This tale recounts the interwoven fate of an Air Force Chief of Staff; potentially disastrous handling of nuclear weapons; a Texas based financial advising company with more than 300,000 military personnel as investors; and a $50 million video project to "re-brand" the Air Force that never got off the ground, but cost the DOD millions of dollars anyway. Its only hero is DOD Secretary Robert Gates, who put an end to a lot of foolishness, and is, in my opinion, the best Secretary of Defense we've ever had because he's demonstrated that a civilian still has the authority to discipline military officers and to hold them responsible when they fail.
To begin the story near its end: In 2007, a B52 bomber mistakenly flew across the U.S. carrying six nuclear-armed missiles, in violation of an international treaty and without the knowledge of its crew. In March '08, the DOD discovered that a shipment of four high-tech nose cone fuses for Minuteman nuclear warheads had been mistakenly shipped to Taiwan a year and a half before. Both mistakes occurred under Air Force Chief of Staff Gen. T. Michael Moseley. After an inquiry into the Air Force errors, Secretary Gates fired, on June 5, 2008, both Moseley and the Secretary of the Air Force. That's not the first time General Moseley screwed up, just the first time he did when Gates was defense secretary.
In 2004, Diana Henriques revealed in The New York Times, that Moseley, then Air Force vice chief of staff, had intervened in an investigation of the sales practices of First Command Financial Planning, a Fort Worth financial adviser "with more than 300,000 customers, virtually all of them current or former officers." Some officers felt that First Command was using pressure tactics and misleading information to get customers. When Air Force lawyers learned of these complaints, they published a warning notice in their electronic newsletter, the On-Line News.
According to Henriques, when First Command "discovered that a legal office at Air Force headquarters had put out a notice asking military lawyers in the field for feedback on 'reports of possible unethical or overly aggressive' sales practices by the company's agents," it was not happy. The Air Force legal staff had "also raised questions about the company's core product, an archaic and expensive type of mutual fund with sales fees that eat up half of an investor's first-year contributions." That didn't make the company happy, either.
Henriques writes: "First Command fought back: it complained to the second-most-powerful general in the Air Force. And it was heard." By the way, the second most powerful general was T. Michael Moseley. The company demanded that the Air Force issue a "retraction" on On-Line News, and a "letter of exoneration." Three weeks after reaching out to Gen. Moseley, the company got what it wanted. The Air Force posted a retraction, and a letter of exoneration, after both had been edited by First Command executives. The documents were signed by the Air Force's top legal officer.
Again, from The Times, "An Air Force spokesman said that Gen. Moseley...'intended only to insure that the company got a prompt and appropriate response' and that Moseley's role was 'fairly routine.'...General Moseley himself said in a written statement: 'Fighting and winning the global war on terrorism and providing support for our airmen are my top priorities.'"
Although First Command had succeeded in intimidating Air Force lawyers, it was not so successful when it came to dealing with the Securities Exchange Commission (SEC), and the National Association of Securities Dealers (NASD). On December 15, 2004, the SEC announced that First Command financial planning had agreed to pay $12 million to settle SEC and NASD charges "Involving Misleading Sales of Investments to Members of the Military." Four million dollars was to be distributed to persons who had invested their money with First Command.
Others who suffered from financial loss through First Command's "violations of certain provisions of the federal securities law" and were not included in the SEC settlement then filed a class action suit against the company in Federal Court. That suit was recently settled for $12 million, which after legal fees gave the 60,000 claimants, all either serving soldiers or veterans, $120 each. "At least it bought them a dinner," said one of the plaintiff's lawyers.
What effects did Moseley's actions have on the Air Force? Henriques writes that Thomas L. Farmer, a retired Air Force lawyer who worked on the First Command inquiry, "'said that neither the Air Force nor the company has acknowledged the chilling impact that the episode, especially the company-edited retractions had in the ranks...Our being rebuked sends a message out into the field that 'Well, they're not going to be able to help us when it comes to this company.' He added that, 'When we tried to tackle it, First Command could contact a four-star general [Moseley] and stop us, to the point where Force Command is helping to write official Air Force material.'"
Early in 2006, another project intruded on Moseley's priorities. He became enthused about "Thundervision," a PR concept created by a video producer and Air Force buff, Edward Shipley. (Shipley's lawyer describes him as "a nationally recognized television and film producer and director," while the International Movie Database (IMDB) lists an E.H. Shipley as producer/director of four or five workout videos.) Shipley wanted to enhance Air Force Thunderbird air show demonstrations through multimedia presentations on large video screens called 'Jumbotrons' at the Thunderbirds air shows. Shipley created a demo reel that included a testimonial from President George W. Bush, at a cost of about $165,000, paid for by the Air Force.
The project was put out for bids, and the contract, for just under $50 million, was awarded to Shipley. Another bidder, whose bid had been 50% lower, protested, and the contract was canceled. An Air Force Inspector General investigation in January, 2008, ended with an Air Force Maj. Gen. being reprimanded for his role in the project, and four other Air Force personnel disciplined. No action was taken against General Moseley.
Shipley was helped by his association with Gen. Hal Hornburg, the recently retired, former head of the U.S. Air Force Air Command, who had worked with him on creating music for the Thunderbird earlier air show demonstrations.
On Monday the 13th, the DOD Inspector General released a new report about the Thunderbird contract award, in which Moseley was alleged to have:
- "Provided preferential treatment and disclosed nonpublic information to a contractor, Strategic Message Solutions [SMS]..."
The report goes back to February, 2005, when Gen. Moseley first met Shipley at a dinner in Moseley's home. One month after that dinner Shipley formed a new company, SMS, in Pennsylvania with Gen. Hornburg as one of his partners. Shipley kept in touch with Gen. Moseley through phone calls and emails.
In April, 2005, according to the Inspector General's report, Shipley "briefed his Thundervision concept demonstration to Gen. Moseley...in Gen. Moseley's Pentagon office." Shipley later told the I.G. investigators "that during the meeting Gen Moseley telephoned Maj Gen Stephen Lorenz [the Air Force Comptroller]..., asking for the money to acquire Thundervision." Shipley also told the inquiry that "he thought it was a 'done deal' because he had a four star general telling him to go do it." Later, Gen. Moseley "sent an email message, 'Subject: $8.5 million for ACC (Thunderbird Season Outreach)' to Maj Gen Lorenz..."
The second Inspector General investigation into the Thunderbird contract award was conducted "in response to a request from the Chairman Ranking member of the Senate Air Service Committee (SASC) that we further examine the conduct of current and former Sr. Air Force Officials named in the [earlier] report for criminal conduct, ethical violations and failures of leadership. It is worth noting that at the time of the first I.G. report, Gen. Moseley was still the Army Chief of Staff, and that Michael W. Wynne was Secretary of the Air Force. Well before the SASC requested investigation was concluded, DOD Secretary Robert Gates had fired both of them.
I think the new DOD Inspector General report does a pretty good job spelling out the Thundervision contract debacle. InsideDefense helped me find the full report. If you read through it, you will learn about the continuing communications between Shipley and Moseley. According to the report, Shipley tells Moseley about his idea to "re-brand and re-market the Air Force." Moseley calls him "a great American." Shipley emails, "'We should talk. We are on the verge of history here...no kidding.'" Moseley emails, "Ed, I'll try to make contact today at first opportunity," and "I thought about you, dude."
Originally Gen. Moseley had proposed that the proposal be granted without seeking competitive bids, but Gen. Jumper overrode him and directed contract competition. The Air Force Director of Contracting Operations "emailed the Vice Commander of AFRS [Air Force Recruiting Service]...noting '[t]here appears to be no true customer' for the project and that the project had 'come down through the [General Officer] channels from the VCSAF with the concurrence of the Chief' and was being 'fast tracked.'" The VCSAF was the Vice Chief of Staff, T. Michael Moseley.
Moseley and Shipley remained close. The General and his wife spent a night as guests at their house in Pennsylvania, and Gen. Moseley invited Shipley to attend the change of command ceremony where he would be elevated to Chief of Staff. On September 2, 2005, Gen. Moseley became Chief of Staff. SMS submitted its proposal on September 15, 2005. The I.G. report included a September 22, 2005, email that Gen. Moseley sent to Shipley: "Dude...I've talked to the lawyers about your idea and I've talked to contracting Bubbas about getting on with planned good ideas and I've got a way huge notion of building a better strategic communications effort. There's a lot 'o Ed in this one. I want to chat with you about all this to see what you think...YOU ARE THE MAN."
That's the kind of email that gets an officer in trouble when he discusses a project with one contractor, and brings him into his confidence, and leaves other contractors in the dark.
The Air Force itself seemed to have grave doubts about the project. Gen. Roland E. Keys, U.S. Air Force Commander, ACC, emailed Gen. Moseley: "I plan to pass on pursuing [the TAPS contract] and it will probably cost some small termination/prep costs,...but I can't see spending big money here...I know this was somehow wrapped up in the Strategic COMM package, so wanted to your thoughts before I precede..." Moseley responded "I'd ask you not to terminate anything until I get wrapped around this one a bit more. Thanks again."
The I.G. report states that Gen. Keys replied, "noting that he had no metrics showing recruiting from Air Force shows, or opinion makers at air shows and questioning to whom the proposed strategic message was being sent...he would prefer to put the TAPS contract instead toward operational financial obligations."
Enough, enough, enough. There seems to be sufficient evidence that Gen. Moseley and Ed Shipley had formed some sort of relationship, and that not every general in the Air Force thought that the Thundervision contract was a good idea.
Lest I go on forever, I direct those interested to the I.G. report which substantiates, satisfactorily to me, the other charges mentioned earlier -- the use of Air Force personnel by SMS (see page 24 of the I.G. report) before the contract was canceled, and the receipt of certain gifts (see page 42 of the I.G. report).
Those who read the report will find that there were some good guys--General Keys and a Colonel Glowacki in the contracting department seem to have really done their best. Glowacki even told the TAPS contracting group that "SMS had a lot longer time to know this stuff...really an unfair advantage to the other companies." Their advice was disregarded.
The worst thing about all this is the seeming lack of a sense of honor on the part of the military community. It seems to have adopted a philosophy of what the Chief of Staff wants, the Chief of Staff gets, regardless of the merits. That attitude may reflect the atmosphere of Secretary Rumsfeld era, when officers knew that if they stood to the Secretary their career was over. That's another reason to welcome Secretary Gates to office. Beyond that, the fact that there were two reports, one when a Republican was President, the other when a Democrat was President; one when control of the Senate was in dispute, and the other when the Democrats controlled it; one when Rumsfeld was Secretary of Defense, the other when Gates was Secretary; reflects the politicalization of all Cabinet Departments, down to the ranks of supposedly nonpolitical appointees.
That after all this evidence, any DOD Investigator General could have left T. Michael Moseley off the hook while punishing those who served under him boggles this blogger's mind, and may make it worth your attention and consideration.
In a final bit of irony, Ed Shipley sued the United States and after his contract was canceled, and won a seven figure settlement payment from the Justice Department. It's your money, folks.
This piece might be called "The Three Sins of T. Michael Moseley", and be played as a farce, but the joke is on us. Maybe we'll do better now that Bob Gates is in charge.