Contracts attracted scandal
As it turned out, the company’s lobbying efforts for a noncompetitive contract failed. The National Nuclear Security Administration, which oversees the nuclear weapons laboratories, did not accept Lockheed’s claims about avoiding competition, and in Dec. 2011, 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 ten years, if all options are exercised — to a group of private companies that did not include Lockheed, without detailing why.
The Sandia contract was one of three that Wilson executed between 2009 and 2011 with the private firms that produce nuclear weapons. In addition, she collected $195,718 from the privately-run 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 the privately-run Oak Ridge National Laboratory; she also was paid additional funds by the privately-run Nevada Test Site, to advise them 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 that the Navy and the Air Force, Wilson’s putative new employer, decide they need. Their contracts with her, in retrospect, might turn out to have been a shrewd investment: Sandia in particular had cited, as justification for hiring Wilson without considering anyone else, her “high-level connections and critical engagement with key individuals.”
Public scandal surrounded all of these contracts, once the June 2013 Inspector General report was published. It said none of the invoices that Wilson’s firm had sent to the laboratories contained sufficient detail to conclude she actually provided all the services the firm promised to supply. Bills sent for $10,000 a month lacked “details as to the time expended and nature of the actual services” the firm performed.
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 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 — after an investigation by the Justice Department — paid $4.7 million in August 2015 to settle the matter. The four laboratories wound up repaying the government a total of $442,000 that they had spent on Wilson’s services.
This was not Wilson’s first brush with an ethics controversy. In February 2013, then-House Speaker John Boehner appointed Wilson to the Congressional Advisory Panel on the Governance of the Nuclear Security Enterprise, 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’s appointment got the attention of an anti-nuclear watchdog group in her home state, Nuclear Watch New Mexico. Wilson ignored pleas by the group’s executive director, Jay Coghlan, to step down from the congressional commission over the perceived conflict of interest. The panel recommended that Washington sharply scale back its regulation and oversight of all the nuclear weapons laboratories.
Wilson is currently 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 Trump 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 Trump’s nomination, but Defense Secretary James Mattis persuaded her to accept it.
Lockheed Martin’s CEO Hewson, whose path crossed Wilson’s when both were working on the plan to capture a no-bid extension of the Sandia contract, told stockholders during a teleconference Jan. 24 that she met twice with Trump during his transition to the White House. In a phone interview, Lockheed Martin spokeswoman Maureen Schumann said Hewson had not recommended or even discussed an appointment for Wilson with Trump or anyone on his transition team.
The Senate Armed Services Committee has not set a date yet for a hearing on Wilson’s nomination. House Armed Services Committee Chairman Mac Thornberry (R.-Tex.) said in a statement last week that "Wilson is an excellent choice for Secretary of the Air Force. 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 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.”
Center for Public Integrity Managing Editor for National Security R. Jeffrey Smith contributed to this article.
A version of this story was co-published by POLITICO.