Monday, October 01, 2007
Corporate Welfare: Anybody Want To Get Paid $13,400 a month to do NOTHING? Your Tax Dollars at work.
Experts Question Official's Deal With Nonprofit
By Robert O'Harrow Jr.
Washington Post Staff Writer
Monday, October 1, 2007; A01
While waiting to be confirmed by the White House for a top civilian post at the Air Force last year, Charles D. Riechers was out of work and wanted a paycheck. So the Air Force helped arrange a job through an intelligence contractor that required him to do no work for the company, according to documents and interviews.
For two months, Riechers held the title of senior technical adviser and received about $13,400 a month at Commonwealth Research Institute, or CRI, a nonprofit firm in Johnstown, Pa., according to his resume. But during that time he actually worked for Sue C. Payton, assistant Air Force secretary for acquisition, on projects that had nothing to do with CRI, he said.
Riechers said in an interview that his interactions with Commonwealth Research were limited largely to a Christmas party, where he said he met company officials for the first time.
"I really didn't do anything for CRI," said Riechers, now principal deputy assistant secretary for acquisition. "I got a paycheck from them."
Riechers's job highlights the Pentagon's ties with Commonwealth Research and its corporate parent, which has in recent years received hundreds of millions of dollars worth of grants and contracts from the military, and more than $100 million in earmarks from lawmakers.
Commonwealth Research and its parent company, Concurrent Technologies, are registered with the Internal Revenue Service as tax-exempt charities, even though their primary work is for the Pentagon and other government agencies. In a recent report Concurrent, also based in Johnstown, Pa., said it was among the Defense Department's top 200 contractors, with a focus on intelligence, surveillance, force readiness and advanced materials.
Concurrent's top three executives each earn an average of $462,000. The company reported lobbying expenditures of $302,000 for the year ending in June 2006, more than double what it spent on lobbying four years earlier.
Concurrent and its subsidiaries receive grants and contracts for an eclectic variety of other activities, including support of faith-based initiatives and specialized welding work. Last year, Commonwealth Research got a $45 million sole-source arrangement to provide reports to the National Security Agency, CIA and other intelligence agencies.
IRS rules allow charitable organizations to engage in a wide range of activities, including services for the federal government. Commonwealth Research's president, Frank W. Cooper, said the company qualifies as a charity because it provides services both locally and to the federal government. He said it also serves as an educational institution.
But Marcus Owens, former director of the exempt organizations division at the IRS, said Concurrent and Commonwealth Research appear to be "providing the sorts of services that are commonly provided by business organizations like Boeing and Lockheed Martin and others, and not charities."
"There are a lot of businesses doing this kind of stuff that are paying taxes," said Owens, a partner at Caplin & Drysdale law firm. "It makes me wonder what the charitable purpose is here."
Specialists in federal contracting law said Commonwealth Research's arrangement with Riechers may have violated regulations governing how the Air Force is permitted to hire and use contractors, including a prohibition on certain uses of consultants to augment the federal workforce. The prohibition is designed in part to ensure that employees in sensitive government jobs serve the public and not corporate or other outside interests.
"It's a seriously questionable arrangement to have him on the payroll not even pretending to do assigned and properly monitored work," said Charles Tiefer, a contracting law professor at the University of Baltimore Law School. "The principal deputy assistant secretary for acquisition and management should not be making himself into a glaring example of what not to do with acquisition and management."
In an interview, Cooper acknowledged that he hired Riechers at the request of the Air Force. Cooper said he did not know precisely what Riechers did for the government, saying he did not ask because he assumed such information was available only on a "need-to-know" basis.
Contrary to Riechers's account, Cooper said they had met once at the Pentagon before Riechers was hired to be a part of a studies-and-analysis program at the company. "It was not just a make-work-type task," Cooper said.
Riechers was paid a total of $26,788 as part of the contract to provide research to the Pentagon, CIA and other intelligence agencies. In a statement, Riechers said he had no problem accepting the pay because Commonwealth Research is a nonprofit organization "that had an established relationship" with the military service. Riechers said he has not made any decisions relating to Commonwealth Research contracts since his appointment.
"We needed some way to kind of gap me," Riechers said about the temporary job.
The Air Force defended the arrangement, saying Riechers was well qualified to perform the work.
"While Mr. Riechers's appointment was pending, the Air Force identified an opportunity to gain immediately from Mr. Riechers's expertise under a preexisting contract and open task order with Commonwealth Research," the Air Force said.
Commonwealth Research was created a decade ago. In documents filed with the IRS, the firm describes itself as "a national resource committed to assisting industry and government achieve world-class competitiveness."
Documents show Commonwealth Research apparently had no revenue for several years. That changed in 2004, when it reported revenue of almost $633,000. The company reported receiving government funding totaling $3.2 million in fiscal 2006. At least two-thirds of that came from the Air Force, according to Daniel R. DeVos, chief executive of Concurrent and chairman of Commonwealth Research.
Commonwealth Research has about 20 employees who DeVos said are involved in "very specialized work for DoD and the intelligence community." Cooper, the Commonwealth Research president, said about eight of those employees are interns or students hired to save the government money.
Commonwealth Research is one of eight Concurrent subsidiaries, documents show. That includes at least four other tax-exempt organizations and three for-profit firms.
Concurrent reported more than $248 million in revenue for fiscal 2006 -- almost triple the amount a decade ago. About $213 million of that total came from "government contributions (grants)," according to tax documents. The company said much of its revenue comes in the form of fully competed contract awards.
Edward J. Sheehan Jr., a senior vice president and chief financial officer, said the IRS approved Concurrent's charitable status because the company "lessens the burden on governance" and helps "the federal government and American industry to perform more effectively through the use of emerging technologies."
A leading patron of Concurrent in Congress is Rep. John P. Murtha (D-Pa.), who represents the district where the company is based. Murtha, chairman of the House Appropriations defense subcommittee, announced the creation of the company in 1987.
Murtha recently arranged $10 million in earmarks for the company for fiscal 2008, according to records compiled by Taxpayers for Common Sense, a nonpartisan watchdog group. One $3 million earmark is for an Air Force project.
Through a spokesman, Murtha said he has no financial ties to Concurrent. Murtha said the company's "quality work and research has resulted in improved equipment for our troops. Their competitive price has saved taxpayers money, and they continue to deliver on-time results."
Riechers is a decorated Air Force officer who retired in 2002. He joined SRI International, another nonprofit firm, as a senior technical adviser. From December 2002 to November 2006, he worked in a variety of Pentagon jobs while being paid by SRI International. In November, Riechers was nominated to be a senior acquisition official, taking the title last held by Darleen A. Druyun. She was sent to prison in 2004 after she left the Air Force for negotiating a job with Boeing while she worked for the government and for favoring the company in several procurement decisions.
At the time of his appointment, Riechers's job with SRI International ended.
Riechers worked for Commonwealth Research from Nov. 27 to Jan. 25. He was appointed to his federal post on Jan. 26 and "received an ethics briefing from Air Force lawyers the same day," said an Air Force statement.
Assistant Secretary Payton said in a statement that the Air Force needed someone who could meet "a unique set of requirements." He is now responsible for research, development and modernization programs at the Air Force worth more than $30 billion a year, according to his biography.
"The Air Force needs his skills, and we need him as the principal deputy to the assistant secretary of the Air Force for acquisition as we continue to acquire the next generation of weapon systems in a transparent and impartial manner," Payton said.
Steve Schooner, co-director of the Government Procurement Law Program at George Washington University, said the Air Force's use of Commonwealth Research to pay Riechers "seems to make a mockery of any number of fundamental public procurement laws and policies."
"It's not transparent, it's not competitive," he said, "and no one seems accountable for the process or the outcome."
Labels: Corporate Welfare