DoD Contractor Improperly Blocked Release of Info

In an unusual investigation of improper secrecy involving unclassified information, an Inspector General report last week found that a Defense Department contractor marked records as “proprietary data,” thereby restricting their dissemination, even though the records did not qualify as proprietary.

Kellogg, Brown and Root Services, Inc. (KBR), a component of Halliburton, “routinely marks almost all of the information it provides to the government as KBR proprietary data,” the Special Inspector General for Iraq Reconstruction found (pdf).

This is not consistent with Federal Acquisition Regulations (FAR), the IG said.

“The routine use of proprietary markings when the data marked is not internal contractor information… is an abuse of FAR procedures [and] inhibits transparency of government activities and the use of taxpayer funds…,” the Inspector General reported.

“The result is that information normally releasable to the public must be protected from public release…”

“In effect, KBR has turned FAR provisions designed to protect truly proprietary information … into a mechanism to prevent the government from releasing normally transparent information, thus potentially hindering competition and oversight,” the Inspector General concluded.

See “Interim Audit Report on Inappropriate Use of Proprietary Data Markings by the Logistics Civil Augmentation Program Contractor,” Office of the Special Inspector General for Iraq Reconstruction, October 26, 2006.

Halliburton’s Kellogg Brown & Root unit won a $17 billion contract in 2001 to provide services to the U.S. Army worldwide that includes over $15.4 billion for Iraq work, noted Tony Capaccio in a report for Bloomberg News. “While KBR has been criticized for its accounting practices, bills and estimates of future costs, this audit is the first to cite it for restricting information,” he wrote.

While national security classification procedures are governed by certain rules and procedures, including a degree of external oversight, the same is not consistently true of the dozens of control markings (such as “proprietary data” or “for official use only”) that are increasingly imposed on unclassified information.

So, for example, there are well-defined procedures for declassification of classified information, but there are no such procedures for lifting controls on many varieties of “sensitive but unclassified” information.

And while the Information Security Oversight Office is responsible for oversight of classification and declassification activity, no one is similarly responsible for monitoring restrictions on unclassified information that is withheld from the public. It would be surprising if such restrictions were not abused, since they can serve as a shield against oversight and accountability.

The new Inspector General report suggests that this is a function that might regularly be assumed by agency Inspectors General.

A House Government Reform Subcommittee held a hearing last March on the proliferation of controls on unclassified information and their consequences. The record of that hearing has recently been published.

See “Drowning in a Sea of Faux Secrets: Policies on Handling of Classified and Sensitive Information,” House Committee on Government Reform, March 14, 2006.