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September 16, 2008 05:32 PM UTC

Musgrave Takes a Perilous Road

  • 35 Comments
  • by: Colorado Pols

As the Greeley Tribune reports this morning:

In a new attack ad her opponent calls “fiction,” U.S. Rep. Marilyn Musgrave questions the financial record of Betsy Markey’s company, alleging that Syscom Services got rich while Markey worked for a senator.

In the ad, which began airing Friday and was in heavy rotation during evening shows and weekend football games, Musgrave’s campaign alleges that Markey’s work with U.S. Sen. Ken Salazar, D-Colo., helped Syscom land lucrative government contracts.

It is a new tack for Musgrave, whose only other commercial so far is a biographical story about how she grew up poor with an alcoholic father…

“What if you knew she actually got rich on non-competitive Halliburton-style government contracts, and her contracts more than doubled after she took a key congressional job?” the Musgrave ad says. “If Betsy Markey used her congressional job to double her company’s contracts, what will she do as your congresswoman?”

The Musgrave campaign offered no proof to support the allegation that Markey influenced contracts between Syscom and federal departments that purchased its services in the time she worked for Salazar… [Pols emphasis]

After the ad aired, Markey’s former boss, Salazar, blasted Musgrave’s campaign, calling the ad “absolutely false in every way.”

“In Colorado, knowingly making false statements against your political opponent is a violation of the law,” he said, adding that there should be an investigation. “Dishonesty of this kind should have no place in the halls of Congress.”

Detailed rebuttal as the Greeley Trib continues, and as the Fort Collins Coloradoan reports:

Kelly accused the Musgrave campaign of cherry-picking years to create the impression that Syscom’s federal contracts rose only after Markey joined Salazar in early 2005 as his Northern Colorado district director, with primary responsibilities for constituent services.

Federal records show Syscom received $1.3 million in federal contracts in 2000 – about the same as the 2007 level when adjusted for inflation – and $1.1 million in 2001… [Pols emphasis]

Government contracts represent a small piece of Syscom’s business and one of its least profitable, Kelly said. Because of federal discounting requirements, profit margins on federal contracts are in the single digits, he said, meaning $1 million in contracts would yield less than $100,000 in income for the company.

The company is listed in federal contracting reports as having 26 employees with $6.7 million in annual revenues, meaning government contracting accounted for about a quarter of its business in 2007.

After the jump, the hypocrisy that makes this a perilous–and desperate–place for Musgrave to go.

For starters, Musgrave introduced legislation in Congress that would double wheat subsidies, which her farm gets from the federal government. HR 1116 would have more than doubled direct payment of wheat subsidies. Musgrave’s bill would have required that the payment rate for wheat subsidies rise to $1.20 per bushel, vastly higher than the present rate of 52 cents. Musgrave’s farm has received thousands of dollars in subsidies. Another farm that Musgrave owns an interest in has received hundreds of thousands of dollars in wheat subsidies specifically. We don’t see how you can look at this bill and not conclude that it would have a “direct personal financial gain” for Musgrave.

Even more interesting, Musgrave co-sponsored a bill that would provide tax breaks for precious metals and coins. Purely by coincidence, her husband owns between $50,000 and $100,000 in precious metals and coins! The watchdog group CREW accused her of sponsoring this bill to help her husband. Musgrave’s family’s gains from the bill would have been worth many thousands of dollars.

And that before we even get into her $14,000 in self-approved pay raises.

What we see from the Markey campaign appears on the level–perfectly explainable contracts with the government with no appearance of impropriety (as the Musgrave camp admits). The business about the company still being listed as “woman owned” (Markey divested down to 49% recently) is a nonstarter, unless there’s any evidence that the designation actually helped the company win a contract from somebody.

But above all, “going there” with Markey opens the door to much more compelling and easy-to-understand criticism of Musgrave. And that’s a mistake she may bitterly regret.

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35 thoughts on “Musgrave Takes a Perilous Road”

  1. on her part.  Her negatives are so high the only way to turn the tide is to drive up Markey’s negatives.  That usually doesn’t work because when a candidate has high negatives they already lack credibility with voters.  As Pols points out above, there is plenty of easily understood ammunition that Markey can use to show first that Musgrave doesn’t have her facts straight and second, that Musgrave has used her votes to promote her own self interest and pocket book. Not a good position for Musgrave to be in.

  2. I guess the GOP decided that this year they had to blatantly lie if they were going to win. From McCain to Musgrave.

    I hope that the Markey campaign responds in kind ASAP.

  3. The announcer starts very neutral and then cranks up the Voice of Doom, while dark, scary music plays under: BUT WHAT IF YOU KNEW…

    To have a GOP ad decrying “Halliburton-style contracts” is just hilarious.

    When was the Big Line on CD-4 last updated?

  4. .

    Because of federal discounting requirements, profit margins on federal contracts are in the single digits, he said, meaning $1 million in contracts would yield less than $100,000 in income for the company.

    It doesn’t take an MBA to see the error here.  

    $1 M in contracts normally produces $1 M in revenue.  

    $1 M in revenue IS $1 M in income.  

    Now, I’m guessing they meant:

    “If profit margins on federal contracts are in the single digits [less than  10%] then $1 million in contracts would yield less than $100,000 in PROFIT for the company.”

    I suspect any business owner here will tell you that they would take all the business they could handle at 10% profit,

    if that was net of everything, including cost of capital, depreciation, taxes, insurance, indirect costs, etc.

    I focus mostly on the federal sector.  

    In many ways, it is a safer playing field.  

    A 10% profit margin in that sector can be more beneficial than a 25% profit margin in the commercial sector if you never get paid by your private customer.  Uncle Sam always pays.  

    .

    2. .

      “Because of federal discounting requirements …”

      This sounds to me like she is getting her Government contracts through an approved GSA Federal Supply Schedule contract.  

      Federal agencies are allowed to place Task Orders against these blanket contracts.  It is a quick way to get a contract in place, without having to worry about competition, small business preference, fair and reasonable pricing, or openness/ advertising.  

      Under these contracts, Ms. Markey would have had to agree to give the Government the same pricing that she gives her other customers.  

      Actually, she has to give the same pricing that she gives her best customers.  

      So, implying that some “federal discounting requirement” is making this part of her business less profitable is not exactly accurate.  

      TANGENT:  Remember the controversy over Lurita Doan, who recently resigned from heading up the GSA ?

      Her self-dealing revolved around this issue.  Her improper intervention on behalf of SUN Micro was due to them violating this requirement.  

      Bottom line, if this no-bid, no competition business she is getting from her contacts in the federal government wasn’t extremely profitable, she could turn it down.  

      Golly, I’ll take it if she doesn’t want it.  

      .

      1. .

        Where is Markey’s business based ?

        Here are ALL the listings for “Syscom:”

        Company Name City State

        SYSCOM TECHNOLOGY INC COLUMBUS OH

        SYSTEMS COMMUNICATION CORPORATION VERNAL UT

        SYSCOM BUSINESSES MEXIA TX

        SYSCOM TECHNOLOGIES, LLC MARIETTA GA

        SYSCOM BUSINESS TECHNOLOGIES TRAVERSE CITY MI

        SYSCOM GROUP, INC DULUTH GA

        SYSCOM, INC BOISE ID

        SYSCOM, INC BALTIMORE MD

        SYSCOM SERVICES INC SILVER SPRING MD

        and

        SYSCOM INSTRUMENTS AG STE-CROIX, CH1450 CHE

        I think that last one is in ConfГ©dГ©ration Helvetica, which we call Switzerland.  

        If someone can tell me which one is her company, I can check out what contracts she’s won.  

        .

        1. .

          but the newspaper article is about the company based in Silver Spring, MD.  

          DUNS 809407885.  

          And they seem to get their federal contracts the old-fashioned way.  Through knowing someone, rather than through competitive bidding.

          Check them out at http://www.fedspending.org.

          If you search for “Level of Detail: Summary” you get a very interesting graph.  In my interpretation, the business they were getting from federal contracts was taking a nosedive into 2002, picked up again in 2003, and shot up in 2007.  

          …………………..

          One more twist you better hope Musgrave doesn’t find out about:

          working for the Senator, Ms. Markey is a government employee.  No, really.

          It is against federal regulations (and maybe the law) for the government to award ANY contracts, sole source or not, to a company owned or controlled by a government employee.

          cf, 48 CFR 3.601.  

          This is also known as “FAR 3.601, Contracts with Government Employees or Organizations Owned or Controlled by Them,”

          where “FAR” means the Federal Acquisition Regulation.  

          If I was the Senator, I too would feign righteous indignation over these charges.

          After all, if a key staffer is improperly using her position for personal gain,

          and has been since he first hired her,

          might that suggest something uncomplimentary about the ethical climate within his office ?

          .

          1. .

            if she has nothing to do with managing the firm,

            or business development (winning new contracts,)

            and has put all of her business dealings into a blind trust,

            and given up any control over the company’s operations,

            then there is no conflict of interest.

            But if that’s the case, she (Markey) needs to come out swinging right back and say so.  

            She needs to explain that, when they won those non-competitive GSA Task Orders in 2007, she was not running the company.

            Identify by name the woman who enabled them to claim they were a “woman-owned” business, assuming it was someone other than her.

            Specify the date she resigned her position on the Board of Directors.  

            Musgrave opened a can of worms, and if she’s smart, Markey will hit back hard and fast.

            .

            1. Baron, you obviously know a lot more about this than I do, but I read through the article. According to this

              (1) the prices are PRE-NEGOTIATED. And that was done BEFORE she took her job with Salazar.

              (2) She divested BEFORE joining Salazar’s staff.

              (3) She’s listed on disclosure forms, but the forms tell you to list all directorships for 2 YEARS prior to the filing.

              (and you can’t criticize her for remaining listed as a woman-owned business: that’s sexist 🙂

              From the Greely Trib article:

              Syscom’s services are rendered through the General Services Administration, which lumps goods and services together at varying, pre-set prices in an effort to help contractors connect with the government offices that need them.

              Markey said those contracts are negotiated every few years and would have been in effect before she took her job with Salazar.

              and this:

              Markey said before she joined Salazar’s staff, to avoid any future appearance of conflict of interest, she divested herself of all the stock she owned in Syscom and transferred it to Kelly.

              and this:

              The National Republican Congressional Committee jumped on the issue Monday, noting that Markey listed herself as the company’s director in her financial disclosure form.

              The form asks candidates to list any company for which he or she has served as a director for two years prior to the filing, however.

               

          2. GSA contracts aren’t usually received because you know someone, but rather because the government already knows you, and because you’ve done the work to get yourself listed with them.  E.g. SUN has been a known GSA vendor for ages; their withdrawal from offering GSA services closes much of the government from purchasing their systems.

            GSA contracts aren’t the same as the big no-bid contracts the Bush Administration has been handing out through State, the DoD, and other agencies, AFAICT.

    3. In accounting speak, “income” is equivalent to “earnings” or “profit”.  That is, how much more money does the business have, after subtracting  costs from revenue.  It is earnings on which businesses pay income tax, not revenue.  Every financial statement reflects this.  Big revenues and big costs produce lots of cash flow, but perhaps not much actual income (retained earnings).

      I see no problem with the Coloradan’s phrasing.

  5. A good ad is self explanatory.

    This ad made no sense.  I assume there’s some fire underneath the smoke but this ad truly smacked of desperation.

    Will Ken Buck, Cory Gardner,Marc Hillman or someone else be the GOP nominee against Markey in 2010?

    .  

      2.    Angie DID have a bankruptcy case.  (IMHO, that in itself should not have disqualified her from office, and had I lived in CD 4, I would still have voted for her.  But some voters may have been troubled by it.)

          We have to wonder if Musty is resorting to making things up now because she has an opponent who doesn’t have the skeletons which her previous opponents had.

            1. believe he had misfiled once.  Taxanaka, however, just stood for raising taxes, like taxachusetts. I even, in a momenht of weakness (pre-TABOR) USED Taxarado myself.

              But negative ads need little basis. If Jesus walked on water today, the 527s would scream “Jesus can’t swim!”

  7. What type of America does Musgrave believe in? This is by far one of the most shallow and dishonest ads to come from that woman (and there have been a lot). To accuse someone of crime without any evidence and tell them the “proof of burden” is on them, is outrageous.

    Musgrave’s campaign is acting like the Gestapo.  

  8.    There’s the one about her helping the homeless (I call it the “Mother Theresa of Fort Morgan” sales pitch).  

      Then she’s got some reference to fighting the Bush administration on spending.  WTF, this is the same president who licked her forehead at a fundraiser in ’06. And of course, she isn’t shy about trying to bring the pork home for CD 4.  (Lipstick on the pig?)

      Win or lose, she’s providing us with some lughs this campaign season.

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