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Florida Weapons Company Investigated For Alleged Violations
Posted Jan 18, 2007 by The Tampa Tribune
Updated Jan 18, 2007 at 09:10 PM
By RICHARD LARDNER
The Tampa Tribune
TAMPA - Federal agents are investigating claims of illegal activity by a Florida business that supplies high-tech gear to elite U.S. military units battling al-Qaida and other terrorist groups.
The investigation of Knight’s Armament began more than a year ago and stems from allegations the Titusville-based company received preferential treatment on government contracts and engaged in improper business activities.
The inquiry is focused on work awarded to Knight’s by the Naval Surface Warfare Center in Crane, Ind., with funding provided by U.S. Special Operations Command at MacDill Air Force Base.
The Navy center, about 70 miles southwest of Indianapolis, supports SOCOM
Agents from the Naval Criminal Investigative Service, Defense Criminal Investigative Service and FBI are involved in the investigation.
“The investigation has been under way since late 2005 and is still ongoing,” said Ed Buice, an NCIS spokesman.
Buice, however, said he could not provide details “of who and what are under investigation” because doing so might compromise the inquiry.
“I can’t be more specific than to say investigators are following up on allegations of fraudulent business practices,” he said.
Representatives from the FBI and Defense Criminal Investigative Service said they do not discuss investigations.
Reed Knight, president of Knight’s Armament, told The Tampa Tribune he was not aware of the investigation until he was contacted by a reporter.
“I have never been interviewed” by federal agents, Knight said. His company has not received any complaints about the quality of its rifles and other gear, he added.
SOCOM spokesman Ken McGraw said the command also was not aware of the inquiry.
“Neither are we aware of any SOCOM personnel being interviewed as part of an investigation of Knight’s Armament,” he added.
Pam McKee, a spokeswoman at the Navy warfare center in Indiana, referred all questions about Knight’s to SOCOM.
Paul Maxin, president of Optical Systems Technology in Freeport, Pa., and a competitor of Knight’s, said he was visited by federal agents last year.
Maxin’s company and Knight’s teamed in 2002 on a $28 million contract for hundreds of rifle sights allowing special operations snipers to pinpoint targets in the dark. The partnership soured after a dispute over who owned the technology rights, however.
Maxin said the agents asked about his company’s relationship with Knight’s, SOCOM, and the Navy warfare center in Crane.
“But they never said specifically what the investigation was about,” Maxin said.
Past Questions
Knight’s, the Navy center, and SOCOM were the subject of a 2004 Defense Department audit that criticized the government for improperly awarding Knight’s a series of contracts for thousands of M4 rifle silencers.
The silencers muffle the carbine’s sound and flash, making it harder for the enemy to figure out where the shots are coming from.
The audit was prompted by U.S. Rep. Wally Herger, a Republican from northern California.
In a December 2002 letter, Herger told the Pentagon inspector general he was “deeply concerned” by information he’d received from a constituent and an unnamed source at SOCOM about the four silencer contracts, which were worth almost $4.4 million.
Herger’s constituent, Phil Seberger, is a World War II veteran who owns OPS Inc., a small business in Shingletown, Calif., that also manufactures silencers.
Seberger complained to Herger that his silencers were better and less expensive than Knight’s. But the contracts were awarded to Knight’s without the normal competition held to ensure the government receives the best price for the highest quality equipment, according to the audit.
In his letter, Herger said the allegations were “not merely the complaints” of an unsuccessful vendor. The SOCOM source, he noted, worked directly on the silencer program.
“My only interest is in getting the best possible equipment to the field for the operators,” Herger wrote. “If that is not happening, we need to know why.”
Military officials said the “sole-source” contracts were based on an “urgent need” for the silencers by U.S. troops, particularly the Army Special Forces deployed to Afghanistan.
The inspector general, however, questioned that rationale, saying “the urgency occurred because of a lack of acquisition and sustainment planning.”
Overall, the inspector general concluded Navy officials had “inappropriately justified” the silencer contracts to Knight’s.
The awards, made between October 2002 and August 2003, “may not have been in the best interest of the government,” the report added.
SOCOM, which provided the funding for the silencers, was not directly faulted.
The inspector general did not address Seberger’s contention his silencer was better than Knight’s because the claim involved different systems “that were not interchangeable,” the inspector general said.
Reed Knight said he was not familiar with the inspector general’s report. But he called Seberger a chronic complainer.
“He’s alleged this stuff time and time again,” Knight said.
Herger’s spokesman, Darin Thacker, said the congressman had no further comment on the allegations and would not discuss the inspector general’s report.
Contract Disputes
In 2005, Maxin’s company, Optical Systems Technology, would compete against Knight’s, its former partner, for another rifle sight contract. This time Socom needed as many as 3,000 units over a five-year period.
Optical Systems Technology proposed its Magnum Universal Night Sight, an improved version of the sight provided under the prior contract. Maxin said his bid was several million dollars below Knight’s.
But Knight’s, with Optics 1 of Manchester, N.H., as its new subcontractor, won a $23 million award from SOCOM for the sights.
Maxin protested the decision to the Government Accountability Office in Washington, claiming the command had not properly tested its equipment before making a decision.
In its March 17 ruling, the GAO denied the protest, citing SOCOM’s test report, which said the Magnum sight cracked after being used on .50 caliber sniper rifles.
Knight’s had the “overall best value rating,” SOCOM spokesman Ken McGraw said, while the Optical Systems Technology sight “did not meet the [SOCOM] specifications.”
Maxin said he remains suspicious of the testing procedures and pointed to a recent contract worth as much as $40 million his company recently received from the Marine Corps for the same sight rejected by SOCOM.
The Marine Corps award, Maxin said, “gives us pause either to the competence and/or integrity of the test methodology” used by SOCOM.
McGraw said the Marine Corps’ requirements “may be totally different” from SOCOM’s.
But the head of a technology center jointly run by the Navy and Penn State University said it’s unusual for one military organization to buy what another has so thoroughly panned.
“If what they’re telling you is, ‘We tested them and they broke,’ then that’s a headscratcher,” said Karl Harris, director of the Navy Electro-Optics Technology Center in Freeport, Pa.
Harris said his office has independently tested Optical System Technology’s sights and found no problems.
“From our perspective, and in a generic sense, they worked,” Harris said.
