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Our tax dollars seem to work very hard enriching the few, while millions remain unemployed.  While 1 in 6 need food assistance.  While 71% earn less than $42,000 a year.

Folks, you and I paid for the creation of companies that have enriched their founders, CEOs, and shareholders to provide us with security.  It's kind of crazy, if you ask me.  Our sweat equity (taxes) funds the National Security Complex that is now mostly owned by private equity firms that are rolling in our dough.

Why don't we enjoy any of the profits from these companies?

Where's the fund that, at the very least, pays us back for our investments that enabled these companies to launch and then thrive?

Why are the "public, private partnerships" a one way street?  It seems to have morphed into a Private (us)/Private Equity Partnership via acquisitions.  Really?  Has it gotten out of hand?  

There are so many questions.  And one could argue that we are paying for our security.  If so, why are so many Americans in such dire straights and insecure?

Do you feel secure?

We passed the beyond the Rubicon Eisenhower warned us about, in my opinion.

Where is the "partnership" in Public/Private Partnerships?  

Usually in a partnership, both contribute funds and sweat equity to build something and, when that something becomes profitable, both partners share in the profits.  

Not so the Public-Taxpayer/Private Partnerships.  Let's listen to Eisenhower's prescient words and warning:

Five decades later, this complex,.....

...has morphed into a new type of public-private partnership—one that spans military, intelligence, and homeland-security contracting, and might be better called a “national security complex.” (Ref 2)

The National Security Complex

It's a huge, privatized industry.  We pay for hundreds of companies to start-up and become profitable to protect us from men living in caves and their millions of minions.  To protect us from cyber attacks, and a host of other nefarious means to harm us.

Is this reassuring?

Five dozen of these security contractors have organized themselves into the International Peace Operations Association (IPOA).

After Blackwater came under worldwide scrutiny for its massacre of unarmed Iraqis in central Baghdad on Sept. 17, 2007, the firm left IPOA, whose code of conduct for “peacekeeping” operations it had flagrantly ignored.

Blackwater created a new association of private military contractors called Global Peace and Security Operations—conveniently without any potentially embarrassing code of conduct.

(Ref 2)

Private contractors are also in control of the core of the complex’s information and intelligence systems. Information and communications technology is the fastest-growing sector in government contracting.

The DHS’s expanding involvement in cybersecurity, information systems, and electronic identification programs, for example, is adding billions of dollars annually to the national security boom.

(Ref 2)

Are we getting what we pay for?

Let's look at Lockheed Martin's IT performance, as an example:

SEABROOK, Md., March 16th, 2006

And it was a failure, it would seem:

The project, known as Sentinel, is already two years behind schedule at only halfway completed, noted the inspector general (IG) of the Department of Justice (DOJ) in an interim report Thursday. The Sentinel program also is about $100 million over budget, according to IG estimates.

Did Lockheed Martin get to keep the $305 million?  Will it be paid the additional $100 million?

Oh my!  You just never know where a look-see will end up.

Forgive me as I deviate, sort of.  Lockheed Martin's EIG Group (the IT division) has been sold to the Veritas Capital, a private equity firm?

Veritas Capitalis a private equity firm specializing in investments in leveraged recapitalizations, buyouts, and growth capital investments.

The firm seeks to invest in companies involved in technology and outsourcing services to the government, primarily in the areas of defense and aerospace; media; security; and infrastructure.

Freaking mind boggling, quite frankly.

It appears that our National Security is profitably traded on Wall Street.  This will be the story hereinafter:  

Through mergers and acquisitions, our national security could end up in the hands of just a few private equity firms.  Is that a good trend?

Of course, we all know about the revolving Military/National Security Revolving Door:

As of 2004, Five of the past nine defense secretaries, excluding those who are in the current administration, have ties to private equities.

Ponder the power these private equity firms wield:

Veritas Capital Management is the 41st largest defense contractor and second only to the Carlyle Group among private equity firms.

...Veritas' roster includes

Adm. Joseph W. Prueher, ex-commander-in-chief of the U.S. Pacific Command and former U.S. ambassador to China;

Gen. Barry R. McCaffrey, Gulf War I veteran and former U.S. Southern Command chief ;

Admiral Leighton W. ("Snuffy") Smith, former commander-in-chief of Allied Forces in Southern Europe ;

Gen. Anthony C. Zinni, former commander-in-chief of the U.S. Central Command ; and

Gen. Richard E. Hawley, former commander of Air Combat Command at Langley Air Force Base, Va.

WOW!  That's impressive....and POWERFUL.

Robert McKeon launched Veritas Capital with his partner, Thomas Campbell, in 1992.

In 2005, Veritas Capital purchased DynCorp. The profits Veritas made with DynCorp are amazing.  DynCorp's profits soared due to the wars in Iraq and Afganistan.

In 2006, DynCorp went public.  

The leveraged buyout also helped rip apart their relationship.McKeon ended up very rich, personally earning $350 million, or seven times his investment, and in control of a company that has emerged as the biggest winner in the war game.

And McKeon is about to get a whole lot richer from just the DynCorp deal:

McKeon personally received a $5 million deal fee when the DynCorp purchase took place, court documents say. He took his initial $48 million  investment off the table through a dividend associated with DynCorp’s IPO.

Last year the private equity investors sold $177 million of DynCorp stock, probably giving McKeon about $80 million of proceeds.

McKeon’s remaining shares will be cashed out if this new deal goes through for some $170 million.

He also stands to get some $20 million more through performance fees associated with the exit of the Veritas fund from DynCorp.

McKeon is known to live a frugal life, which is a comfort.  I guess it's more about the game than the gain.  Hopefully, it's not about the power, unless of course he hopes to free the world of poverty and want.

Cerebrus is buying DynCorp with financing:

Debt Financing

Cerberus plans to use as much as $1.17 billion in bank debt to finance its buyout of DynCorp.

Bank of America Corp.

Citigroup Inc.,

Barclays Plc; and

Deutsche Bank AG

committed to provide a senior secured credit facility consisting of a $565 million term loan and a $150 million revolving credit line, DynCorp said today in a regulatory filing.

The banks also agreed to back $455 million in senior unsecured term loans


It's good to know the banks are financing someone these days!

This is interesting:

Defense Secretary Donald H. Rumsfeld was an investor in 2001, according to government ethics disclosures........While co-founder William L. Richter deals with investors, and lieutenants such as former Vice-President Dan Quayle jet around the globe to seal deals,

There have been 68 announced acquisitions of aerospace and defense companies in the past 12 months with an average size of about $261 million including net debt, according to data compiled by Bloomberg. The average premium of 23 deals for which information was available was 68 percent.


Who else did Veritas Capital purchase or already owns:

UPDATE 1-Veritas Capital to buy CPI Int'l for $19.50/share/$525,000,000  November 26, 2010

Veritas Capital also owns Aeroflex Inc, a provider of microelectronic and testing equipment to aerospace markets, and Vangent, which provides information management and business processing services. (ibid)

Veritas Capital Spending $815 Million on Division of Lockheed Martin
Posted October 13, 2010 2:57 PM

New York equity firm Veritas Capital owns McNeil Technologies (providing linquistic services w/DynCorp)

Now Cerebrus has purchased DynCorp.  I wonder how cozy these equity firms are?  Banks we bailed out funded this purchase.  With our money?  If not ours, whose?

Who has Cerebrus acquired?

DynCorp is Cerberus’s third acquisition announced this year, according to data compiled by Bloomberg.

Cerberus agreed on March 25 to buy Caritas Christi Health Care, a hospital operator affiliated with the Archdiocese of Boston, in a private-equity deal valued at $830 million.

Cerberus agreed on March 4 to invest $400 million in GeoEYE Inc., a Dulles, Virginia-based provider of satellite imagery. Some of its satellite bandwidth is used for national security.

Cerberus filed to take public Freedom Group Inc., a Madison, North Carolina-based maker of firearms, in October.

Since 2006, Freedom has bought gunmakers Remington Arms Co., Bushmaster Firearms International LLC, DPMS Firearms LLC and Marlin Firearms Co., according to a regulatory filing.


IAP Worldwide Services, a Cape Canaveral, Florida-based company Cerberus bought in 2004, has grown from less than $100 million in revenue to more than $1 billion, according to a person familiar with its operations. IAP helps the government with disaster-relief supplies to civilians and maintenance services for military bases.

It bought facility-management operator Johnson Control World Services in 2005 and

G3 Systems Ltd. the following year. G3 provides government services in Europe and the Middle East, according to IAP’s Web site.

Cerberus also owns Tier 1 Group, a Jacksonville, North Carolina-based company that provides weapons and military training, and Tokyo-based Radia Holdings, a temporary staffing company that serves the U.S. government.

Read more:

Well, that's just two private equity firms.  And I doubt we can really access all that these two private equity firms have, are, and will acquire.  However, it is obvious that they hold a great deal of power.

The WashingtonPost did a great job reporting on who is doing what with their Report:
Top Secret America, however, I don't think the Post connected the dots between contractors and private equity firms.

It's old news, perhaps, that Wall Street players are playing Monopoly with national security service companies that you and I pay for with our sweat equity; however,

Who is taking the time to dig in and find out whether or not our National Security has landed in too few hands?

And, if so, what could that mean for our individual security?

If Wall Street profits and gains via security companies performance(s), and our individual security cuts into those gains, which would suffer?  

Wall Street Gains or Us?

I know I am far from the first to do so, but I sometimes wonder if we aren't really paying for these companies to protect the rights of Multi-National Banks and Corporations.  

Maybe that's why the banks financed Cerebrus's purchase of DynCorp.  Who knows?  

So much is kept secret from us, now that we have outsourced our security to......private hedge/equity firms?  

How can our own government departments assure we are not getting ripped off?  

Can the GAO really police the complexity that has become our privately operated National Security Industrial Complex?  I think not.  Worse than herding cats, I would guess.

And the revolving door doesn't exactly elicit everyone to keep their pencils sharp, do you think?  

Good grief!  I guess we can be thankful that we are being kept safe from the larger threats of so-called terrorists and cyber attackers; however,

Looking around, I can't help but notice that we are not protected from things that affect each and everyone of us every day.  Threats to our individual well-being.  

We are open to be scammed 24/7 if we are not wary.  Even TV ads for what seem to be scams.  Not enough protections there.

We were certainly not protected from the horrendous paid and suffering caused by the unregulated Housing Debacle.

Rising prices for everything while wages remain stagnant are might even be declining.

We were not protected from the fraudsters on Wall Street that destroyed our economy.

Our jobs certainly received no protections in return for the taxes we paid when we had a job.

99ers are now facing homelessness and hunger because the GOP refuses to continue to provde them with unemployment benefits, especially the over age 50 99ers.

The list is long.  There are so many things we are not protected from.  But the lack of protection for the basics to sustain life stand out:  Clean and Healthy water and air and home and food for everyone, not to mention health care.  

Somewhere along the line, the feathers we shed working year after year seem to be used to feather the nests of Wall Street private equity firms and former government employees, at the same time our nests are being ripped out from under us.

This really needs to change, and quickly before what we are paying for turns against us, if it hasn't already.

Ref 1: Washington Post

Ref 2:  Dollars and Sense, 03/10/2010

Ok, not my best work, but the questions are important.  Perhaps others can contribute.

The story is just too huge, when you start to follow the connectivity of one acquisition to another, and all the subsidiaries, etc.

Confusion hides sin.

S.I.N. The Acronym

S   incere
I    ntegrity
N  egated

    written by:  SonjaPoet aka War On Error

Originally posted to War on Error on Fri Nov 26, 2010 at 01:47 PM PST.

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Comment Preferences

  •  Tip Jar (10+ / 0-)

    10.2.10 March On Washington ROCKED

    by War on Error on Fri Nov 26, 2010 at 01:47:18 PM PST

    •  Aren't our taxes, in essence, being used as (1+ / 0-)
      Recommended by:
      Angie in WA State

      venture capital for the hundreds of start ups like Blackwater once was?

      Aren't our taxes used to pay for the training of many of those who leave government service to work for the private companies?

      Do we ever get paid pack like most venture capitalists do?


      10.2.10 March On Washington ROCKED

      by War on Error on Fri Nov 26, 2010 at 03:40:38 PM PST

      [ Parent ]

      •  we're paying to subsidize the creation of the (1+ / 0-)
        Recommended by:
        War on Error

        destruction of our economy (outsource manufacturing and jobs and turn the internal economy into a simple pyramid scam) and, per the Namoi Klein "shock doctrine" theory, our Democracy is next.

        Wish I could label your diary a CT (conspiracy theory), but sadly, I cannot.

        I never dreamt that, in my lifetime, my nation might morph into a real fascist state, but it sure seems to be happening, doesn't it?

        "in Order to form a more perfect Union"
        Basta de Guerra. No más. Enough War. No more.

        by Angie in WA State on Fri Nov 26, 2010 at 05:56:10 PM PST

        [ Parent ]

  •  Its Mind Boggling (5+ / 0-)

    You know, many folks can't even begin to comprehend the ramifications of the MIC's influence (think on the corporate media) and the impact of it in our daily lives.

    Additionally, all the "action" takes place in the DC/Virginia area and the privileged elites run this show. no doubt about that.

    •  I think few, beyond here, know that the CIA (4+ / 0-)

      is mostly privatized these days.  Where's the accountability in that?

      I found it

      Top Secret America

      Washington Post

      A most excellent, in-depth look at our privatized security system.

      10.2.10 March On Washington ROCKED

      by War on Error on Fri Nov 26, 2010 at 02:02:45 PM PST

      [ Parent ]

      •  The CIA has usually had others do the covert work (3+ / 0-)

        Few realize that the CIA is in the human intelligence business. Even fewer realize the NSA is in the electronic intelligence business. The NSA does not do covert intelligence. The CIA does, but usually either through contractors or the military. Yeah, Valerie Plame was a covert agent, but what she did was to gather intelligence. Yeah, she was trained to kill. But, killing was not her task. Human intelligence was.

        Practice tolerance, kindness and charity.

        by LWelsch on Fri Nov 26, 2010 at 02:11:20 PM PST

        [ Parent ]

        •  Have you seen the Plame movie yet? (5+ / 0-)

          Heck, most of Blackwater (xe) are former CIA and Seals.

          Our sweat equity paid for their training, Xe gets to profit.

          What is wrong with this picture?

          10.2.10 March On Washington ROCKED

          by War on Error on Fri Nov 26, 2010 at 02:14:52 PM PST

          [ Parent ]

          •  What is wrong is Xe (3+ / 0-)

            is full of itself. If ever a government contractor did not deserve a contract or even to exist it should be Xe. Xe should be prosecuted, not given contracts.

            Whoops, I forgot Haliburton, and everyone else you talked about.

            Practice tolerance, kindness and charity.

            by LWelsch on Fri Nov 26, 2010 at 02:21:12 PM PST

            [ Parent ]

            •  We financed Blackwaters ascent. (4+ / 0-)

              That really bothers me.  Prince is living like a Prince in Dubai and our sweat equity made it possible.

              Why can't he pay the taxpayers back for launching his now global, private enterprise servicing private corporations?

              We are such saps.

              We should all cry with outrage whenever we hear

              Public/Private Partnership.  It's doublespeak for

              OK, we are going to use your hard earned money to for a start up so Herb's grandson, Ducky, can have his own business and a life of ease sucking off the government teet.

              And, btw, this is why all that "drown the government" is just theater.  They all want to enrich their kids and grandkids off the same privatized government teet.

              Don't be fooled, k?

              10.2.10 March On Washington ROCKED

              by War on Error on Fri Nov 26, 2010 at 02:28:13 PM PST

              [ Parent ]

              •  I think it's worse. I think the US taxpayers (1+ / 0-)
                Recommended by:
                War on Error

                subsidized Eric Prince's creation of an international mercenary army, filled with soldiers of fortune.

                How many such mercenaries does Xe now employ, worldwide, I wonder?

                Enough for him to take over a small country, would be my guess.

                Ugh. Now that's some ugly truth that's likely to be coming back to haunt the US at some point...

                "in Order to form a more perfect Union"
                Basta de Guerra. No más. Enough War. No more.

                by Angie in WA State on Fri Nov 26, 2010 at 06:00:59 PM PST

                [ Parent ]

                •  I love your wise insights, Angie. (1+ / 0-)
                  Recommended by:
                  Angie in WA State

                  It is really a chilling possiblity that companies like Xe could actually be hired to herd us.  They were hired for Katrina.  That was wrong in so many ways.

                  10.2.10 March On Washington ROCKED

                  by War on Error on Fri Nov 26, 2010 at 06:21:17 PM PST

                  [ Parent ]

                  •  I think it comes from reading a boatload of (1+ / 0-)
                    Recommended by:
                    War on Error

                    Mack Bolan The Executioner books in the 1970s, along with every science fiction book I could lay my hands on.

                    I grew up on stories about subversive agencies determined to take down America, and their weasely ways... and many (if not most) of the villians of these tales were Americans and not some nefarious foreigner.

                    Hence, my tendency to always look for the bad guys close to home, first. It's faster, and cheaper, and usually right. It's sort of like domestic violence statistics. A lot of murders take place in the US. But the cops always look at the roommate/spouse/family first - because odds are, it's somebody close who did the deed.

                    It does seem to be the MO of these corporate persons, though, to find a way to subsidize their way into life via the US taxpayer, and then enrich the private ownership (these types of guys don't seem to go the public IPO route, do they?) via Department of Defense contracting.

                    How convenient that the scabrous MIC contractors have educated themselves so well on how to work the system that they've scavenged fortunes out of the taxpayers - all in the name of death dealing.

                    It's all just so terribly, terribly sad and worrisome, when you think about it.


                    "in Order to form a more perfect Union"
                    Basta de Guerra. No más. Enough War. No more.

                    by Angie in WA State on Fri Nov 26, 2010 at 07:02:12 PM PST

                    [ Parent ]

                    •  We need a BuSab Department (1+ / 0-)
                      Recommended by:
                      Angie in WA State

                      Did you read the Dosadi Experiment?

                      You write really well, Angie.  Have you tried you hand at writing a zinger?

                      Me, I am straight up didactic...boring, no flare.

                      You have flare..the gift.  Go for it.  You can publish for Kindle these days.

                      Have to run off for some sleep.

                      Nighty night.

                      Oh, I had a new grand daughter in August, btw.  THE best!!

                      10.2.10 March On Washington ROCKED

                      by War on Error on Fri Nov 26, 2010 at 10:00:24 PM PST

                      [ Parent ]

                      •  I haven't read that Herbert series yet - (0+ / 0-)

                        but I have ebook versions of the 3 parts, and it's on my list to read sometime this decade :)

                        Bureau of Sabotage, now that is an idea whose time, I think, has come. We're doing all of it, just under a bunch of different names:

                        are just a few that come to mind.

                        What's a zinger??? You mean a novel? I've thought about it, and I've got a couple of 'starter' books I've been working on this year, but haven't come close to finishing anything... too busy here on the dKos.

                        Congrats on the new gBabe, aren't they some kind of wonderful to behold?

                        "in Order to form a more perfect Union"
                        Basta de Guerra. No más. Enough War. No more.

                        by Angie in WA State on Sat Nov 27, 2010 at 11:44:13 AM PST

                        [ Parent ]

  •  Your diary raises many important points. (3+ / 0-)

    The trend has been apparent at least since the 1970s--when even Ted Kennedy was part of the deregulation trend with deregulation of trucking. Democrats went along with deregulation of trucking and airlines, with the idea of public/private partnerships, with the Clintonian/Gore mess of "reinventing" government. They helped delegitimize government and the civil service. We need to return to at least some of the principles of the original Progressive movement and stop bowing down to the god of the markets. So-smart, so-modern Democrats who accept the conventional wisdom about the great god of the markets have helped erode the norms and principles of professionalism that allowed the medical and legal professions as well as academia and the civil service to provide the foundations for the advances and prosperity of the post-World War II era.

    •  Well said, skeptica. (1+ / 0-)
      Recommended by:
      Angie in WA State

      Oversight and accountability are a couple of reasons why we have government, aren't they?

      Government, laws, and rules evolved because of the nature of some people to be greedy and corrupt.

      Privatizing governance simply makes countries vulnerable to the worst practices of mankind.

      And that is obvious to many, yet too subtly discerned by most.

      What will it take for a wake up call?

      Being frisked at the airport?  I hope so.  

      And there is now talk of privatizing the friskers.

      Good grief.

      Maybe we can save a bundle and have prisoners frisk us for ten cents on the dollar.  Heck, build the private prisons at the airport.  I see a lot of dollars saved, dividends going up, and happy shareholders.  Snark.

      BOTTOM LINE to the private TSA will prompt them to do something like this, watch that unfold.

      10.2.10 March On Washington ROCKED

      by War on Error on Fri Nov 26, 2010 at 02:33:26 PM PST

      [ Parent ]

  •  I love it when wingnuts (1+ / 0-)
    Recommended by:
    War on Error

    bitch about government not being able to do anything.  From what I see (and I do see government contracts every now and then) so much of what the government does is contracted out.  Oftentimes, when the project is delayed or over budget, it's the contractor to blame.

    Government contracts are lucrative; to some extent, I agree that they should be.  They can set the standard for proper pay, and the government makes you jump through a lot of hoops to get those contracts.

    But, I think there's a lot that can be done in-house, by federal employees.  There's unnecessary work being done, I think largely because of the revolving door.  I've known of people that while working for the government, develop a new system or procedure or software, and then quit and sell their services back to their buddies working in the office for 3 times as much.  Bids are a joke because the RFP's are written so specifically that only one firm can really do the job.

    In any case, the privatization of our most important and fundamental services for the common good is a waste of money.  People are either talented or not.  Whether they're working for the government or a private firm doesn't change a damn thing.  Chances are, the government can do it better and cheaper.

    "Mediocrity cannot know excellence." -- Sherlock Holmes

    by La Gitane on Fri Nov 26, 2010 at 03:04:52 PM PST

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