The Project On Government Oversight (POGO) Blog

Senator McCaskill Is the Engine of the Accountability Train

All aboard! Senator McCaskill (D-MO) is leading the way in promoting more accountability in the federal government. Last week, the Senate passed her bill to improve the Inspector General system. Now the freshman Senator from Missouri has drafted S. 2904, which will create a contractor responsibility database--similar to the one proposed by Rep. Maloney (D-NY) in H.R. 3033, which passed the House last week. In an editorial published on Sunday, the New York Times endorsed the idea of a contractor responsibility database, and applauded POGO's Federal Contractor Misconduct Database as an effective model for keeping track of risky contractors.  But there is still more work to be done.

S. 2904 differs from H.R. 3033 in that it expands the types of cases included in the contractor responsibility database. Currently, the Senate is considering proposing some of the provisions in S. 2904 as an amendment to the forthcoming Defense Authorization bill. One suggested change by a senior leader, however, would prevent public access to the database. Considering that the vast majority of the information is already public, I'm not sure why the public should be excluded, unless of course the contractors don't want taxpayers to have a user-friendly portal to see their comprehensive rap sheets.

-- Scott Amey

Say 'NYET!' to Mergers

In an important Washington Post op-ed today, former senior Department of Defense officials Dov S. Zakheim and Lt. Gen. Ronald T. Kadish (Ret.) point out that the lack of competition in the Pentagon's buying has led it to become a Soviet-style system:

The Government Accountability Office reported last month on how things are going with nearly 100 major U.S. defense systems. Not well, it seems. They have exceeded their original budgets and are, on average, almost two years behind schedule.

The GAO report lays bare a festering problem in our nation's military procurement system: Competition barely exists in the defense industry and is growing weaker by the day.

It was a different story just two decades ago. In the 1980s, 20 or more prime contractors competed for most defense contracts. Today, the Pentagon relies primarily on six main contractors to build our nation's aircraft, missiles, ships and other weapons systems.

It is a system that largely forgoes competition on price, delivery and performance and replaces it with a kind of "design bureau" competition, similar to what the Soviet Union used--hardly a recipe for success.

With less competition, contractors have few incentives to keep costs down and performance high. In essence, we are left with a few super-sized contractors that are holding all of the cards. As witnessed by the Air Force tanker deal and the recent IBM suspension, the government has few places to turn--it has, in effect, handcuffed itself.

The Pentagon pushed a policy in the mid-90s to consolidate the defense industry, which has led to the situation we have today. Zakheim and Kadish describe a fateful Clinton Administration "Last Supper" meeting that precipitated the mergers.

Even worse, however, was that the federal government paid for the defense contractor mergers under a policy which its opponents, including POGO, called "payoffs for layoffs." At the behest of defense contractors, the Pentagon and its friends in Congress paid the contractors billions of dollars to merge. At the time, POGO noted:

These mergers contain an even more fundamental problem: even if there are short-term savings for the government, in the long run any lower prices are likely to be offset by the effects of reduced competition from excessive corporate merging. The Pentagon has not yet fully examined the long-term government costs of reduced competition from the tremendous concentration currently underway in the defense industry.

The health care, homeland security, and IT industries are also following a similar path toward merger-mania. In some instances, new companies are being gobbled up by the large DoD contractors. Too much power, influence, and control over the government marketplace is not good for taxpayers. POGO agrees with Zakheim and Kadish--more oversight isn’t going to fix the problem. The government has to do something to increase competition and bring in the many small and mid-sized firms that can help the government meet its needs.

-- Beth Daley and Scott Amey

GAO Says Bajagua Project Has Many "Unresolved Issues"

A report released by the Government Accountability Office (GAO) last Thursday substantiated many of POGO's findings from our 2006 report on the Bajagua project.

The GAO report detailed numerous aspects of a questionable sweetheart deal to use federal funds to pay a private U.S. company, Bajagua, LLC, for a wastewater treatment plant in Mexico.  Bajagua's proposal faces numerous technical, regulatory and financial challenges.

The report found "that the Bajagua, LLC project includes more unresolved issues than the [South Bay International Wastewater Treatment Plant] upgrade, such as the need to obtain over 30 permits, approvals, and concessions from both U.S. and Mexican authorities; the need to resolve significant issues in its draft fee-for-services agreement with the USIBWC; and other legal and technical issues which could delay its schedule."

The Bajagua project would cost an estimated $200 million more in taxpayer dollars over twenty years than an alternative proposal put forth by the government.

All in all, the GAO's report confirms that the Bajagua project is a stinky deal that is bad for taxpayers and the environment of Southern California.

In 2007, POGO's report also generated investigative pieces in the Wall Street Journal and San Diego Magazine.

-- Nick Schwellenbach

Seven Years Later: The Jury Is Still Out on Outsourcing

POGO has written previously about the ongoing debate over the federal government's growing reliance on the private sector to perform public functions (see, for example, here and here). A recent article in the Washington Post about the current state of President Bush's competitive sourcing initiative will surely add more fuel to the debate.

In his 2001 President's Management Agenda, Bush made competitive sourcing--i.e., making commercial activities performed by the government subject to competition with the private sector--one of his key strategies for improving the federal government. Bush's original goal was for agencies to eventually put up for public-private competition no less than 10 percent of their full-time positions, but agencies have fallen far short of that goal. Private contractors are increasingly wary of participating in the competitions, which federal employees have won 83 percent of the time since 2003. But victories often come at a steep cost: To prove it can do the job better and more cheaply than a private contractor, the agency must often cut its staff to the bone, which depletes the federal workforce (ironically increasing the need for contractors) and takes a heavy toll on the morale of all government workers. The Bush administration has also been accused of overstating the cost savings of competitions.

Proponents of competitive sourcing believe that putting federal jobs up for competition with private firms saves money and improves performance. Opponents dispute the fiscal savings and worry about outsourcing a growing number of inherently governmental functions. POGO, which is in the process of investigating the outsourcing issue, tries to fairly present both sides of the debate, but accounts like the Post article only heighten our concerns.

-- Neil Gordon

Important Victory for Inspector General Oversight & Accountability

Late Wednesday night, the Senate passed its version of legislation to amend the law governing federal Inspectors General, after an amendment offered by Sen. Jon Kyl (R-AZ) finally broke through the logjam that had blocked the bill's passage since last November.

Congratulations are most definitely in order for the bill's bipartisan sponsors--Sens. Joe Lieberman (I-CT), Susan Collins (R-ME), and Claire McCaskill (D-MO)--but special kudos should be saved for their dedicated staffers who labored so long and hard to deal with the objections of different stakeholders, not least among them the White House.

In attaining a form that could pass unanimously, the bill was frankly watered down from its original form.  POGO has strongly supported certain changes to current law that we believe would increase both the independence and accountability of the IGs; see our February report on the first part of our ongoing review of the IG system, Inspectors General: Many Lack Essential Tools for Independence. We regret the current bill does not include all the improvements we favor, but are pleased to see the important provisions that it does contain.  We will continue to work with members on both sides of the Hill in the hope they will eventually enact all of the recommendations we proposed in our report.

The bill now must go to conference to sort out the differences with H.R. 928, passed by an overwhelming 404-11 last year.  There are some major differences between the two bills, most notably regarding terms of office (the House favors a 7-year term for presidentially-appointed IGs, but the Senate dropped that provision in deference to administration objections) and dismissal (the House listed ten reasons that would constitute the only cause for dismissal of an IG; the Senate merely requires the president to notify Congress 30 days before dismissal).  However, the political reality is such that if anything is going to prevail this year it will likely be the Senate version, which carries the administration's grudging agreement, if not quite enthusiastic support.

Déjà Vu All Over Again

Remember those hanging chads from Florida in the election of 2000?  That was of course the most notorious failure of election equipment in modern memory.  In the wake of that disastrous election, the results of which are still disputed by many, counties and cities across the country moved to purchase and install nice, new, modern, electronic, touch-screen voting machines in place of the old-fashioned punch-card types.

But guess what?  All those fancy new machines have turned out to be the cure that's worse than the disease.  In The New York Times Magazine this past January, Clive Thompson wrote:   

In the last three election cycles, touch-screen machines have become one of the most mysterious and divisive elements in modern electoral politics.  Introduced after the 2000 hanging-chad debacle, the machines were originally intended to add clarity to election results.  But in hundreds of instances, the result has been precisely the opposite:  they fail unpredictably, and in extremely strange ways; voters report that their choices 'flip' from one candidate to another before their eyes; machines crash or begin to count backward; votes simply vanish.  (In the 80-person town of Waldenburg, Ark., touch-screen machines tallied zero votes for one mayoral candidate in 2006 – even though he's pretty sure he voted for himself.)  Most famously, in the November 2006 Congressional election in Sarasota, Fla., touch-screen machines recorded an 18,000-person 'undervote' for a race decided by fewer than 400 votes.

The problem is that most of the touch-screen machines do not produce any paper record and thus their results are not verifiable.  In a landslide election, that may not matter.  But if the election is close, and recounts are demanded, the lack of paper records could create mayhem. 

Congressman Rush Holt (D-NJ) has made a crusade of trying to rationalize the nation's voting systems.  A holder of a Ph.D. in Physics, Holt has been pushing for changes in the law for the last several years.  Now he's anxious to avert an electoral catastrophe this coming November.  His bill, H.R. 5036, would reimburse any counties that opt to retrofit their touch-screen machines with paper records that voters can verify.  As Rep. Zoe Lofgren (D-CA) pointed out as she led debate on the House floor on behalf of the bill, "Having a voter verified paper trail with an automatic routine audit will go a long way to increase voter confidence and deter fraud."

In his remarks during the floor debate on Tuesday, April 15th, Holt warned that without the extra federal assistance to the states and counties prior to this November, six complete states and a number of counties in 14 additional states "will be conducting completely unauditable elections in 2008." 

The problem for the bill arose with the cost estimate of $685 million issued by the Congressional Budget Office.  As Lofgren pointed out, that was the estimate Rep. Holt had calculated way back in early 2007 when he first offered his legislation.  Further, she said, that number "anticipates the participation of everyone in this bill.  I think it is highly unlikely that every jurisdiction will participate in every aspect of the bill…It is clear that the actual score or total would be less."

But that was seemingly enough to change the minds of Republicans who had previously supported the bill.  Although the committee vote had been both bipartisan and unanimous, suddenly the minority party had problems with the bill.  Rep. Vernon Ehlers (R-MI) led the fight on the House floor against H.R. 5036.

Breaking News: House Voting Today on Contractor Database Legislation

At long last, the House is voting today on H.R. 3033 (the “Contractor and Federal Spending Accountability Act”), a bill introduced by Rep. Maloney (D-NY) that would essentially formalize POGO's Federal Contractor Misconduct Database, with centralized information on federal contractors who have broken the law and violated federal regs.  The bill comes at a crucial time, as government contracting spending has ballooned to $440 billion a year, with few safeguards in place to prevent irresponsible contractors from receiving future taxpayer dollars.

POGO supports the efforts of Rep. Maloney and her colleagues to improve accountability in the federal contracting system.  Not surprisingly, the bill has come under attack by contractors and their allies.  But we're not quite sure what contractors are so afraid of.  The bill wouldn't stop them from receiving contracts; it would just help procurement officials learn more about their corporate culture.  If anything, it would help separate the good contractors from the bad and the ugly.

Click here to watch the live debate on the House floor.

-- Michael Smallberg

UPDATE: The bill passed by voice vote!  Now on to the Senate, where we hear that several offices are interested in sponsoring a mirror bill...

UPDATE 2: Senator McCaskill (D-MO) just introduced a Senate companion bill, with plans to attach the language to the National Defense Authorization Act next week.

An "A" for Contracting Accountability

April has been a busy month for improving contracting accountability in the federal government.

On the eve of tax day, the House passed a bill to prevent contractor tax cheats from receiving large federal contracts and grants (H.R. 4881). The following day, the House Oversight Subcommittee on Government Management, Organization, and Procurement held a hearing on H.R. 5712, which would require all contractors--including those working overseas--to report criminal violations. Failure to do so would result in suspension or debarment from future government contracts. Although regulatory efforts are also being considered to close the reporting loopholes for overseas and commercial contracts, the Hill decided it might have to force such action.

After the GAO released its 17th report since 2001 detailing vulnerabilities in the government's purchase card program, the Office of Federal Procurement Policy issued a memo reminding agencies to reduce the risk of waste, fraud, and abuse, and to discipline employees for charge card misuse. There is also legislation pending, so let's hope that taxpayers will no longer have to foot the bill for trips to Vegas, dinners at posh restaurants, or cosmetic surgery. An organization can hope, ya know!

Recently, we also saw EPA officials go blow for blow with critics who questioned the agency's decision to suspend IBM from federal contracting. Although the suspension only lasted seven days, the EPA concluded that it had all of the evidence it needed to protect taxpayers against contractor misconduct. Interestingly, some of the same critics who questioned the EPA's actions have also accused POGO and others of demoralizing federal workers when we question government activities. Not a sermon, just a thought.

One release that received little attention was the PCIE/ECIE report to the President, which revealed that Inspectors General activities in 2007 saved taxpayers $16.5 billion and led to more than 10,000 successful criminal prosecutions and civil actions.

Of course, you'll have a tough time finding information on these accountability efforts at smartcontracting.org, a new site created by the Professional Services Council, a national trade association representing the government professional and technical services industry. The site is meant to "communicate the benefits and clear up the major misperceptions about contracting" and to serve as a "clearinghouse for reliable information on these important issues." But seeing as the site doesn't include much information on the reports mentioned above or the recent actions to improve the contracting system, it would appear that PSC is only interested in showing the world of contracting from the eyes of its very interested members.

H.R. 3033: you're on deck for the contracting hot seat.

-- Scott Amey

Senator McCaskill Digs In on Thunderbirds Sweetheart Deal Accountability

Yesterday, Senator Claire McCaskill sent a letter (pdf) to Air Force Secretary Michael Wynne with her concerns that insufficient accountability has been taken in regards to the favortism towards Strategic Message Solutions on the Thunderbirds Air Show Production Services (TAPS) contract.  She expressed "displeasure with the level of accountability that has been meted out on those associated with contracting improprieties."  In particular, she has questions about the "details undue command influence as well as command improprieties that appear to have risen all the way to the level of the senior uniformed official in your service, Air Force Chief of Staff General T. Michael 'Buzz' Moseley."

-- Nick Schwellenbach

Email to Gen. Moseley on Thunderbirds Contract: "I cannot support burning that kind of money to fix something that isn’t broken, when I am not buying fixes to things that are broken"

Below are email exchanges between General Ronald Keys, Air Combat Command (ACC) Commander, to General T. Michael "Buzz" Moseley, Air Force Chief of Staff.  Gen. Keys expressed concern that the Thunderbirds Air Show Production Services (TAPS) contract will cost far more than Keys initially was led to believe.  He stated that he finds it tough to swallow spending "big money" on public relations--i.e. the TAPS contract--at the expense of expenditures on current aircraft needs (an especially bad problem given that many aircraft are wearing out because of the conflicts abroad and aging).  Gen. Moseley waved him off and is more concerned about messaging and branding the Air Force for PR purposes through the use of the TAPS contract.  This looks bad, real bad for Gen. Moseley. 

These emails are from pages 211-212 of the Department of Defense Inspector General's (DoD IG) investigation report (pdf) of the "improper influence" of Major General Stephen M. Goldfein on the $50 million contract with Strategic Message Solutions for Thunderbirds Air Show Production Services:

1027. November 9, 2005,
General Ronald Keys, ACC Commander, e-mailed General Moseley, Chief of Staff. Keys wrote, “Boss, we asked for bids on this capability and they have come back. I know you said ‘press’ and ‘found’ some fy ’05 right-colored money to be able to acquire this capability. However, this is turning out to be an $8M per year project… something over $40M for the FYDP, and I cannot support burning that kind of money to fix something that isn’t broken, when I am not buying fixes to things that are broken… and may not be able to even fly mail to Chicago. I plan to pass on pursuing this and it will probably cost some small termination/bid prep costs, … but I can’t see spending big money here when we are talking about stopping aircraft mods and going to 75% BOS funding. I know this was somehow wrapped up in the Strategic Comm package so wanted to know your thoughts before I proceed. RK”

1028. November 10, 2005,
General Moseley responded to General Keys,
“Thanks for the SA Ron. Let me think about this one for a bit. It does fit into my strategic communication plan in a big way. I’d ask you not to terminate anything until I can get wrapped around this one a bit more. Thanks again”

1029. November 10, 2005,
General Keys responded to Moseley,
“Right, Boss…. That’s why I gave you the head’s up. I asked my folks to hold off until after the 21st, since that bloodletting would provide rationale and also to wait until I had talked to you. No one can give me a metric on people recruited (which we may or may not need), or opinion makers touched and changed at events like these. It would enhance getting out a message, but to whom? …. And the contract as written is really more focused at putting cockpit video etc to the ground during lulls in the performance. I would rather put it against the bills coming in to stand up the Adversary Threat Group and UAV COE. Additionally, I would like to re-open the bidding on block 52s to the T’Birds… block 40s would make more sense to me as I would then have the block 50 data-link and targeting pod surrogate IRST in my aggressor fleet to replicate the threat… I don’t see thrust as a driving addition to what the T’birds do and believe we should flipflop the transfer. Having said all of that, will await your direction on the Jumbotron… know you are consumed in the QDR and believe there is not a big rush on this for a couple of weeks. I’m out at Nellis for the Aviation Nation Celebration and then on to Whiteman but am up on e-mail.
Cheers, V/R Ron”

1030. November 14, 2005,
Moseley responded to Keys, “Ron…as we discussed at CORONA…I’m working my way through a bigger set of strategic comm options. And, this has been one I’ve liked – not just for TBird reasons – but for the “messaging opportunities” if we get the right people working this for me. Hold off in killing or deciding anything until I can get some non-QDR time to reflect on this a bit more. I’m prone to support it and pay the money and drive the message we want across the spectrum of options – from Mar through Nov every year at a variety of locations (and use the TBird shows as a vehicle to get at the public).
I’m prone to support it because it offers that spring board to other venues and other outreach opportunities. This will work even better as we get more sophisticated with our “market research” and “branding/marketing.” So, my notion has been this is more than a project to support a demo team & big screens. But, give me some time and I’ll come to closure soonest. Thanks again”

-- Nick Schwellenbach

A Lesson in Retaliation

In the world of academia, dissent and critical thinking are not only encouraged, but expected.  By contrast, there is perhaps no better way to ensure career failure in the federal government, and especially the military, than to consistently present challenging or dissenting views to your superiors.

For this reason, it's hardly surprising that POGO received a letter from University of Virginia doctoral student and former Human Terrain System (HTS) member, Zenia Helbig, alleging that she had been retaliated against. (HTS is an Army program intended to help the military better understand Iraqi culture by sending civilian anthropologists into Iraq.) Helbig wrote to POGO:

"I brought every criticism and concern identified in the "Recruiting and Retention" and "Training" sections of this memorandum to the attention of my superiors at BAE and Program Management personnel at HTS.  Admittedly, I did so somewhat naively, believing that all the personnel and organizations involved were there "for the mission" just as much as I was, and that they needed to only be made aware of the problems to immediately take action to fix them."

Perhaps the same "naiveté" that got Helbig fired from HTS is also compelling her to press on in her uphill battle to reclaim her security clearance and her good name.  I doubt that she was aware of the odds facing whistleblowers when she mounted a public campaign to clear her name--only 3 of the 186 cases that have gone before the Federal Circuit have resulted in a victory for the whistleblower--but so far she seems to be beating those odds.

Helbig is pushing the one button that the federal government seems to respond to more than anything else--public scrutiny.  To this date, her story has been told in Newsweek, Wired.com and Asia Times, just to name a few. 

Undoubtedly, it helps that her story is so sensational.  It's not every day that a group of civilian anthropologists are recruited to go over to Iraq as cultural advisors. That in itself is a story.  But when that mission is also plagued by allegations of severe mismanagement by no-bid contract winner BAE, and also faces overlapping criticism of the program in general by the American Anthropological Association, it becomes a story that will not quickly go away.

It's unfortunate that it takes such a sensational story to get the attention of the news media, but if that's what it takes to get Helbig her good name and her security clearance back, that's what it takes.

-- Jake Wiens

Thunderbirds Investigation -- Air Force Response

Here is the Air Force's response (pdf) to the Department of Defense Inspector General's (DoD IG) investigation report (pdf) of the "improper influence" of Major General Stephen M. Goldfein on the $50 million contract with Strategic Message Solutions for Thunderbirds Air Show Production Services.

Of note, on pages seven and eight, is a memo to senior Air Force leaders from Secretary of the Air Force Michael Wynne and Chief of Staff "Buzz" Moseley and a statement from Moseley.  Both stress ethics.

However, the word on the street is that Moseley missed getting caught in a buzzsaw in this investigation, possibly due to the standards of evidence used to determine responsibility for wrongdoing.  More specifically, we hear that the "clear and convincing" evidence standard was used as opposed to the lower "preponderance of evidence" standard (UPDATE, note: "clear and convincing" would make sense in a criminal investigation, however, because it was declined for criminal prosecution by the Nevada Assistant U.S. Attorney, it was an administrative investigation).  Moseley comes up numerous times in the DoD IG report of investigations (pdf).

-- Nick Schwellenbach