Statements On Introduced Bills And Joint Resolutions

STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS -- (Senate - February 17, 2007)

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By Ms. COLLINS (for herself, Mr. LIEBERMAN, Mr. COLEMAN, Mr. CARPER, and Mrs. MCCASKILL):

S. 680. A bill to ensure proper oversight and accountability in Federal contracting, and for other purposes; to the Committee on Homeland Security and Governmental Affairs.

Ms. COLLINS. Mr. President. I rise to introduce the Accountability in Government Contracting Act of 2007. This bill, which I am delighted is cosponsored by Senators LIEBERMAN, COLEMAN, CARPER, and MCCASKILL, will improve our stewardship of taxpayers' money by reforming contracting practices, strengthening the procurement workforce, reforming our IG community, and including other provisions to combat waste, fraud, and abuse. It will also provide increased oversight and transparency in the Federal Government's dealings with its contractors.

The Office of Federal Procurement Policy estimates that the Federal Government purchased approximately $410 billion in goods and services last year--more than a 50 percent increase in Federal purchases since 2001.

As the administration's proposed budget suggests, the costs of war, natural disaster, homeland-security precautions, and other vital programs will drive those expenditures to even higher levels in the years ahead.

Each of us in this Chamber knows that the Federal Government's prodigious purchasing can create abundant opportunities for fraud, waste, and abuse. Whether the problem is purchases of unusable trailers for hurricane victims, shoddy construction of schools and clinics in Iraq, or abuse of purchase cards by Government employees, we must do a better job of protecting taxpayer dollars and delivering better acquisition outcomes.

Recognizing that imperative requires that we also recognize the obstacles in our path. Such obstacles include resource constraints, inexcusable rushes to award contracts, poor program administration, and perverse incentives.

Other challenges to fair, effective, and open competition and oversight include inadequate documentation requirements, overuse of letter contracts that fail to include all the critical terms until after performance is complete, excessive tiering of subcontractors, and insufficient publicly available data on Federal contracts.

Too often, the problem of waste, fraud, and abuse stimulates floods of outrage and magic-bullet proposals that lean more toward symbolic gestures than practical reforms. The Accountability in Government Contracting Act of 2007 confines itself to sensible, practical reforms that will really make a difference.

Competition for Government contracts clearly helps to control costs, encourage innovation, and keep contractors sharp. It is basic economics--and it's the law, as Congress provided in the Competition in Contracting Act of 1984. This bill promotes more open competition for Government contracts--a positive step for both contractors and taxpayers.

Unfortunately, the tide has been running the wrong way. Competition, intended to produce savings, has sharply diminished. While the dollar volume of Federal contracting has nearly doubled since the year 2000, a recent report concluded that less than half of all ``contract actions'--new contracts and payments against existing contracts--are now subject to full and open competition: 48 percent in 2005, compared to 79 percent in 2001. This is inexcusable.

The dangers inherent in sole-source contracting are on full display in Iraq. For example, the Kellogg, Brown, and Root unit of Halliburton designed and was awarded a multi-year sole-source contract for the Restore Iraqi Oil project. A Defense Department audit concluded that the firm later over-charged the government $61 million for fuel. Incredibly, the Army Corps of Engineers permitted the overcharge.

According to a January 2007 Congressional Research Service report, Kellogg, Brown, and Root's contract work in Iraq included billing for $52 million to administer a project that entailed only $13 million in actual project work, piping unpurified water into showers and laundries used by our troops, and billing for 6 months of failure while using an unsuitable technique to lay oil pipeline beneath a river.

As these examples suggest, we need more competition, less sole source contracting, and tougher management in Federal contracts. The bill I introduce today extends a practice adopted in the fiscal year 2002 Defense Authorization Act government-wide, mandating competition for each task or delivery order over $100,000, the Simplified Acquisition Threshold.

The bill would promote more informed and effective competition for orders over $5 million by requiring more information in the statement of work. At minimum, contractors would be given a clear statement of agency requirements, a reasonable response period, and disclosure of significant evaluation factors to be applied. For awards to be made on a best-value rather than lowest-cost basis, the agency must provide a written statement on the basis of the award and on the trade-off between quality and cost.

To increase the quality of competitive bids, the bill mandates post-award debriefings for task or delivery orders valued over $5 million. Debriefings improve the transparency of the Federal acquisition process by providing information that contractors can use to improve future offers.

Competition helps secure good value for taxpayers' money, but there are exceptions, and they should be the exception and not the rule, when sole-source contracting is appropriate. Sole-source contracting heightens the importance of effective oversight, but oversight is often hampered by a lack of publicly available information on sole-source contract awards.

The bill addresses that problem by requiring publication at the ``FedBizOpps' website of notices of all sole-source task-or-delivery orders above $100,000, within 10 business days after the award.

I shall note some other important provisions of the bill.

The bill will rein in the practice of awarding contracts missing key terms, such as price, scope or schedule, and then failing to supply those terms until the contractor delivers the good or service--thereby placing all risk of failure on the government. In Iraq and Katrina contracting, we saw the perils of failing to supply the ``missing term' promptly. For example, the Special Inspector General for Iraq Reconstruction last July identified 194 individual task orders valued at $3.4 billion that were classified as ``undefinitized contract actions.'

This is entirely too much money and too many contract actions to linger in this status. The bill corrects this flaw by requiring contracting officers to unilaterally determine all missing terms, if not mutually agreed upon, within 180 days or before 40 percent of the work is performed, with the approval of the head of the contracting agency, and subject to the contract disputes process.

Contracting for Hurricane Katrina and Iraq has also involved excessive tiers of subcontractors, driving up costs and complicating administration. The bill extends a tiering-control rule we placed in the Department of Homeland Security appropriations bill, preventing contractors from using subcontracts for more than 65 percent of the cost of the contract, not including overhead and profit, unless the head of agency determines that exceptional circumstances apply.

To further decrease the Government's reliance on large single-source service contracts, the bill strengthens the preference for multiple awards of Indefinite Delivery/Indefinite Quantity, or IDIQ, contracts by prohibiting single awards of IDIQ contracts for services over $100 million. The Government would therefore have at least two contractors for these large service contracts, who would then be required to compete with each other for all task and/or delivery orders, unless strict grounds for exceptions applied.

To ensure that agencies' increasing use of interagency contracting is producing value, we require the Office of Federal Procurement Policy to collect and make publicly available data on the numbers, scope, users, and rationales for these contracts.

But increased competition will not solve all our ills. We must also address the lack of personnel to award and administer Federal contracts. We moved into the 21st century with 22 percent fewer Federal civilian acquisition personnel than we had at the start of the 1990s. The Department of Defense has been disbursing enormous amounts of money to contractors since the first gulf war, but has reduced its acquisition workforce by more than 50 percent from 1994 to 2005.

Among the current, attenuated Federal acquisition workforce, nearly 40 percent are eligible to retire by the end of this fiscal year. Meanwhile, the number and scale of Federal purchases continue to rise, making this human-capital crisis even more dire.

Therefore, the bill would help Federal agencies recruit, retain, and develop an adequate acquisition workforce. Its mechanisms include acquisition internship programs, promoting contracting careers, a government-industry exchange program; an Acquisition Fellowship Program with scholarships for graduate study, requirements for human-capital strategic plans by chief acquisition officers, and a new senior-executive-level position in the Office of Federal Procurement Policy to manage this initiative.

In keeping with earlier Senate action, the bill also targets wasteful use of purchase cards by seeking better analysis of purchase-card use to identify fraud as well as potential savings, negotiate discounts, collect and disseminate best practices, and address small-business concerns in micro-purchases.

Such information is clearly necessary. In a hearing before the Homeland Security and Governmental Affairs Committee, GAO detailed how a FEMA employee provided his purchase card number to a vendor, who agreed to provide the government 20 flat-bottom boats. Besides the fact

that FEMA agreed to pay $208,000 for the boats, about twice the retail price, the vendor used the FEMA employee's purchase card information to make two unauthorized transactions totaling about $30,000. Neither the cardholder nor the approving official disputed the unauthorized charges. As if this was not bad enough, FEMA failed to gain title to the boats. It did not even enter 12 of the 20 boats into their property system. Eventually, one of the boats was later found back in the possession of the original owner.

The bill restricts the de-facto outsourcing of program-management responsibility when a large contractor becomes a ``lead systems integrator' for a multi-part project. The bill requires OFPP to craft a government-wide definition of lead systems integrators and study their use by various agencies.

The bill also specifically addresses demonstrated problems in contracting for assistance programs in Afghanistan. Numerous reports of fraud, waste, and abuse in that country, such as the shockingly poor construction of schools and clinics by the Louis Berger Group, echo the findings of the SIGIR in Iraq.

The Louis Berger Group was awarded a contract to build schools and clinics to help restore a decent life for the people of Afghanistan. Of the 105 structures they erected before their work was stopped, 103 suffered roof collapses after the first snowfall. Here was a case that combined a waste of taxpayer funds, damage to the U.S. image we were trying to enhance, and an actual danger to the people we were trying to help.

This bill requires the Administrator of USAID to revise the strategy for the agency's assistance program in Afghanistan to include measurable goals, specific time frames, resource levels, delineated responsibilities, external factors bearing on success, and a schedule for program evaluations. All of these things should have been done from the outset, not after billions in Federal funds were expended.

Title II of the bill introduces targeted reforms of the Inspector General system. IGs play a vital role in preventing and detecting waste, fraud, and abuse. We must attract more of these specialists to government service, and make the career attractive.

One vital provision in our bill might appear to run counter to that aim but the provision, in fact, preserves the independence of our Inspector Generals. It prohibits IGs from accepting any cash award or cash bonus from the agency that they are auditing or investigating. This codifies the honorable practice of most IGs of declining to accept such awards because of the inherent conflict of interest they present.

The balancing mechanism for that prohibition is to increase the salaries of Presidentially appointed IGs from Senior Executive Service Level III to Level IV. This also corrects a common anomaly wherein Deputy IGs collecting performance pay earn more than their supervising IG. The bill removes the inequity and the disincentive to accepting a promotion.

The bill makes other reforms that will increase the quality of IG reports and audits. For example, it clarifies that IGs' subpoena power extends to electronic documents. It also sets out professional qualifications for the designated Federal entity IGs, or DFE IGs. These IGs work in our smaller Federal agencies and are not subject to confirmation. This is no excuse for this failure to supply minimum professional qualifications for these important positions.

This bill also corrects a serious problem that has left millions of fraudulently disbursed dollars un-recouped. Currently DFE IGs do not have the power to institute lawsuits to recover claims under $150,000, even if they have a compelling case. This is unacceptable. DFE IGs need the power to pick this ``low hanging fruit,' whose cumulative cost can be huge. The bill corrects this problem by giving DFE IGs the same authority that Presidentially appointed IGs have to investigate and report false claims, and to recoup losses resulting from fraud below $150,000.

I believe this summary shows how the Accountability in Government Contracting Act of 2007 combines practical, workable, and targeted reforms to improve a complex process that expends hundreds of billions of taxpayer dollars every year. It will pay recurring dividends for years to come in higher-quality proposals, in more efficiently administered projects, and in better results for our citizens. I urge my colleagues to support it.

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