Effort to Skirt Contracting Rules Unnerves Federal Workers

When Paulson tried to explain, at a Senate committee hearing last week, how the purchase of services related to the buyout would work, he left committee members wanting.

Consider this exchange with Sen. Daniel K. Akaka (D-Hawaii):

Akaka: Mr. Secretary, you mention about needing the right group of experts to help in this huge effort. Has there been any consideration, Mr. Secretary, given to specifically what parts of the Federal Acquisition Regulations would need to be waived to get contractors and consultants to establish this program?

Paulson: Yeah, we -- we've given a -- a lot of thought to that. We've got -- worked it through very carefully with our -- with our general counsel.

Akaka: Do you plan to have competitive bidding? And if not, why not?

Paulson: Well, we -- we -- we have procedures that are designed to -- to mitigate against conflicts, but we need to move very quickly here. And so we can't go through all of the -- the normal processes or it won't work for the markets.

He won't have to go through the normal processes, but he would have to reassure Congress that he won't flaunt them too much.

For example, if Paulson decided he was not going to follow established rules regarding minority participation in the hiring of outside contractors, the legislation says he still would have to "develop and implement standards and procedures to ensure, to the maximum extent practicable, the inclusion and utilization of minorities."

Chvotkin isn't worried about a lack of oversight on the contracts. What bothers him, is "the lack of resources . . . to do it right the first time."

He's concerned that the process to hire contractors, train them and provide technical support is not in place. Chvotkin also wants Treasury to develop a clear statement of the work to be done, a plan for awarding and administering the contracts, and a strategy to have sufficient government workers on the front end to monitor work being done by the financial experts.

But union boss Brown cites the Federal Retirement Thrift Investment Board that manages the Thrift Savings Plan for federal employees as an example of government workers doing a fine job of asset management.

"It's appalling that the proposal allows for the contracting out of asset management," he said. "We are going to reward the folks that got us into this mess with the biggest new client in history. Give me a break."

Contact Joe Davidson atfederaldiary@washpost.com.