how sunlight can improve federal contracting

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How Sunlight Can ImproveFederal Contracting

Nine Recommendations to Make Government ContractingMore Eective and Ecient or Taxpayers

Pratap Chatterjee March 2012


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How Sunlight Can ImproveFederal ContractingNine Recommendations to Make Government

Contracting More Eective and Ecient or Taxpayers

Pratap Chatterjee March 2012

CAP’s Doing What Works project promotes government reorm to eciently allocate scarce resources and

achieve greater results or the American people. This project specifcally has three key objectives:

• Eliminating or redesigning misguided spending programs and tax expenditures, ocused on priority areas

such as health care, energy, and education

• Boosting government productivity by streamlining management and strengthening operations in the areas

o human resources, inormation technology, and procurement

• Building a oundation or smarter decision-making by enhancing transparency and perormance

measurement and evaluation

This paper is one in a series o reports examining government accountability and eciency.



Contents 1 Introduction and summary

4 The problem: Shortalls in ederal contract oversight

13 A brie history o recent reorm eorts

19 Recommendations

22 Conclusion



1 Center or American Progress | How Sunight Can Improve edera Contracting: Nine Recommendations

Introduction and summary

A single, sreamlined daabase ha racks raud, wase, and abuse in ederal

governmen conracs will help save axpayers money and reward good compa-

nies. Presiden Barack Obama in a June 2011 execuive order charged he newly

esablished Governmen Accounabiliy ransparency Board o sar designing

such a daabase wihin six monhs.1

A week aer he execuive order was issued, he House Oversigh and

Governmen eorm Commitee overwhelmingly approved he 2011 Digial Accounabiliy and ransparency Ac, sponsored by Commitee Chairman

Darrell Issa (-CA). e legislaion, which is now awaiing a ull House voe,

goes even urher han he execuive order.

is bill would se up a Federal Accounabiliy and Spending ransparency

Board—or FAS Board—o manage a sandard process by which agencies can

repor all spending daa. e inormaion would be made publicly available on a

websie so ha governmen agencies and wachdog groups alike could ideniy

raud, wase, and abuse.

Issa’s bill, which enjoys biparisan suppor a a ime o inense poliical deadlock

on Capiol Hill, shows ha here is momenum in Washingon or his imporan

issue. Bu i is only an imporan rs sep in he righ direcion. Wha we need is a

wholesale reorm o a procuremen sysem gone awry. ere is reason or hope. An

ambiious new pilo projec by he General Services Adminisraion is expeced o

be launched in he rs hal o 2012, he Sysem or Award Managemen, which will

combine eigh exising ederal procuremen sysems ino a single daabase, a wel-

come sep orward i i succeeds. Wise use o good echnology can help he ederal

governmen eliminae unnecessary sa and programs as well as slash billions o dollars rom he budge by prevening raud, wase, and abuse.

e ederal governmen oday uses dozens o sandalone daabases o rack more

han hal a million business eniies ha are eligible o bid on he $536 billion in




ederal conracing or goods and services. ake, or example, Melanie Johnson,

a Deparmen o Deense conracing ocer, who issued in January 2007 a $300

million conrac o AEY, Inc., o Florida o provide weapons and ammuniion

o he Aghan army and police. Seveneen monhs laer, AEY Presiden Eraim

Diveroli was indiced or raud on he very same conrac, or selling more-han-

40-year-old Chinese ammuniion o he governmen. Laer invesigaions showedha here was pleny o available inormaion on AEY and Diveroli ha should

have given Johnson pause—had she known where o look or i.

is is one o he bigges hurdles or governmen buyers: Bad conracors are

oen hired because governmen ocials canno locae pas perormance inor-

maion. e lack o cos, pricing, and echnical daa is anoher reason why he

governmen ends up paying oo much or goods and services.

Charles Smih, a reired miliary conracing ocer who was in charge o he

$37 billion conrac wih Halliburon in Aghanisan and Iraq, says ha he lack o good daa on conracors was one o he mos signican hurdles in his job. “I

would say ha 90 percen o he daa ha we needed was no available.”2

o be sure, he Obama adminisraion has made public reams o new daa as

par o he Open Governmen Iniiaive on websies such as USAspending.gov

and hrough new ool ses like he Federal Awardee Perormance and Inegriy

Inormaion Sysem, or FAPIIS.3

ese reorms are no sucien. is repor explains he hree key ypes o daa

ha conracing ocials lack, explores eors o solve his problem, and issues

a se o recommendaions on how o eecively consolidae daa ino one single

daabase on conrac spending.

We recommend that the ederal government:

• Creae a single, sreamlined, governmenwide elecronic sysem o replace he

muliple exising daabases

•

Adop a unique way o ideniy conracors in his daabase such as by creaing a“elaed Business Enerprise” daabase

• Publish pas peromance daa or all conracors in his daabase




• Make daa auomaically available unless a genuine reason is esablished oherwise

• Creae an easy-o-use online raining manual or ederal conracing ocers

• Creae an online “budge dashboard” o allow he public o ollow ederal conrac-

ing spending in real ime

• Make sure ha inormaion is accurae and imely by requiring annual inspec-

ions o he qualiy o his daa

• Change he rules on wha producs and services are deemed “commercial” in

order o make sure ha he governmen can have access o underlying cos and

pricing daa o negoiae air prices

• Buy echnical daa rom companies ha have a monopoly conrac in order o

allow ohers o compee or he same service and allow marke orces o work

A single daabase will no only ulimaely help save money or he axpayer bu will

also increase compeiion among conracors and deliver beter services o ciizens.




The problem: Shortfalls

in federal contract oversight

Conracors hisorically sold he governmen everyhing rom “beans o bulles.”

Over ime he range o producs has evolved o include billion-dollar weapons sys-

ems and saellies. I has also evolved o include services, including a broad array

o human resources and even criical miliary suppor uncions in war zones.

By some esimaes, hal o ederal workers are no longer employed direcly by he gov-

ernmen bu by privae conracors.4 Some o his is a resul o a broad experimen in

he 1990s called einvening Governmen, which atemped o make ederal agenciesmore ecien. oday conracors collec income axes, draw up governmen agency

budges, and ake minues a policy meeings. ey si nex o ederal employees a

nearly every agency. More han 7 ou o 10 workers are conracors a he Penagon’s

high-securiy Under Secreary or Inelligence oce.5 Some o he ederal workers in

charge o conrac oversigh are hemselves conracors.6

All old, he ederal governmen spen $536.4 billion on conracors in scal year

2010 according o he Federal Procuremen Daa Sysem, more han wice he

$203 billion ha was spen a decade earlier, even aer adjusing or infaion.7 e

bigges spender by ar was he Penagon, which spen $367 billion, or jus more

han wo ou o every hree ederal dollars spen on conracing. While much o

he money wen o big-icke iems like aircra carriers and je ghers, abou $80

billion in ederal dollars was spen on inormaion echnology alone.8

is explosion in conracing has no been accompanied, as i should have been,

wih an increase in oversigh. Indeed, here are ewer conrols oday, insucien

sang and unding, and poor-qualiy daa wih which o assess conracors’

prices and perormance. Le’s ake each o hese problems in urn.

Lack of staff capacity

Agencies do no have enough sa o cope wih he explosion in conracing.

In 1990 he ederal governmen employed 165,739 people in he acquisiion




workorce, according o an annual survey compiled by he Federal Acquisiion

Insiue. By 2000 his had been cu o 122,787 and nine years laer had shrunk

even urher o 106,506.9 Some agencies have managed o say relaively sable in

erms o sang. e Deense Conrac Managemen Agency, which had 12,539

employees when i was creaed in 2000, sill had 11,114 sa by he end o 2010.10

Bu he numbers do no ell he ull sory. “Measured in dollars [he acquisiion

workorce] is doing over hree imes he amoun o work, a a higher level o com-

plexiy, han i did almos wo decades ago,” David Drabkin, acing chie acquisi-

ion ocer o he General Services Adminisraion, old he Senae Commitee on

Homeland Securiy and Governmenal Aairs in April 2010.11

Lack o sucien oversigh can lead o raud, wase, and abuse. Exac numbers are

hard o come by bu i he Oce o Managemen and Budge esimae o improper

paymens across governmen is any indicaor, as much as $29.4 billion could be a

risk.12 Some o his is caugh by governmen audiors: In scal year 2010, he DeenseConrac Audi Agency audis saved abou $2.9 billion or he governmen.13

A lo more could be saved. e Penagon, which is boh he bigges spender

as well as he bes organized o cach improper paymens, does no review a

very large percenage o is paymens. A March 2011 repor rom he Deense

Deparmen’s inspecor general noed ha he Penagon repored roughly $1 bil-

lion in improper paymens—suggesing ha less han 1 percen o he esimaed

$125 billion in improper paymens across governmen came rom he miliary.14

e inspecor general was skepical ha he Penagon was doing enough, no-

ing ha improper paymens reviews covered less han hal o 2010’s rs-quarer

spending. e repor also noed ha even hose reviews were no properly com-

pleed and were someimes inaccurae.

e Obama adminisraion is aware o he lack o adequae conracor oversigh

and has aken some seps o address i. In April 2009 Deense Secreary ober

Gaes announced a Penagon plan o hire 20,000 acquisiion sa over he nex

ve years o ackle he explosion in conracing.15 Obama in his 2011 budge

likewise asked Congress o se aside $158 million o hire acquisiion ocers and

boos raining.16

is laudable eor, however, is a vicim o recen ederal budgecus. e new hiring iniiaive was haled in Augus 2010 pending review.17

In addiion o hiring more people, i’s equally imporan in his scally consrained

environmen ha exising conracing ocers make every dollar coun.




In he CAP repor, “A $400 Billion Opporuniy: 10 Sraegies o Cu he Fa Ou

o Federal Procuremen,” aj Sharma showed how beter planning, negoiaion,

and managemen in conracing can lead o savings in procuremen spending.18

is repor akes he nex sep, examining he kind o procuremen daa he

governmen collecs o assess one conracor over he oher and negoiae goodprices or axpayers.

I urns ou conracing ocers have no shorage o ederal daabases rom which

hey glean inormaion abou bidders. (see box on page 14) ey range rom a

generic regisry sysem such as he Cenral Conracor egisraion, or CC, o

specic daabases ha rack environmenal violaions, such as he Enorcemen

and Compliance Hisory Online sysem, or ECHO, and occupaional saey viola-

ions, like he Severe Violaor Enorcemen Program, or SVEP.

Each o hese daabases can play a crucial role in ensuring he bes possible vendoris seleced, bu many are never consuled because hey are incompaible wih

each oher or because he governmen doesn’ require hem o be par o he

selecion process. a’s according o expers like Charles Smih, ormer head

o he conracing division o he Army Field Suppor Command, who worked

in governmen conracing or 31 years beore he reired in February 2008.19

Among his oher projecs, Smih was in charge o he $35.7 billion Logisics Civil

The government spends even more money

on grants every year as it does on contracts: In

2010 the government paid out $557.7 billion

in grants o which $369.8 billion went through

the Department o Health and Human Services.

Unlike contracts that are used to buy goods

and services that are ultimately owned by the

taxpayer, grant money is paid out or social

services like Medicare and Medicaid. But like

contracts, the grant money is oten abused byprivate companies that are paid to deliver the

services. In 2010 an estimated total o $70.4 billion

was made in improper payments or Medicare

and Medicaid health services. Indeed the ederal

government’s own estimates o Medicare and

Medicaid payment error rates run as high as 52

percent or certain medical supplies. Once again,

the problem is a lack o good-quality tracking

data to prevent this. In May 2011 the Center or

American Progress issued a report, “Payment

Police 2.0,” on this subject. Author Marsha Simon

concluded that better-integrated databases

o medical claims that are matched up againststate and ederal death records and other public

databases will also go a long way towards

preventing raud, waste, and abuse.

Health care raud




Augmenaion Program conrac, or LOGCAP, awarded o Houson-based KB,

a ormer subsidiary o Halliburon, o build and mainain miliary bases in he

Global War on error.

e lack o good daa on conracors was one o he mos signican hurdles in his

job, according o Smih. “I did my bes I could o pick he righ conracor relyingon he sysems ha we had available,” he says. “Bu we relied heavily on bidders o

repor heir relevan pas perormance o us and hey could sraegically leave ou

conracs ha hey could claim o be irrelevan.”20

Smih says he could also reques inormaion rom oher governmen agencies bu

was concerned abou he daa qualiy. “My bigges problem was ha conracing

ocers had no properly enered pas perormance daa on old conracs i a all. I

would say ha 90 percen o he daa ha we needed was no available.”

Nex we’ll look a he kinds o daa conracing ocials have diculy accessing.

Lack of past per formance data

Melanie Johnson, a Deense Deparmen conracing ocer, was asked o review

a 2006 bid by a company named AEY, Inc., o supply $298 million o ammuniion

o naional securiy orces in Aghanisan.21 Seveneen monhs aer he conrac

was approved on January 26, 2007, 22-year-old Eraim Diveroli, presiden o

AEY, was indiced or raud. e company was alleged o have supplied 40-year-

old subsandard ammuniion o he Aghans. In addiion, ens o millions o he

carridges were manuacured in China, in violaion o U.S. purchasing rules, and

a leas one o he ammo suppliers included a shell company ha was on a ederal

lis o possible illegal arms rackers.22

When she was inerviewed by congressional invesigaors, Johnson explained

ha she had asked he Deense Conrac Managemen Agency o review AEY’s

accouning sysems as well as he company’s nancial and ransporaion capa-

biliy. She go a posiive repor rom DCMA, she said.

“AEY had a hisory o saisacory perormance on similar conracs, showed

increasing revenue growh, adequae capializaion, and was considered low

risk or he evaluaed capabiliies,” DCMA Execuive Direcor Michell Howell

would laer ell Congress.23




Bu ha wasn’ he whole picure available o governmen ocials. I is rue ha

he company was no banned via he Excluded Pary Lis Sysem daabase ha is

run by he General Services Adminisraion. Muliple previous erminaions o

AEY conracs came o ligh ha had never been recorded in governmen daa-

bases. e Sae Deparmen also esied ha boh Diveroli and AEY were on agovernmen wach lis o poenial illegal arms rackers, a ac never shared wih

he Penagon. Indeed, Johnson laer old commitee invesigaors she was no

even aware o he exisence o he lis. An invesigaion by Governmen Execuive

magazine laer showed ha AEY had also been improperly classied as a “disad-

vanaged business” in he year preceding he Aghanisan conrac.24

Jeery Parsons, execuive direcor or Army Maeriel Command’s Provisional

Conracing Command, explained o Congress ha he prior erminaions had

been missed because hey ell below he minimum hreshold.25 He also deended

he Penagon’s ignorance o pas perormance inormaion because he company was required o volunarily submi previous governmen conrac experience wih

he bid. “is case is more abou a conracor who ailed o properly represen

heir company and ailed o comply wih he erms and condiions o he conrac

raher han a auly conracing process,” Parsons said. Ye he problem wih his

approach o conracing is ha mos companies would never volunarily share

inormaion ha could jeopardize a bid.

Lack of cost and pricing data

On November 4, 2004, a conracing ocer wih he ederal healh deparmen’s

Oce o Public Healh Emergency Preparedness issued a noice announcing

ha he agency inended “o negoiae a sole source procuremen wih BioPor

Corporaion … o provide up o 5 million doses o he Licensed Anhrax Vaccine

Adsorbed (BioraxM) in 5mL muli-dose vials o be delivered o he Sraegic

Naional Sockpile wihin 24 monhs o he conrac award dae.”26

In a repor or he Cener or American Progress, Scot Lilly laer calculaed ha

BioPor Corporaion billed he Penagon $1.3 billion or he vaccine, alhough ihad spen jus $250 million o manuacure i.27 Normal pro margins on such

conracs were ypically around 10 percen o producion coss—nohing even

close o he 400 percen ha BioPor is esimaed o have charged.28




e conracing ocials claimed hey didn’ know he acual cos o manuacure

he drug. Bu his inormaion should have been easy o obain. e vaccine was

developed by miliary scieniss a For Derick, Maryland. e acory or he

vaccine’s producion was buil by he sae o Michigan. And he law permis he

governmen o ask wha a produc coss so ha conracing ocers can negoiae

reasonable pro margins.

e 1962 ruh in Negoiaions Ac, or INA, requires companies seek-

ing a negoiaed governmen conrac o submi “cos and pricing” daa.29

Unorunaely, INA does no require cos and pricing daa or so-called “com-

mercial” iems, which prior o he mid-1990s were dened as iems sold o he

general public in subsanial quaniies.30

Governmen conracors successully lobbied o have he deniion o “commer-

cial” signicanly broadened, so ha oday no one really knows how many high-

margin conracs like Biorax he governmen is on he hook or.31

Mos asonishing abou his is ha he governmen has no way o recover he money,

which i was legally obliged o pay under he price negoiaed in he conrac. “In he

end, prices are jacked up because he cos daa isn’ ransparen, and he governmen

is he loser,” says Danielle Brian, execuive direcor o he Projec On Governmen

Oversigh. She poins ou ha even sysem pars o miliary planes, which have no

use ouside he batleeld, are oen classied as “commercial” iems.32

Lack of technical data

Col Deense LLC enjoyed a 15-year monopoly on he producion o he M4 gun

aer rs receiving a sole source conrac in 1994. Because he U.S. Army did no

buy he echnical inormaion on how o manuacure he weapon and open up

he purchasing o oher bidders, Col Deense has been able o charge monopoly

prices.33 And his despie he M4’s las-place nish in an Army reliabiliy es

agains hree compeiors in November 2007.34

In July 2009 he Penagon nally decided o buy he echnical daa package romhe company.35 And in March 2011 i pu ou a compeiive bid reques or he

M4 carbine while also soliciing bids o improve he weapon.36 Weapons expers

expec ha he new conracs will be cheaper and beter han he orginal.37




Boh he Biorax and he Col case demonsrae he high cos o relying on a

single source or a produc. “How does he governmen proec isel rom price

gouging when conracs are no compeiive?” wries Lilly. “One way is o hreaen

o urn o an alernae provider i a more reasonable price can’ be negoiaed.”

Indeed, one o he main ways o make sure ha axpayers ge he bes value is orequire “ull and open compeiion,” a pracice ha has been ederal law in vari-

ous orms daing back as ar as 1809. e idea is ha muliple conracors bidding

agains each oher will help keep prices down. oday he rules ha govern how

his should ake place are dened in he Federal Acquisiion egulaion—a sysem

o rules based in large par on he Compeiion in Conracing Ac o 1984—ha

requires ederal agencies o use eiher sealed bidding or compeiive negoiaion.38

And ye a surprisingly large percenage o governmen spending is no compei-

ively bid. Beween 2000 and 2008 awards o such conracs ballooned rom $73

billion o $173 billion. A 2010 Governmen Accounabiliy Oce sudy showedha 31 percen o governmen conracs in 2009 were never opened up o compe-

iion, while anoher 13 percen ha were opened o compeiion were awarded

aer receiving only one oer.39

e Commitee on Oversigh and Governmen eorm in he House o

epresenaives asked GAO o invesigae. One o he mos common reasons given

or he ailure o compee conracs was ha he conracing ocers could only nd

“one responsible source.” A major reason or relying on hese specic conracors,

according o he GAO, was ha “()or services supporing DoD weapons programs,

he governmen’s lack o access o proprieary echnical daa … and very limied

documenaion o he reasonableness o conracors’ proposed prices” has led o a

“decades-long reliance on specic conracors or experise.”

Wih sucien daa in hand, here is an easy, alhough ime-consuming, soluion

o his problem. e governmen can encourage indusry o compee by making

sure ha everyone has enough inormaion o bid on conracs. One ried and

esed way is o give preerences o small businesses and minoriy-owned compa-

nies o allow hem o grow o he size o ensure ha here are more “responsible

sources” wih a rack record o selling o he governmen. Anoher opion is orconracing ocers o “debundle” (divide ino smaller pars) a conrac and only

allow one company o win a par o he business, hereby also allowing ohers o

build a rack record o selling o he governmen. O course such a sysem is no

perec; major conracors have oen abused his sysem by acing as subconrac-

ors o small or minoriy-owned companies.40




Poor-quality data

Anoher signican problem or conracing ocials is ha inormaion in govern-

men daabases is no always accurae.

A 2009 GAO repor noed ha daa in he Excluded Paries Lis Sysem “may con-ain incomplee inormaion, he daabase has insucien search capabiliies, and

he poins o conac or inormaion abou exclusions are incorrec.” For example,

he GAO noed ha “a pary lised as “Company XYZ, Inc.” in EPLS would no

show up in a search i an agency le ou he comma in he name and looked or

“Company XYZ Inc.” insead.41

e GAO said ha i had also “idenied businesses and individuals ha were able

o circumven he erms o heir exclusions by operaing under dieren ideniies”

such as by regisering under ciious Social Securiy numbers or changing he

ownership deails or he company.

New daabases suer rom he exac same problems. e Projec On Governmen

Oversigh did a sudy o he newly esablished USAspending.gov daabase and noed

some airly subsanial misakes. “ese irregulariies include subsidiaries being lised

independenly o heir paren companies, companies being assigned muliple rankings,

and even a bizarre lising called ‘Governmen o he Unied Saes.’”42

For example, in he FY 2009 op 100 conracor ranking (accessed on April 20,

2010), he wachdog group discovered:

• IT Corporaion appeared wice—#17 and #97• Governmen o he Unied Saes is #22• Norhrop Grumman Corporaion is #3 and is Norhrop Grumman Ship

Sysems, Inc., subsidiary is #35• McDonnell Douglas Corporaion, which merged wih Boeing in 1997, is #66

The Federal Awardee Performance and Integrity Information System, or

FAPIIS—a brand new daabase—has similar problems. A search by he Projec On

Governmen Oversigh on FAPIIS or “Lockheed Marin” produced a lis o morehan 300 companies, “approximaely 200 o which were named “LOCKHEED

MAIN COPORION” bu wih dieren DUNS numbers (a unique

nine-digi idenicaion number provided by Dun & Bradsree). e res were

an assormen o Lockheed subsidiaries including several ha were lised muliple

imes wih he idenical name and minor dierences such as commas or he word




“INC.” ere was even a lising or a “LOCKHEED MAAIN COP.” POGO

sa also ried o nd inormaion abou a 2008 suspension or IBM bu were

unable o rack any such inormaion in FAPIIS.43

Finally, i is imporan o noe ha in an era o igher budges, poorly chosen

cus may acually make procuremen less ecien and ulimaely cos axpayersmore in he long run.

Lack of funding for good initiatives

is adminisraion has made creaive atemps o increase ransparency, such as

by seting up USAspending.gov and FAPIIS, bu hese eors are hreaened. e

2011 appropriaions bill slashed he $34 million Elecronic Governmen Fund,

which pays or hese eors, o $8 million, which will eecively reverse public

access o conrac daa.44

“W hile we will coninue o work wih agencies o improve he qualiy o daa on

he I Dashboard and USASpending, we will no be able o und developmen

eors o improve daa accuracy hrough auomaion and sreamlining,” Kundra

old Congress in May 2011. “For example, here will be a marked reducion in

echnical suppor provided o he conracor and granee communiies who

ener daa on ederal spending.”45

e USAspending.gov iniiaive was based on a sreamlined model daabase devel-

oped by he privae secor ha ironically allowed big businesses ha could aord o

pay or i win ye more business as opposed o leveling he playing eld by making

inormaion accessible o all comers and reduce coss by increasing compeiion.

Such daabases are available rom companies like Eagle Eye (now owned by

Bloomberg), FedSources, and Onvia, who oer a ee-based service o conracors

o help hem analyze previous awards. is includes he abiliy o research individ-

ual conracing ocers o help bidders ailor heir piches.46 While his analysis is

ee-based, all he raw daa is derived rom public sources provided by governmen.

ere are also public service eors ha oer ree daa ools o analyze conracors

such as he Projec On Governmen Oversigh’s Federal Conracor Misconduc

Daabase and OMB Wach’s edspending.org.

In he nex secion, we discuss several o hese new ederal iniiaives in greaer deail.




A brief history of recent reform efforts

e rs sep ha any business wishing o sell o he governmen mus ake is o

apply or a lising on he Cenral Conracor egisraion daabase creaed under

he Federal Acquisiion Sreamlining Ac o 1994. As o November 18, 2011, a

oal o 626,056 eniies were regisered.47 e Penagon alone esimaed ha i

does business wih 235,000 separae vendors.48

Conracing ocials have many ools o compare his muliude o poenial bid-

ders. For example, he Conracor Perormance Assessmen eporing Sysem, orCPAS, is a web-based sysem ha records how well conracors perorm. ose

daa are hen pu ino he Pas Perormance Inormaion erieval Sysem, or

PPIS, daabase, which conracing ocers can use o choose beween vendors.

Anoher key daabase is he Excluded Pary Lis Sysem, or EPLS, which con-

racing ocers are supposed o consul beore awarding conracs o make sure a

vendor isn’ suspended or debarred.

ese are jus our o dozens o daabases ederal ocials can use. (see box on nex

page) Each uses a dieren inerace, making i hard o obain a complee picure

o individual companies and assess hem agains each oher. e Obama admin-

israion’s atemps o address his issue are deailed below. Progress has been

hampered by he complexiy o he exising sysem, lack o good qualiy daa, and

by recen budge cus.

An attempt to combine databases

Under he 2009 Naional Deense Auhorizaion Ac, Congress required con-

racing ocers a agencies o check a new daabase called he Federal AwardeePerormance and Inegriy Inormaion Sysem, or FAPIIS, beore issuing any

conrac worh more han $150,000.49



An Alphabet Soup o Contractor Tracking Databases

1. Central Contractor Registration, or CCR, available at https://www.bpn.gov/ccr/deault.aspx.

2. Common Inormation Data Network Exchange, or CIDNE, available at http://www.issinc.com/solutions/cidne.html .

3. Contractor Perormance Assessment Reporting System, or CPARS, available at

http://nawctsd.navair.navy.mil/Resources/Library/Acqguide/pastper.htm#2 .

4. Department o Deense Revolving Door Database (not public)

5. Enorcement and Compliance History Online, or ECHO, available at http://www.epa-echo.gov/echo/.

6. Electronic Subcontracting Reporting System, available at http://www.esrs.gov/.

7. Excluded Parties List System, or EPLS, available at https://www.epls.gov/.

8. Federal Agency Registration, or FedReg, available at https://www.bpn.gov/ar/.

9. Federal Awardee Perormance and Integrity Inormation System, or FAPIIS, available at http://www.ppirs.gov/apiis.html.

10. Federal Business Opportunities, or FBO, available at https://www.bo.gov/.

11. Federal Election Commission Campaign Finance Disclosures, available at http://www.ec.gov/fnance/disclosure/srssea.shtml.

12. Federal Funding Accountability and Transparency Act Inormation Center, available at http://www.ata.org/ata/.

13. Federal Procurement Data System-Next Generation, or FPDS-NG, available at https://www.pds.gov/pdsngcms/.

14. GAO Bid Protests, available at http://www.gao.gov/legal/bidprotest.html.

15. GSA Schedule Library, available at http://www.gsaelibrary.gsa.gov/ElibMain/home.do.

16. Senate and Executive branch lobbying reports http://soprweb.senate.gov/index.cm?event=selectfelds .

17. Online Representations and Certications Application, or ORCA, available at https://orca.bpn.gov/.

18. Occupational Saety & Health Administration Violations, available at http://www.osha.gov/pls/imis/establishment.html .

19. Past Perormance Inormation Retrieval System, or PPIRS, available at http://www.ppirs.gov/.

20. Public Financial Disclosure Report or Executive branch ofcials (SF-278), available at http://www.usoge.gov/orms/s278.aspx.

21. SEC Filings (EDGAR), available at http://www.sec.gov/edgar.shtml.

22. Synchronized Predeployment and Operational Tracker, or SPOT, available at http://www.bta.mil/products/spot.html.

23. USAspending.gov, available at http://usaspending.gov/.

24. Wage Determinations On-Line, or WDOL, available at http://www.wdol.gov/.


FAPIIS is supposed o combine many o he exising governmen daabases o

allow ocials o check i bidders have aced any civil, criminal, or adminisraiveproceedings50 e daabase is also supposed o allow conracing ocers o check:

• Pas perormance evaluaions• ecords o suspensions and debarmens

https://www.bpn.gov/ccr/default.aspx

http://www.issinc.com/solutions/cidne.html

http://nawctsd.navair.navy.mil/Resources/Library/Acqguide/pastperf.htm#2

http://www.epa-echo.gov/echo/

http://www.esrs.gov/

https://www.epls.gov/

https://www.bpn.gov/far/

http://www.ppirs.gov/fapiis.html

https://www.fbo.gov/

http://www.fec.gov/finance/disclosure/srssea.shtml

http://www.ffata.org/ffata/

https://www.fpds.gov/fpdsngcms/

http://www.gao.gov/legal/bidprotest.html

http://www.gsaelibrary.gsa.gov/ElibMain/home.do

http://soprweb.senate.gov/index.cfm?event=selectfields

https://orca.bpn.gov/

http://www.osha.gov/pls/imis/establishment.html

http://www.ppirs.gov/

http://www.usoge.gov/forms/sf278.aspx

http://www.sec.gov/edgar.shtml

http://www.bta.mil/products/spot.html

http://usaspending.gov/

http://www.wdol.gov/

http://www.wdol.gov/

http://usaspending.gov/

http://www.bta.mil/products/spot.html

http://www.sec.gov/edgar.shtml

http://www.usoge.gov/forms/sf278.aspx

http://www.ppirs.gov/

http://www.osha.gov/pls/imis/establishment.html

https://orca.bpn.gov/

http://soprweb.senate.gov/index.cfm?event=selectfields

http://www.gsaelibrary.gsa.gov/ElibMain/home.do

http://www.gao.gov/legal/bidprotest.html

https://www.fpds.gov/fpdsngcms/

http://www.ffata.org/ffata/

http://www.fec.gov/finance/disclosure/srssea.shtml

https://www.fbo.gov/


https://www.bpn.gov/far/

https://www.epls.gov/

http://www.esrs.gov/

http://www.epa-echo.gov/echo/

http://nawctsd.navair.navy.mil/Resources/Library/Acqguide/pastperf.htm#2

http://www.issinc.com/solutions/cidne.html





• Adminisraive agreemens issued in lieu o suspension or debarmen• Non-responsibiliy deerminaions• Conracs ha were erminaed or aul and deecive price deerminaions• Incidens ha pu is employees in harm’s way 51

e daabase is no comprehensive—only daa rom he las ve years are available. A number o cases are also excluded—hose ha are setled wihou a convicion or

hose ha are setled wihou admission o aul or liabiliy. is means ha conrac-

ors now have an even more powerul incenive o make paymens or oherwise

setle misconduc cases o ensure hey are never recorded in he daabase.52

e bigges conracors, who can aord o negoiae setlemens, are rarely sus-

pended or debarred: An analysis by he sa o Sen. Bernard Sanders o Vermon

concluded ha Lockheed Marin, which earned $234 billion in ederal conracs

beween 2001 and 2010, has been charged a dozen imes wih governmen

conrac raud since 1995. e company has paid nes and setlemens o $68.4million a he very minimum. Likewise, Boeing, which received $196 billion in

ederal conracs beween 2001 and 2010, paid nes and setlemens o $88.9

million or more. And Norhrop Grumman, which received $147 billion in ederal

conracs beween 2001 and 2010, paid $519.8 million in setlemens and nes.53

Unless conracing ocers have beter daa o nd ou i companies like AEY or

Boeing have had problems in he pas, hey may well end up picking bad conrac-

ors. And so long as a company can say ou o rouble or ve years aer any

perormance problems are repored, he complains are auomaically erased rom

FAPIIS unless someone else calls in o complain. e lack o complains may sug-

ges ha he perormance has improved bu he company may also have simply

cracked down on whisleblowers.

I should be noed ha alhough conracing ocers are required o use he

FAPIIS daa o judge bidders, hey are no resriced o i. e Federal Acquisiion

egulaion allows conracing ocers o ask or addiional inormaion o deermine

wheher FAPIIS daa indicae ha he conracor had previously been subjeced o

adminisraive, civil, or criminal review. e conracing ocer can, “wih he assis-

ance o appropriae specialiss,” se “special sandards o responsibiliy” or many kinds o specialized goods and services in order o choose a winning bidder.54 As in

he case o AEY, however, he absence o any warning fags can mean ha a conrac-

ing ocer may no realize ha he company has produced shoddy work in he pas.

In March 2010 Presiden Obama promoed FAPIIS, saying: “[W]e’ll be able o




reduced projec compleion imes rom more han wo years o eigh monhs on

average.60 Kundra also launched Daa.gov o provide he public a way o easily obain

“high value, machine-readable daases” generaed by he governmen.61

Open governmen advocaes hailed hese moves. “e reurns rom hese e-gov-

ernmen iniiaives in erms o ransparency are priceless,” wroe Daniel Schuman,sa counsel a he Sunligh Foundaion, on March 23, 2011.62

Indeed, making hese daa available o he public is a good sar. Despie he ac

ha USAspending.gov makes available company names and addresses, goods and

service codes, place o perormance, spending gures, degrees o compeiion, and

limied socioeconomic inormaion, however, i is ar rom complee. Quie a lo

o inormaion such as he requess or proposals, nal conracs, specic delivery

and ask orders, any amendmens and modicaions o he nal conrac, or how

he vendor has perormed is no available—even hough all ha inormaion is

heoreically par o he public record.

e ederal governmen has successully implemened a more comprehensive

daabase or he $787 billion American ecovery and einvesmen Ac o 2009,

or AR. e creaion o ecovery.gov gave axpayers simple ools o rack he

money in real ime such as chars, graphs, and naional overview maps ha allowed

users o drill down o specic zip codes. In addiion, users were given ways o repor

raud, wase, or abuse o AR unding. e iniial resuls are promising. Less han

2 percen o ecovery Ac conracs and grans were repored or raud, signicanly

less han he ypical 5 percen o 7 percen o projecs.

Saes have also buil similar sysems successully. Virginia allows public access

o a websie (eva.virginia.gov) wih procuremen daa such as cos esimaes and

compeiive bids and oers. Oher saes like Arizona, Caliornia, Connecicu,

Florida, Idaho, Maine, Maryland, and Norh Carolina have similar e-procuremen

iniiaives, while oher saes like Minnesoa, Pennsylvania, and exas have used

sraegic sourcing o bundle purchasing and cu coss.63

Other reform efforts

Lawmakers have made oher modes eors, such as hen-Sen. Obama and Sen.

Coburn’s Srenghening ransparency and Accounabiliy in Federal Spending

Ac o 2008, which calls or a web daabase ha conains requess or proposals,

conracs, scope o work, pro incenive deails, and exen o compeiion.64




In May 2010 Sen. uss Feingold (D-WI) joined Coburn in inroducing he

Federal Conracing Oversigh and eorm Ac o 2010, which would have

expanded FAPIIS.65 Neiher bill passed.

On June 13, 2011, Presiden Obama signed an execuive order creaing an

11-member oversigh and accounabiliy board o “replicae” across he ederalgovernmen he success o ecovery Accounabiliy and ransparency Board, ha

was se up under he American ecovery and einvesmen Ac o 2009 o pro-

vide ransparency and preven raud, wase, and abuse. e same day, ep. Darrell

Issa (-CA) inroduced he Digial Accounabiliy and ransparency Ac ha

made almos he same recommendaions. (e Issa bill, however, has some sig-

nican problems. I rescinds he Coburn-Obama law ha creaed USAspending.

gov. Also, he law is inended o sunse in seven years, which would mean ha

he new daabase will cease o exis i Congress does no reauhorize i on ime.

a could creae problems down he road.)

e Obama adminisraion has also been aking a number o specic seps o

reduce wase, raud, and abuse in ederal conracing by issuing memos o encour-

age improvemens a agencies. For example, in response o recen GAO ndings,

he Oce o Federal Procuremen Policy issued a memo on Sepember 29, 2011,

ha direced agencies o ake seps across governmen o reduce duplicaive con-

racs or supplies or services.66 Likewise in response o a GAO repor ha ound

ha a number o ederal agencies had ailed o suspend and debar bad conracors,

he Whie House issued a memo on November 15, 2011, direcing agencies o

appoin a senior ocial o review hese policies, as well as provide more raining

on how o implemen exising governmen rules.67

e General Services Adminisraion is also creaing a new “Sysem or Award

Managemen,” or SAM, ha will combine eigh exising ederal procuremen sys-

ems ino a single daabase o make i easier o rack conracor perormance. e

rs phase o SAM is expeced o launch in April 2012.68 I his eor succeeds, i

will help resolve many o he issues we have discussed in his repor. Bu i may

no be easy o implemen such a sysem given how hard i has been o inegrae

older “legacy” governmen daabases. Such eors have ailed in he pas and i

may be wiser o design a new sysem rom scrach han o ry o x wha is an very complex and broken sysem in he rs place.

e reorms and advances we have described have yielded meaningul change. In he

nex secion, we lay ou nine concree seps ha Congress and he execuive branch

should ake o ruly sreamline ederal procuremen and deliver savings o he axpayer.




Recommendations

Conracing ocials rom Alaska o Aghanisan need o have easy and robus

means o pick he bes bidders as well as preven uure raud, wase, and abuse.

Here are nine recommendaions on how o make ha happen.

Replace the complex system of multiple contractor databases with

a single streamlined government-wide electronic system

e sysem should sore all pre- and pos-award conracing records, as well as

conrac evaluaion, and allow quick and easy comparisons across muliple pla-

orms. o be sure, here will be an upron cos o convering over older daabases,

bu he money expended on a single inegraed sysem will be considerably lower

han o mainain 25 dieren sysems. Even i access o cerain daa needs o be

resriced, i should be mainained in he same orma in order or auhorized

ocials o be able o search i easily.

Adopt a unique way to identify contractors in the single database

Federal auhoriies use a variey o codes—such as Cenral Conracor egisraion,

or CC; Commercial And Governmen Eniy, or CAGE; and Dun & Bradsree

numbers, or DUNS—o ideniy conracing eniies. None o hese are good

opions since individuals can easily obain muliple codes.

One way o deal wih his could be o creae a “elaed Business Enerprise” daa-

base, where he governmen creaes a Conracor Conrol Number. I a company has

more han one DUNS number, or example, i would be required o le all o hemin he elaed Business Enerprise daabase, associaed wih ha Conrol Number.




Publish performance data on contractors in the single database

In order o compare wo bidders oering he same produc a he same price, he key

deciding acor is going o be how each one perormed in he pas. I’s no enough o

simply publish ndings o aul or liabiliy. Deails o Correcive Acion equess, or

CAs, and setlemens mus also be included, in order o ideniy conracors hahave repeaed problems, and hose who pay nes o erase auls. Such daa are, in

ac, published rouinely in bid proes decisions made by he GAO.69

Create an automated system to disclose information in the

database unless a genuine reason is established to withhold

certain data pending formal review

Auomaic disclosure could help reduce he cos and number o Freedom o

Inormaion Ac requess as well as he ime required o reply o hem.70 oday muchinormaion is only released when an ineresed pary requess i, and aer a ime-

consuming and cosly review process. e resuls are hen ypically released direcly

o only he requeser even hough all daa released are by deniion public records.

Create an easy-to-use online training manual for federal contracting

officers across government in how to use this new database

While his may seem obvious, i is imporan o remember ha one o he reasons

why conracing ocers are no able o rack bad conracors is because hey are

unaware o he many daabases ha are ou here and how o use hem.

Create a “budget dashboard”

e governmen should promoe is new ools by developing an online “bud-

ge dashboard” ha allows he public o ollow he acual number o conracs,

dollar values, and he rue naure o compeiion—o decide or hemselves i

change is occurring. e daa should be easy o bulk-download and use in ou-side websies and applicaions.




Ensure that information is accurate and timely

Inspecors general and he GAO should conduc annual audis o procuremen

and conracor daa qualiy.

Narrow the “commercial” designation

e governmen should change he rules on wha producs and services are

deemed “commercial” so ha ocials have expanded access o underlying cos

and pricing daa. Producs ha are only or primarily sold o he governmen are

no subjec o marke compeiion and he axpayers risk being ripped o unless

here is a mechanism o preven proeering and o negoiae air prices. When

governmen buyers negoiae prices, hey mus be able o make sure ha axpayers

do no ge ripped o by he inaccurae labeling o an iem or service as “commer-

cial,” which prevens hem rom geting he bes deal.

Buy technical data from companies with monopoly contracts

Such daa are necessary in order o allow ohers o compee or he same service

and allow marke orces o work. ese daa are someimes priced ouside govern-

men reach bu he resuling lack o compeiion causes qualiy o all and prices o

rise. Governmen needs o negoiae air prices or such echnical daa.




Conclusion

Te award o a contract to a supplier based on lowest evaluated price alone can be

alse economy i there is subsequent deault, late deliveries, or other unsatisactory

perormance resulting in additional contractual or administrative costs. While it

is important that Government purchases be made at the lowest price, this does not

require an award to a supplier solely because that supplier submits the lowest oer.

A prospective contractor must afrmatively demonstrate its responsibility, includ-

ing, when necessary, the responsibility o its proposed subcontractors.

— Federal Acquisition Regulation71

How o preven raud, wase, and abuse in order o save money and reduce he ed-

eral budge has been an imporan opic o discussion in Washingon or many years.

Scandals rom he $7,600 coee machine and a $670 armres in he C-5 cargo plane

in 1985 o he billions allegedly wased by Halliburon in Iraq in 2003 have sown

deep suspicion in he public mind ha conracors are ou o bilk he axpayer. 72

In order o make sure axpayers ge he bes value or heir money, ederal

ocials rely on complex daabases ha hey can look up o learn abou he

companies ha wan o ge work rom he governmen. Using hese daabases is

dicul: Each o he daabases is dieren and hus no easy o compare. Also,

he daa are someimes inaccurae or incomplee parly because some inorma-

ion is sel-repored by he conracors.

Conracing ocers like Charles Smih will never be able o pick he bes conrac-

or unless we improve and consolidae hese daabases. Despie he ac ha some-

hing like $80 billion is spen on I sysems, no one in he ederal governmen, le

alone he general public, has any simple way o nd ou i a conracor has done agood job or a bad one in he pas.




In summary, hese are he nex seps ha he ederal governmen needs o underake:

• eplace he complex sysem o muliple conracor daabases wih a single

sreamlined governmen-wide elecronic sysem ha would sore all pre- and

pos-award conracing records as well as pas perormance evaluaions.

• Adop a unique way o ideniy conracors in he single daabase such as by

creaing a “elaed Business Enerprise” daabase.

• Publish pas perormance daa or all conracors in his daabase.

• Creae an easy-o-use online raining manual or ederal conracing ocers

across governmen in how o use his new daabase.

• Make daa auomaically available unless a genuine reason is esablished o wih-

hold cerain daa or ocial review rs.

• Creae an online “budge dashboard” o allow he public o ollow ederal con-

rac spending in real ime.

• Make sure ha inormaion is accurae and imely by requiring annual inspec-

ions o he qualiy o his daa.

• Change he rules on wha producs and services are deemed “commercial” in

order o make sure ha he governmen can have access o underlying cos and

pricing daa o negoiae air prices.

• Buy echnical daa rom companies ha have a monopoly conrac in order o

allow ohers o compee or he same service and allow marke orces o work.

e dening principle should be presumpion o ransparency raher han con-

cealmen o inormaion. e value o such inormaion goes way beyond jus

public condence in he governmen and he conracing process. Wih open

access o inormaion, genuine compeiion will increase because he emphasis

will be on qualiy o producion and value o axpayers, which is ulimaely key in an era o budge shoralls.




About the author

Pratap Chatterjee is a journalis and he auhor o wo books on miliary con-

racing—Iraq, Inc, (Seven Sories Press, 2004) and Halliburon’s Army (Naion

Books, 2009) He worked as a visiing ellow a he Cener or American Progress

rom 2010 o 2011.

Acknowledgements

is repor was writen wih he help o he Doing Wha Works eam, noably

Gadi Decher and eece ushing. I drew on he work o ohers on he eam such

as Scot Lilly, aj Sharma, and Marsha Simon. Will omas provided valuable

eedback a every sage o he repor, as well as he ursday wriing workshop

group, which helped me hone my journalisic wriing ino a more rigorous policy

orma. Ed Paisley and his eam helped edi his repor, and Sarah Warell helpedguide he nal produc.

My work in his eld over he pas 10 years has been inormed a every sep o he

way by many whisleblowers and by good governmen groups like he Projec On

Governmen Oversigh and OMB Wach who have led he call or ransparency

in governmen by highlighing raud, wase, and abuse in procuremen. ese wo

wachdog groups have helped galvanize change by launching “FedSpending.gov”

and he “Federal Conracor Misconduc Daabase.”

I wan o especially hank Scot Amey, Neil Gordon, and Nick Schwellenbach o

he Projec On Governmen Oversigh and Gary erkildsen o OMB Wach,

all o whom commened on dras o he repor, as did ichard Loeb, ormerly o

he Oce o Federal Procuremen Policy and Charles Smih, ormer head o he

conracing division o he Army Field Suppor Command.

Vivek Kundra and Dan Gordon a he Oce o Managemen and Budge, boh

o whom have now moved on o new pursuis, were also kind enough o help me

undersand he reorm eors a he Whie House.

Las, no leas, I would like o hank Kaherine McFae and he Ford Foundaion,

which provided he nancial suppor o make his repor possible.




Endnotes

1 President Barack Obama, “Deivering an Ecient, Eective, and Ac-countabe Government,” Executive order, june 13, 2011.

2 Chares Smith, interview with author, May 11, 2011.

3 USAspending.gov was rst aunched in December 2007 to compywith the edera unding Accountabiity and Transparency Act,or ATA, o 2006. The Obama administration oowed up with a

“Memorandum on Transparency and Open Government” on january21, 2009, which in turn aunched other websites ike Data.gov inMay 2009. or more, see: Peter Orsag, “Open Government Directive,”December 8, 2009, avaiabe at http://www.whitehouse.gov/open/documents/open-government-directive. The edera AwardeePerormance and Integrity Inormation System was aunched in Apri2010 as a resut o the sca 2009 Deense Authoriation Act. A pubicversion was unveied on Apri 15, 2011. See: “The edera AwardeePerormance and Integrity Inormation System (APIIS),” avaiabe athttp://www.ppirs.gov/apiis.htm .

4 Scott Shane and Ron Nixon, “In Washington, Contractors Take OnBiggest Roe Ever,”The New York Times, ebruary 4, 2007.

5 Water Pincus, “lawmakers Want More Data on Contracting Out Intei-gence,” The Washington Post , May 7, 2006.

6 Government Accountabiity Oce, “Contingency Contracting:Improvements Needed in Management o Contractors Supporting

Contract and Grant Administration in Iraq and Aghanistan,” GAO-10-357, Report to Congressiona Committees, Apri 2010.

7 or edera Procurement Data System gures, see: “Prime AwardSpending Data,” avaiabe at http://usaspending.gov/expore?sca_year=2010&tab=By+Agency&romsca=yes&carryters=on&Submit=Go.

8 IT spending gures are generated by the Oce o Managementand Budget rom Cinger-Cohen Act reporting requirements. See:Government Accountabiity Oce, “Inormation Technoogy: OMB’sDashboard Has Increased Transparency and Oversight, but Improve-ments Needed,” GAO-10-701, Report to Congressiona R equesters,juy 2010.

9 edera Acquisition Institute, “Annua Report on the edera Acquisi-tion Workorce” (1990, 2000, 2009).

10 Number o current sta at Deense Contract Management Agency

obtained rom: “Deense Contract Management Agency (DCMA),”avaiabe at http://www.dcma.mi/about.cm (ast accessed june2011). Stang eves in 2000 obtained rom: Department o Deense, “DoD estabishes Deense Contract Management Agency,”Press reease, Apri 3, 2000.

11 David Drabkin, Testimony beore the Senate Committee on Home-and Security and Government Aairs, August 5, 2009.

12 Improper payment cacuations arrived at using average ederapercentage o improper payments across edera government o 5.49 percent posted on White House bog: jerey zients, “ImproperPayments Progress,” November 16, 2010. http://www.whitehouse.gov/bog/2010/11/16/improper-payment-progress

13 Savings gures obtained rom estimates posted on: “Deense Con-tract Audit Agency (DCAA),” avaiabe at http://www.dcaa.mi/ (astaccessed june 2011).

14 Tom Carper, U.S. Senator or Deaware, “Bipartisan Group o Con-gressiona leaders Urge Department o Deense toImprove Eorts to Identiy and Eiminate Improper Payments,” Pressreease, Apri 29, 2011, avaiabe at http://carper.senate.gov/pubic/index.cm/pressreeases?ID=bb288b32-dbc7-45d4-95d5-3c8500d-ba14; DoD Needs to Improve High Doar Overpayment Review andReporting (Department o Deense, 2011), avaiabe at http://www.dodig.mi/audit/reports/y11/11-050.pd.

15 Robert M. Gates, “Deense Budget Recommendation Statement,”Apri 6, 2009, avaiabe at http://www.deense.gov/speeches/speech.aspx?speechid=1341.

16 Oce o Management and Budget, “Anaytica Perspectives: Budgeto the United States Government, isca Year 2011”,(2010).

17 Robert Brodsky, “Pentagon abandons insourcing eort,” Govern-

ment Executive, August 10, 2010.

18 Ra Sharma, “A $400 Biion Opportunity: 10 Strategies to Cut theat Out o edera Procurement” (Washington: Center or AmericanProgress, 2010).

19 Chares Smith, “Saeguarding Taxpayer Doars in Iraq: An Insider’sView o Questionabe Contracting Practices by KBR and the Penta-gon,” Testimony beore the Democratic Poicy Committee, juy 9,2008.

20 Smith, interview with author.

21 U.S. House o Representatives Committee on Oversight and Govern-ment Reorm, “The AEY Investigation” (2008),avaiabe at http://democrats.oversight.house.gov/images/stories/documents/20080624102358.pd.

22 C. j. Chivers, “Suppier Under Scrutiny on Arms or Aghans,” The New

York Times, March 27, 2008; U.S. Attorney’s Oce, Southern Districto orida, “Munitions Suppier, His Company, and Others Indictedor lying to Army on Government Munitions Contract,” Press reease,june 20, 2008.

23 Eiabeth Newe and Robert Brodsky, “lawmakers sam State,Deense ocias or not sharing inormation on weapons deaer,”Government Executive, june 25, 2008.

24 Ibid.

25 Ibid.

26 An archived copy o the soicitation notice can be seen at: “Q --Purchase o BioThrax(TM),” avaiabe at https://www.bo.gov/index?s=opportunity&mode=orm&tab=core&id=ac5637cd4e712e14dd80c6069b6288&_cview=1.

27 Scott liy, “Getting Rich on Unce Sucker” (Washington: Center or

American Progress, 2010).

28 Scot A. Arnod and others, “Deense Department Prot and Contractinance Poicies and Their Eects on Contract and Contractor Peror-mance” (Aexandria, VA: Institute or Deense Anayses, 2009).

29 “Cost or pricing data: Truth in Negotiations,” Sec. 254b. o Tite 41 o the U.S. Code.

30 The Truth In Negotiations Act exempts rom its coverage a contracto any doar amount where the agency is acquiring a “commerciaitem” as dened by the edera Acquisition Reguation 15.403-1(c).BioPort caimed that its vaccine was a “commercia item”—despitethe act that consumers cannot buy it on the open market. Origina-y deveoped by miitary scientists at ort Detrick, Maryand, in the1960s, the state o Michigan pubic heath service obtained a icenseto produce the vaccine in 1970. At the time, BioThrax was used tohep protect mi workers in the textie industry who processedanima hair contaminated with naturay occurring anthrax.

31 The denition o “commercia” was broadened signicanty underthe edera Acquisition Streamining Act o 1994, or ASA, andsigned into aw on October 13, 1994, by President Bi Cinton.

32 Emergent tod the Center or American Progress that it assumedsubstantia risk or the deveopment and manuacturing o thevaccine and that the price “was based on independent negotiationswith two agencies o the U.S. government,” both o which “deter-mined the price to be air and ustied.”

http://www.whitehouse.gov/open/documents/open-government-directive



http://usaspending.gov/explore?fiscal_year=2010&tab=By+Agency&fromfiscal=yes&carryfilters=on&Submit=Go



http://www.whitehouse.gov/blog/2010/11/16/improper-payment-progress


http://www.dcaa.mil/%20(last%20accessed%20June%202011)


http://carper.senate.gov/public/index.cfm/pressreleases?ID=bb288b32-dbc7-45d4-95d5-3c850f0dba14



http://www.dodig.mil/audit/reports/fy11/11-050.pdf


http://www.defense.gov/speeches/speech.aspx?speechid=1341


http://democrats.oversight.house.gov/images/stories/documents/20080624102358.pdf


https://www.fbo.gov/index?s=opportunity&mode=form&tab=core&id=ac5637cd4fe712e14dd80c6069b628f8&_cview=1




























33 Richard lardner, “Armsmakers ca hired guns as U.S. shops or newrife,” Associated Press, May 25, 2011; “Cot’s Grip on Army RifeUnder ire,” Associated Press, Apri 21, 2008.

34 Christian lowe, “M4 Carbine ares Poory in Dust Test,” Miitary.com,December 18, 2007.

35 Matthew Cox, “Army acquires rights to M4,” Army Times, juy 6, 2009.

36 An archived copy o the soicitation notice can be seen at: “10 -- M4/M4A1 Carbine 5.56mm,” avaiabe athttps://www.bodaiy.com/archive/2011/03-March/03-Mar-2011/

BO-02390358.htm.

37 Cox, “Army acquires rights to M4”; lardner, “Armsmakers ca hiredguns as U.S. shops or new rife.”

38 There are nine exceptions to the requirement or “u and opencompetition”—imited sources, urgency, industria capabiity,internationa agreements (such as oreign miitary saes), expressauthoriation under the aw, nationa security, pubic interest, smapurchases, and reprocurement contracts when a contractor hasdeauted.

39 Government Accountabiity Oce, “edera Contracting: Opportuni-ties Exist to Increase Competition and Assess Reasons When OnyOne Oer Is Received,” GAO-10-833, Report to the Committee onOversight and Government Reorm, House o Representatives, juy2010.

40 There have been a number o investigations into the abuse o the

minority contracting rues known as Schedue 8(a). Robert O’Harrowjr.’s series or The Washington Post that ran on November 26, 2010,gives an in-depth ook into Schedue 8(a) contracts in Aaska. See:“Two Words: Government Contractors, Aaska Natives,” The Wash-ington Post, avaiabe at http://www.washingtonpost.com/wp-srv/specia/nation/aaska-native/index.htm.

41 Government Accountabiity Oce, “Excuded Parties list System:Suspended and Debarred Businesses and Individuas ImproperyReceive edera unds,” GAO-09-174, Report to CongressionaRequesters, ebruary 2009.

42 letter rom Scott H. Amey to the Honorabe Martha N. johnson,Apri 22, 2010, avaiabe at http://www.pogo.org/pogo-es/etters/contract-oversight/co-cmd-20100422.htm.

43 Nei Gordon, “APIIS irst Impressions,” Proect on GovernmentOversight, Apri 18, 2011, avaiabe at http://pogobog.typepad.com/pogo/2011/04/apiis-rst-impressions-.htm.

44 “letter rom Vivek Kundra to Senator Thomas R. Carper.” May 24,2011. Copy avaiabe at http://carper.senate.gov/pubic/index.cm/pressreeases?ContentRecord_id=e6388a-3810-46e4-bc2d-5742a1edece9

45 Ibid.

46 Eage Eye is at http://www.usaspending.org/ (the company wasrecenty acquired by Boomberg). edSources is at http://www.edsources.com/.

47 The atest numbers in the Centra Contractor Registration databasecan be viewed here: “Centra Contractor Registration,” avaiabe athttps://www.bpn.gov/ccr/deaut.aspx. The numbers fuctuate overtime.

48 Report to Congress on Contracting raud (Department o Deense,2011).

49 “The edera Awardee Perormance and Integrity InormationSystem (APIIS).”

50 An archived copy o the award to IBM can be seen at: “ARCHITEC- TURE AND OPERATIONS SUPPORT CONTRACT,” avaiabe at https://www.bo.gov/?s=opportunity&mode=orm&id=5c2a640a6cb68247a2ce6a72a88243&tab=core&_cview=0.

51 The edera Awardee Perormance and Integrity Inormation Sys-tem, or APIIS, was created under Section 872 o the Duncan HunterNationa Deense Authoriation Act or isca Year 2009. Detais areavaiabe at edera Acquisition Reguation Parts 9.1, 15.407, 42.15, &52.209.

52 “Contract Spending: Escaping the Dark Ages,” Proect on Govern-ment Oversight, May 20, 2010. See aso: letter rom Scott H. Ameyto the Commission on Wartime Contracting, March 7, 2011, avai-abe at http://www.pogo.org/pogo-es/etters/contract-oversight/co-cmd-20110307.htm.

53 Report to Congress on Contracting raud.

54 “Responsibe Prospective Contractors,” Subpart 9.1 o the ederaAcquisition Reguation.

55 Matthew Weiget, “Ocias mark rues or maor contractor data-base,” edera Computer Week, March 23, 2010

56 Tom lee, “APIIS May Be the Worst Government Website We’ve EverSeen, Sunight oundation Bog, Apri 19, 2011; Gary Therkidsen,“APIIS is a Steaming Pie,” OMB Watch Bog, Apri 25, 20 11; DarrenBarbee, “New edera website oers so much government transpar-ency it’s invisibe,” ort Worth Star-Teegram Bog, Apri 15, 2011.

57 Eiabeth Wiiamson, “OMB Oers an Easy Way to oow the Money,”The Washington Post , December 13, 2007.

58 “edera IT Dashboa rd,” avaiabe at http://www.itdashboard.gov/.

59 Vivek Kundra, “Removing the Shroud o Secrecy: Making Govern-ment More Transparent and Accountabe,” Testimony beore theSenate Committee on Homeand Security and Governmenta Aairs,Subcommittee on edera inancia Management, GovernmentInormation, edera Services, and Internationa Security, March 23,2010.

60 Vivek Kundra, “Inormation Technoogy Oversight,” Testimonybeore the House Committee on Appropriations, Subcommittee oninancia Oversight and Genera Government Inormation, March17, 2011.

61 Ibid.

62 Danie Schuman, “Budget Technopocaypse: Proposed Congressio-na Budgets Sash unding or Data Transparency,” Sunight ounda-tion Bog, March 23, 2011.

63 “eVA: Virginia’s Tota e-Procurement Soution,” avaiabe at http://eva.

virginia.gov/; “Code o Virginia,” avaiabe athttp://eg1.state.va.us/000/cod/2.2-4342.HTM. See aso: “E-Procure-ment Techniques,” avaiabe at http://www.pewcenteronthestates.org/initiatives_detai.aspx?initiativeID=56289;“requenty AskedQuestions,” avaiabe at http://eprocurement.nc.gov/Contact%20Us/Contact_Us_Genera_AQ.htm.

64 “Obama and Coburn Introduce Strengthening Transparency andAccountabiity in edera Spending Act o 2008,” Press reease, june3, 2008. or the u text o the bi, see: “Bi Text - 110th Congress(2007-2008),” avaiabe at http://thomas.oc.gov/cgi-bin/query/?c110:S.3077.

65 Gary Therkidsen, “eingod Introduces Moderate ContractingReorm Bi Pubication Date,” OMB Watch, May 7, 2010. or the utext o the bi, see: “Bi Text - 111th Congress (2 009-2010),” avaiabeat http://thomas.oc.gov/cgi-bin/query/?c111:S.3323.

66 Danie I. Gordon, “Memorandum to the heads o executive depart-

ment and agencies. Subect: Deveopment, Review and Approva o Business Cases or Certain Interagency and Agency-Specic Acquisi-tions,” September 29, 2011.

67 jacob j. lew, “Memorandum to the heads o executive depart-ment and agencies. Subect: Suspension and debarment o ederacontractors and grantees,” November 15, 2011.

https://www.fbodaily.com/archive/2011/03-March/03-Mar-2011/FBO-02390358.htm


http://www.washingtonpost.com/wp-srv/special/nation/alaska-native/index.html


http://www.pogo.org/pogo-files/letters/contract-oversight/co-fcmd-20100422.html


http://pogoblog.typepad.com/pogo/2011/04/fapiis-first-impressions-.html


http://carper.senate.gov/public/index.cfm/pressreleases?ContentRecord_id=e6f388fa-3810-46e4-bc2d-5742a1edece9



http://www.fedsources.com/



https://www.fbo.gov/?s=opportunity&mode=form&id=5c2a640fa6cb68247a2ce6a72a88f243&tab=core&_cview=0





http://www.itdashboard.gov/

http://leg1.state.va.us/000/cod/2.2-4342.HTM

http://www.pewcenteronthestates.org/initiatives_detail.aspx?initiativeID=56289


http://eprocurement.nc.gov/Contact%20Us/Contact_Us_General_FAQ.html


http://thomas.loc.gov/cgi-bin/query/z?c110:S.307










http://leg1.state.va.us/000/cod/2.2-4342.HTM

http://www.itdashboard.gov/























68 Genera Services Administration, “System or Award Management:Creating Eciencies through Integration and Consoidation,” (De-cember 2011).

69 Nei Gordon, “It’s O-ish-a: POGO Thinks Past Perormance Inorma-tion Shoud be Made Pubic,” Proect on Government Oversight,january 27, 2011. or GAO bid protest decisions, see: “lega Deci-sions,” avaiabe at http://www.gao.gov/ega/index.htm.

70 john Podesta, “The reedom o Inormation Act: Ensuring Transpar-ency and Accountabiity in the Digita Age,” Testimony beore theU.S. Senate Committee on the judiciary, March 15, 2011.

71 edera Acquisition Reguation. or the u text, see: “Subpart 9.1—Responsibe Prospective Contractors,” avaiabe at https://www.acquisition.gov/ar/05-30/htm/Subpart%209_1.htm.

72 Daniee Brian, “Economic Impacts o the Nationa Security Buid-up:Government Procurement Practices,” Speech or Counci on oreignReations, November 8, 2002.

http://www.gao.gov/legal/index.html

https://www.acquisition.gov/far/05-30/html/Subpart%209_1.html




http://www.gao.gov/legal/index.html



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