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Bidenites make soft landing in heart of lucrative war industry

Bidenites make soft landing in heart of lucrative war industry

Trump revoked rule that closed the revolving door loophole and who's benefitting? Lloyd Austin, Brett McGurk join army of DC's top 'consultants'

Military Industrial Complex

In 2021, Ret. Gen. Lloyd Austin declared he had “no intent to be a lobbyist.” On June 3, less than six months after leaving office, former President Joe Biden’s Secretary of Defense announced that he would be launching a new strategic advisory firm called “Clarion Strategies.” Some Senators allege this is simply lobbying by another name.

A pitch deck obtained by Politico noted that Clarion Strategies’ name is a “nod to its aim to equip clients with the clarity they need to navigate geopolitical upheaval driven by the war in Ukraine, advancements in defense technology like AI and unmanned systems, global trade shifts and emerging alliances among U.S. adversaries like Russia, China, North Korea and China.” In other words, the new firm is very much hoping to court clients from the defense industry.

It won’t have too much trouble — Clarion Strategies is equipped with an all-star roster of Biden administration officials that, in addition to Austin, includes former Secretary of Veterans Affairs Denis McDonough, former Assistant Secretary of Defense for Indo-Pacific Security Affairs Ely Ratner, and former U.S. Permanent Representative to NATO Julianne Smith.

The news troubled two members of the Senate Armed Services Committee, Elizabeth Warren (D-Mass.) and Rick Scott (R-Fla.), enough to write Austin a letter on June 30 voicing their "serious questions" about how decisions he made in office "may have benefitted the defense contractors and other companies that may now be [his] clients.”

There is a cooling-off period that prohibits executive branch officials — typically either one or two years depending on seniority — from directly lobbying their former agencies. However, Warren noted that “Austin appears to have found a loophole by serving as an ‘adviser’ rather than a registered lobbyist.” This loophole, known as the “strategic consulting loophole,” allows some former officials to avoid waiting until the cool-down period for lobbying activities is over simply by serving as an “advisor,” meaning they can still coordinate campaigns and advise lobbyists.

As long as Secretary Austin doesn’t engage in direct lobbying, he is cleared to work for any military contractor that comes knocking.

Warren and Scott denounced Austin for reneging on his 2021 promise by invoking this loophole and demanded that his new firm disclose a list of clients and contracts. “We ask that you reconsider your actions," they wrote. "If you are unwilling to do that, you should at least provide transparency to the public about your new role.”

President Biden tried to crack down on this kind of shadow lobbying, barring certain senior officials such as Secretary Austin from this loophole. However, Trump revoked this executive order on Day One of his second term. For all of Trump’s lambasting on the campaign trail of the revolving door as a “big problem”, his decision to revoke the ethics rules helped Biden administration officials race to lucrative private sector gigs in record time. “It really does a huge favor for Biden administration political appointees,” Rob Kelner, a partner at the Covington & Burling law (and lobbying) firm, told Politico.

Craig Holman, Public Citizen’s Capitol Hill lobbyist on ethics, lobbying, and campaign finance rules, explained in an email to RS that revoking the rules forces the system to rely on weaker, preexisting revolving-door restrictions, which have no limitations on “strategic consulting.” If anything, Holman said, “the law encourages this form of shadow lobbying.”

Several other Biden defense policy officials are following in Austin’s footsteps and working for strategic advisory firms.

Faiq Raza, the Biden Pentagon’s Capitol Hill liaison for acquisition affairs is now a senior adviser to The Roosevelt Group, a consulting firm with noted expertise in defense, military installations, and the appropriations process. According to OpenSecrets, the group currently has nine clients in the defense sector, including Airbus and RTX (formerly known as Raytheon). Biden’s Army Acquisition Chief Doug Bush founded his own consulting firm, DRB Strategies. After four years of leading Army acquisitions, Bush’s new firm deals in government contracting, acquisitions, and “legislative strategies for companies focused on national security.”

“One could only hope that former Biden officials sincerely believed in the revolving door restrictions that they signed on to and would voluntarily live by those principles,” said Holman. “But the new consulting positions of former Secretary Austin and others suggest that is not the case.”

Other Biden defense officials are getting more creative, working for venture capitalists and banks with close ties to the defense industry.

Less than two months after leaving office, Austin’s former chief of staff, Derek Chollet, was tapped by JPMorganChase to lead the bank’s new Center for Geopolitics. According to the advisory unit’s website, the Center aims to help the bank’s clients respond to the shifting geopolitical landscape “through events, webinars, calls, in-person small groups, and one-on-one conversations.”

The Center’s inaugural report, signed by Chollet, highlighted the need to rapidly rebuild, modernize, and expand the U.S. defense industrial base in order to maintain strategic influence internationally. The report specifically argued that such efforts require a larger defense budget and the creation of multi-year procurement packages for weapons such as HIMARS and PAC-3 interceptor missiles. These weapons are built by a client of JPMorgan Chase Bank, Lockheed Martin, which enjoys a lending agreement with the bank worth $3.5 billion.

Brett McGurk, Biden’s top Middle East advisor, waited only three weeks after leaving the Biden administration to join Lux Capital as a Venture Partner. Lux Capital is a venture capital firm invested in defense technology companies such as Anduril, which specializes in autonomous weapons. In its announcement, Lux gushed that McGurk’s “unique combination of diplomatic experience and forging strategic partnerships are [sic] invaluable, as we continue to back founders building transformative companies that are reshaping the world.”

McGurk’s stature also landed him a CNN Global Affairs Analyst position, where he is simply introduced as “Former White House Coordinator for the Middle East and North Africa,” leaving out his new role at Lux. During the last few weeks, McGurk used his CNN platform to make the case for bombing Iran. “So if [you] want to destroy Fordow — and at the end of this I think Fordow has to be taken care of either diplomatically or through a military strike — it really is the U.S. military option.”

In case there was any doubt to where Lux’s interests lie, the venture capital firm’s co-founder Josh Wolfe said on X he hopes for the “day we can make our first Lux investments in a free + open Iran.”

Lastly, some Biden defense officials have opted to simply cut out any middleman and are already working directly for Pentagon contractors.

In May, Aerospace Corporation, selected two top Biden Pentagon officials to serve on its board of trustees — Bill LaPlante, the former Under Secretary of Defense for Acquisition and Sustainment, and Frank Calvelli, Assistant Secretary of the Air Force for Space Acquisition and Integration. In June, former undersecretary of the Army Gabe Camarillo leveraged his experience into a Senior Vice President of Defense Technology Solutions position at KBR — a notable army contractor — overseeing a $2 billion budget to support “land, sea, air and cyberspace defense capabilities for the Department of Defense, UK Ministry of Defence, and Australian Defence Force.”

And just last week, Heidi Shyu, the Biden administration’s Under Secretary of Defense for Research and Engineering, joined the board of Areté, a cyberdefense firm that currently holds contracts with the Navy and the Defense Intelligence Agency.

With Biden’s Pentagon racing through the revolving door at breakneck speed, the list goes on and on. Whether it’s an advisory firm engaging in shadow lobbying, a venture capital firm, or even a Pentagon contractor, it’s dealer’s choice.


Top photo credit: Brett McGurk (Kuhlmann /MSC/Wikimedia Commons) and Lloyd Austin ((DoD Photo by U.S. Air Force Staff Sgt. Jack Sanders).
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