An unhappy marriage – The Case of Raytheon and Xe

The first months of 2010 proved extremely complicated for Raytheon’s PR staff, following it’s association and the subsequent  incidents with Xe’s Paravant. Though stirring up controversies in not a new thing for Xe, as it has become the poster child  for everything that’s wrong with the industry, the situation proved a little less easy for Raytheon, who found itself in the mist of an all-out PR nightmare.

What happened?

Raytheon Technical Services, Raytheon’s training Unit, has a large US Army program in Afghanistan, called Warfighter FOCUS (Field Operations Customer Support)  to consolidate operations for the Army’s live, virtual , and constructive training systems. The contract, valued at over $11 billion is overseen by the Army’s Program Executive Office for Simulation, Training and Instrumentation (PEO – STRI) and spans over a 10-year period.

Raytheon has an extensive training business, however it lacks the specialists for the job and in 2008, it hired Paravant for about $25 million to provide weapons training for the Afghan Army. Paravant is a subsidiary of Blackwater that apparently was created for the sole purpose of this contract. While testifying before the Senate Armed Services Committee in February, Fred Roitz, an executive VP at Xe suggested that Raytheon wanted to do business with Blackwater, as long as it did not appear that is was actually doing business with the controversial firm. Roitz said that “the request for a company other than Blackwater came from Raytheon.” Here is a short chronology of the most notable events marking this contract:

September 2008

The controversial incident involved more than 200 assault rifles guns being signed out to a Paravant employee under the now-famous South-PArk character, Eric Cartman. The weapons, taken from a U.S. weapons facility near Kabul called Bunker 22, were meant for the Afghan National Police. Apparently, these guns were used by Paravant employees for both the Raytheon contract and a Lockheed Martin contract.  What can you say, Paravant/Xe was an efficient company, with a really good sense of humor. This would be really funny, if it wouldn’t be sad…

December 9th 2008

A Paravant Trainer accidentally shoot another one in the head during a practice session of firing assault rifles from moving vehicles. The injured victim was flown to Germany and is partially paralyzed. Paravant reported this incident with Raytheon in the same time and Raytheon filed a report using PEO-STRI system.  The Army never investigated it, and the incident was brought into questioning at the beginning of 2010 by the Senate Committee.

May 5th 2009

This was the incident that sparked the whole crisis, when two Paravant employees killed two Afghan civilians and injured a third. The Paravant employees said they felt threated by a vehicle moving towards them and opened fire. Amidst the layers of this story, we find entangled allegations of improper vetting, alcohol and drug abuse. The incident prompted an investigation led by Sen Carl Levin (D., Mich.), whose report concluded that Paravant employees carried unauthorized weapons and engaged in reckless behavior.

Implications for Xe and Raytheon

Notorious for its dubious businesses, Xe didn’t lose much in the whole affair, except for tarnishing its newly-acquired name. As shown with Paravant, I’m sure that the company has more logos and names in reserve, to put on the table for the next contract. In addition, the heat of the battle in unfairly taken only by the company. For example, the PEO STRI contracting officer overseeing Paravant’s work, Steven Ogaryensek, and the head of its contracting office, James Blake, testified that they did not know that Paravant was linked to Blackwater. Excuse me, they shared the same address and the same bank account!! Let’s be serious, what kind of oversight is that, when all they had to do was look at the address!

In terms of vetting its personnel, could Xe had done a better job? Following the May shootings, Raytheon sent a show notice to Paravant for failing to control, oversee their personnel, to which Paravant replied that if Rayhtheon wanted Paravant to control its personnel at all times, Paravant had to submit new claims for expenses to justify the new measures. In a way, they do make a point. The incident happened during night-time and the contractors were off-duty. What is not justified is them having unauthorized weapons. Common sense tells us that when you send men in a territory such as Afghanistan, they should be able to have weapons to protect themselves. The line is not ment to justify poor management on behalf of Paravant, but the situation is not as cut-clear as the media portrays it.

The consequences for Raytheon are substantial. The company let itself be dragged and associated with excessive use of force incidents. The claim that Paravant was not used to hide the fact that Raytheon was doing business with Xe is shady and lacks  solid grounds. Moreover, the “no comment” approach Raytheon has undertaken leaves room for serious questioning in regards to how it conducts its businesses. A defense contractor, providing mainly back-office system support, Raytheon has crossed an extra mile and landed in the heat of the fire. Inadequate preparations and the lack of PR crisis management planning has led to the improper handling of such situation. I mean, gee one would think that when you’re setting out to do business with Xe in Afghanistan, you’d be more prepared to handle the limelight and the negative publicity.

Raytheon has just named David Jensen as vice president of communications for its Intelligence and Information System (IIS) business, whose main responsibility will be leading internal and external communication programs in support of IIS’s growth strategy. A lot of programs under IIS, such as the National Polar-orbiting Operational Environmental Satellite Systems(NPOESS) and the Advanced weather Interactive Processing Systems, are open to positioning Raytheon as a leader in environmental solutions, but before building a brand image focused on environmental-stewardship, Mr. Jensen should make sure he coordinates with the other divisions in the company. Environment and guns don’t precisely go hand in hand.

Conclusion

The whole incident has cast a doubt on defense contractor’s ability to take responsibility for the contracts they are bidding on. As the main contractor, Raytheon was directly responsible for Paravant’s work in Afghanistan and it should have had the necessary mechanisms to ensure oversight and control. The worrying thing is that if Raytheon, who has so far maintained a pretty high standard of professionalism, doesn’t get things right, then who will?