[Congressional Record Volume 155, Number 42 (Tuesday, March 10, 2009)]
[House]
[Page H3131]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                     EARMARKS AND NO-BID CONTRACTS

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from Arizona (Mr. Flake) is recognized for 5 minutes.
  Mr. FLAKE. Madam Speaker, when most people think about earmarks, they 
think of the silly earmarks that we hear about like the one in the 
omnibus spending bill that will pass the Senate today, $1.7 million to 
combat swine odor in Iowa. And there are a lot of earmarks like that. 
Or one for the Rock and Roll Hall of Fame, or one for a hippie 
memorial. That is typically what is on people's minds when they think 
of earmarks. But today there is a different type of earmark, and it is 
not your grandfather's earmark. It is something that has really come 
about in the last several years or really been perfected in the last 
several years. These earmarks are no-bid contracts to private 
companies.
  Now, when the Federal Government spends money, there are stipulations 
in how they spend that money. It is very difficult for a Federal agency 
to award a no-bid contract. If they do, they have to jump through a lot 
of hoops. There has to be a national security exemption. There have to 
be other exemptions. It is difficult to do, and gratefully so.
  President Obama announced the other day that he is going to try to 
make sure that there are no more no-bid contracts from Federal 
agencies. And that is a great move. But what hasn't been talked about 
are the no-bid earmarks, no-bid contracts that are in the form of 
earmarks that come from Congress that is congressionally directed no-
bid contracts. And what it leads to is what I like to call circular 
fundraising, and this is what has been the subject of a few of the 
privileged resolutions that have been offered here in the House in the 
last couple of days.
  What happens is you have money here that Congress has from the U.S. 
taxpayer. Earmark spending which will be some $8 billion to $10 billion 
this year, goes this way. It goes to the earmark recipient. Say it is a 
defense contractor. And in this case if a defense contractor is getting 
a no-bid contract to make some widget for the Navy or for the Army or 
something else, or to make a shirt or a pair of gloves for our Armed 
Forces, they will get that contract, a no-bid contract, and then what 
you will see is money will come right back to the Member of Congress 
who secured that earmark in the form of a campaign contribution. That 
is represented by the line that goes around there. And in some cases, 
in most cases now, those who secure the earmark for a no-bid contract 
receive campaign contributions from those who they got no-bid contract 
for.
  Oftentimes the earmark recipient will hire a lobbying firm, and that 
lobbying firm will also make contributions to the Member. And then 
sometimes the lobbying firm will also have a PAC, and that PAC will 
make contributions to the Member. So, in some cases, a Member of 
Congress will get what could be called the trifecta: They will get 
regular contributions from the earmark recipient, money from the 
lobbying firm, and also money from the lobbying firm's PAC.
  For one defense contract, say, for a few million dollars, a no-bid 
contract, sometimes the Member of Congress can receive as much as 
$50,000 to $100,000 for one earmark, for what appears to be for one 
earmark. By the time the earmark recipient and the lobbying firm and 
the lobbying firm's PAC contribute to the Member, that is a lot of 
money that makes it back into the Member of Congress' hands. So what 
happens? It is easier then to earmark more spending the next year and 
to do more no-bid contracts.
  This is the essence of the privileged resolution that was offered. 
There is a lobbying firm called PMA that has been raided by the FBI in 
recent weeks, or we learned of it in recent weeks. That lobbying firm 
contributed millions and millions of dollars to Members of Congress who 
had secured earmarks for the client of this lobbying firm. The lobbying 
firm's PAC had contributed millions and millions of dollars as well to 
those Members of Congress who secured earmark spending.
  Madam Speaker, it simply isn't right for Members of Congress to get a 
no-bid contract for anyone, let alone those who turn around and 
contribute money back to that Member. It simply doesn't look right. 
There may not be a quid pro quo here, but it should not be allowed by 
the House to happen. The House should set a higher standard. We are 
charged with upholding the dignity and decorum of the House. And when 
you have circular fundraising like this happening and investigations 
swirling around, we simply can't allow this to continue, Madam Speaker.
  I hope that the next time a privileged resolution is up that we will 
all vote to carry it to the Ethics Committee.

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