New Earmark Rules Have Lobbyists Scrambling

New Earmark Rules Have Lobbyists Scrambling
By ERIC LICHTBLAU
New York Times
Published: March 11, 2010

WASHINGTON — Jolted by a sudden tightening of the rules, lobbyists and military contractors who have long relied on lucrative earmarks from Congress were scrambling Thursday to find new ways to keep the federal money flowing.

“The playing field has changed dramatically,” said Michael H. Herson, a lobbyist in Washington whose firm, American Defense International, represents numerous defense industry contractors who have already put in their requests this year for earmark money.

Those clients, who along with hundreds of other businesses got $1.7 billion last year through the controversial practice of awarding earmarks, will now be barred from receiving money under a new policy adopted Wednesday by Democrats on the House Appropriations Committee.

House Republicans, seeking to outdo the Democrats in ethics reform, went even further Thursday by agreeing to swear off all earmarks, for both nonprofit and commercial organizations, for the next year.

“This is the best day we’ve had in a while,” said Representative Jeff Flake, an Arizona Republican who has been a fierce opponent of earmarks — no-bid contracts directed by lawmakers — but had found little support among Republican colleagues before this week. “In terms of us getting this moratorium, the stars were aligned. What the Democrats did certainly motivated the Republicans.”

Senate leaders, however, have not rushed to follow the House, a situation that would set up a clash when the two chambers try to reconcile their spending bills.

No one was willing to predict on Thursday how that confrontation might play out. Meanwhile, defense contractors and the “K Street” lobbyists in Washington who often represent them were planning new ways of packaging their financing requests — and trying to keep the revenue coming in.

Some firms talked of partnering with hospitals, universities and other nonprofit organizations in seeking federal money, an idea that Congressional officials said might not be allowed under the new rules. Others said they planned to become more aggressive about applying directly to the Pentagon and other federal departments and agencies, and not Congress, for grant money. Still others are warning their clients to diversify their financing sources and become less reliant on Washington.

“For firms that have made their living on getting earmarks for their clients, this is a sea change,” said Joseph M. Donovan, managing partner at Nelson Mullins Public Strategies Group, a Boston lobbying firm that represents about 50 private and public clients. “It fundamentally changes their business model.”

Mr. Donovan said his company had anticipated a sharp cutback in earmarks because of the political mood in Washington and began taking steps to help clients navigate the new landscape. That includes hiring an in-house writer to help them apply for federal grants directly from executive branch agencies instead of Congress.

Because that grant money is usually awarded based on competitive bids, he said it would be harder for smaller companies with promising research-and-development ideas. Contractors will have to be “more strategic” in their thinking, he said, “because I don’t want to be in the position of telling them that things are being done through a wink and nod and you’re just going to get a million dollars.”

In the Senate, some lawmakers have defended earmarks as a necessary tool for Congress to exercise the power of the purse and influence federal spending. Supporters say that for every “Bridge to Nowhere,” the Alaska earmark project that became infamous five years ago, there are worthy projects that get less attention.

As one example, supporters pointed to the earmarking of tens of millions of dollars in the 1990s to General Atomics and other military contractors for early development of what became the Predator program, the unmanned drones now used frequently in airstrikes in Afghanistan. Senator Daniel K. Inouye, the Hawaii Democrat who leads the Senate Appropriations Committee, said that if the House ban on commercial earmarks had been in effect then, “we would not have the Predator today.”

Limiting earmarks to nonprofit recipients is not necessarily a cure-all. For example, Representative John P. Murtha, the Pennsylvania Democrat famous for his earmarking largess, set up the Concurrent Technologies Corporation in his district in the 1980s as a nonprofit research center for metalworking, and he helped guide more than $1 billion in defense earmarks to it before he died last month.

Executives at Concurrent contributed frequently to Mr. Murtha’s campaigns. The group has come under scrutiny by F.B.I. investigators looking into pay-to-play allegations against the now-defunct lobbying firm P.M.A., which represented Concurrent and other clients that got earmarks.

Whether earmark money will dry up complete

We Need a Fix To The Fix

ben's Pen
Tuesday, 11 November 2008 02:29
by Sen. Ben Pangelinan
Guam Variety News

Washington delegate: We need a fix to the fix

The military buildup has been held out as the salvation to the economic crises and financial challenges facing our community. The Department of Defense, as well as the Joint Guam Program Office, has touted the fact that the buildup will benefit local businesses both big and small. It appears that a recent decision in a federal appeals court may have placed a kink in the flow of contract dollars to Guam businesses.

Since 1986, the Congress in authorizing Department of Defense appropriations for contracts, set a goal of channeling 5 percent of contract money each year to firms owned and operated by minorities. This was directed in the appropriations because some lawmakers were not satisfied with the pace of the Pentagon in including smaller minority owned firms in defense contracts versus the awards to the Lockheed Martins and General Dynamics and others.

The appeals court ruling declared unconstitutional the 5 percent set aside of defense contract dollars for minority owned businesses based on the court's decision that there was not enough evidence the Pentagon discriminates against minority firms in awarding the contracts. The court ruled that Congress was deficient in its justification for the policy, lacking strong evidence and proof of discrimination by the Pentagon, and thus violated the equal protection clause. Using the strict scrutiny standard, the court opined that "Congress did not have a "strong basis in evidence" to find that DOD was a passive participant in the pervasive nationwide racial discrimination.

The program has benefited minority owned businesses to the tune of over $15 billion in contracts awarded to these businesses of the over $269 billion in contract awards that were issued last year. It is still in effect and is set to expire next year.

The case started in 1988 when a business owned by a white woman lost a contract to a Korean-American couple for computer services. The Air Force in this case gave the contract to the Korean-American couple even though their bid was higher at $5.75 million verses the white woman's Rothe Development Corporation's $5.57 price.

The initial ruling of a federal court in Texas sided with the Defense Department. Rothe Development appealed the decision. The lower court used six studies that ostensibly presented evidence of a discrimination pattern against minority owned businesses in public and private contracting.

Although this ruling I am sure will still be tied up in appeals for sometime, we need to develop a unified response to Washington and the Congress to press our case here on Guam. The Delegate must take the lead in crafting a legislative remedy based upon a studied analysis of the awards of defense contracts on Guam over the years. We need to solicit the assistance of the Small Business Administration, the Guam Contractors Association, the Chamber of Commerce and the University of Guam to attack the evidence as it relates to the practice here on Guam. The Governor must immediately request a grant from the Office of Economic Adjustment to fund the study necessary to present to the Congress showing the proof and evidence of the effect this will have on Guam-based businesses whether minority owned or not. The Guam story and its uniqueness must be documented and told to fix the fix and meet the strict scrutiny standard and constitutional test.

We must do so with all haste or again, Guam businesses will be left behind just like we were in the A76 process. If we do not, Guam firms and our people will be economically deep-sixed in this military buildup.

ben pangelinan is a Senator in the 29th Guam Legislature and a former Speaker now serving his seventh term in the Guam Legislature. E-mail comments or suggestions to senbenp@guam.net.

Chamorros Deserve Native American Benefits

Chamorros deserve Native American benefits
THURSDAY, 09 OCTOBER 2008
The Marianas Variety
BY SEN. JUDITH P. GUTHERTZ

As a longstanding supporter of Chamorro Rights and Self-Determination, I introduced, along with Senators B.J. Cruz and Rory Respicio, Resolution No. 191. The resolution urges Guam Delegate Madeline Z. Bordallo to request the U.S. Congress to fully acknowledge the Chamorro people as Native Americans. It also requests full inclusion for the Chamorros under Title 25 of the U.S. Code, which covers Native Americans.
I am proud to have sponsored this resolution because it asks that Congress grant the Chamorro people full recognition as Native Americans and integration and inclusion as a Native American Indian Tribe, to be called, "I' Chamorro Na Taotaogui."

Chamorros should have the same recognition and rights as the other indigenous peoples who live on American soil, such as American Indians and Alaskan Eskimos.

If this goal were achieved, Chamorros would receive a number of benefits including greater access to federal contracts, which we believe will prove to be a significant advantage given the coming military buildup. The buildup is an enormous undertaking involving many billions of dollars, and we in Guam should receive our fair share of the business and our fair share of the prosperity that will result.

We had hoped that this issue could be discussed without bringing gambling into the picture, because the Native American status could open many doors for Guam-based businesses. As the laws are written, native groups that have been recognized under Title 25 have certain advantages when it comes to Federal contracts. It's possible that Native Americans from Alaska and the contiguous 48 states could have preference over our own local businesses in getting Federal contracts for the buildup in Guam.

However, some people are associating Resolution No. 191 with gambling. We do not want people to think that we are promoting gambling, because we do not support gambling." Senators Cruz, Respicio and I have decided to hold the Resolution back until after the November election so it won't have any effect on the vote on Proposal A, the "Responsible Gaming Act." Let me be very clear: we are all opposed to Proposal A.

It's unfortunate that the provisions of Title 25 are so broad, taking up 44 chapters on everything from child welfare to business development; from tribal land claims to forest resources management.

Included among them is legalized gambling: Title 25 allows the ruling councils of each of the indigenous groups to make decisions on a number of issues, and among the more well-known of these issues is the ability to legalize gambling (and build casinos) on Native American land.

There are other equally important benefits to be gained from becoming recognized as Native Americans, even beyond the ability to get federal contracts. The most important one is advancing federal recognition of Chamorros as an indigenous people. Federal authorities have yet to fully accept the cause of Chamorro Self-Determination, and the sovereign rights to which the Chamorro people are entitled under the provisions of the United Nations Charter.

Obtaining federal recognition of Chamorros as an indigenous tribe will provide another building block in our quest to secure Chamorro Self-Determination. The future political status of our island will be decided when the Chamorro Self-Determination vote is held. Our dream of Chamorro Self Determination will only be realized if we utilize all means at our disposal to secure federal recognition of the rights of the Chamorro people