Policing Procurement

Every company worries about its public image, and government contractors can be particularly sensitive, since they earn their keep off public largesse. But heightened contract scrutiny, brought on by charges that some companies are performing work for which they never were hired, has many thinking that bad press might be the least of their worries.

The government never has expected companies to provide goods or services that are not called for in their contracts. This ensures that the government, and taxpayers, gets what it paid for, and that companies aren't doing work they're not qualified to do. But recently, a number of contractors have been working outside the scope of their contracts, constructing buildings, providing mental health care for public employees and even sending prison interrogators to Iraq, all under contracts that never were designed for those purposes.

Largely in response to the Army's procurement of interrogators from CACI International Inc. for Iraq's Abu Ghraib prison using a contract for computer services, the government is telling companies to think twice before they contemplate out-of-scope work. If they don't, they could be stripped of their rights to bid for future contracts.

Asking companies to judge whether their work is within scope is not a new policy, says David Drabkin, deputy associate administrator for acquisition policy at the General Services Administration, which, along with the Defense Department, is putting more heat on contractors as part of the "Get It Right" campaign to clean up contracting. But historically, companies haven't been told to alert a government contracting officer about a potential scope problem before they accept a piece of work, Drabkin says.

That's changing. Now, if companies raise a red flag early, they won't be held responsible for infractions. As long as the government contracting officer signs off on the work, companies "are covered," Drabkin says. But if a company fails to speak up and if its work is out of bounds, then the government could propose suspension or debarment from contracting, he adds.

Whose Job Is It?

Officials believe that work as far out of scope as the prison interrogator case is a rarity, but the government's new approach has many companies crying foul. Contractors worry they will be punished for failing to do what they see as the government's job-oversight.

"We are very supportive of Get It Right; I don't see how you could not be," says Olga Grkavac, an executive vice president with the Information Technology Association of America trade group. What worries ITAA's members, though, is "the pendulum swinging to the point where the contractors are now responsible for deciding out-of-scope issues, rather than the government," she says.

"It's an inherently governmental function," says Stan Soloway, president of the Professional Services Council, which represents contractors. But more worrisome than shifting responsibilities is possibly penalizing companies for participating in out-of-scope work, Soloway says.

While Drabkin says the government never considers suspending or debarring a contractor as a punitive measure, Soloway contends that companies still fear that's precisely what might happen if they fail to turn down potentially out-of-scope work. Given that scope issues are relatively minor infractions-compared with, say, bribing a contracting officer-Soloway questions whether it's in the government's interest to hold a hard line and possibly scare some companies out of doing business with Uncle Sam.

Drabkin brushes off those concerns, noting that whenever the government proposes more stringent contracting policies, companies and their representatives say reforms will have a chilling effect. Even when the government considered debarring telecom giant WorldCom for its corporate ethics in 2003, and actually suspended energy trader Enron and accounting firm Arthur Andersen following their massive accounting scandals the previous year, companies didn't break camp and leave the federal market. "It just didn't happen," Drabkin says.

After CACI and Lockheed Martin were found to have supplied interrogators to the military in Iraq and Cuba, respectively, under technology contracts, GSA officials "invited" company executives to meet with their suspension and debarment chief so they could show why their out-of-scope work didn't mean they were unfit to work for the government, Drabkin says. In each case, GSA determined the interrogators' work didn't affect the companies' fitness, and their standing remains unchanged.

Shades of Gray

Drabkin says "any reasonable person," particularly someone who has worked extensively in the federal market on the private or public side, should have questioned the scope of those procurements. But what about cases that fall into what Soloway calls "the gray area"? For example, what if a company is hired to cut payroll checks under a technology contract, rather than one for financial services, because the work is utterly dependent on computers? Generally, GSA's policy is that the majority of work under a technology contract must comprise technology-related services.

But the more pervasive technology becomes, the harder it is to know where a discrete service ends and pure technology work begins, says Soloway, a former Defense deputy undersecretary. "I don't think anybody's really thought about it."

But Drabkin says companies won't be held responsible for judging where such gray area work falls on the scope curve. Instead, GSA will try to provide better guidance to its contracting officials about when it is and isn't appropriate to use particular contracts. "The gray area is our problem to deal with," Drabkin says, acknowledging Soloway's point that as technology permeates daily life, "a lot of things get mixed."

That likely will give some comfort to anxious contractors. But the Get It Right campaign isn't focused solely on scope questions. Officials are reviewing all contracts awarded by GSA's Federal Technology Service, a procurement agency implicated in a number of the out-of-scope cases and other instances in which contracting officers acted inappropriately and sometimes violated federal regulations.

Contractors are frustrated because GSA's housecleaning has made it harder to do business, says Larry Allen, an executive vice president with the Coalition for Government Procurement. "The tourniquet has been tied pretty darned tight," he says. "There is concern that a limb or two might fall off."

Allen says companies are afraid the focus on scope is only one piece of a larger, more cautious approach that threatens to stymie the pace of procurement. "The fear is that the reaction has been pretty substantial and that we are still waiting to come back to a happy medium between allowing business to go forward and ensuring it goes forward properly," he says. "Right now, there ain't nothing going forward."

Drabkin is not unsympathetic. "There are some people who may be a little gun-shy for a while," he says.

"But you know, it's not a bad thing," Drabkin continues. "We've placed a large amount of trust" in the contracting officers. "We rely on them to keep the integrity of our system."