Poor Contractor Performance Hampers Government

The past few weeks have seen a flurry of stories about the ineffectiveness of government contractors government mismanagement. While I'd like to go into detail on each one (they are definitely worth a closer look), the stories are starting to pile up. Instead, a summary round-up of some of the contracting screw-ups that appeared so far in 2008. ** The Washington Times reported today that an investigation that lead to the conviction of a former GSA procurement official (Dessie Ruth Nelson) and two top executives at a private security company (Holiday International Security, Inc.) is being widened to include other "unrelated contractors" who may have bribed Nelson or other procurement officials. Nelson pleaded guilty in early January to accepting over $100,000 in bribes in exchange for steering contracts to the private security firm founded by Michael Holiday. Nelson received, among other things, a shopping bag filled with $35,000 in cash, an envelope containing $10,000, and a $7,000 Caribbean cruise. ** The House Committee on Oversight and Government Reform released a report on Jan. 11 that found a web site created for the Transportation Security Administration to address grievances from travelers incorrectly flagged by the government's no-fly list was poorly constructed and vulnerable to hackers. The report, covered in the Washington Post, Government Executive Magazine, and other tech blogs, concluded that cronyism and a lack of oversight exposed thousands of site visitors to identity theft. In this case, the contract was awarded without competition and the TSA official in charge of the contract was a former employee and good friend of the CEO of the contractor. ** Federal Times reports today that the top official at the National Oceanic and Atmospheric Administration is alleging that "poor contractor performance is delaying a new satellite that will monitor global environmental conditions." The contract in question was given to Raytheon (FedSpending Profile) and Northrop Grumman (FedSpending Profile), which have been slow to solve problems with a key instrument for the National Polar Orbiting Environmental Satellite System (NPOESS). ** Finally, the Washington Post also has an article today about a recent Government Accountability Office report that found a defense contractor hired to repair combat equipment "routinely failed to do the job right and then charged the government millions of dollars for the extra work," according to the WP. The contractor, ITT Industries (FedSpending Profile) apparently received $4.2 million for additional labor, according to the GAO report.

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Earmarks '08: Congressional GOP v. Bush

What a Difference a [Y]ear Makes The coverage of yesterday Congressional GOP retreat in Roll Call make clear the about-face that party leaders are making on earmarks. Republican leaders ... made it clear during the retreat that they would not support any effort by President Bush to strip earmarks from this year's omnibus bill and saw no need to overhaul the practice... arguing any move [by Bush] to eliminate the earmarks would be an inappropriate infringement on Congress' authority to appropriate funding.

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Tax Terms of Fiscal Stimulus Package Agreed

Package Omits UI, Food Stamp Provisions Within the last hour, word has emerged that Congress and the White House have agreed on key terms of a fiscal stimulus package. A story appearing in the electronic version of the Washington Post reports that House Speaker Nancy Pelosi (D-CA) and Republican Leader John Boehner (R-OH) reached agreement in principle in a telephone call Thursday morning. The tax rebate terms:
  • the compromise package is not to include increases in food stamp and unemployment benefits

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Samuelson Watch: Credit Where Credit Is Due

This week, Bob Samuelson bemoans Wall Street and its ship-wrecking captains who command treasure chests of severance packages. At Merrill Lynch and Citigroup, large losses on subprime securities cost chief executives their jobs -- and they left with multimillion-dollar pay packages. Stanley O'Neal, the ex-head of Merrill, received an estimated $161 million.

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House Tries, Fails at SCHIP Expansion Veto Override

The Republican War on Children's Health continues($). The House failed Wednesday to override President Bush's second veto of a children's health insurance bill, again confounding Democrats' plans to expand government-sponsored health coverage to include an additional four million low-income kids.

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Economic Stimulus Package Update

Bush, Congress nearing accord, as Administration cedes some ground to Democrats House Speaker Rep. Nancy Pelosi (D-CA), Senate Majority Leader Sen. Harry Reid (D-NV), and Congressional Republican leadership met with President Bush last night to discuss the broad outlines of an economic stimulus package. Bush came out of the meeting with a "very positive feeling" while Pelosi was "confident" that a bipartisan agreement could be reached. So, here's what the package is shaping up to be so far - these are the boundaries that will most likely contain the package.
  • $145 billion

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A Funny Thing Happened on the Way to the Printer(?)

Did the CBO goof or did it change the naming convention for its annual 10-year outlook report? Last year (Jan. 2007), the CBO released "The Budget and Economic Outlook: Fiscal Years 2008 to 2017." This year (today, in fact), the CBO released "The Budget and Economic Outlook: Fiscal Years 2008 to 2018." What's going on? Both reports cover the same forecasting window, so that hasn't changed. My first scan of this year's report hasn't caught a note explaining the difference in naming convention. Anyone out there care to venture a guess?

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Reality Check: CBO's Deficit Projection for 2008

In the CBO report cited immediately below, the baseline budget projections are not a forecast of future outcomes; rather, they are based on the assumption that current laws and policies remain the same. So the report's incomplete picture of the projected 2008 federal deficit is no fault of CBO's. Having said that:

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The Budget and Economic Outlook: Fiscal Years 2008 to 2018

The CBO has released its outlook for the budget for 2008 through 2012. Under an assumption that current laws and policies do not change, CBO projects that the budget deficit will rise to 1.5 percent of gross domestic product (GDP) in 2008 from 1.2 percent in 2007. CBO: The Budget and Economic Outlook: Fiscal Years 2008 to 2018

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This Time, It's for Real

Global Markets, Federal Reserve Can't Be Wrong Almost overnight, the masters of the universe have converged on a consensus that the U.S. economy is headed for -- or already in -- a recession. U.S. markets were closed yesterday for the Martin Luther King Jr. holiday as major indexes fell 7.2 percent in Frankfurt, 7.4 in Mumbai and 5.5 in London. The Dow dropped 400 points in the first hour of trading today.

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