A National Action Plan for Contract Reform

As part of engagement in the Open Government Partnership, the U.S. government, assisted by civil society groups, is required to develop a National Action Plan. National Action Plans cover a two-year period and consist of a set of commitments that advance governmental transparency, accountability, participation, and technological innovation. The Open Government Partnership issued the 2nd National Action Plan in December 2013.

For the upcoming 3rd National Action Plan, the Project On Government Oversight proposed eight commitments to improved contracting transparency.

1. Improve the FAPIIS Database

The public interface of the government’s Federal Awardee Performance and Integrity Information System (FAPIIS) database has improved considerably since its debut in 2011. The site’s overall design and search interface are cleaner and more user-friendly. At the same time, the reporting requirement for contractors and grantees has expanded.

However, there are still problems with the data posted on the site. A large portion of the government-entered and vendor-entered records in FAPIIS are duplicative and/or provide very little useful information. In addition, the public has been told very little about the creation and continued operation and maintenance of FAPIIS.

The agencies in charge of FAPIIS—the General Services Administration (GSA) and the U.S. Navy’s Naval Sea Systems Command—should be required to do regular spot checks of the data. Duplicate records should be eliminated, and contractors and grantees should be required to provide clear and informative descriptions for all civil, criminal, and administrative misconduct proceedings. The Government Accountability Office, the GSA, and/or the Naval Sea Systems Command should be required to provide Congress and the public an annual status report on the database’s operation and maintenance.

2. Publicly Release Contracting Documents

Taxpayers have the right to know how the federal agencies spend their money acquiring goods and services. But with the details of federal contracts largely kept secret, it’s difficult for the public to determine whether contractors are being held accountable and the government is getting quality goods and services at fair prices.

The public should be able to see all contract-related documents. This includes copies of the contract, delivery and task orders, modifications and amendments, as well as contract proposals, solicitations, award decisions, justifications (for contracts awarded with less than full and open competition and single-bid contract awards), contract audits and reviews, and contractor past performance reviews. Many states and countries make these documents publicly available. would be the ideal place to post these documents.

3. Post Contractor Past Performance Reviews on FAPIIS

The government currently withholds contractor past performance reviews from the public FAPIIS website. This is analogous to a school forbidding parents from seeing their children’s report cards.

Taxpayers should be able to see how the companies who are awarded hundreds of billions of dollars in contracts each year are performing on those contracts. Publicizing contractor past performance data will improve contractor performance and potentially reduce the number of bid protests, which consume considerable amounts of judicial time and resources for the winning and losing bidders.

The government’s rationale is that releasing contractor past performance reviews could harm the commercial interests of the government and the contractor and impede the efficiency of government operations. In the vast majority of situations, however, there is no such threat. Past performance data is made publicly available in other contexts, most notably in Government Accountability Office bid protest decisions, which often contain past performance ratings, scores, report cards, and even anecdotal details about contractor performance. There is a big difference between past performance disclosures that legitimately threaten commercial interests and those that merely cause embarrassment or inconvenience to contractors or the government.

The administration should abandon its policy of automatically designating contractor past performance reviews “source selection sensitive” and therefore exempt from public release. Contracting officials should be given the authority to determine on a case-by-case basis whether releasing this information would legitimately pose a threat to commercial or other interest of the government or a contractor. If no such harm would occur, the information should be posted on the public FAPIIS site.

4. Publicly Release the DoD Revolving Door Database

Many Department of Defense (DoD) officials retire from the federal government to work for companies that do business with the department. The expertise of these officials is coveted by companies that compete for federal contracts. This so-called “revolving door” between the public and private sectors erodes the public’s trust in the government. Former DoD officials should be allowed to use their expertise to make a living in the private sector, but the public should be provided the information needed to determine whether an official is using their unique position to benefit a private company.

The National Defense Authorization Act for Fiscal Year 2008 requires senior DoD officials and senior acquisition officials who meet certain criteria to seek guidance from ethics officials before accepting compensation from a defense contractor. The law requires the DoD to keep ethics officials’ opinions in a centralized database called the After Government Employment Advisory Repository.

The advisory repository is off-limits to the public. Attempts to obtain the data through the Freedom of Information Act have been unsuccessful. (POGO submitted a FOIA request for the data in 2010, and we are still waiting for DoD to reply to us.) In 2013, DoD released some of the data to the Citizens for Responsibility and Ethics in Washington in response to a FOIA lawsuit. However, copies of the ethics opinions were heavily redacted, with names, ranks, and other potentially identifying information omitted. DoD should be required to publicly release the data inthe advisory repository, including the names of the officials who are the subjects of the ethics opinions.

5. Publicly Disclose Contractor Political Spending

With so much money at stake—$445 billion last year—companies seeking government contracts will try to court politicians who have power over contracting decisions. The opportunity for political corruption is high, as is the public's interest in transparency.

Contractors are already required to disclose their Political Action Committee contributions and expenditures. Contractors should also be required to disclose the type of spending that was upheld by the Supreme Court in Citizens United—so-called “dark money”. With so much secrecy in federal election spending, it's difficult to expose and crack down on “pay-to-play” in contracting.

President Obama should issue an executive order requiring contractors and their employees, directors, officers, affiliates, and subsidiaries to disclose election spending exceeding $5,000 in the aggregate. The data should be posted on Disclosure should be triggered every time a contract is renegotiated, renewed, or extended. There must also be adequate enforcement, so that non-compliance or misrepresentation is subject to remedies, including cancellation of a contract and suspension or debarment. Contractors should also be required to certify that they are in compliance with 2 U.S.C. 441c’s ban on direct or indirect political contributions. In 2011, President Obama composed a draft executive order that would have required those seeking contracts to reveal their political spending as a condition of submitting bids.

6. Publish an Annual Report on Defense Contracting Fraud

In 2011, DoD released its “Report to Congress on Contracting Fraud”. The report provided invaluable statistics on DoD contractors who engaged in fraudulent conduct that led to criminal convictions, civil judgments, out-of-court settlements, and suspensions and debarments. For example, it found that hundreds of contractors that defrauded the military (including big players like Lockheed Martin and Northrop Grumman) received more than $1.1 trillion in DoD contracts over the previous decade. The report also identified planned and ongoing DoD initiatives to improve awareness and safeguards with regard to contracting fraud.

The report was prepared by the Under Secretary of Defense for Acquisition, Technology and Logistics at the request of Sen. Bernie Sanders (I-Vt.) through a provision Sanders inserted into the annual defense spending bill. The report cost approximately $81,000 to produce.

DoD should be required to publish an annual report on defense contracting fraud. The report should contain the same elements that were in the 2011 report, to wit: an assessment (including tables) of the value of contracts entered into with contractors that have been indicted for, settled charges of, been by fined by any federal agency for, or been convicted of fraud in connection with a federal contract; recommendations for penalties for contractors who are repeatedly involved in contract fraud allegations; and an assessment of actions DoD has taken to strengthen its policies and safeguards against contractor fraud. The report must be made available, without redactions, to the public.

7. Disclose Executive Order 12600 Reviews

President Ronald Reagan’s Executive Order (EO) 12600 allows contractors to object to the release of information to the public under the Freedom of Information Act (FOIA). There is concern that the government often uncritically accepts the contractors’ assertions—usually in regard to FOIA exemption (b)(4), which covers trade secrets and commercial or financial information—and redacts or withholds more information than is justified or necessary.

FOIA law requires agencies to indicate the amount of information withheld and the specific exemption that applies. There is no requirement for the government to inform FOIA requesters that specific information has been withheld or redacted pursuant to EO 12600.

The government should be required to inform FOIA requesters when a 12600 review was conducted and to denote with a special label or notation information that was withheld as a result of that review. These changes could be implemented by the Office of Information Policy at the Department of Justice. In addition, the Office of Information Policy should conduct an annual audit of the 12600 process to determine whether the FOIA system is operating with a presumption of openness, or is instead being skewed in favor of those with a vested interest in secrecy.

8. Replace the DUNS Unique Identifier System

The current method for tracking federal fund recipients is the Data Universal Numbering System (DUNS). Every year, the government pays the private financial services company Dun & Bradstreet millions of dollars in licensing fees to use the DUNS numbering system. Federal regulations and directives require all contractors, grantees, and other entities seeking federal funds to acquire a nine-digit DUNS number. This effectively gives Dun & Bradstreeta monopoly. Furthermore, the licensing agreement gives Dun & Bradstreet control over how the government uses DUNS data.

DUNS numbers are assigned to each physical location of the entity, often making searches of federal spending databases an arduous task. DUNS numbers are also not subject to transparency requirements such as the Freedom of Information Act, making it difficult to independently verify the accuracy or comprehensiveness of DUNS information. Reliance on this system creates logistical headaches for the government and hampers taxpayers’ ability to track how their money is spent.

The DUNS should be replaced. The government should find an alternative system to uniquely identify federal fund recipients—preferably one that is not the exclusive property of a private company. Efforts to replace DUNS have been underway for several years. In 2012, it was reported that the General Services Administration (GSA) was considering alternatives, such as switching to a new numbering system that is either government-created or a hybrid public/private system.