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Congress Caves on Online Contracts


Senate Majority Leader Harry Reid (D-Nev.)(WDCpix)

Internet junkies and wonks alike may have jumped the gun in looking forward to the new online transparency hyped by House members who vowed to put contracts doled out from the $800 billion stimulus package online.

That promise, included in the initial House bill, was hailed by watchdog groups, who pointed to it as real reform in government contracting. However, in a major concession to government contractors, which opposed having the contracts made public, the final bill requires only a “summary of the contracts” to be posted online; and even the summaries will only be available for contracts worth more than $500,000.


Illustration by: Matt Mahurin

According to the law, the government has to provide certain data about federal contracts, including whether the contracting process was competitive, how the contract was awarded, and for those contracts over $500,000 “a summary of the contract.”

But is a summary good enough? If good-government groups or journalists or anyone else wants to identify what the government is spending $787 billion on and how reasonable those expenditures are, a summary of the contract isn’t going to do it.

“That’s one of the biggest complaints good-government groups have had,” said Michael Smallberg, outreach associate with the Project on Government Oversight.

A report on the stimulus bill issued by OMB Watch notes that “The enacted bill steps back from the level of transparency proposed in the House and Senate bills in two crucial aspects. First, whereas the House bill would have required each contract awarded or grant issued to be posted on the Internet, the enacted bill does not require that contracts or grants be made available as such.”

And in a document published by the Coalition for an Accountable Recovery, consisting of 32 good-government and transparency advocates recommending steps the government should take to make stimulus spending easier to track, the coalition writes that requiring only contract summaries on contracts larger than $500,000 and those awarded without open competition “is not fully satisfactory.” The report urged that “the full contract (with redactions, if necessary), and the Request for Proposals should be posted.”

Moreover, it’s not clear what information must be posted about contracts worth less than $500,000. “I’ve heard lots of people saying they wouldn’t be surprised if we see a lot of contracts coming in at $499,000, right under the threshold,” said Smallberg.

It’s no coincidence that the provision requiring publication of contracts was changed. As Jeremy Madson, spokesman for the government contractor lobbying group the Professional Services Council said after the House bill was approved, “the bill raises big questions about what information is published. In the past, it was usually just the amount of the contract and who won it,” he said. Publishing the entire contract raises concerns about releasing proprietary information of government contractors, he said. “That’s got to be worked out in details,” he said. Lawyers representing government contractors confirmed that that was among their clients’ most serious concerns about the House version of the bill.

Although transparency advocates claim those concerns could have been easily addressed by simply redacting any proprietary information in the published versions of the contracts, the government contractors apparently won that argument.

The watered-down posting rules don’t necessarily mean that all hope for reform is over. Just last week, President Obama declared that he intends to put a stop to wasteful government spending, as TWI’s Spencer Ackerman reported. In a presidential memorandum, Obama directed the Office of Management and Budget to prepare guidelines for evaluating existing contracts and issuing new ones, “in order to identify contracts that are wasteful, inefficient, or not otherwise likely to meet the agency’s needs.”

“When awarding Government contracts, the Federal Government must strive for an open and competitive process,” Obama said in the March 4 Memorandum for the heads of executive departments and agencies, citing a General Accountability Office study last year of 95 major defense projects with more than $295 billion in cost overruns. “Improved contract oversight could reduce such sums significantly.”

As TWI reported before, the stimulus bill also created a new board to oversee and coordinate federal spending and prevent “waste, fraud and abuse.” Any agency’s inspectors general can review concerns about spending under the program, and the GAO will conduct regular and reports on how the money is being spent.

Still, government watchdog groups worry. In addition to the concealed contracts, the OMB guidance on the bill so far requires only publication of the primary government contractor and the first subcontractor, but not the names or terms of agreement reached with any other subcontractors. As the Coalition for an Accountable Recovery describes it, “a city that receives federal funds from a state would be the last organizational user to report on the use of federal funds.” Yet government contractors often sub-contract portions of the work to multiple layers of sub-contractors. That was common in Iraq, for example, where House Committee on Government Oversight and Reform, among others, found egregious examples of waste, fraud and abuse in contracting.

The Coalition’s proposal would require that “any organization that receive funds from the city – such as a contractor hired to build a school and that contractor’s subcontractors and suppliers – be required to report on their use of federal funds if above a de minimis amount of money.”

Because that rule is so far only part of the OMB Guidance, which was still revised, that’s something that advocates hope to keep pushing for. “The guidelines can’t override what was passed by Congress,” said Smallberg, referring to the legislation’s failure to require publication of the actual government contracts. “But the bill left some blanks about implementation. OMB will fill those in.”

Good government groups are working hard to influence the fine print.

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