In questioning Mark Esper last week over his nomination as U.S. defense secretary, Sen. Elizabeth Warren. D-Mass., roundly criticized his past service at Raytheon. Warren specifically complained that in declining to recuse himself from all decisions involving his former employer, the serving Army secretary was clearly "not willing to make a commitment that he will not engage in conflicts of interest for the company for which he was a lobbyist.”
Esper views that past work as valuable experience in the business of defense. The secretary has more than a point, and that is why Sen. Warren’s views on the so-called revolving door are quite dangerous.
The criticism was clearly designed to echo a legislative initiative. Last month, Warren and Rep. Jackie Speier, D-Calif., introduced a bill they have termed the “Department of Defense Ethics and Anti-Corruption Act” (S 1503). Whatever she claimed of Esper, Warren acknowledges that “there are talented and patriotic Americans who work in the defense industry” and that “there’s no question that public and private collaboration has helped produce real advances in new technology.” Her effort with Speier, however, nonetheless aims (as goes the title of Warren’s missive on Medium) “To Reduce Corporate Influence at the Pentagon.”
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To this end, their bill proposes four new public impositions on private interests. The first seems reasonable, if subject to reasonable limits. The second is a touch more draconian than necessary. The latter two would be flatly deleterious to national security.
Banning stock ownership: Warren and Speier want to "ban all senior DoD officials from owning or trading any stock of giant defense contractors” and “ban all DoD employees from owning or trading stock if they’re in a position to influence that contractor’s bottom line.” Warren calls the whole thing “a no-brainer,” but it is not obvious that existing statute and regulation are insufficient. As with earlier laws, the authors do notably and appropriately exclude mutual funds. Such a ban on direct ownership of shares would remove incentives for favoring certain contractors, though their rule would only apply to companies receiving more than $1 billion in revenue from the Defense Department in a single year. The ham-handedness of that number indicates how poorly thought out the rest of this proposal really is.
Limiting foreign lobbying: The specific outrage here concerns Samir Jain, who served in the Obama administration as senior director for cybersecurity policy on the national security staff and as associate deputy attorney general in the Justice Department. He is now a partner at Jones Day and, more to the point, a lobbyist for Huawei. Even assuming that lawyerly presentation of a case from overseas is pernicious, Warren and Speier only want to prohibit former “American National Security Officials” from lobbying on behalf of any country other than Australia, Canada, New Zealand or the United Kingdom. The Anglo-Saxon exclusion is appropriate, but why treat Norway like China? No ally should be lumped with an adversary. If this plank is so important, the secretary of state can make determinations for whole countries at a time, not person by person.
Opening all the books: Warren and Speier want to apply public records laws to private defense contractors “so the public can understand what they’re doing.” By the wording of their act, they specifically mean to make available for public viewing “any record produced using federal funds” at any defense contractor. If the federal government has not already chased off every firm not facing high exit barriers from the defense business, this might do it. Who would so hazard his intellectual property, his business strategies, and sundry other reasonable secrets to any willy-nilly Freedom of Information Act request that a gadfly might lodge? This particular provision, if enforced to the letter, would be absolutely disastrous for the market entry and innovation that the Pentagon wants to encourage.
Slam shut the revolving door: By her public statement on the bill, Warren seems convinced that the sharing of human capital between the military and its suppliers is the source of most of America’s national security problems. There is already a barrier: three- and four-star generals and admirals cannot work for defense contractors without special permission for two years after retirement. Speier and Warren want to extend that not just to all generals and admirals, but to colonels and captains and mere GS-15s. None could work for four years after retirement for any contractor paid more than $1 billion annually by the Defense Department. They offer no explanation why four years would somehow solve all their imagined problems. The door would indeed effectively shut, however, for four years is enough to send all these people to alternative employment. No former official would be on hand, “including as a consultant or lawyer,” to explain to any large defense contractor what the Pentagon is thinking or how the government actually works these days. That is simply a recipe for miscommunication.
At the same time, Speier and Warren also insist that “a former employee or executive of a defense contractor who joins the government would be totally banned from working on anything that could influence their former bosses.” Sometimes the best test of a new law is to consider how the statute might have changed history had it been enforced years earlier.
Consider just one person who went from business to government, taking with him a serious head for that business, to great acclaim by many in government. Shay Assad is a Naval Academy graduate who spent 22 years working for Raytheon. In 2011, the Obama administration made him director of pricing at the Pentagon. He was not often at the Pentagon, as he had obtained special dispensation to keep working from his hometown of Boston.
Over the next eight years, he racked up $500,000 in travel costs and may have saved the government $500,000,000 in contracting costs. One thousand times seems a rather good return to me. I must admit to having previously, publicly criticized his zeal. Politico magazine described him as “The Most Hated Man in Washington” for what, at the time, seemed a “personal vendetta” against defense contractors. Late last year, he was quietly reassigned to another post up in Massachusetts.
Whatever the record will eventually show, no one could call Assad a patsy for the defense industry. Warren and Speier, however, would ban people like him — exactly the ones who know where the bodies are buried in the accounts.
And whatever these two legislators’ indignation about occasional abuses, building barriers between suppliers and customers is frankly no way to do business — in business or in government.
James Hasik is a senior research fellow at the Center for Government Contracting at George Mason University.
