OMB Watch released new federal spending data on contracts and assistance spending on FedSpending.org yesterday. The site now has full spending data for federal contracts from FY 2000 through the first two quarters of FY 2008 and federal assistance data (grants, loans, and related spending) from FY 2000 through the first three quarters of FY 2007. The FedSpending.org database currently contains over $18.7 trillion in federal spending dating back to FY 2000. This update also made minor site improvements, including added advanced search functionality and bugs fixes.

The data update also marks an important milestone for FedSpending.org - 10 million searches - which occured at some point around July 1. The site is a bit less than two years old, but in that time, FedSpending.org has grown to process more than 1 million searches from approximately 400,000 unique visitors each month. On July 1, Alexa.com ranked FedSpending.org 32,259 in traffic among websites on the Internet. Yowza!

The site has continued to surpass all of our expectations that we held when we created it. I hope we can continue to make the site useful and relevant for users in the years to come.

FedSpending.org Reaches 10 Millionth Search

Sens. Byron Dorgan (D-ND), Amy Klobuchar (D-MN), John Tester (D-MT), and Sheldon Whitehouse (D-RI) have sent a letter to Secretary of Defense Robert Gates to formally investigate why the Army relived the Defense Contract Audit Agency of its duty to audit the Army's largest Iraq reconstruction contract.

The request for inquiry comes after the Senate Democratic Policy Committee heard testimony from Charles M. Smith, the former official in charge of overseeing the multi billion-dollar contract with KBR. Smith testified that when he refused to OK $1 billion in unsubstantiated charges from KBR, the Army reassigned him (effectively ending his career) and, in an unprecedented move, hired an inexperienced private contractor to perform the audit work.

We are troubled that the Army Sustainment Command would transfer the review of questioned costs on the single largest contract in the Iraq war from its own auditors to a private contractor. We are particularly disturbed that this would be done as part of an apparent effort to excuse KBR's performance problems.

[...]

Given the seriousness of the allegations raised by Mr. Smith, we urge you to promptly investigate the circumstances of the Army Sustainment Command's hiring of contractor RCI to replace DCAA in the review ofKBR's questioned costs. If this was part of an effort to protect KBR and make sure the company was paid for questionable costs, we urge you to take appropriate disciplinary action.

• Letter to Secretary Gates
• DPC Press Release

The Special Inspector General for Iraqi Reconstruction (SIGIR) has released a new audit report today concerning the work (or lack thereof) of Parsons Delaware, Inc., a contractor who was doing design and construction work on Iraqi prisons and civil justice infrastructure. Parsons is a major U.S. contractor, having received over $4.1 billion in contracts since 2000, according to the latest data from FedSpending.org.

The SIGIR report was picked up by the Associated Press, so hopefully the disturbing findings will gain wide attention. Here's the breakdown of what the taxpayer received from the $333 million that Parsons and other subcontractors received through May 21, 2008 on the contract, according to the SIGIR report:

Far less was accomplished under this contract than originally planned; only about one-third of the planned projects were completed. Although the failure to complete some of the work is understandable because of its complex nature and the unstable security environment in Iraq, millions of dollars in waste are likely associated with incomplete, terminated and abandoned projects under this contract. However, precise amounts of funds expended for projects that have not been completed are not easily aggregated because of the uncertain future of incomplete projects. Some measure of the funds expended for which there was not a usable facility is suggested by the fact that slightly more than $142 million, or almost 43% of the contract's disbursed funds, were spent on projects that were either terminated or canceled, although a number of projects were subsequently completed. Contract management weaknesses also played a key role in the contract outcomes.

One particular project funded under this contract was the Kahn Bani Sa'ad Corrections Facility, in Diyala Province (pictured above). The U.S. government canceled Parsons' funding for this project after repeated delays in construction and then attempted to finish the prison by using two separate subcontractors in Iraq. When security became too difficult to complete construction in June, 2007, the government walked away, having spent $40 million on a half finished prison that the Iraqi government has no plans to use. The efficiencies of the free market at work.

SIGIR sums up the problems pretty succinctly - not enough oversight and management of the contractors:

The reconstruction projects under this contract were executed in unstable security conditions and were beset by insufficient contract management and oversight personnel. Because of poor security conditions and limited personnel resources, it was difficult for responsible government officials to visit project sites, plan and define project requirements, and oversee contractor performance once construction began. These conditions created a high-risk contracting environment and approaches that ultimately led to a high level of project failure and waste.

If signed into law, the FY 2009 Financial Services and General Government Appropriations bill approved by the Senate Appropriations Committee would stop the Executive from joining the race to the bottom for cheap labor.

The Senate panel passed the one-year moratorium on public-private job competitions on Thursday as part of the $44.8 billion fiscal 2009 Financial Services and General Government Appropriations bill. The provision essentially would leave it to the next presidential administration to continue the program, which opens jobs that traditionally have been performed by federal employees to bids from contractors.

The House Appropriations Committee passed an identical measure last month when it considered the spending bill. The House version of the fiscal 2009 Defense Department Authorization bill goes even further, banning all new public-private competitions conducted under the rules in the Office of Management and Budget's Circular A-76 for three years.

The fact is, the only "advantage" that competitive sourcing has over government provision of services is that private contractors create lower-paying paying jobs with no health care coverage or retirement benefits to carry out government functions. So, sure, the government could theoretically save a few bucks from competitive outsourcing, but the savings are extracted from the public it serves by shredding thousands of good jobs.

The Democratic Policy Committee held a hearing in which Charles M. Smith discussed the circumstances under which he was removed from his position as head of the Field Support Contracting Division of the Army Field Support Command. As the official in charge of overseeing a multi billion contract with KBR, he refused to sign off on some $1 billion in unsubstantiated charges by the contracting firm, and as a result, the Army reassigned him to a different post.

Calling the oversight of the KBR contract "irregular and highly out of the ordinary," Smith also told the committee about a number of other practices that substantially weakened the ability of the Army to ensure taxpayers were not getting fleeced by KBR. These practices include:

• The unusual waiving the standard practice of witholding 15 percent of unsubstantiated charges until those charges could be verified
• The hiring of a contractor -- RCI (now SERCO) to oversee the KBR contract
• The conversion of contract type such that some of KBR's contracts would not be audited after they had been completed
• Consistent classification of KBR contract performance as "exceptional," despite problems with the fulfillment of some contracts

And although Smith should be commended for putting taxpayers first at the expense of his own career, we cannot assume that all contracting overseers are of similar moral courage and dedication. As Smith warned, the message from the Army is clear: Effective oversight could be hazardous to contract officers' careers.

The video below is an excerpt from the hearing in which Smith tells Committee Chair Byron Dorgan (D-ND) how poor contract oversight impacts not only taxpayers, but also the troops in the field.

Video: entire hearing
Written statement: Charles M. Smith

The Democratic Policy Committee is holding a pair of hearings this week to examine contractor practices in Iraq.

• Safeguarding Taxpayer Dollars in Iraq: An Insider's View of Questionable Contracting Practices by KBR and the Pentagon
  Wednesday, July 9, 2008
  2:00 p.m. to 3:30 p.m.
  608 Dirksen Senate Office Building
• Contractor Misconduct and the Electrocution Deaths of American Soldiers in Iraq
  Friday, July 11, 2008
  10:00 a.m. to 11:30 a.m.
  226 Dirksen Senate Office Building

Charles M. Smith will be testifying at the first hearing. Readers will recall that we mentioned Smith in this post in June when we wrote about the Pentagon's seeming too-cozy and too-dependent relationship with KBR.

The DPC hearing notice can be found here.

The Fiscal Policy Team and Congress both return to action this week with a number of fiscal policy issues to be tackled during the next five weeks. Below is a rundown of issues coming up soon, with most of the action happening in the Senate:

• Debate continues between Senate Democrats and Republicans over whether to offset the cost of a popular package of tax breaks called the "extenders." The latest development is that Senate Republicans are now challenging Democrats to offset the cost of the package with spending cuts rather than other tax increases. BNA ($)
• The Senate will also resume work on a bill to stave off a cut in payments to Medicare physicians by giving them the same reimbursement levels they had during the first six months of this year. Senate Republicans, who blocked legislation before the July 4 recess by one vote, have agreed to take up the legislation again this week after intense pressure from outside groups, particularly the American Medical Association. AMA Statement, AMA Television Ads
• Legislation to help people hurt by the mortgage crisis was also blocked before the holiday recess by Sen. John Ensign (R-NV), who wanted to have an amendment added to the bill to give tax cuts to encourage the production of renewable energy. The Senate plans to take another crack at that bill this afternoon.
• The appropriations season is well under way in Washington, but not much has been accomplished. With only about 10 weeks left until the start of the new fiscal year, neither the House nor Senate has approved any appropriations bills yet. After a old-fashioned temper-tantrum in the House appropriations committee before the July 4 holiday, prospects for completion of even one appropriations bill by Congress this year seems less and less likely.
• Finally, the Government Accountability Office has a new report out showing the weapons systems currently being developed by the Department of Defense will cost an astronomical $1.6 trillion to complete, of which $335 billion will be needed in the next five years. Yikes! Washington Post