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IG: Energy contractor and ex-lawmaker lobbied officials for no-bid contract worth $2.4 billion per year

Workmen at Sandia National Laboratories’ test for energy irregularities in a machine. (Courtesy Sandia National Laboratories)

A top government contractor managing a key Department of Energy laboratory inappropriately sought help from lawmakers and Obama administration officials to obtain a no-bid contract extension worth $2.4 billion per year, according to a federal review.

In a report released Wednesday, Department of Energy Inspector General Gregory Friedman cited planning documents from Sandia Corporation showing that the firm, a subsidiary of Lockheed Martin that operates Sandia National Laboratories, formulated a strategy to “campaign aggressively (Administration and Congress) to convince [then-Secretary of Energy Steven Chu] to extend the M&O contract.”

Former New Mexico congresswoman Heather Wilson, a Republican, was involved in the efforts, according to the review. The ex-lawmaker now runs a consulting firm and serves as president of the South Dakota School of Mines & Technology.

Sandia’s tactics included persuading the New Mexico congressional delegation, a former U.S. senator, the head of the National Nuclear Security Administration and top advisers to the energy secretary to pressure Chu, the report said.

Friedman said the costs of the efforts were “borne by the U.S. taxpayers,” because Sandia paid for them with money that the federal government had previously given to the firm. He added that the plan represented a violation of federal acquisition guidelines and a federal law barring the use of congressionally appropriated funds to influence contracting decisions.

Sandia had sought a six-year, no-bid extension, but the Department of Energy ultimately extended the contract for two years without competition so the agency could prepare for a “full and open competition,” the inspector general said.

The company did not confirm or deny the findings when asked about them on Wednesday.

“Sandia takes these allegations seriously and has cooperated fully in the inspector general’s review of the issue,” said Heather Clark, a spokeswoman for the firm. She added that the organization is confident it can work with the Energy Department to resolve the concerns raised in the report.

Wilson, who left Congress in 2009 after an unsuccessful run for a Senate seat, denied the findings against her in an e-mail on Wednesday.

“I was not a lobbyist for Sandia and I did not contact any federal official – Congressional or Executive – for Sandia to try to extend the Sandia contract,” she said. “Indeed, I don’t think I met with any member of the New Mexico Congressional delegation or their staffs on any matter, at any time, for Sandia during this entire period. The DOE has never contacted me on this matter and their findings don’t mention me. If they intended to imply I was involved, their report is wrong.”

Friedman said by phone on Wednesday that Wilson was “deeply, deeply involved” in the tactics described in the report.

Wilson was connected to a previous controversy involving $450,000 in payments that Energy Department contractors paid to her firm in 2009 without documenting the work that was supposed to be done in return. Friedman said in a 2012 report that the justification for the billing did “not meet even minimum standards” for federal payments.

RELATED: Inspector general casts doubt on DOE contract work by ex-congresswoman Wilson

The report released Wednesday said Sandia employees urged federal lawmakers and officials to convince the Energy Department, the National Nuclear Security Administration and lawmakers of the “merits of contract extension without competition.”

In one 2009 e-mail, a senior member of the Sandia contracts team said the firm needed support from the then-head of the National Nuclear Security Administration, Thomas D’Agostino, to persuade Chu.

Sandia told the inspector general’s office that the efforts and costs in question were allowable under federal contracting guidelines and that they were necessary to show that the organization was fulfilling the Energy Department’s needs. The firm argued that its activities were typical “for any contractor intent on continuing a relationship with its sponsor,” the report said.

Friedman rejected that explanation, saying in his report that the use of federal funds to influence lawmakers and federal officials was “inexplicable and unjustified.”

The Energy Department agreed with the inspector general’s recommendations, which called for the agency to determine whether a violation of federal contracting guidelines occurred, ensure that Sandia employees do not contact government officials for help obtaining business, and recover any payments that DOE made to Sandia staff or consultants for inappropriate activities.

“We take this issue seriously, and are committed to taking corrective action and preventive measures to ensure it doesn’t occur again,” said Energy Department spokesman Brendan Daly.