What You Don't Know About Lobbying Does Hurt You

By Gene Moran

iStock photo-illustration

There are three categories of lobbying in the defense industry: those who lobby; those who lobby but don’t think they lobby; and those who have no real awareness of how lobbying could help them.

The best-performing federal contractors — as identified by Bloomberg Government — all lobby. Academic research confirms that lobbying in the executive branch and Congress can influence more favorable contract outcomes.

I sought to understand why so few defense companies lobby Congress when it can be advantageous.

It is no secret that several factors shape the consolidation of winners of defense contracts over time, including a shrinking industrial base, offshoring of critical manufacturing capacity, the introduction of other transaction authorities, indefinite delivery, indefinite quantity contracts and the relative increase in lobbying activity since the post-World War II era.

Over the past 30 years, registered federal lobbyists grew to more than 12,000, yet fewer than 1,000 registered lobbyists represent defense interests. Defense lobbying does not rank even among the top 10 industries that lobby Congress. How does that number of registered defense lobbyists align with the number of companies within the defense industry?

There are hundreds of thousands of companies competing within the defense industrial base. A Defense Department report on the defense industry in 2019 acknowledged it doesn’t know the exact size of the defense industrial base, but that it could be one million companies.

For the sake of discussion, let’s say that the number is only 250,000. That artificially small depiction of the industrial base still reveals a dramatic imbalance of registered representation. A fraction of one percent of defense companies is registered to lobby.

Prior research confirms half of defense acquisition dollars go to 50 companies and their subcontractors. Annually, the congressionally mandated small business set aside goals strive to assure that 25 percent of contract awards go to specific socioeconomic categories of small businesses. In defense, that 25 percent equates to roughly 50,000 companies annually.

While acknowledging the mix of dollars versus contracts in these statistics, the odds appear indeed long for the remaining companies vying for the last percentages of opportunity. If the competitive opportunity is so fierce, why would more companies not use every tool in their toolkit to gain better leverage?

The cynic might accept this as a question of a company’s ability to allocate corporate resources of money, people and time to the lobbying process. Sadly, more powerful but addressable reasons help explain the lack of lobbying participation.

My recent academic research identifies facilitators of and barriers to congressional lobbying as perceived by defense executives. The perspective of defense executives toward congressional lobbying has not previously been subject to academic scrutiny. The study’s findings are informative and may help companies think about their own executives’ levels of understanding of complex processes. The findings might also inform Congress as it regularly revisits lobbying rules.

My research focused on companies with annual defense revenues between $5 million and $1 billion. Using recognized qualitative research techniques specific to analyzing interviews, I identified six themes that point to dynamics more nuanced than the easy-to-reach large company versus small company conclusion. Defense executives in key decision-making roles that determined the company’s decision to lobby Congress provided answers to an identical set of questions about the overall business development and sales process, including consideration of congressional lobbying.

By applying widely accepted thematic coding procedures, executives’ responses generated six themes: awareness, experience, outcomes, investment, size and type of business and compliance. The theme of awareness contained two subthemes: communications and connections. Below is a very high-level summary of each theme and subtheme.

“Awareness” captures an executive’s ability to synthesize specific sub-elements of the budget cycle to include lobbying knowledge, experience, connections, appropriations, authorizations, networks, working with Congress, strategy and colors of money. The awareness theme is evident in the responses of all participants and overshadows other relevant themes by a factor of 10 in its sheer dominance of the data. Some participants demonstrated sophisticated levels of awareness, while others demonstrated a lack of awareness.

As for “process,” lobbying requires that a defense executive synthesize complexities of the budget, legislative and lobbying processes and their interrelationships. Defense executives who possess an awareness of process knowledge perceived lobbying Congress as a tool or lever at their disposal. Conversely, defense executives with low process knowledge did not have the same perception of lobbying.

The communications and contacts subtheme integrates how an executive may draw on distributed networks to communicate effectively throughout the federal sales cycle in support of the lobbying decision. Robust networks with effective and timely communications support those executives with adequate process awareness. Support from mentors and knowing with whom to speak can serve those with high levels of process awareness.

Defense executives spend considerable time and energy determining with whom they must communicate amid a government audience that frequently changes positions and does not routinely publish useful contact information directories. Communications in the executive branch and Congress are governed by rules and norms, each requiring varying degrees of sophistication that coincide with the executives’ level of awareness. Higher levels of awareness facilitate the decision to lobby, while lower levels of awareness present a barrier to the decision to lobby.

“Outcomes” include winning contracts, generating sales and earning revenue. Participants universally identify outcomes for their relevance to business success. Executives must consider whether lobbying investment would lead to the desired business outcome. Levels of executive awareness inform whether rewarding outcomes of congressional lobbying are attainable.

For those executives able to foresee future favorable outcomes, they are a facilitator to congressional lobbying. Outcomes can be a barrier to congressional lobbying for those executives lacking the awareness to see the potential future results.

As far as “investment,” several activities, such as communications, relationships with Congress, research and development and training, cause internal competition for limited resources. The decision to invest in lobbying requires practical tradeoffs, regardless of whether the lobbying function is executed by an in-house employee or contracted support.

Dedicating resources such as time and funding to lobbying Congress requires an executive to assess the tradeoff and likelihood of its positive impact on relevant policy, sales or revenue outcomes. Calculating return on investment of lobbying requires high levels of awareness.

“Experience” — as indicated by multiple participants — contributes to developing awareness and requires a combination of education, time in the industry, mentorship and practical on-the-job training. All participants identified experience issues required to function well in their roles and on behalf of their companies. Where and how each gained such experience varied. On-the-job training was the most often cited method of accumulating the requisite experience to succeed.

Time in the industry alone does not necessarily equate to experience, although is often perceived as a valued measure by executives. Executives interviewed possessed decades of experience “in defense,” with the majority claiming credit for prior military service. However, the time in their current corporate role averaged 6.3 years with a mean of five years. None possessed formal acquisition or government relations training beyond “101-level short courses.” Experience, as perceived by defense executives, does not equate to expertise.

Executives with experience perceive facilitators to congressional lobbying in themes of awareness, outcomes and investment. Those with less experience perceive barriers to congressional lobbying in those same themes.

As for “size and type of business,” all participants perceived them as relevant to business success and to the consideration of lobbying Congress. Research data indicated that it was not always simply a matter of small versus large companies, though most acknowledged that large companies have advantages attributable to their size. Conversely, the agility of small companies was seen as advantageous by some executives of larger companies. Most executives saw the large company advantage evident in the presence of large business development teams able to support multiple simultaneous opportunities.

Defense executives of manufacturers and product providers perceived more significant opportunities for return on investments that yield outcomes along a more robust horizon worthy of the required investments.

The types of appropriated funds such as research-and-development or procurement that support the manufacture of products have a longer lifespan, allowing more time for the future outcome to develop. On the other hand, service companies limited to using one-year operations-and-maintenance funds don’t see the same time horizon. While the inter-relationships of multiple themes were evident, product manufacturers see size and type of business as a facilitator of lobbying, while service company executives perceive a barrier.

“Compliance” was also an issue. Participants consistently revealed incorrect terminology and a general lack of understanding of lobbying compliance issues. Nearly all would respond to lobbying and political giving questions, for example, in the context of prior ethics training that had no direct relationship to the lobbying dynamic. Lobbying registration rules do not appear well understood by those who do not lobby.

The Government Accountability Office’s annual report of lobbying compliance only examines the reporting of registered lobbyists, and in those cases, lobbying reporting compliance consistently rates above 95 percent. There is no systemic measure of the well-researched concept of “shadow lobbying,” those who lobby but fail to report the activity.

The perceived barrier to lobbying, or those executives with low compliance knowledge, was understood well enough that executives believed they could address and remove it. Their most common plan to assure compliance was to seek counsel from a mentor within their network.

The research findings confirm certain perceptions of defense executives that present barriers to or facilitators of congressional lobbying, depending on the situation’s specifics. An executive’s awareness of the process, communications, and connections can allow the executive to perceive facilitators and barriers to the decision to lobby Congress.

Further, an executive’s experience, focus on outcomes, understanding of investment return and knowledge of compliance also present perceived facilitators and barriers to the defense executive’s decision to lobby.

Lastly, the size and type of company influence whether an executive perceives a facilitator of or barrier to the decision to lobby Congress. In some cases, the presence of a theme can be a perceived facilitator, while its absence can be a perceived barrier. These findings may inform policymakers and decision-makers of considerations for ongoing and future reforms associated with congressional lobbying.

Budgeting, legislation and federal contracting are each interrelated and practical aspects of the performance of democracy. This research attempted to look beyond large verses small company comparisons and is distinct from ongoing research and efforts in the acquisition, campaign finance and lobbying reforms.
Understanding how defense executives perceive the lobbying decision and environment can inform all such reforms.

Gene Moran, Ph.D., is an award-winning defense lobbyist and author. His most recent book, co-authored with Alan Weiss, Ph.D., is “Million Dollar Influence: How to Drive Powerful Decisions Through Language, Leverage, and Leadership.”


Topics: Contracting, Contracting RulesEthics, Business Trends

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