DMI Blog

Corinne Ramey

No Bid, No Way! Federal Contractors Out of Control

Blog Post About DMI's TheMiddleClass.org

Financial records show that they paid $45 for a case or soda and $100 to wash a 15-pound bag of laundry. They trashed an $85,000 truck that had only minor problems -- like flat tires -- and paid for their workers to stay in five star hotels.

Is this a fancy resort? Maybe some celebrities on a high-class vacation?

Guess again. These figures point straight to Halliburton, the federal contractor notorious for overcharging and botching government contracts in Iraq.

Halliburton, which received $5.9 billion in federal contracts in 2005, is just one example of the corruption and lack of accountability that surrounds the business of federal contracts. And we're not talking about pocket change here. The federal government awarded $412.1 billion in federal contracts in 2006, and less than half of that money was awarded through a "fair and open" bidding process.

The Accountability in Contracting Act, which has passed in the House and is currently awaiting a vote in the Senate, is a partial solution to some of the more egregious practices of awarding government contracts. The act seeks to minimize no-bid contracts, which are awarded without a competitive bidding process. When no-bid contracts are awarded they cannot last longer than one year and the government must publicly justify awarding a contract without open bidding. The bill also addresses "cost-plus contracts," which award the contractor for expenses plus a fixed percent of the profit. So, in Halliburton's case, they would have been given $45 per case of soda plus an extra 3%, which is certainly more than 3% of $4, what a normal case of soda would cost. For Halliburton, buying that expensive Coke is worth it! But maybe not for the American middle class. As TheMiddleClass.org says:

"Whether it's military contractors accepting kickbacks in Iraq, no-bid contracts with a guaranteed profit margin for companies cleaning up after Hurricane Katrina, or politically-connected businesses landing lucrative contracts to provide materials to the Department of Education, it is middle-class taxpayers who ultimately foot the bill. With spending on federal contracts reaching more than $400 billion in 2006 – more than double the level in 2000 – middle-class taxpayers have more incentive than ever to demand efficient spending. Yet lax oversight is provoking increased concern about waste, fraud, and profiteering. Combined with legislation that protects whistleblowers who reveal cases of fraud, this bill represents an important step toward making sure that taxpayer money is spent effectively and efficiently."

Bad government contracts aren't just taking place halfway across the globe. As Barbara O'Brian wrote on the DMI blog, government contracts after Hurricane Katrina were just as rife with corruption and cronyism as those awarded to Halliburton and other companies in Iraq. From overpriced ice that was stored in Maine to blue tarps that cost ten times the normal rate, government contractor spending both here and abroad has been out of control.

Although this bill doesn't address the actual quality of the contractor's work, it is a first step towards reining in the outrageous government spending that has come from mismanagement and lack of oversight. Given that in 2006 the top 50 federal contractors spent $146 on lobbying and donated $15 to federal campaigns, the time has arrived to make federal contractors less accountable to their pocketbooks and more accountable to middle class taxpayers.

Corinne Ramey: Author Bio | Other Posts
Posted at 7:49 AM, Oct 30, 2007 in TheMiddleClass.org
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