The Accountability in Contracting Act requires that large federal agencies minimize the use of no-bid contracts, which are not subject to competition. Under this legislation, when such non-competitive contracts are granted to meet urgent needs, they are not permitted to last for longer than one year and agencies must provide public justification for their decision to award the contract without open bidding. The bill also encourages federal agencies to award contracts with fixed costs, rather than giving out “cost-plus contracts” which are considered less efficient because they pay contractors for all expenses plus a fixed percentage of profits, providing little incentive for contractors to control costs. The bill requires that Congress be informed of any contract overcharges that exceed $10 million. Finally, the bill institutes new regulations for federal procurement officials, mandating that they disclose any occasions when federal contractors make job offers to their relatives and preventing officials from awarding contracts to a former employer for one year.
The Middle-Class Position:
The Middle Class Supports. Whether it’s military contractors accepting kickbacks in Iraq, no-bid contracts with a guaranteed profit margin for companies cleaning up after Hurricane Katrina, or politically-connected businesses landing lucrative contracts to provide materials to the Department of Education, it is middle-class taxpayers who ultimately foot the bill. With spending on federal contracts reaching more than $400 billion in 2006 – more than double the level in 2000 – middle-class taxpayers have more incentive than ever to demand efficient spending. Yet lax oversight is provoking increased concern about waste, fraud, and profiteering. Combined with legislation that protects whistleblowers who reveal cases of fraud, this bill represents an important step toward making sure that taxpayer money is spent effectively and efficiently.
From the Experts:
“The challenges faced by [the Department of Defense] on its reconstruction and support contracts often reflect systemic and long-standing shortcomings in DOD’s capacity to manage contractor efforts. Such shortcomings result from poorly defined or changing requirements, the use of poor business arrangements, the absence of senior leadership and guidance, and an insufficient number of trained contracting, acquisition and other personnel to manage, assess and oversee contractor performance. In turn, these shortcomings manifest themselves in higher costs to taxpayers, schedule delays, unmet objectives, and other undesirable outcomes.”–David M. Walker, Comptroller General of the United States (February 15, 2007)
“The government is shirking its responsibility to protect its constituents, the American public, by not vetting contractors to determine whether they are truly responsible... Federal agencies seem more concerned with awarding contracts quickly rather than ensuring that the government gets the best goods or services at the best practical price from responsible contractors… [Current] standards have not prevented the government from awarding contracts to… contractors that have defrauded the government, violated laws and regulations, had poor work performance during a contract, or had their contracts terminated for default. Continuing to award contracts to such contractors undermines the public’s confidence in the fair-play process and exacerbates distrust in our government. It also results in bad deals for the agency and for the taxpayer.”-Scott Amey, General Counsel, Project On Government Oversight (July 18, 2007)
Beyond this Bill:
This legislation takes vital steps to rein in corrupt or simply careless contracting practices when it comes to monitoring costs, but it does not address the other side of the contracting problem: the quality of work contractors actually perform. Preventing mismanagement of government contracts and taking steps to ensure that contractors that fail to act responsibly and comply with federal regulations are penalized is as important to middle-class Americans who want to see government operating effectively as limiting no-bid contracts and cost overruns. Moreover, this raises the larger question of whether outsourcing work to government contractors is necessarily the most effective way to perform public functions – in some cases, public employees may fulfill these responsibilities more capably and efficiently than contractors.
Value of federal government contracts in 2006: $412.1 billion
Percentage of that money that was awarded through a “full and open” bidding process: less than half
Approximate value of federal contracts that went to just one company – the Halliburton Corporation – in 2005: $5.9 billion
Amount the federal government collected in 2006 from settlements and judgments in cases involving allegations that contractors defrauded the government: $3.1 billion
Amount the top 50 federal contractors spent on lobbying in 2006: $146 million
Amount these contractors donated to federal campaigns in 2006: $15 million
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