Morning Smoke: House Kicks Off Investigation into Pentagon Contracting

House seeks records in contracting case [The Washington Post]

Lobbyists pushed off advisory panels [The Washington Post]

Release of secret reports delayed [The Boston Globe]

Fed Tightens Rules on Regional Directors [The Wall Street Journal]

Mark Pittman, Reporter Who Challenged Fed Secrecy, Dies at 52 [Bloomberg]

Obama executive order targets payment errors [Government Executive]

New authority to speed up acquisition hires [Federal Times]

Bernanke, Geithner at hearings this week [The Hill]

How Big Pharma Profits from Swine Flu [BusinessWeek]

Agencies Withhold Information from the GAO

Last week, The Hill reported that federal agencies have not been completely forthcoming with information requested by the Government Accountability Office (GAO) as part of the congressional auditing group's investigations. 

In a letter to Senator Chuck Grassley (R-Iowa), acting GAO head Gene Dodaro cited several instances in which the State Department, the FBI, the Department of Defense (DoD) the Department of Justice (DOJ), and the White House have stonewalled the agency's investigative efforts.  As reported by The Hill:

And This Year's Qui Tammy Award Goes To...

Popular music has the Grammys, pro wrestling has the Slammies, and Bay Area Music magazine used to honor the California music scene with the Bammies.

So when the Department of Justice makes its annual announcement of how much money the government recovered in False Claims Act cases, POGO thinks the occasion should be celebrated with a special award:

The Qui Tammies.

Qui tam (pronounced "key tam") is the name given to False Claims Act lawsuits filed by private persons on behalf of the United States alleging fraud in a wide variety of federally funded programs: Medicare and Medicaid, defense programs, federally insured mortgage and other federal housing programs, disaster relief loans, and agricultural subsidies. The Qui Tammy award statuette should be a carved figure of Abraham Lincoln since the False Claims Act is also called the “Lincoln Law.” It was enacted during the Civil War to deal with unscrupulous defense contractors who sold defective equipment to the Union Army.

Last week, Justice announced the federal government recovered $2.4 billion in settlements and judgments in cases involving fraud against the government in fiscal year 2009. (According to Taxpayers Against Fraud (TAF), the total is actually much higher because Justice does not include recoveries in criminal False Claims Act cases or settlement money distributed to the states, which accounts for about 45 percent of all money collected in Medicaid fraud cases. TAF claims the true total amount of recoveries by the government this past year is more than $5.6 billion.)

Justice claims that total recoveries since 1986, when Congress substantially strengthened the False Claims Act, now stand at more than $24 billion. Not too shabby. 

The government even has two strong candidates for the inaugural Qui Tammy awards: Senator Chuck Grassley and Representative Howard Berman, the sponsors of the 1986 amendments. Grassley and Berman were also instrumental in the passage of the Fraud Enforcement and Recovery Act of 2009, which further strengthened the False Claims Act.

At the Qui Tammy Awards ceremony, host Billy Crystal’s silly little opening song and dance number will probably make fun of these notable False Claims Act settlements from the past year:

Morning Smoke: Do Wall Street Reformers Have the Upper Hand?

Could Wall Street Actually Lose in Congress? [The Stash]

Fed Said to Ask Banks to Submit Plans to Repay TARP [Bloomberg]

AIG's Rescue Bedevils U.S. [The Wall Street Journal]

Comeback for White House choppers? [Politico]

Blackwater's Secret War in Pakistan [The Nation]

Private money for military education: what's in the fine type? [Foreign Policy]

Thus Spoke Carter: Notes from his Roundtable [Ares]

Senate confirms procurement policy chief [Government Executive]

Senate Confirms Paul Martin as NASA Inspector General [The BLT]

New Executive Order Aims to Avoid Declass Deadline [Secrecy News]

Morning Smoke: Stock Ownership in Congress Draws Scrutiny

Policy, portfolios and the investor lawmaker [The Washington Post]

Republicans criticize dismissal of AmeriCorps watchdog [The Los Angeles Times]

Lockheed Martin F-35 Fighter May Need More Money, Analyst Says [Bloomberg]

Inquiries look into use of retired generals as advisers [Federal Times]

Jamie Dimon seen as good fit for Treasury [New York Post]

Ohio Files Suit Against Credit Raters [The Wall Street Journal]

The SEC surrenders to the oil industry [Felix Salmon]

The State of the State Secrets Privilege [UNREDACTED]

White House takes aim at $98B in payment errors [Federal Times]

DoD Public Meeting on Organizational Conflicts of Interest (OCI) [IEC Journal]

Senate Re-Introduces Bill Closing Legal Loophole for Foreign Contractors

Back in May, POGO blogged about the tragic case of Lt. Col. Dominic "Rocky" Baragona, who was killed in Iraq in 2003 when his Humvee was struck by a supply truck driven by a Kuwaiti transport company that had contracts with the Department of Defense (DoD). Baragona's family filed a lawsuit in federal court against the contractor, Kuwait & Gulf Link Transport Company (KGL), but the court eventually threw it out for lack of jurisdiction.

This week, Sen. Claire McCaskill (D-MO) re-introduced the “Lieutenant Colonel Dominic ‘Rocky’ Baragona Justice for American Heroes Harmed by Contractors Act”. The bill would require foreign companies that have contracts with the federal government outside the U.S. to agree to be bound by U.S. court jurisdiction in certain civil lawsuits brought by U.S. service members, government employees and U.S. contractor employees who claim they were harmed as a result of the contractors’ (or subcontractors’) performance of those contracts, as well as in all civil and criminal actions brought by the United States alleging contractor misconduct. The bill would also give officials the authority to suspend or debar contractors that evade service of process or fail to appear in court.

While the previous version of the bill only covered lawsuits alleging “serious bodily injuries,” the new bill also covers civil actions “alleging a rape or sexual assault.” This addition was most likely prompted by the recent firestorm over the passage of Minnesota Senator Al Franken’s defense authorization bill amendment that prohibits the awarding of contracts to companies that prevent their employees from taking workplace sexual assault cases to court. Unfortunately, the new version of the bill is not retroactive, which effectively shuts the courthouse doors on people who, like Rocky Baragona’s family, have already filed lawsuits.

The bill was the subject of a hearing Wednesday of the Senate Homeland Security and Governmental Affairs Subcommittee on Contracting Oversight. Witnesses at the hearing were generally supportive of the bill but warned that aspects of it may violate the U.S. Constitution or international law or will hinder DoD operations in hot spots around the world.

“While I support the overall substance of the legislation,” testified DoD procurement deputy director Richard Ginman, “I believe there are portions that could be improved,” including changing the language so that only the actions of prime contractors are covered and existing contracts would not have to be modified.

Rocky Baragona’s family has filed an appeal of the dismissal of their lawsuit. Rocky’s father Dominic also testified at Wednesday’s hearing. He concluded with these words:

We get renewed energy from the bill being named in our son’s honor. Even though we know this bill would not help our case, since it is not retroactive, we know the passage would level the playing field between domestic and foreign contractors. This bill will not bring us justice or peace. But it will ensure that no family of an American soldier will ever have to go through the hell that we have endured for over six years, thanks to KGL’s inhuman silence.

-- Neil Gordon

Morning Smoke: Senators Re-introduce Bill Requiring Foreign Contractors to Consent to "Personal Jurisdiction" in U.S. Courts

Bill would allow foreign contractors to be sued in U.S. courts [Government Executive]

McCain wants review on defense work by retired brass [USA Today]

John Kerry vs. Blackwater Xe [The Washington Independent]

House Attacks Fed, Treasury [The Wall Street Journal]

Auditors raise doubts about stimulus numbers, but expect data will improve [Federal Eye]

SEC Told to Improve Ways It Chooses Probe Targets [Associated Press]

U.S. Financial Regulation Overhaul: Side-by-Side Comparison [Bloomberg]

Air Force nominee: Tanker contest will be open [Government Executive]

Coast Guard's Deepwater faces possible cost hikes and delays [National Defense]

House Financial Services Committee Passes Paul-Grayson Amendment to Audit the Fed

The House Financial Services Committee voted 43-26 yesterday afternoon in favor of an amendment introduced by Reps. Ron Paul (R-TX) and Alan Grayson (D-FL) that would remove restrictions preventing the GAO from auditing the Federal Reserve. The amendment was modeled after Rep. Paul’s long-standing bill to audit the Fed, which was co-sponsored by over 300 Members in the House and supported by POGO and many other groups.

The vote on the final passage of the financial regulatory package to which the Paul-Grayson amendment is attached has been delayed until after Thanksgiving. Nonetheless, yesterday’s vote signals a defeat for Rep. Mel Watt (D-NC), who had introduced an alternative amendment that would have limited the scope of the GAO’s audits.

We will continue to monitor this important bill as it makes it way through Congress. In the meantime, however, we wanted to highlight an insightful observation made by one of our blog commenters, who points out that the GAO may not have the staffing and resources it needs to conduct these audits:

GAO currently has right around 3000 employees. Attrition is currently about 10% a year, with at least 330 people planning to leave in the next two years for sure (Based on a voluntary survey of all GAO employees of which 2220 participated.) Along with the other additional work GAO has been tasked with, with respect to the TARP, GAO is currently overwhelmed. GAO's audits, controls, and processes mean that on average each report takes 9 months to complete. The TARP legislation asks for a 60 day turn around, which is really way too fast. People are burning out, and I am not sure that asking GAO to audit the FED will do anything but overwhelm the system further.

One agency cannot be responsible for all of our good government. We need to either:
1. Expand GAO drastically,
2. Make the IGs more robust, and/or
3. Congress and the public will have to understand that GAO's work will not be as reliable as it has been in the past.

We hope Congress takes this message to heart before deciding to task the GAO with even more work.

-- Michael Smallberg

Ineligible Firms Receiving Contracts Intended for Service-Disabled Vets

Today, the Government Accountability Office (GAO) released a report documenting lax oversight controls and fraud related to Service-Disabled Veteran-Owned Small Business (SDVOSB) and Veteran-Owned Small Businesses (VOSB) contracts. The GAO report was released at a hearing before the House Committee on Small Business held by Chairwoman Nydia Velazquez.

GAO’s review found:

1. Ineligible firms improperly received approximately $100 million in SDVOSB contracts and an additional $300 million in contracts set-aside for other small businesses. Some of those contractors were not even eligible for the SDVOSB program. Because there are no penalties for improper contract awards, many of those contractors were allowed to continue their work.

2.   The Small Business Association (SBA) and awarding agencies lack “effective fraud-prevention controls” and “neither the SBA, except when responding to a protest, nor contracting officials are currently verifying the eligibility of firms claiming to be SDVOSBs.”

We have seen similar problems with other small business set-aside programs, including the much maligned Alaska Native Corporation and HUBZone programs. SBA needs to right the ship and do it fast, because it seems to have deep systemic problems that have plagued the agency for years.

-- Scott Amey

Further Reading

• 'Small' Business Administration?
• IG Report Blasts Contracting Privileges for Alaska Native Corporations
• Small Business Contracting is Vital, but Does the SBA Think So?

What Happens When an Ethics Tree Falls in an Earless Forest, and Other Lessons from a Bid Protest Sustained by GAO

A recently sustained bid protest from the Government Accountability Office (GAO) found that a contractor did indeed get an unfair competitive advantage when they hired a former government employee to prepare their proposal and failed to disclose the information to the contracting official. The allegations were brought forward by Health Net Federal Services in a protest of the award of a recent TRICARE (which provides civilian health benefits for military personnel, military retirees, and their dependents, and some members of the Reserve Component) contract to Aetna Government Health Plans (AGHP), who hired the TRICARE Management Activity's (TMA) Chief of Staff to prepare their proposal.

The GAO's decision demonstrates the proverbial problem that an ethics tree can only be heard falling in the forest if you tell the contracting officer about the advice you received. Defending the award, AGHP told the GAO that TRICARE Management Activity's ethics advisor provided the former official with several "clean letters," including permission to work on the bid proposal. But actually reading the letters, the GAO found that the advice of the ethics official was ignored. The official advised them to contact the contracting official with any concerns they had. AGHP never did, which meant that the official wasn't "clean" at all, says the GAO:

POGO and Public Denied -- Who's at Fault?

WOW, what great timing! Yesterday’s breaking story on the new twist to the Defense Department's (DoD’s) revolving door shocked many and has resulted in a call from several members of Congress for a review of the Pentagon's mentorship program. POGO has long been concerned with the revolving door issue, and had asked the Obama administration to make a DoD revolving door database public and also submitted a public comment urging government officials to do the same. Today, DoD finalized that rule, and denied POGO’s request for public access.

In their explanation, DoD kinda threw Congress under the bus:

One source submitted comments on the interim rule. That source supported the rule and its objectives, but recommended that the central database/repository for retention of written ethics opinions, required by section 847(b), be made publicly available. DoD has not adopted this recommendation, as section 847 does not authorize access to the database by the general public.

 
I don't recall, however, that Congress expressly denied public access to data – the law merely states that DoD create an ethics opinion database. Actually, I held hope that the Obama Administration's focus on openness, transparency, good contracting, and eliminating special interest clout in government decisions would rule the day, and that the people would triumph.

Maybe Obama’s lofty goals haven’t trickled down to all parts of the government, but what’s the harm in seeing a list of former government officials who are now working for defense contractors? We have campaign finance and lobbying disclosure – why not expose those circulating between the public and private sectors who might be a driving force behind government decisions and policies? Wait, I just answered my own question.

-- Scott Amey

Non-Functioning Fire Suppression System at LANL Is Just the Beginning

POGO investigators have learned that the saga of the fire sprinkler system that won’t work in a fire is but the tip of the iceberg at Los Alamos National Laboratory's (LANL) TA-55 plutonium facility. 

It turns out that about 2 years ago, there were roughly 300 modifications to safety systems needed to protect workers and the public at TA-55 that were part of “design change packages,” or DCPs, that were never closed out. What this means is that the safety systems were modified, but were never verified as working after the modification.

Now, about 2 years later, the number of DCPs that have not been closed out has grown to around 600.  One such system, the fire system, turns out to be one of the systems for which DCPs are not closed out and which was recently found not to be working. It is not too much of a stretch to assume that other safety systems necessary to protect the workers and public with open DCPs are also not working. 

There is no incentive for LANL to verify that these safety systems are working because it is not part of the contract incentives (there is no money to be made). The local Department of Energy (DOE) government oversight has evidently not been doing its job for over 15 years since 1994 (which is when the open DCPs on safety systems date back to). The so-called Facility Representative program is a program where DOE federal personnel are supposed to be in the LANL facilities on a daily basis checking for, among other things, fraud, waste, abuse, and safety system operability. 

According to our sources, some personnel at LANL have tried to bring this potentially dangerous safety issue to LANL management attention and have been ignored. It would take money from the LANL operating budget to ensure that safety issues like this are closed and this is evidently not a budgetary priority for LANL or DOE.  Evidently, safety systems potentially not working — which are necessary to protect the public — is another “acceptable risk,” apparently like the 3000 rem radiation dose that the public could be exposed to in the event of an earthquake and fire in which the sprinkler system would not work.

Rather than doing the job that LANL and DOE is paid for, management at LANL has discussed just throwing out the older DCPs which date back more than 15 years to 1994. It is not clear to POGO why DOE oversight management and LANL management is being paid for this unsurpassed level of incompetence.  The Local DOE Site Office manager is a senior SES for which the top salary is about $172K and the LANL Director makes over $800K.  It is unclear why this facility is operating if the safety systems are not known to be working with certainty.

POGO has obtained an email exchange detailing the situation, which can be viewed here.

-- Peter Stockton

Further reading:

• The Taxpayer Shouldn't be Burned Again in LANL's Inadequate Fire Protection Program
• POGO letter to Energy Sec. Chu regarding LANL plutonium facility shutdown due to repeat of fire suppression system failures