By Robert O'Harrow Jr.
Washington Post Staff Writer
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.
Senate Armed Services Committee Chairman Carl M. Levin (D-Mich.) has asked the Pentagon to provide details about the arrangement. The Defense Department inspector general's office is looking into the matter, a spokesman said. Two weeks ago, Riechers died in what officials said was an apparent suicide.
Through a spokesman, Murtha declined requests to be interviewed for this article. In statements, Murtha said he has no financial ties to Concurrent. Murtha said the company's "quality work and research has resulted in improved equipment for our troops. Their competitive price has saved taxpayers money, and they continue to deliver on-time results."
"I'm exceptionally proud of CTC's growth but more importantly I'm proud of the outstanding work they are doing with the Defense Department," Murtha said in a written statement yesterday.
Concurrent executives did not return phone calls or respond to e-mail requests for interviews. In a report last year, they attributed Concurrent's growth to the "scientists, engineers, technical experts and highly trained support staff" whose research they said saves the government millions of dollars and helps protect the country's war fighters. In earlier interviews with The Post, Concurrent officials compared their operation to other nonprofit corporations, some of them much larger, that help the government plan systems and assess new technology.
"That's the nature of our work," Daniel R. DeVos, chief executive of Concurrent, said in an earlier interview. "One of the services we perform is as an honest broker."
A review of documents, federal spending data and interviews with former company officials shows the company has had successes. It has produced pollution-abatement gear for the Army, a mobile command-and-control system used after Hurricane Katrina, titanium shields for use by combat vehicles in Iraq and much other research and technology.
But publicly available audits of Concurrent's work also show that auditors have questioned whether the government has received good value for the money it has poured into some projects.
One report by the Pentagon's inspector general's office questioned the propriety of spending millions of dollars to refurbish a building owned by a private company.
The building was used for an Army pollution-prevention research project that was managed by Concurrent. The report said the Army did not "properly plan, program, or manage" the program. It also said "the Army inappropriately paid $3 million for leased facility renovations as a direct charge to a research contract."
The Pentagon's inspector general said the overall program, known as the National Defense Center for Environmental Excellence, had received $212 million in congressional appropriations from 1990 to 2000. It said the center demonstrated 63 technologies in that time. But because of funding limitations and technical issues, including a lack of identified need, only a third of the technologies were transferred to Defense Department facilities. Just one of the technologies was used at more than one site.
Former Concurrent director Bettis Rainsford said the organization's executives "are basically very good people who are very much dedicated to the growth of the organization" and to hiring talented people who can help attract new work. But he said the company's research often goes nowhere.
"A lot of the reports never get off the planning table," he said.Growth Was Paramount
The contours of Concurrent's history are spelled out in a timeline on the company's Web site. It began operation in 1988 as a part of the University of Pittsburgh Trust and was first called Metalworking Technology Inc.
Kuhn, a University of Pittsburgh engineering professor at the time, said a university official and Murtha wanted to help the ailing local economy and the university's Johnstown campus.
"At the time, the Navy was looking to establish a National Center for Excellence in Metalworking Technology. The University of Pittsburgh Trust was an ideal fit," Murtha said in a written statement. The company was to operate the center.
Murtha, a Marine combat veteran, went on to become well-known as a defense hawk who helped lead the Democratic campaign to force the pullout of some U.S. troops from Iraq.
Kuhn was tapped by the university to write the project proposal with help from a couple of graduate students. Although he was initially reluctant to get involved in what he saw as a "pork barrel thing," he said, he saw an opportunity to "dramatically expand" the engineering systems he had been studying and developing through his own company. "What I thought I would do is do it as legitimately as possible," he said.
The company initially occupied a former high school building. At the beginning, some Navy contracting officials questioned how the young entity spent its money and whether it was following federal acquisition regulations, Kuhn said. The university sought out DeVos, who had experience in Washington's government contracting world, to run the organization.
Company documents show that its revenue nearly doubled every year at first, rising from $1.5 million to $22 million in 1992, when the company adopted Concurrent Technologies Corp. as its name. It dropped its affiliation with the university. The vision of the leadership diverged sharply from the original plan. Kuhn said he was distressed on the one hand and dazzled on the other by the new executives' ability to bring in contracts.
"I could see that expansion, growth, acquiring new contracts, was paramount," said Kuhn, who rose to vice president before leaving in 2000. He said he largely enjoyed working at Concurrent but had qualms about how it was run. "I'm uncomfortable with the whole concept, the concept of handling a nonprofit that way."
As company officials sought new work, they stayed close to Murtha. He is routinely praised and quoted in company news releases, something Murtha said is common for him. Concurrent employees have contributed at least $132,000 to Murtha over the past decade, federal records show.
Concurrent's lobbying firm, PMA Group, is run by a former defense subcommittee aide, Paul Magliocchetti. Since 1997, Concurrent has paid Magliocchetti and PMA about $3 million for lobbying and consulting services, according to tax documents filed with the government.
But as part of a long-term strategy, Concurrent executives decided years ago to diversify their relationships on Capitol Hill, Kuhn and other former executives said. When Democrats lost control of Congress in 1994, for example, the firm turned to Republican lawmakers overseeing the appropriations process. Concurrent opened more offices in both Democratic and Republican districts and hired local residents, leading to new sources of earmarks and contracts, a former executive said.
In the past four years, Congress has directed at least $226 million to Concurrent in earmarks, according to records compiled by Taxpayers for Common Sense
This year, Murtha and four other lawmakers proposed $18 million more in earmarks for the firm. Sanford D. Bishop Jr. (D-Ga.), Norm Dicks (D-Wash.), David L. Hobson (R-Ohio) and C. W. Bill Young (R-Fla.) are also members of the House Appropriations Committee. Concurrent maintains offices in all their districts.
Projects include logistics analysis for the Marine Corps in Albany, Ga.; pollution prevention for the Air Force in Fairborn, Ohio, and special operations tactical systems development in Largo, Fla., according to records compiled by Taxpayers for Common Sense.
"They recognized that if they have projects in the districts of people in Washington who can make things happen," that would be to their benefit, Rainsford said. "The strategy was to go nationwide."
Murtha defended his funding efforts.
"Every funding request, from both Democrats and Republicans, is properly vetted," Murtha said in a written statement. "In the end, we fund projects on their value to our military."
The company has critics in Congress.
In a July 17 speech on the floor of the House, Rep. Jeff Flake (R-Ariz.) unsuccessfully sought to strike a $1 million earmark proposed for the Center for Instrumented Critical Infrastructure, to be run by Concurrent. Flake said he could find no evidence that the center existed.
"Concurrent Technology has been the recipient of millions upon millions of dollars over the years," Flake said during his floor statement. "The executives in Concurrent Technology contribute handsomely to members of Congress. So it receives a lot of earmarks. It seems to be an earmark incubator of some type, an earmark that begets more earmarks."
Staff researcher Karl Evanzz contributed to this report.