Own the Beachfront Home of Your Dreams! Just Call John Murtha

By Ken Silverstein

When the Republicans ruled Congress, there were certain lobbying firms and individual lobbyists known to be especially plugged-in with GOP leaders and who hence signed up droves of clients. These included Copeland Lowery Jacquez Denton & White (tight with California Congressman Jerry Lewis), the Alexander Strategy Group (buddies with Tom DeLay), and, of course, Jack Abramoff. With Democrats back in charge, there are new lobbying kings in town and among the best connected is the PMA Group, a firm I've discussed before. Now I've learned the story of how PMA and a New Jersey-based defense electronics firm called DRS Technologies Inc. have teamed up to extract at least hundreds of millions of dollars in earmarks—the polite term for pork—for a single program, all with the help of Congressman John Murtha, head of the House defense appropriations subcommittee.

DRS was founded in the late 1960s by Leonard Newman, who had previously worked as a Division Manager at Loral Corporation. Today the firm is headed by his son, Mark Newman, who joined in 1973. Since then, DRS has grown from a small firm with a few million dollars in annual revenues and less than 50 employees into a multi-billion company with 10,000 employees, and its top officers and board members include a number of former defense officials and officers who have moved through the revolving door. “With a compound annual revenue growth rate of 32 percent over the past five years, DRS has been recognized as one of the fastest growing defense technology companies in the world,” says the firm's web site.

DRS, like many small defense companies, struggled until it figured out how to beat the system. Step one was cultivating a relationship with Murtha, a long-time defense powerhouse who plays a key role in doling out money from the Pentagon's budget. With the end of the Cold War, DRS acquired a number of defense companies, including Laurel Technologies (which produced electronic assemblies and cables in a converted skating rink) in Murtha's district of Johnstown, Pennsylvania. DRS is a perennial supporter and sponsor of the Showcase for Commerce, a huge defense industry showcase held in Johnstown and presided over by Murtha. (The congressman personally visits each booth, “spending time with the exhibitors to discuss their products, services and capabilities and how each firm can help build a stronger supply chain for the defense industry,” according to the event's website.) This year's Showcase for Commerce will kick off on May 31, and DRS will host the VIP Reception/Opening Ceremony, which will be “[h]ighlighted by a welcoming address by Congressman Murtha.” As we'll see below, DRS has also become a major financial sponsor of Murtha's political career.

DRS also lobbies aggressively. Until the late-1990s, DRS had a tiny Washington office, but it now has numerous employees working the Hill and the Pentagon. It has retained a number of outside firms over the years, including the Ashcroft Group, headed by former attorney general John Ashcroft, and the Cohen Group, led by former senator and Clinton-era secretary of defense William Cohen. But DRS's key lobby shop is the PMA Group, to which it paid $180,000 last year.

PMA was founded in 1989 by Paul Magliocchetti, who—as described in a past pitch to a potential client that I was able to obtain—is a former GAO auditor and department manager, and ex-staffer on the House defense appropriations subcommittee, where he had “responsibility for $30 billion in Navy procurement accounts.” PMA has dozens of lobbyists, virtually all of whom came from the Hill or the Pentagon. According to the pitch, all of its personnel “maintain strong contacts” with “Congressional defense oversight committees” and “all Appropriations subcommittees.” PMA, according to the pitch, “becomes part of your organization and complements your existing resources.” The firm maintains “active liaison with key members of Congress and their staff to safeguard client interests,” and helps “design and tailor procurement strategies that maximize successful pursuit of government contract opportunities.”

PMA has close links to a number of key members of the defense appropriations subcommittee. Its lobbyists include Rich Kaelin, the former chief of staff to Pete Visclosky, and Melissa Koloszar, former chief of staff to Jim Moran.

But PMA's best friend in congress is Murtha. Numerous firm clients have received lavish earmarks from the congressman's subcommittee, and PMA is widely known in insider circles as the unofficial gatekeeper to Murtha's 12th district. Six PMA lobbyists work for DRS, including Julie Giardina, a former Murtha staffer, and Daniel Cunningham, who formerly worked for the Army and who is extremely close to the congressman (the two men are golfing buddies and a Hill source told me that Murtha even uses Cunningham as his unofficial driver). A third key lobbyist on the DRS account is Greg Hansen, who according to the pitch, is a retired Navy captain who has contacts “at senior levels” at various Navy agencies.

Which leads me to the Q-70 Advanced Display System, a Navy program that has been a chief cash cow for DRS. (As noted, DRS has a number of lobby shops on retainer, but PMA handles funding requests for the Q-70). The Q-70, which is built in Johnstown, “displays all of the activity surrounding a ship—including the airplanes, missiles, surface ships and subsurface activity of submarines and torpedoes—on a single console or workstation.”

The program to build the system was originally awarded in 1994. At the time, DRS was too small to compete alone so it partnered as a subcontractor with Lockheed Martin, and the team won the competition. Lockheed brought along big-contractor expertise and management capabilities, and DRS brought along vision and the 12th Congressional District of Pennsylvania. Since then, I've been able to determine that hundreds of millions of dollars from the Navy budget have been allocated as earmarks to the Q-70 program. Earmarks are hard to find, however, and I've been told that total funding for the project actually approached $1 billion if you know where to look. In the most recent defense appropriations bill the Q-70 received at least another $4.3 million.

The Q-70 triumvirate hold three places on the list of Murtha's top six career donors: Lockheed has given him $140,075, DRS another $132,550, and PMA has kicked in $107,500. All three help raise money for Murtha as well. A copy of the invitation to a Murtha fund-raiser held last May at the Ritz-Carlton Hotel in Arlington, Virginia reveals numerous individuals from the three firms on the 102-member Host Committee for the event, which honored the congressman's “Lifetime of Major-League Service to Country.” These included CEO Newman from DRS, Magliocchetti and Cunningham from PMA, and at least three lobbyists from Lockheed, including Greg Dahlberg, former staff director of the Defense Appropriations Subcommittee.

The Q-70 is not a horrific boondoggle. It is based on proven technology. But the program has thrived more than it deserved to on the basis of DRS's (and Lockheed's) political smarts. It's become the only game in town as far as the Navy is concerned. The program started out with a few types of consoles, but today there are more than a score, and the Q-70 is ubiquitous throughout the Navy, which has bought thousands of systems.

(“We don't comment on these matters,” Carmen Jacobs, a PMA spokesman, told me when I asked him about the firm's relationship with DRS and Murtha, and the Q-70. Jacobs soon called back to tell me that the Q-70 was an excellent program that had saved taxpayers more than $1 billion. I left messages with Murtha's office and DRS but have not yet heard back; if I do, I'll immediately update this story.)

So, at least for the key players, it's a win-win-win. Earmarks for the Q-70 program fueled the growth of DRS and made Mark Newman a very wealthy man. He owns a home in the affluent New Jersey suburbs and two years ago bought a $2 million beachfront property in Florida. Meanwhile, PMA makes good and easy money lobbying for the firm, and Murtha's campaign chest is well-subsidized from Q-70 lobbyists and contractors. You can almost hear the champagne glasses clinking.

Update, 2:24pm. "We don't comment on these matters," Carmen Jacobs, a PMA spokesman, told me when I asked him about PMA's relationship with DRS and Murtha, and with the Q-70. Jacobs soon called back to tell me that the Q-70 was an excellent program that had saved taxpayers $1.6 billion. "Programs like the Q-70 provide our warfighters with the best technology and equipment they need to protect American lives," said Matt Mazonkey, Murtha's spokesman, in an e-mail. "Since making the decision to compete the Q-70 program in 1993, we have saved taxpayers $1.6 billion."

I haven't been able to determine where that $1.6 billion figure comes from, and I'm confused by Mazonkey's statement since as far as I can tell no warfighters are outfitted with the Q-70. (It may be that Murtha's office sends out a standard reply to questions about earmarks he supports, and the words "Q-70," "1993," "$1.6 billion, and "warfighters" were inserted to fill in the blanks, with the latter meant to be "naval vessels.") I left a message with DRS but have not yet heard back; if I do, I'll update this story.