Top officials at the Lockheed Martin Corporation in 2009 sought to extend their lucrative contract work managing Sandia National Laboratories for the Energy Department, and expected that their political connections would help them gain an inside track for a noncompetitive contract renewal. This is, after all, how Washington usually functions.
But the Energy Department’s top auditor has asserted in a riveting new report that the firm, and top officials that helped it operate the Sandia nuclear weapons labs in Albuquerque, appear to have violated federal laws when they used some of their contract funds to pay for lobbying and other forms of pressure on DOE to obtain the contract renewal.
The firm argued during the department’s review of its actions that spending federal funds to obtain more federal funds was “allowable” and only was meant to help the department’s leaders make an informed decision, according to the Nov. 12 report by DOE Inspector General Gregory H. Friedman.
But Friedman called that decision “highly problematic.” He said it was not only a violation of government-wide contracting regulations, but also “impermissible” under the precise wording of Sandia’s longstanding, multi-billion dollar contract with DOE.
Friedman’s slender six-page summary of his extensive investigation — many details of his work were declared “For Official Use Only” — is noteworthy because it’s an unusual broadside against what many in the Capitol say is a common way of doing business: Get one federal grant, and then use the profits to hire lobbyists — including former members of Congress — to meet with federal officials, lawmakers and others who can help orchestrate a new, even richer federal grant.
It’s Washington’s own version of a perpetual motion machine — one that has created and enshrined countless fortunes in the Capitol region. "Not only is it explicitly against the law for contractors to use taxpayer dollars to lobby federal officials, it's galling that in this particular case, the contractor is using taxpayer dollars to try and do an end-around competition," said Lydia Dennett, an investigator at the Project on Government Oversight, a nonprofit group in Washington. "This instance is hardly the first time appropriated funds have been abused this way."
Lockheed Martin wound up getting a two-year contract extension worth $7.7 billion in March of this year to manage Sandia, rather than the 12-year extension it had sought. But a Sandia official, whose name was not given in the report, acknowledged in a 2010 email obtained by Friedman that its federally-funded campaign for a Lockheed Martin extension was not new.
Sandia used “operating costs” — a budget account funded by DOE — “in the same way in securing” contract extensions in 1998 and 2003, and also coordinated its effort closely with Lockheed Martin, Friedman’s report quotes the Sandia official as writing.