WASHINGTON – Sandia Corp. and its parent company, Lockheed Martin, will pay the federal government a $4.8 million fine for using tax dollars to lobby Congress and federal agencies for renewal of its $2.4 billion contract with the Department of Energy in violation of federal law.
A report by the Department of Energy’s Office of Inspector General in 2014 concluded Lockheed Martin wrongfully used federal funds provided to Sandia for lab operations to lobby for the no-bid contract extension it ultimately received.
Benjamin C. Mizer, head of the Justice Department’s Civil Division, denounced what he said was Sandia’s inappropriate lobbying.
“The money allocated by Congress for the Sandia National Laboratories is designed to fund the important mission carried out by our national laboratories, not to lobby Congress for more funding,” Mizer said in a statement. “This resolution demonstrates that the Justice Department will work to ensure that public funds are used for the important purposes for which they are intended.”
The Justice Department’s announcement of the settlement agreement caps a multiyear inquiry. The agreement does not rule out the possibility of criminal charges.
Heather Clark, a spokeswoman for Sandia in Albuquerque, said the fine will be paid from a fee that Lockheed Martin Corp. is paid for operating the labs. Lockheed Martin received $25.9 million for managing Sandia in 2013.
“Sandia National Laboratories has agreed to settle with the Department of Justice to put the matter behind us, take action on what we learned and focus on our important national security mission,” Clark said in a statement. “At the time of the activities, Sandia believed our actions for a contract extension fell within allowable cost guidelines. However, in looking back at the activities, Sandia acted too early and too independently in planning for a possible contract extension.”
A 2013 inspector general’s report 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 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, who is not mentioned in the settlement agreement between the Justice Department and Sandia Corp. announced late Friday.
“There is no finding of any contact by me with any member of Congress or executive branch official concerning Sandia contract extension,” Wilson said in an email to the Journal late Monday. “That’s because there was none. I was not a lobbyist for Sandia and I was not a member of the Contract Strategy Team criticized by the Inspector General’s report.”
Wilson referred to a 2014 report in which DOE Inspector General Gregory Friedman said Sandia Corp.’s and Lockheed Martin’s effort to lobby federal officials for a no-bid contract was “inexplicable.”
“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,” Friedman wrote. “The evidence indicated that (Sandia) and (Lockheed Martin) 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.”
Sandia is overseen by the National Nuclear Security Administration, a division of the Department of Energy.
Friedman applauded the Justice Department’s ruling Monday.
“Using public funds to lobby for a noncompetitive extension of a contract is simply unacceptable,” Friedman said.
Jay Coghlan, director of Nuclear Watch New Mexico, said the fine was “a slap on the wrist for the world’s biggest defense contractor.”
“Lockheed Martin clearly broke the law by engaging in illegal lobbying activities to extend its Sandia contract without competition,” Coghlan said. “There should be criminal prosecutions for clear violations of federal anti-lobbying laws, and Lockheed Martin should be barred from future competition for the Sandia Labs contract, expected next year.”
Lockheed Martin has managed Sandia National Laboratories since 1993 after winning an intense open bid process for the federal contract. It is currently contracted to run the lab until April 30, 2017.