Legislation weighing contractors' national security risk heads to Senate floor

A Senate committee last week advanced two measures to promote national security in federal contracting and procurement. 

Legislation from Sen. Josh Hawley, R-Mo., would prohibit federal consulting contracts from being awarded to an organization that provides consulting services to the governments of China, Russia or any country that the Secretary of State determines has repeatedly provided support for acts of international terrorism. 

“This bill is very simple. It just proceeds on the premise — the principle — that independent, private consulting firms who are making $1 billion, let’s say, in contracts with the federal government should not at the same time be making money from our chief adversaries like China or Russia or North Korea,” Hawley said during last Wednesday’s committee markup. 

Hawley has been critical of consulting firm McKinsey & Co.’s work in China. A 2021 NBC News investigation found that McKinsey advised Chinese state-run enterprises while also contracting with the federal government, including the Defense Department. 

The Homeland Security and Governmental Affairs panel approved the bill in a 10-1 vote, with ranking member Rand Paul, R-Ky., the lone “no” vote. The senator did not speak during debate on the legislation. 

If an agency determines that a contractor has violated the bill’s requirements, the measure would mandate the agency head to terminate the contract, and the consulting firm would be liable for three times the amount of damages the federal government incurs. 

It also would allow an agency head to waive the bill’s restrictions on a case-by-case basis if they, in consultation with the Defense secretary and director of National Intelligence, determine doing so is in U.S. national security interests and that no other organization can perform the work for the federal contract. 

The committee also advanced a House-passed bill that would mandate the Office of Management and Budget to determine whether acquisition requirements for agencies related to the “lowest price technically acceptable source selection process” have created any national security risks. 

Such a process is appropriate when the best value for something being procured is expected to come from selecting an acceptable proposal with the lowest price, according to the Federal Acquisition Regulation. 

The FAR requires contracting officers, except at the DoD, to avoid using such a process for acquiring information technology services, personal protective equipment or certain training or logistics services in military contingency operations outside the U.S. 

“Federal procurement processes—although often overlooked—are critical to the operation of our government and necessitate comprehensive assessment. Simply put, affordability considerations and associated national security risks of procurement procedures must be thoroughly evaluated,” the bill sponsor’s, Rep. Byron Donalds, R-Fla., said in a statement after the Senate panel approved the measure in a 10-0 vote. Ranking member Paul voted present. 

The House in January passed the legislation 397-0.