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Bribery allegations caught island firms by surprise
Published March 5-6, 2011
By Matt Sheley/Daily News staff
MIDDLETOWN - At one time, it might have been one of the best-kept secrets on Aquidneck Island and in the state of Rhode Island.
But most are aware today of the region's reliance on the defense industry, which generates about $2 billion a year in revenue and employs upwards of 16,000 people.
A $13.5 million kickback scandal allegedly operated out of Advanced Solutions for Tomorrow, a local defense contracting firm, has cast a shadow over the industry, left at least 100 people without jobs and robbed several of their reputations. ASFT's assets were frozen and the company abruptly closed in February after its president and a civilian senior systems engineer with the Naval Sea Systems Command in Newport were arrested on federal bribery charges.
"The largest of the Navy's five systems commands, NAVSEA engineers build and support America's Fleet of ships and combat systems," according to a Navy website. "Accounting for nearly one-fifth of the Navy's budget, NAVSEA manages more than 150 acquisition programs and has more than 53,000 civilian and military employees at 33 activities in 16 states."
Anjan Dutta-Gupta, 58, and Ralph M. Mariano, 52, are accused of bilking the Navy of at least $13.5 million and funneling about $10 million to themselves, Mariano's relatives and associates and Dutta-Gupta's company. The 29-page affidavit that outlines the investigation leading to those charges has left many in the local defense industry wondering how such a thing could happen in such a highly regulated and scrutinized environment.
Warren B. Blakeley, president of McLaughlin Research Corp., is among those who read in disbelief the affidavit U.S. Attorney Peter Neronha filed in U.S. District Court in Providence. (To read, click on the link through the Daily News website at www.newportdailynews.com)
"I think surprise is the word I'd use," said Blakeley, whose defense firm is located in the Aquidneck Corporate Park. "Those of us who've been in the business a long time know the level of scrutiny we deal with everyday. There are so many requirements. We have to report every hour we work, every dollar we spend."
He has worked at McLaughlin Research Corp. for 31 years and cannot remember a similar scandal. The long-term repercussions on Rhode Island's defense contracting industry are sure to include changes - and that's a good thing, Blakeley said.
There will be additional accountability and scrutiny measures for contracts secured by his firm, which employs about 180 people, and all others that do business with the government, he said. McLaughlin Research Corporation specializes in providing a variety of services for the Naval Undersea Warfare Center, everything from high-end engineering to computer aided design to information technology.
The company, which has government contracts totaling tens of millions of dollars, announced last month that it had secured a four-year task order with a potential value of up to $2.6 million for technical support work with the Naval Surface Warfare Center.
"NAVSEA'S Warfare Center Enterprise is comprised of the Naval Surface Warfare Center (NSWC) and the Naval Undersea Warfare Center (NUWC)," the website says. "... the Warfare Centers supply the technical operations, people, technology, engineering services and products needed to equip and support the fleet and meet the warfighters' needs. The Warfare Centers are the Navy's principal research, development, test and evaluation (RTD&E) assessment activity for surface ship and submarine systems and subsystems."
Blakeley recently was appointed to the Special Legislative Commission on Defense Economy Planning. Established by Senate President Teresa Paiva Weed, D-Newport, and Speaker of the House Gordon D. Fox, D-Providence, the 24-member commission is comprised of legislators, state officials, business leaders and members of the defense industry.
Blakeley replaced Mary O'Rourke on the new commission. She was a vice president at ASFT and president of the Southeastern New England Defense Industry Alliance, a regional defense industry trade group. In that role she had been appointed to serve on the state legislative commission, which met for the first time on Feb. 14 - the same day ASFT sent layoff notices to its 100 employees and closed down its offices in Middletown, Fairfax, Va., and Roswell, Ga.
O'Rourke already had resigned from the alliance and the commission; she stepped down from both positions after Dutta-Gupta was arrested at the Atlanta airport on Feb. 6 and Mariano surrendered to the U.S. Marshals Service in Providence the next day. Both men have turned in their passports and are free on bail. If convicted of the bribery charges, they face 15 years in prison and hefty fines.
The federal affidavit filed in U.S. District Court in Providence details the elaborate scheme Mariano and Dutta-Gupta are accused of orchestrating using subcontractors and even Mariano's relatives and "long-time girlfriend" identified only as "MO." The affidavit describes the woman as a senior vice president, director of strategic planning at ASFT, the company whose website listed O'Rourke as its senior vice president, director of strategic planning until it was taken down after Dutta-Gupta's arrest.
Daniel R. Conway, vice president of business development at KVH Industries, said the federal investigation - which U.S. Attorney Peter F. Neronha said is continuing - has generated a lot of local discussion and some positive results.
"When this all broke, it was good to see so many of the different agencies come together," Conway said. "The FBI, (the) Justice (Department), so many different agencies, and it shows that the system does work.
"(ASFT) had some very high-quality people, people who played the game straight and above board and were friendly competitors in the industry, but some of the leadership went way, way over the top."
While not as dependent on Naval Station Newport and NUWC for its work as some area firms, KVH still counts on the military for a sizeable portion of its business. Topping the $100 million mark for revenues last year for the first time, the company produces a variety of state-of-the-art technology, including digital compasses, fiber optic gyroscopes and marine antennas providing satellite TV to boats in the middle of the ocean.
Maintaining a strong military presence in Rhode Island is important, especially when things are not as positive in other segments of the economy. Conway noted that while some areas of business have been "lumpy" - particularly those sectors that rely on discretionary income - the defense industry remains strong.
In its Middletown offices off East Main Road, KVH employs about 250 people. It has announced plans to build a 70,000-square-foot manufacturing center next door to Town Hall to allow its operations to continue to grow, showing its commitment to Aquidneck Island and the state for years to come.
"We think those jobs are very important," Conway said. "They're high-tech careers that have little to no negative impact on the community and provide a very competitive salary and benefits at a time when most places are looking for those types of opportunities."
Keith Carlson of BBN Technologies, a subsidiary of Raytheon Co., agreed, saying the approximately 40 jobs at the firm's office in the Aquidneck Corporate Park played a role in helping the economy try to rebound. BBN does a variety of sophisticated military projects tied to the Navy base, with a focus on high-tech engineering support, acoustics work and sonar, and related aspects of undersea warfare activities.
"I think people are aware of the defense industry here now," Carlson said. "It's a prominent part of the island economy and the state's economy as well."
Sea Corp, another defense contactor based in the Aquidneck Corporate Park, provides submarine engineering services, mainly to the Naval Undersea Warfare Center but also to Raytheon Co. in Portsmouth. It employs 370 people and last year performed about $73.5 million in work for the Navy.
President Larry L. Willner and Richard W. Talipsky, vice president for corporate development, said Sea Corp had little contact with ASFT.
"We have partnered with them periodically," Talipsky said. "We don't have any contract where they are a prime and we are a sub. We have one contract where they are a sub to us."
Sea Corp and other firms in the defense industry are looking to seek if they can hire any of the ASFT employees who lost their jobs, Willner said.
"As far as I know, all of these people are good people, and they are now looking for jobs or trying to get their jobs back on another vehicle," he said.
The ASFT implosion is disrupting some work at NUWC, Talipsky said, because people are being diverted from their primary tasks. Despite the disruption, defense contractors continue to do their jobs, he said.
"It will all come out," Willner said. "This is a bump in the road. We are going to work our way through it and get back to doing business."

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