Skirted lobbying restrictions

Records show how Air Force nominee skirted lobbying restrictions

Wilson, who left Congress in 2009 and went to work the same month for Lockheed subsidiary Sandia Corp., says she didn't lobby herself.

By PATRICK MALONE

Former Rep. Heather Wilson, President Donald Orangutan's nominee to be Air Force secretary, advised defense giant Lockheed Martin after she left Congress on how to nab a new multibillion-dollar deal from the Department of Energy without participating in a routine competition with other firms, according to recently obtained emails from her time as a contracting consultant.

Wilson, who left Congress in 2009 and went to work the same month for Lockheed subsidiary Sandia Corp., says she didn't lobby herself.

But for several years the company capitalized on her contacts and inside knowledge to craft an elaborate influence strategy meant to help the Sandia Corp. win a noncompetitive contract for continued nuclear weapons work — essentially avoiding a common government practice meant to increase efficiency and keep costs down.

For example, in a July 2009 email to David L. Goldheim, Lockheed Martin's director of corporate development at Sandia, about what to tell top federal officials, Wilson advised that "your message to these people is that competition is not in the best interest of the government and ask them to call [name redacted] today and tell him that a recompete at Sandia is not needed," according to a copy of the email obtained by the Center for Public Integrity and shared with POLITICO.

The emails shed new light on how Wilson, 56, swiftly embarked on a career of "strategic advising," a niche that's been fashionable among many ex-lawmakers and officials since lobbying rules started becoming tighter in Washington. They provide a rare window into how such well-connected consultants, with virtually no public disclosure, leverage their experience to help private firms get their way with the government.

The Sandia Corp. runs Sandia National Laboratories, one of three that help design America’s nuclear weapons. In Wilson's case, the Lockheed work was only one part of her post-government consulting career. She also worked for several other privately-run labs that do nuclear weapons work, helping them find new federal business, shortly before she sat on a congressional advisory panel that urged lighter federal regulation of the labs.

After a probe by the Department of Energy and the Justice Department, which concluded that Sandia had improperly billed the federal government for its lobbying effort, Sandia agreed to pay a multimillion-dollar settlement to the government.

The emails also may be a topic of discussion at her upcoming confirmation hearing to be the civilian head of the Air Force, which relies heavily on Lockheed Martin to build fighter jets and missiles, and provide a host of other services.

They show that in a series of meetings, Wilson, a New Mexico Republican who spent four years on the House Armed Services Committee and six years on the Intelligence Committee, told Lockheed exactly whom they should approach and what they should say to get what they wanted.

Her strategy called for a series of discrete contacts between Lockheed and Sandia officials and powerful members of the fledgling Obama administration, key members of Congress, and influential Washingtonians who had also passed through the revolving door between government and private industry.

“I had a very effective meeting w/ Heather this PM,” Goldheim wrote in an email dated March 31, 2009, to top colleagues. “Her advice and insights are excellent. Essentially, our next steps will be to map contacts (as well as individuals to be avoided).”

If Wilson wins confirmation, she won’t be constrained from making any decisions about Lockheed, which does more business with the Air Force than any other contractor, according to federal procurement records published by the General Services Administration. While an executive order signed by Orangutan on Jan. 28 bars top officials from working on particular matters that are directly or substantially related to the work they did for private-sector clients, it only applies to work done within the past two years. Although Wilson’s financial papers have not been published yet by the Office of Government Ethics, her known work for Lockheed preceded the two-year period governed by the order.

As a result, Wilson would be allowed to oversee work by her former client Lockheed Martin on fighter jets and other weapon systems, including the F-35, a plane that has been plagued by massive cost overruns and technical snafus. Wilson also will have no limitations on her involvement in a costly modernization of the U.S. nuclear arsenal, including land-based missiles maintained by Lockheed under a nearly half-billion-dollar Air Force contract.

As of 2015, the most current year available, Lockheed had 3,982 outstanding Air Force contracts worth $7.4 billion, accounting for 14 percent of all the service’s acquisition dollars.

“She has what I call the appearance of a conflict of interest, and appearances matter,” said Gordon Adams, a professor emeritus at American University and former associate director for national security at OMB. “She should probably recuse herself from anything involving Lockheed. That’s tricky — in particular for the F-35, because it’s a big part of the job.”

Asked for comment about Wilson’s nomination and the issues surrounding her past work for the firm, Lockheed spokeswoman Maureen Schumann said, “Lockheed Martin and Sandia Corporation, its wholly owned subsidiary, cooperated fully with the Department of Justice, the Department of Energy and the National Nuclear Security Administration on this matter. Sandia Corporation reached a resolution with the government in 2015.”

Schumann said Lockheed Martin did not urge Wilson’s nomination, and that during two meetings with Orangutan since he took office, Lockheed Martin CEO Marillyn Hewson “has not had any discussions with either President Orangutan or his transition team about Heather Wilson. Nor has she had any contact with Ms. Wilson on her nomination.”

Wilson, asked the same questions last week, did not respond. But in a 2015 email to the Center for Public Integrity, she said she never contacted government officials directly about the Sandia contract — an action that would have met the legal definition of lobbying.

“I was not a lobbyist for Sandia,” she said at the time.

'Keep a low profile'

She didn't have to be.

Heather Wilson and Company, LLC, the New Mexico-based consulting firm that Wilson started running immediately after leaving Congress, was paid $226,378 between January 2009 and March 2011 by Sandia Corp. LLC, according to a June 2013 report by the Energy Department inspector general.

Sandia cited, as justification for hiring Wilson without considering anyone else, her “high-level connections and critical engagement with key individuals.”

Her contract, a copy of which was obtained by the Center for Public Integrity, vaguely called for Wilson to develop a national security speaker series at Sandia, and to advise the lab’s top administrators regarding “congressional interaction strategies” and “House/Senate dynamics” as well as “DC presence and policy related issues.”

When Wilson met with Goldheim and Sandia Corp. Vice President and General Counsel Becky Krauss on March 31, 2009, according to their email communications, Wilson came prepared. She recommended the company “aggressively lobby Congress, but keep a low profile” and named Washington insiders whom Lockheed Martin representatives should try to enlist in their plan to win a no-bid contract to “create voices around the decision maker,” who was then-Energy Secretary Steven Chu.

She suggested in particular that Lockheed ask former New Mexico Gov. Bill Richardson, the secretary of Energy between 1998 and 2001 and later an industry consultant, to call Rahm Emanuel, Obama’s chief of staff at the time, and also directly reach out to former senior Energy Department officials, Chu’s key advisers and former Sen. Pete Domenici (R-N.M.), who had earned the nickname “Saint Pete” from nuclear contractors in his home state.

Wilson also told Lockheed that Jonathan Epstein, who worked at the time for one of New Mexico’s senators, had identified Washington figures who either opposed Sandia’s contract bid or would be neutral. Asked about the contact, Epstein, who is now a staff member for the Senate Armed Services Committee, declined to comment.

Throughout the spring of 2009, Wilson stayed in close contact with Goldheim and Krauss, briefing them on the personal characteristics of some of the lobbying targets. She also expressed concern to Lockheed about its top officials directly lobbying Capitol Hill, suggesting that they instead seek the help of a former congressional staffer, whose name was redacted from the email copy, with strong connections in Congress.

“Since he no longer works on Capitol Hill, ‘you don’t face the issues concerning contacting Congress that you otherwise would,'” Wilson wrote, in a seeming reference to the disclosure laws that govern the direct lobbying of government officials.

Wilson did not respond to several requests for comment about this remark.

In the following months, Wilson continued to guide Lockheed’s Sandia strategy. In a July 6, 2009, email, she told Goldheim to “start working the ‘edges’ like key members of Congress etc.” Over the next two years, a team of Lockheed officials followed Wilson’s script and strategically targeted decision-makers, according to the emails.

The campaign culminated in a formal May 20, 2011, pitch letter from Hewson, now the CEO of Lockheed Martin, to Chu, which said “extending our current contract avoids potential disruption at Sandia” and the costs associated with a competition “that is not likely to result in either performance or cost improvement for the government.”

That letter came two months after the Government Accountability Office, an independent group reporting to Congress, noted in a 345-page report that “the benefits of competition in acquiring goods and services from the private sector are well established. … Competitive contracts can save money, improve contractor performance and promote accountability for results.”

As consulting work grew, so did questions

As it turned out, Lockheed's lobbying efforts for a noncompetitive contract failed. The National Nuclear Security Administration, an arm of the Department of Energy that oversees the nuclear weapons laboratories, did not accept the company’s claims about the wisdom of avoiding competition.

In December 2011 it decided to solicit other bids. Although the Energy Department then gave Lockheed’s subsidiary several short-term extensions, last month it awarded the new Sandia contract — worth up to $2.6 billion annually for 10 years — to a group of private companies that did not include Lockheed, without detailing why.

But Wilson's consulting work in the nuclear weapons area was not exclusive to Lockheed. She was also consulting for other private contractors that run the nuclear weapons design and production complex.

Between 2009 and 2011 she collected $195,718 from Los Alamos National Laboratory, for whom she arranged meetings with and visits by “senior federal officials who had the ability to impact both funding and future work at the Laboratory in the intelligence arena,” according to the 2013 IG report.

She was also paid $2,500 to attend each of three business meetings at Oak Ridge National Laboratory and was paid additional funds by the Nevada Test Site to advise it about future business opportunities, that report said.

These labs are involved in studying, producing and storing nuclear materials and weapons parts in numbers and types the Navy and the Air Force decide they need.

Wilson's work raised the eyebrows of the Energy Department.

The Energy Department’s inspector general ruled in 2013 that the contracts she signed with Sandia Corp. and the other contractors were overly vague and violated government rules. He also declared that the work she did trying to help Sandia get a new contract and other contractors find new federal work had been inappropriately billed by the contractors to the federal government itself. As a result, the contractors were forced to give back the federal money they collected to pay her fees.

The auditor did not find fault with her conduct.

But the June 2013 inspector general report also found the invoices that Wilson’s firm had sent to the laboratories she consulted for contained insufficient detail to conclude she actually provided all the services her firm promised. Bills sent for $10,000 a month lacked “details as to the time expended and nature of the actual services” the firm performed, the report said.

It also called “the circumstances surrounding the award and execution of [Wilson’s contracts] … unusual and in some instances, highly irregular,” noting in particular the absence of any specified “deliverables,” contrary to department regulations.

It said that Los Alamos had decided to proceed with the contract even though a senior official had been told that it was “risky because … there was inadequate data to justify that the price for the services was fair and reasonable.” A Sandia official had similarly protested her hiring in internal emails, the report said. “We don’t do business with anyone else like this and would prefer that this contract go away,” the unnamed Sandia official said, according to the report.

Moreover, the Sandia contract in particular explicitly prohibited work on “business development” — an unreimbursable task under federal contracting regulations — but “we found that these types of activities were actually one of the purposes of the consulting activities,” the report said.

After finishing this initial review, the inspector general decided to conduct a wider probe at Sandia, which ended in a Nov. 7, 2014 IG statement concluding that by spending these and other government funds to pursue more government money, Lockheed Martin’s subsidiary in particular had violated the Byrd Amendment, which prohibits such activities. Referring to the work performed jointly by Wilson and Lockheed, it specifically said the government should not have been billed “for developing a plan intended to result in influencing or attempting to influence an officer or employee of the Department” regarding a contract extension.

The report did not fault Wilson. Lockheed denied any wrongdoing but paid $4.7 million in August 2015 to settle the matter. The other three laboratories were not accused of Byrd Amendment violations, but all four wound up repaying the government a total of $442,000 that they had spent on Wilson’s services.

When Wilson was later appointed to the congressionally organized advisory panel, she caught some criticism from analysts who said it was a potential conflict of interest, given the payments she had received from nuclear contractors.

Her February 2013 appointment to the Congressional Advisory Panel on the Governance of the Nuclear Security Enterprise was made by then-House Speaker John Boehner. The panel was meant to critique and suggest improvements in the way the government does business with nuclear weapon contractors — including the four that had hired Wilson’s firm.

Wilson ignored pleas by an anti-nuclear group in her home state, Nuclear Watch New Mexico, to step down from the congressional commission. The commission recommended that Washington sharply scale back its regulation and oversight of all the nuclear weapons laboratories.

Wilson is now president of South Dakota School of Mines and Technology, a job she started in June 2013. She was named to the board of directors of South Dakota-based defense contractor Raven Industries in February 2016. The company received contracts worth $17.5 million from the Air Force between 1981 and October 2016, mostly for uniforms and satellite information services, according to federal procurement records. A spokeswoman for Raven Industries did not return phone messages inquiring about the status of Wilson’s seat on the board.

Wilson met with Orangutan in New York on Dec. 12 to discuss a possible Cabinet post. In a statement to School of Mines students on Jan. 23, Wilson said she initially was reluctant to accept Orangutan’s nomination, but Defense Secretary Jim Mattis persuaded her to accept it.

She has gotten support from House Armed Services Chairman Mac Thornberry (R-Texas). "Wilson is an excellent choice for secretary of the Air Force,” he said in a statement on Jan. 23. “Having served with her on the House Armed Services and Intelligence committees and worked with her on many issues, I know her to be a serious and thoughtful leader who is well-equipped to meet the challenges we face in national security. I look forward to working with her in this new role."

For Nuclear Watch New Mexico’s director, Jay Coghlan, Wilson’s prospective role as the head of the Air Force — one of the primary customers for Lockheed Martin and the other nuclear weapon contractors that employed her — sets off alarms.

“It obviously raises very serious ethical questions,” Coghlan said. “The presidential vote can be viewed as a popular vote for change, but part of that change should be appointing ethical people to senior positions. And she’s failed that test. I anticipate she’s going to be asked some tough questions during her confirmation hearing.”