Fed Contracting: So Hot!

This week, Representative Mike Quigley (D-IL) introduced a companion bill mirroring the legislation proposed by Senators Russ Feingold (D-WI) and Tom Coburn M.D. (R-OK) that would expand and enhance the Federal Awardee Performance and Integrity Information System (FAPIIS). POGO supports these bills, but we would still like to see most of FAPIIS made available to the public.

In other contracting news, the government is claiming that risky contract types are on the decline (another story here too). But if you read the White House release, that statement is only partially correct. The release states that competition in contracting is increasing and that spending on cost-type and time and material contracts (which place most of the risk on the government and taxpayers) are declining. That is true, but it’s only true for new contracts, which POGO believes only account for 10% of the approximately $130 billion that has been awarded. That’s a good start, but we need to see those trends for all $500 billion in federal contract awards.

The White House release also mentions savings from using reverse auctions. Unlike an auction where winning bids increase, a reverse auction requires the vendors to lower bids before the final offer is accepted. POGO has promoted the use of reverse auctions in the past, and we believe that it is a great way to effectively use competition to get deals.

Another proposal from the White House will likely incite riots in the streets (I know, a slight exaggeration, but it drives home the point that contracting is getting really exciting)—“High Road” contracting. The theory is the government should only be conducting business with contractors that meet and possibly exceed labor, environmental, and ethics standards. A government preference for green contractors might be forthcoming (which would follow government efforts to do the same).

In the meantime, Representative George Miller (D-CA) is trying to do his part to promote responsible corporate governance by barring “new offshore oil and gas drilling permits to British Petroleum or any other company with a significant history of violating worker safety or environmental law.” The House Natural Resources Committee passed Miller’s amendment as part of the CLEAR Act markup today.

While the White House’s “High Road” contracting proposal is certainly a controversial one, it’s not far off from how we as consumers buy goods and services every day.  I know that is a simplification, and that the “High Road” proposal could have unintended consequences, but it would be nice if the government rewarded contractors who are attempting to improve their labor or environmental practices rather than padding their own corporate bank accounts. In fact, there is a growing body of research suggesting that in the long-run, a high-road approach to contracting pays off.

The GSA emission proposal referenced above was obtained and provided to POGO by Federal Times.

-- Scott Amey

Comments

[Scott Amey]

Contractors are buying-in to the green concept:

http://www.federaltimes.com/article/20101130/ACQUISITION03/11300303/1009/ACQUISITION

[Scott Amey]

GSA's new sustainability plan will require contractors to think green:

GSA has embedded Guiding Principles into contract specifications. GSA’s standard contract specifications for custodial services and building operations and maintenance contract require contractors to address environmentally preferable purchasing, green cleaning, recycling, integrated pest management, hazardous material management, and electronic stewardship. These specifications help GSA adhere to the Guiding Principles.

[Scott Amey]

RFPs will include emphasis on going green as government looks for reduced greenhouse gas emissions.

http://www.federaltimes.com/article/20100804/ACQUISITION01/8040302/1001

[Account Deleted]

I think the key word should be "responsible government". Each signed contract should be carefully considered and this will avoid misuse of public money. Any investment should be analyzed in terms of opportunity and jobs created. Every job is vital in the current economic crisis. People need to feel safe and so slowly when we will overcome.

[Gov Con Maven]

SOCAL Contractor, you’re drinking the Kool Aid. I’m simply talking about the underlying costs going into price build-ups, not whether the requirements are meritorious, which is a program management issue.

The “Coopers & Lybrand” study was an utter joke. BTW, it wasn’t a “Coopers & Lybrand” study, it was a “Coopers& Lybrand/TASC” study. It was custom ordered by Jacque Gansler to make a political point. The study was discredited by GAO and lots of others. Even the study authors acknowledged two important things: 1) it was anecdotal; and 2) it only looked at “costs” without comparing benefits.

One last thing, no public accounting firm would be allowed to lend its name to such a such a “report” today. It would be considered a compromise of independence. And what became of TASC after the study was issued? It became a part of Northrop Grumman before it was recently spun off due to organizational conflict of interest issues.

[SoCal Contractor]

GAO doesn't agree that the "explosion of costs in government contracting" comes from excessive contractor overhead. GAO thinks it comes from lack of rigorous definition of requirements, reliance on unproven/immature technologies, and uncertain funding.

Moreover, too much contractor overhead is driven by governmental administrative requirements. Talked to anybody interacting with DCAA lately? Remember the Coopers & Lybrand study from the mid-1990s -- government-unique requirements (and DOD-unique requirements in particular) -- add 20 - 30% to the price being paid.

I understand that contractor overhead is certainly an easy target; it's just the wrong target.

[Govt Con Maven]

Observer Jr. has made an important observation. It's a combination of both creeping profitability on government sales, as well as excessively high direct and indirect costs (much of which is comprised of salary and benefits) that has led to an explosion of costs in government contracting. I've got nothing against profitable govt contractors, but government "negotiators" generally do a very poor job of negotiating contractor costs. All of this is made much worse by the evisceration of Truth in Negotiations Act compliance in the last 15 years.

[Observer Jr.]

Before reveling in feelthee contractors "padding corporate bank accounts," you should probably recognize that this is not where the ill gotten gains sit. They get paid out in salaries and all the slivers of overhead (just like the government, but the govvies don't have the accounting to see this, or, that government overhead dwarfs contractors') as well as profits in the form of dividends. Bank accounts pay zilch as you know.

I was hoping you would lock onto the new TechAmerica "commission" on federal acquisition. It is chaired by the woman who heads LockMart's govt business (where contracts smolder not infrequently), and, POGO's old friend, 'lil Stevie Kelman, whose consulting work for Accenture and collaborations with Booze were not mentioned in the press release. Have little hope the august "commission" will turn up anything new. But it might omit a few contractor foibles, as well as overlook things the government does that deserve awards for exceptional lack of attention, smarts, and concern on behalf of the customers and the taxpayers. I am looking forward to your expose of the "commission."