Contracting offices face increased oversight

After spending much of 2005 on the defensive in the wake of countless contracting scandals spurred by Hurricane Katrina, acquisition offices at civilian federal agencies had hoped for a more low-key, back-to-basics year. It didn't go quite as planned.

Within weeks of assuming control of Congress, Democrats initiated a renewed level of oversight of procurement, shining a light on noncompetitive deals, mismanaged and wasteful contracts and ethical missteps at the General Services Administration. Procurement reform now has become a hot topic on Capitol Hill, and companies are preparing-albeit begrudgingly-for some of the most significant contracting legislation in recent memory.

Click here for a full list of the Top 100 civilian agency contractors, from Government Executive's Aug. 15 special Procurement Preview issue.

The leading proponent for change has been Rep. Henry A. Waxman, D-Calif., who has held hearings examining abuse in Homeland Security procurements, sponsored a bill to reduce the use of sole-source contracts and released a database of 189 contracts linked to waste, fraud or mismanagement. "A major problem is that while contract spending has soared, oversight has been discouraged and account-ability undermined," Waxman said in May at a contracting forum hosted by the Center for American Progress. "The result is mistakes have been made in virtually every step of the contracting process, from pre-contract planning through contract award and oversight to recovery of contract overcharges."

In April, for example, the Education Department inspector general found the agency's management of a key information technology services contract was inadequate. The same month, the National Toxicology Program terminated a contract with a consulting firm it had hired to assess how dozens of potentially toxic chemicals affect women's reproductive health, after reports surfaced that the company had ties to the chemical industry.

Waxman, chairman of the House Committee on Oversight and Government Reform, in particular has focused on the rise of no-bid contracts. The committee released a report in late June concluding that half the $412 billion in federal procurements in fiscal 2006 were awarded with less than full and open competition. A Waxman bill that has passed the House would require agencies to reduce the use of sole-source contracts.

The nonprofit Project on Government Oversight says about 40 percent of government contracts are let without competition. Industry representatives say those numbers are inflated, in some cases counting sole-source task orders from competitively awarded contracts as no-bid. But an analysis of data from the nonprofit watchdog OMB Watch reveals that most civilian agencies de-creased contract competition from fiscal 2005 to 2006, in some cases substantially.

Interagency contracting has been another area of concern, making the Government Accountability Office's list of high-risk areas. When an agency buys commonly needed goods and services through another agency's contract for a fee, it can save money by leveraging the government's buying power. But GAO and watchdog groups say this type of spending has soared without a commensurate rise in the number of personnel needed to manage it. Spending through General Services Administration schedules has increased by $4 billion in the last two years, according to GAO.

The shortage of procurement workers is another looming problem receiving attention. The Acquisition Advisory Panel, which after two years of work released in December a slew of recommendations on the contracting system, called for the expansion of the acquisition workforce. And Waxman's bill would set aside 1 percent of federal procurement spending for contract management and oversight. "Procurement experts can debate whether that's the right percentage or not," Waxman said at the contracting conference. "But we need more resources, and that should not be in dispute."