Fraud at Israeli Military Contractor Oran Safety Glass in Virginia
---------- Forwarded Message ---------- From: IRmep <info@IRmep.org> To: <m.mk@...> Subject: Fraud at Israeli Military Contractor Oran Safety Glass in Virginia Date: Tue, 26 Nov 2019 15:18:28 +0000
Fraud at Israeli Military Contractor Oran Safety Glass
Plunge in DOD contracts incentivizes more war, jeopardizes Greensville County
The
manufacture and sale of "transparent armor" to the Department of
Defense to protect personnel operating military vehicles has long been a
mature industry in the United States. When the Department of Defense
issued a series of U.S. Army contracts for windows to be installed in
"mine-resistant ambush-protected" all-terrain vehicles known as "MRAPs"
in 2014, it wasn’t seeking cutting-edge, technological advances. Rather,
it wanted competent contractors to bid (through "source approval
requests", or SARS) on making transparent armor according to a
government-developed and owned "secret recipe." This item was so
routinely procured, inventoried and installed that it even had its own
"stock number."
Source: Greensville County, which has provided millions in subsidies to Israeli military contractor OSG
For
the newly opened Israeli subsidiary Oran Safety Glass in Greensville
County, there were only two major challenges it would face if it won
competitive bidding for the contracts. The first was that the US
government owned not only the "recipe" but also specifications about the
threats against which the glass would protect as well as the ballistic
testing procedures for the glass. This is US government classified
information at the SECRET level. Oran Safety Glass in 2014 did not have
an officially designated "facility clearance" for handling such
classified information. It also had no way to efficiently procure the
materials needed to produce transparent armor to the specifications in
the government’s "secret recipe." Neither of those obstacles prevented
OSG from bidding on and lowballing US industry leaders. OSG won five
contracts between October 2014 and 2015.
In
2015, one of those US industry leaders, Schott Government Services,
contacted the Army and requested production control ballistics testing
of OSG’s shipments. The Army soon discovered that most of the OSG
manufactured armor was "out of specification." Alarmed, the Army
formally notified OSG that such products manufactured by means other
than its own "recipe" would be considered unauthorized and
non-compliant.
OSG
responded that it was producing a different recipe after it developed
internal concerns about the availability and quality of M-ATV compliant
raw materials. The M-ATV is a vehicle developed by the Oshkosh
Corporation for the MRAP program. OSG argued that after performing tests
on its own "recipe" it found that its already-delivered, out-of-spec
products produced out of compliance with the contracts "did not affect
performance" and that it had even submitted its own recipe to the Army
as a SAR for future sales.
The
US Army was placed under enormous pressure by OSG’s actions. Some of
OSG’s products had already been installed on vehicles and any supply
chain issues would delay its supply lines. The product was desperately
needed. That much is known with certainty. What is not known is whether
OSG rallied any friends within Congress, the Department of Defense, or
elsewhere to cut a deal with the buyer. What is certain is that a
sweetheart deal was indeed made.
On
June 4, 2015 the US Army approved OSG’s new recipe, which relieved the
pressing problem of the already received and installed transparent glass
armor. The Army didn’t cancel any of OSG’s contracts. However, on June
24, 2015 it ordered that any future OSG deliveries would have to comply
with the original US government owned "secret recipe" specified in the
contract. It also ordered OSG to make cash and in-kind payments to cover
additional government costs incurred for handling and processing
"nonconforming goods previously delivered." But it allowed OSG to extend
deadlines on "all outstanding deliveries."
OSG’s competitors were livid, and Schott even sued over the contract.
But the litigant could not convince the presiding judge that there was
any prejudice in the actual issuance of the contract. The legal standard
for prejudice is establishing that if it had not been for a procurement
process error, they could have won the contract. Since Schott
was—unlike OSG—not low-balling and intending to manufacture and deliver
non-compliant products, their prices were so high that the legal
standard intended to prevent prejudicial awards could not protect them.
The
fact that particular contracts are for MRAPs is a government secret.
So, the five contracts cannot be identified from within publicly
accessible listings of payments that have exact dollar amounts related
to contracts awarded to OSG. However, military contract databases do
reveal that in 2016, in an uncharacteristic move, OSG repaid the US
government $4.7 million. It is not known if any American military
personnel whose lives depended on non-compliant OSG armor, ever paid the
ultimate price over Oran’s contracting malfeasance.
2009-2018
annual OSG revenue from U.S. government military contracts in steep
decline ($ million) Federal Procurement Data System
From
the perspective of US taxpayers and residents of Greensville County in
Virginia, there are a number of problems with the way OSG does business
that are unique to its status as a recipient of massive amounts of
funding orchestrated by the Virginia Israel Advisory Board.
VIAB is presently the only taxpayer funded state government Israel
export promotion council in the US Some VIAB board members hold equity
stakes and positions as corporate officers in Israeli companies or joint
ventures seeking to start operations in Virginia. Others are long-term
officers of the American Israel Public Affairs Committee (AIPAC) and
other national Israel affinity and lobbying organizations.
Most news reports about Oran portray the opposite of reality. One year 2019 report, from the Area Development Online news organization ran the headline, "Oran Safety Glass Expands Greensville County, Virginia, Manufacturing Complex."
A far more accurate headline would have been, "Greensville County
Expands Oran Safety Glass Complex." Initially VIAB and Oran played every
angle to squeeze millions in funding out of the state and county, all
so Oran could be well-positioned to submit its fraudulent bids for US
military contracts. Oran is now one of VIAB’s most cherished projects,
and is prominently featured in its promotional materials, as mentioned
in VIAB meeting minutes:
We
are marketing ourselves in Israel, [and] created a brochure. Leveraging
United Airlines direct flight[s]. Using mass media organizations. We
are focused on doing a campaign geared to the Kibbutz industry. A lot of
innovation in water and technology has come from that niche (i.e. Drip
Irrigation and desalinization). We have one kibbutz business that came
to Virginia, Oran Safety Glass in Emporia, currently employing 150
people. They sell their glass to the military and Caterpillar tractor,
they sell back to Israel through foreign military funding, and to the
civilian market. A tiny Kibbutz company has expanded exponentially.
Sometimes it takes a known person that is trusted to guide these small
companies to take interest in the US.
Leading mass media organizations do factor heavily in VIAB’s self-promotion. The Washington Post featured customers of Sun Tribe Solar as alternative energy leaders, without mentioning that the companies that own it do business in Israeli occupied territories.
While the "known person" remains unknown," VIAB brought along five
major campaign contributors on former Governor Terry McAuliffe’s 2016
delegation to Israel. During the trip Virginia representatives signed a Memorandum Of Understanding
(PDF) turning Virginia Tech into Sabra Dipping Company’s uncompensated
US sales and marketing division while pledging additional funding to
Israeli companies.
Oran’s state subsidies
from Virginia were delivered in three phases. The first, they funded
Oran startup operations in Virginia, and then two expansion phases as
defense contracts were expected to pour in. In July of 2006, a
performance agreement was executed between Oran, the Virginia Economic
Development Partnership, the Tobacco Commission and Greensville County.
The parties agreed that in exchange for government support OSG would
make a $4.1 million capital investment to start production in Virginia
and create 45 new jobs within 30 months.
In
2007 the Greensville County Industrial Development Authority leased
five and a third acres of land and an 82,800 square foot industrial
building for ten years to OSG. The County obtained grants to perform a
nearly $600,000 upgrade to the facility, including two separate Tobacco
Commission grants in the amounts of $100,000 and $125,000, a $50,000
Emporia/Greensville Industrial Development Corporate grant, as well as
$125,000 from the Governor’s Opportunity Fund. The project also applied
for a Virginia Department of Housing and Community Development "Virginia
Enterprise Zone Real Property Improvement Grant" of $125,000.
Greensville
County even agreed to go into debt to bring in OSG by securing a loan
for $400,000 from the Virginia Small Business Finance Authority to cover
any "Phase I" cost shortfalls. There were cascading effects. Other
entities such as the Mecklenburg Electric Cooperative also agreed to go
into debt by up to $400,000 to build out infrastructure necessary to
supply electricity to OSG. The county also waived water and sewer
connection fees in the amount of $20,000 and $4,300 in building
permitting fees. The government parties showered another quarter million
in "job creation grants," "training and recruitment incentive grants"
and free classroom space for "pre-employment testing and training" to
assist in the creation of a workforce for OSG. On December 17, 2017, the
Greensville County Industrial Development Authority finally "sold" the
manufacturing facility which it carried on its books as a $1,140,000
asset, to Oran Safety Glass for a price equivalent to the outstanding
loan balance on the property, or $436,644.
Excluding
military contracts, Oran is known to have received close to $3 million
in government economic development subsidies. In return, Oran was
supposed to provide jobs with solid pay and a boost to tax revenues, but
there is no independent evidence that it is meeting any of its
performance benchmarks. An examination of records released by Greensville County under the Virginia Freedom of Information Act reveals the county has only once attempted to claw back funds over non-performance and has little incentive to or capability to probe too deeply.
However, with Oran’s military contracts in steep decline, local
stakeholders could soon begin to press Oran’s government subsidizers to
respond as to whether Oran has jeopardized the county’s financial
viability.
Perhaps
the issue of greatest concern to Virginians, other Americans and the
rest of the world are the incentives created by OSG and other Israeli
military contractors VIAB is herding into Virginia.
Ever more military conflict in the Middle East is good for them. Less
conflict is bad. With military contracts at Oran in seeming eclipse, the
likely result of Pentagon mistrust of Oran’s past contracting
practices, there is new pressure on VIAB, their fellow operatives at
AIPAC and the wider Israel affinity ecosystem that supports Israeli
military contractors, and the government of Israel to do something.
Israel clearly has the ability to create new demand for weapons
production that even top-tier US military contractors like Boeing and
Lockheed Martin do not. What could be better than for the US to respond
to additional Israeli demands for on-the-ground military action against
Israel’s rivals? Or sending more heavy armor into Syria?
Or launching new armored ground campaigns against Iran or even inside
Iraq that benefit Israel, Oran Safety Glass, and the new horde of other
Israeli military contractors streaming into Virginia under VIAB’s guidance?
Note: This IRmep report appeared yesterday at Antiwar.com. Virginia Freedom of Information Act documents about OSG obtained by IRmep for this report are available at: https://www.israellobby.org/oran/
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