
Contracting Reform Bills Move in Congress
by Sam Kim, 3/20/2007
Congress is moving forward on bills to reform the federal contracting system, as the House approved a bill that improves contracting procedures, and the Senate introduced a comprehensive contract reform bill. The bills are an encouraging sign that Congress is working to fix some of the broken parts of the contracting system, but it will need to do much more to address the full scope of the problem.
The $400 billion-a-year federal contracting industry is the fastest growing area of discretionary federal spending, accounting for roughly 40 cents of every dollar spent and having jumped 83 percent since FY 2000. Yet the public does not have reliable access to information regarding the contracting system of the federal government. While this system has operated in relative obscurity, numerous scandals have entangled lawmakers, executive branch officials and private companies in connection with contract waste, fraud and abuse.
On March 15, the House passed the "Accountability in Contracting Act" (H.R. 1362), co-sponsored by Oversight and Government Reform Committee Chairman Rep. Henry Waxman (D-CA), by a vote of 347-73.
The wide margin by which the bill passed reflects a consensus on the need for procedural reforms and greater transparency. It requires agencies that do over $1 billion in annual contracting to devise and implement a plan to minimize sole-source contracts, which are not subject to competition, and cost-plus contracts, which have relaxed controls on contractor spending. It would also limit sole-source contract term-lengths to no more than 240 days.
The bill also includes provisions that would improve public access to contract management information and remove conflicts of interest from the procurement process. Agencies would be required to make available to committee chairpersons or ranking members (but not to the public) audit reports that found overcharges over $10 million. The bill would make public agency justifications for not opening up contracts to multiple bidders. Instituting a revolving door provision, the bill mandates that procurement officials must wait two years after leaving a government position before they can work for a private contractor.
The House Armed Services committee, however, stripped a few provisions from the original bill. For example, a requirement for a public audit report for questionable costs exceeding $1 million was dropped, as was a requirement that one percent of agency procurement budgets be spent on contract oversight.
The House bill also has significant omissions. It lacks strong provisions that would hold contractors accountable for contract underperformance, mismanagement and noncompliance with federal laws and regulations. It also fails to impose stronger and broader limitations on the scope of federal responsibilities available for contracting. Finally, it does not mandate comprehensive disclosure or process reforms of federal procurement policy.
The Honest Leadership and Accountability in Contracting Act of 2007 (S. 606),introduced in the Senate by Sen. Byron Dorgan (D-ND), addresses some of the more wasteful aspects of contracting that H.R. 1685 stops short of tackling. S. 606 currently has 22 co-sponsors.
Under S. 606, war profiteering or fraud would result in larger fines, and prospective contractors that exhibit a pattern of fraud, waste, or abuse will not be considered to have a satisfactory record of integrity or business ethics. Agencies would also have to make public any information regarding contractor violations of federal laws and regulations and any punishments enacted for those violations. This data would be made available through the Federal Procurement Data System, which is one source of data for FedSpending.org.
Under the Dorgan bill, the contracting process would also undergo changes, as higher standards would have to be met in order to issue non-competed contracts. Contractors would be prevented from receiving contracts to conduct government oversight, and contracting out inherently governmental responsibilities would be curtailed. However, it is unclear how strongly the bill would enforce these provisions, and consequently, how much of a difference they would make in contracting procedures.
H.R. 1632 is one of five bills relating to increasing access to government information that the House passed during Sunshine Week, an annual event to bring attention to government openness and transparency.
