Government Contracts Law360 - April 6, 2011
Over the course of the last several years, there has been much written about fraud and abuse in the federal procurement process. The GAO has issued reports that recite such abuse relative to the 8(a), HUBZone and SDVOSB programs. As those reports indicate, companies have been awarded set-aside contracts through those programs, but were not qualified to receive them. In certain circumstances, the apparent fraud was so blatant that the hubris, which certainly existed to think such abuses would go unnoticed, puts Charlie Sheen to shame. Yet, as the GAO reports state, even when the abuses were uncovered, many of these contractors continued to receive government awards. It appears that some contractors performing work overseas in places like Iraq and Afghanistan may also be receiving awards that they do not deserve.
Government agencies responsible for overseas contracts are apparently not properly recording past performance history in the CPAR and PPIR electronic databases. The biggest offenders appear to be the State Department, the Department of Defense and the U.S. Agency for International Development (USAID). Based upon information supplied to the Commission on Wartime Contracting (the Wartime Commission), a bipartisan commission authorized to investigate contracting activities in Iraq and Afghanistan, these agencies have failed to properly report past performance history in up to 90% of the contingency contracts that they have issued. While the failure to report this information is problematic for many reasons, it certainly exposes the government to contractors who are less than ideal for important government contracts. This is especially an issue as it relates to contractors in line for suspension or debarment. As former Connecticut Congressman Christopher Shays, who is the chairman of the Wartime Commission, stated: “[I]f suspensions and debarments are impeded by bureaucratic decisions or inertia, then companies that have committed fraud may continue receiving taxpayer funds. In either case, untrustworthy contractors can continue profiting from government work, responsible businesses may be denied opportunities, and costs to taxpayers can climb.”
Over the years, the government has increasingly relied upon “best value” procurement to let contracts. Past performance is almost always an important factor in determining “best value.” In fact, in most cases, it is the most important factor. If federal agencies intend to continue issuing contracts in this fashion, a practice that is highly questionable for the purchase of certain services, such as construction, then they must make it a point to create a system that allows those deserving of awards to receive them. In the case of small business set aside contracts, the government has started to slowly move in this direction. The VA, for example, is now vetting those contractors on its on-line SDVOSB registry to verify eligibility. If this function is performed correctly, it will greatly enhance the probability that contracts will be let to those who deserve them.
With respect to past performance history, there is a system in place. Federal agencies simply need to use it. As the Wartime Commission just concluded, “stricter accountability for poor performance or misconduct…will help save money and promote better support for U.S. missions.” While that seems like an elementary concept, the government has lodged certain objections. In testimony before the Wartime Commission several days ago, the Undersecretary of Defense for Acquisition, Technology and Logistics, Ashton B. Carter, stressed the need for a more tempered approach. He reportedly pressed for agency discretion when it comes to contract administration abroad, particularly pertaining to the use of suspension and debarment as a contracting tool. While discretion must certainly play a role in the process of administering to any contract, it is wielded in the most effective way when an agency official has the entire universe of information to consider prior to rendering a decision. To that end, there should be no discretion provided to DOD, the State Department, or any other federal agency when it comes to regularly and accurately reporting past performance history. Once that occurs, then the discretion of the agency can come into play in evaluating a contractor’s proposal, or taking any other action that must take into consideration a contractor’s history. Adherence to such a policy will save taxpayer dollars and result in a better product for troops and civilians alike overseas.
Edward T. DeLisle is a Partner at Cohen Seglias Pallas Greenhall & Furman, PC. A member of the Federal Contracting Group, Ed concentrates his practice in the areas of construction law, construction litigation and small business procurement and litigation. He is also a frequent contributor to the Firm’s Federal Construction Contracting blog. Ed can be reached at 215.564.1700 or firstname.lastname@example.org.