EDITORIAL BOARD ALERT: Defense Secretary Shouldn’t Undo McCain Law Restricting Lobbying

Esper Seeks to Make It Easier for Former Pentagon Officials to Become Lobbyists for Defense Contractors

Contact: Craig Holman, cholman@citizen.org, (202) 905-7413

Mandy Smithberger, msmithberger@pogo.org, (202) 347-1122

The U.S. Department of Defense is taking advantage of the public attention to the COVID-19 crisis by quietly lobbying Congress to reverse revolving door restrictions that prevent senior Pentagon officials from lobbying for defense contractors for two years after leaving public service.

Revolving door abuses are rampant at the Defense Department, where contractors offer lucrative employment opportunities for well-connected Pentagon officials in an effort to rig the bidding process in their favor. This often translates into fraud and a waste of taxpayer dollars since contracts may be awarded based on insider connections rather than merit. That is why the agency needs effective restrictions to rein in these abuses.

The late U.S. Sen. John McCain (R-Ariz.) was alarmed by the many former Pentagon officials who become lobbyists for businesses that were seeking major defense contracts from the U.S. Department of Justice. McCain authored a provision in the defense authorization law three years ago that: (1) extended the cooling-off period during which former Pentagon officials cannot make lobbying contacts with their former colleagues from one year to two years; (2) expanded the scope of restrictions by barring these former officials from lobbying the entire Department of Defense, not just their own offices within the department; and (3) included within the two-year cooling-off period a ban on conducting consulting and providing strategic advice on behalf of a contractor’s lobbying campaign.

Defense Secretary Mark Esper, a former lobbyist at the defense technology corporation Raytheon, is pushing in the fiscal 2021 budget request for Congress to repeal the expanded scope of who former officials may lobby and remove the ban on conducting consulting and providing strategic advice for lobbying campaigns on behalf of defense contractors.

Fifteen organizations that monitor government spending urged Congress last week to reject the Pentagon’s effort to roll back the revolving door restrictions, including Public Citizen, Citizens for Responsibility and Ethics in Washington (CREW), and Revolving Door Project.

We urge you to call on Congress to preserve the protections against fraud and waste in defense spending by rejecting the Pentagon’s request to reverse McCain’s strong revolving door restrictions.

A. The Failed Revolving Door Restrictions Beyond the Department of Defense

Public officials are charged with creating policies that serve the public interest. Increasingly, however, these officials are leaving government service to work for private interests, as well as their own, as lobbyists or strategic consultants on behalf of lobbying campaigns. This is known as the “revolving door” in which government officials swing back and forth between public service and lucrative private sector employment. The revolving door muddies the mandate of public officials, overlapping it with special and personal interests.

The revolving door threatens the integrity of government in at least two ways. First, it gives the impression, real or not, that public officials may be influenced in their official actions by implicit or explicit promises of future lucrative jobs. Second, it shows public officials cashing in on their public service, often to the highest bidder on K Street. The image of Congress took a major hit when former U.S. Rep. Billy Tauzin (R-La.) helped write the 2003 prescription drug bill that ensured no price controls on drugs, costing American taxpayers and senior citizens a fortune in Medicare expenses, and then accepted a $1.1 million job as head of the pharmaceutical lobbying association.

The revolving door restriction for the rest of the executive branch as well as Congress, other than the Department of Defense, which was updated in 2008, is contained in 18 USC 207 as part of the Ethics in Government Act of 1978. Generally, the law prohibits most senior government officials from making “lobbying contacts” with their former offices for one year after leaving public service. For senators and very senior executive branch personnel, the cooling-off period is two years.

Despite this restriction, the revolving door continues to swing out of control in most branches of the federal government. As business interests have become more intertwined with government regulations and other official actions, the revolving door has become a bigger problem – so pervasive that it seriously threatens the integrity of the legislative process. One academic study of members of Congress between 1976 and 2012 found a dramatic growth in the revolving door over just the past few decades. Relatively few members became lobbyists in the 1970s (fewer than 10% for both the House and Senate). The trend accelerated dramatically in the 1990s and 2000s, with 50% of former House members and 60% of former senators becoming registered lobbyists in 2012. A more recent study by Public Citizen found that in 2019, nearly two-thirds of former members of Congress had moved into jobs working for lobby firms, consulting firms, trade groups or business groups that seek to influence federal governmental policies.

The same trend of a revolving door spinning out of control is evident in the executive branch as well. It was particularly a problem for the Department of Defense, the federal department that tends to award the largest and most lucrative government contracts. A study by the Project on Government Oversight (POGO) found 645 instances of the top 20 defense contractors hiring former senior government officials, military officers, members of Congress and senior legislative staff as lobbyists, board members or senior executives in 2018. Of those instances, nearly 90% became registered lobbyists, where the operational skill is influence-peddling to help secure government contracts and other official favors.

POGO’s report goes on to express McCain’s growing concerns. “The leadership of the Senate Armed Services Committee expressed concerns in 2017 that the Department was too close to and depended too much on its largest contractors. ‘Ninety percent of the spending of the taxpayers’ dollars comes out of five different corporations. That’s not what our Founding Fathers had in mind,’ then-Senate Armed Services Committee Chair John McCain noted at a confirmation hearing.”

Several incentives that have caused this drastic increase in revolving door abuses, all of which are connected to money. Wealthy corporations are willing to make the investment in well-connected lobbyists because they know who to reach out to in government and how to appeal to their former colleagues as well as get their phone calls answered. When big money is at stake, as in defense contracts, these lobbyists are hired at premium salaries – at it pays off for the wealthy business that can afford to play the game.

B. Why Doesn’t the Federal Revolving Door Restriction Work?

At least three elements of the federal revolving door restriction contained in 18 USC 207 render the ethics measure ineffective.

        1. The Cooling-Off Period

One of the problems is that the “cooling-off” period for most former officials is far too short. “Cooling-off” periods are set lengths of time during which former public officials are prohibited from lobbying their former colleagues after leaving office. At the federal level, there is a one-year ban for members of the House, their senior level staff and senior Senate staff, and a two-year ban for senators. Members of Congress are prohibited from making lobbying contacts in both chambers of Congress, though they may lobby the executive branch and state governments. In the executive branch, there is a two-year cooling-off period for those of a “very senior” level (including the vice president, Cabinet officials and their top deputies) from lobbying the executive branch, and a one-year cooling-off period for “senior” officials from lobbying their former agencies.

The intent is to keep former officials and employees from tapping into their inside connections in government for private gain. One year is clearly too short. One year does not even cover a single legislative session, during which there is little turnover in officers and employees. It also takes time for inside connections through friendships and acquaintances to fade. Two years is a minimum because it at least covers one entire legislative cycle, after which there will be some turnover, especially among staff.

        2. Scope of Agencies That Cannot Be lobbied

Most former government officials are prohibited from making a lobbying contact with their own agency or even just their own division within an agency for one or two years. With the exception of very senior officials, such as Cabinet officers, former officials can make lobbying contacts with other agencies and divisions in the federal government. That means these same former officials may in fact immediately become lobbyists after leaving government service and make lobbying contacts throughout the federal government. When the restriction is limited to just a single division within the same agency, as it was for the Department of Defense prior to the McCain amendment, former officials easily cash in on their connections throughout the agency as hired gun lobbyists for wealthy corporate interests.

        3. Lobbying Contacts vs. Lobbying Activity

The single most important shortcoming of revolving door restrictions – a shortcoming that is so pervasive as to render most revolving door policies as little more than an inconvenience to government officials – is widely known as the “strategic consulting” loophole.

This loophole occurs when a revolving door policy specifies that the type of lobbying activity banned during the cooling-off period is only lobbying contacts and communications with government officials. Such a narrow category of prohibited activity means that former public officials may immediately join a lobbying firm upon leaving government, design a lobbying campaign on behalf of paying clients, organize and direct the lobbying team – but simply avoid picking up the telephone and making the lobbying contact. Any and all strategic consulting activities are permitted, and in all likelihood, those in the federal government will even know that their former colleague is behind the lobbying campaign. The strategic consulting loophole is so prevalent at the federal level that it makes a mockery of the federal revolving door restriction.

C. Conclusion: Preserve McCain’s Revolving Door Restrictions for the Department of Defense

McCain closed each of these three loopholes in the federal revolving door restriction for the Department of Defense. The cooling-off period for senior Pentagon officials is expanded to two years, though it remains one year for less senior officials. Former Pentagon officials are prohibited from lobbying the entire Department of Defense, not just their own offices within the department. And – most importantly – prohibited lobbying during the cooling-off period includes consulting and strategic advising for a lobbying campaign (“lobbying activity”) as well as oral or written communications to former colleagues (“lobbying contact”).

This is a revolving door policy that should exist for the entire federal government. In fact, it was proposed in the “For the People Act of 2019” (H.R. 1). But it is most appropriate and imperative for the Department of Defense, where government contracts are exceedingly lucrative. A good, solid revolving door policy goes a long way toward preventing fraud and waste in government spending and helps rein in government corruption.

The Department of Defense 2021 fiscal budget request, with the provisions that would repeal McCain’s amendments, is being considered later this month before the House Armed Services Committee, chaired by U.S. Rep. Adam Smith (D-Wash.), and the Senate Armed Services Committee, chaired by U.S. Sen. James Inhofe (R-Okla.).

We urge you to call on Congress to preserve the protections against fraud and waste in defense spending by rejecting the Pentagon’s request to reverse McCain’s strong revolving door restrictions on former Defense Department officials looking to lobby on behalf of defense contractors.