House Votes Broad Contracting Changes The House has approved far-reaching changes in contracting rules as part of the 2009 Defense authorization bill. The “Clean Contracting” amendment, sponsored by Oversight and Government Reform Committee Chairman Henry Waxman, D-CA, requires agencies to minimize the use of sole-source and cost-plus contracts and mandates that all contractors on multiple award contracts be given a fair opportunity to bid on task orders. The amendment’s provisions had previously been approved by the House, but their inclusion in the Defense authorization bill – “must-pass” legislation – ensures that they will be considered by the Senate. The authorization bill, H.R. 5658, was approved May 22 on a 384-23 vote. The White House has threatened a veto unless several provisions are removed. The bill would impose a three-year moratorium on public-private job competitions in the Defense Department, and directs the Army to adopt contracting changes recommended by the Gansler Commission. Those recommendations include putting general officers in charge of procurement, allowing expedited hiring authority for acquisition personnel, and creating a fund to train the acquisition workforce. The Army has already begun implementing some of the changes. Waxman called his “Clean Contracting” amendment “a comprehensive package” of reforms. Its provisions, according to a summary released by the Oversight Committee: Enhanced Competition Minimizing sole-source contracts. This section requires large federal agencies to implement a plan to promote competition and minimize the use of noncompetitive contracts. Waxman said noncompetitive contracts have soared from $67 billion in 2000 to $207 billion in 2006. Limiting the length of non-competitive contracts. This section would limit the duration of no-bid contracts awarded in emergencies such as Hurricane Katrina to nine months. Enhancing competition in multiple award contracts. This section would give all contractors under a multiple award contract a fair opportunity to bid for work under the contract. Curbing Abuse-Prone Contracts Minimizing cost-plus contracts. This section would require agencies to minimize the use of cost-reimbursement-type contracts. “Cost-plus contracts leave the government vulnerable to wasteful spending since they provide the contractor with little or no incentive to control costs,” Waxman said. “Spending on this type of contract rose from $62 billion in 2000 to $110 billion in 2005.” Limiting lead-system integrators. This section would prohibit contracts that rely on private contractors to serve as “lead-system integrators” who both manage and perform the contract. Waxman charges that LSI contracts, such as the Coast Guard’s “Deepwater,” have led to billions in wasteful spending. Prohibiting excessive pass-through charges. This section would require regulations to prevent contractors from billing taxpayers for excessive markups on work that is done by subcontractors. Waxman said, “This provision would prevent the abuses that occurred after Hurricane Katrina, where taxpayers were charged $2,480 for “blue roofs” that actually cost under $300.” Minimizing abuse of commercial item authority. This section would require additional cost and pricing information for goods and services “of a type” found in the commercial market place, requiring contractors to justify prices for items that are not regularly sold to commercial customers. Restricting interagency contracts. This section would require regulations to prevent abuse of interagency contracts. Waxman said the provision is designed to prevent abuses like the one that occurred when the Department of Defense hired interrogators at Iraq’s Abu Ghraib prison under a contract to provide information technology run by the Department of the Interior. Linking award fees to acquisition outcomes. This section would require award fees to be paid only when a contractor has at least a satisfactory level of performance. A series of audit reports have documented that contractors often receive large bonuses even on contracts that are far behind schedule and over budget. Contract Transparency Disclosure of CEO salaries. This section requires privately held contractors who hold at least $25 million in federal contracts and derive 80% of their revenue from the government to disclose the compensation of their top executives. Database for suspension and debarment. This section would create a single governmentwide database listing companies that have been suspended or disbarred. Improvements to the Federal Procurement Data System. This section enhances the transparency of multiple-award and interagency contracts by requiring additional reporting to the existing federal procurement database. Anti-Fraud Provisions Whistleblower protection for contractor employees. This section would provide whistleblower protections for all federal contractor employees. Waxman said it is a response to testimony that contractors working for KBR “were fired after reporting egregious examples of wasteful spending.” Mandatory fraud reporting. This section would require both domestic and overseas contractors to report violations of federal criminal law and overcharging. Preventing contractor conflicts of interest. This section requires federal regulations to prevent organizational and personal conflicts of interest among contractor employees. The Government Accountability Office has found that there are no rules governing personal conflicts of interest by contractors. GAO access to contractor employees. This section would give GAO the authority to interview contractor employees. Acquisition Workforce Improvements Acquisition workforce development fund. This section would require agencies to devote at least an additional 2% of their service contracting budgets to oversight, planning and administration. Waxman said the provision is designed to relieve pressure on “a greatly over-extended workforce.” Contingency contracting corps. This section would authorize the establishment of a contingency contracting corps that would handle contracting in a national emergency.