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August 1, 2014

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Fatih Ozmen: Mystery man behind Sierra Nevada

When the Sierra Nevada Corp. drew unflattering publicity last month over its close ties to Gov. Jim Gibbons and his wife, Dawn, the Reno-area defense contractor fought back by touting its "lifesaving" contributions to the wars in Afghanistan and Iraq.

It was a characteristically patriotic response from a secretive, low-key company that has carved a lucrative niche in the nation's post-9/11 defense spending boom.

Through its political connections and cutting-edge technology, primarily in unmanned aircraft and guidance systems, Sierra Nevada has doubled in size since 2001 to 1,000 employees and received more than $600 million in government contracts from the Air Force, most of which were obtained without competitive bidding .

That dramatic growth has occurred under the leadership of the company's energetic but media-shy chief executive, Fatih Ozmen, who took the reins in 1993.

Little is known about the balding, slender Ozmen. He isn't quoted in news stories , and except for a few pictures of him on Sierra Nevada's Web site accepting awards for the company, he has been relatively invisible to the public while he has cozied up to the nation's politically powerful. Ozmen declined to be interviewed for this story, and the company would not provide background on Ozmen and his wife, Eren, or answer questions about their relationship with Jim and Dawn Gibbons.

But there have been public glimpses of Sierra Nevada in the past . It is a company that, despite the clandestine nature of its business dealings, has become a good corporate citizen in Northern Nevada, providing on-site day care for employees' children, putting university interns to work and contributing to local charities.

In November 2001, two months after the Sept. 11 terrorist attacks on New York City and Washington, Sierra Nevada received the Distinguished Business of the Year award at the annual Governor's Industry Appreciation luncheon. Citing Sierra Nevada as an example, then-Gov. Kenny Guinn told attendees: "Be bold and look to the future. Let's not let some terrorist act change us. We can't let the backwash cause us to stop investing or expand business."

Three months later Eren Ozmen, who helps her husband run the company, was nominated by then-Assemblywoman Dawn Gibbons to receive the Women's Role Model of the Year Award presented by then-state Attorney General Frankie Sue Del Papa.

Though the company still bills itself as a small business anchored in Sparks, it now has offices or subsidiaries in 13 states from coast to coast, and has been steadily pouring money into a lobbying effort in Washington to ensure it keeps growing.

Sierra Nevada has designed and manufactured landing gear for the Air Force's Predator drones stationed in Southern Nevada, and received federal tax dollars to develop an autonomous landing system for helicopters to land safely during sandstorms in Iraq and Afghanistan.

The company also has worked to develop for the military a high-tech surveillance airship, a mobile air traffic control tower, an unmanned airborne refueling system and a global positioning system that can help aircraft land more safely on aircraft carriers.

"Sierra Nevada has some technical chops," said Stephen Trimble, bureau chief of North and South America for the worldwide Jane's Information Group, a defense industry authority. "This isn't a fly-by-night corporation."

Trimble, who is based in Washington, said the company is well-known in the industry but keeps a low profile, rarely putting out news releases or showing up at industry trade shows.

"One assumes they do a lot of the work that we're not privy to," he said. "It's fairly known around the industry that they get a lot of money in the 'black world.' "

The black world is an industry term for what's known as black budget money earmarked by Congress that can be handed out for military projects without bidding and without a full public explanation.

There is no public record of how much black budget money Sierra Nevada has received. But according to the Web site FedSpending.org, an independent clearinghouse for public U.S. government contracts, Sierra Nevada has received $602.5 million in federal contract dollars since fiscal 2000. Of that, $474.1 million was handed out by the Air Force, with $36.8 million coming from the Army.

"These kinds of companies grew much more rapidly after Sept. 11 because we threw so much money at homeland security and national defense," said Lawrence Korb, a former assistant secretary of defense who serves as a senior fellow at the Center for American Progress, a policy think tank in Washington.

Korb, a regular defense analyst for the television networks, said much of the money was handed out "without the usual checks and balances."

But a source familiar with Sierra Nevada and the way things work in Washington said the money that has gone to the company can be easily justified.

"There are plenty of companies I would call Beltway bandits that just take appropriations without much substance, but this is not one of them," the source said.

Sierra Nevada's share of the Pentagon budget, which has nearly doubled since 2001 to $610 billion , pales when compared with the billions in federal dollars reaped by the nation's top defense contractors, such as Lockheed Martin, Boeing and Northrup Grumman.

But what Sierra Nevada has over these defense giants, records show, is that most of its government money since 2000 - about 84 percent - has come from sole-source or no-bid contracts.

That concerns Scott Amey, general counsel for the Project on Government Oversight, a public interest watchdog group in Washington.

"It raises questions about whether taxpayer dollars are being spent wisely," Amey said. "It's an indication that we're not taking advantage of the marketplace to assure the American public is getting the most out of the goods and services being provided."

Amey said the average government contractor receives about 30 percent of its federal money from noncompeting contracts. That's the exact sole-source percentage of Lockheed Martin, the largest of the defense contractors, which has collected $158.4 billion from the government since 2000, records show.

But Michael O'Hanlon, a senior fellow at the Brookings Institution, a liberal Washington think tank, said it is unfair to blame defense compan ies for seeking noncompeting contracts.

"They are trying to get something the system allows," he said. "There is nothing inherently illegal or necessarily wrong with a no-bid contract."

The military, Amey said, has handed out an increasing number of noncompeting contracts since the Clinton administration loosened the rules of the bidding process to give the government more flexibility in dealing with contractors.

There are a variety of options under the law to provide sole-source contracts, including whether there's a compelling need to acquire something quickly for national defense and whether a particular product or service is unique to a company .

Many times the military or another government agency simply asks a contractor it trusts to fill an order, Amey said.

There also are times, he said, when a company's political connections help it land lucrative government contracts.

Sierra Nevada appears to have scored well in that regard.

According to the Center for Responsive Politics, a nonpartisan research group that tracks the flow of cash in Washington, Sierra Nevada has paid $1.4 million to lobbyists since 2000 to help it obtain federal contracts. The company's lobbying fees have increased from $10,000 in 2000 to a high of $446,000 in 2005. Last year it spent $442,000 on federal lobbying.

Most of the money went to the PMA Group, a mammoth lobbying firm in Washington founded by Paul Magliocchetti, formerly a top staffer on the House Appropriations defense subcommittee. Lockheed Martin, Boeing and dozens of other major defense contractors are on PMA's list of clients. Sierra Nevada, records show, has been among the firm's highest-paying clients the past two years, having paid it $280,000 last year.

PMA, according to media reports, leads all lobbyists in securing congressional earmarks for clients. Earmarks - money for special projects inserted by lawmakers into legislation without public debate - have been at the center of recent bribery scandals on Capitol Hill.

Records show that Sierra Nevada also paid the Las Vegas law firm of Lionel, Sawyer & Collins $110,000 in 2004 and 2005. Former Sen. Richard Bryan, who oversaw the lobbying effort, said the firm did not help the company obtain defense contracts.

Bryan recalled that he tried, among other things, to get Sierra Nevada funding from the Federal Aviation Administration to develop technology that would help jetliners avoid collisions with birds.

"This is a legitimate thriving business," Bryan said. "It's not just a boarded-up storefront with an old dial telephone in the back room."

Sierra Nevada, records show, has become adept at targeting campaign contributions at elected officials who can help it in Nevada and elsewhere in the country.

The company clearly had a special relationship with Jim and Dawn Gibbons during the governor's five terms in the U.S. House of Representatives.

The Wall Street Journal reported March 30 that Dawn Gibbons received $35,000 in consulting fees from Sierra Nevada in 2004, the same year that her husband helped the company obtain a $2 million contract to develop the helicopter landing system.

In two financial disclosure statements filed by Dawn Gibbons stemming from her unsuccessful bid for Congress last year, Gibbons reported receiving more than $5,000 from Sierra Nevada in both 2004 and 2005. She was obligated by law to declare income above $5,000 from an employer.

After the Wall Street Journal report, Abbe Lowell, the Washington lawyer the governor hired to guide him through an FBI probe into his ties to another defense contractor, eTreppid Technologies, said the relationship between Dawn Gibbons and the Ozmens began long before her husband was elected to Congress.

Neither Lowell nor Sierra Nevada would explain how that relationship began.

But a spokesman for Lowell confirmed last week that Dawn and Jim Gibbons made a one-week trip to Turkey in 2000 with the Ozmens, who have family in that country, and two other couples. The Gibbonses paid their own way and shared the cost of any group activities, the spokesman said.

The Ozmens also have maintained a strong political relationship with the Gibbonses, contributing regularly to their campaigns.

Jim Gibbons, once a Republican member of the House Intelligence and Armed Services Committees, received $32,450 in Sierra Nevada contributions during his 10 years on Capitol Hill, records show. The company also gave Dawn Gibbons $14,000 in her bid to win the congressional seat her husband vacated last year to run for governor.

But Sierra Nevada and the Ozmens have not confined their contributions to the Gibbonses.

They have given tens of thousands of dollars over the years to an array of House and Senate members, including Senate Majority Leader Harry Reid, D-Nev., and his political action committee, the Searchlight Leadership Fund.

Outside Nevada, the Sierra Nevada PAC has contributed to the campaigns of congressional members in districts or states where the company has offices or subsidiaries. Two of its favorite beneficiaries have been Sen. Orrin Hatch, R-Utah, and Sen. Dianne Feinstein, D-Calif.

But the largest contributions outside Nevada in recent years have gone to three ranking members of the House Appropriations defense subcommittee: Democratic Reps. John Murtha of Pennsylvania and Pete Visclosky of Indiana, and Republican Rep. David Hobson of Ohio.

Murtha, who now heads the subcommittee, and the other two have been in a position to help the company land federal earmarks. In 2005, thanks to $6.9 million in funding obtained by Visclosky, Sierra Nevada and several other high-tech companies were able to set up shop at a new Purdue University technology center in Merrillville, Ind.

Last year the Sierra Nevada PAC gave Murtha and Visclosky $10,000 each and Hobson $8,000, records show. The PAC also gave Visclosky $10,000 in 2004.

All three men also are among the biggest beneficiaries of PMA 's political action committee.

In its statement to the media March 30, Sierra Nevada, while defending its reputation, made no excuse for staying close to politicians, especially those in Nevada.

"Integrity has been the cornerstone of the success of this company," it said. "Sierra Nevada remains proud of its intensely dedicated professional employees, the contribution made to our national security and the truly great political delegation (that) represents the people of our state."

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