While Congress takes on the important agenda of overseeing federal contracting, one area in dire need of hearings and intervention is the federal government's system for holding contractors accountable. In early 2007, POGO will unveil updated research documenting hundreds of instances of misconduct by the government's top 50 contractors, resulting in over $10 billion in fines, penalties, settlements and restitution. While federal prosecutors and investigators pursue companies for fraud, faulty weapons parts, Arms Export Control Act violations, and other cases of misconduct, federal contracting officers continue to dole out billions of taxpayer dollars to those same companies. Repeat offenders should be barred from the government contracting dole, but politically powerful ones continue to circumvent contracting responsibility laws. Federal contracting will continue to be plagued with waste, fraud, and corruption until bad actors have been genuinely held accountable. Congressional hearings on the government's suspension and debarment policies have been contemplated but are long overdue.
One form of misconduct that has received little oversight by the Congress is the occurrence of Human Trafficking by Pentagon Contractors in Iraq . A little-noticed section of a 2006 State Department report described the findings of a Department of Defense investigation into human trafficking by Pentagon contractors in Iraq . According to the report: "Some of these abuses are indicative of trafficking in persons, and include: illegal confiscation of TCNs' [Third Country Nationals] passports; deceptive hiring practices and excessive recruitment fees; substandard living conditions; and circumvention of Iraqi immigration procedures." The Pentagon declared a "zero tolerance" policy and claims to have taken steps to address this problem, yet no congressional hearings have yet been held to explore how this policy is being implemented.1 Commercial contractors are now pressuring the Pentagon to weaken new regulations concerning human trafficking. This issue poses national security implications, compromising perceptions internationally of the U.S. role as a force for good.
Under the Clinton and Bush Administrations, vast swaths of the federal government have, in dizzying order, been shifted into the private sector. From 2000 to 2005, the amount of federal money spent on contracting increased by 82%.2 The great promise of privatizing government was that it would save money by engaging a more "efficient" private sector to do what government would presumably do inefficiently. Yet, repeated scandals involving government contractors ripping off the government have permeated the public news media. In addition, anecdotal evidence suggests that contractors are now handling functions that had previously been considered the exclusive domain of the government, raising questions about whether the government can adequately control its spending and fulfill its mission. The federal government's abysmal performance on the Iraq reconstruction effort and its response to Hurricane Katrina exemplify how privatization can often undermine the government's performance. The Congress should closely explore and examine how and why the government is being privatized, and whether this privatization is harmful to government's ability to serve and be held accountable to its citizens.
Congress is not alone in needing stronger ethics rules. In recent years, the news media have profiled a shocking array of scandals involving government officials who made decisions benefiting private interests and left government to work for the very companies they were overseeing. For example, the public learned that convicted lobbyist Jack Abramoff sought to offer a lucrative lobbying position to Interior Department official Steven Griles after Griles made decisions that benefited Abramoff's clients.3 A 2004 POGO study found 300 cases in which officials left government to go work for the 20 largest contractors, with as many as one-third of those officials having been in key positions to influence spending decisions that benefited the contractors.4 POGO's study also found that revolving door and conflict-of-interest rules were confusing and failed to rein in some of the most egregious abuses. A 2006 report by the New York Times documented that at least 90 Department of Homeland Security officials left their positions and went on to work for the agency's contractors.5 Congress has done little oversight in recent years to ensure that the taxpayer and the government are protected from the abuses such conflicts of interest can cause.
In addition to the revolving door, POGO is also concerned with conflicts-of-interest in Federally-Funded Research and Development Centers (FFRDCs). FFRDCs, such as the Institute for Defense Analysis and MITRE, are created by the federal government but are not governed by the ethical standards that apply to federal employees.
Congress has held extremely few hearings in recent years on cases of retaliation against whistleblowers who expose waste, fraud, corruption, and illegal activity. However, Members of Congress and the Administration have been quick to demand investigations into leaks of information to the news media, but have neglected efforts to create protected communication channels for whistleblowers. Much more oversight is needed to examine why retaliation against whistleblowers continues to occur despite existing anti-retaliation laws, and what else prevents federal employees from helping the Congress root out Executive Branch wrongdoing.
A 2004 Government Accountability Office report documented a 50% annual increase in the number of government employees seeking whistleblower protection since the 9/11 terrorist attacks, primarily because they were raising issues regarding homeland and national security weaknesses. The U.S. Office of Special Counsel (OSC), the agency tasked with investigating whistleblower retaliation and disclosures is a failure. The OSC, which is up for reauthorization in 2007, has not lived up to its promise of being a safe haven for whistleblowers. According to its most recent annual report, less than 2.5% of whistleblowers seeking protection from retaliation are given any help at all.6 By comparison, analysis by POGO shows that 17% of Sarbanes-Oxley whistleblowers receive a settlement or favorable ruling going through a process at the Department of Labor.7 In addition, substantiation rates for military whistleblower reprisal investigations conducted by the Department of Defense Inspector General in 2005 were 15%.8 Time and again, POGO has seen honest and dedicated public employees fighting wrongdoing who are crushed by the system while the OSC stands by making excuses for why it cannot help. The time has come for the Congress to end this 30-year-old failed experiment and replace it with an effective system.
A recent Government Accountability Office report noted that the long-standing failure of the Department of Defense to institute sound financial management had "left the department vulnerable to billions of dollars of fraud, waste, and abuse annually, at a time of increasing fiscal constraint."9 Senator Tom Coburn undertook heroic efforts to examine these issues as Chairman of the Subcommittee of Federal Financial Management, Government Information, and International Security Subcommittee. Despite this, he noted at a recent hearing that: "In 2004, the Department set the goal of undergoing a full audit by 2007. That deadline has not been met, and in fact, has been moved to the year 2016. That's 10 years from today. Americans are being asked to wait a full 10 years before their dollars are tracked well enough for the Department to fail an audit….2016 is not good enough." In the past, Congress has also ignored the Pentagon's failures. Financial reporting requirements were eliminated following unfavorable media reports, yet Congress should demand more rather than less transparency and accountability in Pentagon spending.
In response to heightened concerns raised by the 9/11 terrorist attacks, a variety of government agencies unilaterally created secrecy designations and used those labels to keep information about their activities from the public and from the Congress. Most of those secrecy labels have no basis in statute. Others have been so broadly applied so as to be meaningless. At a recent meeting with officials with the Office of the Director of National Intelligence, those officials said that, at their last count, there were over 100 secrecy markings—almost twice as many as open government groups had identified at that point. In most cases, the standards for applying these new secrecy labels are not fully developed, making it more likely the government will abuse them. Past experience has shown that overuse of secrecy can actually harm legitimate efforts to prevent disclosure of truly sensitive information. Secrecy can also hide corruption and other misconduct in need of Congressional attention.
Congress cannot truly exercise oversight of the Executive Branch if large portions of the federal budget are hidden from view – even from the Congress. The increasing call to control pet projects (also known as earmarks) in government spending demands more scrutiny of all areas of the budget. It is time to re-examine how the classified annex of the defense budget is structured and determine whether or not these expenditures actually help us secure the nation. This process will also require reopening the process that led to classifying the budget for intelligence agencies and determining whether or not this is still an advisable course of action.
A Pentagon planning document released in early 2006 was widely criticized for failing to make tough budget calls. Expensive Cold War weapons platforms with questionable value for modern warfare were embraced by Pentagon planners. To keep the funding for these weapons coming, the Pentagon recommended cuts in troop levels. The Pentagon alone is not to blame. Aggressive aerospace and defense industry lobbyists have conditioned the Congress into fighting even the most modest weapons cuts proposed by the Pentagon. For example, members of Congress have repeatedly defended the disastrous C-130J program, forcing over $4 billion to be spent on a plane the Pentagon did not want and that does not work. In another example, the 109th Congress literally cut spending on equipment Marines were using in Iraq – including night vision goggles and upgrades to light-armored vehicles – and transferred those funds to breathe life support into the troubled V-22 Osprey, which cannot even be used in high-risk environments. It is time for the Congress to reevaluate whether its defense spending priorities are genuinely supporting the troops or simply supporting the defense contractors at home.
Expert participants in a recent Government Accountability Office (GAO) panel agreed that there is a strong need to create a government-wide accountability council "to address broad accountability issues among GAO, OMB [Office of Management and Budget], PCIE [President's Council on Integrity and Efficiency], ECIE [Executive Council on Integrity and Efficiency." Government watchdogs help the Congress to hold the Executive Branch accountable by rooting out waste, fraud, and abuse, and by shedding light on issues in need of attention. Anecdotal evidence suggests that government auditing and investigative branches have been denied resources and staffing needed to properly oversee the dramatically expanding federal government. They may also need increased authorities or independence to fulfill their mission. For example, more oversight by the Congress is needed to assess whether major swaths of billions of dollars in government contracts are being adequately policed.
The Department of Energy continues to spend billions of dollars to maintain nuclear bomb making materials and weapons segments spread across the country. Approximately one hundred metric tons of highly-enriched uranium has been declared excess and of no national security value. This stockpile is currently being stored in World War II era buildings, and is not scheduled to be disposed of until 2016.10 Another 200 metric tons can and should also be declared excess and blended-down. The Department of Defense continues to maintain our deployed nuclear weapons on hair-trigger Cold War alert status. Largely as a jobs program for the thousands of contractor employees working for the nuclear weapons complex, the government now plans to spend $150 billion to modernize the complex and build new, more usable nuclear weapons. Aren't there more pressing needs that our national labs should be addressing?
A variety of industry and government whistleblowers, states, and tribes have come forward to express concerns about whether fees are being collected for oil and gas drilling on federal and Native American lands. Recent investigations by the Congress and the Department of Interior's (DOI) Inspector General have revealed substantial and deep-rooted problems. Without adequate oversight and legislative intervention, the oil and gas industry will walk away with tens of billions of dollars in revenues, shortchanging the U.S. government and Native Americans.
The Department of Homeland Security has been open for business for five years but it still has all the problems of a new start-up. The results of the problems are not in dispute: billions of dollars wasted on untested and ineffective technologies and an inability to protect—and in some cases even identify—parts of our most vulnerable infrastructure including aviation, rail and chemical facilities. In other cases, DHS doesn't even play a role, and the other government agencies haven't picked up the slack. For example, in 2006 the Government Accountability Office found that in the commercial nuclear power sector, the Nuclear Regulatory Commission surrendered too much power to private industry, where profits triumphed over homeland security considerations.11 As a result, the nuclear power industry successfully weakened the government's security standards for nuclear power plants. Unless these systemic issues are treated with the urgency they deserve, the federal government will fail to carry out its Constitutionally-mandated function—protecting the homeland.
Some researchers in the National Institutes of Health's (NIH) central facility in Bethesda were discovered a few years ago to be serving simultaneously as paid consultants to drug and biotech companies while they were working for the federal government. The serious conflicts of interest these situations caused were resolved by simply abolishing all consulting at NIH. However, the possibility of allowing consulting again is likely to emerge during the coming year. Moreover, many researchers at the nation's medical schools and universities who receive NIH grants and contracts continue to consult for these companies. POGO is following this issue closely and is ready to provide information about the harmful effects of these widespread conflicts of interest and ways to resolve this problem.
Since 1981, POGO has exposed numerous problems that are the result of so-called procurement or acquisition "reforms," including cozy negotiations, inadequate competition, lack of accountability, little transparency, and risky contracting vehicles that are prone to waste, fraud, and abuse. Given that federal contract spending eclipsed $380 billion in fiscal year 2005 and contracting issues are very high on Congress's agenda, POGO hopes there will be a wave of contracting improvements that should add sound spending practices, public access, and oversight controls that have been sorely missed for over a decade.
1. Victims of Trafficking and Violence Protection Act of 2000, as amended. See also: Trafficking in Persons Report, U.S. Department of State, June, 2006.
2. According to an analysis done by POGO using contract dollar statistics provided at www.fedspending.org.
3. "Abramoff Cited Aid Of Interior Official: Conflict-of-Interest Probe Is Underway," Washington Post, August 28, 2005.
4. The Politics of Contracting, Project On Government Oversight, June 29, 2004.
5. "Former Antiterror Officials Find Industry Pays Better," New York Times, June 17, 2006.
7. POGO calculated this number using Department of Labor statistics provided in "Whistleblower Protections under the Sarbanes-Oxley Act: A Primer and a Critique," by Valerie J. Watnick, City University of New York, Baruch College.
8. It should be noted that "substantiation" does not equate to a favorable personnel action or a settlement. "Combatant Command and Joint Inspector General Orientation Course" (power point presentation), Department of Defense Inspector General Military Whistleblower Reprisal. (CCJIGC). ppt#446,12, History of Whistleblower Protection
9. Department of Defense: Sustained Leadership Is Critical to Effective Financial and Business Management Transformation, GAO-06-1006T, August 3, 2006.