How Some Retired Military Officers Became Well-Paid Consultants

"In the Department, almost all consultants and all members of advisory committees are appointed as Special Government Employees," says guidance posted on the website of the Defense Department's Standards of Conduct Office. "This means that upon appointment, you assume the responsibilities, obligations and restrictions that are part of public service."

Employees who work more than 60 days in a year and are paid at an executive rate are required to file public financial disclosure reports. They also are forbidden from lobbying the agency about contracts and other specific matters, according to the Office of Government Ethics.

Senior mentors for the military don't have to follow those rules, however, because they are contractors, not employees.

The Marines hire mentors directly on individual personal services contracts, while the other services contract with a defense company and require that firm to hire the retired generals as subcontractors. Luck, the head Joint Forces mentor, called that arrangement an accounting device, a "pass-through. There's no question to anybody where I work, who I work for."

Ranck, the general examining Air Force mentoring programs, says one reason that mentors are not hired as employees is so they can get higher pay and have freedom from the government ethics bureaucracy. Special consultants can only be paid up to $80 an hour, he says, and the ethics rules constrain their ability to consult for private companies.

Not all mentors consider it appropriate to also work for defense contractors. Admiral Henry Chiles, 71, who retired in 1996 as commander of the U.S. Strategic Command and who now mentors at the National Defense University, says he steers clear of defense companies. "I think by virtue of doing that work for the government, it behooves me not to represent defense contractors," he says.

Under a policy directive issued last week by Air Force Secretary Michael Donley, the Air Force will encourage that mentors be hired as government employees when possible. Senior mentors hired on contract who might "potentially influence procurement decisions" would be required to file a confidential financial disclosure under the policy. The Air Force says the new policy is unrelated to USA TODAY's inquiries.

Ranck says retired four-star generals probably would continue to be hired as contractors because they would want the higher pay and freedom from government ethics rules.

A rule barring senior mentors from representing defense firms before the military "would cause people to reassess," says Air Force Gen. Gregory "Speedy" Martin, who retired in 2005 as commander of the Air Force Materiel Command. He now mentors for Joint Forces Command and the Air Force. His consulting clients have included Northrop Grumman and Lockheed Martin, he says. He also advises a private equity firm whose website boasts that its stable of retired generals has "a nearly unmatched sense of how the armed forces will spend its money."

Martin acknowledges he has contacted Air Force officials involved in acquisitions on behalf of firms paying him. He says he always identified his clients and never did anything inappropriate. He would not be more specific.

Martin recognizes that the insights gleaned while participating in classified planning exercises could make him a more valuable defense consultant. "I am sure that I am getting current information and updates that could make me 'useful' to some aerospace contractor," Martin says in an e-mail.

However, he adds, the information he got through mentoring is no more useful than what he got through other connections with active-duty officers, including briefings and social contacts. "The question," he says, "is what you do with that information."

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