The Gift Economy

Published — February 8, 2017 Updated — March 3, 2017 at 1:40 pm ET

Air Force Secretary nominee helped a major defense contractor lobby for more federal funds

Republican Heather Wilson thanks supporters after conceding the 2012 New Mexico Senate race to Rep. Martin Heinrich. Wilson is President Trump's pick for secretary of the Air Force. Jake Schoellkopf/AP

‘Competition is not in the best interest of the government,’ she told Lockheed Martin officials to tell the Energy Department

A version of this story was co-published by POLITICO.


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When New Mexico Rep. Heather Wilson left Congress in 2009, she went to work the same month as a paid consultant for a subsidiary of weapons-contracting giant Lockheed Martin. That company then capitalized on Wilson’s extraordinary familiarity with Washington to craft a lobbying strategy meant to avoid having to compete for the renewal of a government contract that brought in huge profits.

The strategy relied on discrete meetings between Lockheed officials and powerful members of the fledgling Obama Administration, key members of Congress, and influential Washingtonians who had also passed through the revolving door between government and private industry.

Wilson, a Republican who had spent four years on the House Armed Services Committee and six years on the Intelligence Committee, spent five months drawing up a roadmap for Lockheed to achieve its key objective: Renewing its existing contract to manage Sandia National Laboratories, a wholly-owned subsidiary that helps make nuclear weapons and has an annual budget of more than $2 billion, without having to compete with any other firm — unlike most federal contractors.

Fulfilling the classic role of a “nonlobbyist” strategic adviser, trading on information she gained while serving in public office, she told the firm exactly who they should approach for help.

“I had a very effective meeting w/ Heather this PM,” David L. Goldheim, Lockheed Martin’s director of corporate development at Sandia Corp., wrote in an email dated March 31, 2009 to senior officials at Sandia, which was obtained by the Center for Public Integrity. “Her advice and insights are excellent. Essentially, our next steps will be to map contacts (as well as individuals to be avoided).”

On Jan. 23, President Trump announced that he will nominate Wilson, a former pilot and graduate of the Air Force Academy, to become the nation’s 24th Secretary of the Air Force. But even though Trump promised during the presidential campaign to “drain the swamp” of Washington powerbrokers that use knowledge gained in public office to pursue private gains, dozens of internal Lockheed and Sandia emails involving Wilson make clear that she is practiced at doing just that. Over the course of two years of work for Lockheed, Wilson made more than $200,000.

Moreover, hers was not a normal course of influence-peddling in the Washington contracting world. An Energy Department auditor ruled in 2013 that the contracts she signed with Sandia and several other private nuclear weapons firms were impermissibly vague and violated government rules, and declared that the work she did trying to ensure that Sandia kept its contract had been illegally billed by the contractors to the federal government itself — forcing Sandia to give back the federal money. The auditor did not find fault with her conduct.

In Wilson’s new job, she apparently won’t be constrained from making any decisions about her former client Lockheed, which does more business with the Air Force than any other contractor, according to federal procurement records published by the General Services Administration.

While an executive order signed by Trump on Jan. 28 bars top officials from working on particular matters that are directly or substantially related to the work they did for private-sector clients, it only applies to work done within the past two years. Although Wilson’s financial papers have not been published yet by the Office of Government Ethics, her known work for Lockheed preceded the two-year period governed by the order.

As a result, Wilson would be allowed to oversee work by Lockheed Martin on fighter jets and other weapon systems, including the F-35, a plane that has been plagued by massive cost overruns and technical snafus. Critics have argued that some parts of the program should be competed, an idea that Lockheed has resisted. Wilson also will have no limitations on her involvement in a costly modernization of the U.S. nuclear arsenal, including land-based missiles maintained by Lockheed under a nearly half-billion-dollar Air Force contract, as well as the controversial deployment of new U.S. nuclear warheads — made mostly by Sandia — to U.S. fighter bases in Europe.

As of 2015, the most current year available, Lockheed had 3,982 outstanding Air Force contracts worth $7.4 billion, accounting for 14 percent of all the service’s acquisition dollars.

“She has what I call the appearance of a conflict of interest, and appearances matter,” said Gordon Adams, a professor emeritus at American University and former associate director for national security at the Office of Management and Budget. “She should probably recuse herself from anything involving Lockheed. That’s tricky — in particular for the F-35, because it’s a big part of the job.”

Asked last week about the scope and purpose of her past Lockheed contracting work and its relevance to her nomination and future work, Wilson did not respond. In a 2015 email to the Center, she said she never contacted serving government officials about the Sandia contract — an action that would have met the legal definition of lobbying. “I was not a lobbyist for Sandia,” she said. Lockheed, which has previously said it fully cooperated with a federal audit of Wilson’s contracts, declined further comment on that matter or on Wilson last week.

But Wilson, 56, is actually one of several Trump nominees to high office who have thrived in Washington’s culture of public-private enrichment. Robert Lighthizer, Trump’s nominee for U.S. Trade Representative, was a professional lobbyist for the steel industry, which has a strong interest in tariffs. Retired Marine Gen. John Kelly, the nominee to become Homeland Security Secretary, worked as an adviser to DynCorp, which recruits and trains border patrol agents. Defense Secretary James Mattis served on the board of General Dynamics Corp., which has billions of dollars in Pentagon contracts. Interior Secretary nominee Rep. Ryan Zinke (R-Mont.) was on the board of QS Energy, a company that could benefit from expanding oil pipelines, when he was elected to Congress in 2014.

Consulting on how to lobby

The New Mexico-based consulting firm that Wilson started running immediately after leaving Congress, Heather Wilson and Company, LLC, was paid $226,378 between January 2009 and March 2011 by Sandia Corp. LLC, according to a June 2013 report by the Energy Department inspector general. The contract, obtained by the Center for Public Integrity, vaguely called for Wilson to develop a national security speaker series at Sandia, and to advise the lab’s top administrators regarding “congressional interaction strategies” and “House/Senate dynamics” as well as “DC presence and policy related issues.”

When Wilson met with Goldheim and Sandia Corp. Vice President and General Counsel Becky Krauss on March 31, 2009, according to their email communications, Wilson came prepared. She recommended the company “aggressively lobby Congress, but keep a low profile” and named Washington insiders who Lockheed Martin representatives should try to enlist in their no-bid contract plan to “create voices around the decision maker,” who was then-Energy Secretary Steven Chu.

She suggested in particular that Lockheed ask former New Mexico Gov. Bill Richardson, the Secretary of Energy between 1998 and 2001 and later an industry consultant, to call Rahm Emanuel, Obama’s chief of staff at the time, and also directly reach out to former senior Energy Department officials, Chu’s key advisers, and former Sen. Pete Domenici (R-N.M.), who had earned the nickname “Saint Pete” from nuclear contactors in his home state.

Wilson also told Lockheed that Jonathan Epstein, who worked at the time for one of New Mexico’s senators, had identified Washington figures who either opposed Sandia’s contract bid or would be neutral. Asked this week about the contact, Epstein, who is now a staff member for the Senate Armed Services Committee, which will hold Wilson’s confirmation hearings, declined to comment.

Throughout the spring of 2009, Wilson stayed in close contact with Goldheim and Krauss, briefing them on the personal characteristics of some of the lobbying targets. She also expressed concern to Lockheed about its top officials directly lobbying Capitol Hill, suggesting that they instead seek the help of a former congressional staffer, whose name was redacted from the email copy, with strong connections in Congress.

“Since he no longer works on Capitol Hill, you don’t face the issues concerning contacting Congress that you otherwise would,” Wilson wrote, in a seeming reference to the disclosure laws that govern the direct lobbying of government officials.

Wilson did not respond to several requests for comment about this remark.

In the following months, Wilson continued to guide Lockheed’s Sandia strategy. In a July 6, 2009, email, she told Goldheim to “start working the ‘edges’ like key members of Congress etc.”

In that email, Wilson also established the baseline message that the company’s representatives delivered over and over for the next two years during meetings with the strategy’s targets: “Your message to these people is that competition is not in the best interest of the government and ask them to call [name redacted] today and tell him that a recompete at Sandia is not needed.”

Over the next two years, a team of Lockheed officials followed Wilson’s script and strategically targeted decision-makers, according to other Lockheed and Sandia emails obtained by the Center. The campaign culminated in a formal May 20, 2011 pitch letter from Merillyn Hewson, now the CEO of Lockheed Martin, to Chu, which said “extending our current contract avoids potential disruption at Sandia” and the costs associated with a competition “that is not likely to result in either performance or cost improvement for the government.”

That letter came two months after the Government Accountability Office, an independent group reporting to Congress, noted in a 345-page report — which caught the attention of Sandia officials and caused brief concern — that “the benefits of competition in acquiring goods and services from the private sector are well established… Competitive contracts can save money, improve contractor performance and promote accountability for results.”

Heather Wilson’s communication with the DOE

These are email messages involving President Donald Trump’s nominee for Secretary of the Air Force, former Rep. Heather Wilson (R-New Mexico), during her time as a paid consultant for Lockheed Martin subsidiary Sandia Corporation.

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.”

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.

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