The Project On Government Oversight (POGO) Blog

Acquisition Workforce Playing Catchup

In the world of contracting oversight, it's not every day that you come across a striking image. But after looking through the this week's "Acquisition Workforce Development Strategic Plan for Civilian Agencies – FY 2010-2014" from the Office of Management and Budget (OMB), I thought this one was worth sharing:

The OMB explains:

Between FY2000 and FY2008, acquisition spending by civilian agencies expanded by 56 percent, from $80 billion to $138 billion (in inflation-adjusted dollars). Over this same time period, the number of contract specialists (GS-1102s, the only segment of the acquisition workforce for which historically consistent data are available) grew by only 24 percent from 7,995 to 9,921 (see figure below). In contrast, both acquisition spending and the number of contract specialists in civilian agencies were little changed during the previous decade.

Though the image doesn't paint a complete picture — it omits spending data from the Department of Defense and acquisition workforce data beyond the GS-1102s — it highlights a concern we've had for some time: the acquisition workforce is stretched too thin. 

-- Bryan Rahija

Top Five Most Intriguing Quotes from the Merrifield Dossier

POGO has just posted hundreds of pages of interview and memos from an Inspector General investigation of a Nuclear Regulatory Commission (NRC) Commissioner.  As we mentioned yesterday on the blog, the investigation, which we requested two years ago, reveals that former Commissioner Jeffrey Merrifield maintained an uncomfortably cozy relationship with some of the power plant contractors he was tasked to regulate. Merrifield went on to accept a job created for him at Shaw Group, a company that could have benefited financially from votes he cast as Commissioner.

Here, we present the top five most intriguing quotes from the dossier:

1. From a memo on interview with Christopher Crane, CEO of Exelon, the largest nuclear utility in the U.S., May 28, 2008:

"Crane recalled that at one point, Merrifield called him to ask if he could call Shaw and General Electric on his behalf because these companies were not returning Englemeyer's telephone calls. Crane did not recall when Merrifield requested him to contact these companies on his behalf. Crane said he later telephoned Richard Gill, The Shaw Group and Andy White, General Electric and recommended that they consider Merrifield for employment."

Morning Smoke: House Ethics Committee Investigating Over Thirty Lawmakers

Dozens in Congress under ethics inquiry [The Washington Post]

GAO faults effort to counter roadside bombs [Government Executive]

'Round and 'Round They Go: Lawmakers Leave Congress for Lobbying Posts [Capital Eye Blog]

IG takes a look at DOE's work for DOD [Atomic City Underground]

Doubts greet Obama's financial oversight plan [The Washington Post]

Officials commit to collaborate on performance-based budgeting [Government Executive]

F-22 gets $474 million parting gift [The DEW Line]

Biden's Confidence in Regulatory Capacity of the NRC: "None, none"

A quick addendum to this morning's post about a Nuclear Regulatory Commission (NRC) Commissioner's all too cozy relationship with companies he was supposed to be regulating: in our letter about the matter to Vice President Biden, we refer to his comments during a December 17, 2007 interview with The Keene Sentinel Editorial Board, in which he shared his level of confidence in the regulatory capacity of the NRC—“none, none.” Thanks to Jim Riccio from Greenpeace for finding the video, which also has the VP saying that the Commission should be filled with “watchdogs” instead of “house dogs” (see 0:45 and 2:22 for the quotes of interest).

-- Ingrid Drake

Reform Contracting? YES WE CAN

For years, POGO has highlighted waste, fraud, and abuse in federal contract spending. Many contracting experts and government officials blame the inadequate size and training of the acquisition workforce for the problems in today’s contracting system. POGO agrees that workforce issues are a major problem, but we have always believed that additional problems deserve equal attention, including:

• Inadequate Competition
• Deficient Accountability
• Lack of Transparency
• Risky Contracting Vehicles

To assist in making improvements in those areas, we have promoted changes including reversing the philosophy of quantity over quality, debundling multiple requirements, limiting sole source contracts, redefining competition, enhancing the acquisition workforce, requiring comprehensive reviews of outsourcing practices, disclosing more contract data (including the actual contracts and orders), increasing oversight, and reducing the use of risky contracts.

Wow, this month has seen its fair share of federal contracting activity on nearly all of those fronts. Yesterday, Senator McCaskill’s Ad Hoc Subcommittee on Contracting Oversight held a hearing on “Achieving the President's Objectives: New OMB Guidance to Combat Waste, Inefficiency, and Misuse in Federal Government Contracting,” firing questions about Office of Management and Budget’s actions to improve federal contracting and efforts to save money.

Earlier in the week, OMB released a memo intended to increase competition and another memo to increase the capability and capacity of the civilian acquisition workforce. The one memo that many are waiting for is the plan to redefine inherently governmental functions that should be performed by civil servants only. (Cue in Jeopardy music.)

Additionally, agencies are seeking public comments on contracting issues related to the length noncompetitive contracts, award fees,  limitations on pass-through charges, and contractor responsibility (due Nov. 5^th).

While some have claimed that the contracting system isn’t broke and government is driving away contractors who don’t want to do business with the federal government, I hear a much different story. I hear from many contractors that support POGO’s contracting efforts and that tired of operating as subcontractors after losing out to the big boys without being given a fair shake in the first place. Furthermore, I hear stories about how the system needs a tune-up. It looks like POGO and its sources are getting what we wished for.

Now, the real work starts — the Obama Administration’s policies and guidance is out, insourcing is in, and the acquisition workforce is getting the support that it sorely needs. The challenge will be in changing the culture inside the government and ensuring that contracting, program, and oversight officials are working together to increase competition and accountability in federal contract spending. Just remember … Yes We Can!

-- Scott Amey

IG Investigation Spurred by POGO Found Former NRC Commissioner Merrifield Violated Ethics Laws

After raising concerns more than two years ago, POGO has just received hundreds of pages of internal documents, which are a part of a Nuclear Regulatory Commission (NRC) Inspector General investigation, that outline how recently departed Commissioner Jeffrey Merrifield disregarded advice from the NRC’s General Counsel and voted on two matters that “could have potentially” financially benefited three companies—Shaw Group, Westinghouse, and General Electric—during the time he was directly involved in employment negotiations with those companies. The IG investigation found that in the two months before accepting a job created for him at the Shaw Group, Commissioner Merrifield voted both to approve China’s purchase of AP 1000 reactors (in which the Shaw Group had a financial interest) and to change criteria of emergency cooling systems that would directly benefit Westinghouse (of which the Shaw Group owned a 20 percent interest). The Washington Post has already picked up the story.

The IG investigation shows that months before he left his post, Commissioner Merrifield tore down the firewall, which he said he had set up in order to protect himself from potential conflicts of interest, and started making calls and visits to potential employers while he was still a voting Commissioner. The IG determined that Commissioner Merrifield participated in 27 final decisions (votes or opinions on policy proposals that can have binding action) that could have benefited nuclear power plant licensees or licensee contractors and “did not take effective measures to prevent a potential conflict of interest during the last 2 months of his term.” Instead, Commissioner Merrifield designed his own recusal process, which was described in the IG interviews with a former staffer as “weird” and with an industry VP as “odd.” This included verbally informing his staff of recusals but not sharing with them a list of the companies he was recusing himself from voting upon, because as the IG learned when interviewing one of Commissioner Merrifield’s staffers:

Morning Smoke: Senators Want More Contracting Guidance from OMB

OMB’s new procurement guidance inadequate, lawmakers say [Federal Times]

FTC's Powers Would Grow Under Financial Overhaul [The Wall Street Journal]

Bair Breaks With Obama, Urges Prepaying Costs to Unwind Firms [Bloomberg]

GMAC Shows Limits of Resolution, Systemic Risk Proposal [BusinessWeek]

Catch F-22 [Rachel Maddow]

Northrop Criticizing its KC-X Customer, Or Asking for a Fair Fight? [Ares]

Senator: Pentagon must make painful spending adjustments [Government Executive]

SBA proposes major revisions to small business contracting program [Government Executive]

Hearing: "Systemic Regulation, Prudential Matters, Resolution Authority and Securitization" [House Financial Services Committee]

Scary Recovery Spending

A ProPublica story recently detailed nearly $30 million in Defense Department contracts awarded under the Recovery Act to companies while “they were under federal criminal investigation on suspicion of defrauding the government.” Some of the companies have since been placed in contracting timeout. Unfortunately, that’s the way the current system works, and with the urgency involved with distributing federal stimulus funds, taxpayer dollars are flying out agency doors to contractors that are being investigated by the government. On the bright side, I haven’t heard of any new money being awarded to contractors on the suspended or debarred list. 

If we had found an instance involving a top contractor being investigated for fraud or similar offenses, it would have been included in POGO’s Federal Contractor Misconduct Database. That begs the question — would it be included in the government’s forthcoming secret Federal Awardee Performance and Integrity Information System (FAPIIS)? Answer: nope. FAPIIS is the congressionally mandated database that is intended to provide government officials with better pre-award information to ensure that taxpayer money doesn’t go to non-responsible contractors. But unfortunately, the scope of FAPIIS was gutted by Congress and as a result, it will only capture a tiny cross-section of the contractors found guilty, liable or that have admitted fault, in criminal, civil, and administrative contract-related proceedings.

It’s kinda scary to think that agencies are still spending their normal appropriations while also spending the hundreds of billions that the government is using to stimulate the economy — all of this occurring with little federal oversight of those expenditures. What a ghostly thought!

-- Scott Amey

Morning Smoke: Hearing to Address New Contracting Guidance from OMB

Hearing: Achieving the President's Objectives: New OMB Guidance to Combat Waste, Inefficiency, and Misuse in Federal Government Contracting [Senate Ad Hoc Subcommittee on Contracting Oversight]

OMB calls for 5 percent growth in civilian acquisition workforce [Government Executive]

FEMA is unable to measure funding benefits [Government Executive]

Coburn Questions Stimulus Contracts to Suspended Contractors [ProPublica]

Lawmakers Slam Tanker RFP [DoD Buzz]

House Bill Taps Largest Firms to Pay for U.S. Financial Rescues [Bloomberg]

GMAC Asks for Fresh Lifeline [The Wall Street Journal]

Senators Question U.S. Response to Flu [The Wall Street Journal]

Improving financial regulation and supervision [Econbrowser]

Congress Getting Into the Performance Game [OMB Watch]

Defense Contractor Rampage: A Case Study

One of our commenters asked for evidence of the rampage defense contractors have been on as the recently reassigned Director of the Defense Contract Auditing Agency (DCAA) has sought to reform the agency. The commenter acknowledges contractor protests, but what also comes to mind is a letter from the Aerospace Industries Association (AIA) to Pentagon Comptroller Robert Hale. In the letter, which can be read here, AIA protested the new guidelines issued by DCAA and instances when the agency held contractors accountable for internal weaknesses that had been permitted in the past — essentially, for correcting the kind of past problems that the GAO identified. From the letter:

Recently issued DCAA policy has resulted in the wholesale disapproval of contractor systems, some of which have been in place for several years without question. This new DCAA policy is disruptive, costly...It also results in contracting officers having to make award decisions in the face of DCAA system inadequacy determinations...

In the attachments to the letter, under "Communication," AIA also protests Stephenson implementing reforms like ceasing the use of integrated product teams, which was recommended by the Defense Business Board — an independent review panel established to review DCAA operations that POGO worried would be too slanted in the interest of defense contractors. The letter also documents instances when contractors resisted giving DCAA access to the information they requested — and being flabbergasted when DCAA wouldn't accept their explanation and instead refused to approve systems that they could not verify.

AIA and other contractors may be on point that some of DCAA's actions related to ethics and reporting went beyond their jurisdiction — but this letter demonstrates that under April Stephenson, DCAA was at least on a path to being more aggressive in protecting taxpayers' interest. And many commenters over at Government Executive also seem to doubt the wisdom of the decision to reassign her.

-- Mandy Smithberger

Morning Smoke: Criminal Investigation into Previous DCAA Audits Underway

Pentagon Contracting Audit Chief Removed Following Critical Senate Hearing [Paper Trail]

CEOs Must Certify Their Tanker Bids [Ares]

Southern Guvs Start Tanker Group [DoD Buzz]

Defense Department Awards Stimulus Contracts to Companies Under Investigation [OMB Watch]

OMB contracting guidance expected to be released this week [Government Executive]

Bill in works to let U.S. dissolve failing firms [The Washington Post]

SEC seeks to curb naked access, expose fast trades [Reuters]

The Challenge in Counting Stimulus Returns [The Wall Street Journal]

Countrywide inquiry broadens [Politico]

AIG: The Sequel [The Big Money]

Industry Years Behind on Testing Approved Drugs [The New York Times]

Removing DCAA Director Won't Fix the Agency's Problems

POGO has learned that an e-mail was sent this afternoon to all Defense Contract Auditor Agency (DCAA) employees informing them that Patrick Fitzgerald, Director of the Army Audit Agency, will be appointed to head DCAA on November 9th.  The current Director of DCAA, April Stephenson, has accepted a position as Special Assistant to the Comptroller. Statement from POGO Executive Director Danielle Brian below.

Contractors have been on a rampage fighting new requirements being placed upon them by DCAA for the past year.  Removing the Director of DCAA does not address congressional and taxpayer concerns that this agency lacks the independence and clout necessary to serve taxpayer interests.  It would be unfortunate and ironic if congressional inquiries into the independence and strength of DCAA ultimately serves to strengthen the hand of contractors.

POGO's curious to hear contractor, DCAA employee, and taxpayer reactions to the news. As always, we encourage you to comment below.

-- Mandy Smithberger

See also:

• Target Practice with the DCAA
• Strengthening DCAA Through Independence and Additional Resources