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Project on Government Oversight

Federal Contractors Beware

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August 21, 2009

This op-ed was originally published in Ethisphere Magazine.com
Written By Scott Amey, General Counsel, POGO | Danielle Brian, Executive Director, POGO

Accountability is Here to Stay

The lack of effective government oversight over the years has been a boon to contractors and corporations, and a bane to taxpayers. Waste, fraud, and abuse in the War on Terror, Hurricane Katrina recovery, and the Wall Street meltdown have finally become so burdensome that the taxpayers—who have watched their dollars slip through their fingers—have finally screamed, “Enough is enough!” While different sectors of the public have expressed concerns in the past, now there has been a shift in the whole of the American zeitgeist. We are all demanding government accountability and oversight.

The shift mirrors that of the post-Watergate 1970s, when public outraged forced the government to adopt or significantly strengthen numerous good government measures, including the Ethics in Government Act of 1978 and the Freedom of Information Act (FOIA). Those sunshine and ethics laws forced the government to operate in a more transparent manner, enabling citizens to become more knowledgeable about government operations and more capable of judging when decisions and policies serve narrow interests at the expense of the public.

The public is outraged again, and for good reason. Federal contract spending increased over 150 percent in the past eight years, rising from $208 billion in FY 2000 to over $536 billion in FY 2008. Those numbers rank the U.S. government as the largest consumer in the world. Over those years, the government has not adequately conducted preventive oversight of federal spending, resulting in a veritable “catch me if you can” free-for-all for many government vendors. Taxpayers have witnessed egregious cases of bribery, fraud, and personal and organizational conflicts of interest, resulting in lackluster government projects that are over-budget and behind-schedule. Some of these instances have even resulted in criminal, civil, or administrative actions against the individuals and corporations involved.

Public outcry against such misconduct has slowly been gaining volume and we are witnessing another shift toward greater accountability and openness. For instance, in the fall of 2008, President Bush took a step toward ensuring contractor accountability by signing a law creating a government-wide contractor and grantee responsibility and performance database. It’s one thing to have mandatory disclosure of misconduct (a recent requirement), but it’s a greater victory to have a centralized database of instances of misconduct that government officials can consult prior to awarding taxpayer dollars. A government-run contractor responsibility and performance database, a version of which POGO has developed and operated on its own since 2002, helps contracting officials to avoid risky contractors and continue to do business with contractors with a proven track record of responsibility, ethics, and performance. The biggest drawback of the government’s database, however, is that it’s not accessible to the public—and that needs to change.

Last year also saw moves to require federal contractors to keep the government informed of certain criminal and civil violations of the False Claims Act (an anti-fraud law which helped recover $1.34 billion in 2008 and over $21 billion since 1986) and overpayments by the government. Additionally, contractors are now required to have a code of ethics and business conduct. They will also have to establish and maintain specific internal controls to detect and prevent improper conduct involving the award or performance of federal contracts or subcontracts. Under the new requirements, the Defense Department has received 27 disclosures since late-2008 – a tremendous improvement over the old voluntary disclosure program which, in its later years, only resulted in a handful of disclosures each year.

Congress and the Obama Administration are also making leaps forward to open the government and protect taxpayers. In 2009, we have seen numerous bills, executive orders, and policy papers crafted to increase contractor accountability and strengthen the government’s control over its policy- and decision-making processes. Many years have passed since the creation of sunshine laws, and now they are being enhanced as data on federal and state spending, campaign contributions, lobbying expenditures, and federal contract and grant information are publicly posted on the Web.

Given all these advances in accountability, maybe it won’t be necessary to directly attempt to overhaul the deeply-rooted culture in the contracting system. The move toward a more open government and contracting system will both reveal and deter waste, fraud, and abuse. It would be incredible if the government posted so much information on the Web that FOIA requests became an anachronism. But even if that day never comes, those contracting with the federal government should consider accountability and high ethical standards as business-as-usual, rather than a fad that will disappear when the most recent crisis blows over. The “catch me if you can” era of contractors policing themselves is coming to a close. The government is requiring them to “go all in” and show their cards so that taxpayers will know where they stand in the game.

Founded in 1981, the Project On Government Oversight (POGO) is a nonpartisan independent watchdog that champions good government reforms. POGO’s investigations into corruption, misconduct, and conflicts of interest achieve a more effective, accountable, open, and ethical federal government.

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