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.
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← Back to Establish transparency standards for military contractors
Reforms, yes; transparency standards, not yet
Our 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