Bribery in the Beltway

April 2, 2007 | Investigative Report: Contract Corruption | Bribery in the Beltway | By Laton McCartney

A year after U.S. Congressman Randall "Duke" Cunningham was sentenced to prison in one the biggest federal information-technology scandals ever, details about the case continue to emerge.
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But in recent months, it has become clear that the information-technology scandal that rocked Washington may be more far-reaching than had been initially recognized. The names of other members of Congress, along with a senior Defense Department official, have surfaced in relation to the case, at the heart of which are government charges that Cunningham and co-conspirators caused hundreds of millions of dollars in defense and intelligence I.T. contracts — a number of them involving national security — to be awarded to companies that in many instances, the government claims, weren't the best qualified for the job.

What is perhaps most alarming about this story, however, is the window it provides into the kind of corruption that can develop in an environment where projects are often funded through "black budgets"; the number of vendor choices is shrinking; accountability is minimal or nonexistent; and buying decisions can be driven by cronyism, massive campaign contributions — some of them illegal — influence peddling and pork barrel politics.

"I think that the Cunningham example is unique because of how deeply entrenched MZM was with a member of Congress," says Scott Amey, general counsel of the Washington, D.C.-based Project on Government Oversight (POGO), "but overall it does highlight the cozy relationship that many contractors have with members of Congress, senior government officials and the executive branch."
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Pay to Play

For 20 years Steve Charles, the executive VP and co-founder of the ImmixGroup, a provider of enterprise technology and services in the government market, representing more than 150 I.T. vendors, has been helping technology companies sell to the government. Charles says that what really matters in selling to the feds is the ability of the would-be contractor to come up with an application or service that's effective in the public sector. "The other stuff — campaign contributions, who you know — they don't really matter at all," Charles says.

Ideally, perhaps, but there is a virtual revolving door between government contractors and government agencies. Virtually all of the I.T. contractors selling their wares to Defense and the various intelligence agencies contribute heavily to political campaigns, especially if the candidates they're backing are in a position to help them get business.

All of which is entirely legal — as long as it is documented and the contributions are reported.

In 2006, defense contractors contributed $16,308,831 to various candidates, 37% to Democrats and 61% to Republicans, according to the Center for Responsive Politics (CRP), a nonpartisan, nonprofit research group based in Washington that tracks money in politics and its effect on elections and public policy. "Most defense-sector contributions are concentrated on members of the House and Senate Appropriations Defense subcommittees, which allocate federal defense money, and the Armed Service committees, which influence military policy," CRP notes on its Web site. "Contributions as a whole favor Republicans, but many of the top contributors within the sector give to both parties fairly evenly, a reflection of the fact that it is important to have friends in high places in both parties when competing for federal contracts."

Typically, the integrators and I.T. solutions providers doing classified business have in-house lobbyists. Their donations are also often channeled legally through outside lobbying firms — or "stealth rainmakers," as they're sometimes called — that specialize in, or focus heavily on, defense contractors. These include the PMA Group, American Defense International (ADI), and Copeland Lowery Jacquez Denton & White. The largest of these firms, PMA, represents dozens of defense contractors including L-3, CACI and DRS Technologies.

L-3, a self-described "leading provider of comprehensive information and communications products, solutions and services for National Security, the Department of Defense, intelligence agencies and other government customers," gave $360,000 through PMA in 2006. In total, it contributed $600,465, according to CRP.

Meanwhile, DRS, a supplier of integrated products, services and support to military forces, intelligence agencies and prime contractors worldwide, chipped in $480,000; CACI, an information systems and high technology services company that sells to the Defense Department and the intelligence agencies, doled out $80,000, CRP says.

The payback from these lobbying efforts can be enormous. Between 1998 and 2004, the 41 defense contractors that paid fees to PMA collectively won $266 billion in contracts from the Pentagon, according to CRP. That amounts to almost 30% of the dollar value of all contracts awarded by the Department of Defense. Moreover, of this amount, $167 billion — nearly two out of three dollars — was received from contracts that were awarded without "full and open" competition. In fact, PMA clients account for 47% of all such non-competitive contracts — contracts in which the government negotiates with a single contractor — handed out by the Pentagon since 1998. ...