San Diego Union Tribune

October 5, 2005

Lawmaker contacted contractor early on
Once on panel, Cunningham wrote to figure now in probe

By Marcus Stern and Jerry Kammer / Dean Calbreath
COPLEY NEWS SERVICE / STAFF WRITER

WASHINGTON – Shortly after House Speaker Dennis Hastert selected Rep. Randy "Duke" Cunningham to serve on the House intelligence committee in 2001, the Rancho Santa Fe Republican sent a letter to Poway defense contractor Brent Wilkes.

"As the speaker's newest designee to serve on the House Permanent Select Committee on Intelligence, I feel fortunate to represent the nation's top technological talent in the 'black' world," a reference to classified government programs.

"I have long benefited from your expertise on major defense issues before Congress, and have appreciated the opportunity to work with you on key service funding priorities. With my new assignment, I see even greater opportunities to work together in support of our national security and intelligence communities," Cunningham wrote in the letter on congressional stationery.

The recipient of the correspondence was the same Brent Wilkes who helped steer at least $71,500 in campaign contributions to Cunningham between 2000 and 2004. He's also the one who flew Cunningham on his corporate jet on campaign-related trips, including a hunting trip in Idaho and a golf tournament in Hawaii, and hosted fundraisers on the lawmaker's boat in Washington, D.C.

He's the same Brent Wilkes who founded Poway-based ADCS Inc. The company had no major defense contracts before Cunningham began assisting the company in the 1990s by contacting Pentagon procurement officials on its behalf, according to defense executives and procurement officials with firsthand knowledge of the events.

And it's the same Brent Wilkes whose house and corporate headquarters were raided by federal law enforcement authorities on Aug. 16 – six weeks after federal agents searched Cunningham's Rancho Santa Fe home.

A federal task force including the FBI, Internal Revenue Service and U.S. Attorney's Office is investigating Cunningham's dealings with Wilkes and another defense contractor, Mitchell Wade, founder of MZM Inc.

A federal grand jury in San Diego is probing Cunningham's dealings with Wade after disclosures that Wade bought and sold Cunningham's Del Mar-area home at a $700,000 loss and allowed Cunningham to live aboard his yacht in Washington. Wade has since resigned as head of MZM, and the company is in the process of being sold to a New York-based equity firm.

Since receiving its first federal contract in 2002, Washington-based MZM has collected more than $163 million in government contracts. ADCS has received at least $80 million in contracts since 1996.

Cunningham's positions on the defense appropriations subcommittee and intelligence committee put him in position to influence the kinds of military-intelligence contracts that ADCS and MZM have relied on in recent years, according to defense officials and contractors, many of whom would only speak on condition of anonymity, fearing reprisals.

Watchdog groups say Cunningham's letter to Wilkes, at a minimum, reflects a worrisome relationship between a lawmaker and a friend who happens to be a generous political contributor and businessman making a living off government contracts.

"At a minimum, this letter presents an appearance of corruption," said Taylor Lincoln, a government policy analyst at Public Citizen, a public-interest advocacy group. "The notion that Cunningham truly sought insight into national security from citizen Wilkes is seriously damaged by the fact that he has been willing to accept tens of thousands of dollars from Wilkes and Co.

"Likewise, Cunningham would have been foolish to put any value in Wilkes' counsel since Wilkes stood to make tens of millions of dollars from the federal government," he said.

Cunningham's attorney, Lee Blalack, rejected those assertions.

"It's ridiculous for these people to suggest that a congressman cannot value the advice of experts in a given field just because these experts support the congressman's political agendas with campaign contributions. Do they expect a member of Congress to receive contributions from people who oppose their policy agenda?"

In addition, Blalack added, "there is nothing inappropriate or unusual about a member of Congress calling the Pentagon on behalf of a constituent regarding the use of appropriated funds."

Wilkes' attorney echoed that view.

"Brent Wilkes has made proper, legal campaign contributions to a variety of local, state and federal officials whose views and positions he supports," said Mike Lipman. "We are confident that the authorities will come to the same conclusion. ADCS Inc. is proud of the work that it has done and will continue to do for the Department of Defense and other government agencies."

Several defense contractors in recent weeks have said that Cunningham intervened with Pentagon officials on their behalf, as well as Wilkes'. Cunningham's intervention, they said, had been crucial to securing defense contracts.

One contractor said his company relocated to San Diego specifically to be in Cunningham's district.

After moving to the district, he said, he raised political contributions for Cunningham to ensure the lawmaker's continued support as Pentagon officials decided how to split annual defense appropriations among competing contractors.

Cunningham never directly asked him for money in exchange for support, the executive said. However, he added, a lobbyist he retained made it clear that he should be located in the district and provide contributions.

"We had a lobbyist advising us, but we kind of knew the game," he said. "And if we didn't do it, somebody else was going to, and so we didn't have a whole lot of choice."

Cunningham also contacted mid-level defense program managers to encourage their use of ADCS software, according to several contracting executives and program managers who had direct contact with Cunningham.

"He just wanted to emphasize the importance of the project we were working on," said one manager. "It was always project related, but it was very odd that he would call me directly."

John Karpovich, a former Pentagon procurement officer who worked on a large program Cunningham helped fund, said Wilkes would infuriate Pentagon staff by saying he was responsible for the annual appropriation and demanding a big piece of the pie.

"Brent came in and said, 'That's our money,' " recalled Karpovich, who has since retired. "He said, 'The congressmen put the money in there for us.' "

Once Congress has appropriated money for programs, officials in the office of the secretary of defense decide how to apportion the money among prequalified contractors. These officials are very mindful of the desires of members of Congress who were crucial in funding the program, according to contractors and program managers.

The particular program Karpovich referred to involved converting paper documents to electronic files. ADCS, or Automated Document Conversion Services, specializes in scanning documents so they can be indexed and cross-referenced easily. Its biggest project has been archiving 1.2 million architectural documents from the Panama Canal in 1999.

Each year from 1994 to 2001, Congress provided funding for the conversion program even though the Pentagon never requested it and despite the fact that much of the program's early promise was overwhelmed by glitches in the software.

In less than a decade, the funding totaled $190 million for software that sometimes went unused because of its defects, according to contractors and procurement officers.

"It was a program that really ran amok. It got seriously out of hand," said one program manager.

In 1998, the Pentagon tried to bring order to the program. Assistant Deputy Undersecretary Lou Kratz created a special team to select projects that would receive funding from the $45 million Congress appropriated for fiscal year 1999.

Wilkes' ADCS wasn't on the list selected by the team. But, as a Defense Department inspector general's report later noted, the Pentagon reversed that decision and pushed $9.77 million into the ADCS program "after receiving inquiries from two members of Congress."

Those two lawmakers were Cunningham and Rep. Duncan Hunter, R-El Cajon, now chairman of the Armed Services Committee, according to the contractors and procurement officers directly involved. Both men acknowledge their ongoing involvement in funding the specific program but deny any wrongdoing.

Facing questions about his interventions on behalf of ADCS in 1997, Cunningham said at the time he had merely talked up the company he believed had the best software. Anyone saying otherwise, he added, "can go to hell." Said the congressman, "I'm on the side of the angels here."

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