Singing the K Street Blues

By Aaron Pressman

Issue Date: May 28 2001

Tech companies spent millions on lobbying last year. But as the economy sours, some are leaving the Beltway behind.

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WASHINGTON - When Greg Garcia started lobbying for networking company 3Com two years ago, technology firms were stampeding into Washington's Gucci Gulch, the Capitol corridors frequented by corporate lobbyists. Working the halls of Congress, the Federal Communications Commission and other government agencies, Garcia pushed 3Com's party line and gathered inside dope on trade issues, funding for research and other hot-button tech priorities.

But Garcia will find himself out of a job next month when 3Com shuts down its Washington outpost. The decision was part of a round of cost-cutting and layoffs at the Santa Clara, Calif., firm. It was also part of a mini-exodus: Novell and DoubleClick are beating a hasty retreat from Washington as well, as their fortunes falter on Wall Street.

The departures could mark the end of an era when technology companies shed their traditional political apathy and dove into Washington to wheel and deal. Their Beltway efforts peaked last year, when some tech companies spent record amounts on lobbying, according to disclosure reports recently released by Congress.

Now some of those firms plan to rely on industry trade groups as their eyes and ears in the capital. The Information Technology Association of America, which includes 3Com, Novell and more than 500 other companies, gained about 60 new members in the first quarter of the year - about twice the number that signed up during the same time last year.

"There obviously are cutbacks - things are difficult at the moment," says ITAA Senior VP Robert Cresanti. Companies are reining in lobbying costs, he adds, "to show the market they're refocusing their efforts on doing business." Until recently, tech lobbying was on a major upswing. The Center for Responsive Politics reported that communications and electronics firms spent $192 million on lobbying the government in 1999, up from $186 million in 1998 and $154 million in 1997. The Washington-based nonprofit group hasn't released a report for the 2000 season yet, but a review of filings shows increased spending by some tech companies last year.

Microsoft spent $6.4 million on lobbying, a third more than its 1999 expenditures, as the company fought off antitrust concerns, waged war on the AOL-Time Warner merger and kept tabs on many other battles. With billions in cash still on hand, Redmond is sure to remain a player.

The software giant added more insiders to its Washington roster last year, hiring former Senate Finance Committee counsel Tom Roesser and former Senate Democratic Steering Committee staffer James Houton. Microsoft also reinforced its legion of outside lobbyists, bringing on former Sen. Bob Kerrey's legislative director, Anne Urban, and Alison McSlarrow, formerly an aide to Senate Majority Leader Trent Lott. They joined such lobbying heavyweights as one-time Republican National Committee Chairman Haley Barbour and ex-Reps. Vic Fazio and Tom Downey.

Microsoft's rivals did not keep pace in spending last year. America Online spent $1.8 million for lobbying, compared with $1.4 million in 1999; Oracle dispensed $2.2 million, slightly less than it spent the year before. And Sun Microsystems' lobbying expenditures remained flat at $1.1 million.

Companies making cutbacks are loath to admit they have diminished their presence inside the Beltway. Novell closed its Washington office and transferred the duties of its local lobbyist to Raymond Nasr, an executive who lobbies from the company's San Jose, Calif., office. Nasr insists there has been no pullback. "I do a heck of a lot of stuff around here," he says.

DoubleClick lobbyist and former Senate staffer Josh Isay is back in New York City working on the mayoral campaign of city comptroller Alan Hevesi. But DoubleClick executives say Isay is still available to them as a consultant.

Word of the retrenchment wasn't as couched at 3Com. Public policy issues will be responded to "on an infrequent, as-needed basis," lobbyist Garcia wrote in an e-mail message about the shuttering of the company's Washington office. "In government relations for us right now, there aren't any issues that are unique to 3Com that the company has to have its way to make or break us," Garcia says. "When you're in this mode, you have to make difficult decisions." If the economy keeps sputtering, there might be even fewer tech-industry advocates greasing palms in Washington.

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