Pentagon resists automatic suspension of indicted contractors

Mandatory suspension or debarment of indicted contractors could have a "chilling effect" on contractor relations, the Defense Department's top acquisition official told the Commission on Wartime Contracting on Monday.

In February, the congressionally chartered commission released an interim report on how the department could reduce waste, fraud and abuse through enhanced oversight and improved deployment of government resources in contingency contracting.

The report offered 32 specific legislative, regulatory and policy proposals, including limiting the government's reliance on armed private security contractors. The commission's final report is due out in July and likely will be considered by Congress for possible legislation.

Defense agreed with most of the suggestions in the interim report and already has begun to implement some, according to Ashton B. Carter, undersecretary of Defense for acquisition, technology and logistics. But Carter told the panel that other ideas would do more harm than good.

For example, the commission recommends automatic suspension or debarment for indicted contractors. The group would mandate that suspensions and debarments no longer be subject to the terms of agreements the contractors make with the Justice Department -- agreements that allow firms to avoid prosecution in criminal actions. Also, contingency contractors operating overseas should no longer be guaranteed a hearing to dispute facts in a suspension or debarment case, according to the report.

Carter disagreed with those recommendations, noting suspension and debarment officials need the flexibility and discretion to judge each case on its own facts and circumstances.

"There is a potential unintended consequence of turning suspensions and debarments from tools to protect the government's interest into tools that automatically punish contractors," he testified. "Such an approach may have a chilling effect on contractor cooperation in identifying and fixing real problems, including those that affect the health and safety of our personnel."

The department also is not on board with the commission's recommendation to limit past performance evaluations exclusively to those records in a federal database. Carter argued some contractors could have valuable experience working for foreign governments that should be considered as part of a past performance appraisal.

"We don't want to erect a barrier for contractors that have not worked for the [U.S.] government," he said.

Defense also is opposing commission recommendations that would mandate broader governmentwide access to contractor records by oversight personnel and establish offices of contingency contracting at Defense, the State Department and the U.S. Agency for International Development.

Nonetheless, Carter conceded the department's contingency acquisition process remains too slow and outdated to effectively serve the warfighter. "We have to create a fast lane for contingency acquisitions so requirements are not done in the ponderous usual way," he said.

Congress recently approved a Defense request to reprogram some of its fiscal 2011 funding. But, the annual budgeting system -- and the absence of permanent funding for the rest of the fiscal calendar -- has created a constant headache for Defense.

"The budgeting system is not adequate for dealing with ongoing wars," Carter said, calling for a more rapid system to implement and issue wartime contracts.

Carter is leading Defense's Better Buying Initiative to increase contractor competition, improve acquisition practices and reduce costs. Thus far, the department has identified $100 billion in unnecessary spending that has been cut and reinvested in warfighting operations. An additional $78 billion has been returned to the treasury for deficit reduction.