Tag Archives: revolving door MIC Military Industrial Complex

Brass Parachutes: The Problem Of The Pentagon Revolving Door

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“THE PROJECT ON GOVERNMENT OVERSIGHT (POGO)”

“There were 645 instances of the top 20 defense contractors in fiscal year 2016 hiring former senior government officials, military officers, Members of Congress, and senior legislative staff as lobbyists, board members, or senior executives in 2018. 

Pentagon officials captured by the contractors they oversee is skewing our spending priorities and foreign policy. Military officers going through the revolving door included 25 Generals, 9 Admirals, 43 Lieutenant Generals, and 23 Vice Admirals.”


“Instances in Which Defense Contractors Hired Senior Government Officials as Executives, Directors, or Lobbyists

Company (in descending order of contract dollars awarded in FY 2016) Number of Lobbyists Number of Executives Number of Directors, Members, or Trustees Total
Lockheed Martin 51 0 4 55
Boeing 69 11 4 84
Raytheon 39 3 5 47
General Dynamics 63 4 3 70
Northrop Grumman 50 4 2 56
United Technologies 52 2 3 57
BAE Systems 24 1 1 26
L-3 Communications 19 0 3 22
Huntington Ingalls Industries 32 1 3 36
Humana 14 0 1 15
Bechtel 8 1 0 9
UnitedHealth Group 39 1 1 41
McKesson Corporation 13 0 0 13
Health Net 16 1 1 18
Bell Boeing Joint Program Office n/a n/a n/a n/a
Science Applications International Corporation (SAIC) 5 4 2 11
AmerisourceBergen 21 0 1 22
Textron 9 3 2 14
Harris Corporation 8 1 2 11
General Atomics 27 2 1 30
Booz Allen Hamilton 3 2 3 8
Totals 562 41 42 645

The number of instances of the revolving door is certainly much higher than what we found using publicly available sources since those sources largely rely upon self-reporting by the companies and individuals. A 2006 Government Accountability Office survey of contractors and Internal Revenue Service data—the most recent government review available—found that 52 contractors employed 2,435 former Department of Defense senior and acquisition officials who had “previously served as generals, admirals, senior executives, program managers, contracting officers, or in other acquisition positions which made them subject to restrictions on their post-DOD employment.”2

Explore the Pentagon Revolving Door Database

The Pentagon Revolving Door Database exposes the depth of the reciprocal relationship between senior Pentagon officials and defense contractors.

Explore the database

Introduction

Governments and corporations want to make sure their leaders and employees act in the best interest of the organization. The private sector has a number of tools for protecting itself from conflicts of interests or otherwise compromising confidential business information. Law firms have conflict-of-interest reviews, and it’s pro forma for major corporations to require departing executives to sign non-disclosure and non-compete agreements. Even fast food restaurants can be exceedingly strict about employees taking jobs with competing chains, or with other franchises in the same chain. Private sector companies do this to protect themselves and their bottom lines.

When it comes to government officials, there are ethics laws that are supposed to protect the public interest. These laws should prevent government officials from using their public service to advance their personal or financial interests at the expense of the public. These laws are frequently insufficient, however. For instance, laws regulating the revolving door—the practice of government officials leaving public service to work for companies they oversaw or regulated—have been ineffective at slowing or stopping it. The revolving door between the government and the corporations it does business with often creates the appearance that government officials are improperly favoring a company in awarding or managing federal programs and contracts. Without transparency and more effective protections of the public interest the revolving door between senior Pentagon officials and officers and defense contractors may be costing American taxpayers billions. Taxpayers deserve protecting just as private sector companies do.

We should be able to have confidence that government officials are making informed decisions based on what’s best for national security, for men and women in uniform, and for the American people.

In his 1961 farewell address, President Dwight D. Eisenhower warned that the influence of the military-industrial complex could “endanger our liberties or democratic processes.” The revolving door of Pentagon officials and senior military leaders seeking lucrative post-government jobs does exactly that. It often confuses what is in the best financial interests of defense contractors—excessively large Pentagon budgets, endless wars, and overpriced weapon systems—with what is in the best interest of military effectiveness and protecting citizens.

The Project On Government Oversight (POGO) has consistently found federal ethics laws to be a tangled mess and insufficient to prevent conflicts of interest. Our first in-depth look into those laws, The Politics of Contracting, revealed how the revolving door leads to trends of agency capture and large defense contractors gathering more monopoly power.7 While those trends may benefit defense industry executives and their stockholders, they undermine competition and performance, lead to higher prices for the military and taxpayers, and can diminish military effectiveness. While there have been some improvements to the laws since we published our first report on the revolving door in 2004, our investigation found the tangled mess remains.

The leadership of the Senate Armed Services Committee expressed concerns in 2017 that the Department was too close to and depended too much on its largest contractors. “90 percent of the spending of the taxpayers’ dollars comes out of five different corporations. That’s not what our Founding Fathers had in mind,” then-Senate Armed Services Committee Chair John McCain (R-AZ) noted at a confirmation hearing for Patrick Shanahan, a former Boeing executive nominated to be Deputy Secretary of Defense. “If you’re drawing from one sector alone, you get this group-think possibility, which could be dangerous,” Ranking Member Jack Reed (D-RI) told reporters.11 Despite those concerns, the Senate confirmed Shanahan.

Following World War II, several five-star generals chose not to go through the revolving door. General George Marshall led the Red Cross. Before becoming president, General Dwight Eisenhower became president of Columbia University. “[A]n officer who has had procurement duties going with any company which does business with the Government presents a problem to the government, to the company with which he goes, and to himself,” General Omar Bradley told the House Armed Services Special investigations subcommittee in 1959. “[N]o former member of the Government should take advantage of his previous position to bring any influence on members of the Defense Department, or any department of Government, to grant contracts to the company with which he is now affiliated.” A number of contemporary retired officers have also found lucrative positions in the private sector that do not create a conflict of interest. Admiral Mike Mullen (USN Ret.), the former Chairman of the Joint Chiefs of Staff, joined the board of Sprint.14 Vice Admiral William Burke, formerly the deputy chief of naval operations for warfare systems, became the chief maritime officer for the Carnival cruise company.15 Lieutenant General Thomas P. Bostick, the 53rd Army Chief of Engineers, became an executive at Intrexon, a biotechnology company. “I have committed to myself to never do business with the US Army Corps of Engineers. I do not want to use my past position to do business with [the US Army Corps of Engineers] either for myself or as a consultant for anyone else,” Bostick told POGO.

“I think anybody that gives out these big contracts should never ever, during their lifetime, be allowed to work for a defense company, for a company that makes that product.”

THEN-PRESIDENT-ELECT DONALD TRUMP

Although it is clear there are opportunities for post-Pentagon service that do not pose conflicts, sadly it is equally clear that a growing number of former military and civilian officials are choosing to take a different path. The vast majority of the individuals identified in this report did not violate any law or regulation. Many of these instances do, however, show the revolving door spinning out of control due to ethics laws that are insufficient to protect the public interest. We should be able to have confidence that government officials are making informed decisions based on what’s best for national security, for men and women in uniform, and for the American people. Instead, the system is skewed by undue influence, rewarding those public officials who favor a future employer or industry with contracts or lucrative jobs. The public is rightfully concerned about the concentration of wealth and self-dealing in the Capitol, with five of the ten richest counties in the United States located within an hour of Washington, DC. Some of that wealth is connected to increased spending on contracting, with the Washington region receiving 17 percent of all federal procurement spending in fiscal year 2016.

This system of influence-peddling has long been recognized, but speaking out against it can hurt the post-government careers of military and civilian officials. “If a colonel or a general stands up and makes a fuss about high cost and poor quality no nice man will come to see him when he retires,” reads a 1983 internal U.S. Air Force memo. “Even if he has no interest in a post-retirement job in the defense industry he is taking a chance by making a fuss.”20 Today, industry programs like “From Battlefield to Board Room,” match up retired and soon-to-be retired military officers with private companies—including large federal contractors—looking to hire new leadership. One individual who benefited from the Battlefield to Board Room program was Major General Mike Boera (USAF Ret.), who was the Air Force’s director of programs and director of requirements and developed programs and business plans for weapon systems. After he went through the Board Room program he became the Executive of Intelligence, Information and Services at Raytheon. The year he joined the company they had received approximately $2.9 billion in Air Force contracts.

In some instances laws designed to punish influence-peddling work. One of the most egregious revolving door examples involved the Principal Deputy Under Secretary of the Air Force Darleen Druyun, who oversaw the management of the Air Force’s weapons acquisition program from 1993 to 2002. Druyun helped Boeing win billions of dollars in business while simultaneously negotiating jobs at Boeing for her son-in-law, and eventually herself. In 2004, Druyun pleaded guilty to a conspiracy charge and was sentenced to nine months in prison.24The Congressional Budget Office found that an aerial refueling aircraft deal Druyun was negotiating with Boeing while seeking employment with the company would have overcharged taxpayers nearly $5.7 billion. In that case, the system ultimately worked, as existing laws did prohibit Druyun’s egregious behavior. However, that was an unusual case. A study commissioned by the Department’s acquisition office identified an additional eight acquisition actions involving Druyun “where the acquisition process appeared irregular or abnormal and where the results may not have been in the best interest of the Government.” The study specifically questioned justifications for sole-source decisions, contract adjustments made after initial award, and changes resulting in “less stringent requirements for the contractor, but higher costs for the Government.”

The revolving door is just one of several forms of undue influence on the operations of the Department of Defense.

The revolving door is just one of several forms of undue influence on the operations of the Department of Defense. While beyond the scope of this report, the reverse-revolving door (when defense industry officials join the government, raising concerns they will then give preferential treatment to their former employers) is also a matter of significant concern. Top contractors have been over-represented in Department leadership. At the beginning of his Administration, President Obama issued an ethics executive order banning lobbyists form working in agencies they lobbied during the previous two years, only to issue the first waiver shortly thereafter to his first Deputy Secretary of Defense, William Lynn, who was previously a Raytheon lobbyist. The last Deputy Secretary for that Administration, Bob Work, joined Raytheon’s board shortly after he retired from the government.28 President Donald Trump’s Secretary of Defense, James Mattis, was a former board member of General Dynamics. His Deputy Secretary, Patrick Shanahan, came from Boeing, the Pentagon’s second largest contractor. Campaign contributions, lobbyists, earmarks, industry-sponsored trips, and contracts structured to garner political support for specific contractors’ programs also undermine the fairness and effectiveness of the procurement system. The government and the public have significantly more—though still inadequate—information about those other forms of influence-peddling. For example, campaign contributions must be periodically disclosed, registered lobbyists must report their expenditures and generic lobbying activities, and incoming executive branch officials have to disclose their positions held outside of government. But the public has significantly less information when it comes to the activities of former government officials.

President Trump has spoken out against that conflict of interest. “I think anybody that gives out these big contracts should never ever, during their lifetime, be allowed to work for a defense company, for a company that makes that product,” then-President-elect Trump said.

Companies will utilize all of the tools of the industry to gain

  • access to senior government policy and program officials;
  • a competitive advantage;
  • business opportunities; and
  • taxpayer dollars.

While all of these influence-peddling methods produce results for companies, the revolving door is truly the quickest and easiest way for a company to get a phone call answered or a person-to-person meeting inside the Pentagon. “I myself don’t get pressured by outsiders, but they do go higher up and get pressure put on me that way,” then-Vice Admiral Hyman G. Rickover told a House oversight committee in 1959 when asked about the revolving door. “It is generally in the nature of urging me to undertake new projects which we consider not worthwhile…it is almost subversive not to want to spend Government money.”30

While ethics restrictions ban some revolving door conflicts, many revolving door instances create an actual conflict of interest, or even the appearance of one, which, although not explicitly illegal, can be just as insidious. Such conflicts can potentially lead to favoritism, ineffective weapons and programs, and bad deals. As a result the conflicts can be detrimental to agencies achieving their mission and waste taxpayer dollars.

Methodology

Many post-government employment ethics laws focus on limiting lobbying or representation before government agencies and officials. The lobbying/representational ban prohibits former federal employees from personally contacting the government on issues they handled during their public service and imposes a one-year or two-year cooling-off period, or a permanent restriction depending on the matter and their level of involvement. In 2008 the Government Accountability Office audit found “significant under-reporting of the contractors’ employment of former [Department of Defense] officials.” To try to get a handle on conflicts of interest, Congress required in the fiscal year 2008 National Defense Authorization Act that the Department of Defense create and maintain a database to track its ethics opinions for its senior officials and officers who seek employment with DoD contractors.33 Unfortunately, that database—known as the After Government Employment Advice Repository (AGEAR)—has never been made public, is limited to certain officials, and, according to several Department of Defense Inspector General reports, is incomplete.34 Notably, the United Kingdom does allow its citizens to see how its government interprets ethics laws for former members of its cabinet offices.

It’s also illegal for contractors to knowingly provide compensation to covered officials for two years after the official left the government unless the official received a written ethics opinion that would allow them to receive compensation. Contractors must also certify they are in compliance with that restriction. If contractors don’t comply with these requirements they could be subject to rescission of their contract, suspension, or debarment.

“Ninety percent of the spending of the taxpayers’ dollars comes out of five different corporations. That’s not what our Founding Fathers had in mind.”

THEN-SENATE ARMED SERVICES COMMITTEE CHAIR JOHN MCCAIN (R-AZ)

For this investigation, POGO compiled, and will continue to update, a database of senior Department officials and senior officers who go through the revolving door. Our database and this report use publicly available information and information obtained through the Freedom of Information Act to show what AGEAR could look like if the public could see it. Our database includes anyone who left the Department of Defense from 2008 to the present and was a senior political appointee, a military officer ranking O-6 and above, or a civilian equivalent, who went to work for an entity with a significant financial interest in the operations of the Department of Defense within two years—the recommended “cooling off period” between when someone leaves government service and when they join an entity that has a financial interest in the work they performed while in government. For defense contractors we defined “a significant financial interest” as receiving $10 million or more in Department of Defense contracts in a fiscal year. This financial threshold mirrors the Department’s standards for its own ethics regulations. We believe two years is long enough to appropriately balance protecting the integrity of the Department’s decision-making processes and the need for people to make a living. There is quantitative analysis that supports the idea that the “influence industry” provides financial incentives based on an individual’s relationships with current policymakers. A 2010 London School of Economics study found “lobbyists with past working experience in the office of a U.S. Senator suffer a 24% drop in revenue—around $177,000—when their ex-employers leave office.”40 At that point the former official’s value is based less on who they know and more appropriately on their substantive skills and knowledge.

We reviewed Department websites and Senate confirmation lists to identify officials who fell within the scope of our study. In some cases we used LinkedIn profiles, and independently confirmed information from those profiles when possible. We also sought comment from the companies, and individuals who could be reached, to confirm that information. We also submitted Freedom of Information Act requests for ethics decisions and information on retired military officers who received waivers from the State Department and their prior military Service to allow them to work on behalf of foreign governments. We are still waiting for responses from the Navy, the Air Force, and the State Department. When available, we referenced agency and employer pages, company and agency press releases, press reports, LinkedIn profiles, and financial disclosure documents. Employer names are based on the name of the entity at the time the official joined the company.

For the top 20 contractors we looked at the companies’ senior executives, board members, and registered lobbyists to see who had previous government experience. Unsurprisingly, a number of these individuals were former Congressional staffers or legislative liaisons for Defense agencies or military Services. Some executives were also lobbyists and counted in each category. A number of the lobbyists were employed by multiple contractors, so there were more instances of the revolving door than people. Many of the lobbyists are not employees of the companies but instead hired through outside firms.

Most of the cases in our database and this report are individuals who went from senior Pentagon positions to work directly for defense contractors as board members or executives, or as lobbyists or consultants on behalf of defense contractors. The definition of lobbyist no longer—if it ever did—captures all the methods of peddling influence, however. A 2016 Politico investigation revealed that well-intended lobbying reforms enacted in recent years not only failed to slow the revolving door but also “created an entire class of professional influencers who operate in the shadows” as “policy advisers, strategic consultants, trade association chiefs, corporate government relations executives, affiliates of agenda-driven research institutes,” among other positions.41

Many of those people occupying those positions aren’t required to register as lobbyists. As another Politico investigation revealed, even Lockheed Martin’s top government affairs official did not register as a lobbyist.42 Tom Eldridge, who was SAIC’s senior vice president for government affairs until mid-2018, was not registered while in that position, either.43 SAIC did not respond to a request for comment about why he was not registered.

Then-presidential candidate Donald Trump appeared to recognize this problem and proposed a five-point plan for ethics reform that would “close all the loopholes that former government officials use by labeling themselves consultants and advisors when we all know they are lobbyists.”44 We included consultants and strategic advisors when we found evidence that they or their firm were in the business of contracting with the Department of Defense, or they were advising corporations with a significant financial interest in Department of Defense programs. Unless otherwise noted, the entities and individuals mentioned in this report declined to comment or could not be reached for comment on our findings.”

https://www.pogo.org/report/2018/11/brass-parachutes/

Who Will Fill McCain “Shoe In The Revolving Door” at the Military Industrial Complex?

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Who Will Fill The Shoes“BLOOMBERG GOVERNMENT ”

“Through successive administrations, McCain railed against the persistent revolving-door between the Pentagon and the defense industry, and the conflicts those ties pose.

His commitment to reining in Pentagon contracting abuses was hardened during the Boeing tanker scandal.”


“No one in the modern era has had more influence on how the Defense Department purchases weapons — or how the agency keeps watch over those multibillion-dollar programs — than Sen. John McCain (R-Ariz.), who died Aug. 25 after a battle with brain cancer.

McCain was the main force behind several of the biggest procurement-focused Pentagon reorganizations since the sweeping changes of the Goldwater-Nichols Act of 1986.

He was a passionate voice against fraud, waste and abuse at the DOD. He regularly took government and contractor witnesses to task for cost-overruns and other management missteps that hurt taxpayers.

“He will be remembered as one of the very few in Congress who was unrelenting in his drive to hold both industry and the executive branch equally accountable to deliver on time, on cost,” Thomas Spoehr, director of the Heritage Foundation’s Center for National Defense, told Bloomberg Government in a written statement.

“There have been many who have been hard on industry or hard on the administration, especially if they come from the other political party,” said Spoehr. “Senator McCain was an ‘equal-opportunity’ critic of both.”

Bloomberg Government communicated with Spoehr, and the others, in May.

‘A DEEP CONCERN’

McCain’s tenure shaping defense acquisition policy took place in three distinct phases, analysts say: his leadership in the Boeing tanker scandal, which first surfaced in 2003; his role in the formulation and passage of the Weapons Systems Acquisition Reform Act of 2009; and most recently, his chairmanship of the Senate Armed Services Committee, which began in 2015.

McCain’s interest in DOD acquisition dates to at least 1987, when he was tapped for a seat on the Armed Services Committee as a rookie senator. McCain descended from a line of Navy admirals, and served as a naval aviator before being captured and held as a prisoner of war during Vietnam.

In December of 2003, after Darleen Druyun left for a job with Boeing, DOD officials announced they were investigating the former principal undersecretary of the Air Force for acquisition for corruption.

That led to Druyun’s guilty plea for inflating the price of a contract for a new fleet of mid-air refueling tankers, while secretly negotiating for her Boeing job. Soon after, McCain began to dig deeper.

McCain’s efforts helped lead to Boeing’s chief financial officer, Michael Sears, getting fired and sentenced to four months in jail. They also spurred the cancellation of the Air Force contract — which saved the government $6 billion, he said at the time.

“He had a deep concern about wrongdoing” in DOD’s procurement system, as reflected in the Druyun case, Peter Levine, a former long-time SASC staffer, told Bloomberg Government. The tanker scandal “was the first instance that really got him energized.”

McCain’s leadership skills, strong sense of outrage, and unflagging energy drew others to his cause, said Levine, currently a senior research fellow with the Institute for Defense Analyses. “People paid attention to him,” he said. “He often brought the rest of the committee along with him.”

BIPARTISAN SUPPORT

Streamlining DOD’s massive acquisition process became a mission of McCain’s soon after he joined the committee, former aides said.

This initially culminated with the unanimous passage of the Weapons Systems Acquisition Reform Act of 2009. By then, McCain had become ranking Republican member of the SASC.

Among other things, the bill, co-sponsored by then-Chairman Carl Levin (D-Mich.), created the Cost Evaluation and Program Assessment office, which provides the secretary of defense with independent cost analyses of new programs.

At the bill-signing ceremony, President Barack Obama, who beat McCain in the 2008 presidential race, praised his formal rival for persistent attempts to ensure cost-accountability at the Pentagon.

In fact, McCain raised the issue of defense procurement overhaul during the first meeting between the two after the election, Obama said. “We pledged to work together to get it done,” he said.

In part through the weapons reform act, McCain “solidified his expertise regarding Pentagon purchasing and defense contractors,” Mackenzie Eaglen, a defense analyst and fellow with the American Enterprise Institute, a Washington think tank, told Bloomberg Government in a written statement.

“It’s indisputable that he was a leader for the committee, his party, and the U.S. Senate writ large on all of these policy questions,” said Eaglen.

‘ENOUGH SAID, GENERAL. OKAY?’

McCain rarely hesitated to tear into Pentagon officials whose projects progressed slower than expected, or cost more than estimated, or suffered mishandled execution.

Such projects included Lockheed Martin Corp.’s F-35 Joint Strike Fighter; Lockheed’s F-22 “Raptor” jet fighter; the $6.5 billion Warfighter Information Network built for the Army by General Dynamics Corp.; and the Littoral Combat Ship, two versions of which are being built by Lockheed and Austal Ltd.

The General Dynamics program amounts to “a network that doesn’t work,” McCain said at a December 2017 hearing in which he also slammed the F-35 as a trillion-dollar program “that continues to operate in dysfunction.”

At times, McCain’s temper got the better of him, as evidenced by testy questioning at committee hearings. In March 2016, about a year after he became Armed Services chairman, one such exchange took place when McCain questioned Air Force Chief of Staff Gen. Mark Welsh over the agency’s plans to replace the A-10 jet, which had been making bombing runs over Iraq and Syria.

McCain became increasingly irritated as he and Welsh sparred.

“But you haven’t got a replacement for it, General,” McCain said. “You sit here and say that you do. This absolutely flies in the face of facts. So — enough said, general. Okay?”

“Okay, chairman,” said Welsh, softly.

SPEEDING ACQUISITIONS

As he took the reins of the Armed Services panel in January of 2015, McCain’s pique at both industry and government for shepherding overly costly defense programs had intensified.

He was ready to push for his most significant procurement revamping yet.

By the end of that year, McCain had written a provision into the 2016 National Defense Authorization Act (P.L. 114-328) to “devolve” responsibility for DOD acquisition programs to individual service chiefs. This decentralization made the service chiefs “milestone decision authorities” — officials designated responsible for major defense acquisition programs — instead of DOD’s centralized Office of Acquisition, Technology and Logistics (AT&L).

McCain continued his push to streamline the system in the 2017 defense authorization bill, when he fought for AT&L to be split into two new Defense Department units — acquisition and sustainment (A&S), and research and engineering (R&E) — each with its own undersecretary.

THE REVOLVING DOOR

In his last few years, McCain used his bully pulpit to go after high-level DOD nominees by asking them to explain how they would make sure their industry backgrounds wouldn’t affect their ability to work exclusively in the interests of taxpayers.

More than 80 percent of top DOD officials under President Donald Trump have defense contractor work experience, a Bloomberg Government report recently found — much higher than the percentage of those appointed to the same positions by Obama.

During several confirmation hearings from June 2017 through the end of that year, McCain, at times joined by Sen. Elizabeth Warren (D-Mass.), targeted Trump nominees, including those for deputy secretary of defense, Patrick Shanahan, and DOD undersecretary for policy, John Rood.

“You should not be making decisions that are related to your previous employment, or would affect the fortunes of one of them,” he told Rood.

Groups like the Project on Government Oversight, a Washington nonprofit, have praised McCain for raising awareness about the revolving door and the effects it can have on the system.

“A lot of his work has come to assessing whether the weapons systems we buy are affordable or effective. He’s recognized that part of the problem with our unaffordable systems is the influence of the revolving door,” Mandy Smithberger, director of POGO’s Straus Military Reform Project, told Bloomberg Government in a written statement.

MCCAIN’S LEGACY

Armed Services Committee staffers remember McCain with great respect. “From the beginning of his career, he’s been dedicated to eliminating waste, fraud and abuse, and bolstering integrity in Congress and at the Defense Department,” Evelyn Farkas, a former Senate Armed Services Committee staffer who is now a nonresident senior fellow at the Atlantic Council, told Bloomberg Government.

McCain will be difficult if not impossible to replace as Congress’s leading Pentagon overseer and reformer, analysts say. Rep. Mac Thornberry (R-Texas), chairman of the House Armed Services Committee, does bring a zeal to change the system, they say. But some question Thornberry’s willingness to engage in McCain-level oversight, especially of industry.

“No one today has the standing, understanding, and frankly the passion to explore defense acquisition issues that Senator McCain has,” said Spoehr of the Heritage Foundation. “Congressman Mac Thornberry comes the closest. It is not clear who, if anyone, can fill this void.”

https://about.bgov.com/blog/mccain-recalled-unrelenting-pentagon-watchdog-reformer/

Former DHS Deputy CIO Barry West Takes Private Sector Role At MicroTech

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Revolving Door DHS andMicroTech

“FEDSCOOP”

“Barry West, erstwhile Department of Homeland Security deputy CIO and senior accountable official for risk management, has landed in the private sector.

MicroTech, a tech consulting firm based in Tysons Corner, Va., recently announced that West will join the company as president. He retired from DHS at the end of May.”

__________________________________________________________________________________________

“We have reached a level of growth where it was clear that the addition of a President would help us continue to exceed our goals,” Tony Jimenez, MicroTech CEO, said in a statement.

“We are absolutely thrilled to have Barry join the team, as he brings a wealth of industry and leadership expertise that will be extremely beneficial to MicroTech. He is also an ideal fit for our company culture, and we are excited to begin working with him.”

West has a wealth of experience in high-level government IT roles. Prior to his time at DHS, he served as CIO at a number of different agencies including the Federal Deposit Insurance Corp., the Pension Benefit Guaranty Corporation, the Department of Commerce, the Federal Emergency Management Agency and the National Weather Service.

At MicroTech, West will oversee corporate business operations and the expansion of the company’s cybersecurity and cloud computing work.”

https://www.fedscoop.com/barry-west-takes-private-sector-role-microtech/

 

 

Industry/Pentagon Revolving Door Featured in Deputy Secretary of Defense Confirmation

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Industry Pentagon Revolving Door

“BREAKING DEFENSE”

“Mr. Shanahan, you’re not making me happy,” the chairman said. “You just ducked basically every question Sen. Fischer asked you.”

After Nebraska Senator Deb Fischer tried to elicit the nominee’s position on how to respond to Russian violations of the Intermediate Nuclear Forces (INF) treaty, McCain stepped in.

McCain’s biggest objection to Shanahan, however, was the nominee’s 31 years at America’s second largest defense contractor, Boeing. (Only Lockheed Martin sells more to the Pentagon. And Sen. McCain, thanks to the long-running scandal over Boeing’s former tanker deal, is believed to harbor a deep suspicion of Boeing’s conduct).

“Not a good beginning. Not a good beginning,” Senate Armed Services chairman John McCain told the administration’s nominee for deputy secretary of defense this morning. “Do not do that again, Mr. Shanahan, or I will not take your name up for a vote before this committee. Am I perfectly clear?”

“Very clear,” said Patrick Shanahan, enduring a rocky confirmation hearing for the No. 2 position in the Pentagon, which remains unusually short on senior officials. Other senators at the hearing asked Shanahan about Pentagon procurement, especially about nurturing innovation, continuing the Third Off Strategy for high-tech weapons, and starting the Pentagon’s long-awaited audit this fall. But McCain repeatedly took the mike to berate the Trump nominee for non-answers on Russia and for potential conflicts of interest after his 31 years at Boeing.

In that initial exchange, Shanahan’s specific offense was giving a vague non-answer in his written testimony to the committee’s question on whether he supported providing “lethal defensive weapons” to Ukraine. In the hearing, ironically, when McCain asked Shanahan to clarify, he stated his support for arming the Ukrainians so swiftly and unequivocally that the irascible but aging senator seemed momentarily thrown before returning to the attack.

“I want to move forward as quickly as I can with your nomination,” McCain told Shanahan at the hearing’s end, “(but) I am concerned. 90 percent of defense spending is in the hands of five corporations, of which you represent one. I have to have confidence that the fox is not going to be put back into the henhouse.”

“Mr. Shanahan, I think you’re a fine man; you have an outstanding record; (but) take a look at your responses that you sent to this committee,” McCain said. “Some of them were less than specific, at least one of them (was) almost insulting.”

Citing US casualties in Afghanistan, Ukrainian casualties against Russian-backed separatists, and the US shoot-down of a Syrian jet, McCain made it clear he wants clear answers on administration policy — and if the committee doesn’t get them, it will find answers of its own as it works on the annual defense policy bill.

“I want some answers, I want some straightforward answers, (and) if they don’t give us a strategy from the people that I admire most, we’re going to put a strategy in,” McCain warned. “I want to work with this administration, I want to work with this president, I want to work with the new secretary of defense, — who I happen to be one of the most ardent admirers of — but I have to tell you, in a couple of weeks, we’re going to mark-up up the defense authorization bill….The president has two choices: Either give us a strategy or we will put a strategy that we develop into the defense authorization bill.”

“Somehow over the last several years, this committee seems to have been treated as sort of a rubber stamp,” McCain concluded. “That’s not what the Constitution of the United States says. The Constitution of the United States says that the Senate would provide advice and consent.”

http://breakingdefense.com/2017/06/mccain-hammers-depsecdef-nominee-shanahan-on-russia-boeing/

Uncle Sam Wants You

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“BREAKING DEFENSE”

Defense Secretary Ash Carter told a skeptical tech community.

It’s part of an all-out effort by the military’s civilian leader to get the technologically best and brightest to work with or even for the often-hidebound Pentagon.

Carter has created the Defense Innovation Unit Experimental (DIUX) and the Defense Digital Service, both of which report directly to him.

The outbound lane on Carter’s new bridge is the DIUX, the much-publicized project to put Pentagon reps in Silicon Valley, Boston, Austin and (soon) other high-tech hotspots around the country. The inbound lane is the Defense Digital Service, which brings civilian techies into the Pentagon.

“A SWAT Team Of Nerds”

The Defense Digital Service is “a SWAT team of nerds,” said Chris Lynch, the DDS director. They spend a year or more at the Defense Department helping with particularly knotty and important problems. “On this particular trip,” explained to reporters on Secretary Carter’s plane en route to the TechCrunch conference, “we’re going to meet with some high-profile engineers to try to convince them to come out for at least a year to serve their country.”

To ease that transition, Lynch’s outfit is consciously counter-cultural. He’s made a point of wearing jeans and sneakers from day one. His team call themselves and any friends they find in the bureaucracy “the Rebel Alliance.”

The “service” is also awfully small. “We have about 18 people today,” Lynch said, and they are working on half-a-dozen projects.

“Our goal is to stay small and be very selective about the projects that we’re engaged in,” Lynch said. Defense agencies, services, and commands come to him to pitch their projects, but which ones DDS ultimately takes on is in large part guided by the personal interests, expertise, and passion of the individuals who join the service. The service doesn’t try replace the people already working on a problem for the Defense Department. Instead, DDS aims to help defense insiders over crucial hurdles with a well-timed infusion of outsider knowledge, then move on.

But how can less than 20 people make an impact on the two million-strong Department of Defense? “This model has been proven out many, many times over history, in particular at DoD,” Lynch said. “Small, highly empowered teams can actually make history and can change things.”

“The Department of Defense got to pull off the first ever federal bug bounty,” Lynch said. “It’s probably the last place that a lot of people would have thought it would have happened.”

Now the effects are “cascading “across the federal government, , said D.J. Patil, the Chief Data Scientist at the White House, speaking alongside Lynch. Just as the Defense Digital Service was the catalyst to get the Defense Department to move, the Defense Department’s example is the catalyst getting other agencies to move.

“Since the Department of Defense launched this first-ever Hack the Pentagon bug bounty program, we have seen a number of other departments who have said, ‘oh, that was really good, we’re going to go do that too,’” said Patil.

Marijuana? Maybe. Treason? No.

The audience at TechCrunch seemed more than a little skeptical of Carter’s pitch. Their questions ranged from the National Security Agency to digital privacy, Edward Snowden — a traitor to many in the Pentagon but a hero to many here — and even drug use.

What if a really good engineer went to Burning Man and decided to “partake in some goodies,” the moderator asked. Would that disqualify them from working for the Pentagon?

“Times change,” Carter said. “The laws change respecting marijuana…. Yes, we can be flexible in that regard.”

The call to serve their country “animates a lot of people,” the secretary said, “but they want to know if it can be done in a way that’s consistent with their lifestyle, their values, with everything else that’s important in their lives.” The Pentagon needs to meet them halfway.

But some things cannot change. Asked if the president should pardon Edward Snowden, the NSA contractor who illegally disclosed vast archives of highly classified material, Carter refused to comment on individual cases but came down emphatically against leaks.

“All of us who enjoy the public trust and handle classified information have the responsibility” to safeguard it, Carter said. That does not mean we have the right to tell the world secrets that we personally feel uncomfortable keeping. “To arrogate to oneself the authority to (disclose) something that’s been trusted to you,” he said, “that is something we can’t condone.”

The cultural divide is very real. The day after his talk at TechCrunch, Carter went to Austin to announce a new DIUX outpost to be hosted by the Capital Factory there. A poster on the wall quoted Buckminster Fuller on the need to “reorient world production away from weaponry,” and a local reporter asked whether techies working with DIUX should be worried their technology would be “militarized” or “misused.”

“We’re actually looking to reach out and build bridges to people who have not worked with us before — and yes, that includes people who have reservations,” Carter replied, “because I think when they get to know us, they’ll learn two things. The first is the United States military conducts itself in a way that I think makes people proud,” Carter said. “We’re extremely careful in what we do that we don’t harm civilians. No other military is as scrupulous.”

“The other thing they’ll discover,” Carter continued, “is the great satisfaction that comes from knowing, when you go to bed at night, that you spent your day doing something that contributes to the security of the country and a better world.”

SecDef Carter Wants YOU For The Defense Digital Service

 

 

Buy a Car Without Knowing Sticker Price?

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B-21 Price Tag Secret

“POGO”

“Would you buy a car without knowing the sticker price? How about a fleet of ultra-sophisticated military aircraft?

Didn’t think so.

“There are only two phases of a program. The first is ‘It’s too early to tell.’ The second: ‘It’s too late to stop,’” said veteran Pentagon reformer Ernie Fitzgerald.

Because of this, it is troubling that the Air Force is hiding the initial price of the new B-21 stealth bomber. Congressional auditors found that the cost of Pentagon weapon systems grew $469 billion beyond initial estimates. Given the complexity and cost risks inherent to this program, the public deserves to know the baseline contract price of the B-21 program so the Pentagon and the contractors can be held accountable for any cost overruns.

The Air Force has promised to deliver an effective and affordable bomber. But price estimates released by the Air Force for the program have ranged from $33.1 billion to $58.4 billion—an increase of $25 billion, or 76 percent. Publicly releasing the actual contact price is key to oversight of this program and of the rest of our planned nuclear modernization, which is currently projected to cost taxpayers $1 trillion.

The Air Force has resisted releasing the figure, claiming the contract price would allow potential adversaries to identify some of the new plane’s capabilities, like its range and how many weapons it can carry. The Chairman of the Senate Armed Services Committee, Senator John McCain (R-AZ), has said this argument is “nonsense” since the program’s budget is unclassified and the Air Force has already released the per-unit cost, drawings of the new bomber, and a list of top-tier suppliers for the program.

In a closed-door 19-7 vote, members of the Senate Armed Services Committee eliminated the Chairman’s requirement to publicly disclose the cost. Tell Congress that you believe the American people need to know the contract price to hold those in charge accountable.

Tell Congress you want to know the price taxpayers will pay for the B-21 stealth bomber program. The only reason to keep the costs secret is to prevent oversight.

For more information on POGO’s work on the B-21 bomber see “Senators Vote to Keep Bomber Price Secret” and “B-21 Comes with a Stealth Final Price Tag.” You can follow all of our Pentagon spending work at the Straus Military Reform Project website.”

http://www.pogo.org/blog/2016/06/would-you-buy-a-car-without-knowing-price.html

Considering the Role of the Defense Industry on the 4th of July – 2016

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Free Download at “Academia. edu

In 1968, Ken Larson came home from serving two US Army tours in Vietnam, having been awarded five medals, including a Bronze Star.

For 36 years thereafter he participated in the design, development and production of large scale weapons systems under Federal Government and Foreign Military Sales Contracts.

He worked in several different disciplines for the companies that produced these weapons, negotiating and controlling the associated contracts with procurement agencies in the U.S. Armed Forces and allied countries. 

“ODYSSEY OF ARMAMENTS”  is a free Academia.edu download below, detailing the twenty-five weapons and communications systems to which Ken was assigned and the twelve companies that produced them.  Many are in use in the Middle East today.

His  account supplies the reader with personal insights into the management of the US Government Military Industrial Complex, the largest of our federal agencies and a principle contributor to our national debt. 

https://www.academia.edu/9606784/Odyssey_of_Armaments

ken-portrait-copy

Ken Larson

 

Lockheed/Air Force Computer Crash Wipes Out 100,000 Investigations

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Lockheed Martin Computer Crash

“DEFENSE ONE”

“Air Force has lost records concerning 100,000 investigations from workplace disputes to fraud.

Neither the Air Force nor Lockheed Martin, the defense firm that runs the database, could say why it became corrupted or whether they’ll be able to recover the information.

A database that hosts files from the Air Force’s inspector general and legislative liaison divisions became corrupted last month, destroying data created between 2004 and now, service officials said.

Lockheed tried to recover the information for two weeks before notifying the Air Force, according to a service statement.

The Air Force has begun asking for assistance from cybersecurity professionals at the Pentagon as well as from private contractors.

“We’ve kind of exhausted everything we can to recover within [the Air Force] and now we’re going to outside experts to see if they can help,” said Ann Stefanek, an Air Force spokeswoman at the Pentagon.

For now, Air Force officials don’t believe the crash was caused intentionally.

“[W]e’re doing our due diligence and checking out all avenues within the investigation to find out if there’s anything that we’re not aware of,” Stefanek said. “Right now, we don’t have any indication of that.”

Lockheed declined to answer specific questions about the incident.

“We are aware of the data corruption issue in the Air Force’sAutomated Case Tracking System (ACTS) and are working with the Air Force to identify the cause, and restore the lost data,” Maureen Schumann, a company spokeswoman, said in an email.

The Air Force inspector general is an independent organization that reports directly to Air Force Secretary Deborah Lee James and Gen. Mark Welsh, the Air Force chief of staff. The office investigates claims of waste, fraud, and abuse within the service.”

http://www.defenseone.com/technology/2016/06/computer-crash-wipes-out-years-air-force-investigation-records/129049/?oref=defenseone_today_nl

After Retiring, 4 Star General Odierno Lands on Wall Street

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Photo Master Sgt. Jerry Morrison US Army

Army Gen. Ray Odierno

“DEFENSE NEWS”

“With last week’s announcement that he has joined JPMorgan Chase as a senior adviser to CEO Jamie Dimon, retired US Army Gen. Ray Odierno became the latest high-ranking officer to find a second career on Wall Street.

Odierno joined fellow four-stars Gen. David Petraeus, who became chairman of Kohlberg Kravis Roberts & Co.’s KKR Global Institute, and Gen. Wesley Clark, who became a deal adviser for the Blackstone Group’s energy sector, in working for financial firms after retiring from the military.

Loren Thompson, a defense-industry consultant and analyst with the Lexington Institute, said the most visible, highest-ranking generals typically are in the greatest demand in the private sector.

“The appeal of retired general officers in the financial community comes down to three things: first of all, broad experience because of their frequent career rotations; discipline, which enables them to be organized and more focused than many people who have never served; and thirdly, prestige,” he said.

As chief of staff of the Army, Odierno commanded 100,000 servicemen and –women, and was instrumental in defeating al-Qaida in Iraq, Thompson said.

“You don’t get a lot of advisers like that,” he said. “I think you can’t overlook the prestige quality that a former chief of staff of the Army confers on a financial institution or a stock trader. Chief of staff of the Army is a title that grows with celebrity the farther you get from Washington.”

Retired Marine Maj. Gen. Arnold Punaro,  now a consultant (whose clients have included JPMorgan, but he had no inside knowledge of Odierno’s hiring), dismissed the suggestion that Odierno was hired because of his celebrity status.

“Wall Street is extremely interested in the international business climate, they’re interested in what’s going to happen in other parts of the world, because that affects where they should and do business,” Punaro said. “They’re always concerned about risk.”

Odierno’s expertise includes cybersecurity, acquisition, risk management and crisis management, which is very valuable to companies, he said.

“They’re not looking for him to tell them how to do a battle plan to take back Mosul, they’re looking for how do you mitigate risk,” Punaro said.

Jody Miller, president of C2C Executive Search in San Francisco, said she sees lots of resumés from retired military officers. Hiring a senior officer like Odierno is a smart political move because it sends the message to Washington that JPMorgan is pro-America and pro-government, she said.

“Hiring someone like that is a very strategic move,” she said. “It’s a good image to have guys with a lot of stars come in and advise, it’s a really good, clean, all-American image.”

Not every retiring general will have the same career opportunities as Odierno, Thompson said.

“He didn’t just run a military service,” he said. “He didn’t just ascend to the highest military rank. He managed to stay out of political trouble, which is not easy.”

Wall Street can be a good fit for those senior officers who have a combination of political acumen, organizational skill, demonstrated career success, and an air of being above politics in the sense of not being a creature of one or the other political party, Thompson said. Financial firms also have the ability to pay for top-tier candidates, he said.

“If you’re running a tightly managed logistics company, with thin profit margins, there’s not a lot of latitude for going out and paying some high-priced military celebrity. Wall Street will always have more discretion in terms of its ability to pay for talent,” Thompson said.

And part of the appeal for the senior officers is the ability to make up for their comparatively low military wages.Top officers typically make less than $200,000 a year. While this is not an insignificant salary, it does not compare with what someone with their skills and experiences would make in the private sector.

“If you’re a colonel, or a one-star, it may seem like you’re being reasonably paid,” Thompson said. “But when you’re overseeing an entire military service, and you’re only making as much as a member of Congress, it’s easy to imagine that there are other career lines that might be more lucrative.”

Photo Master Sgt. Jerry Morrison US Army

http://www.defensenews.com/story/defense-news/bizwatch/2015/08/22/after-retiring-odierno-lands-wall-street/32084129/

The Government/Contractor Executive Revolving Door Goes Nuclear

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Image: Nuclear News Dot Net

“THE PROJECT ON GOVERNMENT OVERSIGHT”

“[Daniel] Poneman served from May 2009 to October 2014 as the number two official at the Department of Energy (DOE), in charge of more than 100,000 federal and contractor employees and a budget of just under $30 billion.

Less than six months after leaving his government post, Poneman was named the president and CEO of Centrus, where he’ll be making as much as $1.7 million a year. He took charge of the company earlier this month.

If the name Centrus doesn’t ring a bell, that’s because it was known as the United States Enrichment Corporation (USEC) until last March, when the company filed for Chapter 11 bankruptcy. Before it went under, USEC had enjoyed decades of special treatment from DOE and other government offices. Like its predecessor, Centrus is likely to need a lifeline from U.S. taxpayers in order to stay afloat. With Poneman now on board, the company may be able to utilize his cachet to attract future government bailouts, no matter the potential taxpayer losses.

Poneman’s rapid transition to a high-paying job with Centrus has drawn scrutiny on Capitol Hill, where lawmakers from both sides of the aisle are questioning whether government ethics rules are strong enough to safeguard the integrity of DOE actions that affect the company’s bottom line. Company and government records reviewed by the Project On Government Oversight add to the picture, showing how Poneman and DOE took positions—on issues such as the downblending of highly enriched uranium (HEU) that has been declared excess to military needs—that favored USEC/Centrus, a supplier of low enriched uranium (LEU), and the nuclear power industry  in general. The records show how the revolving door blurs the lines between the government and the corporate world, enabling an official in Poneman’s position to enrich himself and the industry he used to oversee.

Blurring the Lines

As the longest-serving Deputy Secretary in DOE’s history, Poneman often found himself in a position to shape Department policies that affected the fortunes of USEC/Centrus and the industry at large.

There’s no indication that he gave special treatment specifically to USEC or Centrus. As Politico pointed out, he was part of a board that denied the company’s 2009 application for a $2 billion loan guarantee. Poneman “had no relationship with Centrus or USEC” throughout his DOE tenure, company spokesperson Jeremy Derryberry wrote in an email to POGO. “It was appropriate for him to handle matters relating to entities, including Centrus or USEC, when he was not talking to anyone affiliated with the company in question about future employment opportunities.” Poneman didn’t start negotiating for a job with Centrus until after he left government, Derryberry said.

Nonetheless, Poneman was one of DOE’s top officials at a time the Department supported USEC and Centrus with millions of taxpayer dollars, as detailed below. Poneman himself explored other ways to support USEC after DOE denied the company’s loan guarantee request. In 2011, he was part of a team of deputies from cabinet-level departments that advised the White House to support the company “despite its financial challenges,” according to a presentation slide cited by members of the House Oversight and Government Reform Committee in letters sent last month to DOE and Centrus.

In addition, Poneman was in a position to coordinate the Department’s decisions about downblending excess HEU, a material that can be used in small quantities to build a devastating improvised nuclear device. For years POGO has recommended accelerating the pace of downblending HEU into LEU, which would reduce security vulnerabilities, cut costs, and generate millions or even billions in revenue for U.S. taxpayers. Nonetheless, the rate of downblending has steadily decreased over the past ten years, including during Poneman’s tenure.

USEC and Centrus have had a major stake in the rate of downblending. “Given the current oversupplied nuclear fuel market, any additional LEU from downblended highly enriched uranium released into the market would have a significant negative effect on prices for LEU,” Centrus wrote in its latest annual report. POGO has argued, however, that the government could alleviate these fears by storing downblended LEU until market conditions change and by publishing a plan for the material’s release.

As the longest-serving Deputy Secretary in DOE’s history, Poneman often found himself in a position to shape Department policies that affected the fortunes of USEC/Centrus and the industry at large.

During Poneman’s tenure at DOE, the Department’s decreased rate of downblending helped to protect USEC from further fluctuations in uranium prices. Now that Poneman has gone through the revolving door, he’s in a strong position to represent Centrus’s position on downblending and other issues.

Poneman’s movement to Centrus also raises questions about his treatment of other companies and industries during his time at DOE. In 2010, he issued a memo that called on DOE officials to provide “near-term relief” and “longer-term streamlining” of safety and security requirements for Department contractors. Several years later, he offered a lifeline to the over-budget Mixed Oxide Fuel (MOX) program at the Savannah River Site when it was targeted for cancelation. Poneman’s posture suggests he was keeping several companies and industries happy before he decided on his post-government career path.

DOE and USEC: It’s Complicated

From its inception, USEC was repeatedly propped up by DOE and other government agencies as it tried to make a profit supplying uranium fuel for commercial nuclear power and the Navy’s nuclear needs. As the Government Accountability Office (GAO) put it, the “relationship between DOE and USEC is long and complex.”

After decades of managing the nation’s uranium enrichment operations, the government gave the job to USEC and privatized the company in 1998. But USEC relied on the federal government and U.S. taxpayers to keep it on life support. The company was “the beneficiary of several favorable arrangements with the U.S. government” over the years, according to the GAO. For example:

  • DOE gave USEC the license to gas centrifuge technology—one of the methods used to enrich uranium—that the Department had spent around $3 billion in taxpayer funds developing in the 1970s and 80s;
  • In 2012 and 2013, when DOE transferred uranium to USEC to support its enrichment work, it reportedly didn’t collect enough money to compensate U.S. taxpayers, and the GAO has repeatedly questioned the legality of these sales; and
  • A government lease allowed USEC to pay nominal rent for the use of gaseous diffusion facilities—another method used to produce enriched uranium—in Ohio and Kentucky.

Despite this and other government assistance, USEC struggled to stay afloat, especially in the aftermath of the Fukushima disaster when dozens of nuclear reactors in Japan and Germany went offline and prices for LEU plummeted. The company eventually had to file for bankruptcy, listing $70 million in assets and more than $1 billion in debt.

Poneman is joining Centrus at a time when the company continues to rely heavily on government funding as it tries to turn a profit. According to its latest annual report, two of Centrus’s biggest three customers in 2014 were the U.S. government and the Tennessee Valley Authority—a government-owned corporation that has a long-term agreement to purchase LEU from USEC/Centrus in order to produce tritium, an important component of nuclear weapons.

A Lobbyist by Any Other Name

As a former “senior” official under government ethics rules, Poneman is required to wait at least one year before representing Centrus in front of DOE. Like other senior Obama appointees, Poneman agreed to extend this cooling-off period to two years, and to wait until the end of the Administration before lobbying anyone in the executive branch. He also faces a permanent ban on representing Centrus before the government regarding a “particular matter” in which he “participated personally and substantially” during his DOE tenure.

Centrus’s spokesperson told POGO that the company and Poneman will follow all applicable ethics rules. He said that Poneman “was not hired to conduct government relations or to lobby the U.S. Government,” but rather to “lead Centrus in continuing to reliably deliver nuclear fuel to reactors in the United States and internationally and in expanding its commercial business.”

However, the revolving door rules still allow an executive in Poneman’s position to direct his company’s lobbying strategy behind the scenes, as long as he personally doesn’t contact his former government colleagues during the required “cooling-off” period.

“[I]t’s safe to say his appointment as CEO is all about maximizing [the company’s] influence with key federal officials for all types of federal support,” Public Citizen’s Tyson Slocum told Environment & Energy News. “There’s no question he’s going to help open a lot of doors; that’s the reason you make him CEO…His real value is his high-profile government service and his Rolodex.”

Poneman’s new employer is no stranger to lobbying. USEC and Centrus have spent more than $21 million over the past ten years lobbying the federal government, according to the Center for Responsive Politics.

The company’s lobbyists have included former senior officials who, like Poneman, traveled through the revolving door shortly after leaving government. Last year, when Centrus wanted to lobby DOE, Congress, and the White House on “federal support for uranium enrichment,” it retained the services of government alumni at BlueWater Strategies, according to a 2014 lobbying disclosure report. BlueWater’s lobbying team included McKie Campbell, a recent staff director on the Senate Energy and Natural Resources Committee who “worked on the gamut of energy and natural resource issues and legislative initiatives including nuclear energy,” according to an online company bio.

Centrus also stands to benefit from the appointment of former company representatives to senior positions at DOE. The Department’s new Chief Financial Officer is Joseph Hezir—a former lobbyist who represented USEC and consulted with the company on “DOE financial assistance programs,” according to a 2013 ethics disclosure form spotlighted by the Washington Examiner.

Centrus’s spokesperson told POGO the company’s operations “are regulated by the Nuclear Regulatory Commission, not the Department of Energy.” Apparently this would mitigate any concern about the revolving door between DOE and USEC/Centrus. But DOE has still been heavily involved in Centrus’s oversight, said Autumn Hanna of Taxpayers for Common Sense (TCS), a group that has opposed the federal subsidies granted to USEC over the years. The Department is “very closely connected” to the company’s gas centrifuge project “and always has been,” Hanna wrote in an email to POGO.

Even though, when USEC filed for bankruptcy last year, DOE resumed control of the gas centrifuge technology it licensed to the company for uranium enrichment, Centrus continues to work as a subcontractor on the project, and could play a bigger role in the future. In its annual report, Centrus said the government would need to provide billions of dollars in loan guarantees if it wants the centrifuge project to be “economically viable” on the commercial marketplace.

USEC, and then Centrus, also sought to influence proposed DOE rules. In 2010, DOE issued a proposal requiring nuclear companies to contribute to a fund that would compensate victims of nuclear accidents. In response, USEC and its allies said the rule would burden the U.S. nuclear energy industry “with the specter of uncertain costs” and would “reduce the [industry’s] competitiveness.” USEC urged DOE to adopt a cap on the maximum amount any company would be required to pay. “[T]his cap, plus the very low risk that a covered incident would ever occur, should allay fears that implementation of the [rule]…will undermine U.S. exports or impose an unpredictable and burdensome costs on U.S. companies,” the company wrote. DOE included a proposal for a cap when it officially introduced the rule last December.

In other words, Centrus still has a major stake in DOE policymaking and would stand to benefit from Poneman’s knowledge and contacts as a former Department official. Since leaving government, Poneman has also the joined the boards of companies that operate in the energy world and are often seeking to influence DOE actions. He recently became a director of Venture Global LNG, which is seeking DOE authorization to export natural gas to countries with which the U.S. does not have a free trade agreement. And he joined the board of The Traxys Group, a commodity firm that trades in uranium components and recently weighed in on a DOE proposal to downblend additional HEU.

So even if Poneman never takes another step inside DOE, he is now leading or advising companies that have a major stake in the agency’s actions and would stand to benefit from his knowledge and contacts as a former government official.

The Road Not Taken

Perhaps it’s no surprise that Poneman has taken a job in the same industry he oversaw as Deputy Secretary. But it’s important to remember that the revolving door is not inevitable. Many government alumni have managed to find high-paying leadership jobs outside of the very industry they used to oversee.

Another former DOE Deputy Secretary, Kyle McSlarrow, left government in 2004 after serving in the same position as Poneman to head a lobbying group for the cable industry. He is now a vice president at Comcast. Even if McSlarrow is collecting an executive’s salary, he isn’t trying to influence his former DOE colleagues, and nobody could accuse him of giving favorable treatment to his future industry employers while he served in government.”

http://www.pogo.org/our-work/articles/2015/the-revolving-door-goes-nuclear.html