They Call It A Charity

Here’s how it works: Rep. John Murtha (D-Pa), chairman of the defense subcommittee of the House Appropriations Committee, arranges for a nonprofit university-affiliated program in his district to get a federal government contract.  Unlike contracts that are secured by competitive bidding, a so-called “earmark” goes to a firm that is directly or indirectly named in the appropriations bill or is understood to be the object of the appropriation. As the years go by, the firm, named Concurrent Technologies Corporation, drops its university ties, greatly increases its officers’ salaries, hires a lobbying firm that contributes to Rep. Murtha and to other Republican and Democratic members of the Appropriations Committee, and it announces its availability to do more research, development, training and analysis for the federal government. Voila! In four years the firm gets $226 million dollars in earmarked federal contracts and hires 1500 employees. And guess what?  It still retains its status as a 501(c)(3) nonprofit charity and so pays no income taxes. The story is in today’s Washington Post. Kudos to Rep. Jeff Flake (R-Ariz.) who has been dogged in pursuing the scandal of earmarks. His questioning of the Concurrent Technology earmark is toward the very end of this post.