Research Center's Role Faces Scrutiny

By Carol D. Leonnig

Advice From Murtha Allies Guided Funding Requests, Documents Show

A Pennsylvania defense research center regularly consulted with two "handlers" close to Rep. John P. Murtha (D-Pa.) as it collected nearly $250 million in federal funding through the lawmaker, according to documents obtained by The Washington Post and sources familiar with the funding requests. The center then channeled a significant portion of the funding to companies that were among Murtha's campaign supporters.

The two advisers included a lobbyist for PMA Group, a firm with close ties to Murtha that is the subject of a federal investigation into whether it made illegal contributions by reimbursing donors to the Pennsylvania lawmaker and other members of Congress. The Electro-Optics Center also relied on advice from a longtime Murtha friend who now works on the congressman's appropriations staff.

Federal agents are also exploring how the center obtained its funds after they received dozens of internal documents last year. It is unclear whether the records have become a central focus of the Justice Department's probe, but they open a window into a largely hidden process in which powerful lawmakers can direct funds to pet projects.

The Electro-Optics Center, created by Murtha a decade ago under the auspices of Pennsylvania State University, was envisioned as a way to spur a new high-tech industry and create jobs in economically depressed western Pennsylvania. Last year, the U.S. attorney in Pittsburgh received a packet of budget materials, memos and e-mails from inside the center documenting how closely its managers conferred with PMA about the best ways to get its projects funded in the federal budget, according to two sources familiar with the information.

The center was supposed to help contractors in researching laser and optics technology to improve products for the military, and center officials said contractors were supposed to benefit from some of the federal funds.

Unlike in traditional earmarks -- funding for specific projects publicly requested by members of Congress -- most of the money for the center came through a budget maneuver known as a "plus-up." The process for this kind of earmark allows lawmakers to add money to an existing program in the budget without public disclosure. The center sought $120 million in this type of money for itself and other companies in 2006 alone, according to the records.

Several of the center's partners hired PMA for lobbying. In the 2008 budget, PMA clients received $299 million in defense earmarks through Murtha and other lawmakers. PMA and its clients gave $775,000 in contributions to Murtha in the last election cycle.

A PMA lobbyist and a close associate of Murtha's helped make many key decisions about what research and which contractors would get the federal money flowing to the center, according to the documents.

Typically, the center's director, Karl Harris, worked with the lobbyist to prepare funding wish lists, which were described in some of the records as "requests for Mr. Murtha to carry." The requests were sent to the congressman's staff, according to the records. The lists detailed how much, and where in the budget, money should be added for projects desired by the center and the contractors.

According to center records and two sources, Harris consulted regularly on the center's overall funding requests with the two men he jokingly referred to in the office as his "handlers": the PMA lobbyist, Daniel Cunningham, and Murtha friend Charlie T. Horner. Cunningham, who golfed with Murtha and occasionally drove him home to Pennsylvania from Washington, was part of the lobbying firm formed by former Murtha aide Paul Magliocchetti. Horner, a former veteran and Defense Department official, was a paid consultant for Electro-Optics, as well as for Lockheed Martin.

Harris did not return calls, but his staff referred questions to Penn State. Edward Liszka, the university's head of defense-related research, said the university was very involved in reviewing the center's research work and doubts that a PMA lobbyist played any significant role. The university receives a percentage of the center's research funds for administration, and Liska said that is a routine arrangement for academic institutions.

Patrick Dorton, a PMA spokesman, said Cunningham occasionally consulted with Harris to provide correct information about PMA clients.

The records show how the center planned to distribute money it received for some research projects. For a $2.5 million optical sensor project, for example, $1.8 million would be split between Boeing-SVS and Kuchera Industries. Kuchera, a Windber, Pa., company that has received $50 million in earmarks from Murtha, is a focus of the ongoing federal investigation, according to sources familiar with the probe. Company representatives have said Kuchera will not comment on the investigation.

Thomas Spellissy, a former Defense Department budget official who once worked as a consultant for Optical Systems Technology Inc., one of the companies that received funding through Electro-Optics, said he regularly fielded Murtha's requests for "plus-ups" when he was at the Defense Department. The vast majority, he said, were good projects that helped U.S. troops in the field. In some cases, however, this type of earmark wastes money, he said, but it was not feasible for him to turn them down.

"A staffer for a congressman says, 'I need you to accept this money for sensors, a couple million,' " Spellissy said. "If I said no, he can turn around and say I won't support you on this other thing you really want. I could say no -- then his boss calls the general to complain about me."

"Mr. Cunningham's review of the requests compiled by the EO Center was intended to ensure the accuracy and completeness of the information pertaining to the projects for which PMA clients were seeking funding consideration," Dorton said. Matt Mazonkey, a spokesman for Murtha's office, said the EOC has received no earmarks since Horner joined Murtha's staff last spring. He declined to comment on how the center received its funding but said the congressman is proud of its work.

"The Penn State Electro-Optics Center has created an alliance of over 350 companies and universities that the government can quickly tap to rapidly respond to emerging needs within electro-optics," he said. "This successful partnership has saved the Defense Department over $1 billion in just the past few years."

Liszka also cited the savings for the government and called the center "a leader in electro-optics technology."

Each year, Harris prepared long spreadsheets that included detailed descriptions of desired projects and how they should be funded in the budget -- which line item, through which federal department and the specific dollar amount, the records show. The documents also described whether the center or a defense company would receive the funding, and gave the name and number of the Defense Department budget official the center should contact to make sure the money was delivered.

The requests for funding for specific contractors often highlighted the company's lobbying firm. The names of PMA lobbyists and contact numbers, for example, are noted next to requests for three of the companies.

In addition to the $80 million the center requested for itself in 2006, it submitted $40 million in projects described as "company requests of Mr. Murtha via the EOC" -- corporate funds that were to come first to the center. Of that, $30 million was listed to benefit Northrop Grumman, mostly to support its work on aviator night-vision goggles.

Northrop Grumman spokesman Randy Belote said his company had partnered with the EOC in some night-vision research but had not asked any lawmakers for funding for the projects.