Alissa Tabirian
NS&D Monitor
8/28/2015
Sandia Corp. will pay $4,790,042 to settle claims that it used federal funding to lobby federal agencies and Congress to secure a noncompetitive extension of its management and operation contract for the Sandia National Laboratories (SNL), the U.S. Department of Justice (DOJ) announced on Aug. 21. The alleged lobbying, which would violate the Byrd Amendment and the False Claims Act, was discovered last November by the Department of Energy (DOE) Inspector General’s Office (IG).
The IG identified an “inexplicable and unjustified” campaign, from 2008 to 2012, that involved the creation of a contract strategy team to provide guidance on lobbying federal officials and lawmakers. The team’s three consultants were tasked with developing a plan that would position a competitive bid as “costly and disruptive” and engaging with individuals involved in awarding the contract, the report says. The objective was to “convince a new President, freshman NM [New Mexico] delegation, Democratic Congress, new DOE Secretary, new NNSA administration, new E&W [Energy and Water] Appropriations Committee Chair that the value and contribution of the team merits a contract extension," the report says. The full IG report also revealed emails between officials with SNL and Lockheed Martin Corp. (the full owner of Sandia Corp.) that cited the contractor’s 1998 and 2003 contract extensions as precedent for the use of federal funding to secure extensions. Other redacted emails warned SNL that its efforts could be identified as lobbying. The IG recommended recovering “unallowable” costs from consultant and SNL employee salaries.
Although the initiative ultimately sought to avoid an open contract competition, the DOE in May posted a "full and open competition" notice for management of the labs.
Sandia Corp. admitted no wrongdoing in accepting the settlement, according to the DOJ press release. SNL spokeswoman Heather Clark told NS&D Monitor by telephone that the DOJ “first contacted us in June 2014 and we had a series of meetings and exchanges with them.” The lab “cooperated with [DOJ] throughout the process and . . . our understanding of our legal obligations on interacting with public officials became clearer as a result of the investigation,” Clark said. She added in a written statement that SNL “agreed to settle with the [DOJ] to put the matter behind us, take action on what we learned and focus on our important national security mission.” The amount, she said, “will be paid from fee earned for operating the labs.”
“At the time of the activities, Sandia believed our actions for a contract extension fell within allowable cost guidelines,” Clark said. “However, in looking back at the activities, Sandia acted too early and too independently in planning for a possible contract extension.”
Department of Justice spokeswoman Nicole Navas did not provide additional information about the matter or say how the case might have proceeded had Sandia Corp. not settled. She told NS&D Monitor by email that “the department generally neither confirms nor denies the existence of an investigation.”
