Contract Transparency: What Uncle Sam Can Learn from the States

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March 15, 2017 | By: Sean Moulton
Sailors and civilian contractors on the flight deck of the littoral combat ship

Sailors and civilian contractors on the flight deck of a littoral combat ship (Photo: Naval Surface Warriors / Flickr)

Taxpayers have the right to know how their tax dollars are being spent. In fiscal year 2016, the federal government spent more than $471 billion of taxpayer money through contracts. That’s a great deal of public money—and roughly the same amount is spent each and every year. But do we really know what we are getting for all that money?

Though we have made progress on spending transparency over the last decade, current contract disclosure standards remain inadequate to allow substantive evaluations of individual spending decisions. This is because the federal government does not proactively post the documents related to government contracts as a part of standard spending transparency disclosures.

While the federal government has several times considered establishing a policy to proactively post contracts, the step has never been taken. Although the federal government hasn’t figured out this issue, a review by the Project On Government Oversight reveals that 33 states seem to have, and consistently post some to even most of their contracts on their procurement websites.

The State of Federal Spending Transparency

The government’s primary vehicle for informing the public about federal spending is the USASpending.gov website. Through this website the federal government makes basic information available about non-classified prime contracts above $3,000. Taxpayers and researchers can learn the name of the contractor, the dollar value of the contract, the agency making the award, whether the contract was competitively bid, and anything from a few words to a sentence or two about what the contract entails. This information is helpful in tracking spending patterns and understanding government contracting in the aggregate. But that data is insufficient to evaluate the individual spending decisions, to see if the government is overpaying for products and services.

The detailed information you would need to really evaluate these spending decisions is typically only found in the original contract agreement and the related documents such as contract modifications, amendments, and task or delivery orders that spell out what we got and for how much.

Unfortunately you can’t get those documents through USASpending.gov or any other federal contract data source. That’s because the contracts and other documents are not among the information federal government is required to make available through the site, and agencies appear unwilling to voluntarily take up the task.

Some agencies post a few individual contracts that generally receive greater public interest. Under the Freedom of Information Act (FOIA) agencies are expected to post any records for which they receive multiple requests (usually three or more). The Department of Energy, for instance, posts the contracts and related documents for running the major energy laboratories around the country, and the National Aeronautics and Space Administration posts select contracts related to operations and missions. But for each of these agencies, these are a handful of the hundreds, if not thousands, of contracts managed each year. If you want to see more basic contracts for telecommunications or guard services at either agency, you won’t find them online.

So generally if you want to see federal contracts you must file a FOIA request. With many agencies dealing with sizable FOIA backlogs, you will likely wait weeks if not months to get a copy of the contract. The agency may try to charge you fees if the request is large enough. Moreover, even when the requested contracts are disclosed, only the requester receives them, not the general public.

Clearly, proactive online disclosure of contracts would be a significant improvement, offering more comprehensive information, as well as faster and easier access to that information. So why hasn’t the federal government posted its contracts? Uncle Sam has explored proactive disclosure several times, but never been able to make the commitment.

Previous Contract Transparency Efforts

In 2008, proactive contract disclosure was included as a provision of the Strengthening Transparency and Accountability in Federal Spending Act, co-sponsored by then-Senator Barack Obama (D-IL) along with Senators Tom Coburn (R-OK), John McCain (R-AZ), and Tom Carper (D-DE). The legislation sought to build on the Federal Funding Accountability and Transparency Act, which established the USASpending.gov website. Under the proposed legislation, the request for proposal, announcement of award, actual contract, and scope of work documents would have been linked to from USASpending.gov. But work on the bill stalled as the 2008 election ramped up and two of its main co-sponsors were campaigning against each other. It never passed.

In 2009, Congress almost included a requirement to post award documents in the American Recovery and Reinvestment Act of 2009. The House version of the legislation included the provision (see Sec. 1201(c)), but it was absent from the Senate bill, which only provided for contract data to be disclosed to the public (see Sec. 1519). Unfortunately, Congress dropped any form of the requirement when the bills were merged in conference. Interestingly, a survey by POGO reviewed all state procurement websites and found that one state—New Hampshire—moved forward on the idea that got left out at the federal level and posted original scanned Recovery Act contracts.

In May 2010, the Obama administration issued an advance notice of proposed rulemaking to explore establishing standards for posting federal contracts online. The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council, which initiated the inquiry, sought to amend the Federal Acquisition Regulation (FAR) to “enable public posting [online] of contract actions should such posting become a requirement in the future.” POGO supported this effort. The proposal, however received push back from contractors and agencies that claimed posting contracts would cost too much and might reveal confidential business information. A few months later the administration abandoned the idea.

In 2015, the Consumer Financial Protection Bureau reported in a FOIA Advisory Committee meeting that it planned to post all of its contracts online. The agency intended to add a transparency clause to its contract awards requiring each contractor to submit a disclosable copy of the contract with all requested redactions to the agency within ten days of the contract being awarded. Those contracts would then be posted online by the agency. By 2017 the agency had cancelled its plans to proactively post all contracts, at least in part because of resource concerns, and instead has indicated it will post the contracts that are requested three or more times. The Bureau does include a transparency clause in its contracts, but merely uses it to expedite responding to requests for contracts.

Though the idea has been considered several times, concerns about cost, feasibility, or disclosure of protected information have derailed the effort before it is even tried. But if posting government contracts is insurmountably costly or dangerous to the procurement process, no one told the states. Many of them have boldly gone where the federal government still fears to tread—proactively posting contracts online.

State Contracts Websites

At least 33 states proactively post some contracts online, according to research conducted by POGO. That means two-thirds of the states are ahead of the federal government when it comes to contract transparency.

POGO reviewed the procurement and/or spending sites for all 50 states. On each site we conducted different searches and randomly selected 10 contracts to review. States that had contract documents available for 7 or more of the 10 reviewed entries were categorized as posting “most” contracts. Those states that had contracts available in at least 1 but less than 7 of the 10 reviewed were categorized as posting “some” contracts. Not all of the posted contracts were complete, as some had information redacted, presumably to protect proprietary or privacy information. However, this did not seem to be a common practice, nor were the redactions extensive within the contracts.

Some states’ procurement websites only covered statewide contracts that any agency could use to purchase goods and services. Other states included contracts specific to individual agencies. Since POGO had no way to determine how many contracts might be missing from a given system, the review did not attempt to evaluate the completeness of the contract entries but instead focused on the level of detail for the entries in each system.

The 15 states that posted Most contracts are listed in table 1. These states don’t seem to fall into any immediate patterns. The states are from all geographic areas of the country. Both large states such as Pennsylvania and Florida and smaller states such as Connecticut and Idaho made the list. These state procurement disclosure systems all posted a large percentage of the contracts covered but varied greatly in their structure and functionality.

 Table 1: States that
proactively
post most contracts
1. Arizona
2. Connecticut
3. Florida
4. Idaho
5. Indiana
6. Kansas
7. Michigan
8. Missouri
9. Nebraska
10. Pennsylvania
11. Utah
12. Vermont
13. Virginia
14. Washington
15. West Virginia

For instance, Indiana allows public searches for contracts on their Oracle based database. While the search interface can be difficult to master and searches with more than 1,000 results are blocked, users can see scanned images of all of Indiana’s contract documents, which contain details on the terms of the agreement and the service or product being purchased. The Indiana system not only makes contracts available but also grant agreements, leases, license agreements, and memos of understanding. The system appears to cover approximately 98,000 records.

The Florida Accountability Contract Tracking System (FACTS) is Florida’s central tool that provides access to all state government contracts. The website allows users to look up contracts (as well as grants) by agency, commodity or service, dollar value range, recipient name, date, or award ID. The results can be re-sorted by any of the information provided and downloaded. Each entry can be opened to review the details on the contract including budgeting information, deliverables, any audits done, and all related documents including the original contract and amendments.

Missouri’s contract search allows users to search for statewide contracts by keyword, type of contract, or contract number. You can also browse lists of all contracts organized around the contract description, contractor name, or contractor number. Most of the contract entries have contract documents available for download in both searchable PDF or Word format. Many states post scanned images of contracts, but in posting searchable versions, Missouri allow users to more easily find and use information within them.

Eighteen states, again with a wide range of geography and size, posted Some contracts (listed in Table 2).

 Table 2: States that
proactively
post some contracts
1. Alabama
2. Arkansas
3. California
4. Kentucky
5. Maryland
6. Massachusetts
7. Mississippi
8. Montana
9. Nevada
10. New Hampshire
11. New York
12. North Dakota
13. Ohio
14. Oklahoma
15. Rhode Island
16. South Dakota
17. Tennessee
18. Wisconsin

Mississippi posts contracts on a transparency themed website for the state, along with information on the budget, expenditures, revenue, travel, leases, bonds, grants, and workforce. The site has some basic browse functions for finding older contracts. Contracts from FY 2015 forward are posted on a new separate system the state developed—Mississippi’s Accountability System for Government Information and Collaboration (MAGIC)—but that system was designed as a resource planning tool for Mississippi officials. While the system may assist state officials, it seems overly complicated and slow for a public access tool. Many contract listings have links for documents that don’t call up any information.

Oklahoma’s Solicitation Public Search allows users to search statewide contracts as well as open, awarded, or pending solicitations. The system includes more than 200 statewide contracts. Many include numerous documents associated with the contract besides the contract itself, including addendums and pricing schedules. However, for some, the posted contract agreement is simply an award announcement with considerably less detail then a full contract. Notably, Oklahoma also posted searchable contract documents instead of scanned images.

It should be noted that usability of some of procurement disclosure systems may be seen as problematic or below average. For instance, Michigan’s Contract Connect website would not likely be called cutting edge. It requires users to download an Excel file that lists the more than 1,000 contracts available. Users then click on hyperlinks to get copies of the contracts. Pennsylvania’s eMarketplace has links to detailed contract files as well as solicitations and bid tabulations, but the links only show up when using Internet Explorer. These are not ideal technical approaches and should not be emulated by any federal effort.

Regardless, most states are already succeeding in what the federal government has continually refused to do—posting contract documents online for the public to review and evaluate.

State Perspective on Contract Transparency

POGO was able to contact many of the states that proactively post contracts to inquire about their efforts. Several states explained that they posted contracts online because of statutory or other legal requirements. Pennsylvania’s Bureau of Procurement, for instance, noted that “public posting of most contracts in excess of $5,000 is required by the Pennsylvania Right to Know Law.”

Carol Wilson, Director of Procurement for Connecticut’s Department of Administrative Services, noted that the Department began posting all statewide contracts back in 1998 because they saw it as a way to fulfill their legal obligation under FOIA, since all the contracts were subject to public disclosure. In 2009 a new state law was passed requiring all agencies to post their contracts and related materials on the Department’s website.

Several states note that posting their contracts meet goals that go beyond fulfilling legal requirements, such as achieving cost savings, gaining better procurement results, avoiding resource-consuming requests, and improving public trust. Dena Potter of Virginia’s Department of General Services informed POGO, for instance, that the Commonwealth posted contracts not only to meet statutory requirements but also because of a “desire for transparency and good public procurement and business practices.”

The Bureau of Procurement in Pennsylvania’s Department of General Services told POGO that an additional benefit to posting the contract documents was that doing so “reduces the number of open records requests we receive.” Several states agreed on this point. Connecticut’s Carol Wilson emphasized that fewer FOIA requests means “more time we can spend on our work rather than responding to requests for information.”

Several state procurement officials acknowledged that contractors were concerned about disclosure of proprietary information. However, these concerns seem to be fully addressed through redaction of any confidential business information. One state noted that they allowed the contractor to designate proprietary information for redaction. Some might expect that with contractors might push for extensive redactions, but the POGO review did not find widespread use of redaction. While prices and personal information such as names or signatures were sometimes redacted, these were just as often found in other contracts from the same state.

In fact, given that federal contractors often cite prices as part of the proprietary information they worry will be disclosed if contracts are posted, the information was surprisingly common on the state websites. None of the officials POGO reached for comment could offer a specific complaint or problem that had arisen from posting the contracts and related information online.

Redactions of federal contracts are done every day when contracts are requested under FOIA or state open-records laws. Contrary to claims from contractors who shy away from openness and accountability measures, a system can be established to protect information that genuinely needs to be withheld from the public.

Despite the advances in federal government transparency, there are many promising innovations not yet pursued at the federal level. Congress should consider following the lead of these 33 states and pass legislation requiring proactive posting of contracts. There is a demonstrated desire by Members of Congress to advance this kind of legislation, but efforts have been unsuccessful thus far in part because contractors and executive branch agencies have claimed that kind of transparency would cost too much and could reveal trade secrets. This claim is demonstrably false: 33 states have successfully released this data to the public.

It is not clear why at the state level disclosure of contracts could be seen as a benefit to businesses, but at the federal level the same transparency is considered potentially damaging. The success that states have shown with their contracting websites proves that the federal government could implement such transparency while addressing agencies' and contractors' concerns. Congress must push back on the false narrative perpetuated by contractors and establish clear requirements for contract transparency at the federal level.

 

State

Contracts

Alabama

Some

Alaska

None

Arizona

Most

Arkansas

Some

California

Some

Colorado

None

Connecticut

Most

Delaware

None

Florida

Most

Georgia

None

Hawaii

None

Idaho

Most

Illinois

None

Indiana

Most

Iowa

None

Kansas

Most

Kentucky

Some

Louisiana

None

Maine

None

Maryland

Some

Massachusetts

Some

Michigan

Most

Minnesota

None

Mississippi

Some

Missouri

Most

Montana

Some

Nebraska

All

Nevada

Some

New Hampshire

Some

New Jersey

None

New Mexico

None

New York

Some

North Carolina

None

North Dakota

Some

Ohio

Some

Oklahoma

Some

Oregon

None

Pennsylvania

Most

Rhode Island

Some

South Carolina

None

South Dakota

Some

Tennessee

Some

Texas

None

Utah

Most

Vermont

Most

Virginia

Most

Washington

Most

West Virginia

Most

Wisconsin

Some

Wyoming

None

 

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