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NDAA Scorecard for Taxpayers: Ya Win Some, Ya Lose Some

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Right now Congress is voting on its 1600+ page National Defense Authorization Act for Fiscal Year 2013 (NDAA). The bill authorizes a whopping $633.3 billion for national defense discretionary programs, including $527.5 billion for the Department of Defense base budget. This Pentagon budget is out of sight and in an alternate universe—one where the fiscal cliff doesn’t exist. That said, this enormous must-pass bill contains several POGO-approved reforms aimed at cutting some fat, enhancing government accountability to taxpayers, and improving oversight of contractors. Lawmakers are hoping to pass the bill out of both the House and Senate today.

The bill is the result of a conference committee that resolved the differences between the House and Senate versions of the NDAA (H.R. 4310, S.3254). The Joint Explanatory Statement of the Committee of Conference sheds light on how the committee made some of the decisions. (See Project On Government Oversight picks for the NDAA from both chambers and an earlier letter on amendments we supported in the House.)

POGO applauds the conferees from the House and Senate Armed Services Committees for keeping a few of the most important reforms on the table—like best practice whistleblower protections for contractors and grantees, and anti-human trafficking measures. But despite these major wins for taxpayers, there also are some losses.

Here’s the POGO scorecard on the NDAA:

Whistleblower Protections

  • Perhaps the biggest victory for taxpayers is Sen. Claire McCaskill’s (D-Mo.) proposals for major enhancements to whistleblower protections for employees of federal contractors and grantees. These are best practice protections that will cover much of the nearly $2 trillion in taxpayer funds spent on contractors and grantees. Section 827 significantly improves existing protections for DoD contractor whistleblowers. Section 828 extends the excellent whistleblower protections for stimulus fund recipients to non-DoD federal contractors, subcontractors, and grant recipients who make disclosures about government waste, fraud, abuse, and illegality. Though the conferees limited these reforms to a four-year pilot program and carved out intelligence community contractors, these reforms will go a long way toward increasing accountability to taxpayers. Sen. McCaskill’s Floor amendment, which became Section 828, was cosponsored by Sen. Robert Casey Jr. (D-Pa.). Section 827 was originally passed in the Senate Armed Services Committee.

Government Contracting Accountability

  • Another important win is a proposal by Sen. Richard Blumenthal (D-Conn.) and Reps. James Lankford (R-Okla.) and Gerry Connolly (D-Va.) to help stop contractors from using taxpayer dollars to fund human trafficking. Sections 1701-1708 will close loopholes in existing regulation, increase enforcement, mandate responsible labor recruitment practices, and provide criminal penalties.

However, the conferees watered down some of the Senate-passed reforms. The Senate bill would have prohibited excessive pass-through contracts and charges in the acquisition of services. But Section 802 only requires a review and justification of pass-through contracts.

That said, other critical components of the Wartime Contracting provisions were included in the final NDAA. Section 846 requires commanders to develop comprehensive risk assessments related to contractor performance in operational or contingency plans. Section 848 establishes additional oversight responsibilities for Inspectors General for contingency operations. Section 849 makes Chief Acquisition Officers of federal agencies responsible for oversight of contracts and contracting activities for overseas contingency operations. Section 850 requires Department of State and USAID to submit reports to Congress outlining which officials are responsible for policy, planning, and execution of contract support for overseas contingency operations (including acquisition, contract oversight, and risk management).

  • Unfortunately, Sen. Joe Manchin’s (D-W.Va.) Senate-passed provision to reduce the contractor employee compensation cap from over $763,000 to $230,700 did not make it through conferencing. This commonsense provision would not have restricted the compensation paid to contractor employees—it only would have reduced the taxpayer-paid portion of their compensation. This reform is essential as the current contractor compensation cap is more than three times the President’s salary, and will likely exceed $800,000 when adjusted in 2013.

Instead of reducing the cap, Section 864 requires the Comptroller General to submit a report on allowable costs of contractor employee compensation to Congress. Although more data may be helpful in convincing certain Members of Congress, POGO agreed with the Senate and thinks it’s high time to reduce the cap on high-flying contractor salaries.

  • Sen. Jeanne Shaheen’s (D-N.H.) amendment requiring a report by the suspension and debarment officials of the military departments and the Defense Logistics Agency on delays in the federal suspension and debarment process was not included. This provision would have helped tackle the long-standing problems with this broken enforcement tool for holding fraudulent contractors responsible and safeguarding taxpayer dollars. The amendment was cosponsored by Sen. Kelly Ayotte (R-N.H.).
  • Two important Senate-passed provisions by Sen. Bernie Sanders (I-Vt.) were also cut by conferees. Cosponsored by Sen. Joe Manchin (D-W.Va.), the first would have required the Pentagon to publish annual reports on federal contracting fraud. Another amendment, cosponsored by Sen. Sheldon Whitehouse (D-R.I.) would have required that a database of certain senior DoD officials seeking employment with defense contractors be made publicly available.
  • However, we are pleased that Rep. Jackie Speier’s (D-Calif.) DoD IG review of the DoD revolving door database made it through conferencing. It will include reporting on the number of requests for ethics opinions made by military officials seeking employment with a defense contractor and noting when such records are missing. POGO has fought a long battle to bring transparency to the DoD revolving door database, and this will at least help us find out how well the system is working.
  • Unfortunately, Sen. Ron Wyden’s (D-Ore.) amendment requiring the Pentagon to disclose and justify to Congress any contracts that contain indemnification clauses that hold military contractors harmless of acts of negligence was watered down to a reporting requirement. Section 865 in the NDAA now requires the Secretary of Defense to submit to Congress reports on the use of indemnification agreements. This reform would have ensured that when a contractor (such as KBR) is found guilty of endangering the safety of military personnel, they won’t be able to simply point to their contract and say the government is responsible for indemnifying their legal costs and damages.
  • The conferees also shied away from reining in waste and abuse associated with the acquisition of so-called commercial items. Despite calls from the Pentagon to redefine commercial items as those genuinely commercial and the Senate’s attempt to allow contractor officers to request additional cost or pricing data, conferees settled on Section 831, requiring guidance and training related to evaluating price reasonableness.
  • Section 955 missed the mark as far as comparing government and service contractor employee costs and utilizing the most cost-efficient workforce as required by law. Across-the-board cuts would produce savings, but POGO’s recommendations for a Government Accountability Office study on cost modeling and improvements to service contract inventories would allow DoD to better compare federal employee and service contract costs and would lead to far greater savings.
  • The NDAA also includes enhancements to the Federal Awardee Performance and Integrity Information System (FAPIIS), which POGO helped create in 2008.

Wasteful Spending in the Pentagon Budget

  • Sections 126, 127, and 128 are aimed at greater accountability for the expensive, problem-ridden Littoral Combat Ship (LCS). These commonsense provisions require studies on matters related to the ships’ performance and cost. We are glad the conferees included the amendment Rep. Jackie Speier (D-Calif.) offered in the House requiring the Government Accountability Office to investigate cracks, equipment failures, engine breakdowns, weld quality, and other matters related to the ships’ performance and cost.

Costly Nuclear Weapons Programs and Complex Oversight

  • Section 3166 establishes a 12 member congressional advisory panel on the governance of the nuclear security enterprise, in part to address issues of accountability in the nuclear weapons complex. Unfortunately, this panel is stacked with Armed Services Committee appointees and is likely to make a decision in the interest of the complex instead of taxpayers. POGO is pleased the conferees rejected most of the House’s proposed sweeping rollbacks of oversight at nuclear weapons facilities. These rollbacks would have eliminated Department of Energy (DOE) oversight of the National Nuclear Security Administration’s (NNSA) nuclear weapons complex, essentially allowing NNSA to oversee its own compliance with the law, and dangerously weakening oversight by the Defense Nuclear Facilities Safety Board. Section 3120 keeps the House proposal to reduce reporting requirements and give nuclear facilities contractors authority that currently belongs to the DOE and NNSA.

Photograph courtesy of the National Media Museum.

By: Suzanne Dershowitz
Public Policy Fellow, POGO

suzanne dershowitz At the time of publication Suzie Dershowitz was a public policy fellow for the Project On Government Oversight.

Topics: Government Accountability

Related Content: Budget, Defense, NDAA

Authors: Suzanne Dershowitz

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