Pentagon panel has contractor contacts

By Ray Locker and Ken Dilanian, USA TODAY
WASHINGTON — More than half of the panel members appointed to review the Pentagon’s latest four-year strategy blueprint have financial ties to defense contractors with a stake in the planning process, a USA TODAY analysis shows.

Congress created the 20-member panel in 2006 to analyze the Defense Department’s four-year plan, known as the Quadrennial Defense Review. Lawmakers called for the committee to provide an independent “alternate view” of the Pentagon’s plan, which shapes future military policy and spending on weapons and other needs.

A dozen of the unpaid panelists were appointed by Defense Secretary Robert Gates and eight by the top Republican and Democrat members of the House and Senate Armed Services committees. Eleven work for defense contractors as employees, consultants or board directors, records show.

“The Pentagon often talks about its cooperation with industry, but this makes you wonder who’s wearing the pants in this relationship,” said Mandy Smithberger, national security investigator for the Project on Government Oversight.

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Gates “takes very seriously” the ethical issues confronting panelists with ties to defense firms, said Paul Hughes of the U.S. Institute of Peace, the QDR committee’s executive director. Last fall, the secretary ordered that his appointees be covered by federal ethics rules and had to disclose their assets and sources of income, Hughes said.

Initially, according to panelist John Lehman, congressional appointees were not to be subject to the executive branch ethics and disclosure rules.

This week, after inquiries by USA TODAY, officials from the Pentagon and Congress decided that all panel members will be governed by the same rules, Hughes said. The panelists have agreed to recuse themselves from considering any recommendation that could affect a company with which they are affiliated.

Committee members will have to file financial disclosure statements to the Pentagon, but those disclosures won’t be publicly available, said Cynthia Smith, a Defense Department spokeswoman.

One case that will require a recusal involves panelist Lehman, a former Navy secretary in the Reagan administration who was appointed to the committee by Sen. John McCain of Arizona, the ranking Republican on the armed services panel. Lehman runs an investment company specializing in defense holdings. His firm owns Atlantic Marine Holding Co., which repairs Navy ships in Mayport, Fla. The latest version of the review, released last week, recommends moving a nuclear aircraft carrier to Mayport from Norfolk, Va., which could mean more business for Atlantic Marine.

Lehman said he would recuse himself from reviewing the Mayport carrier issue and anything else that touched on his business interests. At the same time, he said, he and others with defense ties are capable of offering unbiased advice. Most defense experts have some financial affiliation with the defense industry, Lehman said, pointing out that the Defense Department does business with more than 33,000 companies and also funds university research.

“Could you find anybody who knows anything about defense who doesn’t have some potential conflict of interest?” he asked.

Some experts say the answer is yes. “There are retired military officers or Defense officials who don’t have defense industry ties. If you wanted to find these people, you could,” said Jordan Tama, an American University professor and expert on government commissions.

The panel’s co-chairmen — former Defense secretary William Perry and former National Security adviser Stephen Hadley— each work for the defense industry. Perry is chairman of the board of LGS Innovations, a division of Alcatel Lucent, which won nearly $70 million in defense contracts last year, and Hadley is on the board of Raytheon, which won more than $15.8 billion, according to government contracting data. Neither responded to requests for comment.Four other members — former diplomat Richard Armitage, retired admiral David Jeremiah, retired general Jack Keane and retired major general Robert Scales — run consulting companies that list some of the nation’s largest defense firms as their clients. Jeremiah and retired general George Joulwan are also members of the board of directors of General Dynamics, a defense contractor that makes tanks, ships and other weapons while also providing intelligence services.

“It’s pretty straightforward,” Jeremiah said. “You disclose any affiliation that you have, they are reviewed by legal counsel, and if there’s one where there is a problem, it is resolved in one of several ways. You can be recused from the discussion of that particular item.”

That’s not sufficient, said Janine Wedel, a George Mason University professor and author of a book on government contracting. “It’s the ultimate irony when an entity ostensibly set up to provide impartial oversight is in fact rigged to be much less impartial than what it is supposed to be overseeing,” she said.