Is eTreppid's video compression technology so battlefield

special that it warranted a secret sole-source contract?

By Sherri Cruz
03/09/07

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 the
interest 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.