Contractors, administration officials voice concerns about contracting bills

Legislators told reform measures could have unintended consequences.

Representatives of federal contractors and a Bush administration official raised concerns Wednesday over what they characterized as potential unintended consequences of pending contracting reform legislation.

Several witnesses at a hearing of the House Oversight and Government Reform Subcommittee on Government Management, Organization and Procurement said that while the goal of increased transparency in the procurement process is laudable, some of the bills currently before the subcommittee could have adverse effects on contracting efforts.

For example, witnesses said, the Government Contractor Accountability Act (H.R. 3928), sponsored by Rep. Christopher Murphy, D-Conn., doesn't take into account differences in the practices of publicly traded companies and private firms.

The bill would require a contractor to disclose the names and salaries of its most highly compensated officers if more than 80 percent of the company's annual revenue comes from federal contracts and it holds contracts worth more than $5 million in any fiscal year. Currently, while the compensation of heads of publicly held companies is widely available, private companies are not obligated to fully disclose that information.

Paul A. Denett, administrator of the Office of Federal Procurement Policy at the Office of Management and Budget, said federal contracting officers already have access to compensation information under existing regulations and making the information available to the public could have a "chilling effect" on companies' participation in competing for federal contracts -- especially small businesses.

"There are a lot of small businesses that would be disturbed about jumping into the government space if this legislation was enacted," Denett said. "The presidents of those private companies don't want their employees to know what they're making." He said members of Congress should consider only making the bill's provisions applicable to companies with more than $25 million in contracts in a given fiscal year. That, Denett said, "would get at some of the much larger [companies] that in conjecture are causing you the most consternation."

Murphy said he would consider such a change, because he wanted to target the legislation at large private firms that operate much like public companies.

Alan Chvotkin, senior vice president and counsel for the Professional Services Council, said the industry association is opposed to Murphy's bill because "a privately held company should not be punished for organizing itself in a manner that best suits its needs."

The hearing also addressed the Contractors and Federal Spending Accountability Act (H.R. 3033), co-sponsored by New York Democrats Carolyn Maloney and committee chairman Edolphus Towns. That measure would mandate the creation of a governmentwide database of information on contractor performance and misconduct. Supporters of Maloney's legislation say existing compilations of information on contractor performance are incomplete or inconsistent. The new structure would standardize performance metrics and methods agencies use to submit information, she has said.

Scott Amey, general counsel of the Project on Government Oversight, told the subcommittee that his organization has strongly supported Maloney's legislation for years. Denett conceded that having a centralized database might be more efficient, but said the information agencies would be required to collect under the bill may be overly expansive.

Chvotkin and Rep. Tom Davis, R-Va., spoke out against Maloney's bill, saying it requires reports on allegations of misconduct or legal violations, and not just fully adjudicated findings.

"What we're talking about here really is the institutionalization of gossip, and that gives me great concern," Davis said. "Putting down mere allegations or charges and trying to make this a part of what a contracting officer or procurement official looks at, I think, makes this an open season that does not help the contracting process at all."

Maloney said it was not the intent of her legislation to include allegations and that she would work with Davis to clarify any misunderstanding about what should go into the database.