The Revolving Door
The Netplex runs on federal dollars and retired federal employees
P> For the infotech industry, government is a vast, spinning lazy Susan from which bureaucrats, politicians and White House appointees can be plucked and digested at will.
Consider Andrew Barrett. Until just a few weeks ago, he worked as one of the five commissioners at the Federal Communications Commission, which is writing the detailed rules for the partial deregulation of the nation's telecommunications sector. But Edelman Public Relations Worldwide just hired Barrett to lead the agency's public affairs work in the telecommunications, high-technology, media and utility industries.
Success will be measured simply "by the amount of money you bring in and the quality of the work you do," Barrett said. Edelman's customers include Los Angeles-based Hughes Electronics Co., Washington-based INTELSAT, as well as AT&T and the long distance phone companies -- all of whom are at the mercy of the FCC as it implements telecom deregulation.
Barrett's career switch is hardly unique. Alfred Sikes, FCC chairman from 1989 to 1993, works for New York-based Hearst New Media & Technology, an electronic publishing arm of Hearst Corp. Richard Wiley, another FCC commissioner who served from 1970 to 1977, is now a leading partner at Washington-based Wiley, Rein & Fielding, working for the broadcast industry in Washington. He also chairs the FCC's advisory committee on high-definition television.
But Edelman is not alone in its consumption of former government talent. Fleishman Hillard Government Relations' lobbying group in Washington boasts nine former members of Congress, three former cabinet officials and a staff that averages 10 years of employment in Congress or various administrations.
Or consider PRC. A few years back, it hired Don Upson, a key Republican staffer for the House government operations committee, to keep the pulse of program funding. On April 17, it added Ron Oxley, a former director of resource management at DoD, to help in defense business development.
These jumps from government to industry are routine. One can hardly expect experienced, educated and well-connected officials to head for the Montana hills once they grow tired of the government's daily grind. After all, they've got bills to pay, retirements to plan and children to educate.
The revolving door explains in part the rapid rise of Washington's infotech industry. Many infotech companies locate near Washington "because there is talent.... Smart, educated people" are present in large numbers around Washington, said Heather Rosenker, a spokeswoman for the Vienna, Va.-based Professional Services Council, which lobbies for local infotech integrators.
The council last month appointed its new government relations chief: Charles Cantus, formerly a congressional relations official for the departments of Energy, Transportation and Labor. In 1988, Cantus served as a regional representative for Sen. Bob Dole's failed presidential campaign, giving him access to good contacts in any future Dole administration.
Rosenker has a good point. Former government officials started many of the infotech companies in the Washington area. For example, Ed Scheidt retired as the chief encryption expert at the CIA, and founded Tecsec Inc. in Vienna, Va. Tecsec develops data-encryption software for the commercial market.
When Texas Instruments was looking to expand its software business in government, it picked Michael Dillard to head the Government Solutions Software Business. Among other things, Dillard was a former leader of infotech planning at the CIA.
But the positive impact may go much further than a slew of start-ups. James Riggle, research fellow at George Mason University's Institute of Public Policy, is doing a study of executives at 900 local high-tech companies. If more than 50 percent of executives can trace their lineage back to the government, he said, then the government can reasonably claim to have spawned the nation's high-tech industries -- satellite, telecommunications and infotech.
The existing data already shows that "a large proportion of the pioneers in the industries, the key players... came out of the Department of Defense," especially the Pentagon's technology-intensive intelligence programs, he said.
Ex-government employees get hired by industry for a number of reasons: technical experience, knowledge of the bureaucratic procurement maze and familiarity with the government's technology needs.
So what if you need someone familiar with the federal procurement rules? Then follow the example of Federal Sources Inc., a consulting firm based in McLean, Va., that hired Chuck Wheeler, who served for 12 years in Congress until he was ejected following the Republican takeover in 1994. "I was born and bred here. I see no reason to go anyplace [else]," Wheeler said.
And what if you really want someone to handle your own information systems? Then follow the example of Arlington-based SRA Corp., which hired Renny di Pentima, deputy commissioner for systems at the Social Security Administration. Di Pentima works as SRA's chief information officer.
Similarly, Hank Philcox, the CIO at the Internal Revenue Service for many years, is now CIO at DynCorp.
Some other examples:
- Oracle has long understood the value of the revolving door. Retired Vice Adm. Jerry Tuttle and retired Brig. Gen. Jack Pellicci are both executives with Oracle's government operations -- and both played critical roles in infotech planning in their previous careers. A few years back, Oracle appointed former Star Wars chief James Abrahamson as chairman of the board.
- GTE recently got a plum in Don Scott, who used to run the General Services Administration's massive FTS-2000 phone contract.
- Boeing, which has made quite a success of its infotech services business with the Defense Information Systems Agency, now has on staff two former DISA employees: Dennis Groh and Susan Jimenez.
Indeed, industry's attraction is so great that "the government is having difficulty keeping the expertise or acquiring it because it is not in a position to pay [commercial] wages," said Wheeler.
But there are other, less, ahem, technical reasons to hire ex-government officials. "I have relations with people throughout Europe and South Africa whom I can talk to about spectrum" controversies, said Barrett.
This network of friendships and contacts that ex-government officials bring to industry is frequently their biggest asset. If you work in San Diego for Science Applications International Corp. and want the inside scoop on a critical Defense Department decision, you can turn to any of SAIC's many ex-government officials based in the Washington area. SAIC's employment roster includes Duane Andrews, who ran the Pentagon's information systems until President Bush lost his re-election bid in 1992, and Dave Roberts, who oversaw spending programs for the House defense appropriations subcommittee.
Numerous laws, regulations and media floggings have forced government officials to minimize any quid pro quo between industry and soon-to-retire officials. For example, laws bar Edelman's Barrett from representing any clients before the FCC for one year, and neither former congressional members nor their staffs can lobby their colleagues for one year.
"I disagree with the one-year limitations.... They are silly," said Barrett. The rules should be replaced by a looser regulation barring FCC commissioners from dealing with companies affected by an FCC ruling within the last 120 days of a commissioner's tenure, he said.
Staff members at government groups such as Public Citizen and Common Cause have spent many hours trying to tighten these limitations, but to little avail. And now that Republicans are attacking many other programs cherished by liberals, "I don't think this is a hot issue now. There are other issues occupying peoples' time," said Bob Schiff, staff attorney for Public Citizen's Congress Watch division. Worker safety, election campaign financing, the recently approved ban on gift giving to members of Congress have distracted attention from the revolving door, he said.
The revolving door also allows many industry executives to graduate to politics, either temporarily or permanently. An obvious example is Mark Warner, who made his start in politics as a fund-raiser for the Democratic Party in the 1980s, and then made his fortune acquiring spectrum licenses for himself and others in the telecom industry. Warner later parlayed his spectrum licenses into a high-tech investment portfolio estimated at more than $100 million -- some of which will be spent to defeat Republican Sen. John Warner.
There are a myriad of other examples: Phil Odeen, the chief executive officer of BDM International Inc., McLean, Va., was tapped by then-Defense Secretary Les Aspin in 1993 to head a review of cost-cutting consolidation programs. Odeen got Aspin's nod despite BDM's $100 million contract for work on one of those programs.
And Aspin's replacement as defense secretary, William Perry, has spent much of his working life jumping back and forth between industry and government. These jumps allowed him to start high-tech weapons programs during the late 1980s and now operate them as defense secretary 15 years later.
The revolving door keeps revolving. Computer Data Systems Inc., Rockville, Md., recently named Peter Bracken as CEO. Bracken spent 23 years in NASA before jumping to Lockheed Martin in 1986.
On April 12, Intergraph Corp., based in Huntsville, Ala., hired retired Adm. Jimmy Pappas as "executive consultant for federal programs," including the company's $1.2 billion Computer-Aided Design-2 computer contract with the Navy.
Why should anyone be surprised?