Todd Jacobson
NS&D Monitor
11/14/2014
Officials with Sandia National Laboratories improperly used government funds to lobby for an extension to the Lockheed Martin-run contractor’s management and operating contract, the Department of Energy’s Inspector General said in a report released this week. The IG report details a Sandia plan to push for a contract extension that was hatched in 2009, relying heavily on influencing the Obama Administration and Congress to push for a long-term deal without a contract competition. The IG said the plan was developed by lab officials and consultants paid with funds reimbursed by the government, including former New Mexico Congresswoman Heather Wilson (R), whose agreement with Sandia came under heavy criticism a year ago.
Federal law prohibits the use of government funds for lobbying efforts. “We find that the position and actions taken by SNL to develop and execute the contract extension plan to be highly problematic,” the IG said. “Given the specific prohibitions against such activity, we believe that the use of Federal funds for the development of a plan to influence members of Congress and Federal officials to, in essence, prevent competition was inexplicable and unjustified.”
According to the report, Sandia said it believed it was OK to push for a contract extension “based on ‘the merits of the matter’ ” and it said the costs should be deemed allowable. Sandia was pushing for a seven-year extension with the possibility of five years of award-term extensions; its contract was extended in 2009 by two-and-a-half years with up to six months in extensions, and DOE extended the contract in April 2013 by another two years with a third-year option. Sandia spokeswoman Heather Clark said this week that the lab was reviewing the report. “Sandia takes these allegations seriously and has cooperated fully in the Inspector General’s review of the issue. Sandia has had a longstanding and close relationship with the DOE given the nature of our national security mission. Sandia is confident that the company and the DOE will be able to resolve these issues.”
NNSA Reviewing Costs
In an Oct. 14 response published with the IG report, National Nuclear Security Administration chief Frank Klotz said a review panel has been established to examine the extent of unallowable costs and he said the agency will determine whether any adjustment to the lab’s performance fee is warranted “based on the administration and management issues” raised by the IG. “We take this issue seriously and are committed to implementing corrective actions and taking preventive measures to ensure this does not occur,” Klotz said, noting that the lab had already repaid $226,378 in money previously paid to Wilson.
In a statement provided to NS&D Monitor, Wilson denied lobbying for the lab. “I was not a lobbyist for Sandia and I did not contact any federal official—Congressional or Executive—to try to extend the Sandia contract. The findings in this report don’t specifically mention me and I wasn’t at the meetings to which the report refers.”
Plan Hatched to Influence Decision
Sandia officials began formulating a plan to hold onto the lab M&O contract as early as March 2009, according to the IG report. According to a March 16, 2009 presentation, the lab planned to “approach the new administration with a defined capture strategy to extend the LMC ownership of Sandia Corporation at the conclusion of the current contract term for an additional 7 years with award term potential of an additional 12 years.” Further, the strategy said if that was not successful, support was needed for “LMC to win a competition including attempting to influence the evaluation criteria in the RFP.” The IG said the document indicated that lab would “over the next 12 months campaign aggressively (Administration and Congress) to convince [the then Secretary of Energy] Secretary Chu to extend the M&O contract and retain the LM [Lockheed Martin Corporation]/Sandia team.”
The IG said three consultants were hired to help with the strategy, and one unnamed consultant’s advice “suggested that LMC should aggressively lobby Congress and influence chairs and members of key committees (but keep a low profile); meet with the New Mexico Congressional delegation who ‘should let Chu know (by direct contact) that [the delegation] expects a contract extension and will follow the matter with personal interest’; have Sandia vice presidents influence Chu’s key advisors; and contact a former U.S. Senator, a former NNSA Administrator and a former Governor of New Mexico.”
Lab Looks for ‘Heavy Congressional Support’
A “Contact Plan” with a list of officials who had “influence on [the] decision” was also created, with political officials and staffers on the list, as well as DOE and NNSA individuals who were involved in the extend/compete decision. “In this case, appropriated funds were used to pay the recipients of a Federal contract, both SNL employees and consultants, salaries and fees for developing a plan intended to result in influencing or attempting to influence an officer or employee of the Department or a member of Congress in connection with the extension of the SNL contract,” the IG said.
Sandia went on to implement the plan, the IG said, with senior lab and Lockheed Martin officials meeting with then-NNSA Administrator Tom D’Agostino Sept. 3, 2009, to “initiate discussions on the future of the Lockheed Martin/Sandia relationship and their desire to retain the same team for the future M&O contract that has performed so successfully over the past 16 years.” Lockheed Martin also sent a memo to Chu outlining the company’s interest in an extension, which drew a response from a member of the Contract Strategy Team: “if the answer [from the Secretary] was not in the affirmative, then Lockheed Martin/Sandia should seriously consider initiating some heavy Congressional support,” according to the report.
The IG also noted that Sandia was aware of the problems with using government funds to lobby for a contract extension, citing a 2004 document from the lab’s legal counsel that cautioned against such activities despite that the lab acknowledged it had done so during previous campaigns for an extension in 1998 and 2003. “When considering the question of whether a cost would be allowable when SNL assisted LMC in matters of competition, the Legal Counsel warned that, ‘Neither Sandia nor NNSA could tolerate even the suspicion that Sandia was assisting in the competition at prime contract expense,’ ” the IG said.
