POLITICS

What Happens When The Tech Industry Meets Washington

10/22/2013 09:41 pm ET | Updated Oct 23, 2013

WASHINGTON -- A once-powerful tech industry trade group has been shedding clients and losing senior staff, according to internal firm documents obtained by The Huffington Post, dealing another blow to an industry that has stumbled repeatedly in its attempts to navigate official Washington.

At least 75 clients have abandoned the lobby shop TechAmerica since July, according to the documents, including industry giants General Electric, European Aeronautic Defense and Space Co., Samsung Semiconductor, IHS and Venable. Other members have threatened to leave and been rewarded with dramatically reduced membership dues, according to people familiar with the situation.

A TechAmerica spokeswoman said that the departures were not a sign of an imploding organization, and that news of them was leaked to HuffPost by someone with an "ax to grind."

The turmoil is being overseen by TechAmerica CEO Shawn Osborne, who took over in 2012, charged with turning around what had once been a premiere lobbying organization. To do that, Osborne slashed budgets, staff, and membership perks. He also eliminated most of the group's regional offices, which once included California, Texas, Oregon, Florida and Illinois.

At its peak in 2009, TechAmerica had revenues of some $15 million, and its goal was to represent the entire technology industry, rather than just Silicon Valley. Phil Bond, the group's president until 2011, said TechAmerica aimed to be the industry's "big voice on tax, trade and technology issues."

But as the tech industry has splintered into divergent, if not competing, interests in recent years, tech industry lobbyists have had trouble forming the broad, multi-industry coalitions that often spell success on Capitol Hill. Major legislation to reform the patent system in 2011 pitted drugmakers against the tech industry. The techies had their clocks cleaned.

Since 2009, TechAmerica has been spending millions of dollars more than it earns every year, according to IRS filings. At the same time, the group's reserve assets have plummeted, from more than $8 million in 2008 to $2.2 million in 2011, the most recent year for which tax returns are available.

TechAmerica has slashed its lobbying budget by more than 60 percent, from $1.5 million in 2009 to just $530,000 last year, according to lobbying disclosure forms. Two of TechAmerica's top lobbyists, Kevin Richards and Kristine Berman, both left for other jobs this summer.

Current and former employees of TechAmerica have expressed dismay at the changes on websites like GlassDoor.com, where one former employee wrote in late 2012 that the cuts had produced, "plenty of low morale among remaining staff, with most looking for career opportunities elsewhere. Meanwhile executive leadership is trying to make-up for the personnel shortage with plenty of college interns to fill staffing needs. Hopefully the association will pull through."

The TechAmerica spokeswoman said the changes at the organization were part of a broader strategy. "When we announced the elimination of non-core programs and personnel [in 2012], we forecasted that there would be attrition in certain member categories," Stephanie Craig, senior vice president for communications at TechAmerica, wrote in an email. "And, as we anticipated, that has happened. All you are seeing is the residual effects (annual memberships based on accrual accounting) of last year’s changes."

Craig said the attrition and financial data "don't provide the whole story," and she said the list of lost accounts came from "someone with an ax to grind."

"Our new value proposition that is focused on our strengths and kicked off in 2013 is resonating well with our core members and is attracting new members," Craig said. She said the changes have also resulted in a financial turnaround as well, which she said is not apparent in tax filings through 2011.

"For the first time in TechAmerica's history, we are on budget and very close to breaking even in 2013," Craig wrote. "This is the result of the changes we implemented in 2012 and the addition of new members. We've also added staff in our key policy and member service areas.

"Change is difficult but necessary to improve the association, which is exactly what is happening," she said.

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