POGO's response to the Subcommittee's July 30, 2007 letter presenting questions to complete the record on Testimony on Federal Contracting: Why Do Risky Contractors Keep Getting Rewarded With Taxpayer Dollars?

Chairman Edolphus Towns

Subcommittee on Government Management, Organization, and Procurement

Committee on Oversight and Government Reform

U.S. House of Representatives

2157 Rayburn House Office Building

Washington, D.C. 20515

Ranking Member Brian Bilbray

Subcommittee on Government Management, Organization, and Procurement

Committee on Oversight and Government Reform

U.S. House of Representatives

2157 Rayburn House Office Building

Washington, D.C. 20515

Dear Chairman Towns and Ranking Member Bilbray:

This is the Project On Government Oversight's (POGO) response to the Subcommittee's July 30, 2007 letter presenting questions to complete the record for the hearing entitled "Federal Contracting: Do Poor Performers Keep Winning?" The July 18, 2007 hearing raised many contractor accountability issues that must be resolved to ensure that taxpayer dollars are spent wisely. I testified about flaws in the federal contracting system that routinely allow contractors with substandard responsibility records to continually receive federal contract awards.

As stated in its written and oral testimony, POGO believes that its Federal Contractor Misconduct Database (FCMD) is a useful tool for government officials. Currently, there is no centralized, comprehensive government listing of contractor criminal, civil, or administrative indictments, convictions, fines, penalties, restitution, administrative agreements, or settlements. POGO's database makes available valuable information that will assist government officials when awarding contracts.

POGO provides the following responses to the questions presented:

Question 1:

How does the Project On Government Oversight’s contractor misconduct database differ from the database proposed in H.R. 3033? What types of reports or other data should be included in such a database?

POGO Response

There are differences between POGO's Federal Contractor Misconduct Database (FCMD) and the database proposed by Representative Carolyn Maloney and Chairman Towns in H.R. 3033. Those differences are primarily due to POGO's lack of resources and access to information from federal agencies and contractors.

POGO's FCMD and the database proposed in H.R. 3033 differ in the following ways:

(1) H.R. 3033 covers all federal contractors and entities receiving federal assistance. The FCMD is currently limited to the top 50 federal contractors, but will soon be expanded to the top 100 contractors. It does not include grant recipients.

(2) H.R. 3033 requires contractors to report contracts terminated for default and suspension and debarment show cause letters. The FCMD has limited information about contracts terminated for default and contractors receiving suspension or debarment show cause letters because that information is generally not publicly available;

(3) The FCMD allows users to sort the data by multiple variables (contractor, disposition, court type, misconduct type, contracting party (if any), date, and amount). H.R. 3033 does not discuss specific user-friendly features of the database, but we hope that POGO's model is replicated so that government officials and the public can easily search and sort the data as need; and

(4) The proposed government database does not outline special features that can help users link to other sources of government information. The FCMD provides useful links to contracting resources, contractor information, POGO's letters to each contractor, and their response if any was submitted to POGO.

Despite some differences in information collection methods, types of information collected, and its presentation, POGO's FCMD provides a model from which the government should consider when creating a comprehensive responsibility and performance database. As stated by Inspector General Skinner during the July hearing, there is a large gap in the government responsibility and performance information that is utilized by government officials. Until that gap is closed, contracts will continue to be award to nonresponsible contractors in violation of federal law.

Question 2:

During your testimony you stated that POGO's database includes "pending" cases as well as cases that have been resolved without any admission of guilt or liability. Why do you include those cases? Does inclusion of these cases violate the due process rights of contractors?

POGO Response

During the hearing, Ranking Member Bilbray expressed concern about POGO's inclusion of pending cases and cases resolved without any admission of guilt or liability in the FCMD. POGO believes that relevant cases that remain pending (which are found in a separate part of a contractor's FCMD web page, and are not counted as instances of misconduct or added to the monetary total) and all settlements should be included so that government officials can be fully informed to make their own assessments about the scope of a contractor's responsibility and performance record.

After the release of the FCMD, POGO has received suggestions that we should limit the inclusion of "old" cases and "minor" instances of misconduct. POGO believes, however, that the inclusion of all misconduct, regardless of its nature, severity, or when it occurred provides a comprehensive resource for government officials to make well-informed contract award decisions. POGO also believes that the inclusion of cases not involving the government as a party indicate a contractor's culture of responsibility and business ethics that should be considered by federal contracting officials. POGO is not trying to be the judge and jury in deciding guilt of a contractor, the appropriateness of the misconduct, or the penalties imposed on and paid by a contractor. Instead, POGO's mission is to provide timely and accurate information about federal contractors that receive billions of contract dollars.

POGO does not believe that the inclusion of pending cases or cases in which there was no admission of guilt or liability violates the due process rights of contractors. All acts of misconduct and alleged misconduct – from regulatory infractions costing a few thousand dollars to fraud cases costing millions – occurring at any time are important in determining a contractor's level of responsibility. Certainly all pending cases deserve the presupposition of innocence, but those instances are useful contractor responsibility and performance indicators. Although we can debate the weight that should be placed on final and pending instances, proceedings settled without an admission of guilt or liability, or "old" or "minor" instances of misconduct, they all should be factored into the government's "best value" determination when awarding taxpayer dollars.

POGO would also like to submit for the record that we have sent multiple letters to the top fifty contractors detailing both instances of misconduct and pending cases to give them an opportunity to verify POGO's data and respond for the record. POGO has received responses from at least five contractors, which are posted on the contractor's FCMD web page.

Conclusion

As you are aware, federal contracting regulations require prospective federal contractors to have "a satisfactory performance record" and "a satisfactory record of integrity and business ethics." (FAR Subpart 9.104-1(c) and (d).) However, the resources currently used by government contracting officers, such as the Past Performance Information Retrieval System (PPIRS) and the Excluded Parties List System (EPLS), do not collect criminal, civil, and administrative rulings or resolutions that would be required pursuant to H.R. 3033. Without such information, federal contracting officers and suspension and debarment officials lack important information relevant to a contractor's present level of responsibility.

POGO hopes that the Congress passes H.R. 3033, and that federal taxpayer dollars are awarded to responsible contractors only, as required by law and as is in the best interests of American taxpayers.

Thank you again for this opportunity to share POGO's views on holding contractors accountable. I will be pleased to answer any additional questions you may have, or to work with the Subcommittee at any time in the future.

Sincerely,

Scott H. Amey

General Counsel