Is eTreppid’s video compression technology so battlefield special that it warranted a secret sole-source contract?
By Sherri Cruz
Before it was at the center of a scandal involving a federal investigation of the governor of Nevada, eTreppid Technologies LLC was once a run-of-the-mill company, developing software and vying for business through licensing deals. ETreppid makes data compression software, which shrinks images, audio and video data so that it can be transmitted faster through technologies such as video cameras, cable and media players.
The Reno-based company, founded in 1998, doesn’t appear to have been wildly successful. It announced one deal in 2002 with General Electric Co.’s subsidiary GE Security Inc., which used eTreppid’s technology in its ClearCast line of video surveillance cameras that were marketed to casinos.
GE has since discontinued the ClearCast line and is now using VisioWave technology in a new camera. “We acquired more capable video technology, more suitable to the needs of our customers,” said Steve Hill, a spokesman for GE.
eTreppid also made a run at the movie industry but it didn’t win that business, according to a story in the Hollywood Reporter.
Alas, things turned around for eTreppid in 2004 when eTreppid and U.S. Special Operations Command (USSOCOM) announced a $30 million military contract win in a press release dated Feb. 18 that year.
What was unusual about the win is eTreppid didn’t have to compete for the contract. Other companies weren’t considered. Which begs the question: Is eTreppid’s technology so superior that only eTreppid could have done the work?
We don’t know because the contract was obtained under Federal Acquisition Regulation code 10 U.S.C. 2304(c) (6), which says contracts that need to be secret for “national security” reasons may be awarded to a sole source if it “demonstrates a unique and innovative concept” and certain other criteria are met: “This authority may be used for any acquisition when disclosure of the Government’s needs would compromise the national security.”
ETreppid’s chief executive Warren Trepp got help winning the contract from a powerful friend, Gov. Jim Gibbons. Then a congressman, Gibbons was a member of the House Armed Services Committee, which oversees the Department of Defense and doles out defense money.
Gibbons has said in past news releases and recent news stories that eTreppid’s technology wowed him, and in theinterest of national security, he opened doors for Trepp. The FBI is investigating Gibbons for possible ethics violations.
Trepp and Gibbons deny any wrongdoing.
But given the mere appearance of compromised ethics surrounding the $30 million deal, should alarms have sounded for Gibbons, Trepp or federal officials? Given their fast friendship, shouldn’t that have warranted a competitive bidding situation?
Ken Hoffman, a spokesman for USSOCOM said: “USSOCOM would have no way of knowing what the relationship is between Gov. Gibbons and Mr. Trepp. To the best of our knowledge, USSOCOM was not approached by any political figure on behalf of eTreppid.”
After winning that contract, eTreppid registered in March, 2004 with lobbying group Innovative Federal Strategies LLC (formerly Copeland Lowery Jacquez Denton & White) to land more defense work. The lobbying group is now facing its own scandal.
Also under wraps is a civil lawsuit filed in Jan. 26 by Dennis Montgomery, Trepp’s former partner. It has been reported that Montgomery’s allegations of improprieties by Gibbons and Trepp led to the investigation.
Government officials have said disclosing contents of the suit would hurt national security. In the lawsuit, Montgomery is disputing the ownership of software he says belongs to him. “No other person on Earth, to my knowledge, has created the types of programs I have created,” he said in his press release. He didn’t disclose what software is in dispute.
Montgomery didn’t return a phone call for this story.
Montgomery is listed on eTreppid’s archived site as executive vice president and chief technology officer. For 20 years, prior to joining eTreppid, he was a consultant for companies such as Eastman Kodak Co., Hexcel Corp. and Kaiser Permanente, according to his bio.
Among eTreppid’s claims gleaned from press releases and a few stories: It developed “revolutionary” technology that compressed data faster than anything else in the market. ETreppid has five patents listed with the U.S. patent office.
Montgomery is listed as the inventor of all of them. ETreppid, the “assignee,” is the likely owner of those patents.
Hoffman said eTreppid’s advantage was that its product was proprietary. “ETreppid owned the exclusive rights to the product, and there were no similar competing products,” he said. The potential value of the contract was $30 million, he said. USSOCOM only spent $9.6 million for the software. The contract has since ended, he said. “ETreppid provided the products contracted for.”
Some experts in eTreppid’s line of business are skeptical that eTreppid won based on its merits.
“The history of compression research is littered with ambitious individuals and companies making extravagant claims that turned out to be quite unfounded,” said Andreas Wittenstein, president of Bitjazz Inc., a video compression company based in San Geronimo, Calif. Wittenstein, who had never heard of eTreppid, characterizes the data compression market
as small and fragmented. None of the four other data compression experts contacted for this story had heard of eTreppid either.
Evaluating eTreppid’s technology is difficult, given what little public information there is about the company. There are few press releases and only an archived version of its old Web site. The company only has a front page up now.
In another release put out by eTreppid on Feb. 18, 2004 a consultant for the U.S. Air Force, Pete Wiedemann, reviewed eTreppid’s technology: “eTreppid compression is, in a word, impressive.” Who is Wiedemann? A Google search brings up few references. Apparently, he does a lot of defense consulting in a variety of areas, according to fedspending.org. In 2004, he was paid $283,000.
In the release, Wiedemann speaks in jargon: “Just the single-pass, lossy compression by itself yields high quality at very tight ratios, making it a valuable tool for communications and storage of a wide variety of data; Its ability to add lossless iterative re-compression magnifies that capability, achieving even tighter compression.”
Lossy means some of the data is lost in the process of compression. Lossless keeps data intact.
Wittenstein dismisses much of eTreppid’s claims. “The concept of ‘iterative lossless compression’ raises a red flag for any information theorist,” he said. “Iterative data compression gains are a common hoax.”
“eTreppid Technologies may truly have developed a superior product,” he said. But without being able to evaluate the technology, he said he has no way of knowing.
Read my story about Warren Trepp.