Are Multi-Million Dollar Consulting Contracts Worth the Future of the Democratic Party?

By: Nomiki Konst

The DNC is going through an existential crisis, being at its weakest state since 1920. This is not the Democrats’ first existential crisis, though. In 2005 the DNC members were at war with national consultants who they claimed were sucking up the resources of the party. It was that year when Vermont Governor Howard Dean won and enacted his 50 state strategy. But it came with a fight over resources, contracts and state funding. And while the 2017 DNC elections have been billed as the Bernie vs. Hillary or the progressives vs. establishment fight, it is actually the 2005 fight over funding, on steroids.

It’s become a common statement over the past few months: The Democrats have raised more money than ever and lost more seats than ever (1,000+ seats nationwide since 2009). They had an elaborate convention, beautifully crafted marketing, what was praised as the most sophisticated data operation to date and teams of veteran campaign strategists working in what was supposed to be the easiest Presidential race in recent history. But around 9:45pm ET on Nov 8, it was clear that the house of cards was on the verge of collapse. And that by the next day, the DNC would have to not just answer how they lost the Presidency and so many other races, but: Where did all that money go?

Former Chair Candidate, NH State Chairman Ray Buckley broke the news during the Phoenix DNC forum that as an executive member he had never seen the budget — and that most leaders at the DNC, as well as all of the members, had no idea where the record amount of money raised was being spent. When the DNC Chair candidates debated over whether the party should accept lobbyist money (which was banned under Obama’s administration), Buckley stated “the question should not be about whether we need the lobbyist money, but rather where we’ve spent all this money we’ve raised.”

There’s much finger-pointing towards OFA, President Obama’s national organizing entity that, in retrospect many members feel competed with their state’s funding. After the 2010 electoral shellacking, OFA scaled back, and mostly sent out fundraising emails. But the senior staff for OFA has not gone away, as many moved on to start consulting firms which picked up contracts with both the DNC and HFA. And the cross over contracts are jarring — with almost $1billion being allocated to eight major consulting groups from 2015–2016.

Several DNC members have privately disclosed that they received calls on behalf of Tom Perez from Jennifer O’Malley Dillon, a partner of Precision Strategies and former Executive Director of the DNC when the OFA was housed within it. Dillon is also a Co-Chair of the upcoming Unity Commission, forged out of the 2016 rules committee. The goal of the Unity commission is to set the DNC’s new rules.

Members have repeatedly discussed the frustration with the conflicts of interests within the Democratic party. For Dillon — whose firm received $571,573 from HFA and $593,397 from the DNC, totaling almost $1.2 million — having a seat as a co-chair of the DNC’s rules committee, raises red flags.

One DNC member voting for Mayor Pete Buttigieg stated, “When a firm with a large contract with the DNC co-chairs the new rules committee and makes calls on behalf of a DNC candidate, you can’t help but wonder whether Perez’s interests lie with the DNC members or if he’s cut a deal to keep the contract with Precision.”

And DNC Chair candidate Mayor Pete Buttigieg did not shy away from discussing resource allocation, “There’s a feeling out there that the tail is wagging the dog when it comes to consultants. Consultants add a lot of value. But we’re the client.” Buttigieg continues, “We’ve got to make sure we have the best possible governance that we all feel good about both in the structure of the DNC and the DNC’s relationship with all the members.”

Another long time high ranking DNC member stated, “We’ve been quietly complaining about OFA sucking the resources from the DNC. Now to see Dillon — who ran OFA — making calls for Perez, I’m alarmed that these people don’t realize how they killed our party.”

The story of conflicts of interests just begins with Jennifer O’Malley Dillon.

Some members have expressed frustration over Dillon’s push for Perez, seeing a large contract with the DNC, and potentially a presidential candidate she is advocating to run. That candidate is Governor Terry McCaulliffe. McCauliffe has not expressed any public plans to run for President, but there are questions as to whether the DNC will once again become an outlet for a presidential candidate, as it was in the 2016 primary.

Today, it is openly acknowledged by many members that the DNC and the Clinton campaign were running an operation together. In fact, it doesn’t take much research beyond FEC filings to see that six of the top major consulting firms had simultaneous contracts with the DNC and HRC — collectively earning over $335 million since 2015. (This does not include SuperPACs.)

One firm, GMMB earned $236.3 million from HFA and $5.3 from the DNC in 2016. Joel Benenson, a pollster and strategist who frequents cable news, collected $4.1m from HFA while simultaneously earning $3.3 million from the DNC. Perkins Coie law firm collected $3.8 million from the DNC, $481,979 from the Convention fund and $1.8 million from HFA in 2016.

And, it would be irresponsible of me to not note that by a simple glimpse of FEC filings, former Chair, Debbie Wasserman Schultz and some of her senior staffers remained on payroll with the DNC until December, well past she resigned on July 25, 2016.

What does this all mean? The DNC, which lacks an open budget, has been allocating dozens multi-million dollar contracts without accountability from its members and leadership. The money, of course, did not go into state parties and organizing, and the majority of members I’ve interviewed expresses resentment and frustration.

But as we approach the DNC vote on Saturday, the question over conflicts of interests remaining in the party, is a priority. When I asked Sec. Tom Perez during an interview whether he’d ban conflicts of interests, he answered “The people I talk to want to build a Democratic party that works for everyone….We have a big tent in the Democratic party.” Secretary Perez, a civil rights attorney surely knows that conflicts of interests would be alarming when presented in a court room. How can a party that condemns Trump’s vast conflicts continue to allow those with millions of dollars in consulting contracts with the national party be in leadership positions at the DNC and/or be voting members. Who controls whom?

While each of the DNC candidates spends money on this three month long race, they are raising and disclosing funds and expenditures in different ways. Rep. Keith Ellison, a federal office holder, is using his campaign fund — which is required to disclose contributions, which must abide by federal restrictions. The remaining candidates are using 527 organizations, which have looser contribution limits. Sec. Perez, who set a cap at $33,400, has held fundraisers hosted by many individuals who happen to work for firms with large contracts with the DNC.

Unlike traditional campaigns, the money going into these races is not as indicative of the DNC problems as the campaign tactics, which reflect the money going into the DNC.

At a time when the Democratic party is hemorrhaging members nationally and experienced eight years of crushing losses, many are questioning how a few consulting firms could continue their lobbying for national contracts. Some answer: just raise more money to send to the states. But it’s not just that these national contracts are expensive, it’s that the consultants’ track records are horrifying.

If the DNC does not re-allocate its funds by cutting off these contracts, banning conflicts of interests and sending money to the state parties to rebuild, recruit, train and organize, the Democrats might be facing their darkest days, with all the money in the world, but no members.

Millennials under 35 have overwhelming lost trust with the party and are registering as Independents. Democratic Socialists of America has record membership meetings. Are a handful of consultants worth the future of the Democratic party, and arguably the rights of citizens nationwide?

As we approach the DNC leadership vote this Saturday, the diverse group of voting members of the Democratic party will have a crisis of conscience.