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DOE says Lockheed broke rules

Copyright © 2014 Albuquerque Journal

Lockheed Martin Corp., for years the contractor paid millions to manage Sandia National Laboratories, was bracing itself in 2009 for stiff competition from other companies seeking to take over the federal contract.

Sandia's management contract has barred Lockheed Martin from communicating with members of Congress or Energy Department officials for the purpose of obtaining or retaining business for Sandia. (Sandia National Laboratories)

Sandia’s management contract has barred Lockheed Martin from communicating with members of Congress or Energy Department officials for the purpose of obtaining or retaining business for Sandia. (Sandia National Laboratories)

The Department of Energy in 2005 signaled an end to no-bid contract extensions for the nuclear weapons lab contractors, such as Lockheed Martin, when it put the Los Alamos National Laboratory contract out for a public bid. Other national companies, such as Boeing and Fluor, were waiting in the wings to bid on taking over the Sandia contract.

But no bidding occurred, and in March 2014, Lockheed Martin – after a five-year effort – won a two-year contract extension from the Department of Energy to manage the Albuquerque lab’s $2.6 billion-a-year operations.

The decision to extend the $26 million management contract without bid was a change of course after DOE in 2011 said the agency planned to open the Sandia contract to new bidders.

And on Wednesday, a report by the Department of Energy’s Office of Inspector General concluded that Lockheed Martin wrongfully used federal funding provided to Sandia for lab operations to pull the strings of power and lobby for the no-bid contract extension it ultimately received.

“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,” the inspector general said in its report.

“The evidence indicated that SNL (Sandia National Laboratories) and LMC (Lockheed Martin Corp.) officials had conversations with members of Congress and federal officials to convince the department, NNSA and Congress of the merits of contract extension without competition,” the inspector general’s report said.

Sandia’s management contract has specifically prohibited Lockheed Martin from communicating with members of Congress or DOE officials for the purpose of obtaining or retaining business for Sandia labs.

The inspector general’s findings require the National Nuclear Security Administration, which oversees the management of Sandia, to identify any federal funding paid to Sandia employees or consultants involved in the alleged lobbying effort and seek reimbursement of that taxpayer money from Lockheed Martin.

The NNSA also was assigned to develop new guidance for Lockheed Martin and other national lab managers to prevent lobbying or other political activity with federal contract funds.

Sandia spokeswoman Heather Clark, in a statement Wednesday, called the IG report findings “allegations,” but said lab management is confident any issues will be resolved.

“Sandia takes these allegations seriously and has cooperated fully in the Inspector General’s review of the issue,” Clark said in an email. “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. Sandia is in the process of reviewing the IG report and will address any and all recommendations with the DOE and NNSA to achieve resolution.”

Wednesday’s report comes after a 2013 inspector general’s report that alleged Sandia had inappropriately paid former Rep. Heather Wilson, R-N.M., about $226,000 in consulting fees, beginning in January 2009, to lobby for Sandia to take on new assignments for the federal government. Sandia and Wilson have denied that claim and said no prohibited lobbying occurred. However, Sandia has reimbursed the government more than $226,000 for fees paid to the consulting company run by Wilson.

“If the authors (of the inspector general’s report) intended to imply I was influencing Congress for Sandia, their report is wrong.” Wilson said in a statement sent to the Journal on Wednesday.

The latest inspector general’s report identified a “Contract Strategy Team” of Sandia employees and consultants assembled in March 2009 and tasked with winning a no-bid contract extension.

“Available documentation confirmed that an essential element of this plan was to influence members of Congress and federal officials to prevent the need for a competitive process as a means to achieve the desired contract extension,” the IG report said.

Retired Sandia labs President C. Paul Robinson told the Journal in 2012 that assembling a lab management contract bid proposal costs the bidder about $4 million.

The inspector general’s report cited a communication between Sandia and Lockheed Martin officials saying, “We believe it is best for LM, Sandia and the nation to work together towards influencing DOE to retain this team.”

One of the ways Lockheed Martin lobbied the New Mexico congressional delegation was to submit written requests for new funding in annual status reports to Congress on national security and scientific research. Despite notice from federal officials that the communications constituted prohibited lobbying efforts, the written requests from Sandia to members of Congress continued, according to the inspectors general’s report.

The inspector general’s report notes that its investigation into Lockheed Martin’s lobbying for a no-bid contract stemmed from allegations of Wilson’s consulting contract with Sandia, but the report’s actual findings – based on investigation of the allegations – make no mention of Wilson by name. Instead, the report refers generally to Sandia “consultants.”

Wilson, in her statement Wednesday, repeated that she did not engage in prohibited lobbying on behalf of Sandia, and said she played no part in the strategy team established to win a no-bid contract extension.

“I was not a lobbyist for Sandia and I did not contact any federal official – congressional or executive – for Sandia to try to extend the Sandia contract,” Wilson said in an email to the Journal. “The DOE has never contacted me on this matter. The findings in this report don’t specifically mention me and I wasn’t included in the meetings the report refers to.”

Wilson is now president of the South Dakota School of Mines & Technology in Rapid City. Wilson worked as a consultant for Sandia from 2009 to 2011. Wilson ended the Sandia contract to launch her unsuccessful 2012 bid for the U.S. Senate.

Jennifer Talhelm, spokeswoman for Sen. Tom Udall, D-N.M., said Udall “did not weigh in on the Sandia contract extension at all until after it was determined.”

After the Sandia contract extension was completed, Udall sent a letter to the NNSA requesting that the lab work more collaboratively with the University of New Mexico and other local partners on research, technology transfer and other economic development efforts, Talhelm said.

Lockheed Martin has managed Sandia National Laboratories since 1993 after winning an intense open bid process for the federal contract.