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San Diego Union-Tribune June 24, 2005

As contractor's business grew, so did secrecy

By Bruce V. Bigelow

The defense contractor embroiled in controversy over the purchase of Rep. Randy "Duke" Cunningham's Del Mar home has maintained an aura of secrecy as its business boomed during the past three years.

As a privately held company, MZM Inc. is not required to file financial disclosures with government regulators that describe its business operations. The company is based in Washington, D.C., and has made few public pronouncements since it was founded by Mitchell Wade in 1993.

Wade did not return calls for comment made to MZM's headquarters this week.

The company's business began to take off three years ago when it was designated the sole contractor for certain types of Army intelligence programs.

MZM's five-year contract with the Department of Defense was structured as an open-ended blanket-purchase agreement, with a $250 million spending limit, said Keith Ashdown, an analyst with Taxpayers for Common Sense, a nonpartisan group dedicated to cutting wasteful government spending.

(Blanket-purchase agreements are vaguely worded contracts designed to give agencies flexibility and to speed purchases. Contractors are screened and pre-qualified. Critics contend these open-ended contracts allow agencies to skirt public oversight.)

Under the agreement, MZM became an exclusive contractor for the Defense Information Systems Agency, enabling the agency to order services from MZM.

Landing important defense intelligence business was like a Class-A minor league baseball player suddenly pitching in the major leagues, Ashdown said.

He said he could find no federal contract revenue for MZM before fiscal year 2003. A search of MZM's federal contracts on FSI, a Virginia market research firm that maintains an online database of federal contracting information, also indicates the company had no contract revenue before 2003.

Since then, MZM's business has mushroomed.

The company now ranks as the nation's 100th largest federal prime contractor, based on 2004 revenue that was estimated at $66.2 million in an annual survey prepared by Washington Technology, a regional news organization.

In its 2005 list of the nation's biggest contractors, Washington Technology noted that MZM declined to disclose information about its major customers, contracts or projects.

Summaries of contracts awarded to MZM in recent years suggest, however, that most of the company's revenue stems from the blanket-purchase agreement, which was awarded to the company in late 2002 or early 2003.

Wade purchased Cunningham's Del Mar home in November 2003.

"As far as I can tell, everything they have gotten was awarded no-bid," Ashdown said.

He estimated that MZM generated about $68.6 million in revenue in 2004, and about $65 million of that was derived from orders placed under the blanket-purchase agreement. Out of 56 "contractual actions" last year, 50 came through the agreement, Ashdown said.

He estimated that in the past two years MZM has reaped $110 million through the arrangement.

"Why did they get that contract, and who helped them get it – that's the question mark," Ashdown said. "But it's clear that they exist almost solely on this one contract."

Much of MZM's services under the agreement involved classified work on intelligence programs for the U.S. Army, although FSI shows MZM also filled orders for office equipment and computer systems design services.

Under one key program, MZM established a computerized data center for the Army National Ground Intelligence Center near Charlottesville, Va.

The company subsequently joined the Charlottesville Regional Chamber of Commerce, but the chamber's director of member services could not remember MZM officials participating in any of the chamber's networking opportunities.

"They are members, but I don't know them personally," said Larry Banner, a chamber vice president.

MZM also has done work for the U.S. Army Intelligence and Security Command at Fort Belvoir, Va., and for the Counter Intelligence Field Activity, a highly secretive program created in response to the Sept. 11, 2001, terrorist attacks.

MZM may have been in a position to win such important intelligence work in part because of the credentials of James C. King, a senior vice president at MZM.

King, 59, retired in 2001 as an Army lieutenant general after spending most of his 33 years in military intelligence. King established the National Imagery and Mapping Agency in Bethesda, Md. The agency provides surveillance imagery from satellites and reconnaissance aircraft, imagery intelligence and geospatial information in support of national security objectives.

Recruiting top military and government officials into the senior ranks of defense contractors is a common practice, said John Pike, director of GlobalSecurity.org, a Web-based institute focused on defense, aerospace and national security issues.

"The notion that you would get former senior military people so they could help you get business . . . and that companies would make political contributions and get things earmarked for them is normal," Pike said. "That's how you get things done in this town."

Information gleaned from the federal government's Central Contractor Registration indicates that MZM usually operates as a consultant.

MZM's registration data, which all federal contractors are required to file, says the company provides services as a marketing consultant and in administrative management and general management consulting services. Wade, the company's founder, is listed as the chief point of contact in all categories.

Documents detailing federal campaign contributions made through MZM's political action committee also indicated that Wade's 42-year-old brother, Gregory, works in San Diego as a project director for the company.

Gregory Wade declined to comment yesterday, except to say he no longer works for MZM.

Records in Gregory Wade's 2002 divorce, filed in San Diego Superior Court, show that he reported income of $13,630 in the 12 months prior to his divorce. He worked for MZM for seven of the 12 months, according to the records.

(He is not to be confused with Greg V. Wade, who is the community development director for Imperial Beach.)

Staff Writers Penni Crabtree and David Washburn contributed to this report.

Copyright 2005, Union-Tribune Publishing Co.