Earmarked for profits

Targeted spending: Practice is often contractors' back door into budgets.

Publication: The Morning Call

Josh Drobnyk and Jacob Fenton
June 8, 2008

Last year's defense spending bill came with a lucrative gift for Reading-based Fidelity Technologies. Without having to compete, the firm was awarded a $3.2 million Pentagon contract.

Instrumental in the decision was U.S. Rep. Tim Holden, D-Schuylkill, who asked that the project be added as an ''earmark'' to the $471 billion spending bill after Fidelity approached him with the request.

Holden, the 17th District legislator, was by no means unfamiliar with the company. The company's founder, Jack Gulati, and his family have contributed at least $10,550 to Holden's re-election campaigns over the past eight years. And the lobbying firm it has employed for years, PMA Group, and officials who work there have donated more than $63,000 to Holden's campaigns this decade, more than Holden has received from any other company's staff, according to the Center for Responsive Politics.

In an interview, Holden defended his support for the company, saying that he's helping a business that employs many of his constituents. He scoffed at the suggestion that the company's contributions to his campaign may have led to favorable treatment in return.

''Who is going to contribute to your campaign, people you don't help?'' Holden said, before adding: ''There is no quid pro quo here.''

The Fidelity contract is a prime example of the controversy surrounding the thousands of pet projects that lawmakers fight to include in Congress' annual spending bills. Part of the debate over earmarks -- particularly big defense contracts -- comes down to this: Should lawmakers be able to pick and choose which projects to fund and which contractor to do the work? And to what extent is there a conflict of interest when those contractors are contributing thousands of dollars to lawmakers' re-election campaigns?

A wide variety of projects made up the 11,000-plus earmarks slipped into last year's spending bills. Money for performing arts centers, grants for police departments and technology upgrades at universities are a few of those requested by area lawmakers. But the defense contracts make up the big-ticket expenses.

Critics say the process is rife with conflicts and lawmakers have no business pinpointing what contracts the Pentagon and other agencies should award.

''The way that you would hope it would work is that these companies would go directly to the Pentagon and say, 'Hey, this is a great product,''' said Bill Allison, a senior fellow at the Sunlight Foundation, a Washington-based nonpartisan organization. ''Instead they are going directly to members of Congress and say, 'We don't want the competition, we want you to guarantee that we get this product in the door.'''

Of the contributions from big contractors to lawmakers, Allison said: ''It is almost like a lobbying tax on a company that is trying to get an earmark.''

Lawmakers who champion earmarks -- the vast majority -- defend them as worthy opportunities to help out their districts. The congressmen argue that they are better positioned than federal government employees to know what projects need funding and what companies could use a leg up inside the government.

''One of the things I do here in Washington is to represent my district and to fight for my district and avail my district of opportunities for meeting some of the financial needs in the communities,'' said U.S. Rep. Allyson Schwartz, D-Montgomery, the only area lawmaker willing to make public which requests she prioritizes for funding. ''The appropriations requests are one way to do that.''

All six area lawmakers raised between $1 million and $3.3 million in the last election.

While the 13th District's Schwartz and other lawmakers say contributors to their campaigns get no advantage in the earmark process, the relationship between giving and getting is clear to some, lobbyist Frank Cushing acknowledged.

''I know a bunch of members that if you go in to see them, somewhere in the conversation they somehow say, 'Well, we were looking through our list of campaign contributors and didn't happen to see you there,''' said Cushing, a lobbyist with the National Group, which lobbies on appropriations bills, told The Associated Press. ''Is there a quid pro quo? No, not directly, but you'd have to be pretty dense not to figure it out.''

Holden has a long association with Fidelity. In 2001, he helped advise the company during its contract negotiations with the Czech Republic to produce an artillery training simulator system. And while redistricting earlier this decade pushed Fidelity just outside of his district's boundaries, many Holden constituents work there and he maintains a close relationship with the company.

Holden said his office has worked with the National Guard to ensure the money earmarked for Fidelity, which funds a system to simulate live combat, would be welcomed by the Pentagon. He said he has requested money for the program for years.

''They have a program that the Pentagon likes that creates jobs in my district and I have the opportunity to help support these jobs in my district,'' he said of Fidelity.

Asked about the tens of thousands of dollars in contributions Fidelity and PMA Group have made to his re-election campaign, he responded: ''Look at organized labor. They contribute probably close to 50 percent of my campaign contributions in every cycle. Is that because I vote 90 percent of the time with them? Probably.''

The Fidelity earmark was one of 23 that were sponsored or co-sponsored by Holden in 2007. Among his other sponsorships were Penn State University's Cancer Institute ($5.6 million), Tulpehocken Creek Watershed ($844,000) and Robesonia borough's streetscape improvements ($147,000), according to Taxpayers for Common Sense, which compiled a list of all earmarks last year, the first year that earmarks were required to be disclosed. In all, Holden was the sole House sponsor of $21.3 million in earmarks last year, more than any other area lawmaker.

The debate over earmarks has intensified this election season, with presumptive GOP nominee John McCain calling for an end to the congressional projects.

Examples can be found of all five other area lawmakers requesting money for companies that have contributed to their campaigns. Voters express mixed feelings.

Lynn Zaffrin, 50, of Doylestown said that with wars in Iraq and Afghanistan, the military needs to get its military hardware somewhere, and it may as well benefit the district.

''At least it's keeping the money in Bucks County,'' said Zaffrin, a retail clerk.

Gerry Meglio, 38, a salesman from Warrington Township, noted a downside.

''The positive is your representative is talking care of your local district,'' Meglio said. ''If you look nationally at it, it's not necessarily a good thing because they hide these things in these bills without debating if this is how we should be appropriating these funds.''

Among the 32 earmarks that U.S. Rep. Charlie Dent, R-Lehigh, helped insert into the 2007 spending bills was a $1.6 million item for Night Vision Systems to supply the National Guard Counterdrug Program. The Allentown company is no stranger to working with the government, having been awarded $200 million-plus in Pentagon contacts from 2003 until 2006.

Night Vision executives and the political action committee of its parent company, DRS Technologies, have contributed at least $4,500 to Dent's campaigns in the last three years.

Dent, of the 15th District, said he gives no favoritism to organizations that give money to his campaigns. He said he often finds that defense contractors come to him for requests at the prompting of the Pentagon.

''Sometimes the Pentagon can't put everything they want in their budget request,'' he said. ''In some cases the Pentagon will encourage companies to contact their member of Congress to see if they can help.''

He said that he wasn't sure if that was the case with the Night Vision earmark.

It's not just big defense contractors that hire lobbyists to help their cause. Lehigh University, like many schools, pays a lobbyist $160,000 a year to help navigate Washington. The school is regularly awarded earmarks through Dent. Last year, it nabbed a $492,000 earmark to do cancer research. A year earlier, Dent pushed forward a $2 million Pentagon contract for the school to research lightweight battlefield computers. Lehigh's lobbyist, Van Scoyoc Associates, contributed $1,212 to Dent's campaign last cycle.

U.S. Rep. Patrick Murphy, D-Bucks of the 8th District, pushed for a $1.6 million earmark for EDO Corp. to make a ''smart rack'' weapons release systems that lets fighter pilots fire various weapons or drop bombs at separate times. The Warminster company's political action committee gave Murphy's re-election campaign the maximum $10,000 contribution last year. It also employs PMA Group, whose employees have been more generous to Murphy than all but one other organization's staff, having donated $18,500 to Murphy's campaigns in the past two years.

Murphy's spokesman Adam Abrams said Murphy gives no one special treatment. ''Anyone in our district gets an audience with our office if they have an idea that will benefit our district,'' he said.

For Associated Press national coverage of earmarks, go to http://www.apme.com/earmarks/ .