By Elizabeth Newell Jochum
April 23, 2008
The House passed three pieces of contracting legislation on Wednesday aimed at increasing transparency in contracting and avoiding waste, fraud and abuse.
The 2007 Government Contractor Accountability Act (H.R.3928) would require companies to disclose the names and salaries of their most highly compensated officers if more than 80 percent of their annual revenue came from federal contracts and they held contracts worth more than $25 million in any fiscal year.
The compensation of heads of publicly held companies is already widely available, but companies have not been obligated to fully disclose that information. Rep. Chris Murphy, D-Conn., has said taxpayers have a right to know more about what kind of profits companies are making from government contracts. Detractors say federal regulations limit the amount contractors can charge the government for executive compensation and disclosure of salaries does not provide any real information about a company's profits.
"A privately held company should not be punished for organizing itself in a manner that best suits its needs," said Alan Chvotkin, senior vice president and counsel for the Professional Services Council, an industry association, at a recent hearing. He also said the legislative history of the bill was troubling. "It's directed at a single company in a unique set of circumstances. I don't know that there is a broad application across government."
Ali Ahmad, a spokesman for Rep. Tom Davis, R-Va., said on Wednesday that the bill has matured since it was first introduced. "It's gone from part of the majority's 'contractors are all bad' series of bills to one that promotes open government."
Ahmad said it now expands the 2007 Federal Funding Accountability and Transparency Act, introduced by Davis and Rep. Roy Blunt, R-Mo., which includes compensation disclosure for businesses receiving more than $25 million a year in government contracts as well as in funds through grants, loans, cooperative agreements or other sources that account for more than 80 percent of the company's income.
The House also passed legislation that would mandate the creation of a governmentwide database on contractor performance and misconduct. Supporters of the 2007 Contractors and Federal Spending Accountability Act, (H.R.3033), introduced by Rep. Carolyn Maloney, D-N.Y., said existing compilations of information on contractor performance were incomplete or inconsistent. She believed the new structure would standardize performance metrics and methods agencies used to submit information.
Maloney said on the House floor on Wednesday that she had worked closely with Davis, the U.S. Chamber of Commerce and other stakeholders to modify the bill to avoid what Davis has termed the "institutionalization of gossip."
A controversial provision that would have directed federal officials to start suspension or debarment proceedings against firms with two judgments or convictions for the same offense during any three-year period was scrapped after Davis complained that it could force major contractors like Boeing Co. out of the marketplace.
The revised bill directs federal procurement officers to document why they awarded a contract to a company with two or more debarment-worthy offenses on its record, but it does not require administrative punishment.
The House also passed the 2007 Close the Contractor Fraud Loophole Act (H.R. 5712). The legislation is meant to reverse the exclusion of companies working on overseas contracts from a proposed rule change to the Federal Acquisition Regulation. The rule would require contractors to self-report criminal violations of contracting rules, such as fraud, as well as overpayments by the government. Bush administration officials recently told lawmakers on the Government Management, Organization and Procurement Subcommittee that the exclusionary language was a "drafting error" and they were removing such language from the proposed rule, rendering the legislation redundant.
Rep. Peter Welch, D-Vt., who introduced the bill, has expressed skepticism that the administration will follow up on closing the "loophole" and insisted that the legislation is necessary.
Welch's legislation could stall in the Senate, especially if a revised rule is proposed, reversing the exclusion of companies working abroad from self-reporting. The level of support for the other two bills in the Senate also is unclear.
Maloney has attempted to push through legislation similar to H.R. 3033 in the past with no luck, but some are saying there could be more support this time around, especially given the bipartisan backing of the legislation in the House. On Wednesday, Sen. Claire McCaskill, D-Mo., introduced a companion bill in the Senate with plans to attach the language to the National Defense Authorization Act next week.
By Elizabeth Newell Jochum
April 23, 2008