Friday, July 23, 2004

The 9/11 Commission Report

Both links below are to the Washington Post

Executive Summary (PDF 5.9 MB)

Full Report (PDF 7.4 MB)


For Bush and Kerry, Different Lessons From 9/11 Report

July 23, 2004
For Bush and Kerry, Different Lessons From 9/11 Report

LENVIEW, Ill., July 22 - President Bush staunchly defended his administration's antiterrorism policies on Thursday, the day that a bipartisan panel called for the nation's intelligence apparatus to be restructured, while his Democratic challenger, Senator John Kerry, called such changes "long overdue'' and criticized Mr. Bush for failing to carry out such an overhaul.

"This report carries a very simple message for all of America about the security of all Americans: We can do better," Mr. Kerry said in Detroit after speaking at the National Urban League convention. "We must do better, and there's an urgency to our doing better. We have to act now."

He added, "If I am elected president and there still has not been sufficient progress rapidly in these next months on these issues, then I will lead."

While generally embracing the recommendations of the panel, Mr. Bush used his appearance here at a training facility north of Chicago to underscore one of his major campaign themes, that the nation was better protected as a result of his administration's policies.

One example, he said, was the medical and emergency workers called first responders; he praised several hundred attending his speech at the Northeastern Illinois Public Safety Training Academy.

Mr. Bush congratulated them and strongly defended his actions since the Sept. 11 attacks, saying "Because of these achievements, America and the world are safer."

"If an attack should come," he said, "American will be prepared."

Mr. Bush referred several times to the commission report, characterizing it as an important tool in mapping future strategies to combat terrorist activities. He called it "a serious and comprehensive report with thoughtful recommendations," and said, "We will carefully study all their proposals, of course."

Mr. Bush, who was introduced by Tom Ridge, the secretary of homeland security, also said that the report affirmed many steps his administration had already taken. He used much of his speech to review those steps, recalling military efforts in Afghanistan and Iraq, disruptions of financial networks used by terrorists and changes that eased the sharing of information by law enforcement agencies.

"I agree with their conclusion that the terrorists were able to exploit deep institutional failings in our nation's defenses that developed over more than a decade," he said. "The commission's recommendations are consistent with the strategy my administration is following to address these failings and to win the war on terror."

"But the job is not done," Mr. Bush said. "This report will help our country identify even more steps we can take to better defend America."

Mr. Kerry used the report to challenge Mr. Bush's leadership and priorities, blaming him for the conflicts among agencies that have been cited as impediments to more efficient intelligence gathering and response.

"Unfortunately, this administration has had an ongoing war between the State Department, the Defense Department, the White House," Mr. Kerry said. "People have been at odds, everybody knows it, they'll deny it, but everybody does know. And the fact is that it has created a struggle that has delayed our ability to move forward."

Mr. Kerry aimed only veiled criticism of former President Bill Clinton, saying some changes in the nation's intelligence-gathering efforts should have been made before Mr. Bush took office. And he said he agreed with the commission's finding that Congress had given terrorism too little attention and had responded slowly and inadequately in the years before the attacks.

But he focused much more of his criticism on Mr. Bush.

"Sure, Congress shares some responsibility," Mr. Kerry said, "But as you know, the watchdog role is a role of proposal, a role of scrutiny."

He added: "The bottom line is, the executive is the implementer. The executive department proposes the budget, the executive department has the ability to lead."

Mr. Kerry's running mate, Senator John Edwards, was more circumspect in his response to the report, interrupting a fund-raising trip to Hartford to speak to reporters after telephone conversations with the commission's leaders, Thomas H. Kean, the former Republican governor of New Jersey, and Lee H. Hamilton, the former Democratic representative from Indiana.

Mr. Edwards praised the "bipartisan nature" of the commission's work, then called on Mr. Bush to act immediately on those recommendations that could be accomplished by executive order, and for Congress to work on the rest.

"We had thousands of Americans who lost their lives on Sept. 11,'' Mr. Edwards said, "and it is very important for us, those of us in positions of responsibility, to pay the greatest tribute we can pay to them, which is to take action and reform our intelligence operations."

Mr. Kerry's remarks about the Sept. 11 report came after he addressed the National Urban League, vowing to expand loans, contracting and other business opportunities for minorities and to crack down on gang violence, not just by prosecuting it but by offering alternatives like job training and drug treatment.

President Bush is to address the group on Friday, an appearance the White House scheduled after it rejected an invitation from the National Association for the Advancement of Colored People to speak at its convention last week. A Bush campaign official said Thursday that Mr. Bush would "speak directly to the African-American community" about how his agenda was helping cities. The official said Mr. Bush would also highlight the increases in minority home ownership and drops in drug use and crime under his administration.

Mr. Kerry, who did address the N.A.A.C.P., alluded to the tiff after he was introduced by Vernon Jordan, a former Urban League president who heads his debate negotiation team.

"As president of the United States, I will show up - not just at national meetings during election season," Mr. Kerry said. "I want you at the table with me, in a full partnership to build a stronger America at home and an America more respected in the world again."


Thursday, July 22, 2004

The 9/11 Commission Report

According to the 9/11 Commission Report issued July 22, 2004, the U.S. government was not prepared to detect mistakes by al-Qaida plotters and stop the worst terror attacks in American history.

The final report recommends sweeping overhaul of the nation's intelligence services to disrupt future attacks.

The panel determined the "most important failure" leading to the Sept. 11 attacks "was one of imagination. We do not believe leaders understood the gravity of the threat."

The commission identified numerous "specific points of vulnerability" in the Sept. 11 plot that might have led to its disruption had the government been better organized and more watchful.

The report concludes that despite these opportunities, "we cannot know whether any single step or series of steps would have defeated" the 19 hijackers.

The report stopped short of addressing the crucial 7 minutes that the President failed to act -- action which could have stopped the second, third, and fourth planes.


Report Alleges Halliburton Overcharges

July 21, 2004
Report Alleges Halliburton Overcharges

WASHINGTON (AP) -- Vice President Dick Cheney's former company, Halliburton, charged the government $2.68 per gallon to import gasoline from Kuwait to Iraq while a U.S. government agency did the same job for $1.57 a gallon, a congressional Democratic report said Wednesday.

Halliburton's oil deliveries cost taxpayers an extra $166.5 million, when the company's per-gallon price is compared with the government agency's price, the report said.

The report by the House Government Reform Committee's Democratic staff was prepared for Reps. Henry Waxman of California and John Dingell of Michigan, two of the leading Democratic critics of the company Cheney led before running for vice president.

The presidential campaign of John Kerry also has made Halliburton's contracts in Iraq and elsewhere a campaign issue, saying the Bush administration has shown favoritism in giving the firm non-competitive contracts.

Cheney has repeatedly denied any current involvement in the company or the contracts it has received.

Halliburton spokeswoman Wendy Hall said in a written statement that the price comparisons are unfair.

She said KBR, the subsidiary that handled the oil deliveries, has repeatedly asked for copies of the successor contract given to the Pentagon's Defense Energy Support Center.

``If DESC would provide a copy we would be happy to review and make comment. Although we have not seen the contract, we believe the terms are significantly different and could impact the price. Beyond that, it would be imprudent to make conclusions without a thorough examination of both contracts,'' Hall wrote.

Halliburton, which provides services to the U.S. military in numerous countries, received the non-competitive oil delivery work from the U.S. Army Corps of Engineers in May, 2003, and was replaced by the DESC last April.

Waxman and Dingell often have criticized Halliburton's fuel costs but the latest study compares Halliburton's costs to those of its successor.

The report said the defense agency purchased its gasoline in Kuwait directly, and then hired a Kuwaiti company -- Altanmia -- to transport the fuel to Iraq.

Halliburton, in contrast, used Altanmia to deliver the fuel and also to act as a middleman to purchase the gasoline. This arrangement drove up the costs, the report said.

The report said that Halliburton charged the government more than DESC for all three components of the total price: fuel purchase, transportation and fees/markups.

``The total difference between Halliburton's price and the DESC's price is substantial on a per-gallon basis,'' the report said.

``Halliburton's total cost of $2.68 per gallon to import gasoline from Kuwait was equal to the spot price plus $1.86 per gallon.

``DESC's total cost of $1.57 per gallon ... is equal to the spot price plus 59 cents per gallon.''


Tuesday, July 20, 2004

Outsourcing: An analysis of the current state of offshore outsourcing in New York City based companies

Prepared for New Jobs for New York

Howard A. Rubin, Ph.D.
Professor Emeritus City University
of New York, Computer Science
Patricia Jaramillo
CEO and Founder, Magnolia Communications LLC

At the request of New Jobs for New York, an analysis of the current state of offshore outsourcing in New York City based companies, including near-shore activity in Canada and Mexico, was conducted during the period March 1, 2004 thru May 31, 2004.

The principal finding of the analysis is that the true cost savings associated with outsourcing are not nearly as large as many in the business community believe them to be. Whereas respondents to the survey cite 44% estimated savings, the survey has found that the true savings can sometimes be less than half of that.

This study focused on:

* Use of offshore resources in the areas of Information Technology (IT) and Business Process Outsourcing (BPO) today and future plans/trends
* The primary reasons/drivers that companies have engaged in the use of offshore outsourcing
* The complete cost of offshore outsourcing
* The cost competitiveness of New York resources

The study group:
The 100 largest public companies in New York City were the focus of this study. Data was collected via survey or secondary research from 62 of these companies. In general, all included had over $1B in annual revenue, more than 3,000 total employees, and had over 100 IT employees.

Summary of Results
It is clear that New York City continues and will continue to be the "capital" of the world in critical areas of business. The New York City economy is vital and growing. According to a report by the New York City Comptroller, in the first quarter of 2004—the economy grew by 7 percent, adding 21,000 jobs, the largest quarterly growth since the final three-month period of 1999. In the context of maintaining their vitality and economic dominance the trend towards offshore outsourcing is clearly evident in the largest New York City based companies. The results of this study indicate that some sorts of offshore outsourcing are inevitable but with a clear understanding of the true economics of offshore outsourcing there are areas in which companies can competitively and should be performing work onshore with New York itself offering opportunities and possible locations. In particular areas in upstate New York have the skillets available and compensation structure that enable opportunities for companies to have cost-competitive facilities within a few hundred miles of New York City especially in the areas of IT and BPO support.

Finding # 1:
The use of offshore outsourcing in the areas of IT and BPO is growing. The majority of the companies in the study were engaged in offshore activities and that number will continue to grow, as it's the preferred approach for IT and BPO. Of those that were engaged in offshore outsourcing, IT work was the primary focus (80%) and BPO was the secondary focus (36%). Approximately 15% were engaged in both. Primary offshore activity was in India followed by Canada (near shore), Philippines, Ireland, China, and Eastern Europe.

Finding # 2:
The primary drivers ranked by companies going offshore are cost savings (90%), skillset availability (64%), quality (41%), worker productivity (34%), and time zone leverage (18%).

Finding # 3:
The average amount of cost savings cited by companies with offshore IT or BPO is 44% versus their cost structure in New York City.

Coupling findings 2 and 3 it is obvious that cost savings is the dominant driver of offshore strategy. However, savings close to 44% can be attained using labor resources for IT and BPO in cities such as Syracuse, Rochester, Buffalo, Rensselaer, etc. where salaries for IT and BPO jobs are within 10% to 20% of the true cost of offshore equivalents.

Finding # 4:
The true cost of offshore resources is not just the raw salary differential. The myth of ten offshore workers to one onshore worker is simply not true. There are a number of costs that need be added to raw offshore wages to get the complete picture—planning, transition, start-up, technology and communications, remote management and oversight, and, of course, travel and logistics.

Finding # 5:
Companies that are currently going offshore are willing to consider use of equivalent onshore labor with consideration to favorable labor rates, incentives, and skillset availability.