An inspector general report once meant for Department of Energy eyes only sheds more light on a fierce lobbying campaign for the contract to run Sandia National Laboratories.
The special inquiry report, obtained by Greenwire under the Freedom of Information Act, fleshes out allegations that Sandia Corp., the DOE contractor that runs the New Mexico-based labs, used federal funds to influence the government’s contract extension for the company.
Sandia Corp. is a subsidiary of Lockheed Martin Corp. The company first won the contract in 1993, which has since been extended several times. The latest extension came in March 2014 for another two years, with the department planning to open the contract for competitive bids after that.
The Sandia labs contract is worth at least $2.4 billion a year. The contractor wasn’t ready to lose that kind of money, according to the IG.
With a contract extension set to expire in 2012, Sandia got to work years before in 2009 to convince a new administration with a new Energy secretary that its contract should be renewed without competition. In his report, Inspector General Gregory Friedman found that Sandia developed and executed a plan to meet and influence lawmakers and administration officials in order to help obtain a noncompetitive extension of the DOE contract.
Those actions, however, seemingly crossed the line. The DOE watchdog determined that the lobbying violated provisions of law and regulations that prohibit "the use of federal funds to influence members of Congress or federal officials with regard to an extension of a contract," according to the report.
Sandia argued to the department watchdog that costs associated with its lobbying were "allowable" and its moves to secure an extension "were based on ‘the merits of the matter.’"
The inspector general also recognized that Lockheed Martin had "a corporate interest in the future of the SNL contract."
Nevertheless, the IG said "given the specific prohibitions against such activity, 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."
‘Competition will be Disruptive’
By March 2009, Sandia had formed what it referred to as a Contract Strategy Team to develop a plan to win over Congress and the new Obama administration on extending the labs’ contract.
Part of that plan included a section titled "Competition will be Disruptive," noting how a competitive bid for the contract would be a "serious distraction" to Sandia management as well as "costly and disruptive" to DOE and the National Nuclear Security Administration.
The contract strategy plan also stated that the "Period of Influence" was now to win a new extension.
"The LM/Sandia Team must 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," said the plan, according to the IG.
Sandia hired three consultants to advise and guide the contract strategy, including former Rep. Heather Wilson (R-N.M.), who had lost a Senate bid in 2008.
The other two consultants’ names were redacted from the IG’s special inquiry report. One consultant’s contract had a ceiling price of $25,000 while the other’s agreement totaled $300,000.
Wilson was paid $226,378 under her Sandia contract. The department recovered those funds as well as other payments made to Wilson after a separate report released by the DOE inspector general in June 2013 raised questions about her consulting services (E&E Daily, June 12, 2013).
In March 2009, members of the Contract Strategy Team met with Wilson, who provided several suggestions to the team, according to meeting notes reviewed by the IG. Much of her advice centered on how to reach Steven Chu, the incoming Energy secretary.
"Chu’s staff must speak with him on the [positives] of extension — work key influencers," was one of the former congresswoman’s suggestions. She also advised outreach to Chu’s "friends and family" and asked if the team knew whether "any of Chu’s colleagues at LBNL [Lawrence Berkeley National Laboratory] who would advocate for the Lockheed Martin/Sandia team?"
In a statement to Greenwire, Wilson — who is now president of the South Dakota School of Mines and Technology — said the IG’s full report confirms that she wasn’t a lobbyist.
"The full report confirms what I have said all along. I was not a lobbyist for Sandia and I did not contact any federal official — congressional or executive — to try to extend the Sandia contract. I was not a member of the ‘Sandia Contract Strategy Team’ that is criticized in the report," Wilson said.
The ex-lawmaker said she emphasized that Lockheed Martin should lobby for the contract extension.
"Interestingly, someone’s notes from a conversation with me contained in this full report confirm that I advised that contract extension activities should be done by Lockheed Martin, not Sandia. That is the same position taken by the Department of Energy Inspector General," Wilson said.
Notes from the same March 2009 meeting noted that Wilson said "Lockheed Martin should aggressively lobby Congress, but keep a low profile."
‘This process is political’
The report delves into much of the internal back-and-forth discussion at Sandia from 2009 to 2012 on whom to talk to about the labs’ contract extension. The IG found evidence that Sandia and Lockheed Martin officials did have talks with lawmakers and the administration. At times, those discussions could grow heated.
One Sandia official was frustrated when he learned others were not planning on bringing up the contract extension.
"This is absolutely ridiculous! Yet another missed opportunity," the official said in an August 2009 email. "I don’t know what game we are playing, this process is political whether [redacted] accepts it or not — our competitors are not shy about invoking the political process."
The IG found Sandia employees funded by the labs’ contract were engaged with Lockheed Martin in the plan to influence policymakers. That partnership came about despite internal warnings.
One individual, whose name is redacted in the IG’s report, warned in a January 2009 email that Sandia would be "in serious hot water" if it requested lobbying help from Lockheed Martin’s Washington team. Nevertheless, by May of that year, another email dug up by the IG found that Sandia met with Lockheed Martin to "engage their support for our strategy."
Whether to help Lockheed Martin in winning the labs’ contract had been a question for Sandia for some time. A March 2004 email within Sandia said it would be appropriate to keep distance between Lockheed Martin’s business development and the labs’ contract.
"Neither Sandia nor NNSA could tolerate even the suspicion that Sandia was assisting in the competition at prime contract expense," the email said.
Nevertheless, it seemed to be common practice for Sandia to use "operating costs" to obtain contract extensions.
The IG found a May 2010 email where a Sandia official wrote, "In terms of precedent, we used operating costs in the same way in securing the extensions in  and 2003. … In 2003 there was a Sandia team formed to secure the extension and we worked closely with [Lockheed Martin]."
Lockheed Martin said it has cooperated with the IG regarding his review of the lobbying for the labs’ contract extension.
"With regards to the Inspector General report, Sandia has cooperated with the Inspector General’s review and will continue to do so," the company said in a statement.
‘OFFICIAL USE ONLY’
The IG’s special inquiry report was labeled "OFFICIAL USE ONLY," meaning it was not meant initially for public dissemination.
"Appropriate safeguards should be provided for the report, and access should be limited to Department of Energy officials who have a need to know," the report’s title page read. "The report may not be disclosed outside the Department without prior written approval of the Office of the Inspector General."
Disclosure of the report outside DOE, however, is determined by FOIA. Public records requests by Greenwire for the report triggered its release, though the document is still pockmarked by redactions under FOIA’s privacy and law enforcement exemptions.
In November 2014, the IG released a summary report (Greenwire, Nov. 12, 2014). It also noted on its website that "the full report on this matter has been designated as for ‘Official Use Only’ and is not available for public release."
At 10 pages, the summary report is not as extensive as the full report. The "official use only" version weighs in at 29 pages and provides more detail on the lobbying campaign for the Sandia labs’ contract.
Reporters Katherine Ling and Hannah Northey contributed.