The Money Trail: Contractors lean to the right

[IMGCAP(2)]President George W. Bush will be a shoo-in for the November election if the largest federal IT companies and their employees get their way.

As a group, these contractors in overwhelming numbers are supporting President Bush and other Republican candidates with their campaign contributions, with 62 percent of their total donations going to the GOP and 38 percent to the Democrats, according to an analysis prepared for Washington Technology by the Center for Responsive Politics, a nonpartisan Washington group that tracks campaign contributions.

The center tracked contributions of Washington Technology's Top 100 federal IT contractors as reported to the Federal Election Commission, including contributions of company employees, spouses, and political action committees. The Top 100 list, published annually in May, ranks the largest contractors based on their federal prime contracting IT revenue.

As of Sept. 13, the Top 100 contractors had given Republicans $13.8 million and Democrats $8.4 million for the contribution cycle that began Jan. 1, 2003.

"It's typical of corporate donations, because ideologically they prefer Republican policies, and Republicans have a majority" in Congress, said Anthony Corrado, a visiting fellow and campaign finance expert at the Brookings Institution, a liberal think tank in Washington.

The chief executives of these companies are even more emphatic in their support for Republican candidates, giving 79 percent to Republicans and just 21 percent to the Democrats. This includes donations by CEO spouses.

So far, the Top 100 CEOs have contributed $818,043 to the political parties and their candidates in the 2004 campaign, with $643,877 directed to Republicans. They have given $71,775 to President Bush and only $9,000 to Sen. John Kerry (D-Mass.)

Michael Dell, chief executive of Dell Inc., topped the list, giving $119,750 to Republican candidates and $5,000 to Democrats. Dell gave $6,000 to Bush, but nothing to Kerry.

Among the Top 100 companies, Verizon Communications Inc. was the No. 1 contributor to 2004 political campaigns. So far this contribution cycle, the New York company has given more than $1.6 million ? almost $1 million to Republicans and $618,000 to Democrats.

"We believe in good public policy," said Kevin McLernon, Verizon's director of government relations. When making political contributions, Verizon considers politicians' stands on issues, such as health care, broadband policy and Internet taxation, of importance to the company and business in general.

"We use the PAC to support the elected officials who support our public policy agenda," McLernon said.

Following Verizon on the list of top contributors are defense giants Northrop Grumman Corp. ($1.6 million), Lockheed Martin Corp. ($1.5 million), Boeing Co. ($1.4 million) and General Dynamics Corp. ($1.3 million).

Although companies and their employees might give purely for ideological reasons, they also want to win support on policies and legislation that affect their businesses. And government contractors want to court the good will of lawmakers who control spending on their projects.

"As a general rule, most of these companies and executives give because they think they're going to get something in return, such as a seat next to a congressman at a dinner or a golf outing with a committee chairman.

Often contributions are solicited with that in mind," said Larry Noble, executive director and general counsel at the Center for Responsive Politics.

"People give to buy access. They give to influence legislation," Noble said. "Lawmakers have a limited amount of time they can spend with people, and they are more likely to spend it with contributors."

Many, but not all, companies on the list have political action committees, or PACs, which can legally give up to $5,000 per candidate per election in primary and general elections.

Corporate PACs tend to make contributions to both Republicans and Democrats, especially to congressional committee members who have jurisdiction over areas of interest to the companies, such as defense appropriations, the Brookings Institution's Corrado said.

"They have good relations with both sides," he said. "It's more practical giving than ideological."

The Giving Season

It comes as no surprise to campaign finance experts that a telecommunications company was the lead giver among Top 100 contractors. In 2000, AT&T Corp. was the top corporate donor, giving nearly $5.3 million dollars, $3.1 million of which went to Republicans. Congress and the administration regularly deal with a host of policies and regulations ? such as spectrum allocation ? that affect the telecom industry.

"Companies that are subject to being regulated to death will give [contributions] because the government tries to exercise too much control," said Todd Gaziano, director of the Center for Legal and Judicial Studies at the Heritage Foundation, a conservative think tank in Washington. "So naturally, they're going to give money if they think it will stop them from being regulated."

Corrado also pointed out that many telecom companies provide in-kind communications services as contributions to the parties.

Not surprisingly, the next four largest contributors are defense companies.

Northrop Grumman, the second largest overall contributor, "supports those who support strong national defense," said Thomas Henson, the company's manager of media relations.

Lockheed Martin, the third largest donor, looks at five criteria when determining whether to give money to the Democrats or Republicans, said Steve Chaudet, the company's vice president of state and local government affairs. The company considers a candidate's position on national defense, high tech issues and broad-based business issues.

In addition, the company considers whether a lawmaker represents a district in which the company has a facility or in which employees reside, and whether incumbent candidates sit on oversight committees that have jurisdiction over areas of interest to the company, Chaudet said.

Boeing spokesman Douglas Kennett said his company's concerns include free and open trade worldwide and issues relating to major federal clients such as the military services and NASA. The company supports elected officials that create an even playing field with Airbus S.A.S., Boeing's major commercial aircraft competitor.

Boeing also advocates a "just solution" to the Foreign Sales Corporations Program and its successor, the Extraterritorial Income Exclusion (FSC/ETI) tax provision to eliminate retaliatory tariffs on U.S. products by the European Union, and it supports a healthy domestic Export-Import Bank to help finance the export of U.S. goods and services to international markets, Kennett said.

"Boeing supports candidates at all levels who support broad issues of concern to our company, regardless of their political affiliation," he said.

Senior Editor Nick Wakeman contributed to this article. Staff Writer Roseanne Gerin can be reached at rgerin@postnewsweektech.com.Overall campaign contributions in the 2004 election cycle by Top 100 companies have declined by about one-third compared to those for the 2000 election.

Washington Technology's Top 100 federal IT prime contractors have given $22.3 million to the political parties and candidates this year, compared with $34 million in 2000, according to an analysis by the Center for Responsive Politics in Washington. The non-profit research center examined contributions by company employees, spouses and political action committees.

The primary reason for the decrease in overall corporate contributions this year is the ban on soft money that went into effect in 2002, according to Larry Noble, executive director of the center.

Many companies decided not to give to the "527" independent advocacy groups, in part because of fears that such giving might violate the law. Named for the section of the tax code that allows for their existence, 527 groups can raise unlimited funds from corporations, labor unions and wealthy individuals and use the money to influence elections.

Companies also saw the soft money ban as a legitimate excuse to cut back on their contributions.

"Many businesses felt as if they were being shaken down by the parties," Noble said. "They were giving because they felt they had to, not because they wanted to. The soft money ban gave them a way out."

Although Top 100 contractors have reduced their overall contributions, the percentage split of donations going to Republicans and Democrats remains roughly the same in 2004.

This year, Top 100 contractors are giving 62 percent to Republicans and 38 percent to Democrats, compared with 63 percent to Republicans and 36 percent to Democrats in 2000. One percent went to other party candidates that year.

However, the amount of direct giving to presidential candidates has increased dramatically, rising from $1 million in 2000 to $2.5 million in 2004.

Significantly, contributions to President George W. Bush have fallen from 76 percent in 2000 to just 56 percent this year.

Although corporations and their employees can continue making campaign contributions until the November elections, they likely have already contributed 80 percent to 90 percent of what they intend to give for this election, campaign finance experts said. The preference for Republican candidates by Washington Technology's Top 100 companies is mirrored by the defense industry, which, like IT contractors, has given 62 percent of its contributions to the GOP and 38 percent to Democrats.

The defense industry, which includes several Top 100 companies, has given $12.8 million in the 2004 election cycle, according to the Center for Responsive Politics study.

"The defense industry has always been a big contributor, and any industries that deal regularly with the government tend to be big contributors," said Larry Noble, the center's executive director.

The biggest giver among industry groups, the financial, insurance and real estate sector, sent 59 percent of its $241 million in campaign contributions to Republicans and 41 percent to Democrats.

By comparison, labor unions, among the staunchest Democratic Party supporters, have given 86 percent of their $43.9 million in donations to Democrats.

The energy industry, a big GOP donor, has given 75 percent of its $37.4 million in contributions to the Republican Party.