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When GSP Consulting Corp. opened up in 2002, the lobby shop started by two former staffers for then-Sen. Rick Santorum (R-Pa.) found staying local in Pittsburgh didn’t mean staying small. Setting its standard retainer at a modest $40,000 a year and donating federal campaign funds almost exclusively to Pennsylvania’s congressional delegation, in five years the firm built a $2.8 million annual federal appropriations practice that boasted a 90 percent client retention rate and a 19-fold average annual return on its retainers. While the firm moved into related fields, such as state lobbying, economic development consulting, and grant writing, its federal practice focused on what its founders knew: earmarks. That strategy did wonders for dozens of regional firms around the country. Overall, lobby shops saw their appropriations lobbying registrations jump in number from 2002 to 2006. In GSP’s case, the plan is now showing some cracks. When Santorum was swept out of Congress during the 2006 Democratic takeover, the firm simply announced a strategic alliance in Wisconsin, two new hires, and “an aggressive growth plan.” At the same time, GSP replaced references to Santorum in staffers’ online biographies with the phrase “a former senator.” But GSP wasn’t able to head off problems: Since the 2006 midterm elections, the firm lost more than half of its 64 registered federal clients. It also lost seven lobbyists, including two key Democrats with federal experience. And GSP’s ambitious expansion into cities in other states seems to have stalled, with its ventures in Madison, Wis.; Cleveland; and Lansing and Ann Arbor, Mich., breaking away to form independent lobby shops — and in some cases, taking clients with them. Joseph Kuklis, Santorum’s former deputy state director and GSP’s chief executive officer, says he developed an expertise in small tech business development during his time with Santorum. “My old job for the senator was to help prioritize his appropriation requests in Pennsylvania,” he says. Kuklis and partner John Dick, a fellow Santorum staffer, proved adept at getting their clients into the Pennsylvania delegation’s request lists. LOW-COST AND LOCAL The firm grasped early on that netting federal earmarks didn’t require deep-pocketed clients, a large staff, or even, initially, a full-time Washington office. Instead, GSP lobbied for biomedical and tech clients from an office in the same Pittsburgh building that housed Santorum’s Pennsylvania headquarters. Clients like Body Media, a medical device company, received earmarks totaling $4 million through Sen. Arlen Specter (R-Pa.) and other federal sources. GSP’s low-cost, localized approach was so successful that its principals began recruiting lobbyists to open up as many as 10 regional GSP offices in places like Cleveland; Tampa, Fla.; Lansing, Mich.; and New Orleans. The firm hired a few Democrats early on, and Kuklis increasingly looked to Pennsylvania state lobbying and economic development work, out of concern that “earmarks may not be a major part of the business in the future,” he says. State lobbyists say they’ve noticed the change in the firm’s focus. “Because they were so closely allied with Rick [Santorum], and they got a lot of their money from federal appropriations, I think that was a double [concern] for them,” says Bob Cranmer, a Harrisburg, Pa., lobbyist with Pugliese Associates. “They’re more of a presence in the state than they used to be.” Kuklis says he doesn’t see last year’s attrition on the federal side as a significant setback. Despite losing seven professionals, the firm still has “nine or 10″ others handling federal matters, Kuklis says. GSP has also installed Colette Marchesini Pollock, a former staffer to Rep. John Murtha (D-Pa.), in the D.C. office. Given that the firm’s clients tend to be fledgling companies that either grow too big to receive startup earmarks or cease to be able to afford it, Kuklis says, turnover is to be expected. And given the environment for earmarks in Washington, he says, “I don’t think it’s a smart business move for us to take 40 different projects to D.C. anymore.” DRUNKEN SAILORS Others familiar with the Pennsylvania market say GSP may be experiencing a more dramatic version of the slowdown in earmarks nationwide. “There was a period of time when they were spending [federal appropriations dollars in Pennsylvania] like drunken sailors,” says Ron Platt, head of the D.C. public policy practice of Pittsburgh-based Buchanan Ingersoll & Rooney. Success rates for appropriations clients in the state were phenomenal, Platt says. Then came lobbying scandals and an increased scrutiny of earmarking, a tightening federal budget, and changes in Pennsylvania’s delegation. Buchanan Ingersoll’s Pennsylvania lobbyists abandoned the high-volume earmarks business model, deciding, says Platt, to “charge more money and do fewer of them.” And now, Specter’s office informally mandates that no lobby shop will get more than a few earmarks for its clients a year, Platt adds. (Specter’s office did not respond to requests for comment.) Some problems, however, may be specific to the firm. Its outside-of-Washington approach to appropriations, low overhead, and previous track record of near-immediate results made it more vulnerable to breakaway offices and impatient clients. Liz Powell, who headed GSP’s Cleveland office until she left the firm last July, praises the firm but recalls that “pretty much 95 percent of what they did was earmarks.” Even clients the firm has helped haven’t always stuck around. GSP helped the Findlay, Pa., municipal township acquire a $7.5 million package to improve its sewer system, says township manager Gary Klingman, but the township ended the relationship last year. “It wasn’t that they didn’t perform,” Klingman says. Findlay simply liked its chances for federal money better elsewhere: The township now works with lobbyist Ron Klink, a former Democratic congressman from western Pennsylvania who also handles appropriations. JUMPING SHIP Whether due to the appropriations climate or other reasons, some prominent members of the firm have left. GSP lobbyist Scott Harshman, a former Murtha staffer, says he left out of a desire to start a solo practice. He registered his first client, a former GSP customer, last February. Marc Jordan, the sole lobbyist for the firm’s Lansing and Ann Arbor offices, left for a Michigan law firm. Dennis Troy, who had been the head of a Pittsburgh law firm legislative practice bought by GSP, is starting his own business. Henry Sanders Jr., the lead lobbyist for GSP’s joint venture with a Madison public affairs firm, “decided to spin the practice out on my own,” he wrote in an e-mail to Legal Times. And Powell, who headed GSP’s satellite office in Cleveland, reached an agreement with the firm allowing her to launch G2G Strategies with some of GSP’s former Cleveland clients. The departures took more than a dozen clients. Chuck Hammel, owner of a Pittsburgh trucking business, says he never had more than a vague sense of what the firm might do for him on the federal level and wouldn’t have wanted a handout. It didn’t help that the firm had solicited $15,000 in PAC donations from Hammel in 2006 in alleged violation of Federal Election Commission rules, drawing an ethics complaint. Another former client, who declined to speak for attribution, says he simply lost confidence in GSP despite Republican political contacts who recommended the firm to him. “At the end of the day, it’s guys starting off in a Republican senator’s office,” he says of the founders. Given that the firm’s other practices appear to be doing well — GSP just moved into larger offices in Pittsburgh earlier this month, and Kuklis insists that overall firm revenue in 2007 was up from the previous year (Pennsylvania state lobbying rules do not include the disclosure of fees) — that might not be such a bad thing. “You’ll see additional registrations from us in the next few weeks, and they may not all be appropriations-driven,” he says.
Jeff Horwitz can be contacted at [email protected].

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