Image: Regina Dugan
DARPA
Regina Dugan became director of DARPA in July 2009.
msnbc.com
updated 8/17/2011 2:45:54 PM ET 2011-08-17T18:45:54

Pentagon inspectors are reviewing contracts awarded by its top research division, the Defense Advanced Research Projects Agency, to a Maryland-based company that was co-founded by the agency’s director.

The Pentagon’s Inspector General said it will also do a broader audit of all DARPA contracts and grants awarded in the past two years.

The audit, first reported by Wired.com and The Los Angeles Times, was revealed in a Defense Department letter to the Project on Government Oversight, a nonprofit watchdog group that seeks to expose corruption and other misconduct in government.

POGO had written to the Department of Defense Inspector General in May and June, expressing concerns about a potential conflict of interest in DARPA’s awarding of contracts to RedXDefense, a Rockville, Md.-based company that specializes in explosives detection systems. The company’s devices have been used by U.S. military forces to find roadside bombs in Iraq and Afghanistan.

Regina Dugan, who co-founded RedXDefense with her father, Vince Dugan, in 2005, became director of DARPA in July 2009. She was a senior official at DARPA before 2005. Vince Dugan remains CEO of RedXDefense.

RedXDefense has won $1.7 million worth of contracts with DARPA since Dugan took over as agency director, according to Wired. DARPA officials have said Regina Dugan recused herself from any decisions involving the company, and the contracts were awarded to RedXDefense fairly.

"At no time did Dr. Dugan participate in any dealings between the Agency and RedXDefense related to the contract,” DARPA spokesman Eric Mazzacone told Wired in March.

DARPA officials did not immediately respond to a request for comment from msnbc.com.

Wired said a financial report that Dugan filed last year showed she still owns tens of thousands of dollars’ worth of stock in RedXDefense, though the Times said she reported her stake had no fair market value.

The financial disclosure statement also said the company still owes Dugan “at least a quarter-million dollars” for a “note/loan” she had given it, according to Wired.

In addition to the inquiry involving the RedXDefense contracts, the Inspector General’s office will also do a broader audit to “determine the adequacy of DARPA’s selection, award, and administration of contracts and grants awarded in FY 2010 and FY 2011 for research and development projects,” according to a letter from Assistant Inspector General John Crane to POGO.

DARPA, which helps develop cutting-edge technology for the military, has an annual budget of about $3.1 billion. The agency was established in 1958 in response to the Soviet launching of Sputnik the previous year.

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