Pension dispute stalls nomination

Senate must resolve the issue before DOD CIO is confirmed

The nomination of John Grimes to become the Defense Department's assistant secretary for networks and information integration and chief information officer shows a need to balance financial compensation and conflict-of-interest concerns, according to representatives of U.S. high-tech industries. But recent events demonstrate that the issue is far from being resolved.

Grimes, a Raytheon executive with nearly 50 years of information technology experience in the military, White House, intelligence community and industry, found his confirmation blocked on Capitol Hill earlier this month because of controversy over his company pension.

Grimes' nomination did not get voted out of the Senate Armed Services Committee after he testified before it July 28. Some committee members were concerned that he would be drawing a pension from Raytheon. That could create a conflict of interest because that company has extensive dealings with the Pentagon.

Even the facts of the case are in dispute. An official in the DOD CIO's office who requested anonymity because of the issue's sensitivity said the pension controversy arose after Grimes said he wanted to begin drawing his Raytheon pension once he is confirmed. The CIO official said Republican committee leaders are trying to work out a solution with Sen. Carl Levin (D-Mich.), ranking Democrat on the committee.

But Trey Hodgkins, director of defense programs at the IT Association of America, said Grimes wanted to preserve the value of his Raytheon pension so he can draw it after he leaves the government.

Darci Bushey, a Raytheon spokeswoman, said she was unfamiliar with the pension issue. Levin's office also could not provide additional information.

Industry groups were quick to urge that Grimes' nomination not be held up.

"He is exactly the guy at the stage in his life we want to attract," said Dan Heinemeier, president of the Government Electronics and IT Association.

Heinemeier said he understands some lawmakers' conflict-of-interest concerns. But he said they should trust the intentions of industry officials who want to serve in government. He said leaders are apprehensive in the wake of a recent Air Force/Boeing aircraft tanker scandal in which an Air Force contracting official awarded contracts to Boeing in exchange for a job.

"Government would be ill-served" if the Senate fails to confirm Grimes' nomination, Heinemeier said.

Three strikes exist against political appointees from the private sector because they are asked to take pay cuts, forgo pensions and pay pension insurance, Heinemeier said.

The official in the DOD CIO's office said Acting Deputy Defense Secretary Gordon England, a former General Dynamics executive, is involved in a similar pension dispute. But the official added that England could serve in an acting capacity until he gets confirmed because he was confirmed as secretary of the Navy.

Hodgkins said the government should resolve the pension controversy for political appointees. "This could cause a problem going into the future," he said.

Not all CIO salaries are equal

Most chief information officers who leave the private sector to join the government take significant pay cuts. The annual salary of the Defense Department's CIO is substantially lower than the total compensation paid to top commercial CIOs last year.

Annual salary for the DOD CIO: $140,300

Annual salary and other financial compensation for the highest paid company CIO in 2004: $5.9 million

Source: Defense Department CIO's office and Baseline's 2005 CIO Compensation Survey


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