A Call for Competition
Thursday, June 28, 2007
Roughly half of the money spent on all federal contracts in 2006 was awarded with little or no competition, according to a congressional report released yesterday.
The report, prepared by the House Committee on Oversight and Government Reform for its chairman, Henry A. Waxman (D-Calif.), found that the federal government spent $412.1 billion on procurement last year. Of that, $206.9 billion, or 50.2 percent, was awarded through contracts that required either no bidding process, had limited competition or otherwise fell short of "full and open competition."
No-bid contracts alone amounted to $103 billion in 2006, a 43 percent jump from the previous year, the report said.
The report also said that audits and investigations had found that 187 contracts, valued at $1.1 trillion, "have been plagued by waste, fraud, abuse, or mismanagement."
Titled "More Dollars, Less Sense: Worsening Contracting Trends Under the Bush Administration," the report is the second since last year that Waxman has released examining government spending. He and other lawmakers have been highly critical of the contracting process and have proposed legislation they say will bring more government oversight to spending.
Waxman's report is based on information from Eagle Eye, a database of government contracts, audits and investigations by the Government Accountability Office and other inspectors general.
Industry representatives were critical of the report. Alan Chvotkin, senior vice president and counsel for the Professional Services Council, an industry trade group, said some emergency responses such as those after Hurricane Katrina make no-bid contracts necessary.
"You need to get food and supplies in there," he said. "Those are no-bid. They don't put out a solicitation and then ask for bids in seven days. No one would stand for that. There are some legitimate reasons for no-bids."
Chvotkin and other critics said Waxman's report may have mischaracterized some transactions as no-bid contracts. For example, after some contracts are awarded through competition, individual task orders connected with those contracts do not have to be put out for bid. But critics say Waxman may have counted those as no-bid, which would have inflated his numbers. "Everything is lumped together," Chvotkin said.
Larry Allen, executive vice president of the Coalition for Government Procurement, a trade group for government contractors, said Waxman "has his mind made up that the procurement system is broken, and he's looking at facts only in a way that supports that conclusion."
"This is one of those areas where you can cut it any way you want to make it look the way you want," Allen said.
The report noted that the $412.1 billion spent on procurement last year was more than double the $203.1 billion spent in 2000. Much of the increase has been driven by the wars in Iraq and Afghanistan and by homeland security, analysts say.
Over that six-year period, spending by the State Department rose most steeply: 280 percent, from $1.2 billion in 2000 to $4.7 billion last year. The Department of Homeland Security raised its spending from $3.5 billion in 2003, the year it was created, to $15.1 billion last year -- a 337 percent increase.
Among companies receiving procurement money, Lockheed Martin ranked highest in 2006, with $31.5 billion from 14,016 contracts. "Federal spending on this one company in 2006 exceeded the gross domestic product of 109 countries, including Iceland, Jordan and Guatemala," the report said.
Halliburton, the oil-services firm once headed by Vice President Cheney, was identified as one of the fastest-growing major contractors during the Bush administration. In 2000, Halliburton ranked 28th, receiving $763 million; in 2006, it was ranked sixth, receiving more than $6 billion.
Waxman has said that the large amount of spending requires strong oversight but points out in his report that the number of government acquisition workers has stayed relatively constant for the past six years.
"It's become a problem because we've lost a lot of control and oversight on government spending that's made it difficult to make sure federal dollars are being spent wisely," said Scott Amey, general counsel at Project on Government Oversight, a watchdog group.
"We're seeing that competition has become the exception rather than the rule," he said. "You're not being assured you're getting the best prices at that point."