A graphic with this article incorrectly identified Rep. John P. Murtha of Pennsylvania as a Republican. He is a Democrat.
A Contractor, Charity And Magnet for Federal Earmarks
Friday, November 2, 2007
Concurrent Technologies began two decades ago doing metalworking research in Pennsylvania's struggling rust belt. In the years since, the Johnstown, Pa., company has become a federal contracting chameleon.
It is an intelligence adviser, an environmental consultant and a software engineering specialist. It has trained mine-detecting dogs and managed religion-based initiatives. It oversees construction projects, organizes conferences and studies ways to use hydrogen for fuel in Pennsylvania and South Carolina. Missile-defense research is part of its portfolio. So is the development of special armor for combat vehicles in Iraq and "solid waste technology" in Florida.
And it is a nonprofit charity.
Behind the rise of Concurrent is Rep. John P. Murtha (D-Pa.), chairman of the House Appropriations Committee's defense subcommittee, who helped arrange funding to launch the organization in 1988. Murtha has since arranged millions of dollars more in directed congressional appropriations called earmarks. Now Concurrent has nearly $250 million in annual revenue and 1,500 employees.
Concurrent is a prime example of how to marry entrepreneurial savvy, influence on Capitol Hill and arcane procurement rules to create budget magnets in congressional districts. Unlike many other big contractors, Concurrent pays no income tax on most of its revenue. Unlike nonprofit, federally funded research-and-development corporations, it is not chartered by the federal government.
According to Concurrent's chief financial officer, Edward J. Sheehan Jr., the Internal Revenue Service approved Concurrent as a charity because it "lessens the burden on governance" and helps "the federal government and American industry to perform more effectively through the use of emerging technologies."
Though most of its revenue comes from government contracts, it has thrived with help from the political imprimatur that comes with the earmarks and their sponsors.
"The message they give to federal agencies is, 'We're the guys you want to play with because we have big friends,' " said Keith Ashdown, an investigator at Taxpayers for Common Sense, a nonpartisan group in the District that monitors congressional spending. "This is the model everyone is following."
Former Concurrent officials said the nonprofit organization's executives, some of them veterans of for-profit contractors inside the Beltway, accepted increasing responsibilities to keep Concurrent expanding. As revenues grew, so did their salaries, which for the top three executives rose from an average of $262,000 in 1999 to an average of $462,000 last year, according to documents on file with the IRS.
"Growth is the primary thing," said Howard A. Kuhn, a co-founder and former vice president of Concurrent. "It came directly from the way that Beltway Bandits work."
The Nature of Our Work
Last month, Concurrent came under scrutiny by Congress after The Washington Post reported that a nonprofit subsidiary, Commonwealth Research Institute, agreed to pay a senior civilian Air Force official $13,400 a month while awaiting White House approval of his appointment.
The official, Charles D. Riechers, said in an interview that he did not meet company officials before he took the job and did no work specifically for the company in the two months he was on its payroll. Instead, he said, he worked for the Air Force's acquisition office as a senior adviser on a variety of technical matters through a consulting arrangement that service officials said is common in the Pentagon. Riechers became principal deputy assistant secretary for acquisition in January.