Federal Budget & Tax

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Friday, May 23, 2008

Earmark Skimming: It Costs Money ... to Spend Money

When Sen. Ben Nelson (D-NE) heard from the Department of Defense that the agency was withholding 12 percent of a $1 million medical research earmark Nelson had secured for the University of Nebraska, he learned about a widespread but little-known practice among federal agencies -- taking a cut from earmarked funds, some for unrelated purposes as varied as staff salaries and postage stamps. Nelson dubbed it "earmark simming."

This week, the New York Times reported on this practice. Apparently,

according to a Congressional Research Service study that [Nelson] ordered, the federal government has no umbrella legal authority that allows agencies to take a cut of each earmark, and it has no overall standard for how much agencies should take.

The Tiimes story says that OMB is currently preparing a governmentwide report, due in March 2009, that will examine how much each agency takes from earmarks and for what purpose.

The first question may not be why it should take at least ten months to prepare the report but... how much will it cost?

Posted by Dana Chasin, 02:50:02 PM

Wednesday, May 21, 2008

Senate Restricting Public Access to Contractor Data

The U.S. Senate is moving to restrict public access to a new contractor misconduct database, part of a new proposal being spearheaded by the Project on Government Oversight and Sen. Claire McCaskill (D-MO). Apparently there is bipartisan objection to the proposal within the Homeland Security and Governmental Affairs Committee. Scott Amey at POGO has the rundown:

Now, I can see, at worst, allowing certain information to be stored in a "government only" section of the database. But throwing a blanket of secrecy over the entire database is absurd. A large percentage of the cases included in the proposed responsibility databases are already publicly available in SEC filings and DOJ or agency press releases.

This doesn't sit well with POGO and an eclectic list of 32 other groups that support an open and transparent government. Hopefully, Congress will decide that the public deserves to see scofflaws' rap sheets. The public should have access to a government sponsored comprehensive list of contractors (similar to POGO's Federal Contractor Misconduct Database) that defrauded the government, violated laws and regulations, had poor work performance, or had their contracts terminated for default.

Also see this good article from this morning on the issue from Robert Brodsky at GovExec.com.

Posted by Adam Hughes, 05:37:16 PM

Jackson May Not Have Been Only Bad Apple at HUD

Carol Leonnig at the Washington Post wrote a great article over the weekend that gets further into the weeds on contracting problems at the Department of Housing and Urban Development under former Sec. Jackson. Leonnig profiles three small businesses that received huge jumps in the size of federal contracts they received over the last five or so years, often times despite objections of career contracting officers. It appears awarding contracts as political favors might have extended well beyond Jackson to many other high ranking officials at HUD:

Federal investigators are still sorting through HUD contract awards to friends of Secretary Alphonso Jackson, who resigned last month amid a criminal probe. But some career staff members and agency observers say problems in the agency's contracting process run much deeper than Jackson and involve officials who promoted certain companies while rebuffing concerns about their performance and qualifications.

The three companies profiled began as very small operations with little or no federal contracting experience. Harrington, Moran and Barksdale Inc. (HMBI) had no federal contracts until FY 2004, when they received over $71 million. During the Bush administration, HMBI was received almost $223 million in federal contracts, 80 percent of which were awarded without full and open competition. The other two companies, National Housing Group which received almost $52 million) and Drayton, Drayton, and Lamar, Inc. (which has been awarded about $32.5 million) have even worse records for competition. The National Housing Group received 92.2 percent of its funding without competition while Drayton, Drayton, and Lamar comes in at an astounding 98.6 perent without competition.

What is truly troubling about this story is that the career contracting employees at HUD who attempted to do the right thing on behalf of taxpayers were moved out of their positions after they raised objections, cited evidence of wrongdoing, or claimed political manipulation. In one case, not only were the claims of the 33-year veteran contract officer vindicated by subsequent investigations, but the company in question has had a principal employee charged with fraud related to the contract. The two contract officers who are profiled in the Post story retired shortly after being moved into policy positions.

HUD officials deny any wrongdoing in any of the cases cited in the Post article, instead blaming the contractors who they repeatedly attempted to favor through sole-source contract awards. HUD spokesman Jereon Brown contributed quite an understatement when he said "not all contractors perform as well as expected." As we have advocated before many times, what will help deter these types of instances is access to data on contractor performance and copies of the actual contract. Then we'll be able to judge for ourselves how well contractors are performing and how wise an investment various federal contracts are.

Wash Post: HUD Repeatedly Dismissed Staff Concerns About Contracts

Posted by Adam Hughes, 10:50:55 AM

Thursday, May 15, 2008

Best Spin Ever: Doan Fought for Accountability!

When I posted at the end of April that the book had closed on Lurita Doan, former head of the General Services Administration, (GSA) apparently I was wrong. She has resurfaced in interviews in GovExec magazine, on Federal News Radio and most recently in this border-line ludicrous column in Federal Computer Week by Neal Fox, the former assistant commissioner of acquisition at the GSA.

Now I've come across some interesting spin in Washington in my time here, but I think this one has to take the cake. There are too many strange, misleading, and frustratingly vague statements (e.g. "Some people who had backed IGs began to have doubts.") in Fox's article to jump into all of them (Beverley Lumpkin over at POGO has a good rundown refuting many of them that is worth reading). But the overall tone of the piece implies that IG offices are a danger to good government and need to be reigned in. This perspective needs to be soundly dismissed.

Fox's main point seems to be that a thirsting for power and arrogance at the IGs office was the main issue at GSA, not any particular issue or problem they were investigating (and there were plenty). Fox's point is mind-numbingly ironic considering many of the actions the IGs office was investigating can not be seen as anything else than a power grab by a pretty arrogant Ms. Doan herself (see strong-arming contracting officers and side-stepping contracting protocols to help friends). Worst of all, Doan's unprecedented actions to attempt to cut the IG office's budget and outsource its contracting oversight responsibilities to, of all places, private contractors, was a deliberate attempt to keep prying eyes away from her attempts to operate on her own outside of federal laws and regulations.

I'm still hopeful, as I think POGO was at first glance, that vague assertions and unsubstantiated ramblings like those contained in Fox's article won't influence anyone (that would be a shame). In these times of poor oversight and significant corruption and incompetence in the federal government, we need strong IG offices more than ever to help develop a more effective and accountable government.

Posted by Adam Hughes, 12:37:26 PM

Monday, May 05, 2008

Prince of Darkness Sheds Light on GOP Secret Decision
Not to Hold an Off-the-Record Vote on, Shhh... Earmarks

And revealed, appropriately enough, in the Sunday edition of Chicago Sun Times by Robert Novak, aka, the Prince of Darkness. Read all about it in House GOP Giving up on Earmark Crackdown:

A recent secret survey of the House Republican minority by the party's whip organization showed 2-1 opposition to imposing a moratorium on earmarks.

House Republican John Boehner, who personally sponsors no earmarks, has indicated the party's position should be based on what GOP House members want. That led to the whip check.

Reformers had contemplated calling for a vote on earmarks by a closed-door session of the House Republican Conference, assuming it would be difficult for many members to vote no. But the lopsided outcome of the whip check dissuaded reformers from requesting a vote.

Don't tell anyone I told you.

Posted by Dana Chasin, 04:40:13 PM

Thursday, May 01, 2008

Op-Ed Dismissive of Contractor Oversight, Calls for More Contractors

WaPo published an op-ed Monday in which former senior Department of Defense officials Dov S. Zakheim and Lt. Gen. Ronald T. Kadish (Ret.) note a recent GAO report that finds massive cost and schedule overruns in weapons acquisitions by the Pentagon. The report implicates a degradation of competition between contracting firms resulting in, according to Zajheim and Kadish (ZK, hereafter), "a kind of 'design bureau' competition, similar to what the Soviet Union used."

After complaining about an Air Force tanker project won by EADS, a European defense contractor, ZK conclude that what's really needed to curtail waste, fraud, and abuse in military contracting is increased competition in the defense market spurred by an increase in domestic defense firms. Without really explaining why, they also claim that "[m]ore regulations and bureaucratic restrictions on contractors are not the answer."

Although the consolidations helped contractors survive the spending cuts, they now threaten to undermine the industry. That's because many in Congress and at the Pentagon want to impose stricter oversight and controls on weapons manufacturing and development while simultaneously demanding more competition -- driving the system to an immature and evolving "globalized" marketplace.

Here's the thing though: Better oversight and better procurement practices may not "fix the problem," but because of the nature of the defense "market," it may be the government's only tool to increase acquisition value.

Read more...

Posted by Craig Jennings, 11:08:38 AM

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