March 12, 2010, 12:05 pm

DEFENSE: DoD Bows to Critics, Denies Kuwaiti Firm Sole Source Contract

By Nick Schwellenbach

A Kuwaiti company held up to illustrate a major loophole in the accountability of foreign contractors won’t get a lucrative logistics contract for trucking and storage in war zones, at least not without having to compete. The Pentagon bowed to congressional criticism this week that the award should have been subject to competition. KGL Holding Co. and one of its business units has been criticized for its behavior toward the family of an Army officer killed in an accident involving a KGL truck in Iraq, and for allegations of human trafficking.

In January, the Defense Logistics Agency announced its intent to award a sole source contract award to KGL for logistics services throughout the U.S. military’s Central Command area, which includes Iraq, Afghanistan, Kuwait and other countries.

But the agency said this week it was reversing course and opening the contract to full and open competition for companies willing to bid. DLA explained it had found other companies could provide the same services as KGL.

KGL “never sought a sole source award and welcomes any decision by the Defense Logistics Agency that promotes competition in U.S. government contracting,” the company said in a statement.

KGL has been in the spotlight since the 2003 death of Army Lt. Col. Dominic ‘Rocky’ Baragona Jr. when a KGL tractor-trailer crossed two lanes of traffic and struck Baragona’s vehicle. U.S. District Judge William Duffey Jr. in Atlanta last year threw out a wrongful death lawsuit brought by Baragona’s family because such legal action belonged in Kuwait.

But the judge also had harsh words for KGL, saying the company was “callous” and used delaying tactics to drag out the case for nearly four years. “The Court implored KGL to work with Plaintiffs to fashion a just resolution in this case, but this request was ignored,” Duffey wrote.

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March 11, 2010, 3:38 pm

MONEY & POLITICS: House Dems and GOP Both Claim Earmark Reform High Ground

By Nick Schwellenbach

U.S. House Democrats and Republicans are in the midst of one-upping each other on the issue of earmarks – the very sort of earmarks that were the subject of a major Center investigation, The Murtha Method, last fall. But this time it’s not about which party can insert the most earmarks for pet projects into legislation. Instead, House members are hurrying to shun earmarks as the politically toxic symbols of inside-the-Beltway corruption and fiscal imprudence. Yet to be seen is whether Senate lawmakers will also swear off earmarks.

Yesterday, the Democratic-run House Appropriations Committee declared that it will not approve any earmarks directed to for-profit companies, and will require audits of earmarks to non-profit groups to prevent any companies “from masquerading as non-profits.” The change is intended for the long term, not just the coming fiscal year appropriation bills, a committee fact sheet notes. Additionally, a new program will be established in the Defense Department to open more contracting opportunities to small companies with no Pentagon connections, and to select winners based on merit, according to the committee.

The announcement was made jointly by Chairman David Obey, D-Wis., and by the new chair of its Defense Appropriations Subcommittee, Norm Dicks, D-Wash. Dicks’ subcommittee is the gatekeeper for the most federal money spent on earmarks.

“If this rule had been in effect last year, it would have resulted in 1,000 fewer earmarks,” according to the committee’s press release.

The defense appropriations bill also contains the most earmarks directed to for-profit companies. Other spending bills largely steer earmarks towards non-profits, said Rep. Jeff Flake, R-Ariz., perhaps the most vocal opponent of earmarks in the House.

“It’s not enough to swear off some of the earmarks that lend themselves to corruption – we need to get rid of all earmarks if we have any hope of regaining taxpayers’ trust,” Flake said in a statement yesterday.

Republicans in the House quickly responded by adopting a moratorium on all earmarks for fiscal 2011. The government’s fiscal year begins on Oct. 1. “We’ve taken a big step toward fiscal responsibility. We’ve got a long way to go, but we’re headed in the right direction,” said Flake. “We now need to encourage the Democrats follow our lead.”

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March 02, 2010, 2:52 pm

TRANSPORTATION: Halt in Federal Highway Program Reveals Lobby’s Larger Frustrations

By Matthew Lewis

The transportation lobby stands united in its collective angst with Republican Sen. Jim Bunning of Kentucky, whose objections to deficit spending brought many of the federal government’s highway programs to a halt Sunday night. The political impasse over a $10 billion bill extending unemployment benefits carried the additional consequence of halting spending from the federal highway trust fund, which pays for roads, bridges and safety inspections. Until the stand-off ends, thousands of federal employees are furloughed and hundreds of millions in state funding is in limbo.

State transportation directors, who happen to be in Washington for their annual legislative meetings, held a well-attended news conference to call attention to, as Mississippi’s Larry L. “Butch” Brown put it, “the severity of the actions caused by inaction.” Underpinning their frustration was the fact that Congress has already extended an expired transportation law three times since Sept. 30 in lieu of passing a new bill.

Far and wide in the transportation lobby, from the National Asphalt Pavement Association to the public interest coalition Transportation for America, groups issued statements, flooded Washington with phone calls, and sought answers to questions that even the U.S. Department of Transportation was not prepared to answer. Among them: Who will perform the federal accounting on stimulus projects during the shutdown? “It’s not clear,” said Missouri Transportation Director Pete Rahn, after meeting with federal officials.

“This couldn’t have come at a worse time,” said Brian Turmail of the Associated General Contractors of America, which was busy contacting its members, putting out alerts, and talking to congressional leaders to press for a fix. “Everyone we talked to was engaged,” Turmail said. “But until it’s fixed, you never know.”

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February 25, 2010, 1:30 pm

Health Care Reform Emerges As New Olympian Challenge

By Joe Eaton and Aaron Mehta

When a U.S. hockey player lays out a Canadian opponent, he need not worry about stitches, a concussion or knocked-out teeth. Unlike 46 million Americans, U.S. Olympians have health insurance.

But that doesn’t mean U.S. athletes aren’t watching as President Barack Obama meets with Congressional leadership today to push health reform.

Like other small organizations that don’t have a lot of employees to spread out the insurance risk, the United States Olympic Committee is finding that covering figure skaters and bobsledders is getting seriously expensive, says Desiree Filippone, the USOC’s director of government relations. That’s why the committee paid $40,000 to the Washington, D.C., lobby firm Monument Policy Group to keep tabs on Congressional health reform efforts and other issues in 2009.

Filippone did not say how much it costs to insure an Olympic star like Lindsey Vonn, who took a spill in the giant slalom Wednesday that required X-rays. American athletes are actually covered through the 46 individual governing bodies for various sports, she said. U.S. Figure Skating covers figure skaters. U.S.A. Curling covers the rock throwers.

“That’s not very cost effective in a lot of ways,” Filippone said, because it means higher premiums than if the groups joined together. “We are trying to figure out if there is a better way to do it. We haven’t found it.”

Monument Policy Group, the lobby company USOC hired, is run by C. Stewart Verdery, Jr., a high-power lobbyist and former Assistant Secretary for Policy and Planning at the U.S. Department of Homeland Security. Verdery did not return Center calls for comment.

The U.S. Olympic Committee “didn’t push for any angle at all” in the legislation, Filippone said. In 2009, the committee lobbied on issues as diverse as immigration visas and military construction. “We are nonpartisan. We had no particular political position on this one way or the other.”

A quick look at Congressional lobby records reveals that the U.S. Olympic Committee isn’t the only sports organization concerned about health reform. The National Football League Players Association and the Professional Golfers Association of America also lobbied on the issue last year.

The NFL players’ lobbyist, William Sweetnam, Jr., who was paid $30,000 to work exclusively on health reform, was foggy about what the group of well-paid athletes wanted from Congress. Players were concerned about how cash from their health reimbursement account is split in the case of divorce, he said.

PGA lobbyist Eric Winborn said the association was worried about the impact of health reform on small businesses. The PGA, he noted, represents golf pros working at local country clubs – not just multi-millionaire players like Tiger Woods .

It’s unclear what the PGA got for the $18,000 it paid Winborn to work on health reform and other issues. On Tuesday, two days before Obama’s summit, Winborn was on vacation. Golfing? Nope. Skiing in Utah.

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February 09, 2010, 3:07 pm

ENVIRONMENT: New EPA Scrutiny for Atrazine Reflected in Center’s Database Complaints

By Jim Morris and M.B. Pell

After years of fielding complaints about the ubiquitous weed-killer and water pollutant atrazine, the Environmental Protection Agency has decided to take a closer look at the product, used on corn and other crops, mainly in the Midwest. Some of those complaints are documented in a database produced by the Center in 2008 as part as of our Perils of the New Pesticides investigation.

Last week, an EPA advisory panel began assessing the latest science on the chemical, frequently found in surface waters and groundwater, and two more meetings of the advisory group are planned for later this year.

The Perils of the New Pesticides project includes a tool that allows the public to search 15 years of previously undisclosed EPA data for reported environmental and health effects of specific products. A search of “atrazine” produces 242 pages of results from 1992 through 2007. This material reveals that the EPA received hundreds, if not thousands, of reports of atrazine in water, but does not indicate the severity of the contamination or whether potential health threats existed. Atrazine is the most common water pollutant found in the EPA database, but that could be the result of state and federal agencies specifically testing for the compound.

Last October, the EPA announced that it would re-evaluate atrazine, focusing on the compound’s potential association with cancer as well as birth defects, low birth weights, and premature births. Of concern are recent studies, such as this one by researchers at the Indiana University School of Medicine, which found a correlation between birth defects and elevated levels of agrichemicals, including atrazine, in surface waters.

Steve Owens, assistant administrator over the EPA’s Office of Prevention, Pesticides, and Toxic Substances, said in a statement that the agency “will take a hard look at atrazine and other substances” and “determine whether a change in our regulatory position is appropriate.” Atrazine was banned in the European Union in 2003 due to its presence in groundwater above a strict regulatory limit for all pesticides; there are some restrictions on its use in the U.S., but it remains one of the most commonly applied herbicides. More than 60 million pounds were used domestically in 2008.

Steven Goldsmith, a spokesman for atrazine’s Switzerland-based manufacturer, Syngenta, called the EPA’s reassessment “really unnecessary. Atrazine has been one of the most studied agricultural products in history. The EPA just completed a 12-year review, which resulted in [atrazine’s] re-registration in 2006.” While atrazine often turns up in rivers and streams, Goldsmith said, the concentrations are “well below thresholds set by the EPA to protect human health.”

The EPA’s renewed interest in a pesticide that has long troubled public health advocates closely follows a move by the Food and Drug Administration to reassess bisphenol A (BPA), a chemical used in hard plastic bottles and metal food and beverage cans since the 1960s. The FDA announced in January that it had “some concern about the potential effects of BPA on the brain, behavior, and prostate gland in fetuses, infants, and young children” and would, along with the National Institutes of Health, conduct “in-depth studies to answer key questions and clarify uncertainties about the risks of BPA.” The agency said it supported industry actions to stop producing baby bottles and cups containing the chemical.

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February 09, 2010, 11:54 am

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

By Nick Schwellenbach

Congressman Murtha being wworn 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 with 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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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 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 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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