Swindling Uncle Sam
Danielle Brian is the executive director of the Project On Government Oversight.
Last year, Congress uncovered scores of government-paid shopping sprees in federal credit card programs. Among the more interesting buys: a $13,000 Nevada brothel bill and a breast implant operation. But while good government types like Sen. Charles Grassley (R-Iowa) and Rep. Jan Schakowsky (D-Ill.) were busy uncovering this massive fraud, Rep. Tom Davis (R-Calif.) was proposing that they be expanded in his controversial Services Acquisition Reform Act (SARA) legislation.
Davis is back to proposing SARA once again. He held a late-night legislative markup session on May 7, and though Davis wisely backed off from the federal credit card proposal, other parts of the legislation are equally troubling. Defense and technology contractors have been pushing aggressively for many of the so-called reforms in SARA, because if it were to pass into law, the government would be forced to turn a blind eye to ripoffs by these contractors.
The legislation proposed by Chairman Davis is the latest in a long line of industry-promoted changes by organizations like the Information Technology Association of America, Contract Services Association and Aerospace Industries Association that have crippled the government's ability to police its spending -- leading to more waste, fraud and abuse.
Several provisions will likely to lead to the fleecing of taxpayer dollars:
Open Money Bags for Contractors
Shuckstering Time and Material and Labor Hour Contracts
These kinds of contracts allow contractors to engage in almost unlimited billing of the government without producing a product. According to the Pentagon's head fraud-fighter, the inspector general: "Time and material, and labor hour contracts are the highest risk and least preferred contract types.... We believe the use of these types of contracts should be discouraged, not expanded."
These contracts are like hiring a house painter, telling him no matter how long he takes or how much he spends on paint, his bill will be paid. The proposed legislation would even prohibit government auditors from reviewing contractors' costs.
Undermining Good Government Laws
Exemptions to the Truth in Negotiations Act (TINA) and Cost Accounting Standards (CAS) Protections
The legislation would arbitrarily exempt certain companies from complying with these taxpayer protection statutes. Both TINA and CAS protect the government in cases where a commercial marketplace does not exist -- for example, in the purchase of hugely expensive military weapons systems or aircraft. Cost Accounting Standards ensure that contractors do not use Enron-like accounting gimmicks to rip off the government. And the Truth in Negotiations Act puts the federal government on an even playing field in negotiating contracts by requiring improved transparency. In a recent news article, Clark G. Adams, a former project director at the government's Cost Accounting Standards Board, called proposals to change the TINA and CAS rules "ridiculous."
Circumventing Safeguards
Making "Off the Shelf" Meaningless
Do you remember Al Gore smashing the ashtray on David Letterman? He did so to make a point: that the government would stop buying products that were specially commissioned and, instead, would seek out products already sold publicly "off the shelf." However, somewhere along the way, that idea went astray. Industry lobbyists succeeded in expanding the definition of "off the shelf" to the point where it is meaningless. For example, a military plane called the C-130J has never been sold for anything other than military use, yet it is labeled as a commercial product. Now Rep. Davis is pushing that concept into the technology and services arena. His legislation would waive pricing safeguards and other protections that have ensured public funds were not being wasted or abused.
Speculative Financing Schemes
Share-in-Savings Contracts
The legislation would expand the use of speculative and unproven financing schemes known as share-in-savings contracts. Under share-in-savings contracts, contractors provide capital financing for projects such as computer system upgrades in exchange for receiving funds down the line that are saved as a result of the upgrade. However, developing the baselines to estimate savings is virtually impossible in the technology arena. Problems have already occurred in the pilot programs and Congress' research arm, the General Accounting Office, has found that "the government has not identified many suitable candidates for use of this technique."
Former presidents Reagan and Bush understood the importance of fighting waste, fraud and abuse. They empowered the Defense Department's inspector general, who put defense contractors on notice for the first time. Other reforms included the Competition in Contracting Act, the Procurement Integrity Statute and strengthening the Truth in Negotiations Act. Republicans have much to be proud of -- those efforts ended one of our nation's most embarrassing moments in the 1980s, while defense contractors gorged on government pork. SARA would undermine those efforts by helping to unravel the laws that have protected taxpayer dollars from waste, fraud and abuse.
Where have all the frugal conservatives gone?
Click here to read the Project On Government Oversight's letter on Rep. Davis' SARA legislation.
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Published: May 12 2003
