House backs big increase in contractor oversight

The House has approved a final version of the 2008 defense authorization bill that includes a variety of measures that would greatly increase oversight of the federal contracting industry.

The conference report to the bill (H.R. 1585) was approved Wednesday evening by a vote of 370-49.

The legislation, which now heads to the Senate, authorizes nearly $507 billion for the Defense Department and national security programs at the Energy Department. It also provides almost $190 billion for emergency needs, including equipment for deployed troops, resetting equipment to restore readiness, and support for ongoing military operations in Iraq and Afghanistan during fiscal 2008.

The bill, however, would not deliver war funds, which must be approved in a separate appropriations bill.

"This bill provides a 3.5 percent military pay raise, prevents fee increases for health care, and includes the Wounded Warrior Act to ensure that our injured forces receive the best care we can provide," House Armed Services Committee Chairman Ike Skelton, D-Mo., said. "This legislation also authorizes critical funds to restore readiness and protect our forces in the field, making sure that our service members have the equipment and training they need to meet current and future threats. The bill also increases accountability to the American people through additional oversight of our operations in Iraq and Afghanistan and reforms to the contracting process."

The bill dramatically alters the level of procurement oversight and accountability for federal contractors, both domestically and abroad.

The conference approved an amendment, co-sponsored by the Senate's seven Democratic freshman members, that will create a bipartisan Commission on Wartime Contracting. The panel, modeled after the World War II-era Truman Committee, will be charged with investigating virtually all contracts in Iraq and Afghanistan, including funds for reconstruction, logistical support for coalition forces, and security and intelligence functions.

"We've been able to create a commission that has teeth in it to bring accountability back to our wartime contracting system," said Sen. Jim Webb, D-Va. "The waste, abuse and lack of oversight associated with some of these federal agency contracts are hitting the pocketbook of every American."

The conference report also includes the 2008 Acquisition Improvement and Accountability Act. The act would:

• Create a position for an associate administrator for acquisition workforce programs in the Office of Federal Procurement Policy at the Office of Management and Budget, and make permanent the Acquisition Workforce Training Fund;
• Require agencies to publicly justify the use of procedures that prevent full and open competition; increase the oversight of service contracts and tighten the rules for the use of procedures for commercial services contracts;
• Prevent contracting officers from awarding task orders of more than $100 million to a single contractor without written justification. Companies bidding on multiple award contracts will be able to protest task orders worth more than $10 million;
• Prohibit the use of lead systems integrators on new Defense programs after 2010 and limit the use of LSIs on existing programs beyond initial production;
• Call for additional training for military personnel deployed to the wartime theater with contractors on how to properly manage and oversee contracts;
• Require the Pentagon to provide additional information to Congress when major multiyear contracts are requested; limit Defense's ability to use these contracts on programs with a history of major cost growth;
• Tighten revolving-door reporting requirements for Pentagon officials who leave to work for defense contractors.

The bill also would increase the authority of wartime auditors and inspectors general. The Office of the Special Inspector General for Iraq Reconstruction will have broadened powers to investigate all funding, regardless of the source or fiscal year. The bill would establish an Office of the Special Inspector General for Afghanistan Reconstruction.

The A-76 public-private competition process for Defense contracts would be revised in a number of ways that appear to tilt the pendulum in favor of federal employees and damage the president's competitive sourcing agenda.

Health care and retirement costs will be excluded from the cost comparison process -- an attempt by Congress to prevent contractors from providing little to no benefits and coverage to employees in order to win competitions. There no longer will be automatic recompetition of work performed by federal employees, although they will have increased appeal rights for competitions won by contractors.

In addition, Defense workers would be able to compete for work currently done by contractors if it had been performed by federal employees any time since 1980; if the contract was awarded without competition; if it is for an inherently governmental function; or if the contractor's performance record is poor.

A-76 competitions also would be prohibited at military medical facilities as part of the Wounded Warrior Act -- which came about as a result of the recent Walter Reed Army Medical Center controversy.

Another scandal-driven measure would provide government officials and Congress greater oversight over private security contractors.

In the wake of the September shooting in Baghdad by security guards for Blackwater Worldwide that left 17 civilians dead, the secretaries of Defense, State and the U.S. Agency for International Development must sign a memorandum of understanding regarding matters relating to contracting in Iraq and Afghanistan.

The memo will clarify the agencies' roles and responsibilities in managing and overseeing security contracts. The agencies also will have to maintain a private security personnel register and develop an identification system for contractor vehicles.

The legislation also provides enhanced protections for whistleblowers. Contractor employees will be able to report waste, fraud and abuse -- as well as mismanagement and hazards to public safety -- to the SIGIR and to Congress. And, those whistleblowers who feel that their employer has retaliated against them now will have the right to a jury trial in a district court if relief from other entities, such as the Defense inspector general, is not provided.

While the White House has expressed its displeasure with several aspects of the bill, members and aides have said modifications to the legislation in conference may be enough to avoid a threatened presidential veto.