"Revolving door" of D.C. money still paying off for Nethercutt

WASHINGTON — Shortly after losing his 2004 U.S. Senate race against Patty Murray, former Rep. George Nethercutt joined the board of a small Eastern Washington company developing a new way to keep computers from overheating.

A month later, when Nethercutt signed on with a lobbying firm in Washington, D.C., one of the first clients he brought in was that same company, Isothermal Systems Research, based near Spokane.

But Nethercutt's connection to Isothermal began long before he left office.

Since about 2001, the Spokane Republican had helped steer millions in federal contracts to the company, some through earmarks — projects slipped anonymously into the federal budget by individual lawmakers.

Isothermal, meanwhile, donated thousands of dollars to Nethercutt's campaigns. The company and its lobbyists were the second-largest contributors to Nethercutt's Senate race, behind Microsoft.

Nethercutt's relationship with Isothermal is a classic case of what is known in D.C. as the "self-licking ice-cream cone": A lawmaker helps a company win a contract, that company helps the lawmaker stay in office, and on and on it goes.

It's all legal — as long as contributions aren't a quid pro quo for political favors.

Nethercutt and Isothermal

1988: Isothermal founded in Kentucky.

1994: George Nethercutt elected to U.S. House.

About 2001: Nethercutt begins steering federal contracts to Isothermal.

2002: Isothermal opens its Spokane County headquarters.

2000-04: Isothermal executives, employees and relatives contribute more than $52,800 to Nethercutt campaigns.

2003: Isothermal has $6.5 million in federal contracts.

2004: Isothermal has $49 million in federal contracts.

December 2004: Nethercutt leaves Congress.

January 2005: Nethercutt joins Isothermal's board, and joins lobbying firm of GOP operatives.

November 2006: Nethercutt steps down from Isothermal but continues lobbying for the company.

Then-Rep. Nethercutt pitched Isothermal at an Appropriations Committee hearing and issued news releases taking credit for securing federal money for the company. Company executives praised Nethercutt for his work on their behalf.

No one has suggested that Nethercutt violated any rules while championing the company.

But the relationships among lawmakers, lobbyists and contractors have come under scrutiny in recent months — particularly among members of the powerful House Appropriations Committee, where Nethercutt served for 10 years.

Former California Rep. Duke Cunningham, an Appropriations Committee member, was sentenced to eight years in prison last year after admitting he accepted $2.4 million in bribes to aid defense contractors.

Now, federal authorities are investigating whether the former committee chairman, Rep. Jerry Lewis of California, directed hundreds of millions of dollars to clients of certain lobbyists in exchange for campaign contributions. That lobbying firm, Copeland Lowery, had an extensive client list that included Isothermal.

Democrats who now control the House and Senate vow to shore up congressional ethics by making the earmark process more transparent and placing new restrictions on lobbying.

Small firm, big donor

Nethercutt met Isothermal's founder, Don Tilton, around 1998, according to the company's public-relations firm, MWW.

Nethercutt didn't respond to requests for an interview for this story, and Tilton, a longtime contributor to Nethercutt's campaigns, declined to comment.

But in 2001, Tilton told The Spokesman-Review newspaper in Spokane that Nethercutt helped Isothermal make inroads at the Pentagon, which had considered the company too small to deal with.

Company profile

Isothermal Systems Research

Company type: Private corporation

Founded: 1988

Technology: SprayCool, which uses nonconductive liquid to cool computer components

Headquarters: Liberty Lake, Spokane County

Total employees: 270

Annual sales: $9.2 million, estimated

Source: Dun & Bradstreet, Isothermal Web site

In a recent interview with The Seattle Times, Isothermal CEO Jeff Severs lauded Nethercutt for being "helpful in completing development of technology."

For a relatively small, private company — Isothermal employed about 200 people last year, according to business information provider Dun & Bradstreet — it's been a big political donor.

The firm's executives, employees and their family members donated more than $52,800 to Nethercutt's campaigns from 2000 to 2004, according to PoliticalMoneyLine, which tracks political contributions.

Isothermal's giving went well beyond the hometown congressman.

The company's largest recipient was the National Republican Congressional Committee, which got $120,500 from 2004 to 2006.

During the 2004 election, the company was the third-highest contributor to Lewis, who chaired the House Appropriations Committee until this year, according to the Center for Responsive Politics. Executives, employees and their family members have given $31,500 to Lewis' campaigns since 2000, and an additional $32,500 to his political-action committee, according to PoliticalMoneyLine.

Isothermal's connections to members of the Appropriations Committee were first reported by Copley News Service in December 2005.

Keeping electronics cool

Tilton started the company in 1988 in Kentucky. His brother Chuck joined a year later. Both men had studied engineering at Washington State University in Pullman.

The company later moved its headquarters to the Spokane area and established a research-and-development center in Pullman. It also has offices in Seattle.

The company's technology, called SprayCool, is designed to cool computer components. Spray cooling uses a fine mist of nonconductive liquid that is sprayed onto the electronics' hot spots and then evaporates, taking heat with it.

Severs sees opportunity in cooling large computer server centers, such as those being built by Google and Yahoo!, and expects more commercial business this year.

But more than 90 percent of its business has come from the government.

In 2003, Isothermal had $6.5 million in federal contracts. That year, it hired its first lobbyist, the firm of Copeland Lowery, whose star employee, Letitia White, had been an Appropriations staffer for Lewis and worked with Nethercutt on the committee.

The next year, Isothermal's contracts jumped to $49 million.

The company also got $3 million for its share of a $4.5 million collaborative deal with Tessera Technologies, a California company. Nethercutt placed the money in the 2004 Energy Department budget.

Tessera's lobbyist was Letitia White's husband, Richard.

The Energy Department's 2005 budget included a $2.5 million earmark for spray-cool testing, with Nethercutt's help.

The earmarks didn't mention Isothermal by name but directed the money toward testing spray-cool technology that the company developed.

Even bigger contracts came from the Defense Department.

In small spaces, such as armored vehicles and jet cockpits, computer overheating can shut down electronic targeting, firing and maneuvering mechanisms. Spray cool was seen as a way to solve that problem.

From 2001 to 2005, Isothermal won $94 million in government contracts — the vast majority extensions to existing contracts or those awarded with limited competition, according to Keith Ashdown at Citizens for Responsibility and Ethics, a watchdog group that reviewed the contract list.

The government work propelled Isothermal onto Inc. Magazine's 2005 list of the 500 fastest-growing high-tech companies. Its revenue grew 440 percent in three years.

The company received a Department of Defense Award for Value Engineering in 2003, and its spray-cool technology was picked to prevent overheating of electronics in the Marines' new amphibious Expeditionary Fighting Vehicle (EFV).

But with new, even-smaller electronic components, the overheating problem can now be solved with more-established cooling technologies.

Spray cool is expected to be used in the EFV command vehicles that would squire regimental leaders around the battlefield and coordinate attacks. But it won't be used in personnel vehicles, which are going back to conduction cooling engineered by General Dynamics.

Making a pitch

In July 2001, then-Secretary of the Air Force Jim Roche was fielding questions at an Appropriations Committee hearing about aircraft spending when Nethercutt launched into a pitch for Isothermal.

"Before I ask for your answer, I will tell you that there is a company in my own district that has been working on the EA-6B and I think the F-16, and looking at that in terms of spray-cooling technology for avionics and it has great promise," Nethercutt, a member of the House committee, volunteered.

After Roche answered a question about aging electronics, Nethercutt interjected: "Well, this company, Isothermal Systems Research, is a pretty good one ... worth looking at in today's world."

In early 2003, the Pacific Northwest National Laboratory (PNNL) in Richland got a phone call at its D.C. office from House Appropriations staffers. PNNL is funded by the Department of Energy and managed by the nonprofit Battelle.

Jack Bagley, who represents PNNL and Battelle in D.C., and who took the call, said he was told that some members of Congress had suggested that PNNL collaborate with a company called Isothermal to test its technology.

"I said if that's what Congress would like, we were willing to be the host, though I didn't know what that meant," Bagley said.

Shortly after, Bagley heard from the deal's proponent on the committee: Nethercutt, who secured several million for the project, Bagley said. The money went to both Isothermal and PNNL.

The following year, 2004, Nethercutt planned a media event with Isothermal at PNNL's Richland lab as part of his Senate campaign.

A few PNNL officials were concerned because, they said, the spray-cool technology had not been developed at their lab and was still in a trial phase.

Internal correspondence also noted that most of Isothermal's executives were contributors to Nethercutt's campaigns and suggested the lab distance itself from the event.

Greg Koller, a spokesman for PNNL, confirmed that the lab gave Nethercutt and Isothermal access for the event in July 2004. But he added, "We didn't participate. It was their show."

On the board

Nethercutt joined Isothermal's board in January 2005 — just weeks after he left Congress — according to the company's Web site.

Severs declined to say what the company paid Nethercutt, who stepped down last November when the board was reshuffled.

In January 2005, Nethercutt also joined a lobbying firm of GOP operatives, Lundquist Nethercutt & Griles. Nethercutt's former chief of staff joined the firm in early 2005.

One of the firm's partners, Andrew Lundquist, ran Vice President Dick Cheney's secret energy task force in 2001.

Another partner, Steven Griles, a former deputy secretary at the Interior Department, has been told by the Justice Department that he is a target of its ongoing investigation related to convicted super-lobbyist Jack Abramoff, The Washington Post reported in January. Griles has since left the lobbying firm.

Isothermal had paid Lundquist Nethercutt & Griles $120,000 in lobbying fees by mid-2006.

Representatives at the firm didn't respond to a request for an interview about its work with Isothermal.

Its public-relations group, Mason Public Affairs, sent an e-mail on the firm's behalf that said: "We worked together with a team of highly capable consultants and lobbyists in Washington, D.C., to accelerate the adoption of the company's technology ... while creating jobs in Eastern Washington state."

Steve Ellis of Taxpayers for Common Sense, a watchdog group, sees Nethercutt's role with Isothermal as an example of a system that's broken.

"This appears to be another case of an appropriator setting himself up for a soft landing after Congress," Ellis said. "It's the revolving door."

The ethics bill passed by the Senate in January would make lawmakers wait two years before becoming lobbyists but would not prevent them from joining the boards of firms they had helped while in office.

Nethercutt's replacement in Congress, Rep. Cathy McMorris Rodgers, R-Spokane, has been working on Isothermal's behalf, taking credit for another $6 million earmark for PNNL and Isothermal last year.

The company has donated at least $8,500 to her campaigns.

Times researcher Gene Balk contributed to this report.

Alicia Mundy: 202-662-7457 or amundy@seattletimes.com