February 09, 2010, 11:54 am

MONEY & POLITICS: Remembering Rep. John P “Jack” Murtha

By Nick Schwellenbach

Congressman Murtha being Sworn in by his Mentor, Former Speaker Tip O'Neill, 1974. Courtesy of Rep. Murtha's Office. Yesterday marked the passing of one of Washington’s most powerful and controversial legislators, one whose work was familiar to followers of the Center for Public Integrity. Pennsylvania Democrat John P. “Jack” Murtha, chairman of the House Defense Appropriations Subcommittee, died Monday afternoon at the Virginia Hospital Center in Arlington, VA, according to a statement from his congressional office. Murtha was 77.

For 36 years, Murtha had represented Pennsylvania’s Twelfth Congressional District, which is centered in Johnstown; just days ago, Murtha became Pennsylvania’s longest serving member of Congress. A biography accompanies the death announcement on his website, listing a host of legislative and policy accomplishments. But Murtha is likely best known to Center readers as the lawmaker who elevated Congressional earmarks to their present-day status as a crucial tool for funneling taxpayer dollars back home.  

The biography notes that “with the wide-spread loss of coal and steel jobs that were the lifeblood of the [Johnstown] area, [Murtha] pushed the region in a new direction, intent on diversifying the economy by attracting health care, defense, medical research, tourism and high-tech jobs.” What the biography doesn’t say is that Murtha’s use of earmarks and other forms of congressionally-steered funds lay at the basis of Johnstown’s now decades-long economic stimulus by the federal government.  Since 1989, Murtha has been either the chairman or ranking member of the House Defense Appropriations Subcommittee, depending on the political fortune of his party, putting him in control of one of the largest spigots of federal money: the defense spending bill.

The millions of dollars directed by Murtha often went to firms that employed former congressional staffers and other insiders as lobbyists; those lobbyists and the firms they represented regularly made campaign contributions to Murtha and other subcommittee members. The ethically dubious relationships have long raised suspicions among government watchdogs, and are believed to be at the center of an FBI investigation into public corruption, though no charges were ever lodged against Murtha. A Center for Public Integrity investigation confirmed that most of the fellow members of Murtha’s subcommittee also directed earmarks towards companies that employed former staffers and made contributions.

Murtha was always unapologetic. He remarked at last year’s Showcase for Commerce in Johnstown, dubbed ‘MurthaFest’ by some, that earmarks “are critical to our economic survival” and rhetorically asked, “I’m supposed to oversee these companies?,” referring to the firms that received earmarks. He answered his own question: “That’s not my job. That’s the Defense Department’s job.”  Reporters had asked about Kuchera Defense Systems, a Johnstown-based contractor, that the FBI raided in early 2009; the firm had employed Murtha’s brother Kit as a lobbyist.  Kuchera had also donated at least $60,000 to Murtha’s campaign over the years.

Murtha was fond of noting that the U.S. Constitution vests only Congress with the responsibility of funding the government; the powerful ‘cardinals’ in the appropriations committees played an especially large role.  Bringing home part of the federal budget pie has long been accepted, even admired in Congress and by constituents.  

As a result, the Defense Department and its contractors could not help but notice Murtha.  Besides being a widely-respected voice on military affairs — Murtha was the first Vietnam veteran to be elected to Congress, and he garnered attention when he opposed the Iraq War in 2005 — he had his hand on the tiller of military spending.

So it’s hardly surprising that Murtha’s passing is being met a note of sorrow from the defense contracting community. Jim McNerney, the CEO of Boeing, the second largest U.S. defense contractor with a presence in Johnstown, said in a statement, “We at Boeing are deeply saddened to hear today of Rep. John Murtha’s passing.  Jack — or Mr. Chairman as I called him — served his country in both war and in peace, earning not only medals for sacrifice and valor but also the respect of his constituents who first elected him to Congress 36 years ago.  Our nation has lost a patriot who loved this country and what it stands for, and the people of Pennsylvania have lost a man who cared deeply for those he served.”

Likewise, his death merited attention from the highest levels of the Obama administration. Defense Secretary Robert Gates released a statement saying he was “deeply saddened to hear of the passing of Jack Murtha.  America has lost a true patriot who served his country faithfully first in uniform as a decorated combat Marine, and then as an elected representative.”

February 05, 2010, 1:59 pm

MONEY & POLITICS: Senator Richard Shelby Goes to Bat for Major Financial Benefactor

By Josh Israel and Nick Schwellenbach

Senator Richard Shelby The unusual “blanket hold” placed on Obama administration nominees by Senator Richard Shelby, represents an effort to support a firm that has contributed more than $100,000 to the Alabama Republican over the course of his long political career, according to a Center for Public Integrity analysis.

Shelby reportedly initiated the blanket hold in an attempt to back a $35 billion tanker contract for Northrop Grumman and EADS; the plane would be built in his state.

The contract had been initially awarded to the companies in 2008, but was canceled after rival Boeing protested and the Government Accountability Office upheld the protest — forcing the Defense Department to rebid the contract. Shelby has been outspoken in support of granting the contract to Northrop Grumman and EADS. Shelby and Northrop Grumman have both objected to the Defense Department’s new rebidding process.

While by all accounts a Northrop Grumman contract would create significant numbers of jobs in his home state, Shelby’s initiative is also a move to secure funding for a company that has long funded him. The fourth-term Senator has received at least $108,233 in PAC contributions to his political campaigns and leadership PAC from Northrop Grumman’s corporate PACs. This includes contributions, dating back to his first Senate election in 1986, from the company’s political action committee and from the PACs of companies that are now part of Northrop Grumman.

According to the Center analysis, this level of support ranks Northrop Grumman as the seventh most generous institutional supporter over the course of Shelby’s political career.

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February 05, 2010, 1:04 pm

February 5, 2010

By Peter Newbatt Smith

TODAY’S HIGHLIGHTS: More than 65,000 U.S. veterans suffer from “military sexual trauma”; immigration detainees are hit with excessive telephone charges; and separate reports examine teacher training programs for American Indians and for Afghans.

VETERANS’ HEALTH CARE: A report on improper charging of copayments to certain veterans notes that the VA treated 65,264 patients in fiscal 2009 for military sexual trauma, defined as “the experiences of sexual harassment and/or sexual assault that occurred while the veteran was in the military.” Of that total, 60 percent were women. Also, the report says the medical treatment code for military sexual trauma is “inconsistently implemented” in paperwork at VA clinics, making it difficult to track treatment across the system (Veterans Affairs Department’s Inspector General).

IMMIGRATION: U.S. Immigration and Customs Enforcement should monitor more closely the terms of telephone services provided by its contractor to ensure that immigration detainees are not charged unreasonable fees. (Homeland Security Department’s Inspector General).

EDUCATION: Office of Indian Education needs to better manage a grant program to ensure Indian college students repay the grant money for training to become teachers and school administrators (Education Department’s Inspector General).

FOREIGN AID: U.S. Agency for International Development’s $94 million contract with Creative Associates International to train and support teachers in Afghanistan “is making progress but has not achieved its two main goals” (U.S. AID Inspector General).

FOREIGN AID: U.S. AID’s $45.6 million contract with Development Alternatives Inc. to increase the capacity of government institutions in a region of Pakistan bordering Afghanistan “had achieved little with regard to the program’s two main goals” after almost two years (U.S. AID Inspector General).

FOREIGN AID: A U.S. AID program run by three groups to prevent mother-to-child transmission of HIV in Nigeria met its benchmarks but needs to improve the accuracy of reported data (U.S. AID Inspector General).

GOVERNMENT BUILDINGS: Card-access security at the Environmental Protection Agency’s buildings near the University of Nevada-Las Vegas campus must be tightened to protect the agency’s computer server room from unauthorized access (EPA Inspector General).

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February 04, 2010, 2:20 pm

February 4, 2010

By Peter Newbatt Smith

TODAY’S HIGHLIGHTS: Exactly what is a “green reserve”? U.S. states need to know; Navy must do better in estimating coastal ship’s long-term costs; and U.S. AID program misses HIV prevention targets in Dominican Republic.

ENVIRONMENT: The Environmental Protection Agency’s self-reported data is unreliable for assessing the agency’s computer security (EPA Inspector General).

WEAPONS: The U.S. Navy’s $84 billion estimate of long-term operating costs for the coast-hugging littoral combat ships failed to fully reflect government best practices such as obtaining an independent estimate to compare with its own (Government Accountability Office).

FOREIGN AID: A U.S. Agency for International Development program to prevent mother-to-child transmission of HIV in the Dominican Republic failed to meet most of its benchmarks (U.S. AID Inspector General).

ECONOMIC STIMULUS: Some $44.9 million in Community Service Block Grants is at risk for fraud, waste and abuse because the grants were made to 20 local agencies designated as “vulnerable” or “in crisis” (Health and Human Services Department Inspector General).

ECONOMIC STIMULUS: U.S. states need better guidance from the EPA to use some $6 billion in stimulus money earmarked for “green reserve” projects that reduce, capture and treat stormwater runoff before it reaches the sewer system (EPA Inspector General).

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February 02, 2010, 7:00 am

The Daily Watchdog: February 2, 2010

By Peter Newbatt Smith

A daily roundup of just-released investigative reports, drawn from oversight agencies, congressional committees, and government offices across Washington.

Defense and Iraq reconstruction contracts continue to get attention from government investigators. This batch of reports also includes several related to different aspects of health care.

“IRAQ RECONSTRUCTION FUNDS: Forensic Audits Identifying Fraud, Waste, and Abuse — Interim Report #2” (Special Inspector General for the Troubled Asset Relief Program). Reports that forensic audits “have identified almost $340 million in anomalous transactions,” and separately resulted in 27 criminal investigations related to “easy access to cash associated with weak controls over expenditures.”

MILITARY PROCUREMENT: “Contracted Advisory and Assistance Services for the U.S. Army Future Combat Systems” (Defense Department’s Inspector General). Found that contractor Science Applications International Corporation (SAIC) had an “organizational conflict of interest” because it received contracts related to both developing, and assisting in the evaluation of, the Future Combat Systems program.

MILITARY PROCUREMENT: “Defense Contracting: DOD Has Enhanced Insight into Undefinitized Contract Action Use, but Management at Local Commands Needs Improvement” (Government Accountability Office).

MILITARY PROCUREMENT: “Status of DOD’s Implementation of Independent Management Reviews for Services Acquisitions” (Government Accountability Office).

MILITARY PROCUREMENT: “Observations on the Department of Defense Service Contract Inventories for Fiscal Year 2008” (Government Accountability Office).

HEALTH CARE: “Patient Safety Act: HHS Is in the Process of Implementing the Act, So Its Effectiveness Cannot Yet Be Evaluated” (Government Accountability Office).

HEALTH CARE: “Electronic Health Records: DOD and VA Interoperability Efforts Are Ongoing; Program Office Needs to Implement Recommended Improvements” (Government Accountability Office).

HEALTH CARE: “Comparison of Second-Quarter 2009 Average Sales Prices and Average Manufacturer Prices: Impact on Medicare Reimbursement for Fourth Quarter 2009” (Health and Human Services Department’s Inspector General).

“VETERANS’ DISABILITY BENEFITS: Further Evaluation of Ongoing Initiatives Could Help Identify Effective Approaches for Improving Claims Processing” (Government Accountability Office).

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January 27, 2010, 12:41 pm

TRANSPORTATION: Winter Ends for the High-Speed Rail Lobby

By Matthew Lewis

The transportation world is buzzing over the President’s visit to Florida Thursday, reportedly to announce the lucky recipients of $8 billion in stimulus funds for high-speed rail projects. The Associated Press is among reporting those that the announcement will likely include high-speed rail money for 31 states.

As the Center for Public Integrity reported in November, money for high-speed rail — starting with that $8 billion — has unleashed a new frenzy of lobbying. Lobbying on high-speed rail – from both the public and private sector — more than tripled in the third quarter of 2009, compared to a year earlier.

And there’s been no letup. Some new players formally registered their interest with the U.S. Senate in the fourth quarter of 2009, including Fortune 500 corporations like microchip manufacturer Intel and Jacksonville-based freight railway CSX. Tampa’s Hillsborough County was among other new entrants. Florida’s state government scrambled to complete a commuter rail plan in December, in part to signal its commitment to high-speed rail. And CSX was a big winner in that local deal, selling track to the state for hundreds of millions of dollars to clear the commuter deal. When it comes to the more ambitious high speed plan, CSX would like to see brand new tracks — rather than sharing it with freight trains.

Companies that stayed active on the advocacy front include IBM and engineering company HDR, among others, while a batch of local governments potentially interested in rail, including Charlotte’s Mecklenberg County, have entered the lobbying scene in the new year. The Nevada-based Western High Speed Rail Alliance also formally joined the fray in January.

This map provides a starting point for tracking high-speed rail activity across the United States. Red dots represent the public and private organizations formally lobbying Washington, D.C., on high-speed rail policy. Dollar signs represent projects awarded a slice of the $8 billion in stimulus funding for high-speed rail. Blue trains represent other rail advocacy groups across the U.S. that are not registered to formally lobby Washington lawmakers. Source: Senate Office of Public Records. Production: Matthew Lewis/The Center for Public Integrity.

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January 27, 2010, 7:00 am

The Daily Watchdog: January 27, 2010

By Peter Newbatt Smith

A daily roundup of just-released investigative reports, drawn from oversight agencies, congressional committees, and government offices across Washington.

This batch of reports includes several examining government contracts in Iraq and other overseas locations.

IRAQ: “Long-standing Weaknesses in Department of State’s Oversight of DynCorp Contract for Support of the Iraqi Police Training Program” (Special Inspector General for Iraq Reconstruction). Finds that “over $2.5 billion in U.S. funds are vulnerable to waste and fraud” because the State Department has not devoted sufficient staff to overseeing this contract. Initially only one contracting officer was responsible for reviewing all the contractor’s invoices; there are now three.

IRAQ: “Department of State Grant Management: Limited Oversight of Costs and Impact of International Republican Institute and National Democratic Institute Democracy Grants” (Special Inspector General for Iraq Reconstruction).

MILITARY PROCUREMENT: “Evaluation of DOD Contracts Regarding Combating Trafficking in Persons” (Defense Department’s Inspector General).

MILITARY PROCUREMENT: “Recent Law Has Impacted Contractor Use of Offshore Subsidiaries to Avoid Certain Payroll Taxes” (Government Accountability Office).

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January 26, 2010, 3:42 pm

FINANCE: FHA and Ginnie Mae Punish Troubled New York Lender Cited by Center Probe

By Brian Grow

A New York-based lender that was featured in a recent Center for Public Integrity investigation has been expelled from a government-insured mortgage program and denied the right to sell mortgage-backed securities to investors.

Citing rampant violations of federal lending rules, the Federal Housing Administration and mortgage guarantor Ginnie Mae took action Monday against Jericho, New York-based FHA lender TopDot Mortgage. TopDot, which is registered with the FHA as Premium Capital Funding, was featured in a Dec. 9, 2009, story by The Center for Public Integrity and The Washington Post. The piece focused on mortgage lenders with checkered pasts, which had nevertheless won approval from Ginnie Mae to sell FHA loans in the secondary mortgage market. Ginnie Mae guarantees payment on those securities to investors. As a result, TopDot was able to generate new cash, which the firm could use to make more FHA loans. According to the Department of Housing and Urban Development, TopDot had a portfolio of Ginnie Mae securities worth $181.2 million; that portfolio is now being transferred to another mortgage-payment manager.

The story identified 36 lenders with records of civil lawsuits, reckless lending, fines, and government sanctions that had Ginnie Mae approval, and found that TopDot was the subject of several lawsuits alleging the company had misled borrowers about the terms of both traditional and FHA loans. More significantly, as of last December, TopDot had a default rate on FHA loans issued in the previous two years of 14.3 percent, more than double that of other FHA lenders in its area. The company’s default rate has since risen to 14.9 percent. At the time, Andrew Pennacchia, TopDot’s vice president of legal affairs, said Ginnie Mae had not raised concerns about TopDot’s default rate, and claimed the lawsuits lacked merit.

Now, according to a press release issued by HUD (which oversees FHA and Ginnie Mae), TopDot’s problems may go further. TopDot allegedly engaged in “numerous and egregious violations of FHA requirements,” including failure to document borrowers’ incomes and creditworthiness, and approval of loans with an excessive debt-to-income ratio, according to the release. “This lender demonstrated a pattern of utter disregard for how we do business,” said FHA Commissioner David Stevens. “Ginnie Mae’s requirements are in place to protect both the borrower and the American taxpayer,” added Ginnie Mae executive vice president Mary Kinney.

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January 22, 2010, 6:59 am

The Daily Watchdog: January 22, 2010

By Peter Newbatt Smith

A daily roundup of just-released investigative reports, drawn from oversight agencies, congressional committees, and government offices across Washington.

Reports this week include a headline maker from the Justice Department on the FBI's requests for phone records and two from the State Department concerning contracts with private security companies.

LAW ENFORCEMENT: “A Review of the Federal Bureau of Investigation's Use of Exigent Letters and Other Informal Requests for Telephone Records” (Justice Department’s Inspector General). Finds “widespread use of exigent letters and other informal requests for telephone records that did not comply with legal requirements or FBI policies.”

GOVERNMENT PROCUREMENT: “Memorandum Report on the Preliminary Review of the Second Worldwide Personal Protective Services (WPPS II) Contract Task Orders” (State Department’s Inspector General). Found that the State Department’s Office of Acquisition Management could not provide sufficient documentation to allow the IG’s office to audit four task orders.

GOVERNMENT PROCUREMENT: “Performance Audit of the U.S. Training Center Contract for Personal Protective Services in Afghanistan” (State Department’s Inspector General). Finds some deficiencies in the performance of contractor U.S. Training Center, formerly known as Blackwater Lodge and Training.

GOVERNMENT PROCUREMENT: “Review of the Centers for Disease Control and Prevention’s Compliance With Appropriations Laws and Acquisition Regulations — Contractor A” (Health and Human Services Department’s Inspector General). Finds that eight task orders awarded to “Contractor A” were inappropriately administered as personal service contracts.

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January 21, 2010, 11:21 am

STATES: West Virginia Could Pull Ahead on Ethics Front

By Caitlin Ginley

West Virginia stands to gain at least 21 points in our States of Disclosure project, following passage of an ethics bill yesterday in the House of Delegates that appears likely to become law.

One of the major provisions of the bill would require legislators’ spouses to disclose their employment information, officer or director positions, and outside investments. The current law does not require any information of spouses — an important criteria in our survey. The state could also score points for requiring disclosure of lawmakers’ job titles and descriptions of any outside employment.

If the bill passes the state senate and becomes law, West Virginia, which failed our survey last year with only 45 points, could potentially move up the ranks to number 26 on the list, tying with Florida. Despite the significant jump, however, the state would still receive a D grade from the Center, mostly due to a complete lack of client and real property ownership information from legislators, neither of which seem to be addressed in the current proposal.

West Virginia delegates also approved an amendment to post disclosure forms online, boosting the state’s public accessibility score. West Virginia is currently in the minority of states that have yet to make their legislative financial disclosure information available in any electronic format.

House Minority Leader Tim Armstead, who announced plans for a new ethics law last year, cited the Center’s survey and the failing grade we gave his state, specifically noting that zero points were awarded for spousal information. Theresa Kirk, executive director of the state’s ethics commission, also noticed the poor ranking and said she “considered it a good opportunity to look at our disclosure requirements.”

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