May 30, 2009

Link to Original:  http://www.philly.com/inquirer/front_page/20090530_Navy_blocks_accused_Pa__firm.html

 

Kuchera Defense faces allegations of fraud. The contractor has ties to Murtha, who spurned questions.

By Pete Yost and Dan Nephin

Associated Press

WASHINGTON – A Pennsylvania defense contractor that got millions of dollars in congressional earmarks from Rep. John P. Murtha has been blocked from doing business with the Navy amid allegations of fraud.

Details of the suspension surfaced yesterday as another Democrat who serves on the Murtha-chaired House Appropriations subcommittee on defense, Rep. Pete Visclosky of Indiana, was subpoenaed in a Justice Department criminal investigation. That probe involves a Washington-area lobbying firm with strong links to Murtha and Visclosky.

A federal grand jury subpoenaed records relating to a firm known as PMA Group from Visclosky’s congressional office, his campaign committees, and from some of his employees. In recent months, FBI agents raided PMA and the suspended Pennsylvania firm, Kuchera Defense Systems Inc.

During a brief news conference yesterday at a trade show for defense contractors in Johnstown, Murtha turned aside questions about the suspension of Kuchera, a family-run business that has supported him with $60,000 to his campaign and to his political action committee since 2002.

Over the last two years, Murtha has secured $14.7 million in congressionally directed funds known as earmarks for Kuchera to perform work for the military, a tiny slice of Murtha’s earmarks overall.

Asked about Kuchera’s troubles, Murtha said: “What’s that got to do with me? What do you think, I’m supposed to oversee these companies? That’s not my job. That’s the Defense Department’s job.”

Asked if he had a lawyer, Murtha responded, “What kind of question is that?” and then turned around and walked out of the room.

Murtha is chairman of one of the most powerful panels in Congress, the House Appropriations subcommittee on defense, where he has been a member for more than two decades. Visclosky is the third-ranking Democrat.

In remarks to defense contractors before the news conference, Murtha defended the much-maligned practice of congressional earmarking.

He said the money he directs pays for road and sewer improvements and improving water quality in the Western Pennsylvania region. He said the annual trade show helps promote economic development there.

At the Pentagon, Lt. Clay Doss, a Navy spokesman, said the Navy suspended Kuchera Defense Systems on April 23 for “alleged fraud,” including “multiple incidents” of incorrect charges, along with allegations of defective pricing and ethical violations.

In a story May 17, the Pittsburgh Post-Gazette quoted a former Kuchera director of human resources as saying that the firm had moved employees to Kuchera Defense from another Kuchera entity, Kuchera Industries. That personnel move would have in effect raised the amount of overhead costs on Kuchera Defense’s government contracts, allowing the company to claim a higher reimbursement for its costs.

Regarding Murtha and PMA, in the last two years alone, the congressman has directed $78 million in earmarks to clients of PMA.

A former staffer on Murtha’s subcommittee, Paul Magliocchetti, left Capitol Hill to start the lobbying firm in 1989, the same year Murtha became chairman of the subcommittee. A former chief of staff to Visclosky also went to work for PMA.

From 2005 through 2007, more than one of every five dollars Murtha collected in campaign contributions came from PMA lobbyists or their clients – more than $1 million in all, according to Federal Election Commission records.

The annual defense contractors’ trade show in Johnstown is in the heart of Murtha’s congressional district.

This year, seven of the world’s largest defense contractors, who have been among the veteran Pennsylvania Democrat’s biggest campaign contributors over the years, helped bankroll it.

In a 15-month span ending March 31, employees of the seven defense contractors sponsoring the Johnstown show this week put more than $200,000 into Murtha’s campaign account. The seven are Lockheed Martin Corp., Boeing Co., BAE Systems P.L.C., Northrop Grumman Corp., General Dynamics Corp., Raytheon Co., and DRS Technologies Inc.

The “Showcase for Commerce” has helped cement a partnership of major defense contractors and Johnstown-area firms, including Kuchera.

For example, in 2007 Murtha announced that Kuchera Defense Systems had been awarded a $100 million, 10-year contract by Raytheon Missile Systems to build circuit boards for the Air Force.

On Thursday, Anne Marie Squeo, a spokeswoman for Raytheon, said the company was complying with federal acquisition regulations, which allow a suspended firm to complete work on an existing project but bar it from being awarded new government work or any expansions of existing projects.

Thursday night, Dennis McGlynn, an attorney representing Kuchera, said the company was appealing the Navy suspension and “we hope to have it lifted after we have an opportunity to present our reply.”

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