A Lobby Shop That Goes Beyond K Street

At dusk, the view from Steve McBee’s eighth floor office is a sweeping panorama of twinkling lights. Against a dark sky with mauve-colored clouds, planes ascend over the Washington Monument. Down below, it’s rush hour along the Pennsylvania Avenue power corridor between Capitol Hill and the White House.

McBee, president and CEO of McBee Strategic Consulting, moved his operation into this modern suite in September. While the view may be quintessentially Washington, D.C., the office’s metallic and orange interior, booming soundtrack playing R.E.M.’s “Nightswimming,” and a conference nook that feels like a hipster lounge give a nod to the firm’s West Coast roots and to McBee’s vision of building a different kind of lobby shop.

“Makes you want a martini, huh?” McBee says, gliding around the space filled with stark, abstract artwork.

McBee, 39, started his own shop in 2002 with two employees. Since then, the firm’s federal lobbying revenue has quintupled — to $8.1 million last year. That’s a 70 percent rise over 2006, a jump attributable in part to newfound demand for Democratic lobbyists like McBee. Today, McBee Strategic has a staff of 21, including 15 professionals, more than 70 clients and offices in Washington, D.C., and Seattle.

By the end of this year, McBee — who throws out corporate jargon like most lobbyists drop legislative acronyms — “differentiate that solution,” “value-oriented,” “grow the verticals” — says he plans to have 30 employees, four business units and a third office in San Francisco’s financial district.

And he says he intends to more than triple his company’s total revenue to $30 million within the next three years, an extremely aggressive goal by even the most ambitious K Street standards. He will get there, he says, by expanding the shop’s scope of services well beyond the lobbying business, including the world of finance — using political intelligence to broker deals and help position companies for sale.

Last year, he opened a Seattle-based public relations unit. Later this year he plans to open the San Francisco outpost, which will house his McBee Strategic Capital Markets Solutions practice.

In the words of McBee’s former business partner, Denny Miller: “He’s an energetic young man who’s in a hurry to succeed.”

‘A Solutions Company’

McBee started his K Street career by joining Miller’s firm in 1999. Drawing on his Washington state ties and experience doing defense and appropriations work for Rep. Norm Dicks (D-Wash.), McBee embarked on a business portfolio in the increasingly controversial and competitive world of securing earmarked funds for clients.

But where other firms have made the appropriations sector their livelihood, McBee is using it as a base from which to diversify into a bigger business that he hopes will rely on far more than lobbying.

When McBee opened his firm, many of his first clients were those with ties to Dicks or the Pacific Northwest, or companies looking for earmarks, including defense contractors Boeing Co., General Dynamics Corp. and Northrop Grumman Corp., which manufactured the B-2 Spirit stealth bomber — a project that McBee worked on in Dicks’ office.

But as earmarks have come under more scrutiny and become the target of lobbying and ethics reforms, McBee has focused more on policy work and communications, with energy, transportation and technology clients rounding out a roster of defense, aerospace and aviation companies.

“The lobbying reform is real,” McBee says. “It’s going to significantly change the way firms do business.” It will, he adds, make it harder to thrive as an “access lobbyist,” the door-opener that McBee says he is not. “Our model, while it wasn’t done with reform in mind, the reforms provide jet fuel,” he says. “We provide much more valuable solutions where traditional tactics have been effectively taken off the table.

“We want to be a solutions company,” he adds in his trademark McBee-speak. “We don’t want to be a lobbying company.”

Yet the bulk of McBee Strategic’s revenue, 90 percent, still comes from lobbying, and earmarks are still part of that business.

It was a craft he practiced during his three years at Miller’s shop, then known as Denny Miller McBee Associates. Both Miller and McBee say the two parted amicably, although sources familiar with the breakup say that in reality, it got nasty.

Miller, who is considered personally and professionally close with Dicks, felt betrayed by McBee’s departure, since he was setting up a rival outfit. But McBee, these sources say, wanted to build a business of his own that extended well beyond the Northwest. One person familiar with the split called it “brutal.” But in the end, says another source who knows them both: “I don’t think there’s any lingering bad blood.”

In the midst of this transition, McBee successfully wooed his new firm’s first client, Dimension4, which previously had retained Denny Miller McBee. The defense contracting and technology company takes the graphic information of a military technical manual and delivers it back in a format that allows soldiers, sailors or airmen to click on different parts of the drawings to help them train or maintain weapons systems.

Kent McManus, Dimension4’s CEO, recalls that both Miller and McBee asked for his business. He went with McBee only, though other clients split their business between the firms. McManus says McBee has been helpful to the company with Defense Department contracts and Congressional earmarks.

“I perceived Steve to be a perceptive, energetic young man,” McManus says. “Hiring him — it’s one of the better decisions I’ve made.”

The Client’s DNA

McManus says his company plans to up its contract with McBee Strategic to include business development consulting in addition to lobbying. He adds that he intends to sell his company and wants McBee’s help to position it for maximum profits. “He thinks more like a businessman than he does a connected lobbyist,” says McManus, whose company has paid McBee Strategic more than $900,000 in lobbying fees since 2002, according to federal disclosures.

The defense company, formerly based in Seattle, opened a facility in Dicks’ hometown of Bremerton, Wash., in 1999, the same year it started working with McBee and Miller. In 2004, it moved its headquarters to Bremerton.

McManus has given personal money to Dicks, the No. 2 Democrat on the Appropriations Subcommittee on Defense and chairman of the Appropriations Subcommittee on Interior, Environment and Related Agencies, as well as to Washington Democratic Sens. Patty Murray and Maria Cantwell. The company started a tiny political action committee that has given Dicks $4,500 total in the 2006 and 2008 cycles.

The PAC also has given to Cantwell, Murray, Rep. Rick Larsen (D-Wash.) and House Minority Leader John Boehner (R-Ohio). “We’re not heavy political contributors,” McManus says of his company.

But earmarks often tend to roll more easily to campaign contributors. According to a Roll Call report in September, the employees or PACs of all the private entities for which Dicks helped secure earmarks had given to the appropriator’s coffers.

In the fiscal 2008 Defense funding bill, Dimension4, with help from McBee Strategic, secured a $3.2 million earmark sponsored solely by Dicks, according to a database compiled by Taxpayers for Common Sense.

McBee and his employees past and present have donated more than $300,000 in personal money since 2002, and the firm hosts private fundraising events. About $130,000 of that went to members of the Washington delegation, according to figures compiled by the Center for Responsive Politics.

But McBee says his business model is one of getting into clients’ “DNA” to figure out policy opportunities in Washington, D.C. “When we started this company, we said we would make it by adding value to our clients, not on access and fundraising,” McBee says. “If it’s not about revenue generation or market share, we weren’t going to be involved in it.”

On Background

McBee begins most days by e-mailing colleagues and clients by 5 a.m. from the Dupont Circle home he shares with his wife and two young sons. He expects his team to respond by 9 a.m.

McBee has built his firm by choosing employees who have spent their careers, like he has, at the intersection of political power between the two Washingtons. In addition to working for Dicks, he worked for Cantwell when she was in the House, and started his Hill career working for former Rep. Al Swift (D-Wash.).

Jeff Markey, an early member of the firm who is now senior executive vice president, was deputy chief of staff to Rep. Doc Hastings (R-Wash.). McBee’s wife, Jennifer Noland, the firm’s general counsel, worked for Murray and Dicks.

Executive Vice President Casey Sixkiller was a policy adviser to Murray.

Other McBee lobbyists hail from appropriations backgrounds. Menda Fife was a professional staff member on the Senate Appropriations Subcommittee on Defense, while Jill Shapiro Long has Senate Appropriations ties. Rob Hobart served as an appropriations and legislative aide to Rep. Zach Wamp (R-Tenn.).

The firm also has tapped a bipartisan mix of people with policy and political experience. Glynda Becker joined McBee from the Bush White House, where she worked in the Office of Political Affairs. Former Senate Commerce, Science and Transportation Committee staffers Sam Whitehorn, who worked for the Democrats, and Rob Chamberlin, who worked for the Republicans, handle policy issues. Ashley Cohen Slater, most recently director of Congressional affairs for the White House Council on Environmental Quality, joined last week.

One of McBee Strategic’s most senior hires is Rick Desimone, a former chief of staff to Murray. Desimone joined the firm last year and runs its Seattle-based public relations unit, McBee Strategic Communications.

Desimone says that observing the McBee team’s lobbying approach over the past several years helped him decide to join the firm when he left Capitol Hill.

“From a consumer standpoint, when I was on the Hill, it really was different,” Desimone says of the McBee team’s style. “They take the time to understand the environment that the Congress is working in and individual Members’ proclivities, and will try to really build a strategic case around why doing something on behalf of a client is going to have value, not just to the client but to the community which the Member represents.”

With earmarks under attack, Desimone says lobbyists must make arguments that stress a project’s merit. “If this thing ends up on the front page of the newspaper or Sen. Coburn decides to attack it on the floor of the Senate, not only can it withstand the scrutiny, but people can be proud of it because it’s making a difference,” he says, referring to earmark critic Sen. Tom Coburn (R-Okla.).

Even so, McBee has had client earmarks make headlines, and not always in a positive light. While Desimone worked for Murray, the Senator helped secure more than $5 million for a helmet computer display project by Microvision, a Redmond, Wash., company represented by McBee. But The Seattle Times reported that soldiers weren’t using the helmet computer because it caused a blind spot.

A Swift Rise

McBee, who wears slim-tailored suits and spends much of his time on cross-country flights, grew up in Bellingham, Wash., about 90 miles north of Seattle. He went to college at Western Washington University.

He never graduated, although a 2001 McBee biography retrieved from an archived Denny Miller McBee Web site says, “Mr. McBee earned a B.A. in Political Science at Western Washington University.” McBee wrote his own bio while at Miller McBee, but he says he does not know why the degree is listed. “I have never, ever represented that,” he says. “I have not tried ever to distort this part of my bio.” Other McBee bios provided to clients do not list any degree, nor does his firm’s Web site.

McBee began his D.C. career during college, when he took an internship in Swift’s Congressional office. A full-time job opened up in Swift’s office, and McBee says he decided to leave the university without completing a degree.

Swift’s district, which included Bellingham, was faced with losing two military installations, including Naval Air Station Whidbey Island, in the early 1990s in a base closure and realignment round. Swift’s BRAC aide departed the Congressman’s staff, and Swift says the only available person to handle the assignment was the recent intern, Steve McBee.

“And I thought, ‘Oh shit, he’s so young, but he’s all we got,’” recalls Swift, who spent 16 years in the House and is now a lobbyist at Colling Swift & Hynes. “So we threw him into this. I had an extra room in the Longworth [House Office] Building; we converted that into a BRAC room.”

Getting a base removed from the Department of Defense’s hit list is often a highly technical, uphill battle. Swift recalls that McBee, who was in his early 20s at the time, skillfully worked with constituents, including military retirees, to flesh out flaws in the Navy’s budget analysis.

“I just had real questions as to whether he would be able to quickly get all that under his belt,” Swift says. “Well, he was fantastic. He was fabulous. The people from Everett and Oak Harbor, the constituents, became huge fans of Steve, so I stopped having qualms. He was very young, very green, but very bright and he works hard.”

It was during that successful BRAC effort that McBee got to know Denny Miller, a longtime Washington state lobbyist and Seattle native who had worked for former Sen. Scoop Jackson (D-Wash.).

‘Young Man in a Hurry’

Although McBee trod a typical trail from Hill staffer to lobbyist, he says he wasn’t interested in lobbying when he decided to leave the Hill. He wanted to head to New York City or Silicon Valley. Miller and his wife, who co-owned the firm, persuaded McBee to stay and become business partners with them.

“At the end, I just sort of decided there were interesting ways to connect what is happening in Silicon Valley with what is happening in [D.C.],” McBee says.

During McBee’s partnership with Miller, Denny Miller McBee Associates grew steadily, peaking at $2.6 million in revenue in 2002, the year McBee left the firm. In 2003, Miller’s revenue plunged by $1 million, down to $1.6 million.

“He was a young man in a hurry,” Miller says of McBee. “He looked at himself as being in a different generation and was probably more aggressive in a positive sense than we were.”

Last year, as part of the effort to expand his client base, McBee, Whitehorn and Chamberlin pitched Sony Electronics, which was looking for a firm to represent it on two issues, including two-way plug and play, a fight with cable companies over whether electronics makers, like Sony, can sell directly to consumers devices that attach to cable networks.

Joel Wiginton, Sony Electronics’ vice president and senior counsel for government affairs, says his company interviewed 10 firms for the $20,000-a-month contract.

“They were the only firm that came to the pitch meeting prepared,” Wiginton says. “Most pitch meetings are people telling you who they know and what relationships they have. They spent some time to learn about the issue, so they came to the meeting and offered us some advice, some direction, free of charge.”

Back at his Washington, D.C., office where an immaculate glass oval table, with no drawers, serves as his work space, McBee emphasizes his business plan. “Clients don’t have a hard time connecting our work to their balance sheet,” he says.

In a follow-up e-mail, he continues: “Our mission is to be a total solutions provider to our clients to create competitive advantage for them. ... Lobbying is an effective business tool, but bundling lobbying solutions with a fully integrated platform of applications like communications, business development, and strategic consulting is explosive. This is the future of our company.”

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