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AP logo Lab Manager Settles Lobbying Claims With $4.8M Payment

ALBUQUERQUE, N.M. — Aug 24, 2015, 3:31 PM ET

The managers of one of the nation's premier federal laboratories have agreed to pay nearly $4.8 million to settle allegations of improperly using taxpayer funds to influence members of Congress and others to extend the lab's $2.4 billion management contract.

Sandia National Laboratories in New Mexico issued a statement Monday saying the lab's management agreed to settle with the U.S. Department of Justice to "put the matter behind us, take action on what we learned and focus on our important national security mission."

The U.S. Department of Energy's Office of Inspector General released a report last fall that found the use of taxpayer funds by Sandia was a violation of federal codes and provisions in the contract itself.

The inspector general determined that the lab formed a team and worked with consultants beginning in 2009 to develop a plan for securing a contract extension without having to go through a competitive process.

That plan called for lobbying Congress, trying to influence key advisers to then-Energy Secretary Steven Chu and reaching out to a former director of the National Nuclear Security Administration and former New Mexico Gov. Bill Richardson, a Democrat who led the Energy Department under the Clinton administration.

One consultant suggested the lab's message to decision-makers should be that competition was not in the best interest of the government.

Department of Energy Inspector General Gregory Friedman said his office worked with the Justice Department to gather the documentation and other information that served as the basis for the settlement. "Using public funds to lobby for a non-competitive extension of a contract is simply unacceptable," he said.

Sandia officials said they believed at the time that their actions fell within allowable guidelines. Now, they acknowledged they acted "too early and too independently" in planning for a possible contract extension.

Sandia's parent company, Lockheed Martin Corp., will pay the fine out of the fee it earned from the federal government for managing the lab.

Watchdog Greg Mello of the Los Alamos Study Group called the settlement payment a token fine and described the allegations against Sandia as a failure to enforce government's basic tenets. "The blatant, illegal lobbying activities conducted by Lockheed and Sandia should have resulted in criminal prosecutions, or at least barring this contractor from competing for the Sandia contract, plus fines," Mello said.

For more than two decades, the federal government has contracted with Sandia Corp. to manage and operate the lab, which is part of the government's nuclear weapons complex. Its main facilities are in Albuquerque and Livermore, California.

Federal investigators accused Sandia of using federal funds to support lobbying efforts between 2008 and 2012. Documentation reviewed by the inspector general also indicated the lab had taken similar actions and used operating costs to secure contract extensions in 1998 and 2003.

According to the inspector general, the lab was aware of problems with using federal funds for such purposes. In 2004, Sandia's own legal counsel said the lab should be careful to avoid even the suspicion that it was helping when it came to matters of management competition.

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