Rep. Harold "Hal" Rogers - R-Ky.
[More on Harold "Hal" Rogers]
As a small start-up company in Massachusetts sought to become a major player in the business of homeland security, it hired a lobbyist and attended a fundraiser for one of the most powerful members of Congress.
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Rep. Harold "Hal" Rogers - R-Ky. |
The company was Reveal Imaging Technologies Inc. The congressman was Rep. Harold "Hal" Rogers (R-Ky.). The fundraiser, held Oct. 22, 2003, brought in $14,000 from Reveal and was the beginning of a mutually beneficial association.
Reveal had just received a government grant to develop smaller, cheaper explosives-detection machines to scan baggage at the nation's airports. Rogers, who chairs the House Appropriations homeland security subcommittee, said he wanted the machines to improve security while saving taxpayers money.
In the end, Reveal received a federal contract from the Transportation Security Administration worth up to $463 million. Rogers achieved his goal of launching the next generation of machines. In the process, he received $122,111 in donations to his leadership political action committee from Reveal executives and associates — and a pledge from the company to move $15 million worth of work to Rogers's poor Appalachian congressional district.
Reveal's dealings with Rogers illuminate the intersection of politics, money and homeland security in the rush to make the nation safer since the Sept. 11, 2001, terrorist attacks. The relationship fits into a long tradition of companies seeking sympathetic ears on Capitol Hill and of lawmakers securing money for their causes and their constituents back home.
What is different today is that the money at stake is the billions of dollars that the White House and Congress have set aside for homeland security at a time of persistent fear about another terrorist attack.
A Washington Post review of scores of documents, along with interviews with company executives, government officials and procurement specialists, shows that while Reveal was developing a machine that would receive accolades, it also was donating to Rogers's PAC and hiring two lobbying firms to help smooth the way with the government. Rogers pressed homeland security officials to deploy the Reveal machines and take other measures that he said would make the country safer while his PAC received donations from homeland security contractors, some of which he encouraged to create jobs in his district.
In an eight-page letter to The Post, Reveal executives said there was no "connection between voluntary political contributions" to Rogers's PAC and the awarding of the contract. The president of the company said Reveal secured the contract strictly on the merits of its technology after a "rigorous and objective" certification process.
"Members of Reveal's management team, and others, make these voluntary contributions to Representative Rogers, and many other elected officials, because they share our concern about improving our Nation's Homeland Security technology, and for no other reason," Reveal president and chief executive Michael P. Ellenbogen said in the letter.
"It is the scientists at the TSA — not Congress — who decide what systems meet the government's rigorous requirements," he said.
TSA officials said Rogers played no role in the contracting process.
"The decision to award the contract to Reveal was based on the source selection team's conclusion that it offered the best value to the government," TSA spokeswoman Yolanda Clark said.
Rogers said he is working in the interests of the nation and his district. He dismissed any suggestion that campaign money could sway his policymaking.
"It's demeaning," the 13-term congressman said in a recent interview. "Anybody that knows me and knows my record knows that I will go after whoever it is standing in the way of doing the right thing. I'm going to do what I think is best for the country, regardless."
A Magnet for Money
After 25 years in Washington, Rogers, 67, is an old-school politician who looks out for his constituents and remains intently focused on reaching the pinnacle of power on Capitol Hill.
In 2001, Rogers became chairman of the House Appropriations subcommittee on transportation, a post that would give him an important role in directing aviation-security projects after the terrorist attacks. Two years later, he climbed even higher, becoming the first chairman of the Appropriations homeland security subcommittee.
That put Rogers at the center of the largest restructuring of the federal government in a half-century. His subcommittee holds the purse strings for billions of dollars in homeland security spending, giving him tremendous influence over the 22 agencies that make up the Department of Homeland Security. He can deny them appropriations if they refuse to follow his direction. He can hold public hearings and order investigations to examine how the department spends its money.
"He had our attention," former homeland security secretary Tom Ridge said in a recent interview.
Like other powerful members of Congress, Rogers has become a magnet for political contributions.
Three years ago, Rogers made it clear that he wanted to become chairman of the entire House Appropriations Committee, one of the most powerful jobs in Congress. Rogers formed Help America's Leaders Political Action Committee, better known as HALPAC. The PAC contributed to the campaigns of Republicans in tight races — whose support Rogers hoped to draw upon in his quest to become Appropriations chairman. As of October, HALPAC had collected more than $1.8 million and had cash on hand of $545,236.
Contributors include a number of homeland security contractors. Some firms also moved parts of their operations into Rogers's district. They include Datatrac Information Services Inc., Science Applications International Corp., NucSafe and Reveal, the explosives-detection company.
With Rogers cheering them on, Datatrac and its corporate partners in 2003 received a 10-year contract renewal worth up to $200 million for border-crossing cards used by Mexicans, even though government investigators had concluded that the cards were not being used properly and were vulnerable to fraud. Many of the cards are manufactured at a government facility run by Datatrac in Rogers's district.
A Datatrac official declined to discuss the company's ties to Rogers. Campaign finance records show that a Datatrac executive gave $1,000 to HALPAC and $1,000 to Rogers's reelection fund in 2004.
SAIC, whose political action committee contributed $15,000 to HALPAC, opened an office in a Somerset, Ky., industrial park last year and said it would bring 100 new jobs to Rogers's hometown. SAIC spokesman Jared Adams said in a recent interview that the company moved there because it is inexpensive and close to Rogers.
"Being close to leadership helps us understand trends in government," Adams said.
Richard Seymour, who runs NucSafe, a radiation-detection company in Oak Ridge, Tenn., said the company moved its manufacturing operations to Corbin, Ky., two years ago after meeting with Rogers, his staff and representatives of a local economic development group started with help from the congressman. Seymour said members of Rogers's staff put his company in touch with TSA officials, although "nothing ever came of it." He said his company received a $1.8 million grant from a Homeland Security Department agency this year.
Seymour declined to say whether Rogers "earmarked" or specifically set aside homeland security money for NucSafe, saying his company was a privately held corporation and is under no obligation to disclose the sources of its funding.
"It's no secret we've gotten support from congressman Rogers," Seymour said.
Four NucSafe executives, including Seymour, have donated $9,200 to HALPAC and Rogers. Seymour said the donations were suggested by local Republican representatives, not by Rogers or his staff.
"It's the usual thing. You are made aware that they have these fundraisers, and they generally ask companies who have received any kind of assistance for any help they see fit," Seymour said. "Chairman Rogers has been one of the most ethical political figures I have ever dealt with. If you bring business to his district, that's all he ever cared about."
'A Clear Vision'
Rogers, other lawmakers and TSA officials were searching for a solution to a vexing homeland security problem when Reveal came on the scene.
Two months after Sept. 11, 2001, Congress mandated that every checked bag at airports be screened for explosives, setting tight deadlines and authorizing research funding. The TSA eventually hired Boeing Co. to deploy an explosives-detection system that relied on technology similar to that used in a medical CAT scan.
Under a contract that ballooned to more than $1.2 billion, Boeing deployed minivan-size machines that were widely criticized as too expensive to install and too large for airport lobbies.
On Feb. 13, 2002, Rogers asked government investigators "to determine if there is a possibility of using smaller, less expensive machines," according to the congressman's office. In October 2002, Rogers proposed giving $100 million toward the TSA's research and development program for explosives-detection machines; $75 million was later appropriated.
That October, a group of engineers, physicists and entrepreneurs registered Reveal as a corporation in Delaware. In June 2003, the company established its headquarters in Bedford, Mass., and hired a high-powered Washington lobbyist, Van Scoyoc Associates Inc.
Three months later, Reveal secured $2.4 million under a TSA grant program to study how to develop smaller explosives-detection machines, the company said. Reveal was one of four companies to share in $9.4 million in grants. Also receiving grants were Lockheed Martin Corp., Analogic Corp. and InVision Technologies Inc., one of the firms that made the larger machines installed under the Boeing contract.
On Oct. 22, 2003, Reveal executives met Rogers at a fundraiser in Washington, "hosted by Van Scoyoc Associates," according to Rogers's office. Eight days later, HALPAC reported that five Reveal executives, five directors and one lobbyist donated $14,000, campaign finance records show.
Rogers's staff said in a statement that the fundraiser marked the first time the congressman met representatives of Reveal. Rogers said he did not recollect the event, and his staff declined to provide details. Company officials also declined to discuss the fundraiser or any of the circumstances surrounding their donations to Rogers.
"I've had a lot of fundraisers," said Rogers, who added that he played "no role whatsoever" in helping Reveal secure its TSA grant. "Campaign contributions mean nothing on my watch."
Reveal's president said his company made the contributions because Rogers supports the use of emerging technologies for aviation security.
"We contribute to those who we believe have a clear vision," Ellenbogen said in an interview. "We are supporting those who believe there is a place for new technology." Other Reveal executives and board members did not return phone calls seeking comment on their donations.
Of the other companies participating in the TSA grant program, Analogic contributed $1,000 in 2004, Lockheed Martin's employees' PAC contributed $5,000 in 2004, and GE InVision Inc., formerly known as InVision Technologies, contributed $19,000 between 2002 and September 2005, campaign finance records show.
In January 2004, three months after the Reveal donations to HALPAC, Rogers and David M. Stone, who was the TSA's chief at the time, attended an aviation industry meeting in Hawaii. Stone recalled that Rogers raised the issue of the Reveal technology and asked about the agency's progress in evaluating the company's machine.
Throughout 2004, Rogers and his staff continued questioning homeland security officials about Reveal's progress. Ridge recalled that Rogers was a "big supporter" of Reveal's technology.
"He always thought our work at the TSA was too labor-intensive and that the number of workers could be reduced if we developed this technology," Ridge said.
Before it could be sold to the TSA, Reveal's device needed to be certified by the agency on a series of technical standards. Van Scoyoc, one of Reveal's lobbyists, worked with the company to obtain the certification, according to Steven O. Palmer, a member of the firm.
"We've been helping them through the certification process at the TSA," Palmer said in recent interview.
On July 14, 2004, Rep. John L. Mica (R-Fla.), the chairman of the House Transportation Committee's aviation subcommittee, "expressed concern over when Reveal's CT-80 would be certified and available to the TSA," Reveal noted in its letter to The Post.
In September 2004, campaign finance records show that Van Scoyoc joined with Reveal officers and others associated with the company in donating an additional $17,250 to HALPAC.
Nine days after the contributions were reported, a House-Senate conference committee chaired by Rogers on the homeland security appropriations bill submitted a report that mandated that Congress spend $30 million on next-generation explosives-detection devices "that are currently being tested, certified, and piloted."
Rogers would later announce that a large portion of that money — $15 million to assemble 100 Reveal machines — was going to a company called Mid-South Electronics Inc. in Annville, Ky., not far from Somerset. Rogers told local reporters the money would help the company overcome "a potentially devastating blow" from a catastrophic fire several months earlier.
Solving a Problem
Toward the end of 2004, Rogers and a staff member met with the TSA's Stone and one of his technology advisers. Rogers brought up Reveal, Stone later told The Post. The congressman said the company offered the potential of increasing security while decreasing costs, and he wanted to know how the certification process was going, Rogers and Stone recalled. The TSA chief told Rogers that Reveal's technology was still being studied.
"I remember talking to Stone about the certification process," Rogers said in a recent interview. "It went on and on and on."
On Dec. 21, 2004, the TSA certified Reveal's CT-80 machine, the company said. Reveal officials touted their machine as significantly smaller and cheaper, costing $340,000, about one-third of the price of the larger machines, and saving the government significant labor costs.
Reveal officials also said their golf-cart-sized machines would fit more easily into existing airport spaces, easing passenger flow and minimizing the need for costly construction projects at the ticket counters. But technical documents showed one significant drawback: The machines operated at a quarter of the speed of the larger machines already used at airports.
The Reveal machine "is slower but it solves particular problems," Ellenbogen, the company's president, said in an interview. "It's a PC as opposed to a mainframe."
Reveal officials said the machine was designed for use at medium-size and small airports. Government authorities also envisioned using the smaller machines to supplement the bigger machines at larger airports and to replace some older technologies, Stone said.
In February, Stone briefed a Senate panel about the certification process. He was enthusiastic about the machines, saying the TSA intended to buy and test eight of the devices at three airports as part of a pilot program — and would then decide how to proceed. At the hearing, Sen. John McCain (R-Ariz.) asked, "When can we expect to see some of that" technology?
But Rogers was growing frustrated. His irritation became public this year in March, when Stone, a retired admiral, appeared before his subcommittee.
Rogers demanded to know why the agency was taking so long to deploy the Reveal machines. He said they could save taxpayers millions of dollars on labor costs for screeners while making the country safer.
"Admiral, in just a few months, it will have been four years since 9/11 — the same time, roughly, that we went from Pearl Harbor to absolute victory in World War II," Rogers said, according to a transcript of the hearing.
"And here we are about the same time from 9/11 as we were from Pearl Harbor, and in most of the airports in our country, they are still checking for explosives, trying to mimic a dog, swiping the luggage with a smeller thing to test in a machine," he said. "How can you defend that? Would you admit that that's an absolute, utter failure?"
Rogers continued: "When are you going to get those machines in those airports?"
Stone later said he was unaffected by Rogers's criticism.
"I didn't feel pressure from the chairman because I believe we needed to accelerate new technologies into the field," Stone said.
'Everything Is Legal'
Twelve days after the March hearing, a report appeared that raised questions about the TSA's efforts to deploy explosives-detection machines. The report, which had been requested by Rogers and was issued by the Government Accountability Office, highlighted the potential cost savings but also said it was "unclear" how the TSA would make effective use of the new technology without putting a strategic plan in place.
On March 18, three days later, HALPAC reported that Reveal executives, board members, a lobbyist and lawyers associated with the firm donated another $25,250.
Four months later, on July 27, the TSA announced that it was seeking proposals for a "Stand Alone Reduced Size" explosives-detection machine. At the time, Reveal was the only company that manufactured a reduced-size machine that had been certified by the TSA.
On Aug. 18, HALPAC reported that 11 Reveal executives, board members and lobbyists each contributed for $3,000. That $33,000 was their largest donation to date.
In its letter to The Post, Reveal said any "allegation" of a connection between the donations and the contract "would constitute a willful disregard of the truth" and was not supported by the record.
Reveal said in its letter that company executives "have voluntarily contributed to Representative Rogers's Political Action Committee and many other elected officials in connection with fundraising events hosted by members of Reveal's management."
Campaign finance records show that the majority of contributions by company executives, board members and one spouse went to HALPAC. The records show that of their $114,950 in contributions, more than three-quarters — $87,500 — went to HALPAC, making the company by far the biggest donor to the PAC. The records also show that those same donors gave a total of $27,450 to 11 other candidates and PACs. Reveal executives did not respond to a question about their pattern of giving.
Rogers said he was surprised to learn that Reveal and its associates were the largest contributors to HALPAC. He said he was not informed about specific fundraisers until sometimes as late as the night before.
"It is true that the first small machine certified by TSA was made by a supporter of mine in my race for Chairman of the Appropriations Committee last year," Rogers said in a statement. "That does not detract from the fact that the company won its contract fair and square in open competition. TSA made its decision based on science and engineering."
Rogers said the money played no part in his support for the Reveal technology.
"Everything is legal and above-board," Rogers said in an interview. "The fact that these people were coming to my fundraisers, I was pleased about it, but it did not influence me."
In its letter, Reveal cited two other lawmakers who had voiced support for its machines, Mica and McCain. Campaign finance records show that neither lawmaker received donations from Reveal executives or board members.
On Oct. 20, Reveal announced in a news release that it had won the TSA contract for the next-generation machines. The company said its CT-80 machine "revolutionizes" baggage screening.
The current chief of the TSA, Edmund S. "Kip" Hawley, who was in charge of the agency during the contracting process, declined repeated requests for an interview.
TSA spokeswoman Clark said the agency received other bids for the contract from GE InVision and L-3 Communications Holdings Inc. She said technical officials at the agency acknowledged that Reveal was the only company whose machine met the size specifications contained in the request for bids on the contract.
"TSA identified a specific need for a reduced size [explosives-detection system] and set a maximum size specification to meet that need," Clark said. "The Reveal CT-80 was the only certified [explosives-detection system] that met the size specification."
Database editors Derek Willis and Sarah Cohen and researchers Alice Crites, Bobbye Pratt and Madonna Lebling contributed to this report.
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source: http://www.washingtonpost.com/wp-dyn/content/article/2005/12/24/AR2005122400372_pf.html 25dec2005
SOMERSET, Ky. — The evidence of Rep. Harold "Hal" Rogers's leverage over the federal budget has accumulated over the years in the poor hill country of his Appalachian Kentucky district here.
There are high-tech industrial parks, railroad freight facilities, economic development offices, even a parking lot at a lakefront resort, all funded by federal tax dollars. Particularly striking is the Center for Rural Development, a grand building in one of the nation's poorest regions.
The center, dubbed the "Taj Mahal" by some residents, has a soaring ceiling, a wall of windows and a performing arts theater. On a pedestal in the lobby sits the Harold "Hal" Rogers Leadership Award, an etched-glass bust of the powerful Republican lawmaker.
Rogers is now tapping a new source of money for his district. As chairman of the House Appropriations homeland security subcommittee, he has encouraged contractors to move into his district and announced millions of dollars in anti-terrorism research at Kentucky colleges and universities. He has taken credit for $206 million in homeland-security-related funding for the state.
"I'm two people," Rogers said in an interview. "I'm a national legislator, and I'm a local congressman."
In Kentucky's 5th Congressional District, Rogers has become an almost mythical figure, a former state prosecutor so formidable that he sometimes runs for reelection unopposed. For a time, the state renamed the Daniel Boone Parkway to honor the lawmaker for securing federal money for highways in the state.
With his white hair and smooth-as-bourbon mountain accent, the 13-term lawmaker from Somerset presents himself as a gruff populist watching out for the nation's taxpayers and his congressional district. He describes himself as "one of the strongest critics of wasteful spending."
But the Lexington Herald-Leader, one of the state's largest newspapers, has called him the "Prince of Pork." And so much federal money for high-tech homeland security projects has flowed to southeastern Kentucky that he and others have taken to calling the area "Silicon Holler." In announcing some of the funding last year, Rogers issued a news release headlined "New Initiatives Seek to Combat Terrorism, Bring Jobs to Kentucky."
First elected in 1980, Rogers was named to the House Appropriations Committee in his second term. In 1995, he was named chairman of the Appropriations subcommittee on commerce, justice, state and the judiciary. That made him a member of the "College of Cardinals," an elite group of lawmakers who are able to bend the federal budget to their will.
In 2003, Rogers became the first chairman of the new Appropriations subcommittee on homeland security, a position that gave him immense sway over federal anti-terrorism projects. Seeking to keep his party in power and become chairman of the full Appropriations Committee, he had started the Help America's Leaders Political Action Committee (HALPAC).
Last January, Rogers was defeated for the chairmanship by Rep. Jerry Lewis (R-Calif.). But HALPAC continues to raise money, and Rogers said he is considering another run for the post.
Registered at a Washington law and lobbying firm, HALPAC is actually anchored in Somerset, documents show. The man who signed the paperwork creating HALPAC on April 8, 2002, was Clay Parker Davis. He is Rogers's friend and president and chief executive of Citizens National Bank in Somerset.
"I've known Hal for 33 years," Davis said in a recent interview. "I don't care much for politics. I'm just a friend to him. We're just like brothers."
Rogers became a director of the bank and bought the institution with Davis and other local businessmen in the 1970s.
In financial disclosure forms filed this year, Rogers reported that he receives between $100,000 and $1 million a year on holdings of up to $5 million in Citizens Bancshares, the holding company for Citizens bank. Federal election records show that the bank also holds HALPAC's money. The bank's Web site lists Rogers as "Director Emeritus."
Davis also is a founding director of the Center for Rural Development, which was started in part with federal funding arranged by Rogers. The center houses the Southeast Kentucky Economic Development Corp., which also got its start thanks to Rogers.
The organization now works closely with Rogers's district office, along with several other lawmakers from Kentucky, on development deals and loans for homeland security contractors and companies seeking to move into the area, state records show.
The center's chief executive, Lonnie Lawson, initially told The Washington Post that up to 45 percent of the center's $20 million budget this year will come with Rogers's assistance. But Rogers later said in an interview that the center received the money on its own through a competitive grant process.
After speaking with Rogers recently, Lawson downplayed Rogers's role in arranging the center's funding. "We compete just like everyone else," Lawson said. "Obviously, we try to keep [Rogers's staff] in the loop where we are going for funding, but there is no undue influence."
Millions of dollars from the center and some of its occupants is kept at Citizens National Bank, Lawson said. Rogers said he has no control over where entities he helped create do their banking.
Lawson said that guiding companies to the region and finding federal funding for local development groups "is what any good congressman would do."
The center also is home to the National Institute for Hometown Security, which Rogers set up last year. The institute, along with the Kentucky Homeland Security University Consortium, also set up by Rogers, are the heart of "Silicon Holler."
"These two organizations will put Kentuckians on the frontline of the war against terrorism while also helping to boost our economic development efforts by providing a platform to advance homeland security research and development," Rogers said in a Nov. 4, 2004, news release.
Rogers was joined at a news conference that day in Somerset by Tom Ridge, then the head of the Homeland Security Department. Ridge said the projects were funded with the "unique notion that the homeland is not secure until the hometown is secure."
Since Rogers became chairman of the House Appropriations homeland security subcommittee in 2003, the Homeland Security Department's science and technology division has given at least $34 million to the hometown institute and the consortium of Kentucky schools. That compares with $18 million the division gave to a Texas A&M University consortium, $15 million each to a Johns Hopkins University consortium and a University of Minnesota consortium, and $12 million each to a University of Southern California consortium and a University of Maryland consortium, according to figures supplied by Homeland Security Department spokesman Russ Knocke.
Unlike the Kentucky schools, the others are considered "Centers of Excellence." The centers were mandated by the law that created the Homeland Security Department to "bring together the nation's best experts and focus its most talented researchers on a variety of threats." The schools that constitute the Centers of Excellence all competed for their designations and funding.
Knocke initially described the Kentucky funding as an "earmark."
"DHS is not a decision-maker with respect to where the funding goes," he said in a statement.
Knocke later issued another statement, saying his previous remark "has turned out to be not completely accurate information, as erroneously provided to me by one of our directorate's (sic). This is not an earmark."
Some scientists familiar with homeland-security-related technology said the projects at the Kentucky schools could be helpful in protecting the nation. But others noted that a few of the projects appeared to be underfunded or duplicative.
"In principle, most of these things on their surface look like reasonable things to do," said Tony Fainberg, a government physicist for 20 years who recently retired from the Homeland Security Department's science and technology division, which gave the money to the Kentucky schools.
The department gave $1 million to the University of Kentucky, along with Morehead State University, Eastern Kentucky University and Alice Lloyd College to develop wall treatment materials that can be used in buildings to "protect against explosions, radiological exposure, chemical agents and electromagnetic pulses," according to a news release issued by Rogers's office.
The University of Kentucky, the University of Louisville and Western Kentucky University received $1.5 million "to develop a wireless electronic monitoring system for securing milk from the farm to the processing plant."
The department gave $124,280 to the University of Kentucky and Eastern Kentucky University to reduce the explosive potential of agricultural fertilizer, a frequently used component in makeshift bombs.
The University of Kentucky also received $95,751 "to determine the best way to manage and disseminate information during time-stressed situations."
Rogers's wife, Cynthia, is a vice chair of the board of regents at Eastern Kentucky University, which has received authorization for $23.2 million in Homeland Security Department funds, including $20 million in the current fiscal year that the university will distribute to "selected applicants," a department official said.
She said in a recent interview that her husband did not help her secure the unpaid position and had nothing to do with the grants going to her university.
"People who know me, they know I can do things on my own," Cynthia Rogers said. "Hal said, 'People are going to talk, so let them talk.' "
Rogers denied playing any role in obtaining the funding for individual schools, but he took credit for creating the consortium.
"It's one of the highlights of my life," Rogers said. "I'm thrilled to death with it."
O'Harrow reported from Kentucky and Higham from Washington.
source: http://www.washingtonpost.com/wp-dyn/content/article/2005/12/24/AR2005122400373_pf.html 25dec2005
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