and will be adhered to during

solicitation reliability/durability function fire testing. - Armorer’s Overhaul/Rebuild Manual

(supplied with FAT only). Six printed copies and one electronic copy on disc shall be provided.

The manual shall detail all procedures and gaging requirements necessary for overhaul/repair of

the firearm. - Copy of manufacturer’s QC/QA process synopsis, Quality Manual, or ISO

certificate as detailed in Section 3.3.1. - Certificate of Conformance (C of C) stating that the

firearm samples meet all Statement of Work Basic Compliance requirements. - Certificate of

Conformance (C of C) stating that the Contractor has function fired a minimum of 7,500 rounds

of 5.56mm through a PDW sample with no Class 4 malfunctions (see Table II). The

Contractor’s test firearm shall be the same model as the solicitation sample submission. - Repair

Parts Price List as detailed in Section 3.23. NOTE: All Certificate of Conformance (C of C)

shall be signed by a designated company official authorized to bind the company. NOTE: All

solicitation sample packaging and documentation sent with the samples shall clearly be identified

with the Contractor’s name and solicitation number.

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3.7 Supplemental Items. The following items shall be supplied with each firearm model

submitted for solicitation and FAT testing: - All potential spare parts (excluding trigger

assembly, barrel, bolt, bolt carrier assembly, and receiver) needed to support reliability/durability

testing outlined in Sections 3.23/3.24. The quantity of spare parts supplied by the Contractor

should be based on the Contractor’s recommended maintenance intervals for a 7,500 round test. -

Two (2) sets of special tools, if needed, for complete disassemble/reassemble of the firearm. 3.8

Training. The Contractor shall provide armorer training within thirty days of contract award.

Training shall be provided to no less than twelve (12) designated armorers, on-site at the NFTTU

Altoona, PA location. Training duration shall be up to five (5) days in length and will cover all

aspects of maintenance, repair, and overhaul/rebuild of the firearm. Training will include

firearm design, operation, assembly/disassembly, maintenance, malfunctions, and gaging. The

Contractor shall provide two (2) cut-away models of the firearm at the time of on-site training

and these will become the property of the NFTTU. 3.9 Action/Mechanism. 3.9.1. The firearm

shall be able to be operated by a left or right-handed user without permanent modification. 3. 9.2

The action shall be select-fire (capable of semi-automatic and automatic fire). 3.9.3 The action

shall fire from a closed bolt. 3.9.4 The action shall be gas operated. 3.9.5 The action shall have

a bolt catch that automatically locks the bolt to the rear upon firing the last round in the

magazine. The operator shall be able to manually use the bolt catch to lock the bolt to the rear

with the magazine removed from the firearm. When the bolt catch is depressed the bolt shall

return to battery position. 3.9.6 The magazine catch shall securely retain the magazine in the

magazine well. The magazine release shall be spring loaded and be designed to prevent

inadvertent activation. The magazine release, when depressed, shall disengage the magazine

catch and permit the magazine to fall free from the magazine well. 3.9.7 The action shall possess

a firing pin designed to prevent accidental discharges if the firearm is dropped. 3.9.8 The

firearm shall be designed in such a way that the operator can clear a malfunction using

immediate action without the use of special tools. 3.9.9 The firearm shall be able to be safely

operated by a shooter wearing gloves. 3.9.10 The action shall be capable of accepting all

standard NATO STANAG 20 and 30 round M16 magazines (NSN 1005-00-921-5004) and

Magpul 30 round PMAG (NSN 1005-01-576-5159). The magazine well shall be designed to

allow easy insertion of a magazine. 3.9.11 The receiver top shall be equipped with an integral

MIL-STD-1913 Picatinny rail for mounting sights and other accessories. 3.9.12 The firearm shall

be capable of being field stripped without the use of special tools.

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3.9.13 The firearm shall be designed so that components cannot be readily assembled incorrectly

or in reverse, thus rendering the firearm inoperable. 3.10 Fire Control Selector. 3.10.1 The fire

control selector shall have three positions; safe, semi-automatic, and automatic. The selector

shall have positions which are clearly labeled for the mode of fire. 3.10.2 The selector shall

operate manually without binding from one position to another when the hammer is cocked.

3.10.3 The selector shall remain in place in each position under spring detent. 3.10.4 The

selector shall be capable of being checked for position both visually and by feel. 3.10.5 The

selector shall be movable between the mode of fire positions by the operator without moving the

firing hand from the shooting position. 3.10.6 The selector shall be designed to allow for

operation by left and right handed shooters with no parts changes or modification. 3.11 Trigger

3.11.1 The trigger shall return to its normal forward position under spring action after partial or

complete trigger pull. 3.11.2 The trigger pull shall not be less than 5.5 pounds and not exceed 9.5

pounds. 3.12 Overall Length. 3.12.1 The overall length of the firearm shall not exceed 30

inches with the stock fully extended. 3.12.2 The overall length of the firearm shall not exceed 20

inches with the stock fully retracted and/or folded. 3.13 Weight. The unloaded weight of the

firearm (without magazine) shall not exceed 7 pounds. 3.14 Barrel. 3.14.1 The barrel shall have

a rifling twist rate of 1 in 7 inches. 3.14.2 The barrel bore and chamber shall have a corrosion

resistant and wear resistant coating or treatment that is equal to or better than chrome plating.

3.14.3 The barrel shall be equipped with a flash suppressor and/or muzzle brake. The muzzle

device will be rated on its ability to reduce muzzle signature. It is desired that the muzzle devise

effectively reduces muzzle rise during firing. 3.14.4 A minimum barrel length is not specified. It

is desired that the barrel length be as long as possible while maintaining the overall length

requirements of Section 3.12. 3.15 Caliber. The firearm shall be chambered for 5.56x45mm

NATO. 3.16 Pistol Grip. 3.16.1 The pistol grip shall be a fixed, vertical pistol grip constructed

of a durable material. 3.16.2 The pistol grip shall be designed for use by right or left handed

shooters.

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3.17 Buttstock. 3.17.1 The buttstock shall be easily adjustable for length of pull. 3.17.2 The

buttstock shall be either collapsible or folding. 3.17.3 The firearm shall be fully operational

with the buttstock either fully extended and/or collapsed/folded. 3.17.4 The buttstock, if a

folding design, shall not readily move from the folded position. 3.17.5 The buttstock, whether

collapsible or folding design, shall be able to be deployed using the non-firing hand without

removing the firing hand from the pistol grip. 3.17.5 The butt plate shall either be serrated,

checkered, or be manufactured from a non-slip material. 3.18 Forend. 3.18.1 The front forend

shall incorporate MIL-STD 1913 Picatinny rails on the top, bottom, and both sides to

accommodate the attachment of optics or accessories. 3.18.2 It is desired that the forend

Picatinny rail sections be capable of being removed or added. If rail sections are removable, the

sections shall be designed/constructed to not readily loosen. 3.18.3 The forend shall be

constructed of durable, heat resistant material. 3.18.4 A one-piece monolithic forend/upper

receiver is acceptable. 3.19 Sling Attachments. 3.19.1 The buttstock shall have slots capable of

accepting a 1 ¼” wide sling and/or have the capability to mount a removable sling attachment.

3.20 Finish. 3.20.1 The external finish shall be a non-reflective black, dark grey, or dark earth

color. 3.20.2 The firearm exterior and interior shall be protected with a durable corrosion

resistant coating or made from durable corrosion resistant material. 3.20.3 The coating and

materials shall be abrasive, impact, and chemical resistant equal to or greater than phosphated

steel or anodized aluminum. 3.20.4 The interior and exterior surfaces shall be free of rough

surfaces, voids, cracks or other manufacturing defects. 3.21 Magazine. 3.21.1 Magazines shall

be compatible with standard NATO STANAG M16 design. 3.21.2 The magazine shall have a

capacity to hold thirty (30) 5.56x45mm NATO rounds. 3.21.3 Two (2) magazines shall be

supplied with each firearm shipped under contract.

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3.22 Sights. 3.22.1 Front Sight Assembly. The front sight shall have a black or dark gray

non-reflective finish. The front sight shall be capable of being removed and/or be a fold down

design. The front sight post shall be protected. 3.22.2 Backup Rear Sight Assembly. The rear

sight shall have a black or dark gray non-reflective finish. The rear sight shall have at least one

aperture of no less than 0.20 inches diameter. The rear sight shall be capable of being removed

and/or be a fold down design. The rear sight shall be mounted at the rear of the receiver. The

rear sight shall not interfere with the mounting of optics. The rear sight shall be adjustable for

windage and from at least 100 to 300 yards/meters elevation. 3.23 Repair Parts. 3.23.1 The

Contractor shall provide a price list (by nomenclature description) of all firearms components

and assemblies to be used by DHS for repair and maintenance of the firearm throughout its

anticipated service life. Pricing shall be good for a five (5) year period. 3.23.2 The awardee or

awardees of the subject contract shall provide notice of design changes to any component and a

First Article Test (FAT) will be required as outlined in Section 3.2.2. 3.24 Reliability. 3.24.1

Samples shall be tested with 4,000 rounds (per firearm). The firearms shall collectively exhibit

no more than twenty (20) Class 1, nine (9) Class 2, or two (2) Class 3 malfunctions (see Table

II). The firearms shall exhibit no Class 4 malfunctions. If any firearm experiences a Class 4

malfunction, testing of that Contractor’s samples will be discontinued. The number/type of

firearm attributed malfunctions and parts breakages shall be recorded and used to rate

performance. Malfunction classes are listed in Table II. The Contractor shall supply a

minimum of six (6) trained shooters to participate in solicitation reliability testing. A

Contractor’s representative shall be available during testing to assist NFTTU personnel with

maintenance and firearm repairs (using supplied replacement parts). The headspace of each

firearm shall be monitored throughout reliability testing. The bolt shall not fully close on the

“field max” 1.4730 inch headspace gage (NSN 5220-00-070-7814). Testing shall be

discontinued for a firearm if replacement parts are not available. 3.24.2 Cycles Completed -

Reliability. Each firearm will be rated for its ability to complete 250 round firing cycles without

repair or replacement of parts. 3.25 Durability. 3.25.1 Three (3) samples used during reliability

shall be tested with an additional 3,500 rounds (per firearm). The firearms shall collectively

exhibit no more than fifteen (15) Class 1, six (6) Class 2, or one (1) Class 3 malfunctions (see

Table II). The firearms shall exhibit no Class 4 malfunctions. If any firearm experiences a Class

4 malfunction, testing of that Contractor’s samples will be discontinued. The number/type of

firearm attributed malfunctions and parts breakages shall be recorded and used to rate

performance. The Contractor shall supply a minimum of three (3) trained shooters to participate

in solicitation durability testing. A

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Contractors’ representative can be available during testing to assist NFTTU personnel with

maintenance and firearm repairs (using supplied replacement parts). The headspace of each

firearm shall be monitored throughout durability testing. The bolt shall not fully close on the

“field max” 1.4730 inch headspace gage (NSN 5220-00-070-7814). Testing shall be

discontinued for a firearm if replacement parts are not available. 3.25.2 Cycles Completed -

Durability. Each firearm will be rated for its ability to complete 250 round firing cycles without

repair or replacement of parts. Rating will be cumulative based on the total of 30 cycles from

reliability and durability. NOTE: Contractor supplied shooters shall be familiar with the

firearm’s function and safety features as well as standard range safety practices. NOTE: The

total duration of the firearm reliability/durability testing will be a minimum of 5 weekdays.

NFTTU will coordinate with each Contractor regarding testing schedule and location. Table II:

Malfunction and Type Allowance Class Type 1 Malfunction can be cleared by the operator

within 10 seconds. 2 Malfunction that cannot be cleared by operator within 10 seconds; but can

be cleared by operator with equipment immediately available to a law enforcement officer in the

field (i.e., Leatherman-type tool or pocketknife). 3* Malfunction not correctable by operator and

requires a higher level of maintenance. This may include the replacement or repair of a part

other than the barrel, bolt, action assembly, or receiver. 4 Catastrophic malfunction that requires

replacement of the barrel, bolt, receiver, and/or anything that affects safe operation. *Parts

replacement(s) in accordance with the manufacturer’s recommendation for preventative

maintenance does not constitute a Class 3 malfunction.

3.26 High Temperature. Samples shall be tested with 60 rounds (per firearm), after temperature

soaking of the firearm for 8 hours at 125oF. The number/type of firearm attributed malfunctions

and parts breakages shall be recorded and used to rate performance. The firearm shall not

exhibit any Class 4 malfunctions. 3.27 Low Temperature. Samples shall be tested with 60

rounds (per firearm), after temperature soaking of the firearm for 8 hours at –45oF. The

number/type of firearm attributed malfunctions and parts breakages shall be recorded and used to

rate performance. The firearm shall not exhibit any Class 4 malfunctions. 3.28 Salt Water

Immersion. Samples shall be tested with 60 rounds (per firearm), after immersion in a 5% saline

solution at a depth of 6 inches for one minute followed by 24 hours in an environmental chamber

at 70oF and 70% humidity. The number/type of firearm attributed malfunctions and parts

breakages shall be recorded and used to rate performance. The firearm shall not exhibit any

Class 4 malfunctions. 3.29 Sand & Dust. Samples shall be tested with 60 rounds (per firearm),

after being subjected to a blowing sand and dust environment in accordance with MIL-STD-

810G. The number/type of firearm attributed malfunctions and parts breakages shall be recorded

and used to rate performance. The firearm shall not exhibit any Class 4 malfunctions. 3.30 Parts

Interchange. All firearm components subjected to disassembly shall be 100% interchangeable

between firearms without additional fitting or alternation (excluding the bolt/barrel). Upon

reassembly, the firearm shall be fully functional.

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3.31 Drop Test. The firearm shall be equipped with a discharge control mechanism that is

designed to prevent the firearm from firing as a result of an impact, while the hammer is in the

cocked position, with the safety off. Additionally, the firearm shall be serviceable and exhibit no

major damage as the result of being dropped on a concrete pad from a height of three feet in the

following orientations: a. Muzzle facing the concrete pad. b. Butt of stock down facing the

concrete pad. c. Top of the receiver and barrel facing the concrete pad. NOTE: Major damage is

defined as damage that would result in the gun being unsafe to fire, discharging during testing, or

malfunctioning during firing.

3.32 Accuracy. 3.32.1 Accuracy. Each firearm will be rated for its initial accuracy at 50 yards.

The average extreme spread of five 5-shot groups shall be no greater than 2.5 inches.

4. 0 VERIFICATION 4.1 Performance verification. Table I details all performance criteria.

Except as otherwise specified, the Government reserves the right to perform any of the

inspections and tests set forth in this Statement of Work, throughout the duration of the contract,

where such inspections and tests are necessary to ensure that supplies and services conform to

prescribed requirements. 4.2 Quality Management System. The Government will analyze the

manufacturer’s quality management system for basic compliance. If the Contractor is ISO

9001:2008 certified, they shall submit written proof of ISO certification from an accredited

agency. NOTE: ISO certification is not required, but will suffice for compliance with 3.3.

Additionally, Government personnel or a third-party representative may perform a QC system

audit after contract award. If conducted, the audit will be performed at the Contractor’s

manufacturing facility. 4.3 Sample Size. All samples submitted will be visually inspected. 4.4

Documentation. All required documentation as listed in Section 3.6 shall accompany the sample

and will be examined to verify compliance. 4.5 Supplemental Items. All items will be inspected

to verify compliance. 4.6 Action/Mechanism. All samples submitted will be visually and

physically examined to verify compliance. 4.7 Fire Control Selector. All samples submitted

will be visually and physically examined to verify compliance. The safety mechanism of all

samples submitted will be tested for compliance by actuating and checking for function every

250 rounds during the reliability/durability test phase. 4.8 Trigger. The trigger pull of all

samples submitted will have the trigger pull measured by a calibrated Dvorak TriggerScan

trigger pull tester. Initial and post reliability/durability trigger pull shall be measured and

recorded on all samples. The average of three (3) trigger pulls per sample will be used to verify

compliance. 4.9 Overall Length. All samples submitted will have the overall length measured

with a steel ruler to verify compliance.

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4.10 Weight. All samples submitted will be weighed using an electronic scale to verify

compliance. 4.11 Barrel. All samples submitted will have the barrel verified by physical

inspection and the use of a bore scope. Barrel length will be measured from the face of the

closed bolt to the barrel muzzle. A Phantom v7 high-speed camera will be utilized to detect

visible muzzle flash emitted from the muzzle while firing. Five rounds of Lake City M855

5.56mm will be fired in a darkened range with the firearm mounted in a rest. 4.12 Caliber. All

samples submitted will have the chamber dimensions verified by physical inspection and the use

of certified headspace gages. Initial and post reliability/durability headspace shall be measured

and recorded on all samples. The gage shall be inserted in the cleaned chamber and the bolt

returned to the battery position. Only finger pressure shall be used to close the bolt. Maximum

headspace: bolt shall not fully close. 4.13 Pistol Grip. All samples submitted will be visually

and physically examined to verify compliance. 4.14 Buttstock. All samples submitted will be

visually and physically examined to verify compliance. 4.15 Forend. All samples submitted

will be visually and physically examined to verify compliance. 4.16 Sling Attachments. All

samples submitted will be visually and physically examined to verify compliance. 4.17 Finish.

All samples submitted will be visually and physically examined to verify compliance. 4.18

Magazine. All samples submitted will be visually and physically examined to verify

compliance. The magazine shall be capable of holding thirty (30) 5.56x45mm NATO rounds.

4.19 Sights. All samples submitted will be visually and physically examined to verify

compliance. 4.20 Reliability. Six (6) samples will undergo a 4,000 round (per firearm) reliability

test in multiples of 250 round firing cycles. The following ammunition types will be utilized:

Speer 24450 64 grain .223 Remington, Speer XM223SP1 62 grain .223 Remington, Federal

XM223T3 62 grain .223 Remington, and Lake City M855 5.56mm. Ammunition will be

supplied by DHS. The firing cycle shall be 60% automatic mode and 40% semi-automatic

mode. Sustained rate of fire will be maintained throughout each cycle and each 250 round cycle

will be fired within 5 minutes. The firearms will be cooled and cleaned after each firing cycle.

A detailed inspection will be performed after every forth (4th) firing cycle. All recommended

maintenance procedures will be adhered to and parts will be changed at the Contractor

recommended maintenance interval (using supplied replacement parts). All malfunctions will be

analyzed by two (2) NFTTU armorers to determine the malfunction type/cause and malfunctions

attributed to the firearm(s) will be recorded. Firearms experiencing a Class 3 malfunction will be

repaired (using Contractor supplied replacement parts) and will continue testing. Non-

destructive testing will be conducted on each firearm after completion of the reliability test. The

key firearm components (barrel, bolt, and receiver) shall be free of cracks, seams and other

defects. The headspace shall be measured using certified headspace gages. 4.21 Durability.

Three (3) randomly selected samples used in the reliability test will undergo an additional 3,500

round (per firearm) durability test in multiples of 250 round firing cycles. The following

ammunition types will be utilized: Speer 24450 64 grain .223 Remington, Speer XM223SP1 62

grain .223 Remington, Federal XM223T3 62 grain .223 Remington, and Lake City M855

5.56mm. The firing cycle shall be 60% automatic mode and 40% semi-automatic mode.

Sustained rate of fire will be maintained throughout each cycle and each 250 round cycle will be

fired within 5 minutes. All

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firing shall be from the shoulder. The firearms will be cooled and cleaned after each firing cycle.

A detailed inspection will be performed after every second (2nd) firing cycle. All recommended

maintenance procedures will be adhered to and parts will be changed at the Contractor’s

recommended maintenance interval (using supplied replacement parts). All malfunctions will be

analyzed by two (2) NFTTU armorers to determine the malfunction type/cause and malfunctions

attributed to the firearm(s) will be recorded. Firearms experiencing a Class 3 malfunction will be

repaired (using supplied replacement parts) and will continue testing. Testing shall be

discontinued for a firearm if replacement parts are not available. If any firearm experiences a

Class 4 malfunction, testing of that Contractor’s samples will be discontinued. Non-destructive

testing will be conducted on each firearm after completion of the durability test. The key firearm

components (barrel, bolt, and receiver) shall be free of cracks, seams and other defects. The

headspace shall be measured using certified headspace gages. 4.22 High Temperature. Three

(3) randomly selected samples will be temperature conditioned in an environmental chamber at

125 +5oF and 0% humidity for 8 hours. After 8 hours of temperature conditioning each firearm

will be used to fire 60 rounds of ammunition within 2 minutes after removal from the

environmental chamber. The ammunition used will also be temperature conditioned at 125oF for

8 hours. Any malfunction will be recorded and analyzed by NFTTU armorers. 4.23 Low

Temperature. Three (3) randomly selected samples will be temperature conditioned in an

environmental chamber at -45 +5oF and 0% humidity for 8 hours. After 8 hours of temperature

conditioning each firearm will be used to fire 60 rounds of ammunition within 2 minutes after

removal from the environmental chamber. The ammunition used will also be temperature

conditioned at -45oF for 8 hours. Any malfunction will be recorded and analyzed by NFTTU

armorers. 4.24 Salt Water Immersion. Three (3) randomly selected samples will be immersed in

5% (by weight) saline solution at a depth of 6 inches for one minute. Upon removal from the

saline solution, the firearms will be subjected to environmental conditioning at 70 +5oF and 70%

humidity for 24 hours in an environmental conditioning chamber. After environmental

conditioning, each firearm will be used to fire 60 rounds of ammunition within 2 minutes after

removal from the environmental chamber. Any malfunction observed will be recorded and

analyzed by NFTTU armorers. 4.25 Sand & Dust. Three (3) randomly selected samples will be

subjected to blowing sand and dust per Method 510.5 detailed in MIL-STD-810G . After sand

and dust conditioning, each firearm will be used to fire 60 rounds of ammunition. Any

malfunction observed will be recorded and analyzed by NFTTU armorers. 4.26 Parts

Interchange. Prior to reliability testing, an NFTTU armorer will disassemble all samples. All

parts and assemblies, excluding barrels and bolts, will be sorted and placed in individual bins.

All parts and assemblies will be inspected for burrs, sharp edges and workmanship. A second

NFTTU armorer will reassemble the firearms using randomly selected components. Any

components found not to be interchangeable and the need for any tools needed to

disassemble/reassemble the firearm will be noted. A Contractors’ representative can be available

during parts interchange testing to assist NFTTU personnel with disassembly and assembly. 4.27

Drop Test. Three (3) randomly selected samples will undergo 3-foot drop testing onto a concrete

pad. One firearm will be oriented to drop so as to land on the muzzle, one firearm will be

oriented to drop so as to land on the butt of the firearm stock, and one firearm will be oriented to

drop so as to land on the top of the barrel/receiver. Each firearm will contain a magazine loaded

with dummy ammunition.

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C-14

A cartridge case containing a live primer will be in the chamber during the drop test. After drop

testing, the firearms will undergo a LTI by NFTTU armorers and 5 rounds of ammunition will be

fired in each firearm. Any discharges during drop testing and malfunctions during subsequent

firing will be recorded and analyzed by NFTTU armorers. 4.28 Accuracy. Three (3) randomly

selected samples will be subjected to initial accuracy testing. Accuracy will be evaluated at 50

yards by shooting five (5) 5-shot groups. The ammunition used for accuracy testing will be

Speer 24450 64 grain .223 Remington. The firearm will be accuracy tested mounted in a

machine rest that is designed to securely clamps the receiver top of Colt M4 type carbines. If the

sample firearm is of such a design that the NFTTU machine rest cannot be utilized, the

Contractor will be notified and will have an opportunity to supply one of their own design for

use in accuracy testing. An Oehler optical target or equivalent system will be used to record the

groups.

5.0 REPORTING REQUIREMENTS

The Contractor shall submit a monthly report providing the Contracting Officer (CO) and

Contracting Officer’s Representative (COR) status of all orders placed under the respective

contracts by all DHS components to include; delivery order number; delivery order date, quantity

for each Contract Line Item Number (CLIN); total delivery order obligation amount; and

delivery order due date.

Section C HSCEMS-12-R-00011

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C-15

Definitions American National Standards Institute (ANSI) – Organization that oversees the

development of voluntary consensus standards for products, services, processes, systems, and

personnel in the United States.

Certificate of Conformance (C of C) – Contractor’s assurance that the equipment provided meets

the contract’s specifications.

National Firearms Tactical Training Unit (NFTTU) – Organization responsible for the

facilitation and execution of ICE law enforcement responsibilities by providing personnel with

firearms, intermediate force weapons, protective equipment, training, logistical support and

guidance that will testing to ensure that firearms, body armor, and ammunition carried by ICE

agents – and officers and agents at other DHS components meet or exceed the highest level of

standards.

Personal Defense Weapon (PDW) - 5.56x45mm NATO, select-fire firearm suitable for personal

defense use in close quarters and/or when maximum concealment is required.

Quality Management System – Organizational structure, procedures, processes and resources

needed to ensure the product manufactured meets the needs of the customer.

Sporting Arms and Ammunition Manufacturers Institute Inc. (SAAMI)– Organization of the

United States leading manufacturers of firearms, and ammunition. Reponsible for creating and

publishing industry standards for safety, interchangeability, reliability, and quality.

Obama's Crackdown on Whistleblowers

Tim Shorrock

March 26, 2013 | This article appeared in the April 15, 2013 edition of The Nation.

(AP Photo/Pablo Martinez Monsivais)

In the annals of national security, the Obama administration will long be remembered for its

unprecedented crackdown on whistleblowers. Since 2009, it has employed the World War I–era

Espionage Act a record six times to prosecute government officials suspected of leaking

classified information. The latest example is John Kiriakou, a former CIA officer serving a

thirty-month term in federal prison for publicly identifying an intelligence operative involved in

torture. It’s a pattern: the whistleblowers are punished, sometimes severely, while the

perpetrators of the crimes they expose remain free.

Research support provided by the Investigative Fund of the Nation Institute.

About the Author

Tim Shorrock

Tim Shorrock, who has been contributing to The Nation since 1983, is the author of Spies for

Hire: The Secret World of...

Also by the Author

Naoto Kan and the End of 'Japan Inc.' (World Leaders, History, World)

Criticism of the government’s response to the catastrophe has obscured major political changes.

Tim Shorrock

1 comment

Watching What You Say (Bush Administration, Corporate Responsibility, Covert Ops, Politics,

Society)

How are AT&T, Sprint, MCI and other telecommunications giants cooperating with the National

Security Agency’s warrantless surveillance program?

Tim Shorrock

The hypocrisy is best illustrated in the case of four whistleblowers from the National Security

Agency: Thomas Drake, William Binney, J. Kirk Wiebe and Edward Loomis. Falsely accused of

leaking in 2007, they have endured years of legal harassment for exposing the waste and fraud

behind a multibillion-dollar contract for a system called Trailblazer, which was supposed to

“revolutionize” the way the NSA produced signals intelligence (SIGINT) in the digital age.

Instead, it was canceled in 2006 and remains one of the worst failures in US intelligence history.

But the money spent on this privatization scheme, like so much at the NSA, remains a state

secret.

The story goes back to 2002, when three of the whistleblowers—Loomis, Wiebe and Binney—

asked the Pentagon to investigate the NSA for wasting “millions and millions of dollars” on

Trailblazer, which had been chosen as the agency’s flagship system for analyzing intercepted

communications over a smaller and cheaper in-house program known as ThinThread. That

program was invented by Loomis, one of the NSA’s top software engineers, and Binney, a

legendary crypto-scientist, both of whom began working for the NSA during the Vietnam War.

But despite ThinThread’s proven capacity to collect actionable intelligence, agency director Gen.

Michael Hayden vetoed the idea of deploying the system in August 2001, just three weeks before

9/11.

Hayden’s decisions, the whistleblowers told The Nation, left the NSA without a system to

analyze the trillions of bits of foreign SIGINT flowing over the Internet at warp speed, as

ThinThread could do. During the summer of 2001, when “the system was blinking red” with

dangerous terrorist chatter (in former CIA Director George Tenet’s famous words), they say the

agency failed to detect critical phone and e-mail communications that could have tipped US

intelligence to Al Qaeda’s plans to attack.

“NSA intelligence basically stopped in its tracks when they canceled ThinThread,” says Wiebe,

sitting next to Binney at an Olive Garden restaurant just a stone’s throw from NSA headquarters

in Columbia, Maryland. “And the people who paid for it were those who died on 9/11.”

The NSA Four are now speaking out for the first time about the corporate corruption that led to

this debacle and sparked their decision to blow the whistle. In exclusive interviews with The

Nation, they have described a toxic mix of bid-rigging, cronyism and fraud involving senior

NSA officials and several of the nation’s largest intelligence contractors. They have also

provided an inside look at how Science Applications International Corporation (SAIC), the

government’s fourth-largest contractor, squandered billions of dollars on a vast data-mining

scheme that never produced an iota of intelligence.

“That corruption was the heart of our complaint—the untold treasure spent on a program that

never delivered,” Drake explained to me one morning in Bethesda, Maryland, across the street

from the local Apple Store where he now works. He wants it understood that the NSA Four’s

case was not primarily about President Bush’s warrantless domestic surveillance program, as

outrageous as that was. “Some in the press think we blew the whistle on Trailblazer because, oh,

it violated people’s rights,” he said. “Well, it didn’t violate anybody’s rights, or create any

intelligence, because it never delivered anything.”

But there’s a direct link between their case and domestic spying: the technology developed at the

NSA to analyze foreign SIGINT—including programs created for ThinThread—was illegally

directed toward Americans when the agency radically expanded its surveillance programs after

the 9/11 attacks. In response, Drake, Wiebe and Binney have taken to the media to expose and

denounce what they say is a vast and unconstitutional program of domestic surveillance and

eavesdropping.

By using the NSA to spy on American citizens, Binney told me, the United States has created a

police state with few parallels in history: “It’s better than anything that the KGB, the Stasi, or the

Gestapo and SS ever had.” He compared the situation to the Weimar Republic, a brief period of

liberal democracy that preceded the Nazi takeover of Germany. “We’re just waiting to turn the

key,” he said.

* * *

James Bamford, the world’s foremost authority on the NSA, said Americans should take Binney

seriously. “Remember, he was the equivalent of a general because of his rank” at the NSA, he

said. “In terms of going public with their names and faces,” the NSA Four rank as the most

important whistleblowers in NSA history, he added. “Obviously, I think they’re very credible.”

Because of their experience in some of the NSA’s most secret programs, the NSA Four are

“indispensable” to understanding the agency’s unconstitutional operations, said Jameel Jaffer,

deputy legal director for the ACLU. “NSA is an extraordinarily powerful agency with

sophisticated technology that is poorly understood by many experts. It operates behind a veil of

secrecy that is penetrated only occasionally by whistleblowers like these.”

In 2011, the Pentagon’s Office of the Inspector General (OIG) declassified parts of its 2005 audit

of Trailblazer and ThinThread, which was triggered by the NSA Four’s complaint. Its report

severely admonished the NSA for “wasting” its resources on Trailblazer (the amounts are

redacted). It also found that the agency had overlooked fraud and abuse and “modified or

suppressed” studies that put ThinThread in a positive light.

The NSA, the Office of the Inspector General concluded, “disregarded solutions to urgent

national security needs.” And in a chilling comment that foreshadowed the government’s

persecution of the whistleblowers, the OIG noted twice that some of the NSAers and contractors

who came forward were in great fear of retaliation. “Many people we interviewed asked not to

be identified for fear of management reprisal,” it stated.

The OIG report is the government’s only public response to the extraordinary charges made by

the whistleblowers. The NSA would not comment on any aspect of this story. Neither would

SAIC or any of the other contractors involved with Trailblazer. Eventually, one intelligence

source responded to the most serious charge, but only if promised anonymity. “Essentially, what

they’re saying is that we missed 9/11,” said a former high-ranking government official with

intimate knowledge of the NSA’s SIGINT capabilities. “That’s absolutely bizarre. I mean, how

hard is it to prove a negative? The only way I can respond is to violate a sacred oath I take very

seriously, and I won’t do that.”

In fact, none of the whistleblowers were convicted of leaking classified information. Yet all have

paid dearly for speaking out. “This is all about retaliation, reprisals, revenge and retribution,”

said Jesselyn Radack, the Government Accountability Project lawyer who represents the

whistleblowers before the OIG. She describes the charges against Drake as ludicrous. “Tom was

not charged with disclosing classified material but retaining information for possible disclosure,”

she told me.

In 2010, Eric Holder’s Justice Department indicted Drake on ten felony counts, including five

under the Espionage Act, based primarily on Drake’s conversations with a single reporter. Those

charges were dropped in 2011 after he pleaded guilty to a misdemeanor charge of exceeding the

authorized use of a computer. The FBI’s investigation of the other three ended at the same time.

But like Drake, they lost their security clearances and thus their ability to work in intelligence.

None of the whistleblowers have any doubt about who is responsible for the intelligence failures.

“No NSA director did as much damage to the agency as Gen. Michael V. Hayden,” Binney told

me. Hayden is now a principal with the Chertoff Group, the intelligence advisory company led

by former Homeland Security Secretary Michael Chertoff. His primary job there is advising

government agencies and corporations about cybersecurity, which keeps him in constant contact

with the NSA. The press office at the Chertoff Group never responded to my requests to

interview Hayden, so I tracked him down myself. In February, after he made an appearance at

George Washington University, I asked Hayden if the NSA would have been better off not

wasting “hundreds of millions of dollars” on Trailblazer and going with its in-house system,

ThinThread. In his first public comments on Trailblazer since 2005, Hayden admitted that the

NSA and its contractors “overreached.” The agency “outsourced how we gathered other people’s

communications,” he said. “And that was a bridge too far for industry. We tried a moonshot, and

it failed.” But he wouldn’t comment on ThinThread (which, as Drake wryly pointed out to me,

“did get to the moon”).

Last October, at a conference on cybersecurity at the National Press Club, I asked Hayden about

the whistleblowers’ charges regarding the NSA’s domestic surveillance program. At the mention

of the term “whistleblowers,” he suppressed a smile. “As a former NSA director, I can tell you

there is no workforce in the federal government more conscientious” about privacy and Fourth

Amendment rights, he told me, avoiding any direct mention of his critics from the agency. “But

that’s a trusting sort of thing, and I realize it doesn’t have much purchase in America.” The

public, he added, must understand that the agency “has a problem. To be good, NSA needs to be

powerful, and frankly it needs to be a bit secret.” The message was clear: people like the NSA

Four should stay quiet.

But here’s the irony: Even though Trailblazer failed, the massive enterprise it created set the

model for the wholesale privatization of national security work after 9/11. As I described in my

2008 book Spies for Hire, this tsunami of taxpayer largesse reached into every nook and cranny

of the intelligence-industrial complex that had slowly been built over the 1980s and ’90s to

service the vast CIA and Pentagon needs for surveillance, reconnaissance and advanced IT. In

the end, a handful of contractors earned at least $1.2 billion from Trailblazer, and probably

several billion more, since huge amounts were squeezed from other parts of the NSA, including

its detachments in the Army, Navy and Air Force. “It was a feeding frenzy,” recalls Drake.

One incident in particular crystallized the greed and hubris that gripped the NSA’s top officials

at the time. It happened right after the 9/11 catastrophe, when Samuel Visner, a former SAIC

executive who ran Trailblazer for the agency’s SIGINT division, held a meeting with contractors

working on ThinThread (one of them still works inside the NSA; he is the source for this

anecdote). Now that Trailblazer was the NSA’s chosen SIGINT project, the contractors were

worried that they would be cut out of the money loop. But Visner assured them that, in the wake

of the attacks, their worries were gone.

“We can milk this thing all the way to 2015,” he said, according to separate accounts by Drake,

Binney and Wiebe, who heard it directly from the contractor. “There’s plenty to go around.” In

2003, Visner returned to SAIC as a director of its Intelligence, Security and Technology Group.

Visner is now a vice president in charge of cybersecurity policy at CSC, one of the NSA’s most

valued contractors (neither CSC nor Visner would comment).

* * *

Trailblazer marked a dramatic shift for the agency, away from small, government-led research

projects that hired contractors only for specific functions to huge projects run by contractors who

answer only to the senior leadership of the NSA. Since its origins during the Cold War, the NSA

had led the world in encryption, computer and voice-processing technologies. But all of its

development work was done by an elite corps of government scientists and mathematicians.

Until the 1980s, “virtually everything was done in-house,” says Loomis, who spent much of his

career in the agency’s telecommunications and computer services directorate. “As for contracting

for development,” he added, “that did not happen.”

That began to change around the turn of the century, when the NSA was forced to wrestle with

enormous technological changes. For most of its existence, the agency had been focused on radio

and microwave signals traveling through the atmosphere. The telecom revolution and the

Internet altered the game forever. Suddenly the NSA was deluged with digitized cellphone traffic

and e-mail flowing across fiber-optic cables that were almost impossible to intercept. It was an

“explosion,” Hayden told me at George Washington University. “And if you’re a signals

intelligence organization—we eavesdrop, right?—if your technology isn’t the technology of the

target, then guess what you are? Deaf!” Hayden was appointed director in 1999, when the

agency was struggling to figure a way out of this conundrum.

His solution was to turn away from the NSA’s historic legacy and privatize. “Hayden made a

fateful choice,” says Drake. “If we’re not going to make it, we’re going to buy it. That was the

mantra.” Hayden couched his plan as “transformation.” Trailblazer, its centerpiece, involved

turning the NSA’s most precious asset, SIGINT analysis, over to the private sector, from the

development to the operations stage. The idea was to use cutting-edge technologies to analyze

intercepted cellphone and e-mail traffic for clues to plots against the country. But Drake, who

had extensive experience as a contractor and in the private sector, says it was flawed from the

start.

* * *

In the early 1990s, after a stint in Air Force intelligence and the CIA, Drake was assigned to a

top-secret NSA project called MINSTREL that was digitizing intercepted voice communications.

But he came in as a contractor and his actual employer was the now-defunct GTE Government

Systems. There, he encountered his first corruption, including massive cost overruns and fraud;

in 1992, he reported GTE to the Pentagon hotline. “That’s how I became a whistleblower,” he

told me (MINSTREL, like Trailblazer, was canceled without becoming operational). Drake later

worked inside the NSA for Booz Allen Hamilton and other contractors before finding work in

the late 1990s as a private consultant in Silicon Valley. He returned to the NSA in 2001 as a

member of the agency’s senior executive service. As a result of these experiences, Drake knew

that hiring big corporations to develop new technologies ran against the grain of the information

revolution. Trailblazer “was an industrial-age model so inappropriate for the digital age,” he said.

The model of innovation in the computer industry was “very small teams, skunk teams,

developing the next critical applications. And here we were going in the completely opposite

direction.”

That’s because corporations—and their moles inside the NSA—ran Trailblazer from the start.

The fix began in 2000, when Hayden hired Bill Black, a wily NSAer who had worked at the

highest levels of SIGINT in Europe as Hayden’s deputy. For the previous three years, from 1997

to 2000, he’d been working for SAIC, then a rising San Diego defense contractor with extensive

contacts in the intelligence community. Black’s new job at the NSA was to carry out Hayden’s

“transformation” plan by siphoning business to companies like his. To get the Trailblazer

contract up and running, Black hired one of his closest associates from SAIC: Sam Visner, who

had left the NSA in the mid-1990s to work as a contractor.

Visner was a true believer. His father had been a scientist on the Manhattan Project during World

War II, and according to his former associates, he saw Trailblazer as the twenty-first-century

equivalent of the atomic bomb needed to win the “war on terror.” Hayden’s hiring of him and

Black, the whistleblowers say, set the stage for SAIC winning the Trailblazer contract.

In April 2001, the NSA awarded the first part of the contract to SAIC, Booz Allen Hamilton,

Lockheed Martin and TRW, which was absorbed into Northrop Grumman in 2002. Their job was

to “define the architecture, cost, and acquisition approach” for the project, according to a 2001

NSA press release. The results of their deliberations were announced in September 2002, when

the NSA, as recommended by the companies, awarded the prime contract, called the Technology

Demonstration Platform, to SAIC. It was initially worth $280 million. SAIC’s team included

Northrop Grumman, Boeing and CSC—the company where Visner now works.

By this time, Drake was a senior “change leader” reporting to Maureen Baginski, who was the

agency’s director of signals intelligence and number three in the hierarchy, behind Hayden and

Black. Drake sat in on many of the Trailblazer meetings and claims the concept setup was a

scam. He told me that the four companies agreed secretly that the prime contract would go to

SAIC, while they would divvy up big chunks of the subcontracting among themselves. Later, as

a material witness for the Pentagon’s OIG, he provided investigators with hundreds of

documents relating to the bidding and award process for Trailblazer; they remain classified, and

Drake can talk about them only indirectly. Most crucial, he says, were statements he collected

from NSA officials showing that agency leaders had told their procurement office to hand the

award to SAIC. “The orders came from the very top,” Drake says. “They just ensured it was

weighted in a way to award it to SAIC and its subcontractors. That was the deal.”

I went over these details with a government procurement analyst who once worked for the

Pentagon’s OIG and has had access to classified contracts. He could not comment on the record

because of his current position in government, but was shocked at the evidence of collusion.

“That’s the fraud, waste and abuse right there,” he said. “You’re steering the contract to a

favored client. That’s blatant and outright favoritism. The impropriety is apparent.”

The primary showcase for Trailblazer was a large building leased by Northrop Grumman in the

“National Business Park” next to the NSA. There the agency and its contractors showed their

system off to congressional overseers and intelligence leaders. The sessions took on increasing

urgency after 9/11. “Basically, they took one whole portion of their facility to turn into a

demonstration room, a showcase,” Drake recalls. “But that’s all it was: show and tell, a dog and

pony show. Very large screens, fancy computers stacked up, a director’s place in the middle. But

I have to tell you, there was nothing behind it.” Congress and the NSA finally agreed. After

millions of dollars in cost overruns, Trailblazer was quietly terminated in 2006 by the current

NSA director, Gen. Keith Alexander.

* * *

If Trailblazer was a massive corporate boondoggle, ThinThread was the embodiment of the

“skunk team” approach that had made the NSA the crown jewel of US intelligence. It cost less

than $3 million, was small enough to be loaded onto a laptop, and included anonymization

software that protected the privacy rights of US persons guaranteed in the 1978 Foreign

Intelligence Surveillance Act (FISA). And while Trailblazer employed hundreds of contractors,

ThinThread was the work of less than a dozen NSA employees and a handful of contractors.

It came out of the NSA’s SIGINT Automation Research Center, or SARC, where Loomis was

director of R&D. In the late 1990s, he began working on tackling the Internet and the rapidly

growing use of cellphones and e-mail. “I knew more and more intelligence and law enforcement

targets would be making use of these cheap commodity electronics,” Loomis told me, sitting in

the living room of his Baltimore home. “So I jumped in with both feet.”

The genius of the group was Bill Binney, Loomis’s deputy at SARC. An amiable man who

suffers from diabetes, Binney joined the NSA in 1966 while in the Army and began working as a

civilian in 1970. In 1997, he was named technical director of SARC’s World Geopolitical and

Military Analysis Reporting Group. “That’s when I started looking at the world,” Binney told

me.

While the NSA brass and their corporate advisers believed the Internet could be tamed only by a

massive corporate-run program, Binney found that cracking it was relatively simple. The secret

was in the numbering system established by telecom providers: every phone has a number, every

e-mail has an address, and every computer linked to the Internet has a unique identifier. The

encryption systems from the past were “so much more complex,” he says. “This was simple

shit.”

ThinThread was basically three programs. The front end, analyzing incoming streams of Internet

traffic, had been developed by Loomis. “It could take massive amounts of input and reassemble

it in a sensible order,” he says. “And then, with a minimum amount of bandwidth requirements,

could provide it to whoever was interested in a particular topic and do it while accommodating

all privacy concerns that are required by FISA.” The middle portion was the anonymization

software that hid the identities of US persons until there was sufficient evidence to obtain a

warrant (Trailblazer had no built-in FISA protections). The back end, built by Binney, was the

most powerful element of the system. It translated the data to create graphs showing

relationships and patterns that could tell analysts which targets they should look at and which

calls should be listened to. Best of all, “it was fully automated, and could even be remotely

controlled,” Binney says.

But there was another crucial difference with the Trailblazer model: ThinThread did its

automated analysis at the point of interception; Trailblazer downloaded everything flowing over

the Internet and analyzed it after the fact with key words and phrases. “Trailblazer made no

distinction up front,” says Binney. “They didn’t try to determine ahead of the interception what

to listen to. They just took it all.” This model of “taking it all” remains the NSA’s modus

operandi, and it is why, Binney and Wiebe say, the agency is building a massive data center in

Utah.

The ThinThread prototype went live in the fall of 2000 and, according to my sources, was

deployed at two top-secret NSA listening posts. One was the Yakima Research Station in

Washington State, which gathers electronic communications from the Asia-Pacific region and

the Middle East. The other was in Germany and focused primarily on Europe. It was also

installed at Fort Meade. In addition, several allied foreign intelligence agencies were given the

program to conduct lawful surveillance in their own corners of the world. Those recipients

included Canada, Germany, Britain, Australia and New Zealand. “ThinThread was basically

operational,” says Binney. “That’s why we proposed early deployment in January 2001.”

As ThinThread was being tested, word spread throughout the intelligence community that the

NSA had a “cheap Trailblazer” that could help with surveillance. One day, Charlie Allen, a

legendary figure who was head of collections for the entire intelligence community under

George Tenet, came to see it. Black, Baginski and Visner were given demonstrations as well.

“But Hayden never visited the SARC,” says Binney. “Not once.” Yet on August 20, 2001—“at

4:30 in the afternoon,” Loomis says, reading from his notes of the meeting—Baginski informed

him that ThinThread would not become operational. Why? “It would have made Trailblazer

meaningless,” says Binney.

During this time, Binney and Wiebe, who was working on the ThinThread team as a SIGINT

analyst, were called in to describe their system to congressional oversight committee staff, in

particular a GOP staffer named Diane Roark. Long concerned about the NSA’s technical

problems, she demanded that it keep ThinThread alive and provided funds to keep it going (she

declined to be interviewed).

According to the whistleblowers, the 2002 intelligence budget, which was signed by President

Bush, included $9 million for ThinThread and an order to Hayden to install it at eighteen sites

around the world considered the most critical for counterterrorism. But the NSA, they say, defied

the spending directive (ironically, considering what happened after 9/11, Hayden’s general

counsel told Loomis that ThinThread did not meet the agency’s FISA requirements).

Then came the shock of 9/11. With the entire intelligence community frantically working to find

who was responsible, the SARC team tried to persuade Baginski to put ThinThread into

operation. “With each passing day,” Wiebe e-mailed her on October 8, “more and more

information is coming out regarding the facts re what Al Qaeda is using for communications, yet

the only relevant weapon in your arsenal continues to sit on the sidelines 27 days after the events

of September 11.” Baginski, who is now the CEO of Summit Solutions, a contractor specializing

in SIGINT interception, told me, “I’m not going to talk about it.”

But she did take action. According to Drake, Baginski approved a plan to plug ThinThread’s

automated analysis system into an enormous NSA database called PINWALE that included

records of thousands of cellphone calls and e-mails. They found actionable intelligence—links

between individuals and organizations—that had not previously been discovered or had not been

shared before 9/11. Drake, who was ThinThread’s program manager by this time, still can’t talk

specifics because the information remains classified; but he insists it could have alerted US

intelligence to the 9/11 plot. “And that’s what caused them to finally shut ThinThread down,

because of the severe embarrassment it could have caused,” he told me.

In the weeks after the attacks, NSAers became aware that Hayden had changed the rules of

engagement by throwing out the warrants required for surveillance of US persons. As the public

was to learn in December 2005, when the secret wiretapping was exposed in The New York

Times, the NSA was sifting through oceans of cellphone and e-mail traffic from AT&T, Verizon

and other carriers. This massive data-mining program was given a secret code name: Stellar

Wind. It came as a shock to many NSA employees. “People came to me and said, ‘My God,

they’re pointing our system toward the United States,’” recalls Drake. For Binney, the last straw

came when he learned that the graphing software he had developed for ThinThread had been

attached to the NSA’s database to begin the “hot pursuit” of Al Qaeda suspects—but without the

privacy restraints he and Loomis had built in. “They took the graphing software and began

tracking relationships on a gargantuan scale,” he told me. “They considered it domestic

intelligence.”

* * *

On October 31, 2001, seven weeks after 9/11, Binney and Wiebe walked out the NSA’s doors

for the last time. “I couldn’t take the corruption anymore,” Binney told me. Loomis left too,

taking a job with a nearby contractor. In September 2002, they signed an official letter of

complaint to the Pentagon OIG that was joined by Roark, the House staffer. Drake, who stayed

on at the NSA until 2008, testified as a material witness. When the OIG released its report in

2005, it exonerated the whistleblowers. The NSA, it concluded, was developing a “less capable

long-term digital network exploitation solution that will take longer and cost significantly more

to develop” than ThinThread.

After they left the NSA, Binney, Wiebe and Loomis were granted permission to form a company

and sell the analytical skills they had developed for the NSA and ThinThread to other

government agencies. But they quickly found they’d been blackballed. All three told me the

NSA contacted every agency approached by the whistleblowers—including the Army

Intelligence and Security Command and the National Reconnaissance Office—and persuaded

them not to do business with the three. “We’ve been denied untold hundreds of thousands of

dollars in potential income as a result,” Wiebe told me. The three are considering a lawsuit

against the NSA officials responsible. But redress is going to be difficult: in late March, Binney

and Wiebe were informed by the Pentagon’s inspector general that their 2012 request for an

investigation into reprisals against whistleblower and a review of their clearances had been

rejected. “The alleged personnel actions occurred…over a decade ago” and are “outside the

scope of whistleblower provisions”of US law, the OIG said in a letter made available by their

attorney, Jesselyn Radack (Drake’s complaint is still outstanding).

Meanwhile, the NSA Four watch in grim fascination as the crackdown on whistleblowers

continues, and Congress and the Supreme Court approve laws legalizing the surveillance state

they’ve spoken out against. They see some hope in President Obama’s recent order extending

legal protections to intelligence whistleblowers. But like other observers, they are waiting to see

if its implementation will have any effect. Without real protections, they say, accountability is

impossible. “When you permit something like Trailblazer and no heads roll except for the

whistleblowers, what kind of message does that send to the American public?” asked Loomis.

Despite the recent setback, Binney and Wiebe remain determined to speak out against the

surveillance state. “I’m trying to stir shit up,” Binney told me. “I’m hoping they charge me,

because that would get me into court and I could really talk about this in the open.” Drake, for

his part, has become a leading voice for civil liberties; on March 15 he delivered a powerful

speech about whistleblowing at the National Press Club. Speaking in the same room where

General Hayden haughtily dismissed his case last fall, he slammed a government that “prefers to

operate in the shadows and finds the First Amendment a constraint on its activities.” The act of

“taking off the veil of government secrecy has more often than not turned truth-tellers and

whistleblowers into turncoats and traitors,” who are then “burned, blacklisted and broken by the

government on the stake of national security,” he said. “And yet I was saved by the First

Amendment, the court of public opinion and the free press—including the strengths and growing

resilience of the alternative media.” Those rights of expression, he added, “are the very

cornerstone of all our liberties and freedoms.” And that may be the most important lesson of all.

No one except John Kiriakou is being held accountable for America’s torture policy—though

Kiriakou didn’t torture anyone, he just blew the whistle on it. Read Peter Van Buren on the

Obama administration’s “Protecting Torturers, Prosecuting Whistleblowers” (Sept. 11, 2012;

originally on TomDispatch.com).

Craig B Hulet was both speech writer and Special Assistant for Special Projects to Congressman

Jack Metcalf (Retired); he has been a consultant to federal law enforcement DEA, ATF&E of

Justice/Homeland Security for over 25 years; he has written four books on international relations

and philosophy, his latest is The Hydra of Carnage: Bush’s Imperial War-making and the Rule of

Law - An Analysis of the Objectives and Delusions of Empire. He has appeared on over 12,000

hours of TV and Radio: The History Channel “De-Coded”; He is a regular on Coast to Coast

AM w/ George Noory and Coffee Talk KBKW; CNN, C-Span ; European Television "American

Dream" and The Arsenio Hall Show; he has written for Soldier of Fortune Magazine,

International Combat Arms, Financial Security Digest, etc.; Hulet served in Vietnam 1969-70,

101st Airborne, C Troop 2/17th Air Cav and graduated 3rd in his class at Aberdeen Proving

Grounds Ordnance School MOS 45J20 Weapons. He remains a paid analyst and consultant in

various areas of geopolitical, business and security issues: terrorism and military affairs. Hulet

lives in the ancient old growth Quinault Rain Forest.