[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
PROTECTING TAXPAYER DOLLARS: IS THE GOVERNMENT USING SUSPENSION AND
DEBARMENT EFFECTIVELY?
=======================================================================
HEARING
before the
COMMITTEE ON OVERSIGHT
AND GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
__________
JUNE 12, 2013
__________
Serial No. 113-35
__________
Printed for the use of the Committee on Oversight and Government Reform
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COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM
DARRELL E. ISSA, California, Chairman
JOHN L. MICA, Florida ELIJAH E. CUMMINGS, Maryland,
MICHAEL R. TURNER, Ohio Ranking Minority Member
JOHN J. DUNCAN, JR., Tennessee CAROLYN B. MALONEY, New York
PATRICK T. McHENRY, North Carolina ELEANOR HOLMES NORTON, District of
JIM JORDAN, Ohio Columbia
JASON CHAFFETZ, Utah JOHN F. TIERNEY, Massachusetts
TIM WALBERG, Michigan WM. LACY CLAY, Missouri
JAMES LANKFORD, Oklahoma STEPHEN F. LYNCH, Massachusetts
JUSTIN AMASH, Michigan JIM COOPER, Tennessee
PAUL A. GOSAR, Arizona GERALD E. CONNOLLY, Virginia
PATRICK MEEHAN, Pennsylvania JACKIE SPEIER, California
SCOTT DesJARLAIS, Tennessee MATTHEW A. CARTWRIGHT,
TREY GOWDY, South Carolina Pennsylvania
BLAKE FARENTHOLD, Texas MARK POCAN, Wisconsin
DOC HASTINGS, Washington TAMMY DUCKWORTH, Illinois
CYNTHIA M. LUMMIS, Wyoming ROBIN L. KELLY, Illinois
ROB WOODALL, Georgia DANNY K. DAVIS, Illinois
THOMAS MASSIE, Kentucky PETER WELCH, Vermont
DOUG COLLINS, Georgia TONY CARDENAS, California
MARK MEADOWS, North Carolina STEVEN A. HORSFORD, Nevada
KERRY L. BENTIVOLIO, Michigan MICHELLE LUJAN GRISHAM, New Mexico
RON DeSANTIS, Florida
Lawrence J. Brady, Staff Director
John D. Cuaderes, Deputy Staff Director
Stephen Castor, General Counsel
Linda A. Good, Chief Clerk
David Rapallo, Minority Staff Director
C O N T E N T S
----------
Page
Hearing held on June 12, 2013.................................... 1
WITNESSES
Mr. John Neumann, Acting Director, Acquisition and Sourcing
Management, U.S. Government Accountability Office
Oral Statement............................................... 4
Written Statement............................................ 6
The Honorable Angela B. Styles, Partner, Crowell & Moring
Oral Statement............................................... 14
Written Statement............................................ 16
Mr. Scott Amey, General Counsel, Project on Government Oversight
Oral Statement............................................... 24
Written Statement............................................ 26
APPENDIX
The Honorable Gerald E. Connolly, a Member of Congress from the
State of Virginia, Opening Statement........................... 66
PROTECTING TAXPAYER DOLLARS: IS THE GOVERNMENT USING SUSPENSION AND
DEBARMENT EFFECTIVELY?
----------
Wednesday, June 12, 2013,
House of Representatives,
Committee on Oversight and Government Reform,
Washington, D.C.
The committee met, pursuant to call, at 9:37 a.m., in Room
2154, Rayburn House Office Building, Hon. Darrell Issa
[chairman of the committee] presiding.
Present: Representatives Issa, Mica, Duncan, McHenry,
Jordan, Chaffetz, Walberg, Lankford, DesJarlais, Gowdy,
Farenthold, Woodall, Meadows, Cummings, Maloney, Norton,
Tierney, Clay, Connolly, Speier, Duckworth, Kelly, Cardenas,
Horsford.
Staff Present: Alexia Ardolina, Majority Assistant Clerk;
Alexa Armstrong, Majority Staff Assistant; Kurt Bardella,
Majority Senior Policy Advisor; Richard A. Beutel, Majority
Senior Counsel; Molly Boyl, Majority Parliamentarian; Lawrence
J. Brady, Majority Staff Director; Ashley H. Callen, Majority
Senior Counsel; John Cuaderes, Majority Deputy Staff Director;
Adam P. Fromm, Majority Director of Member Services and
Committee Operations; Linda Good, Majority Chief Clerk; Laura
L. Rush, Majority Deputy Chief Clerk; Scott Schmidt, Majority
Deputy Director of Digital Strategy; Peter Warren, Majority
Legislative Policy Director; Rebecca Watkins, Majority Deputy
Director of Communications; Meghan Berroya, Minority Counsel;
Jennifer Hoffman, Minority Press Secretary; Carla Hultberg,
Minority Chief Clerk; Elisa LaNier, Minority Deputy Clerk; Dave
Rapallo, Minority Staff Director; Donald Sherman, Minority
Counsel; Mark Stephenson, Minority Director of Legislation;
Cecelia Thomas, Minority Counsel.
Chairman Issa. The Oversight Committee exists to secure two
fundamental principles. First, Americans have a right to know
that the money Washington takes from them is well spent. And
second, Americans deserve an efficient, effective government
that works for them.
Our duty on the Oversight and Government Reform Committee
is to secure these rights and to protect American tax dollars.
Our solemn responsibility is to hold government accountable to
taxpayers, because taxpayers have a right to know what they get
from their government.
It is our job to work tirelessly in partnership with
citizen watchdogs to protect these rights and to deliver the
facts to the American people and bring genuine reform to the
Federal bureaucracy.
In recent years, we have seen a massive expansion of
government and its growth in spending. That is a given, as our
economy has grown. But there is a culture that has been created
that feels it is entitled to taxpayer dollars. The entitlement
philosophy has grown both in the area of contracts and in
grants. Today, among other things, we will examine the growth
in grants. Grants are a circumvention of both competitive
bidding and specific appropriation by Congress.
Today when we talk about suspensions and debarment, what we
are really talking about is a common sense process that does
what the American people already expect government to do:
ensure that the vendors we use, whether for grants or
contracts, in fact meet the expectation of the law. And when
they don't, don't use them again.
We need to have a culture of zero tolerance for fraud, for
criminals, for tax cheats, for those receiving taxpayer money
through grants and contracts. We must have a standard that
meets the expectation of the American people.
When I was a small child and all my life growing up, we
have heard the expression, fool me once, shame on you. And we
all know that fool me twice, shame on me. One of the problems
in suspension and debarment is in fact that the system does not
prevent fool me twice. In some cases, fool me twice occurs
within the same agency; in some cases it occurs within
different agencies who do not communicate about bad actors.
I wish I could say that this is the first debarment hearing
that has been held by this committee. But this is at least
biannually a hearing that we come back to again and again,
because the problem isn't fixed. Several months ago, I publicly
put forward draft legislation for a comprehensive suspension
and debarment reform bill entitled Stop Unworthy Suspending
Act, or Suspend Act. It has been posted on the committee's
website since February, and I believe it is becoming time to
move it forward, especially when we look at specific events
that have led to us having less faith in our government. We
need to restore that faith.
Year after year, Washington takes more money and Americans
have seemingly less to show for it. Time and time again, we see
contracts being re-issued when failure has been the previous
result.
So on this issue, one that I am proud to say has been
bipartisan, has been in fact one where we on this dais know
there is a problem, Administration after Administration has
said, give us a little more time, and we will fix it, I believe
that the time to believe that it will be fixed without
legislation has expired. Today's hearing is to probe into any
final details before this committee seeks to move comprehensive
legislation to ensure suspension and debarment is reformed.
With that, I recognize the ranking member for his opening
statement.
Mr. Cummings. Thank you very much, Mr. Chairman.
This is indeed a bipartisan issue. As I was sitting here, I
could not help but think about the neighborhood that I live in
and that I left a few hours ago, where we have young men who
make one mistake, get a record, and then are punished for the
rest of their life, jobs they can't get, opportunities they
cannot take advantage of.
I am sure when they hear about big companies doing things
wrong, and then finding themselves right back doing business
with the government, they ask the question, where is the
justice, or is it just us?
So Mr. Chairman, I thank you for calling this important
hearing. Today we will examine how the government is using
suspension and debarment in Federal spending to protect
taxpayers from potential waste, fraud and abuse. Suspension and
debarment are mechanisms by which the Federal Government
protects taxpayers by prohibiting the award of new contracts or
grants to individuals and businesses that are bad actors.
Debarment is automatic upon conviction of certain crimes.
But Federal agencies also have the authority to suspend or
debar an individual or business in cases where there has not
been a conviction or an indictment, but where there is,
nevertheless, ample evidence of unethical behavior or
incompetence. A report issued by GAO in 2011 found that some
agencies have failed for years to suspend or debar a single
individual or business. For example, GAO found that FEMA had no
suspensions or debarments from 2006 to 2010, despite the fact
that congressional committees found numerous instances of
contract waste, fraud, abuse and poor performance in the
aftermath of Hurricane Katrina. What is wrong with that
picture?
In another example, the Department of Justice suspended or
debarred only eight contractors from 2006 to 2010. Making
matters worse, a 2011 Inspector General's audit found that from
2005 to 2010, the Department issued 77 contracts and contract
modifications to some of the same entities the Department
suspended or debarred. Something is absolutely wrong with that
picture.
Although a 2012 report by the Interagency Suspension and
Debarment Committee noted that marginal improvements have been
made since the release of the GAO report in 2011, it also
stated that persistent weaknesses remain throughout various
agencies.
The vast majority of individuals and businesses who
participate in the Federal marketplace are honest and do their
upmost to fulfill the terms of their Federal contracts. It is
not ethical or fair when these competent government contractors
lose government business to those who have performed
ineffectively, inefficiently and dishonestly.
Our goal is not to punish contractors, but to protect
taxpayers. Taxpayers deserve to know that the Federal contracts
and grants are not awarded to those who have acted dishonestly,
irresponsibly or incompetently.
Having powerful suspension and debarment tools does little
good if they are not being used effectively. The GAO report
found that the civilian agencies with the highest numbers of
suspensions and debarments share certain characteristics.
First, they dedicate full-time staff to suspension debarment
process. Second, they have detailed guidance in place. And
finally, they have a robust case referral process I think we
need to carefully examine these best practices.
The draft Suspend Act that the Chairman is sponsoring
seems, and I think that it is something we should be able to do
in a bipartisan way, it is an effort to shed light and make
this whole debarment process much more efficient and
transparent, and make it accountable, and make sure that those
who are suspended and debarred are effectively dealt with.
I look forward to working with the Chairman to further
improve this legislation. As our Nation's economic recovery
continues, it is important that we guard against unnecessary
spending and make sure that we are doing every single thing in
our power to protect taxpayer funds.
I look forward to the testimony of our witnesses today.
With that, I yield back.
Chairman Issa. I thank the gentleman.
Members may have seven days to submit opening statements
and other extraneous material for the record.
We now welcome our witnesses. Mr. John Neumann is Acting
Director of Acquisitions and Sourcing Management at the
Government Accountability Office. Welcome.
The Honorable Angela Styles is a partner at Crowell &
Moring's Washington, D.C. office, and of course the former
Administrator of Federal Procurement Policy in the Office of
Management and Budget.
Mr. Scott Amey is the General Counsel at the Project on
Government Oversight.
Welcome all. Pursuant to the rules of the committee, would
you please rise, raise your right hands to take the oath.
Do you solemnly swear or affirm that the testimony you are
about to give will be the truth, the whole truth and nothing
but the truth?
[Witnesses respond in the affirmative.]
Chairman Issa. Let the record reflect that all witnesses
answered in the affirmative. Please be seated.
I am pleased to say you are all pretty experienced at this.
So your entire opening statements will be placed in the record.
We would like you to stay as close as you can to five minutes
or less, to leave plenty of time for questioning, because
ultimately, we will read your opening statements or in most
cases have. But we certainly would like to be able to get your
insight to specific questions.
Mr. Neumann?
WITNESS STATEMENTS
STATEMENT OF JOHN NEUMANN
Mr. Neumann. Thank you. Chairman Issa, Ranking Member
Cummings and members of the committee, I am pleased to be here
today to discuss the Federal Government's use of suspensions
and debarments.
In 2012 alone, the Federal Government spent more than $517
billion on contracted goods and services. As you know, to
protect the government's interest, Federal agencies are
required to award contracts only to responsible contractors,
those with a satisfactory record of integrity and business
ethics and capable of performing required work.
One way to protect the government's interest is through the
use of suspensions and debarments to exclude firms or
individuals from receiving contracts when they engage in
misconduct. My statement today highlights two key points.
First, agencies we reviewed with the most suspension and
debarment activity shared certain characteristics. Secondly,
Federal Government efforts to oversee and coordinate the use of
suspensions and debarments faced challenges.
Let me expand a little bit on my first point. In 2011, when
we looked at 10 different agencies, we found that the four
agencies with the most suspension and debarment activity shared
three characteristics. They each had dedicated program and
dedicated staff, detailed policies and procedures and practices
that encouraged an active referral to process.
The first of these characteristics is the dedicated program
and staff. This is needed to carry out the essential functions
of an agency's program. Each of the four agencies we reviewed
with active programs had dedicated staff that were focused on
reviewing cases of contractor misconduct and poor performance
for possible suspension and debarment.
Secondly, these agencies had detailed policies and
procedures that went well beyond the guidance in the Federal
Acquisition Regulation. And lastly, we found that those
agencies with active programs each had practices to encourage
referrals of contractor misconduct to be considered for
appropriate action. This referral process required senior
agency officials to promote a culture of acquisition integrity,
so that suspension and debarment is understood and utilized by
all staff.
The remaining six agencies we looked at in 2011 lacked
these characteristics and had few or no suspensions or
debarments of Federal contractors despite having billions of
dollars in contract spending.
The second point that I would like to highlight is on
Federal Government efforts to oversee and coordinate the use of
suspensions and debarments. At the time of our review in 2011,
the Interagency Suspension and Debarment committee faced a
number of challenges.
This committee, as you know, is charged with monitoring and
coordinating the suspension and debarment system across the
Federal Government. However, it relied on voluntary
participation and an informal coordination process that not all
agencies participated in. We noted that agencies without active
suspension and debarment programs generally were not
represented at the committee's monthly coordination meetings.
In response to our recommendation, OMB issued guidance that
directed Federal agencies to appoint a senior official to
ensure regular agency participation in the Interagency
Committee meetings, among other actions. Since then, several
agencies have taken steps to address our findings and
recommendations.
Chairman Issa, Ranking Member Cummings and members of the
committee, this concludes my prepared statement. I am pleased
to respond to any questions that you may have.
[Prepared statement of Mr. Neumann follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Mica. [Presiding] Thank you, and we will withhold
questions until we have heard from all of the witnesses.
Let's recognize now Angela Styles, Partner in Crowell &
Moring. Welcome, and you are recognized.
STATEMENT OF ANGELA STYLES
Ms. Styles. Thank you very much, Congressman Mica,
Congressman Cummings and members of the committee. It is an
honor to be invited to testify here today.
There is little question that changes to the suspension and
debarment system are needed. I commend the committee for taking
a hard, bipartisan look.
Federal suspension and debarment officials exercise a
powerful and highly discretionary authority that directly
affects the credibility of our entire procurement system. It
has to be fair and it has to be transparent. The dialogue
created by your draft legislation has already created greater
attentiveness to fair process, consistency and timeliness.
Because a significant portion of my legal practice involves
the representation of companies and individuals in suspension
and debarment proceedings before many Federal agencies, both
civilian and defense, I have a unique perspective on the
multitude of processes, procedures, standards of review and
remedies, both written and I think very important to the
committee, unwritten ones as well.
While the Federal Acquisition Regulation, the FAR, and the
non-procurement rule establish a high level framework, much of
the system operates using unwritten practices and tools. While
many civilian agencies are bolstering suspension and debarment
programs in response to your congressional oversight, it is
hard to be confident that the current written processes or the
unwritten practices ensure fairness, meaning that all companies
and individuals facing debarment are given a similar
opportunity to properly present their case, and that the
correct result is obtained.
It is important, however, to separate the process from the
people. We have been extraordinarily fortunate over the years
to have dedicated, objective and fair-minded civil servants
running the suspension and debarment processes across the
Department of Defense, the General Services Administration and
the Environmental Protection Agency. The creativity and
openness of the suspension and debarment officials at these
three agencies has for many, many years facilitated fairness
and objectivity.
For the long term, however, the system cannot be sustained
on the fairness and objectivity of individual suspension and
debarment officials alone. Across the government, the
processes, procedures, standards of review, remedies and tools
must be consistent and transparent. The lack of access and
transparency is an impediment for companies that are working to
improve ethics and compliance programs. When problems do arise
at companies, and they arise even at the most responsible of
contractors, the agencies need to be able to work in
partnership with contractors toward continual improvements.
DOD, EPA and GSA learned long ago that by having an open
door for contractors to discuss compliance and ethics concerns,
both parties could agree on expectations and appropriate
changes to contractor programs.
From my perspective, the greatest concern are the unwritten
processes across agencies. They create significant issues of
fairness. I have seen this most specifically in five areas
where the processes vary significantly across agencies and are
not transparent to all the parties. I discuss it extensively in
my written statement, but this includes show-cause letters,
requests for information, access to the administrative record,
the public release of information, administrative agreements
and lead agency determinations. These five different areas are
not articulated in the FAR. They are not available to the
public to understand how the suspension and debarment process
actually works on a day to day basis.
In conclusion, I think there is little question that
changes are needed, and changes can add significantly to
consistency among the agencies and transparency. I think making
our procurement process better through ensuring that our
suspension and debarment process works better will give
taxpayers significantly greater confidence that the government
is buying from contractors with the highest ethical standards.
And I don't mean contractors that are just meeting the law.
We need contractors that understand what value-based
procurement programs are, ethics and compliance programs within
their companies and they need to do more than simply meet the
requirements of the law. They need to lead our U.S. companies
in what it means to be a responsible company.
That concludes my prepared statement and I am happy to
answer any questions you may have.
[Prepared statement of Ms. Styles follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Mica. Thank you. We will hold questions.
We will now turn to our next and last witness, Scott Amey.
He is General Counsel, Project on Government Oversight. Welcome
and you are recognized.
STATEMENT OF SCOTT AMEY
Mr. Amey. Thank you, Congressman Mica, Ranking Member
Cummings and members of the committee.
Thank you for inviting me to testify today about the state
of the Federal Government's suspension and debarment system,
from exposing outrageously priced spare parts to initiating the
creation of the FAPIIS system, which was born out of this
committee, POGO has promoted a good government agenda. Today's
hearing, and improved attempts to prevent the government from
doing business with risky contractors, contractors with
criminal, civil and administrative misconduct records or poor
performance histories, is essential to improving Federal and
grant spending that now exceeds $1 trillion annually.
Everyone agrees that the Federal Government should not do
business with companies that have defrauded the government or
violated laws or regulations or performed poorly on contracts
or had their contracts terminated for default or cause. But in
reality, the government is awarding contracts and grants to
such companies. The government has a two-tier system to protect
the public, pre-award responsibility determinations and
suspension and debarment. I discuss both in my written
testimony, but I will focus today on the failures of the
suspension and debarment system.
The suspension and debarment system is a vital tool in
protecting agencies, government missions and programs and
taxpayers. Despite a complex framework outlined in the Federal
Acquisition Regulations, and comprehensive programs within
certain agencies, we are still finding flaws in the system.
Excluded activities are still receiving new contracts or
grants. Companies can be viewed presently responsible by just
firing a few employees or promising to enhance training or
compliance measures.
Many agencies are not effectively using the suspension and
debarment tools at their disposal, with NRC, Social Security,
Commerce, HHS and Labor having 10 or fewer suspensions or
debarments in recent years. Inconsistences are the norm. And we
often hear about government reports and audits and media
stories alleging criminal activity or poor performance one day,
and a new multi-million dollar contract or grant awarded to the
same entity within days.
Additionally, the length of suspension can range from
anywhere from a few days to years. Referrals of the suspension
and debarment actions can be slow. I am still confused at how
BP was considered responsible for years after the Gulf oil
spill disaster, but was only suspended two weeks after it
pleaded guilty to numerous criminal counts. BPs suspension has
lasted over six months. It will be interesting to see how much
longer it will last, and if it will be waived or lifted prior
to a new solicitation for oil or petroleum products or
services.
This is the perception, that the larger contractors are too
big to suspend or debar. Since 2000, POGO estimates that there
have been approximately 82,000 suspension or debarment actions
levied against companies and individuals. But the number of
large contractors that have been sanctioned under the system
can be counted on two hands.
As far as the Suspend Act, earlier this year, Chairman Issa
released a discussion draft of a bill entitled the Stop
Unworthy Spending, or the Suspend Act. I applaud the chairman's
handling of this draft bill and the outside the box thinking
that was put into it.
We have heard for years that the suspension and debarment
system is fine. But yet nearly every government report reports
that there are flaws in the system. Past efforts to reform the
system have been cause for mandatory suspension or debarment
for certain procurement or tax-related offenses. Those efforts
were short-sighted and unrealistic. SDOs need flexibility to
review a contractor's present level of responsibility and
mandate suspension or debarment only when necessary and not to
just punish a contractor.
I agree with the chairman and the draft language in the
bill that the consolidation of the suspension and debarment
offices and resources will improve consistency and be a better
use of the limited resources that are appropriated for
suspension and debarment activities. The bill also attempts to
expedite review, which is crucial. Section 5 looks to
coordinate agency actions.
For years, POGO has been concerned with the lack of
coordination between IGs and others within the acquisition and
oversight world. POGO provides the following recommendations
that should be considered as the Suspend Act is being
finalized.
Mandate that IGs or other investigative units make
referrals to SDOs after opening an investigation and making
findings that reasonably support a basis for suspension or
debarment. SDO shouldn't have to wait until the Justice
Department has closed a file to make a responsibility
determination.
Require SDOs to make suspension or debarment determinations
within a set period of time after receiving a government
referral. The determination should include a description of the
referral, the SDOs justification for suspending or debarring
the entity or not taking action, and any description that is
concluded in a settlement or agreement.
A record should be publicly available so that SDOs are held
accountable to the public. Enhance annual reporting to Congress
of the spending and suspension debarment workforce, the total
number of referrals, declinations, fact-based suspensions or
debarments, administrative actions, anything that comes from
those offices clarifies that suspension and debarment
activities are inherently governmental functions that must be
performed by government employees.
Release past performance data. In the past, past
performance data is currently released by GAO and Federal
courts in bid protest decisions and the proactive release of
such information would benefit government officials,
competitors and the public.
Thank you for inviting me to testify. I look forward to
working with the committee to further explore how we can
strengthen the suspension and debarment process.
[Prepared statement of Mr. Amey follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Mica. Thank you. We will start a quick round of
questioning.
Mr. Neumann, this looks like we are spending about a
trillion dollars a year, it looks like, of government money on
contracts and also grants. Is it as bad in grants as it is in
contracts as far as not compliance with getting rid of the bad
players? About half a trillion of each, isn't it? And is it as
bad in contracts as in grants? Did you look at both?
Mr. Neumann. In 2011, we did look at the total number of
exclusions for both grants and contracts. But our work focused
on agency actions taken under the Federal Acquisition
Regulation for contracts. The same practices apply for non-
procurement.
Mr. Mica. So you really didn't look at that aspect as one,
just in general, you looked at the failure to comply with
getting the bad actors out of the process?
Mr. Neumann. Certainly we looked at the agency suspension
and debarment programs.
Mr. Mica. Let me ask you this.This is another one of these
groundhog attempts by government where we keep going back and
back and trying to clean this up and nothing is done. There
have been attempts in the past, mechanisms put in place to try
to make again the bad actors be identified and excluded. Is it
your belief that only legislation now can remedy this? GSA had
some ability to do this. OMB had some ability to take steps.
Mr. Neumann. I think based on our work there are a number
of improvements that agencies can take.
Mr. Mica. Do we need a law with teeth in it to make certain
that these things get done?
Mr. Neumann. We certainly need agency action.
Mr. Mica. Well, okay, they already have the ability for the
agency to act, for agencies to act. It appears, and you were
with OMB, Ms. Styles, OMB directed agencies to appoint senior
officials responsible to the agency's suspension and debarment
program. Has that taken place in all the agencies? Are you
aware, Ms. Styles or Mr. Neumann? Go ahead? Yes, no, maybe?
Ms. Styles. I can tell you from the outside perspective,
not consistently, no. And to the extent that they have been
appointed, it is actually very difficult to figure out who they
are in certain agencies.
Mr. Mica. Is that your observation too?
Mr. Neumann. Yes. That is our observation as well.
Mr. Mica. They have the ability and can administratively go
after some of these things. Then we have some of these
programs. How much money has GSA spent on either the SAM
program or EPLS program? Do you know?
Mr. Neumann. We didn't look at that.
Mr. Mica. They are trying to merge these two. One was to
set up a list of bad players, right. And that has not been
effective. That is the crux of most of the testimony that we
are here for.
Now, who is responsible for again moving forward? Is it GSA
and OMB? And neither have done that, is that correct, Mr.
Neumann?
Mr. Neumann. Both OMB and GSA have roles in decisions about
that.
Mr. Mica. But obviously people aren't reporting, contracts
are being given and hundreds of millions of dollars to bad
players, is that correct?
Mr. Neumann. We do know that there have been some mistakes
made in the past where contractors that were debarred were
given contracts.
Mr. Mica. Who is the worst? Mr. Cummings mentioned FEMA,
you have HHS and Commerce, lack effective programs. Who is the
worst?
Mr. Neumann. What we found was that there were six agencies
at that time that had taken few or no suspension or debarment
actions and didn't even have policies or procedures in place or
dedicated staff.
Mr. Mica. In spite of, again, the requirement,
administrative requirement to report, in spite of the
requirement to set up a system to maintain a current list, the
list hasn't been current, right? Or complete?
Mr. Neumann. The GSA has continued to experience problems
with that. GAO has reported on that over the years. We
understand they have taken steps to work with the agencies to
improve that. But there are still reports of problems.
Mr. Mica. And you were at OMB, Ms. Styles. What are they
doing at OMB? That is part of their, that is Office of Budget
and Management, just ignoring again either the requirements to
report or keeping a list that would be referred to and people
disbarred or suspended being prohibited from getting these
contracts or awards?
Ms. Styles. At this point, they issued the 2011 memo, and
they have policy responsibility for the EPLS, which is now in
the system for award management, or SAM. The data is in SAM, it
is just not as thorough and complete, and it is difficult to
manage.
Mr. Mica. I have a question. You have looked at some of the
legislation and commented on it. Does it have enough teeth to
get the job done and make these agencies comply?
Mr. Amey. There may be a few minor tweaks that need to be
implemented. But for the most part, I think you are hitting on
the problem. Unfortunately the suspension and debarment system
has been around for many years, but it has been through
executive order, it has been through some regulations, it has
been through kind of a stovepipe mentality that the agencies
are required.
You won't find anywhere in the U.S. Code other than a note
in the financial chapter of the U.S. Code in Section 31 where
there is a note on how the ISDC is even supposed to run. So I
think that is part of the problem, we created a system but we
didn't supply sufficient guidance on how that system should
operate.
Mr. Mica. Well, again, every one of these hearings are
absolutely stunning, of the unresponsiveness of agencies and
simple things like keeping a list and then debarring or
disallowing people who are bad players and ripped of the
government.
Mr. Cummings?
Mr. Cummings. Mr. Amey, the thing I am concerned about is
ineffective and inefficient. Period. And I state it quite
often, we in Congress have a lot of motion, commotion, emotion
and no results. At the same time, the public, who pays us,
depends upon us to carry out government in a responsible way,
are shortchanged.
The question becomes when you look at, based on your
research, do you get the impression that there are just some
folks that just don't give a damn about whether somebody who is
a bad actor continues to have opportunities over and over
again? Is it that the policies are not in place?
And then I want you to comment on the chairman's bill,
again, I want you to note if there are any deficiencies in it,
again we want to know. It looks like a very good bill to me.
But you get tired of going down the same road over and over
again and nothing, when I say nothing, nothing happens. And so
what this says to the bad actors is that we could continue to
do the stuff that we do and keep coming right back to the
government and saying, keep me in business, not for a year or
two, but for generations. So help me with this. Start with the
Suspend Act. I think that is a good place to start.
Mr. Amey. I think the Suspend Act has some great qualities
to it. We would support it. There are a few minor tweaks. I
think there is some room for Improvement in trying to get
referrals in quicker. The biggest thing is the IGs or the
oversight community conducts investigations and they may have
met the burden to make a referral over to an SDO to have them
start the suspension and debarment process.
Unfortunately, I hate to say it, but in reality the
suspension and debarment process is being used as a punishment
in its current state, because so many times we have to wait for
the Justice Department to close its file and get a conviction
or some kind of civil action against the company before an SDO
takes action. I don't think we should be doing that. We need to
protect the taxpayer.
They are two separate systems. One is accountability and to
hold them criminally or civilly accountable. But the other is
to protect the American taxpayer. The BP example is the best
that I can think of, where I don't know why two weeks after
they finally pleaded guilty that they were considered non-
responsible. I am sure the EPA was looking at them and I know
there were some issues with lead agency discussions. Obviously
BP is a major supplier of oil and petroleum products and
services to the Federal Government. So at that point, the
military, the last thing they need, especially from a
competition standpoint, is to be down a vendor.
However, it just boggles my mind that we had to wait nearly
30 months after the oil disaster before we could hold BP
accountable and consider them non-responsible, which now they
have been considered non-responsible for the last six months.
As far as the answer to your overall question, the FAR does
provide a very complex system that should be followed. Do I
think people want to provide bad companies with contracts or
grants? No. Part of it is laziness, part of it may be they
checked the excluded parties list or the SAM system a month ago
and all the vendors checked out, but they didn't check the day
that the award was given. So at that point, a contractor may
have been suspended or debarred in that time frame.
Contractors know how to game the system. Until we end up
with a system of unique identifiers and be able to track
companies and their owners, we are going to have a problem. It
is very difficult, the contractors know so, okay, we are
suspended or debarred, but we will open up a new entity under
my wife's name, my uncle's name, my brother's name. So at that
point, there is some gaming of the system. That is where you
kind of have some of the flaws that GAO and some of the IGs and
ISDC have pointed out through the years.
Mr. Cummings. Mr. Neumann, what is the most common cause
for debarment? In other words, maybe you can answer that, Ms.
Styles, I don't know, what is the most common reason, one, two,
three?
Mr. Neumann. We didn't do analysis on the reasons that were
used.
Mr. Cummings. Why don't you tell me a few? You know some of
them, right? That is your job.
Mr. Neumann. Certainly contract fraud, bribery, theft, tax
evasion, any other contractor misconduct, or even poor
performance, are all reasons for suspending or debarring
contractors in cases that we have looked at.
Mr. Cummings. So somebody can be debarred for poor
performance?
Mr. Neumann. Yes, they can.
Mr. Cummings. How is that measured, Ms. Styles? In other
words, what is poor performance in one person's mind may not be
poor performance in another. We have a lot of situations where
we see contractors come in, and this is to me, it bothers me
tremendously, we saw it in the Coast Guard, I was chairman of
the Coast Guard subcommittee, they will come, they will do a
bid for one price, and I know they do change orders. Not change
orders, but changes need to be made. But some of them were just
ridiculous. Almost a third more for the cost of a ship or
whatever. You begin to wonder about some of those things.
Is that the kind of stuff, talk to me, Mr. Amey.
Mr. Amey. I don't' think that is enough to get you
suspended or debarred. It is a possibility, especially if that
type of information is captured in the FAPIIS system, then at
that point at least it raises red flags for contracting
officers. You have a frontloaded part of the system and you
have a backloaded part of the system.
So you are trying to get as much information to your
contracting officers pre-award to make sure that we are only
truly working with those who are responsible.
Mr. Cummings. I see. Thank you very much.
Chairman Issa. [Presiding] Thank you.
I am going to follow up on the ranking member. Ms. Styles,
when we look at suspension versus debarment, in your
experience, and I know Mr. Amey knows this from the outside,
suspension is often used for a poor performer, because piling
on additional contracts by definition only makes the matter
worse. In other words, if you are growing into ineffectiveness,
if you are growing in a way in which you can't handle the
contracts you already have, suspension is more often looked at
as, if you will, temporary versus permanent. Is that roughly
what we should understand for the record?
Ms. Styles. Absolutely. There are actually measures less
than suspension. So there are show cause letters from agencies
to understand why they would have a termination for default. I
have seen them in instances where there is poor performance on
one contract, where the agency has had them come in to the
suspension and debarment official and explain why the company
should not be debarred permanently because of a poor
performance issue. We are seeing it more and more.
So the agencies are becoming more active and following the
information that actually is available on FAPIIS on termination
for default specifically.
Chairman Issa. Mr. Amey, you mentioned BP. I want to broach
that for a moment, because in any legislation, we want to make
sure that we get the best value for the American taxpayer. The
failure of BP to oversee a drilling rig in the Gulf versus the
delivery of finished product fuel, wouldn't you agree that one
of the challenges, when you get into very large companies, is
you can have perfect performance over here, no logical reason
for suspension or debarment, and you can have, over here, an
entity that should not get access to do what they were doing
again at a minimum until they prove that that bad outcome has
been prevented.
Would you say that bifurcating is inherently part of it? I
am using them as a large, very separated entity. I could be
using Lockheed Martin or Raytheon or any number of other
entities who operate in very different areas. It is one of the
areas of concern for procurement officers.
Mr. Amey. Yes, and there are ways to get around that in the
suspension and debarment system. Boeing was suspended, but it
was only a unit of Boeing, so the whole company was not
suspended. It was only, I think, their missile division unit
and some certain individuals that headed up that department. So
there are ways to kind of massage that issue, especially for
the larger contractors.
But in the case of BP, BP had, in our Federal contractor
misconduct data base, BP I think is either one or two in the
number of instances of misconduct. They had numerous instances
of other environmental violations, some procurement related and
some non-procurement related instances.
Chairman Issa. Yes, and I am not picking on BP other than
from a legislative standpoint. You were very kind to call it
minor tweaks. But we are concerned that this kind of
legislation happens once in a generation. So whatever we leave
off or we do wrong, you and the oversight, if you will, the
sunlight community and the GAO and our IGs are all going to be
dealing with for generations if we miss something.
That was an area that I think the ranking member and I
would share that we are not asking for input as much for big
companies. I think when we look at Raytheon's space activities
in some program versus their being a vendor to Boeing in
others, those are so big it is pretty easy to go through them.
We can have an exception at some level.
But it is really the person who is delivering office
supplies that is a crook versus the person delivering office
supplies that makes a mistake, and making sure that we divine
the difference, so that we are not losing valuable vendors. I
am very concerned that we are writing thinking about big
companies. I want to make sure that it works for the smallest
vendor too, both to catch them when they are wrong, but not
over-punish them when it is in fact a benign occurrence.
Mr. Amey. That is where the flexibility is needed in the
system, whether it is within your board or within the
individual suspension and debarment offices, to look at the
facts before them, look at the record that they received from
the other oversight agencies within the Federal Government,
talk to the company to make sure that you have a fair, level
playing field.
I think actually with the consolidation you may actually
find you are going to get more of that. A few years ago I
talked to a suspension and debarment official and he said, if I
would have known that other agencies had entered administrative
agreements with this same company, I wouldn't have been the
fourth. So at that point, there wasn't a sharing of information
that was helpful to realize what the full record and the track
record of that company was.
Chairman Issa. Mr. Neumann, the proposal Mr. Amey gave of,
if IGs were able to make direct referrals and that they were
immediately considered, at least for suspension, figuring 74
major IGs and, as we consolidate, the understanding, do you
believe that that would be helpful to the process, to
essentially empower IGs to make findings due to their audits?
Mr. Neumann. Yes, we do. You saw in our 2011 report that
agencies with active programs often got referrals from the IG.
So they are very important to the referral process.
Chairman Issa. Ms. Styles, having been at OMB, there is an
OMB think, which is, let us manage it, we can manage it. How
much should we let to Office of Management and Budget and
others, versus how much do we have to put strictly into
legislation, in your opinion?
Ms. Styles. Since the ISDC was created by executive order,
it would probably be helpful for that to be in statute. I do
think because OMB effectively manages the FAR Council and the
non-procurement rules, which means the grant process as well,
that they are the right place to make consistent government-
wide changes that need to happen to the rules and processes and
tools. That is the only place it can really happen from a
consistent basis.
Chairman Issa. Do you see any conflict in essentially
second-guessing the grant process and exceptions to suspension
and debarment? Do you see that it can be bifurcated at OMB
sufficiently that you are not sort of encouraged to get the
money out there, and at the same time encouraged to spend it
well, and at the same time being pushed for bad actors?
Ms. Styles. The management and budget processes over there
have been bifurcated for a long time. So I think they run
pretty well separately in terms understanding their roles and
responsibilities there.
I do think that the procurement and the grant processes
need to be put together, which I know is part of your
legislation. It makes no sense whatsoever to have two different
processes that are absolutely inconsistent for the same
suspension and debarment process.
Chairman Issa. My time is expired. I will comment, strictly
for the record, that one of the challenges that I think we face
is that when you define something as a grant more broadly, not
just suspension and debarment, versus procurement, you often go
from a system that does a really good job of saying, you have
to justify the winner to a beauty contest with grants. That is
a separate problem for this committee to make sure that grants
are as objective as possible, rather than subjective.
But that is another hearing. And I am told next we go to
Ms. Kelly.
Ms. Kelly. Thank you, Mr. Chairman. Good morning.
Mr. Neumann, you have looked at a number of agencies with a
variety of suspension and debarment programs. I would like to
talk to you about what you have learned about best practices.
Your 2011 report notes that agencies with the most suspensions
and debarments have dedicated full-time staff. Should all
agencies have full-time staff to manage their suspension and
debarment programs?
Mr. Neumann. Not all the agencies necessarily have full-
time staff, but they do have dedicated staff that are tasked
with looking for and considering cases for suspension and
debarment.
Ms. Kelly. So even though they are not full-time, that is
the only thing they focus on, you are saying?
Mr. Neumann. They do have other duties, but they do spend a
portion of their time doing that. The main agencies we looked
at in 2011 did have full-time staff. But our characteristic
that we thought was important to note was that they dedicated
program and staff with full Management commitment.
Ms. Kelly. The report also mentioned that agencies with the
most suspensions and debarments also had detailed policies or
guidance involving the suspension and debarment process. What
do you feel are the key policies that lead to an active S&D
program?
Mr. Neumann. There are many different policies and guidance
out there at each of the agencies that are unique to the
agency. It allows people in the agency to understand who to
refer cases of contractor misconduct or serious poor
performance or faulty appropriate officials. So those policies
and procedures went beyond what is in the FAR to actually
implement it. So someone at EPA knows exactly who to refer the
case to.
Ms. Kelly. Okay, thank you. You indicated that agencies
with the most suspensions and debarments also have an active
referral process. What are the elements of an active referral
process?
Mr. Neumann. For example, in DOD, we looked at 2012, we
looked a little more deeply at the four components at DOD, we
found that they actively met with the IG community, they
trained contracting officers and other officials that had
access to contractor records to get referrals. And they
coordinated with the Department of Justice.
Ms. Kelly. Okay. Lastly, your statement also mentions other
efforts underway to improve coordination of suspension and
debarment programs. Can you please elaborate on those?
Mr. Neumann. We were pleased to see that OMB had taken
action to direct agencies to participate in the Interagency
Suspension and Debarment Committee. That committee is only as
effective as its member agencies' participation. So that is
very important. I think that is one of the key things to having
a system of suspension and debarment, is having that
coordination between the agencies, so that they can coordinate
on many things, including sharing practices, deciding who
should be a lead agency and bringing more transparency to the
process of suspension and debarment.
Ms. Kelly. Thank you very much. I yield.
Mr. Cummings. Would the gentlelady yield?
Ms. Kelly. Yes.
Mr. Cummings. I was just talking to the chairman about the
whole idea of, when you have the debarment and then you have
suspension. I was just wondering, do you have a situation where
you, folks are, say for example, it appears that somebody
deserves debarment. And so those who are making the decision
say to themselves, well, you know, we don't want to be so
harsh. So they end up giving them the suspension. In other
words, if it sounds like somebody should be debarred, do they
have longer suspension? Do you follow me, Ms. Styles?
Ms. Styles. Yes. So most agencies, DOD, GSA, have been
dealing with this through show cause letters. So instead of
suspending a company, because if you suspend the company it
becomes public, their stock prices drop, and a lot of times
suspension and debarment officials have only read an article in
the paper, or they don't feel like they have enough facts in a
particular situation.
So they have created their own process. They issue a show
cause letter, which is not a suspension, and they ask the
company to come in and tell them what is going on.
Mr. Cummings. And this is all private, right?
Ms. Styles. Yes, sir.
Mr. Cummings. Okay. So then the company comes in and they
talk about what the issue is and then they either let them go
or what?
Ms. Styles. They oftentimes have actual filings. So it
depends, the process varies by agency. Some of them may require
an actual filing with the agency, some of them allow you just
to come in and discuss the issue, make a presentation in
person. Some agencies have both.
At that point in time, the suspension and debarment
official decides whether he wants to go ahead with an official
suspension or proposed debarment process, or if he believes the
company is presently responsible and usually he will give the
company a letter stating that they are presently responsible.
Mr. Cummings. Just one last thing. Talk about
communications between agencies. Mr. Amey, you were talking
about that. How much communication do we have between the
agencies? Then I will finish.
Mr. Amey. My experience is that it was very little until we
got the FAPIIS data base. But even then, are we getting the
right and the quantity of information that we need in there for
the contracting officers as well as the suspension and
debarment officials, to make the proper rulings.
Mr. Cummings. Thank you, Mr. Chairman.
Chairman Issa. Thank you.
We now go to the gentleman from Tennessee, Mr. Duncan.
Mr. Duncan. Thank you, Mr. Chairman.
Mr. Amey, in every industry, the more it is regulated, the
more it ends up in the hands of a few big giants, because the
little guys just aren't able to get the contracts or the
favorable regulatory rulings or various other things, or comply
with all the rules and regulations and red tape. We end up with
this big government, big business duopoly. We see that now in
the Dodd-Frank law, because it was passed to get back at some
of the big Wall Street banks and financial firms. Yet over 200
small banks have gone out of business.
I noticed in your testimony you say large contractors have
a financial means, plus high-priced attorneys that enable them
to negotiate an alternative to suspension or debarment. The
possibility of delays, litigations and reductions in
competitions can mean the difference between the maximum
penalty and a lesser sanction. As a result, large contractors
have an unfair advantage over smaller contractors when it comes
to avoiding suspension and debarment.
What do you think the Congress can do to prevent or rectify
this problem of too big to suspend or debar, this favoritism
that is going toward the big giants?
Mr. Amey. I think the regulations that we have in the FAR
will work if they are utilized properly. There is a provision
that allows for waivers or compelling reasons determinations.
So at that point, even a suspended or debarred contractor can
still get new business. And we saw it with Boeing, during their
suspension, they received multiple waivers.
So if it is a large contractor and we do need them for the
competition, then at that point the government can get around
it. But at least they have the safety that they have been
suspended, but we are going to grant them a waiver and if so, I
think that waiver or justification should be publicly available
so that we can all see it.
When they are too big to suspend or debar, it is a problem.
When MCI WorldCom was suspended, their suspension was lifted
just days before the next big huge national telecommunications
contract was awarded. When I called people within the agency,
they said, we needed them to compete. So at that point, we have
seen some tradeoffs in the system.
Small businesses are at a disadvantage because mainly they
are operated by a small number of operators, owners or have a
small number of employees. So it is more difficult for them to
take action, like in a large business where you can let go an
executive or managers or whoever it may be that was at fault.
We just don't see that with small or mid-size contractors. And
they don't have the legal resources to fight, as Ms. Styles
mentioned, of going in, receiving the show cause letter and
then going in and doing what they need to do to protect their
business. Unfortunately they are not in the same position as a
large contractor with the resources they have.
Mr. Duncan. Well, I hope that we keep that in mind as this
legislation progresses. But before my time runs out, I want to
ask you about something else. In your testimony you talk about
the Inspector General for Afghanistan reconstruction and how
all these companies and people that were still getting taxpayer
money even though they had actively supported terrorism in
Afghanistan and you mentioned the December letter sent by a
bipartisan group of Senators and the January 2013 reply from
Secretary McHugh, in which he said there was not enough
evidence.
What is the situation since then? Have you looked at any of
those to see if there was enough evidence? That sound terrible,
to keep giving taxpayer money to companies and people that are
actively supporting terrorists.
Mr. Amey. You are correct. We haven't looked at it because
it hasn't been publicly available. I have had some meetings
with people in SIGARs office. And they are still upset that the
SDO within the Army wasn't acting on these. I do think that
this is where, when the Secretary of the Army responded, he
said, well, we didn't have enough evidence based on the
evidentiary standard for debarment. But he didn't refer to
whether there is enough evidence that for the lower standard
for suspension.
So the fallout of that has been that the SIGAR has actually
asked for suspension and debarment authority. And that is
another issue that this committee may want to consider. But
should IGs, as kind of the investigator, the prosecutor, the
judge and the jury then, have that much power. SIGAR, at least
SIGIR, the Special Inspector General for Iraq Reconstruction,
are a little different. We are spending billions of dollars
very quickly in a contingency environment.
Therefore I think it is worth putting on the table on
whether they should have some kind of authority when they find
certain evidence against contractors in those environments on
whether they should have the authority to hold those
contractors accountable.
Mr. Duncan. Thank you very much.
Lastly, very quickly, Mr. Neumann, why are there so many
persistent problems with the SAM data base? Are those being
corrected, do you think? A lot of complaints, apparently.
Mr. Neumann. We have seen problems in the past with the
data base from excluded parties, and this continues in the SAM.
We understand that there are numerous technical glitches,
including inability to search on DUNS number, which is a unique
identifier for companies. So that is something that definitely
needs to be corrected. We hope that GSA is working toward that.
Mr. Duncan. We spend fortunes on all this technology, yet
we seem to just take anything, if somebody says computer
glitch, we seem to accept things that we should never accept.
Thank you, Mr. Chairman.
Chairman Issa. Thank you. And perhaps we should let the NSA
do it. They seem to be able to deal with big data bases.
[Laughter.]
Chairman Issa. Ms. Styles, following up just on what the
gentleman had asked, the proposal of special IGs dealing in
foreign nations being able to essentially bypass ordinary due
process and be the judge, jury and hangman, what do you think
about that from OMB? Is that a process that you would support,
essentially support Congress agreeing to in the case in which
you are dealing with an overseas special operation generally in
relation to a war zone? And I might mention that Abraham
Lincoln would have supported it.
Ms. Styles. I actually think the Army does it overseas as
well. I think they have special people overseas to do it. In
that situation, and I think many of your civilian agencies
would tell you the same thing, they know and understand the
situation, and their contractors are better, and they are able
to assess the situation and deal with it in a more appropriate
way, because they are there and they are close to that
contractor.
Chairman Issa. Thank you. The gentleman from California.
Mr. Cardenas. Thank you very much, Mr. Chairman.
The Federal Acquisition Regulation requires Federal
agencies to ensure that contractors have a satisfactory
performance record and a satisfactory record of integrity and
business ethics before they make purchases and award contracts
to these individuals or companies. Does the GSA suspension and
debarment data base document a contractor's past performance
record on prior government contracts?
Mr. Neumann. There is some past performance information
available. But there is information on FAPIIS, rather, that
includes the administrative agreements and other things. But
GSA does manage these data bases. I can get back to you with
more specifics on that.
Ms. Styles. There is a past performance information system
data base that is just not publicly available. So it is part of
the system that they are putting together. But it is not
information that is made publicly available, it is only
available to contracting officers.
Mr. Cardenas. Are we dealing with one system or various
systems?
Ms. Styles. It is one system that we put together
collectively. So it is all trying to be put into this system
for award management.
Mr. Cardenas. So different departments could actually know
who is a good actor, bad actor, et cetera?
Ms. Styles. Yes, sir.
Mr. Amey. But there are questions about past performance
information on whether it is genuine and helpful? In the past
we have heard some examples of great inflation for past
performance, and contracting officers will give the minimum
grade that doesn't get them sued or involve litigation. So at
that point, and I think it is either a GAO or recent IG report
that even talked about the past performance information isn't
where we really need it to be to be very helpful to contracting
officers.
Mr. Cardenas. And when you are talking about the government
having to be concerned with being sued, once again, it was
mentioned earlier, the bigger the corporation you are dealing
with, the higher likelihood that they are going to fight with
lawyers, et cetera and trying to protect their name.
Mr. Amey. The larger a corporation and also it depends on
the government's reliance on those contractors. There are a lot
of contractors that we are giving hundreds of millions of
dollars to, and there are a few that we are giving billions of
dollars to annually. So at that point it is very difficult to
hold those contractors accountable when you need them and
different agencies need them on a daily basis.
Even with suspension and debarment, a contractor can still
work on their existing contracts but they are not permitted to
get new contracts. There are even questions there when there
are options or extensions of those should suspension and
debarment, the rules say it can apply and they can exercise it.
But there are questions on does that hurt government mission in
the fact that you are taking someone out of the equation that
was there that you are going to have a drop off and a learning
curve to bring someone else in. So at times the system
handcuffs the government.
Mr. Cardenas. Yes, and the experienced legislators know
that when you have legislation there is a big difference
between the words can and shall, a big, big difference. So it
is very permissible, when the word can is there, and it is open
to interpretation.
POGO has recommended that the contractor performance and
responsibility system would be improved if contracting data
were made public and posted on a public website. Mr. Amey, how
would making past performance information publicly available
improve the government-wide suspension and debarment process?
Mr. Amey. In multiple ways. I think it would be more
helpful actually to the contractor community, because we do see
a lot of bid protests and bid protests slow down the system. So
at that point it would be nice for contractors when, if they
lose a contract, that they are going to know right off the bat
before debriefing anything else, here is what the past
performance ratings were for this specific contractor, for this
specific program, to have it publicly available. I would assume
that we would see a decline, at least on past performance bid
protests.
Also for the public. It is very difficult in the public
side to hear about contractors who break the law, or violate
regulations or, whether it is in a government report or in the
news media. And then continually hear that they are performing
well and the government keeps using them. The Army, especially
in Iraq, has used multiple contractors that have had a laundry
list of allegations against them. It is very difficult, I think
public perception-wise, contractor-wise, to feel that we do
have a level playing field for everyone in the system, both
small businesses, mid-size businesses as well as large
contractors.
Mr. Cardenas. When it comes to resources for holding
companies responsible for their actions and/or their standard,
whether or not they are meeting our standard, are your
resources increasing or declining to enforce that?
Mr. Amey. Mine or the government's?
Mr. Cardenas. Our government's resources. Because this is a
process. It takes men and women hours and data bases, et
cetera, it takes funding for us to be able to defend the
government's position with these multi-billion dollar
contracts, well, hundreds of billions of dollars in contracts
that go across the board in any given year.
Mr. Amey. It has kind of been an up and down system. A few
years ago, many years ago, we cut back on the size of the
acquisition work force, which is your contracting officers,
which is our first line of defense. We have been cutting back
on the IG community, which, there is return on the dollar for
the investment that they make of their time in trying to fight
waste, fraud and abuse.
But as government is trying to make ends meet, I don't see
resources increasing in those areas, and in a lot of instances,
they are probably going to shrink to minimal levels. So it is
something that we have to be wary of.
Mr. Cardenas. So less resources means it is harder to
actually hold the contractors accountable?
Mr. Amey. It can be, but that is where the consolidation of
all these systems is trying to make it a little easier by
having kind of a one stop shop where a contractor can go to get
information on past performance, get information on present
responsibility, track records, administrative agreements, which
should be, in this day and age, is we are trying to automate
the process to make it a lot easier, so it is a lot less staff
time, a lot less paper shuffling back and forth.
But as people have mentioned, the same system has increased
a lot in money, it is over budget and behind schedule. It has
even been shut down because it wasn't working efficiently. So
at that point even the systems that we are creating aren't
working. I actually think the SAM system is a step back. The
EPLS worked well if you knew how to use it. Now I even
struggle, and I use these systems on an everyday basis, trying
to find who is excluded in the new SAM system.
Mr. Cardenas. Thank you, Mr. Chairman. I yield back.
Chairman Issa. Thank you. The question for the committee
might be, did we debar the person who failed on the SAM system.
[Laughter.]
Chairman Issa. We are not going to say IBM publicly. I
promise you.
We now recognize the gentleman from Utah, Mr. Chaffetz.
Mr. Chaffetz. Thank you, Mr. Chairman. I appreciate your
holding this, and thank you all for being here.
Mr. Neumann, I want to ask you, the GAO did this great
study back in 2007, April 19th of 2007. It says, thousands of
Federal contractors abuse the Federal tax system. And right at
the beginning, right at the very top it says, roughly there are
$7.7 billion owed from Federal contractors that had unpaid
Federal taxes. It went on to say that that was an understated
number and gave some reasons why.
Is there any sort of update to this? Is there a way to look
at this on a more regular basis since the 2007 report?
Mr. Neumann. I am not aware of any recent work that GAO has
done to update that, but I can check and get back to you for
the record.
Mr. Chaffetz. That would be real helpful, because Mr.
Chairman, it says in the second sentence, specifically, 27,000
DOD contractors, 33,000 civilian agency contractors, and 3,800
GSA contractors owed, then if you tally them up, about $7.7
billion. Mr. Amey, I think you wanted to add something?
Mr. Amey. If I may. Those reports were great. This issue
has even come up recently with going after government employees
that haven't paid their taxes, and it recently came up with
contractors that haven't paid their taxes. That has been one of
the systems that they have said, okay, then we need probably
mandatory disclosure or mandatory suspension or debarment, is
if you are a tax cheat.
So that has been kind of the knee jerk reaction on the
Hill. But it would be nice, even from my perspective, to get an
update on those reports, to hold those contractors accountable
in the present day.
Mr. Chaffetz. Yes, and I would share with the panel, as the
chairman knows, we passed out two bills, one that requires
Federal workers, if they haven't paid their Federal taxes, they
should be prohibited from getting jobs and should be relieved
of their duties if they are unable to get on any sort of
payment plan. And also specifically, we did one very specific
to contractors. If they haven't paid their Federal taxes, they
should be prohibited from getting additional Federal contracts.
Mr. Amey. And there were some issues with those reports,
because I think they required IRS cooperation, which isn't
always easy, to be able to get access to those records. But
also, in the responsibility determinations, there are annual--
--
Ms. Styles. I was going to add, there is an annual
certification now. So what happened since that report is that
there was added an annual certification. Actually you will find
in SAM, you can pull it up for any contractor, that makes a
certification that they don't have any delinquencies over
$3,000. So that has been helpful. People have to fill it out,
and they have to go and look and know and realize that they
have to go pay it before they can become a contractor.
Mr. Chaffetz. Let me shift gears, if I could. I want to
talk about the Department of Defense, where so many of these
big problems are. My understanding is that DOD has set a goal
of completing suspension and debarment referrals from the
Inspectors General within 30 days. But the reality is these are
taking close to 323 days, is the last average that we saw. So
here you have the Special Inspector General, Mr. Chairman, on
September 18th, 2012, sending us a letter saying that we have
contractors that are affiliated with the Haqqani network, the
Taliban, and/or al Qaeda, we as a responsible group here, the
Special Inspector General for Afghan Reconstruction, sends this
over to the Department of Defense and says, here are the
problems.
And yet, not a one of them gets reviewed, let alone
debarred, along this process. So how do we solve that? Why not
just give the SIGAR, in that type of setting, given the fact
that we are funding the very terrorists that are killing our
men and women, instead of dealing with the bureaucratic mess
that is the Department of Defense? Mr. Amey?
Mr. Amey. It is a really good question. I think there is a
fear factor involved there with the checks and balances in the
system, to make sure that the IG isn't the one making the
findings, and then also the one making the decision on the
future viability of that company or individual.
Mr. Chaffetz. My understanding is, Mr. Chairman, the
Department of Defense has one person dedicated to this. So we
have tens of thousands of Americans serving overseas and yet we
have billions of dollars going out the door and we have exactly
one person to review this. Why do we allow that person to just
ignore what the SIGAR is able to find is pretty appalling.
Mr. Amey. I hope in my best dreams that they are not
ignoring the problem. It is not an easy process.
Mr. Chaffetz. Yes, but if we were talking about the Army,
by the way, just the Army, and this person sits in the United
States of America, doesn't even sit in Afghanistan.
Mr. Amey. I believe there are some suspension and debarment
officials within Iraq and Afghanistan.
Mr. Chaffetz. If you can name one, if you can show me an
email, point them out to us, get them back to us. Because it is
not happening. And it is a travesty.
Mr. Amey. I can't disagree with you more that 323 days
seems overly excessive. So at that point I hope there is a way
to turn these around. That is one of my suggestions for the
Suspend Act, is to get referrals. At that point, if there is an
argument over the evidence that the SIGAR provided to the Army
SDO, but at least we should have some kind of decision on why
it is taking so long, some kind of transparency in the system
to report back on, are you considering them, have you made no
decision at all.
Mr. Chaffetz. Mr. Chairman, as I yield back, perhaps what
we should do is give the Department of Defense an opportunity
to challenge it. But if unchallenged within 30 days, then they
do go under suspension and debarment, make the Pentagon
probatively say no, we want to keep this person to make a case
for it, we just can't keep taking these chances.
I appreciate the generosity of time and yield back.
Chairman Issa. I thank the gentleman.
We now go to the gentlelady from Illinois, Ms. Duckworth.
Ms. Duckworth. Thank you, Mr. Chairman, and thank you so
much for holding this hearing today. I applaud your efforts to
bring more accountability, efficiency and transparency to the
Federal contracting process.
The conversation we are having today is absolutely critical
for fiscal responsibility of taxpayer dollars and good
government oversight efforts. I am very much looking forward to
working with you both on improving contracting practice at
civilian agencies, which is the focus of today's hearing, and
hopefully taking a closer look at the problems at the
Department of Defense.
The wars in Iraq and Afghanistan have showcased some of the
difficulties in managing contractors who perform government
contracts overseas. So far, we have talked about debarment and
the lack of debarment for folks here in the United States. But
as my colleague, Mr. Chaffetz, pointed out, we have a lot of
contractors overseas who are also in need of debarment. For
example, in 2007, the State Department came under criticism for
its handling of the prime contractor, First Kuwaiti General
Trading and Contracting Company, which was tasked with building
the American embassy in Iraq.
This committee raised concerns at that time about the poor
workmanship performed by this contractor, as well as its past
record of corruption, which may have been purposely overlooked.
Suspension and debarment is one tool that the government has at
its disposal to help ensure accountability when dealing with
contractors. However, a tool like this is only effective if it
is actually used.
Mr. Neumann, GAO's recent findings shows that there has
been little use of suspension and debarment against military
contractors with poor performance records and documented
ethical violations, especially overseas. Are there special
circumstances when we are dealing with these overseas
contractors that might account for that?
Mr. Neumann. At the time of my review, we did find that the
Army and other DOD components had good processes and procedures
in place. But they do have limited staff. They have dedicated
staff, but they get thousands of referrals every year. So that
is something that I would defer to the Army as to what accounts
for the time that it takes them.
But it certainly seems that they should be investigating
all leads. We found that they did do that in the cases we
looked at, when they had sufficient evidence that there was
misconduct or some other wrongdoing.
Ms. Duckworth. Have they actually debarred anyone overseas?
Ms. Neumann. I don't recall if they had any specific cases.
I think there were some that involved overseas contractors when
we looked at 75 cases. I would have to check our files to see
how many of those, if any, were for overseas contractors.
Mr. Amey. I believe there is one that I know of. I think
there was a company, Agility, that has been suspended. I think
it is even involved in current, ongoing litigation. But you
raise a good point, and it was raised by the Commission on
Wartime Contracting, I think they held a hearing on it, and
some of their annual reports and their final report on the
under-utilization, in contingency environments of the
suspension and debarment system. Again, justifications for
declinations, of holding contractors accountable. They did
present in the report the unique circumstances that continency
contracting presents.
And then in the case of First Kuwaiti, they were the
largest contractor that was building the Baghdad Embassy. SO it
wasn't like, if you were, they could continue to work on that
contract, but there would be some real questions about being
able to use them in that environment where they have the
logistics there, they have the people there.
The one thing you do have to weigh in all this is fairness
and due process for the contractors. But it is also fairness
for the Federal Government, because you don't want to eliminate
competition or place the government at a disadvantage by ruling
out contractors. And there is only a certain number of
contractors that can do big picture work. That is unfortunately
the way we bundle contracts now.
Ms. Duckworth. But that is how we got to $800 million
overpaid for food contracts in Afghanistan to Supreme. Why do
you think certain agencies will refuse to initiate sanctions
against a company that flagrantly disregards the law? I am
thinking specifically of the case of Academie Blackwater, which
continued to be used as government contractors after criminal
investigation by the U.S. Attorney at the Eastern District of
North Carolina found out they engaged in repeated systematic
violations of U.S. laws and regulations that protect national
security over an extended period of time. At what point do you
say, well, you are the only game in town so we are just going
to continue to work with you even though we know you are
breaking national laws? At some point you have to stop.
Mr. Amey. You are correct. It ends up being a question of
competition for the Federal Government. But it also ends up
being a question of present responsibility. What you are
looking at is this time. The time you get a referral and you
are looking at a contractor, or a grantee and you are saying,
are they currently, presently responsible. Usually what happens
is, once an allegation comes out against the company, they fire
people, they bring in a corporate compliance monitor, they
probatively self-police and do the best they can to mitigate
any further, and mitigate a suspension or debarment because
they don't want that to hurt their bottom line.
So a lot of times what SDOs are looking at is only, are you
currently responsible now. Sometimes it may not matter what
they did a week ago or six months ago.
So again, suspension and debarment is not a punishment and
therefore the SDOs are somewhat limited. Unfortunately I do
think that we buy too much into the promises that are given by
the contractors, and I would like to see the use of suspension
and debarment. If we do need them again, then grant them a
waiver. And let's bring them back in and let's justify it.
They're suspended from future contracts, but we need them and
here is why, and let somebody justify and go on the record, so
at least then we know why contractors with poor performance or
that have defrauded the government are still receiving taxpayer
dollars, rather than having us all sit here and scratch our
heads.
Ms. Duckworth. Thank you, gentlemen, Ms. Styles.
Mr. Walberg. [Presiding] I thank the gentlelady and
recognize myself for my five minutes of questioning.
Ms. Styles, you stated in your written testimony that the
actual process of suspension and debarment varied widely across
Federal agencies. You also mentioned that the lack of access
and transparency not only creates an impediment for companies
that are working to improve ethics and compliance programs, but
also creates issues of fairness.
Can you describe for us further and suggest some changes
that might be made to improve this process?
Ms. Styles. Absolutely. I think what you find is you have a
written system, you have the Federal Acquisition Regulation and
you have non-procurement rules. The problem is that the active
suspension and debarment agencies over time have really created
some flexible processes to get information and to be fair to
contractors. But if you are a company that either is proposed
for debarment or suspended, or you are a company, believe it or
not, lots and lots of companies probatively go in to suspension
and debarment officials to talk about compliance and ethics
issues.
So if something happens at their company, if there is an
article in the newspaper, if they are under investigation, the
first thing they do and the first thing we recommend is that
they go in and talk to their suspension and debarment official
about how they discovered the activity, how they detected it,
how they fixed it, how they remediated, what they have done to
enhance their compliance programs. So there is a lot of
interaction that is going on between the active suspension and
debarment offices and the contractors to recognize the fact
that some bad things can happen in good companies who want to
improve compliance programs, and you also have situations with
medium size companies and small companies that get into
trouble, didn't realize that they needed to have a compliance
program, that they needed to have an ethics program.
So they actually work with the suspension and debarment
officials through these unwritten practices and using the tools
like administrative agreement to make the companies better
contractors.
Mr. Walberg. How different are the procedures between
various SDO offices?
Ms. Styles. They are vastly different. It is like night and
day.
Mr. Walberg. Describe an example of working with two
different entities on very similar issues.
Ms. Styles. So you could work with the EPA or the Army,
which has a more hearing-like process, they have a suspension
and debarment official that actually acts more like a hearing
officer. They have people that work within the office that
present the case and that work with them, a lot of times the
inspector general is involved in presenting the case.
You have agencies with significantly more informal
practices. So the General Services Administration, the Small
Business Administration, in many respects the Air Force or the
Defense Logistics Agency, they are much more informal. They
will issue a show cause letter for you to come in, they will
ask for some written statements.
So the practices, I think the difficulty with the system
right now and the way that it can be improved is by putting a
lot of these unwritten policies, procedures, practices, tools
into the FAR, into a place that anybody can understand they are
available, even the other civilian agencies that may not know
that there is a show cause letter or that you could have an
administrative agreement. So that even a medium or small
company would have fair access to the system and understand.
Mr. Walberg. So you would say consistency would be very
helpful for contractors?
Ms. Styles. Absolutely. It would be very helpful just to be
able to understand the process. Because you can't read the
rules and understand the process right now.
Mr. Walberg. Seems common sense. Let me follow up. In your
written testimony you mentioned you have confronted a number of
problems for contractors under the current lead agency process.
What were the problems and how should we address them?
Ms. Styles. The main problem that we see is that there is
no actual written in the FAR articulation of what a lead agency
is. So one agency will take the lead for the entire Federal
Government. So one agency makes a decision if a contractor or
individual will be suspended or debarred for the entire Federal
Government. As you know, many contractors work with a variety
of agencies.
It is hard to understand how that actually happens. I have
seen it in process where one agency sends an email to all the
other agencies on the Interagency Suspension and Debarment
Committee, telling them, I am taking lead agency, if you are
interested or if you think you should take lead agency, let me
know. It is not something that we as contractors have a lot of
access or information to.
But what is important are the companies that want to
probatively go in and talk to their suspension and debarment
official when there is an issue. That is exactly what you want.
You want early engagement between the contractors and the
agencies. You can't figure out on your own which lead agency
you should approach.
So we have had situations where we have approached the
agency, where a contractor has the most, highest dollar value
contracts. We assumed we were the right agency. We had
extensive discussions and filings with the suspension and
debarment official only to have a completely different agency
debar the company the next day for the same issues. So that
agency didn't tell the other agencies that they were
considering the suspension and debarment matter of this
particular company. So all the effort that this company went
through to prove what they had done to remediate was for
naught, because then they were publicly suspended.
Mr. Walberg. Okay. Thank you. My time is expired. I
recognize Ms. Norton.
Ms. Norton. Thank you, Mr. Chairman. I appreciate this
hearing.
Mr. Amey, I have a question for you based on a report from
the Commission on Wartime Contracting 2011. The only experience
I know personally about debarment and contracts comes from my
own experience as Chair of the Equal Employment Opportunity
Commission. We worked with the Office of Federal Contract
Compliance.
Lots of folks wanted debarment and suspension and it rarely
happened. But actually the OFCCP was very effective in
combating discrimination because it did a lot of monitoring and
nobody wanted to lose a contract or be held up as somebody who
discriminated. So it did a quite effective job.
I was looking for some, recognizing that debarment, for
example is a kind of nuclear weapon, I was trying to think of
something short of that that would get people's attention. I
note that this Commission on Wartime Contracting from a couple
years ago recommended something that seems to me to be very
mild and at the very least, it would have occurred, they
recommended that the State Department, because they were
talking about State Department funds, document in writing their
justification for overturning from debarment officials the
people whose job it is to evaluate this.
Their recommendations were suspension or debarment. Put it
in writing, and in writing you might have thought that if you
were going to overturn it, that that would signal not only to
them but to other contractors, you better watch out. It is not
as easy as you think.
But I understand that the State Department responded that
simply putting in writing their reasons, and surely they had
reasons, would have been overly burdensome. So I am flummoxed
at that. Do you agree that such a requirement to put in writing
why you are overturning a recommendation of those closest to
the facts would be unduly burdensome?
Mr. Amey. I do not agree with that statement of the State
Department. I would like to even see it expanded further, that
we see summary data, at least, at a minimum, but all data from
those SDOs offices on what it went through, what was presented
by either the government or by the contractors that made them
make any decisions, whether it is a declination or not. I think
even if they are going to suspend or debar a contractor, I
think there should be some kind of public display of that
information so it does put contractors on notice.
I think it would actually help in the sense that it would
act as a deterrent.
Ms. Norton. Surely, in writing, to see they will call you
out. Particularly since this information is already available.
It is not like they would have to gather it, assuming they did
not make an arbitrary decision. They simply have to put down
the data, as you indicate, and the reasons for their decision.
Mr. Amey. Correct.
Ms. Norton. Are you aware of why they would have considered
such a requirement, or the other two witnesses, why they would
have considered a requirement burdensome? Would either of you
consider such a requirement burdensome?
Ms. Styles. Most of the suspension and debarment agencies
that I work with do have something in writing to the record
about what they found.
Ms. Norton. Sure. They will make arbitrary decisions. So
the notion of putting it out there as a possible deterrent,
especially when, as you have indicated, it is difficult to
impart. Really in the case of the State Department, it amazed
me, you were talking about $200 billion in contingency
contracting and about a quarter of it, $60 billion, more than a
quarter of it, was attributed to fraud and waste and abuse.
They should have been reaching out for some way to correct
this. But I suspect they were left with nothing to do except
continue as they were going along.
Do you see the same kind of waste in taxpayer dollars if
this continues, and would you take action to see to it that
this recommendation of two years ago from the Commission, where
it was in fact implemented?
Mr. Amey. Certainly. Unfortunately I think we see a lot of
the commissions and panels that are created produce hundred-
page books and reports and then they are not acted upon. There
are a lot of recommendations and I know that there were some
efforts last year to pass, especially in the Senate, with
Senator McCaskill and Senator Webb, to pass a lot of the
recommendations that were in the Wartime Commission's final
report. And Unfortunately a lot of them, some got into the
Defense Authorization bill but some fell on deaf ears.
It is an open issue and that is the kind of information
that you hope to bring together, especially with the open
process that the Suspend Act has had. I do applaud the chairman
for the way that you have gone about putting it out and having
a discussion draft that people can comment on. I think it is
going to end up at the end of the day a better piece of
legislation, because it will add a lot of debate to the current
draft bill to where we can pull on the other experiences, the
IG reports, GAO and what other commissions and panels have
recommended.
Ms. Norton. Ms. Styles said the information already exists.
So Mr. Chairman, I will expect to see that information duly
available and recorded, since there is not a compilation of new
information. I believe calling people out, expecting things to
overturn what those closest to the facts have said is the
least, otherwise you leave the impression you are making
arbitrary decisions.
Chairman Issa. [Presiding] Would the gentlelady yield?
Ms. Norton. I would be glad to, Mr. Chairman.
Chairman Issa. I agree with the gentlelady that this is an
issue that this bill may be timely to send some form of a
message in. Ms. Styles, from your experience, would it be
helpful if either through the letter of a new law or through,
if you will, the report language, we made it clear that the
harvesting, maintenance and future reference for this kind of
material would be essential to the evaluation?
Ms. Styles. Absolutely. I think the agencies need to keep
an administrative record.
Chairman Issa. Not agencies. Harvesting collection, in
other words, centralizing. I think back to no policeman in
Detroit would fail to want to know that there was an arrest or
investigation in Cleveland, even if it didn't lead to an
indictment. That is sort of the way I view it, is that
information, even if you can't use it in court, is valuable to
know whether you have somebody you need to look at more
thoroughly.
Ms. Styles. Absolutely. You can take a look at the EPA
suspension and debarment opinions that are actually public and
published and it helps you as a practitioner and it should help
other people understand how the decisions are made and where
the lines are drawn. So to the extent you can make information
public without harming companies that the suspension and
debarment official actually decided didn't do anything wrong,
that is always the risk that I see.
Chairman Issa. Thank you. I thank the gentlelady.
We now go to the gentlelady from California, Ms. Speier.
Ms. Speier. Mr. Chairman, thank you.
I am flummoxed in some respects that this issue has been
around for as long as it has. We have really done very little
to address it. It is a system that is basically voluntary in
terms of suspension and debarment, one in which the entity that
has responsibility and has limited resources and an incomplete
and unreliable data base. And we wonder why it is not working.
This is really documented from, I believe, the General
Accounting Office. Here is Boeing. This is no small company.
Big company. Boeing has just charged the taxpayers of this
Country $2,200 for a bearing sleeve that retails for $10. This
is metal tube assembly. Boeing charged the taxpayers $12,000
and the retail cost is $1,100.
Now, at some point, a big company like Boeing needs more
than a slap on the hand. Now, the likelihood of us debarring
Boeing is pretty remote, correct? But as long as suspension and
debarment are really not options, what is going to get the
attention of a Boeing? To me the only thing that is going to
get the attention of a Boeing is slapping them with hefty
fines. I am curious, Mr. Amey, if you have any comment on that.
Mr. Amey. Unfortunately I would have to disagree. I don't
think fines work. Boeing has a lot of money in the bank, and
they paid millions of dollars in fines, when they were
suspended. They were suspended many years ago. That plus a
personal conflict of interest that occurred with a high senior
level official at the Air Force that went to work for Boeing in
violation of conflict of interest standards, they were fined,
and if I remember correctly, it was in the $600 million range.
But since that fine has been paid, there have been multiple
spare parts horror story reports out by the DOD IG, that has
shown that they have over billed on spare parts, on screws,
nuts, bolts, and the products that you just named in the most
current report. So it is possible to suspend Boeing, even if it
is just a portion of Boeing. That is what happened when it was
suspended before. They suspended their missile division. They
didn't suspend the whole company. But it did prevent at least
that division of Boeing, that is a very large company, from
receiving new Federal contracts. But then it was waived.
Ms. Speier. So where are we?
Mr. Amey. We are in a position where at least, if you go to
suspend them, it is on record, it is, as Ms. Styles said
earlier, it is kind of a public nightmare for them. It is a
problem on Wall Street for a company to be suspended or
debarred, and it puts everybody on notice that, before I award
the next multi-million dollar contract to Boeing, I need to ask
a few questions, I need to make sure that their compliance and
their performance standards, as well as their level of
professionalism and integrity, are at the top of the charts.
Ms. Speier. Mr. Chairman, I guess my question is, are some
of these companies too big to suspend and debar? I think that
is the situation we are in. Because in the end, even if we
suspend them or debar them, in the case of Boeing, it was
waived.
I am also concerned, Mr. Amey, maybe you can help me on
this, John Sopko, who is the SIGAR, recently came to our
Congressional Watchdog Caucus. It was pretty astonishing. We
could have him come and speak to us for a full hearing and
learn a great deal. He said, and with great frustration, that
the Army is refusing to look at the classified evidence that
SIGAR found to support suspension and debarment. My question to
you, Mr. Amey, is do you think the Inspector General should
have this authority? How else are we ever going to get some
kind of accountability here?
Mr. Amey. It presents a very unique situation, due to the
fact of the SIGAR is operating in a contingency operation. So I
may separate it from, do we want to grant all IGs the power to
suspend or debar contractors? I would probably say no. But with
SIGIR and SIGAR, we have had hundreds of millions of dollars
pour into Iraq and Afghanistan. The money is being spent very
quickly. There is a lack of oversight over the money. We are
building things that aren't being used, we are building things
that are being turned over, we are funding the insurgency.
So at that point, I think there needs to be, if we don't
grant them the suspension and debarment authority, I think we
need to tweak the system to be able to speed it up. Waiting 323
days for the SDO to make decisions on referrals is ridiculous.
There needs to be more consistency in that system and speed in
that system. The legislation may get there, and I think there
is a point in the legislation that talks about this, only
involves civilian agencies. But other agencies may enter
agreements.
So that may be something where we may want to have SIGAR,
SIGIR, have a special inspector general for contingency
operations, whatever it is, mandatorily have to enter into an
agreement with a board or with an SDO to be able to get those
decisions reviewed quicker. Because as you mentioned, it is
problematic, especially when it is overseas money that is just
going out the door with very little result.
Ms. Speier. Thank you. I yield back.
Chairman Issa. I thank the gentlelady, and I think your
points are good.
Before you came in, we had multiple questions along this
line. I think the ranking member and I came to an understanding
that at least in report language, we are going to have a
finding in the bill that this needs to be addressed. Whether we
address it in explicit language or more, the next time a
special IG is appointed, these powers must be managed, there
will be some agreed-on language. Mr. Cummings and I have come
to a general understanding. We will work out the details. We
would love your input.
We now go to the gentleman from- you know, you have to sit
in the front row when you come in early, because Lacy will get
ahead of you.
[Laughter.]
Chairman Issa. The gentleman from Nevada rather than
Missouri. Lacy, I always see you when you come in. The
gentleman is recognized. Thank you.
Mr. Horsford. Thank you, Mr. Chairman.
This is actually a very important hearing, and I want to
commend you, Mr. Chairman, and the ranking member. Because when
you follow the money, you see where there can be efficiencies
identified and implemented. We desperately need to find
efficiencies. Contracting is one of the major areas.
I want to ask, the amount of contracting and grant award
dollars have increased from approximately $200 billion in
fiscal year 2000 to over $1 trillion in fiscal year 2012. In
2009, the GAO found 25 instances in which companies and
individuals suspended or debarred for committing serious
offenses were later awarded new contracts. Contracting
officials either failed to check the suspension and debarment
data base before awarding the contract, or if they did check
it, the data base failed to turn up the name of the suspended
or debarred entity.
So if we had this huge increase in contracts and awards,
did we have a corresponding increase in the workforce that is
required to monitor whether or not these are eligible entities?
Mr. Neumann. GAO has done a lot of work looking at the
acquisition workforce and certainly has found that there have
been new challenges there, particularly at certain agencies, in
identifying the right size and the training skill set needed
for the acquisition workforce. So that certainly is an issue.
Mr. Horsford. So the POGO actually made a recommendation
that the ISDC reports to Congress should include summaries of
size and spending on the suspension and debarment workforce.
Why is this important?
Mr. Amey. We have seen some, first off, the ISCDs first
report that was due in 2009 was delayed two years. At that
point we sort of had to sit and wait for it. At least they got
the fiscal year 2011 report out in time. But I think there is
an effort, especially with the legislation that is on the table
with the Suspend Act, is trying to make the government more
effective and efficient. Currently I don't know what the total
number is of SDOs that are in the Department of Defense, that
are in the civilian agencies. Earlier there was a discussion on
there are some full-time, there are some part-time. So that
means they are sharing hats. Is that the best system?
POGO a few years ago even found contractors, the GSA had
contractors come in and support their suspension and debarment
work, doing research and analytical research into the
contractors that have allegations before them. So there is even
a contractor workforce that is in this community, which is a
little scary. That is one of the reasons why we have
recommended that we have to figure out how much we are spending
on this workforce, how many people are in this workforce, add
consistency to the current system to make it run better.
And then also more than likely, have to put this in the
hands of government employees, because a lot of the data that
is front of the SDO office is proprietary or needs to be
protected. Therefore, especially after the week we have had
with NSA and the ties to Booz Allen and Mr. Snowden, we do have
to at some point ask some questions about who is in our
workforce and what do they cost.
Mr. Horsford. So definitely including that within a
proposed legislation would be important, a workforce element
within what we are trying to achieve here.
Let me ask, 1,300 criminal, civil and administrative
instances of misconduct for over 170 of the Federal
Government's largest contractors. Out of the information that I
was able to glean, what are the largest type of offenses that
we are seeing contractors making? And specifically I want to
know, there was an ad hoc hearing conducted where members heard
from low wage workers who are employed by these Federal
contractors who are being paid minimum wage with no benefits,
even though the contractor was required to pay prevailing wage
or Davis-Bacon wage rates and failed to do so.
Is that an issue? If so, where can we find the
documentation for that, and what are the other type of offenses
that these contractors are making?
Mr. Amey. The information you are referring to is in the
Project on Government Oversight's Federal Contractor Misconduct
data base. We collect annually the data on the top 100
government contractors. So even though it is top 100, people
have moved in and out. That is why it is 172.
And you are hitting an issue. A few years ago, suspension
and debarment only applied for procurement. Then it was
expanded and it went non-procurement. So you could have a labor
violation, a tax violation, an anti-trust violation, a worker,
labor issues, consumer protections. So our data base includes
all that.
Born out of that, out of this committee in 2008, they
passed a law to create a Federal Awardee Performance and
Integrity Information System, it is called FAPIIS. That system
is supposed to gather information. But it was only limited to
procurement. So what I would recommend is, and you may want to
go back and look at the scope of the FAPIIS legislation and see
if it needs to be expanded to include the type of information
you are referring to to make sure that that is on the radar of
a contracting officer prior to award to see what the track
record is.
And also to the suspension and debarment officials in
trying to make a determination of present responsibility. You
want them to have the most accurate, complete and up to date
report as possible on the contractors that we are working with
to avoid risky contractors that put government agency mission
and projects in jeopardy.
Mr. Horsford. Thank you, Mr. Chairman. I hope that we can
be as inclusive as possible with your proposed legislation and
take some of these other provisions into account, your draft,
as being considered by the full committee. Thank you.
Chairman Issa. Thank you. The ranking member and I will be
meeting in a few days to work out the final tweaks as a result
of this. We would welcome your input for that.
We now go to the always noticed gentleman from Missouri,
Mr. Clay.
Mr. Clay. Thank you, Mr. Chairman. I don't mind bringing up
the rear. I will try not to take all of the five minutes.
Mr. Neumann, Chairman Issa has a draft bill that would call
for a board of civilian suspension and debarment that would
consolidate more than 41 civilian agency and government
corporation's suspension and debarment functions into one
centralized board. This board would be responsible for, among
other things, ensuring the excluded parties list is current, as
well as employing a transparent case Management system that
would allow the public to be informed of all cases.
How effective do you believe this board would be in
improving efficiency and transparency?
Mr. Neumann. Given that GAO has found that there have been
problems with the current process and the inconsistency between
agencies on the activity level of their suspension and
debarment programs, GAO would welcome any changes that would
make improvements to that overall process and ensure
consistency and transparency.
I think it is important to note that there are certain
characteristics that agencies will still need to have in place
in order to get the referrals to whoever is managing the
suspension and debarment process, including having a very
active referral process involving IGs and other officials at
the agency level and be trained on that, so they know what
cases should be referred for appropriate action.
Mr. Clay. But having a central clearinghouse, so to say,
with timeliness being one of the major factors here, do you
think that would make this process more efficient and
transparent?
Mr. Neumann. It certainly would build on some of the
existing responsibilities of the current voluntary system under
the Interagency Suspension and Debarment Committee. That
committee has the charge to monitor and oversee this
government-wide system. As we noted, it has been ineffective in
the past. While there has been some improvements made, I think
we still want to see some more improvement there overall.
Mr. Clay. How likely is it that having a single point of
authority for maintenance of the excluded parties data base
would resolve the accuracy problems it has had over the years?
Mr. Neumann. Do you mean the accuracy of the data base?
Mr. Clay. Yes.
Mr. Neumann. The problems with the data base I think are
longstanding. So there would be, there needs to be some look at
how to improve that particular data base. GAO has noted that as
far back as 2005 and again in 2009, even when we did regional
work, there are still problems with the data base.
So I think that any efforts to take a look at the problems
and have someone take steps to improve it would be welcome.
Mr. Clay. I thank you for your responses.
Mr. Chairman, that is all I have and I yield back.
Chairman Issa. I thank the gentleman.
I will just follow up with a quick question round that came
from the earlier questions. Ms. Styles, the process which is
undocumented of show cause, our legislation currently does not
formalize that nor address the reality that it is and likely
will continue to be done unless we either formalize it or
prohibit it. Would you suggest that as we are preparing a final
bill, that we do just that, either formalize it or prohibit it?
Ms. Styles. I think it should be formalized, absolutely. It
is a very good process. In situations where an SDO wants more
information, they just don't always have the facts. They want
to make sure they are dealing with an ethical contractor, but
they don't want to suspend them unnecessarily.
Chairman Issa. Mr. Neumann?
Mr. Neumann. Yes, we saw that as the Department of Defense
used those very efficiently to get more information, in some
cases to either get the contractor to improve its ethics
programs, or in other cases to get enough evidence to do a
suspension or debarment. So those were very effective tools
that they used.
Chairman Issa. Mr. Amey?
Mr. Amey. I believe the SDOs believe it is as well. The
ISDC has been reporting it, on how many administrative
agreements or how many settlements that they have entered into,
non-prosecution agreements, different things that help them
gather information about contractors. So I think the community
finds it to be an important tool as well.
Chairman Issa. So getting a three for three that would
should formalize it. Let me just ask one question. Is this an
appropriate place to tie in a specific, if you will, right of
IGs to at a minimum create a mandated show cause? In other
words, less than a direct authority to suspend or debar, the
idea that IGs' findings in audits and other work would
automatically empower a show cause so that they would have a
direct part of this, their investigation would link directly to
this process? Ms. Styles?
Ms. Styles. I think at most of the effective agencies they
already do. So they refer them and it automatically causes the
show cause process to start. So it actually would be putting in
the statute a process that already exists.
Chairman Issa. And you had earlier said that the best part
of our bill is that we take an executive order and put it in
statute.
Ms. Styles. That is correct.
Chairman Issa. Okay. Unless I have any further thoughts
from any of the three of you, I want to thank you for your
generosity of time, and for helping us in what is likely to be
a very shortly put forward piece of legislation. We stand
adjourned.
[Whereupon, at 11:30 a.m., the committee was adjourned.]
APPENDIX
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Material Submitted for the Hearing Record
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