Sunday, September 9, 2007

The Earmarks Continue

Business Week ran a very interesting piece about "The Hidden World of Earmarks," and how getting the right, well-connected lobbyist is important for companies wanting to secure government contracts.

The list of lobbyists working for the most successful earmark-wrangling companies is replete with former Hill aides who served with the money-spending appropriations committees, and even a member of Congress or two. And as the number of dollars available on Capitol Hill has surged, earmark lobbying itself has become a cottage industry. In 1998, 1,447 entities hired lobbyists to work on budget and appropriations issues, according to Taxpayers for Common Sense. By 2006, that number had swelled to 4,516 lobbying clients.

It's not just the clients that have grown: From virtually nothing a decade ago, roughly a dozen firms specialize in garnering earmarks today. One such firm, PMA Group, founded in 1989 by former defense appropriations staffer Paul Magliochetti, represented at least 15 of the top 50 corporate earmark winners in 2005, including Lockheed Martin, General Dynamics, and Boeing (BA ). Others well known for delivering federal money include Van Scoyoc Associates, Alcalde & Fay, and Cassidy & Associates. In this quietly lucrative world, many say they don't advertise for clients--companies find them. "The people who want results come to me," says one prominent earmark lobbyist. "The smart ones figure out who can deliver."

Hiring the right lobbyist can become one of the most profitable investments a business can make.

On average, companies generated roughly $28 in earmark revenue for every dollar they spent lobbying. And those at the very top did far better than the average: More than 20 companies pulled in $100 or more for every dollar spent. By any standard, that's a hefty ratio: The companies in the Standard & Poor's 500-stock index brought in just $17.52 in revenues for every dollar of capital expenditure in 2006. Or look at the results in direct marketing, where an extremely successful campaign might bring in $5 in revenue for every dollar spent. "If mainstream American businesses got a 28-to-1 ratio in sales, they'd be ecstatic," says Steve Zammarchi, president and CEO of Wunderman New York, a sales and marketing firm.

Obama is the only Democratic candidate who has released his earmarks to the public, part of his pledge to call for openness and transparency in gov't.

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