When companies want contracts, they make friends on the Hill.
Successful contractors invest thousands, and sometimes millions, of dollars to build relationships with members of Congress. Companies ask legislators to write letters of recommendation on their behalf when they're trying to win new business. They lobby for money for programs that fund their contracts and for the creation of programs that could employ them. They ask for wording in appropriations bills that subtly-and sometimes not so subtly-direct business their way. They plant questions during oversight hearings to make agency officials aware that a Congress member is keeping a close eye on a certain contract.
Federal contracting officers and senior managers feel pressure to comply with congressional wishes. Members of Congress, after all, can hold agency staffers' feet to the fire during oversight hearings, and they decide how much money agencies get. As one contracting official noted, "You don't say 'no' because they could have hearings. . . . You want them to be happy."
Congress has steadily increased its influence over executive branch contracting during the past century, partly because legislators employ more staff members who consequently have more time to follow individual procurements, says James F. Nagle, a procurement lawyer at Oles Morrison Rinker and Baker LLP in Seattle.
Government's increasing reliance on contractors also has loosed a flood of dollars, along with greater involvement by Congress and lobbyists. The creation of the Homeland Security Department, as well as reconstruction in Iraq and New Orleans, all brought more work for contractors and additional attention from lawmakers. The work also presents more business opportunities for lobbyists, who now spend increasing energy helping companies win contracts. Lobbying, in turn, leads to more congressional involvement as members monitor procurements at K Street's behest.
"Congress is getting involved to a much greater extent than ever before," Nagle says.
When Rep. Randy "Duke" Cunningham, R-Calif., pleaded guilty in November to accepting bribes in exchange for directing government contracts, newspaper editorials expressed outrage. Cunningham's behavior was extreme-he wrote down a bribe menu, complete with contracts and their payoff prices-but interviews with agency officials, lobbyists, contractors and congressional staffers show that lawmakers try to influence agency procurements every day. That's business as usual in Washington.
Down the highway from one of Northern Virginia's largest shopping centers, a tall, shiny office building houses Tom DeWitt's dream. A retired soldier, DeWitt started a company, SNVC, in 1998 with an Army buddy. SNVC originally stood for Small Northern Virginia Company; today, the acronym is the name of the firm. DeWitt, who at 47 looks like a younger version of President Bill Clinton, started the company because he wanted to continue serving the country. It provides program management support and systems integration to the military. Much of his early business came from his Army contacts.
After an early spurt of explosive growth, work plateaued and DeWitt started looking for ways to reinvigorate the company. Working with Congress was one of his solutions. He learned the importance of communicating with lawmakers when his company lost a $100 million contract to a company with strong relationships on the Hill.
To build his own relationships, DeWitt hired Beth Miller-Herholtz, formerly a director of business development and government affairs for another government services provider, to be SNVC's vice president of corporate development. She helps him focus on outreach, through weekly visits to lawmakers and building the company's reputation in the community. DeWitt recently served on a committee that worked with the office of Rep. Tom Davis, R-Va., to set up a program that enables state and local governments to use contracts set up by the General Services Administration to purchase information technology for homeland security needs. "It now opens a business opportunity for us, but . . . every company can go out and compete," says DeWitt.
He also joined the board of visitors at his alma mater, Longwood University in Farm- ville, Va. "Those relationships, which are now in infancy, will help get us to the next level," says Miller-Herholtz. "[Washington] is a small town, and you run into people." Building a reputation with members of Congress and the community can help officials making contract awards think more highly of your company, too, she says.
Working the System
Robert G. Efrus, vice president of The Implementation Group Inc., says rubbing shoulders with legislators creates a "positive selling environment" for his clients, which include software companies BEA Systems Inc. and SAS. He manages the company's corporate business development practice, which helps clients win federal contracts. The Implementation Group is part of Van Scoyoc Companies, a Washington-based government affairs company. One of the Implementation Group's pamphlets says it helped a defense technology company increase federal sales by more than 50 percent in one year and that it aided a publicly traded bank in winning contracts at GSA and the Treasury and Veterans Affairs departments.
Efrus' strategies include having his clients provide expert testimony before Congress and planting questions during oversight hearings. A list of questions, posed in a neutral way, can help a lawmaker decide what to focus on during an oversight hearing, he says, and it also lets agency officials know that the lawmaker is paying attention to decisions on a specific contract.
For example, if a client is a small, disadvantaged business, Efrus would suggest the question, 'What is your agency doing to increase subcontracting to small, disadvantaged businesses?" These strategies "help create a positive selling climate through branding and generating awareness," similar to the effect of vendor advertisements in publications read by federal employees, Efrus says. "The goal is not to inappropriately influence a contract. . . . The idea is to play within the system and make the system work for you."
Julia T. Susman, president and chief executive officer of the Washington-based Jefferson Consulting Group, also knows the system well. In 1998, one of her clients, a health care company, had the idea that it could contract with VA to check its bills to make sure it wasn't overpaying for veterans health care services. Susman says the department initially resisted the idea because the money it recovered had to be returned to the Treasury, which left the department with little incentive to collect overpayments.
"I said, 'What if we talked to the Hill, and they thought it was a good enough idea that it could change the law?' " Susman recalls. She and her client met with members of authorizing and appropriations committees and got the law changed to allow VA to keep the money it collected. Her client won the contract.
Asking for Help
Sometimes the system is not fair. That's when contractors say they need Congress the most. Contract awards sometimes are made through flexible procurement rules that unfairly favor one contractor over another, Efrus says. By making calls on his constituents' behalf, a member of Congress can make sure they are treated fairly, Efrus says, adding that a lawmaker's calls typically are handled by top agency officials.
At a conference hosted by the Coalition for Government Procurement in February, Rebecca Earle Middleton, a senior associate at the Washington lobbying firm The Rhoads Group and former staffer for Rep. Frank Wolf, R-Va., told more than 100 contractors, "It's good to have a relationship because you never know when you're going to need it." When one of her contractor clients didn't get paid on time, a congressional staffer called the agency, and the company got its money within two weeks.
Harold Jackson, president of La- fayette, Colo.-based Buffalo Supply Inc., a distributor of medical equipment and supplies, contacted lawmakers after learning that Veterans Affairs was considering a new policy that would have prevented it from using certain kinds of private supply companies. Jackson met with staffers on the House Small Business Committee and convinced them to remove language in pending legislation that would have implemented the policy. "It could have put us out of business," says Jackson.
Peter Kant, vice president of government affairs for Rapiscan Systems, a Hawthorne, Calif.-based security inspection systems company, says congressional contacts help him determine which office in an agency to call. If Kant learns that the Defense Department is trying to prevent suicide bombings in Iraq, for example, and Rapiscan has technology that detects suicide bombers but Kant doesn't know who to talk to at the Pentagon, congressional staffers will guide him.
"It cuts through a lot of research time and red tape," says Kant. Rapiscan follows the procurement process as set out in the Federal Acquisition Regulation, "but understanding where to go in the government is a very helpful service from our congressional friends," he adds.
Lawmakers and their staffers also send letters and make phone calls on Rapi-scan's behalf, a common practice that many congressional offices consider a constituent service. Kant says the letters typically include background on a product and ask that somebody at the agency meet with Rapiscan. Those introductions help, he says. "There are a lot of people in town who have a technology or service that they think can help. But coming to Washington and figuring out where to go is exceedingly difficult."
"A member of Congress can put a tremendous amount of pressure [on contracting decisions]. . . . Most members of Congress won't badger people to give work to their constituents, but they'll . . . insist they take a look [at a contractors' offerings]," says Will Hollier, lobbyist and managing partner at the Washington office of The Gallatin Group, a public affairs firm. He is former chief of staff for Rep. Mike Crapo, R-Idaho.
Officially, lawmakers say they stay out of specific procurements. "We don't get involved in contracting decisions," says the spokeswoman for Sen. Ted Stevens, R-Alaska. A spokesman for Rep. Davis says, "After helping to make sure the underlying policy and strategy is right, Davis steps aside and lets the chips fall where they may."
Jenny Manley, a spokeswoman for Sen. Thad Cochran, R-Miss., chairman of the Senate Appropriations Committee, says the senator "wants to be as helpful to his constituents as possible," which includes giving advice and guidance about the procurement process. When he writes a letter on a contractor's behalf, it is "intended simply to make the proper agency aware of what the constituent has to offer. Cochran relies on the experts at the agency to make an assessment of the constituent's abilities," Manley says.
Defense contractor Mitchell Wade pleaded guilty in February to bribing Cunningham in exchange for appropriations language and to corrupting Pentagon officials who awarded contracts to his company. While bribing a public official is illegal, appropriations requests, which direct money toward specific programs and sometimes specific companies, are a normal part of congressional business.
Sen. George Allen, R-Va., has an "appropriations request" button on his Web site. The Gallatin Group's Hollier says drafting appropriations language is a valuable constituent service and that lawmakers might even do a better job directing procurement dollars than contracting officers. "Members of Congress are accountable to voters, whereas people making [procurement] decisions do not have that accountability . . . [and] have no understanding of local needs," he says.
Since federal law prohibits agencies from lobbying Congress directly, contractors often lobby for programs on behalf of federal agencies. "The government can't lobby government, so that's an opportunity for us," says SNVC's Miller-Herholtz. Before asking lawmakers for support for programs or funding, contractors usually make sure their "clients"-the federal agencies-want that help. "We're the broker," says Jefferson Consulting's Susman of her role in bringing agencies and lawmakers together to agree on programs and policy they want to pursue.
Contractors often rely on information released to Congress by branches of the Defense Department, listing programs that were not included in the president's budget. Civilian agencies rarely release such lists, so contractors do their own research by talking to program managers and senior officials about programs they'd like to see supported.
Earmarks for government contractors aren't easily identifiable in appropriations language because they seldom mention companies by name. Instead, they describe a company's technology or capabilities. A December 2004 report by the Congressional Research Service found that earmarks have increased over the past decade. In the fiscal 2005 Defense appropriations bill, CRS found $9 billion worth of earmarks, or 2.3 percent of the total appropriation. "If we had a system with integrity, contractors should never be lobbying," says Danielle Brian, executive director of the Project on Government Oversight, a Washington-based nonprofit. Contractors have a profit motive, she says, and should not be driving the funding plans of agencies.
Under the current disclosure system, it's difficult to track which lawmaker requested an earmark and whether a lobbyist or a contractor was involved. Even committee staffers often don't know why lawmakers make requests or whether the contractor that benefits made campaign contributions. Some lobbying reform legislation inspired by the Cunningham scandal, as well as the growing number of indictments involving lobbyist Jack Abramoff, would require those representing companies and groups before Congress to disclose more information about campaign contributions.
James Thurber, director of American University's Center for Congressional and Presidential Studies, says Congress members should be required to associate their names with the earmarks they sponsor and to include justifications. He also says lobbyists should file monthly reports on their activities and be required to include information about the earmarks they are lobbying for. Today, lobbying firms only include general references to appropriations or authorization bills.
"The industry will adapt to whatever changes are necessary. There's a constitutional right to petition your government," says Roger Morse, senior government affairs adviser at Preston, Gates & Ellis LLP, a global law firm, and former staffer for Rep. Van Hilleary, R-Tenn.
Successful contractors clearly have decided that hiring lobbyists is worth the cost. For example, disclosure forms show that Boeing Co. spent $5.1 million on lobbying in 2005 and Raytheon spent $2.3 million in 2004. Those figures include the time that company employees spent lobbying, money spent on outsiders, trade association dues, and travel and entertainment expenses related to seeking help on the Hill. Boeing and Raytheon declined requests for interviews about their lobbying practices.
Lobbyists: Hire Us
Morse, who specializes in dealing with House Republicans, warns that companies need the help of lobbyists. "If you approach members the wrong way, you may do more harm than good," he says. Lobbyists know the nuances and can help contractors craft their messages and requests to fit Congress members' personalities and party platforms, and focus on the right issues-jobs or national policy, for example.
When Buffalo Supply's Jackson first started reaching out to lawmakers for help with his VA policy problem, he had a hard time setting up meetings with those who represented districts other than his home base in Colorado. So he hired a lobbyist, "and those doors opened for me," he says. Jackson says he could have spent months trying to get appointments with Davis and other committee chairmen, but his lobbyist was able to set them up within days. "You have to have someone with contacts if you're going to get anything accomplished," he says.
Mary Ellen Fraser, a lawyer in the government contracts practice at the global law firm McKenna, Long & Aldridge LLP and former counsel to the House Committee on Armed Services, recommends being prepared: If you want a letter written on your behalf, have the draft ready. If you want the staffer to make a phone call, bring the phone number. If you want the lawmaker to introduce legislation, bring a draft of the language, she told participants at the February Coalition for Government Procurement conference.
Money also can get lawmakers' attention. Lobbyists help clients set up political action committees to coordinate political donations from company employees. "Members are so busy they don't have much time to do anything but fund raise, so you get to spend time with them and talk to them about issues when you're at fund-raisers with them," says Jefferson Consulting's Susman. Her firm hosts small fund-raisers where clients pay to spend an hour with a member of Congress.
Companies often set up PACs to coordinate employee donations, but some big firms, such as IBM, opt not to do that. Kenneth A. Gross, ethics expert and partner at Skadden, Arps, Slate, Meagher & Flom law firm in Washington, says that when companies establish PACs, they need to be careful to separate fund raising from specific requests to lawmakers. "You should not be mentioning any specific legislation with a plea for campaign money . . . any of these communications that bring the two together are formulas for problems," he says. But companies make that mistake all the time, he adds. The Wade and Abramoff plea agreements both involved campaign contributions, Gross noted, adding that the difference between a political contribution and a bribe can be hard to discern.
Rapiscan's Kant, a former lobbyist, says there's no need to lure lawmakers to meetings with promises of fund-raisers or fancy meals (which can violate congressional ethics rules). "It's my belief that in Washington, anyone can get a meeting with anybody," he says. Rapiscan's parent company, OSI Systems Inc. of Hawthorne, Calif., recently started a PAC. Angela Styles, former head of the Office of Management and Budget's Office of Federal Procurement Policy and now a contracts attorney at the Washington law firm Miller and Chevalier, says as long as an agency is not in the middle of a procurement and as long as "it doesn't come with the expectation that you will definitely award to these people," there is nothing wrong with lawmakers making requests and introductions for contractors. "What is your congressman for if not to open doors?" she says.
Executive branch officials don't always welcome the calls they get from the Hill. A procurement official and former contracting officer who asked not to be named says he would never let a request from Congress influence which contractor is selected for an award. He added that simply responding to constant inquiries from Congress is time-consuming and frustrating. "You answer one question 20 different ways and it takes you away from your job. . . . They demand it right away," he says.
Sean Bamford, former assistant counsel at the Defense Supply Center Philadelphia, which buys billions of dollars' worth of supplies each year, says most calls from Congress involved an aide asking about the status of a procurement. "I never saw a congressman steer a procurement to one particular contractor, but they would ask general questions about the procurement," he says. Sometimes congressional interest caused the process to move faster. Bamford is now an associate with the government contracts practice group at the law firm Pepper Hamilton in Washington.
In other cases, congressional interest changes a procurement: The Stennis Space Center in Mississippi beat other space centers in the quest to host NASA's shared services center after lawmakers intervened, says spokesman Robert Mirelson. NASA originally had focused on an area near the Kennedy Space Center in Florida. "Congressmen said, 'We think we have a better place.' They had businesspeople involved. There is a process out there that doesn't circumvent the legal contracting process," says Mirelson.
A spokesman for the Air Force says its legislative liaison office receives 10 to 15 inquiries from Congress weekly, usually about the status of specific procurements, payment issues, or the capabilities of a constituent who is a contractor. Air Force policy requires the service to "give full and timely responses," within certain limits. Responses about ongoing procurements are evaluated to make sure no sensitive information is released without authorization.
The oversight role of Congress demands some degree of involvement. "I think taking Congress out of the mix would be a huge mistake. Congress plays an important part: It protects contractors from arbitrary agency actions, and ensures contractors are kept honest, if the agency fails to do that. . . . The system, when it works right, is very effective," says Christopher R. Yukins, associate professor of government contracts law at The George Washington University Law School.
That's why SNVC's DeWitt is ramping up his congressional outreach, especially to the appropriators. He's establishing relationships, and making sure lawmakers know about his company. As for earmarks, he says, "We're not at that level of maturity yet."