Top Federal Contractors Spend Millions on Influence, Get Billions in Contracts
The federal government's 100 largest contractors received an incredible return on their investment in lobbying and election contributions in FY 2016, spending just $289 million on political influence but receiving more than $262 billion in federal business, according to analysis by the Project On Government Oversight (POGO).
POGO found that the median return on investment was $1,323 in contracts for every dollar spent on federal lobbying and election activities.
This data comes in part from POGO’s Federal Contractor Misconduct Database (FCMD), recently updated with the government’s Federal Procurement Data System fiscal year 2016 ranking of the top 100 contractors. POGO’s database currently tracks 220 of the federal government’s largest providers of goods and services and contains more than 2,700 resolved and pending misconduct instances dating back to 1995. Over that time, these entities have paid nearly $99 billion in fines, settlements, and court judgments.
The top 100 companies were collectively awarded more than $262 billion in contracts in FY 2016, accounting for 55 percent of all contracts awarded that year. According to data compiled by the Center for Responsive Politics, the top 100 collectively spent more than $218 million on federal lobbying in 2016 and nearly $71 million in federal campaign donations during the 2016 election cycle, resulting in a median return on investment (dollar amount in contracts received for each dollar spent on lobbying and campaign contributions) of $1,323.
POGO also found a strong positive correlation between contract awards and lobbying/election expenditures for aerospace/defense contractors. By comparing the two data sets and analyzing it by industry sector, we found the median return on investment for aerospace/defense companies was $1,120 for every dollar spent lobbying, while for IT services firms it was an astonishing $5,296. Four IT giants have joined our database this year, including Carahsoft, Engility, Hewlett Packard Enterprise Company, and prestigious IT institution Stanford University.
Eight of the ten largest federal contractors in FY 2016 were military hardware suppliers. Of these eight, five were also among the ten biggest spenders on political influence. Lockheed Martin and Boeing topped both lists and earned relatively high returns on investment: $2,382 and $1,225, respectively.
Some contractors had deceptively low returns on investment. General Atomics received $377 in contracts for every dollar spent on influence, while General Electric received just $183. However, these companies get other returns from Uncle Sam, such as subsidies (grants, loans, and tax credits) and favorable tax, trade, and regulatory policies. According to Good Jobs First’s Subsidy Tracker database, in FY 2016 General Atomics received nearly $68 million in research grants from the Department of Energy, while General Electric received more than $42 million in federal grants, loans, and loan guarantees from various agencies.
In the past, POGO has recommended common-sense reforms to bring greater transparency and accountability to the contracting system:
- Requiring contractors to disclose their campaign spending and contributions;
- Requiring contractors to disclose their ultimate beneficial owners to the government, and making this information publicly accessible in an open data format;
- Posting contract documents online; and
- Improving the systems the government uses to track contractors’ past performance and misconduct.