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REPORT Defense Contractors' Capture of Pentagon Officials Through the Revolving Door

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REPORT Defense Contractors' Capture of Pentagon Officials Through the Revolving Door REPORT BRASS PARACHUTES: Defense Contractors’ Capture of Pentagon Officials Through the Revolving Door November 5, 2018 About THE PROJECT ON GOVERNMENT OVERSIGHT (POGO) IS A NONPARTISAN INDEPENDENT WATCHDOG that investigates and exposes waste, corruption, abuse of power, and when the government fails to serve the public or silences those who report wrongdoing. WE CHAMPION REFORMS to achieve a more effective, ethical, and accountable federal government that safeguards constitutional principles. 1100 G Street, NW, Suite 500 Washington, DC 20005 WWW.POGO.ORG Acknowledgements The Project On Government Oversight would like to thank all those who have helped compile information used in this report: SCOTT AMEY CHRISTINE OSTROSKY THE CENTER FOR RESPONSIVE POLITICS NICK PACIFICO TOM CHRISTIE VANESSA PERRY LYDIA DENNETT PIERRE SPREY DANNI DOWNING CARTER SALIS LESLIE GARVEY NICK SCHWELLENBACH NEIL GORDON MIA STEINLE DAN GRAZIER EMMA STODDER WILLIAM HARTUNG AMELIA STRAUSS ELIZABETH HEMPOWICZ MARK THOMPSON DAVID JANOVSKY MARC VARTABEDIAN MEG LENTZ WINSLOW WHEELER SEAN MOULTON Thanks to the generous support from: THE CHARLES KOCH FOUNDATION PHILIP A. STRAUS, JR. Contents Introduction ........................................................................................................................................... 2 Methodology .......................................................................................................................................... 7 Major Findings ........................................................................................................................................ 9 Ethics Rule Loopholes ..........................................................................................................................11 Loophole 1: Senior Officials Face Few Limits ............................................................................................. 11 When Very Senior Officials Go Through the Revolving Door ............................................................... 12 Senior Officials in Major Weapon Systems Acquisition and Requirements Face Few Limits ............. 15 The Revolving Door Impacts the Cost of Logistics and Military Readiness ........................................ 21 The Revolving Door’s Influence on Foreign Military Sales and International Markets ...................... 24 Loophole 2: Lobbying Restrictions Are Overly Narrow and Miss “Behind the Scenes” Work ..................29 It’s Not Lobbying, It’s “Business Development” .................................................................................. 31 Dayton Taking Behind-the-Scenes Work to New Heights ................................................................... 34 Alabama: The Pentagon of the South ................................................................................................... 37 Recommendations................................................................................................................................ 39 Endnotes ..............................................................................................................................................41 Appendix A – Ethics Laws Guide ........................................................................................................... 64 Appendix B – Top 20 Department of Defense Contractors in Fiscal Year 2016 .................................... 88 Lockheed Martin ...........................................................................................................................................88 The Boeing Company ...................................................................................................................................96 Raytheon .................................................................................................................................................... 110 General Dynamics ...................................................................................................................................... 118 Northrop Grumman ................................................................................................................................... 129 United Technologies Corporation ............................................................................................................ 138 BAE Systems .............................................................................................................................................. 148 L3 Technologies (Previously L-3 Communications) ................................................................................ 153 Huntington Ingalls Industries ................................................................................................................... 157 Humana ...................................................................................................................................................... 165 Bechtel Group ............................................................................................................................................ 169 UnitedHealth Group Incorporated ............................................................................................................ 171 McKesson ................................................................................................................................................... 179 Health Net, Inc. .......................................................................................................................................... 180 SAIC ........................................................................................................................................................... 184 AmerisourceBergen ................................................................................................................................... 186 Textron ....................................................................................................................................................... 189 Harris Corporation .................................................................................................................................... 192 General Atomics ........................................................................................................................................ 193 Booz Allen Hamilton .................................................................................................................................. 199 1 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.1 Even fast food restaurants can be exceedingly strict about employees taking jobs with competing chains,2 or with other franchises in the same chain.3 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. 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.”4 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.5 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 2 diminish military effectiveness.6 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.7 The leadership of the Senate Armed Services
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