Defense bill includes major contracting reforms

The House and Senate have approved a sweeping set of acquisition reforms, some of which had languished for nearly two years.

Provisions in the fiscal 2009 Defense authorization bill (S. 3001) would increase competition in contracting, tighten regulations on interagency procurements and mandate the establishment of a database to monitor companies that have faced criminal and civil actions. The House passed the bill on Sept. 24 and the Senate approved it over the weekend, sending it to the White House. President Bush is expected to sign it soon.

"This legislation says that Congress is serious about stopping waste, fraud and abuse," said Rep. Henry Waxman, D-Calif., chairman of the House Oversight and Government Reform Committee.

Sen. Joseph Lieberman, I-Conn., chairman of the Senate Homeland Security and Governmental Affairs Committee, said closer scrutiny of government spending was especially important given the current economic situation. "These reforms will restore competition as the cornerstone of federal contracting," he said.

The bill would mandate a scaled-down version of the much-debated contractor misconduct database, which would house information on nearly all complete criminal, civil or administrative proceedings against contractors with awards in excess of $500,000.

Republicans and industry groups opposed the idea, arguing that the information in the database might prove unreliable and should not be presented out of context. As a compromise, the provision's Democratic sponsors -- Rep. Carolyn Maloney of New York and Sen. Claire McCaskill of Missouri -- agreed that only government officials would be granted access. The original bill would have opened the repository to the public.

"Congress is finally taking common-sense action to make sure that fraudsters and felons do not get federal contracts," Maloney said. "It's outrageous that until now we've had no central way to monitor contractor performance, allowing a handful of contractors to repeatedly violate the law yet still receive millions of dollars from the federal government."

The authorization bill also contains pieces of Waxman's Clean Contracting Act, including a one-year limit on sole-source emergency procurements, a prohibition on excessive layering of subcontracts and a requirement for more competition for multiple award contracts.

In addition, the legislation calls for increased scrutiny of cost-reimbursement contracts, which Democrats have criticized as prone to abuse. Inspectors general would have to issue an annual report to Congress that includes the total number and value of their agencies' cost-reimbursement contracts and an assessment of how well such contracts are regulated.

The Office of Management and Budget would be required to increase its oversight of interagency acquisitions, including their frequency of use, management controls, cost-effectiveness and savings generated. All multiagency contracts would have to assign responsibility for management. Officials would have to explain why the contract is the best procurement alternative and present a business case.

A number of key contracting provisions that originated in the Senate, including the creation of a Contingency Contracting Corps, also made it into the final bill. The corps would deploy during emergencies, national disasters or contingency operations within and outside the United States. Membership would be voluntary and open to all federal and military acquisition professionals.

The bill addresses the depleted acquisition workforce as well. OMB's Office of Federal Procurement Policy and the Federal Acquisition Institute would be required to prepare an acquisition workforce development strategic plan to increase the size of the contracting workforce and create a governmentwide acquisition intern program. The strategy would have to include a specific and actionable five-year implementation plan.

OFPP would be required for the first time to develop a governmentwide policy on personal conflicts of interest by contract employees who perform jobs closely associated with inherently governmental functions. OMB would have to establish a consistent definition of inherently governmental activities.

"The federal government's prodigious purchasing creates abundant opportunities for waste, fraud and abuse," said Sen. Susan Collins, R-Maine, ranking member of the Homeland Security and Governmental Affairs Committee. "Whether the problem is purchases of unusable trailers for hurricane victims or shoddy construction of schools and clinics in Iraq or Afghanistan, we must do a better job of protecting taxpayer dollars and delivering better results."

A number of controversial provisions did not make it into the final bill. A House amendment that would suspend all public-private competitions at the Defense Department for the next three years was scrapped as was a ban on private interrogators in U.S. military detention facilities.