CQ TODAY PRINT EDITION
Jan. 23, 2009 – 8:13 p.m.
With Lobbying Rules Waived, Lynn’s Earlier Pentagon Tenure Now at Issue
By Josh Rogin, CQ Staff
The White House sought to smooth William Lynn’s confirmation to a top Defense Department post by exempting him from new ethics rules, but now scrutiny of his last stint at the Pentagon has presented new questions about his nomination.
Lynn, nominated by President Obama to be deputy Defense secretary, previously served as the Pentagon’s comptroller during the latter half of the Clinton administration. He was tasked with the dual mission to reform the Pentagon’s antiquated financial management systems and move the world’s largest corporation closer to its first-ever clean audit. But Pentagon investigators, experts and watchdog groups noted little if any progress toward those goals after he spent four years at the post.
Moreover, some allege that Lynn sought to relax accounting rules while in office and misled congressional staff on Defense budget matters.
The Pentagon still has never achieved financial transparency. But with fiscal reform as a top priority in a time of economic crisis, Lynn’s Pentagon record has increasingly come under scrutiny.
Military reformers and some former Defense officials from the 1990s argue that, aside from potential conflicts with Obama’s new ethics rules, Lynn’s record as a public official is itself a problem. Lynn served as Pentagon comptroller from 1997 to 2001 and was director of the program analysis and evaluation office before that.
A 1998 Defense Department inspector general’s audit report criticized Lynn’s stewardship of the comptroller’s office, saying the department “did not comply with several laws and regulations” relating to 1997 financial statements.
“Material instances of noncompliance included inadequate accounting systems, improper accounting, and inadequate disclosure in the financial statements,” the report said. “The DOD control environment was not conducive to the preparation of auditable financial statements because the CFO did not provide timely guidance to the DOD components.”
Also in 1998, Lynn testified before the Federal Accounting Standards Advisory Board in support of relaxing a requirement that the department report on the historical value of all major assets, such as weapons systems.
He said the Pentagon couldn’t meet the requirement and adhering to the standard would hurt department morale. The board later relaxed the requirement.
Rafael DeGennaro, director of the Citizen Century Institute, a nonprofit organization that promotes transparency in government, also testified at the board’s hearing. He told the board that the stronger standards were necessary to hold Pentagon program managers and contractors accountable for their estimates and cost overruns.
“On an obscure day, when reformers were trying to get better DOD accounting, William Lynn was part of the problem, not part of the solution,” DeGennaro said in an interview. “He was not a reformer when it mattered.”
Winslow Wheeler, a defense analyst at the Center for Defense Information and former Senate Defense budget aide, said the comptroller’s office under Lynn gave Congress misleading information about Defense budget numbers as a matter of course.
Lynn’s presentations to Congress sought to alter budget projections by using misleading economic figures, counting savings that didn’t exist and comparing numbers incorrectly, according to Wheeler.
“Bill Lynn’s Defense budgets, when he was comptroller, were more full of budget gimmicks than pretty much any Defense budget I’ve seen during my 30 years on Capitol Hill,” he said.
Lynn’s supporters, who include most of the top former Defense officials in Washington, contend that he performed as well as anyone during his tenure at the Pentagon. Moreover, they portray the criticisms of Lynn’s management as critiques that could be applied to any past official, given the long and ongoing record of incomplete overhauls at the department.
“I don’t know anybody who did the job better than Bill Lynn,” said John Hamre, president of the Center for Strategic and International Studies. Hamre directly preceded Lynn as comptroller and served as deputy Defense secretary after Lynn became comptroller.
Lynn was right to oppose the historical cost requirements for weapons systems, Hamre said, because that would have drained resources toward a task not related to running the department. “Solid fiduciary practices are important, not pristine accounting records years after the fact,” he said.
Dov Zakheim, who directly followed Lynn as comptroller, said Lynn’s experience would prepare him well for the role and also downplayed the auditing issue.
“This whole business of clean audits is not something you can do quickly with such a massive organization,” Zakheim said.
Supporters also point out that acquisitions reform and budget oversight are more immediate problems than auditing.
Ethics Waiver
Lynn’s nomination had already been snagged by Obama’s new ethics rules barring administration officials from working on issues for which they had been lobbyists. That would have barred Lynn from working on any program he had dealt with as a senior executive at defense contractor Raytheon Co., where he was a registered lobbyist in 2008. The White House issued a waiver exempting Lynn from applicable sections of the new rules.
“I have determined that it is in the public interest to grant the waiver given Mr. Lynn’s qualifications for his position and the current national security situation,” Peter R. Orszag, director of the Office of Management and Budget, wrote in the waiver.
Senate Armed Services Chairman Carl Levin , D-Mich., was quick to endorse the waiver, which the panel had sought before voting on the nomination. But Levin said that under congressional ethics rules, Lynn would still have to recuse himself for one year from matters related to Raytheon.
“I support Mr. Lynn’s nomination and look forward to prompt consideration by the Senate,” Levin said in a statement.
In Congress, the politics surrounding the Lynn confirmation are delicate, with each party holding different reasons for avoiding harsh criticism of the nominee.
On one hand, Senate Democrats are determined to enforce tough ethics rules and clamp down on what they call the “revolving door” culture at the Pentagon. On the other hand, they are apprehensive about opposing one of their new president’s top national security picks.
Sen. Claire McCaskill , D-Mo., backed off her initially strong reservations about Lynn last week, but she still acknowledges that the appointment could appear to conflict with Obama’s call for government reform.
“Even if he is the most ethical and has more integrity than anyone who has held that position, it’s the appearance of impropriety that trips us up,” McCaskill said.
Senate Republicans would seem to have more impetus to object to Lynn on ethical concerns, as they briefly did for the nomination of Secretary of State Hillary Rodham Clinton last week.
But the GOP has strong ties to defense contractors such as Raytheon, and they may be reluctant to forge another losing battle over a nomination that seems greased for passage — especially so early in their new chess match with the bolstered Democratic majority.
John McCain of Arizona, the ranking Republican on the Armed Forces Committee, said in a statement that he was disappointed by the waiver and would wait to decide whether to support Lynn’s nomination.
“While I applaud the president’s action to implement new, more stringent ethical rules, I had hoped he would not find it necessary to waive them so soon,” McCain said.
Comments
this nomination should be rejected...and for the obvious resons stated about his prior performance. There has to be a smart person with knowledge that is available to do this job without the conflicts of interest. Of course Bidens son the lobbist should be barred from government influence also....More chang?...nah just a recycle of the same ol" same ol".It's pathetic...
Nah, the author misses the point. The real reason he's getting confirmed is that Raytheon has lined the pockets of both dems and repubs.
This is what makes the public so cynical. Despite the PR over lobbyists, anyone Obama wants to appoint merits a waiver because it is "in the public interest." He should have spared us the posturing. "I have determined that it is in the public interest to grant the waiver given Mr. Lynn's qualifications for his position and the current national security situation," Peter R. Orszag, director of the Office of Management and Budget, wrote in the waiver.
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