The Gift Economy

Published — February 28, 2017 Updated — March 1, 2017 at 10:30 am ET

Trump pick for Air Force boss frustrated auditors with lucrative, murky consulting for nuclear weapons labs

Former lawmaker Heather Wilson refused to detail what she was doing for $20,000 a month

Introduction

A federal inspector contacted the Energy Department fraud hotline a few years back to flag irregularities in contracts that several nuclear weapons laboratories had signed with a former New Mexico Congresswoman whom President Trump has designated to become the new Air Force Secretary.

A far-reaching probe ensued in Washington after the hotline contact, which ended in a demand that the weapons labs give back nearly a half-million dollars to the government. The former Congresswoman, Heather Wilson, has said she did not do anything wrong in trading on her Washington experience to become a “strategic adviser” to the labs.

But internal Energy Department documents newly obtained by the Center for Public Integrity make clear that some of the contracting irregularities stemmed from demands specifically made by Wilson in her negotiations with the labs.

Wilson’s nomination now represents the last chance for President Trump to get one of his first choices for service secretary installed. Army secretary nominee Vincent Viola, a Wall Street trader with a personal net worth estimated at $1.8 billion, withdrew from consideration on Feb. 3. The challenges of breaking ties with his businesses “have proven insurmountable,” Viola’s camp said in a written statement. Then on Sunday, Navy secretary nominee Philip Bilden stepped aside. He cited worries that submitting required ethics documents describing his business connections would cause “undue disruption and materially adverse divestment of my family’s private financial interest.”

If confirmed, Wilson would oversee billions of dollars-worth of military work by the Lockheed Martin Corp., whose subsidiary ran one of the nuclear weapons labs that hired her from 2009 to 2011, starting a day after she left Congress. Wilson’s work involved using her contacts in Washington to try to gin up new federal business opportunities for the privately run weapons labs.

But the labs got into trouble by billing the government for her work, and one of them was accused of effectively using federal funds to lobby for more federal funds, a violation of law, according to the Energy Department’s Inspector General. The lab’s manager, the Sandia Corporation, agreed to pay a total of $4.7 million dollars to the government to settle the case, although it too denied any wrongdoing.

According to investigators, Wilson refused from the outset to provide a detailed accounting — at any time — of how she did her work while earning fees from Sandia and from the Los Alamos National Laboratory totaling $20,000 a month.

Refusing to account for her time constituted an exception to DOE contracting rules, and it flummoxed some of those within the department, and even within the labs, who were tasked with ensuring that taxpayer funds were being prudently spent, according to notes kept by the investigators who probed the contracts. The contracting officials became upset about the arrangement, and one of them eventually rebelled by blowing a whistle through the hotline.

Two paychecks for one meeting, auditors said

They complained in part that Wilson’s silence about how she spent her time had blocked their efforts to determine whether she was billing the labs fairly or improperly collecting fees from more than one laboratory for doing essentially the same work. They also expressed uncertainty that Wilson had met a contractual requirement that she devote 50 hours a month to meeting each of the labs’ needs.

On at least two occasions while working as the head of a consulting firm she established after leaving Congress, for example, Wilson occupied a single seat at government meetings in Washington, but collected two paychecks from firms running separate labs, which subsequently each billed the government for these expenses.

Wilson “billed both LANL [Los Alamos] and SNL [Sandia] full consultant costs,” inspector general investigators wrote about a June 2010 White House meeting Wilson attended. “Invoices do not describe work performed that was unique to each laboratory.” She billed the labs in the same way after unspecified December 2010 meetings in Washington, DC.

“Due to the lack of work product, we were unable to prove or disprove the potential issue of duplicative services,” said Felicia Jones, a spokeswoman for the Energy Department’s Inspector General Office, in a Feb. 16 email to the Center for Public Integrity about the notes, which were obtained under the Freedom of Information Act.

The contracts that govern federal payments to the private firms that operate the Sandia laboratory, based in Albuquerque, and the nearby Los Alamos National Laboratory require clear evidence of the work that subcontractors such as Wilson conduct, as one of several conditions for reimbursement by the government. “Examples of such evidence are work products and invoices with sufficient detail regarding the time expended and nature of the actual services provided,” an Energy Department Inspector General’s report in June 2013 said.

But a Sandia laboratory contracting official told investigators in an interview on Jan. 29, 2013, that when Sandia requested that Wilson fill out a time record, “Ms. Wilson refused to do it.” An official at Los Alamos similarly told the investigators that “Ms. Wilson was very direct with him, stating that she was not going to account for her time in any detail.”

“He said…Ms. Wilson stated…she does not need to do that for Sandia and she was not going to do it for them,” according to the investigator’s notes. Wilson also asserted “the $10,000 a month fee was not negotiable. That…was her fee to government clients, and her regular fee to commercial accounts was much higher,” said the official, whose name was redacted from the documents.

Asked this month in emails for comment about this account, Wilson did not respond. She also did not respond to phone calls.

probe by the inspector general’s office showed Wilson coached lab executives that they could extend their contract to run the lab by telling Washington decision-makers that “competition is not in the best interest of the government.” In August 2015 Sandia reached a settlement with the Justice Department over its use of federal funds to finance her work that called for its payment to the government of $4.7 million, but admitted no wrongdoing.

Los Alamos National Security, LLC, a consortium consisting of Bechtel, BWXT Government Group, URS (since acquired by AECOM) and the University of California that operates Los Alamos National Laboratory, paid Wilson $195,717.52 between August 2009 and February 2011. Wilson also received approximately $30,000 from the contractors that ran the Nevada National Security Site and Oak Ridge National Laboratory during that time.

Trump announced Wilson as his choice for Air Force secretary on Jan. 23. Wilson hasn’t submitted the required pre-confirmation financial disclosure to the Office of Government Ethics. Her confirmation hearing before the Senate Armed Services Committee has not yet been scheduled.

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