Wednesday, October 1st, 2014

The Obameter

Establish transparency standards for military contractors


"Establish transparency standards for military contractors. … Create the reporting requirements, accounting, and accountability needed for good governance and actual money savings with contracting."


Updates

Contracting reforms are in place, but not transparency standards

As a candidate, Barack Obama said he would "create transparency for military contractors,” which was part of a larger agenda to reform defense contracting.

Although Obama made a general statement that he would "create transparency and accountability needed for good governance,” he didn't specify how.

Instead, he talked about getting the Pentagon and State Department to write a policy clarifying how they decide to outsource work to private contractors, as opposed to doing it in-house. Obama also mentioned establishing the legal status of military contract employees, especially in foreign countries, so that if those employees commit abuses, the government is able to prosecute them.

We'll address these two specific reform promises before we address general transparency improvements.

In March 2009, the White House sent a memo to all federal agency heads, in coordination with the Office of Management and Budget, to create a process for identifying  "contracts that are wasteful, inefficient, or not otherwise likely to meet the agency's needs, and to formulate appropriate corrective action in a timely manner.” The memo also directs the Office of Management and Budget to "clarify when governmental outsourcing for services is and is not appropriate.” In September 2011, the agency followed through with a policy letter that outlines a strategy for determining when contracting makes sense.

The second promise about legal status of contract employees, remains unresolved.

A Senate subcommittee hearing on contract oversight in April 2012, a Pentagon official acknowledged more work needed to be done.

"We agree in broad terms that the Department of Defense needs to have remedies available to handle contractors who may not be subject to U.S. law,” said the Richard Ginman, director of defense procurement and acquisition policy at the Pentagon. "We would like to work with the Congress to develop an effective approach to ensuring contractors can be held accountable.”

So, Obama appears to be batting .500 on this military contracting promise, but since the title of the promise and some of the general language mentions transparency and accountability, we decided to look into this as well. We asked two open-government experts who follow military contracting. Neither thought Obama had really made military contracting more "transparent and accountable.”

Laura Peterson, a senior policy analyst for Taxpayers for Common Sense, said "no major new transparency initiatives have been introduced.” For an incremental reform on transparency, Peterson referred us to USASpending.gov, which provides information on basic information about contract recipients and total money awarded to that contractor. The White House under Obama relaunched the website and added subcontractors to that database.

Scott Amey, general counsel at the Project on Government Oversight, said USASpending.gov doesn't go far enough. For instance, it doesn't list the number of employees, the number of hours worked, or even a breakdown of costs, such as overhead and administrative costs.

"That type of analysis is impossible for us to do on the outside,” Amey said.

Peterson also mentioned ForeignAssistance.gov, which allows the public "to examine, research, and track U.S. Government foreign assistance investments in an accessible and easy-to-understand format.” So far, the website includes budget plans, money obligated and money spent by USAID and the Millenium Challenge Corporation.

With USAID, for instance, you can see that the agency spent about $22.9 million on counterterrorism and $9.1 million on combating weapons of mass destruction in 2011, with a breakdown of that spending by country.

With the State Department, you can see next year's budget plan, but no other details. That's a far cry from the 20 or so agencies the website says will one day be included in its foreign assistance database. Even if that information comes in the future, there wouldn't be details of which defense contractors receive that foreign aid money.

Overall, we find Obama made some progress setting up a policy for when to contract government work. Meanwhile, military contracting is a little more transparent than before, but not much. We rate this a Compromise.

Sources:

Scott Amey, general counsel at Project on Government Oversight, July 11, 2012

Whitehouse.gov, Memorandum for the Heads of Executive Departments and Agencies: Government Contracting, March 4, 2009

Senate Subcommittee on Contracting Oversight, The Comprehensive Contingency Contracting Reform Act of 2012, April 17, 2012

USASpending.gov

ForeignAssistance.gov, U.S. Agency for International Development, Spent Stage

Reforms, yes; transparency standards, not yet

President Barack Obama promised to institute transparency standards to govern military contractors with "the reporting requirements, accounting and accountability needed for good governance and actual money savings," but proposed reforms to the Defense Department's acquisitions process don't quite signal greater transparency.

In the past two years -- and especially in 2010 -- the Department of Defense has initiated significant changes in the way it acquires goods and services, and while some of these directly affect contractors, they don't make the process more transparent to the public, said Scott Amey, general counsel for the Project on Government Oversight.

"I haven't seen too many enhancements when it comes to access to Pentagon spending... to better monitor those taxpayer dollars," Amey said.

Directives from the Defense Department's acquisition chief, Ashton Carter, in June and September 2010 indicate a slight shift in DOD's approach to acquisitions. Service contracts greater than $1 billion must be written with cost efficiency objectives, and contractors must be notified initially how much the department can spend on a good or service. Audits should be more thorough and consistent. Single-source contracts must be reopened for bids after three years. Contractors are to be rewarded for meeting schedule and cost deadlines and should share the savings with the department when a project comes in under cost.

These guidelines offer some accountability and the possibility for savings, but reporting requirements and accounting standards are not addressed.

"The White House has made some progress this year if you include the reforms introduced by Defense Secretary Robert Gates last summer and Congress last spring,” Laura Peterson, a senior policy analyst with Taxpayers for Common Sense, wrote in an e-mail. "Since these reforms were framed as the Defense Department's contribution to government-wide belt-tightening and accountability initiatives, I think you can chalk them up to Obama.”

The president also released a memorandum in January 2010 -- strikingly similar to the Contracting and Tax Accountability Act of 2007 he introduced as a senator -- directing agency heads to deal with contractors delinquent on taxes and to recommend "process improvements to ensure these contractors are not awarded new contracts, including a plan to make contractor certifications available in a government-wide database, as is already being done with other information on contractors.”

Unclassified and non-proprietary information is available in a contractor performance database that includes data on top-line bids, subcontractors and statements of work, Peterson said.  

The IMPROVE Acquisition Act, passed by the House of Representatives in April 2010, would have required contractors to certify they do not have a delinquent tax debt greater than $3,000 while bidding for a government contract. The bill, however, stalled in the Senate during the 111th Congress.

The 2011 National Defense Authorization Act, also passed by the House, does touch on accounting and accountability by allowing the government to withhold up to 10 percent of contractors' payments if the contractor does not have appropriate business systems in place. This gives the government some leverage to ensure contractors are using systems with which they can account for spending, Amey said.

"The legislation is good, the directives are good, but the implementation remains to be seen," said Peterson, adding that the administration is pushing forward -- but not quickly.

The White House did not provide evidence that it is taking steps toward greater transparency in regard to military contractors, and Amey said he has not seen movement in this direction.

With progress limited and no pending proposals for actual transparency standards, we continue to rate the president's efforts on this promise as Stalled.

Sources:

Interview with Laura Peterson, senior policy analyst with Taxpayers for Common Sense

Interview with Scott Amey, general counsel for the Project on Government Oversight

Memorandum for the Heads of Executive Departments and Agencies, White House website, Jan. 20, 2010

Memoranda for Acquisition Professionals, Office of the Undersecretary of Defense, June 28 and Sept. 14, 2010

Taxpayers for Common Sense website

No transparency in sight

As a candidate, Barack Obama talked a lot about transparency in government. In the case of defense contractors, he said he would "create the reporting requirements, accounting, and accountability needed for good governance and actual money savings with contracting."

While several reforms have been put into place to improve the process of military contracts, we couldn't find any new transparency standards. We did extensive searching on the Web and spoke with Laura Peterson, an analyst at Taxpayers for Common Sense, a group that tracks military spending and contracts. She hasn't seen any, either.

If any transparency standards have been put into place, they aren't very transparent because after hours of research, we haven't been able to find any.

We'll keep an eye on this one to see if there's progress, but for now, we're rating it Stalled.

Sources:

Interview, Laura Peterson, national security analyst at Taxpayers for Common Sense

Extensive searching of White House, Department of Defense and other Web sites