THE ISRAEL LOBBY ENTERS STATE GOVERNMENT

RISE OF THE VIRGINIA ISRAEL ADVISORY BOARD

By Grant F. Smith

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6.

Sham Military Contracting at Oran Safety Glass

We even have a kibbutz that brought a company here to Emporia. If you know this Oran Safety Glass (OSG) they make all bullet-proof glass for the principal battle tank for the U.S. army, the Abrams battle tank. A little baby kibbutz right near Jerusalem. They built a facility here ten years ago. They doubled the capacity two times. Just recently increased the workforce by 50%. Since they came here, they exposed themselves to the civilian market, and they are selling now basically bullet-proof glass to Caterpillar tractors and Bombardier train engines in Canada and they're very, very successful here. Dov Hoch, VIAB Executive Director

In presentations before Israeli business leaders, Dov Hoch emphasizes the unique funding possibilities available in Virginia courtesy of the massive settlement won in court against tobacco companies and a specialized state fund designed to revitalize former coal producing regions. No VIAB project is more exemplary of “multiple bites of the apple” than Oran Safety Glass repeatedly tapping multiple levels of funding and loan guarantees to build its U.S. military contracting business.

The manufacture and sale of “transparent armor” to the Department of Defense to protect personnel operating military vehicles has long been a mature industry in the United States. When the Department of Defense issued a series of U.S. Army contracts for windows to be installed in “mine-resistant ambush-protected” all-terrain vehicles known as “MRAPs” in 2014, it wasn’t seeking cutting-edge, technological advances. Rather, it wanted competent contractors to bid (through “source approval requests”, or SARS) on making transparent armor according to a government-developed and owned “secret recipe.” This item was so routinely procured, inventoried and installed that it had its own “stock number.”

For the newly opened Israeli subsidiary Oran Safety Glass in Greensville County, there were only two major challenges it would face if it won competitive bidding for the contracts. The first was that the U.S. government owned not only the “recipe” but also specifications about the specific threats against which the glass would protect, and the ballistic testing procedures for the glass. All were U.S. government classified information at the SECRET level. Oran Safety Glass in 2014 did not have an officially designated “facility clearance” for handling such classified information. It also had no way to efficiently procure the materials needed to produce transparent armor required in the specifications in the government’s “secret recipe.”

Neither of those obstacles prevented OSG from bidding on and lowballing U.S. industry leaders. OSG won five contracts between October 2014 and 2015.

Oran Submits Fraudulent Bids on U.S. Government Contracts

In 2015, one of those industry leaders, Schott Government Services, contacted the Army and requested production control ballistics testing of OSG’s shipments. The Army soon discovered that most of the OSG manufactured armor was “out of specification.” Alarmed, the Army formally notified OSG that such products manufactured by means other than its own “recipe” would be considered unauthorized and non-compliant.

OSG responded that it was producing a different recipe after it developed internal concerns about the availability and quality of M-ATV[1] compliant raw materials. OSG argued that after performing tests on its own “recipe” it found that its already-delivered, out-of-spec products produced out of compliance with the contracts “did not affect performance” and that it had even submitted its own recipe to the Army as a source approval request (SAR) for future sales.

The U.S. Army was placed under enormous pressure by OSG’s actions. Some of OSG’s products had already been installed on vehicles and any supply chain issues would delay its supply lines. The product was desperately needed. That much is known with certainty. What is not known is whether OSG rallied any friends within Congress, the Department of Defense, or elsewhere to cut a deal with the buyer. What is certain is that a sweetheart deal was indeed made.

On June 4, 2015 the U.S. Army approved OSG’s new recipe, which transcended the pressing problem of the already received and installed transparent glass armor. The Army didn’t cancel any of OSG’s contracts. However, on June 24, 2015 it ordered any future OSG deliveries would have to comply with the original U.S. government owned “secret recipe” specified in the contract. It also ordered OSG to make cash and in-kind payments to cover additional government costs incurred for handling and processing “nonconforming goods previously delivered.” But it allowed OSG to extend delivery times on “all outstanding deliveries.”

OSG’s competitors were livid, and one even sued over the contract.[2] But the litigant could not convince the presiding judge that there was any prejudice in the actual issuance of the contract. The legal standard for prejudice is establishing that if it had not been for a procurement process error, they could have won the contract. Since they were—unlike OSG—not low-balling and intending to manufacture and deliver non-compliant products, their prices were so high that the legal standard intended to prevent prejudicial awards could not protect them. As discussed later, it is possible that a False Claims Act lawsuit could have remedied the situation, but OSG, like other VIAB companies operating across Virginia, is an extremely unlikely place for such lawsuits ever to be filed.

Oran’s Pentagon Contracts

The fact that particular contracts are for MRAPs is a secret. So, the five contracts cannot be identified from within publicly accessible listings of payments that have exact dollar amounts related to contracts awarded to OSG.  However, military contract databases do reveal that in 2016, in an uncharacteristic move, OSG repaid the U.S. government $4.7 million. It is not known if any American military personnel who’s lives depended on non-compliant OSG armor, ever paid the ultimate price over the contracting malfeasance.


   

Yearly OSG revenue from U.S. government military contracts 2009-2018 ($ million)[3]

From the perspective of U.S. taxpayers, there are a number of problems with the way OSG does business that are unique to its operations as not only an Israeli company, but an Israeli military contractor.

The first is OSG’s ability to, without being cleared to access or store U.S. government classified information, bid on contracts that require and necessitate conferring that status upon the successful bidder. This risk has produced negative outcomes in the past. The Nuclear Materials and Equipment Corporation, which also obtained and stored classified U.S. government information in its Apollo, PA nuclear materials processing site, invited top Israeli spies into its plant facilities, creating a conundrum for regulators concerned about its improbably high “losses” of weapons-grade nuclear material. NUMEC also employed an Israeli scientist to learn how to handle plutonium, long before Israel was able to produce it at its nuclear weapons production facilities. This employee was not in any way formally cleared by U.S. regulators to be working on such delicate matters.

Israel’s theft and use of U.S. classified and proprietary technologies, including technology diversions to China, are well documented and even legendary. It is improbable to assume that any of the innovative processes contained in the U.S. “secret recipe” did not ultimately make their way back to OSG headquarters in Israel and then onward to parts unknown.

Finally, the corporate hierarchy and culture at OSG subverts the primary tool preventing fraud in U.S. government contracting, the False Claims Act. The federal statute was originally enacted in response to defense contractor fraud during the American Civil War. Today, it allows corporate insiders to file suits on behalf of the government against companies that defrauded U.S. government agencies. Filed under seal, if the Department of Justice joins the action, a plaintiff “whistleblower” can sue and receive a portion of any funds recovered by the government. This law is not only applied in instances of military contract fraud. In 2012 pollster Gallup was charged under the False Claims Act over a failed U.S. Mint contract to launch $4 billion worth of dollar denominated coins. Gallup paid $10.5 million in fines for overbilled, faulty polling work provided to the U.S. Department of Treasury and other government agencies.

At OSG, as with many other VIAB projects, top management consists of Israeli and prominent American Jews not just committed to OSG’s business objectives, but commitment to grow the business as an expression of their support for Israel. They would be subjected to extreme and unusual pressure in a False Claims Act scenario. Consider what happened to American journalist Leonard Fein, editor of the liberal Jewish magazine Moment, after he expressed—in the eyes of Israelis—disloyalty through his actions.

In 1980 Fein organized a group of 56 prominent American Jews to sign a letter saying Israeli Prime Minister Menachem Begin was lying about Israel’s plans for expanding illegal settlements. He described what happened:

I was fingered as the organizer of this little movement. Some two years later, I was interviewed in Israel by the Jerusalem Post. And the Post said, “What gives you the right to criticize Israeli policy?” I said, “Look when Begin comes back from his visits to America and gets off the plane, he always says, ‘I have great news, the American Jewish community is 100 percent behind us.’ And if he’s going to say that, I’m going to correct him, because it simply is not so.”

The reporter from the Post [asked] “are you calling Begin a liar?” I said, “Use whatever word you want, that’s all I have to say.” The next day, front page, Jerusalem Post, “American Professor calls Begin a liar.” And my roof fell in. I depended on wealthy liberal Jews to support Moment magazine. Money was withdrawn right and left from its support…[4]

Fein’s story could be retold by hundreds, if not thousands, of other conscientious American Jews standing up in a way perceived as harmful to Israel. Within many Jewish circles, particularly those most dedicated to Israel, a “Shonda” is doing something shameful that is publicly witnessed by non-Jews. This, in turn is said to bring shame on all Jews in general because, particularly as Zionists tend to claim, all Jews are held accountable for “the worst deeds of the worst among us.” Or, in other words, fellow Americans are just so bigoted that they automatically project the bad actions of individuals, small groups or organizations and the identity of an entire class of Americans.

What if OSG did bid on the MRAP contract, knowing full well that it could not procure the U.S. government’s “secret recipe” compliant materials? What if an Israeli manager at the company, or Jewish American working in management, then filed a False Claims Act lawsuit alleging the company knowingly low-balled its bid in order to win the contract, knowing full well that it had no intention of complying with its terms?

Even after prevailing in court, where would the employee go? Certainly not to Israel. If he or she were to remain in the U.S., the whistle blower could instantly lose access to his immediate establishment pro-Israel community. He or she would also probably spend the rest of his days looking over his back, like Victor Ostrovsky, a former Mossad officer who wrote two bestselling nonfiction books exposing the agency’s practices, and who now quietly runs an art gallery somewhere in the West.

State Government Funding for Oran

Unexplored in news media accounts about Oran are any meticulous compilations of precisely how much taxpayer funded and other government aid the Israeli company has soaked up thanks to VIAB. The funding comes in from multiple levels. That is VIAB strategy:

 

The place where you can make a difference, is on the local level. And this is something most Israeli companies don’t understand. Here [in Israel] we have one level of government, for all practical purposes. On the U.S. side, you’ve got states, counties, cities, and even neighborhoods. So that’s where the negotiation comes to play. Sherwin Pomerantz, Founding Chairperson, American State Offices Association, speaking alongside Dov Hoch, executive director VIAB[5]

Most news reports about Oran portray the opposite of reality. One year 2019 report, from the Area Development Online news organization runs the headline, “Oran Safety Glass Expands Greensville County, Virginia, Manufacturing Complex.”[6] A far more accurate headline would have been, “Greensville County Expands Oran Safety Glass Complex.” Initially VIAB and Oran played every angle to squeeze millions in funding out of the state and county, all so Oran could be well-positioned to submit fraudulent bids for U.S. military contracts. Oran is now one of VIAB’s most cherished projects, and is prominently featured in its promotional materials, as mentioned in VIAB meeting minutes:

We are marketing ourselves in Israel, [and] created a brochure. Leveraging United Airlines direct flight[s]. Using mass media organizations. We are focused on doing a campaign geared to the Kibbutz industry. A lot of innovation in water and technology has come from that niche (i.e. Drip Irrigation and desalinization). We have one kibbutz business that came to Virginia, Oran Safety Glass in Emporia, currently employing 150 people. They sell their glass to the military and Caterpillar tractor, they sell back to Israel through foreign military funding, and to the civilian market. A tiny Kibbutz company has expanded exponentially. Sometimes it takes a known person that is trusted to guide these small companies to take interest in the US.[7]

Oran did indeed start out as the main industry of the Tzubga kibbutz located in the Judean Hills of central Israel. Since its founding in 1979, it grew to become Israel’s leading manufacturer of “transparent armor.” It markets its products for use in “military, paramilitary and civilian” applications, with the latter concentrated in projectile resistant train and bus windshields, though it is entering glass digital displays to project information in public transportation settings.[8] And as noted, the U.S. Department of Defense does procure OSG products within what the Pentagon designates as the “Military Armored Vehicle, Tank, And Tank Component Manufacturing” sector. But how much of a boost did access to the U.S. government owned “secret recipe” give to Oran? With its penchant for output substitution, is any of the civilian product sold for freight trains and bus windshields derived from that secret formula? What about foreign military sales based on the formula from OSG in Israel?

Oran has received mammoth ongoing support in Virginia delivered in three phases. The first, for Oran to set up operations in Virginia, and two expansion phases as defense contracts poured in. In July of 2006 a performance agreement was executed between Oran, the Virginia Economic Development Partnership, the Tobacco Commission  and Greensville County. The parties agreed that in exchange for government support OSG would make a $4.1 million capital investment to start production in Virginia and create 45 new jobs within 30 months.

In 2007 the Greensville County Industrial Development Authority leased five and a third acres of land and an 82,800 square foot industrial building for ten years to OSG.[9] The County obtained grants to perform a nearly $600,000 upgrade to the facility, including two separate Tobacco Commission  grants in the amounts of $100,000 and $125,000, a $50,000 Emporia/Greensville Industrial Development Corporate grant, as well as $125,000 from the Governor’s Opportunity Fund. The project also applied for a Virginia Department of Housing and Community Development “Virginia Enterprise Zone Real Property Improvement Grant” of $125,000.

Greensville County even agreed to go into debt to bring in OSG by securing a loan for $400,000 from the Virginia Small Business Finance Authority to cover any “Phase I” cost shortfalls. There were cascading effects. Other entities such as the Mecklenburg Electric Cooperative also agreed to go into debt by up to $400,000 to build out infrastructure necessary to supply electricity to OSG. The county also waived water and sewer connection fees in the amount of $20,000 and $4,300 in building permitting fees. The government parties also showered another quarter million dollars of “job creation grants,” “training and recruitment incentive grants” and free classroom space for “pre-employment testing and training” to assist in the creation of a workforce for OSG.


 

2007 Location

Facilities upgrade grants

Amount

Tobacco Region Opportunity Fund Grant

 $           100,000

Tobacco Region Opportunity Fund Grant

 $            125,000

Governor's Opportunity Fund - VEDP

 $            125,000

Job creation and Training and Recruitment

 $            250,000

Dept of Housing and Community Development Block Grant

 $            125,000

Phase 1 Loans - Greensville County

Virginia Small Business Finance Authority

 $            400,000

Mecklenburg Electric Cooperative Loans

Debt to build electricity connectivity to plant

 $            400,000

Waived fees

Water and Sewer connection

 $              20,000

Building permit fee waiver

 $                4,300

Total

 $        1,549,300

2009 Expansion

Facilities upgrade grants

Governor's Opportunity Fund - VEDP

 $              50,000

Tobacco Region Opportunity Fund Grant

 $            100,000

Virginia Jobs Investment Program Grant

 $              17,500

Enterprise Zone Jobs Grant

 $              80,000

Dept of Housing and Community Development Block Grant

 $            150,000

Local Contribution for Community Development Block Grant

 $              50,000

Waived fees

Building permit fee waiver

 $                5,000

Total

 $            452,500

2017 Expansion

Facilities expansion grants

Governor's Opportunity Fund - VEDP

 $            150,000

Tobacco Region Opportunity Fund Grant

 $            235,000

Tobacco Region Opportunity Fund Loan

 $            117,500

Total

 $            502,500

Grand Total

 $        2,504,300

 

Government subsidies for Oran Safety Glass[10]

Oran was supposed to provide jobs with solid pay in exchange for its subsidies, but there is evidence that it may not be meeting its performance benchmarks. One former employee complained in June of 2018 that:

I wouldn't recommend anyone to work at OSG because there is no job security…The life span seemed to be a year at the most. People there work for basically nothing and have families to feed. Some are hired through the temp agency and are only paid $8 per hour, but OSG may pay the temp service $10 per hour for that employee.[11]

Late in 2014 the U.S. Equal Employment Opportunity Commission sued OSG under Title VII of the Civil Rights Act of 1964 for firing an assistant quality control supervisor, Nicole Williams. Williams began working at OSG on May 9, 2012. Around May 25, she learned she was pregnant, and notified the company a few days later. Although she was performing at an acceptable level, on June 8, OSG fired her because she was pregnant.

OSG was contractually obligated to create at least fifty new jobs in exchange for the subsidies it received to locate in Greensville in 2006. In 2008 it promised to create an additional 25 new jobs with an average annual wage of $33,648. OSG’s performance agreement was careful to specify that “seasonal and temporary positions…shall not qualify as new jobs.” In 2017, OSG’s performance agreement was even more insistent about what qualified as meeting the contractual requirement for new jobs. It read:

New jobs mean a minimum of fifty-five (55) new full-time employees maintained at the existing facility and the New Facility for which the standard fringe benefits are provided by the Company for each employee, and for which the Company pays an average annual wage of at least $43,000.

Those parameters don’t jibe with word inside the factory about the heavy use of temporary workers. Although Greensville County has the right to demand proof of full time employment and wages at the factory, and has been asked to release such information, it has provided no evidence that requirements in the performance agreement are being met.[12]

Other outstanding questions are whether VIAB is trading opportunities to lobbyists like Matthew Benka who are retained by projects such as Oran, for unpaid, and unreported “favors.” Benka stewarded the VIAB reconstitution through the legislature, but never reported his lobbying work for VIAB or the Jewish federations pushing the reconstitution.

The greatest issue of concern to Virginians and Americans in general is that more military conflict in the Middle East will be good for Oran Safety Glass. Less conflict will be bad. Military contracts have been in eclipse, the likely result of Pentagon mistrust of Oran’s contracting practices as well as declining numbers of American “boots on the ground” in the Middle East. This creates subtle pressure on VIAB, and the Virginia Jewish federation citizen lobbyists, and wider Israel affinity ecosystem who support OSG, to do something. What could be better than for the U.S. to follow Israel into a new round of on-the-ground military action against Israel’s enemies, or be convinced to launch wars that benefit Israel on its own account? What could be better?

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[1] The Oshkosh M-ATV is a Mine Resistant Ambush Protected (MRAP) vehicle developed by the Oshkosh Corporation for the MRAP

[2] SCHOTT GOVERNMENT SERVICES, LLC, Plaintiff, v. THE UNITED STATES, Defendant, ORAN SAFETY GLASS, INC.,
https://scholar.google.com/scholar_case?case=11340217780044701718&q=schott+government+services+vs+oran+safety+glass&hl=en&as_sdt=20006#r[1]

[3] Federal Procurement Data System – Next Generation, http://Pfds.gov consulted on 9/27/2019

[4] Weiss, Philip, October 3, 2013, “When Leonard Fein criticized right winger Menachem Begin– ‘the roof fell in’” Mondoweiss https://mondoweiss.net/2013/10/criticized-rightwinger-menachem/

[5] Hoch, Dov and Pomerantz, Sherwin,US Financial Incentives for Israeli Companies” Presentation at the Israel American Business Summit, May 29, 2019

[6] “Oran Safety Glass Expands Greensville County, Virginia, Manufacturing Complex” Area Development News Desk, September 8, 2017, https://www.areadevelopment.com/newsItems/9-8-2017/oran-safety-glass-manufacturing-operation-greensville-county-virginia.shtml

[7] VIAB Meeting minutes, November 27, 2018 p3

[8] Oran Safety Glass, Company Movie, November 5, 2014. https://www.youtube.com/watch?v=Z01raca4-1g

[9] On December 17, 2017, the Greensville County Industrial Development Authority sold the facility, which it carried on its books as a $1,140,000 asset to Oran Safety Glass for a price equivalent to the outstanding loan balance on the property, or $436,644. See https://IsraelLobby.org/Oran for details.

[10] Virginia Freedom of Information Act release from the Virginia Economic Development Project. See https://IsraelLobby.org/Oran for details.

[11] Quote, with spelling corrections, from employer review website Indeed.com consulted on October 7, 2019.

[12] The county indicated in response to a Virginia Freedom Of Information Act request for this data saying that “no such documents exist” about machinery, improvement and equipment costs and expenses at the Oran plant. They indicated that only Virginia’s Commissioner of Revenue would have such information, and that it would be confidential. Greenfield County also does not know how many new jobs were created or maintained, and that “Job verification is managed by the grant agencies, on the county.” See https://IsraelLobby.org/Oran for details.