Contract Reform Takes Center Stage in House

A group of reform bills that would bring accountability and transparency to the federal contracting process has been approved by the House in the last few months, potentially setting the stage for federal contracting reform to be a major area of legislative action in the remaining months of the 110th Congress. In the last two weeks, the House has approved five separate bills related to contractor accountability or oversight of the federal procurement process. These bills represent an excellent first step in bringing much-needed reform to the way the federal government oversees and implements federal contracts, a process that is rife with secrecy, corruption, waste, and abuse.

On April 14, the House passed H.R. 4881, the Contracting and Tax Accountability Act of 2007, which would require all firms bidding on federal contracts to submit a declaration that they are not delinquent in their taxes. The bill would also bar firms on which the IRS has placed a tax lien from being awarded a federal contract. This legislation seeks to recoup over $7 billion owed to the Treasury by firms receiving payments from the federal government. The legislation was first introduced by Rep. Brad Ellsworth (D-IN) on Dec. 19, 2007.

The next day, the House Oversight Subcommittee on Government Management, Organization, and Procurement held a hearing on H.R. 5712, the Close the Contractor Fraud Loophole Act, which would require all contractors, including those working outside of the United States, to report criminal violations and fraud by their employees. Existing law exempts certain contractors, including those working overseas, from informing the government if an employee breaks the law in obtaining or implementing a federal contract, or if an employee is significantly overcompensated. The subcommittee approved the legislation, sponsored by Rep. Peter Welch (D-VT), and the full House passed the bill by voice vote on April 23.

Also on April 23, the House debated and approved two other pieces of legislation by voice vote. H.R. 3928, the Government Contractor Accountability Act, would amend the 2006 Transparency Act to require certain large government contractors that receive more than $25 million and 80 percent of their annual gross revenue from federal contracts to disclose the names and salaries of their five most highly compensated officers unless such information is already publicly available. The bill was introduced by Rep. Chris Murphy (D-CT) in the fall of 2007.

H.R. 3928 would help increase transparency in the contracting process. Although publicly traded firms are required by the Securities and Exchange Commission to disclose the names and salaries of top-level managers, many firms that contract with the federal government, like private security company Blackwater USA and AEY, Inc., are private entities for which this information is not publicly available.

The third bill approved on April 23 was H.R. 3033, the Contractors and Federal Spending Accountability Act, introduced by Rep. Carolyn Maloney (D-NY). This bill would require the General Services Administration to create an online database of information on federal contractors who have broken federal law or regulations, as well as include information on contractor performance. This bill would mandate a federal database that would be similar, but more expansive, to one created by the Project on Government Oversight, called the Federal Contractor Misconduct Database.

Such a database would be effective in improving pre-award contracting decisions and help procurement officers in identifying (and hopefully avoiding) abusive, risky, or dishonest contractors, particularly those who repeatedly violate standards of conduct. The Maloney bill was modified before it passed, stripping a controversial provision that would have forced federal officials to start suspension or debarment proceedings against firms with two judgments or convictions for the same offense during any three-year period. The final version of the bill merely requires contract officers to justify why they awarded a contract to a company with two or more debarment-worth offenses on its record.

H.R. 3033, like the other bills, likely faces an uphill battle to final passage in the Senate. Two reform-minded freshman senators, Claire McCaskill (D-MO) and Barack Obama (D-IL), are leading the charge for two of these bills in the Senate. McCaskill introduced a companion measure to H.R. 3033 on April 23 and hopes to add it as an amendment to the Defense Authorization bill being considered the week of April 28. Obama has introduced a mirror bill (S. 2519) for the Ellsworth tax delinquency bill (H.R. 4881), but the Senate has not taken any action on that legislation.

Whether any of these bills are passed into law depends in large part on the Senate — where a razor-thin majority and more strident Republican opposition to these common-sense proposals might stall the progress made to date.

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