Earmarks Boost Small Kentucky Businesses


After it hired a lobbyist and its employees' contributed to a member of Congress' leadership political action committee, a Kentucky company saw its defense business quadruple thanks to earmarks.

Over the last three years, Rep. Harold Rogers, R-Ky., says he has earmarked at least $10.4 million in defense funds for Phoenix Products, Inc., a small company in McKee, Ky., that makes aircraft accessories, including custom V.I.P. interiors for Black Hawk helicopters that offer the finest leather," fabric, naugahyde and carpet, according to the firm's Web site.

In the 2008 Defense Appropriations Act that was signed into law on Nov. 13, the company received two earmarks for a total of $3.6 million to deliver 500 leak proof" transmission drip pans for Black Hawks used by the U.S. Army and the National Guard. The funding would be used to address U.S. Army drip pan needs," Rogers explained in one of the two request letters he sent to the House Defense Appropriations Subcommittee. In a press release, Rogers was somewhat more effusive about the drip pans, saying that they keep troops and patients safer during complicated rescue missions."

But Army officials say that they have yet to decide if the transmission drip pans should be purchased from Phoenix Products at all.

Last year, Congress directed the Army to examine a new design of a leak-proof drip pan that is manufactured by Phoenix Products Inc.," Major Thomas McCuin, Public Affairs Officer with the Army wrote via e-mail, referring to a 2005 earmark that gave $2 million to Phoenix Products, according to the earmarks database maintained by the Office of Management and Budget.

A small number of the transmission drip pans have been installed to determine their usefulness; the Army has yet to collect data or determine the results from what McCuin called an informal test."

Sometime in the coming year, the Army will decide how to proceed," he wrote, adding that the modification may be useful. The three possibilities are: 1) to install these pans on all 1,668 Black Hawk helicopters in the Army's inventory; 2) to approve the product for optional purchase by unit commanders using their own operations and maintenance funds; or 3) not to purchase the product at all," McCuin wrote.

But Rogers, who serves on the House Appropriations Committee and is the ranking member on the Subcommittee on Homeland Security, has already decided that the pans are worth purchasing.

Roger's press office did not return phone calls and refused to give out the e-mail addresses of any of their staff.

The transmission drip pan lies directly under the blades of the helicopter and is used to collect any leaking engine or transmission fluids when the helicopters are in service or in storage. They ensure that the section of the cabin which lies directly beneath the transmission is not stained and the electronic equipment there is not damaged.

Building Phoenix into a Successful Business

Phoenix Products was incorporated in 1973, the company's Web site says. According to online, searchable records maintained by the Kentucky Secretary of State's office, the firm's president is Peggy Wilson, and its registered agent is Thomas Gray Wilson. A government contractor, Phoenix Products had a modest amount of business from the Defense Departmentin 2000, for example, the company had three Pentagon contracts worth a little more than $261,000, according to contract data from FedSpending.org.

In 2004, the company hired a lobbying firm, Martin, Fisher, Thompson and Associates, to inform Congress and the Department of Defense of the availability of composite products, custom interiors and miscellaneous metal parts for aircraft produced by client," lobbying records filed with the Senate Office of Public Records show. Phoenix's hired lobbyists pushed the company's agenda with members of Congress and the Department of Defense.

The Defense Appropriations Act passed in 2004 contained a $2 million earmark for the company in the Army operations and maintenance budget, according to OMB's earmark database, which was airdropped" into the bill during conference.

In the five years prior to getting its first earmark, the company had averaged about $550,000 a year in federal contracts, according to FedSpending.org.

Despite repeated phone calls and emails, Phoenix Products did not respond to requests for comment.

In 2006, Phoenix added Kentucky-based McCarthy & Speaks Strategic Solution, a lobbying firm that has strong connections with Rogers, to its Capitol Hill representation. Partner Jeff Speaks worked in Rogers’ congressional office as projects director for 10 years, according to the firm's Web site; Speaks represented Phoenix Products, the firm's lobbying disclosure forms show. The other partner, John T. McCarthy III, was the chairman of the Kentucky state Republican Party.

Since 2004, Martin, Fisher, Thompson and Associates and McCarthy & Speaks Strategic Solution Phoenix Products have reported that Phoenix Products has paid them more than $240,000 to lobby on its behalf.

During that same time period, the firm's employees have given $12,400 to Rogers's campaign and have been contributors to his leadership PAC as well. In 2007, Peggy Wilson and Thomas Wilson each made $1,500 donations to Rogers's leadership PAC, Help America's Leaders (HALPAC); their first campaign donations to HALPAC came in 2004, Federal Election Commission records show. They've also contributed to other members of the Kentucky delegation including Sen. Mitch McConnell (R-Ky.) and Sen. Jim Bunning (R-Ky.).

The Powers of Persuasion

Martin, Fisher, Thompson and Associates has won for its clients other earmarks from Rogers. Outdoor Venture, a Stearns, Ky.-based military tent maker, has paid the lobbying firm a total of $865,000 since 2001.

According to research conducted as part of Sunlight's EarmarkWatch project, Outdoor Venture has received earmarked money for the past six years. Also, a press release on the Kentucky representative's Web site, notes that Rogers, a senior member of the House Appropriations Committee, has secured more than $62 million for the military tent system over the last six years."

In the most recent Defense Appropriations bill, Rogers requested two earmarks worth $6 million for the firm; the final bill trimmed that to $5.6 million. As the research on EarmarkWatch.org points out, from a release on Outdoor Venture's own Web site, the demand for tents has gone down, yet the company has been able to maintain their current level of employment."

Outdoor Venture did not respond to phone calls seeking comment on the story.