Deforming the Reform: A Case Study in Oversight Perseverance

I am continuing our series of solutions for the Department of Defense (DoD) with a look at how the government keeps track of companies that have engaged in misconduct when awarded lucrative government contracts. This is specifically a problem for the DoD, because when you look at the top 100 contractors, the majority with high numbers of misconduct are companies that work with the DoD. This is not surprising because procurement oversight in the DoD is weak, and many of the companies know that if they get caught doing something wrong, they can declare a national security need and will probably get a follow-on contract or other contracts in the future.

This Solutions column will look at how attempts to reform and add more transparency to government contracting by open government groups and the Congress resulted in weak, but promising, legislation. But then, the government, under pressure from the government contractors, has been further deforming and degrading this attempt at open government records. This is a common problem when reforms are introduced, get passed in a weakened form due to corporate lobbying and are further degraded as the reforms are implemented into the government bureaucracy because the government acquiesces to the pressure by government contractor lobbyists. The politicians can brag that they passed more government oversight for more open government to their constituents and the media, but after that parade moves on the good government groups have to fight to keep the reform alive from the long knives of industry.

A new federal contractor misconduct database, Federal Awardee Performance and Integrity Information System or FAPIIS, was long in the making, but debuted on April 15. It is supposed to be a solution to require, by law, that government contracting personnel use this database to check for misconduct while they are making contract award decision and give the public a glimpse of past misconduct of companies that work with the government. (See this Solutions column for more information on debarring government contractors.) However, this solution is already greatly in need of its own reform, even on its public debut, in order to really help identify contractors that perpetually attempt to swindle the government.

Here is the history of this deformed reform:

A good government group, the Project on Government Oversight (POGO), realized in the early 2000s that the government didn't have a good data base that listed government contractors' misconduct. (For full disclosure, I founded POGO and still serve on their board of directors.) After issuing a report on the subject in 2002, POGO designed their own Federal Contractor Misconduct Database that listed the incidences of misconduct for the top 100 government contractors. The database was updated and revamped in 2007.

When you look at the POGO database, it becomes apparent that the top contractors involved in misconduct are many of the main DoD contractors. Lockheed Martin, a major defense contractor and my nemesis for many years in my DoD investigations, is the largest government contractor with $38 billion of government contracts in fiscal year 2009 and has the largest amount of incidents of misconduct – 57 since 1995.

However, POGO realized that their database was limited and not official, so, they, with the help of some other good government groups and sympathetic members of Congress, pushed for the government to create a comprehensive database of thousands of government contractors so government contracting personnel and the public could consult with the list to see which has been responsible or irresponsible with their government contracts. In October of 2008, President George W. Bush signed a bill that had a provision to start a federal database that was to use POGO's database as an example. This legislation was shepherded by a diverse and bipartisan group of legislators: Reps. Carolyn Maloney (D-New York), Henry Waxman (D-California), Tom Davis (R-Virginia), Edolphus Towns (D-New York); Sens. Claire McCaskill (D-Missouri), Barack Obama (D-Illinois), Carl Levin (D-Michigan), John McCain (R-Arizona) and Hillary Clinton (D-New York). It is interesting to note that the three major contenders for the 2008 presidential election, all signed on to help pass this bill.

Unfortunately, the deforming of the reform started when the bill was being debated. The government contractors, especially the DoD contractors, (see these two Solutions columns for more information on the power of DoD lobbies here and here) have powerful lobbies which, when they could not kill this new important database, managed to shoehorn in a provision that the database could not be made public. If only government personnel could see the database, there would be less public scrutiny to its faults and omissions … besides, if you take out any sensitive internal company data, why shouldn't the public be able to see which contractors are messing with their tax dollars?

In a stealthy and surprise move, in July 2010, Sen. Bernie Sanders (D-Vermont) slipped in a provision in a supplemental appropriations act that required the new database be made public. The act passed before the corporate lobbyists could pull out the long knives, and President Obama signed the bill.

The oversight of the implementation of this database was not finished because of various pressures during the public comment stage and POGO had to watch the progress with great scrutiny.

So, last Friday, April 15, the FAPIIS database finally went public, nine years after POGO had created their site. Two provisions have made it less than it should be. One is that it will not have any misconduct incidents that happened before April 15 – yes, this April 15 – so the contractors start with a clean slate on the site. The POGO site goes back to 1995. It will take a while for the new misconduct data to appear, but I am pretty sure that Lockheed and other DoD contractors will, once again, make their way to the top. The other problem is that past performance reviews of contractors by the government won't make it onto the web site. These two provisions were hat tips to the contractor lobby while the bill was winding through the Congress and into implementation stage by the government bureaucracy.

POGO has found factual flaws in the site and the software is very clunky.

However, the government may not be able to have the funding to fix it up because there is a budget push to cut federal money for government web sites. Rep. Daryl Issa (R-California) had pledged that these cuts would not shut down government accountability web sites. He may be successful, but this gives the industry another shot at trying to kill the site that shows their dirty laundry.

So, this is supposed to be a Solutions column, so where is the solution in this column?

This story is a cautionary tale to anyone who is trying to put in reform legislation. If you mean to have the reform be effective and consequential, you have to watch it diligently all the way through the legislative process but, much more importantly, you cannot declare a victory until it gets through the executive branch implementation without being deformed by lobbyists who didn't get their way during the legislative process.

Getting this type of reform legislation through is a bit like guerilla warfare if the legislation is attacked and stripped of vital components. If Senator Sanders had not slipped in the provision to make the database public, it may have been many years before anyone could be convinced to take a stand and undo the law after it passed. The large imperial army of corporate lobbyists greatly outnumber the reformers, so the reformers need to be very relentless and resourceful.

The solution on how to successfully get effective reform is to not let your guard down through the whole process. I have seen members of Congress and even nonprofit groups accept greatly flawed reform legislation without persistently keeping it effective. Then, the deformed reform is even more deformed by the unwilling bureaucracy, and it is either not effective, or even worse, prettied up to look like reform, but actually helpful to the corporations. Then, the members of Congress and the reform groups declare a great victory. It becomes very hard to bring up the problem the reform was supposed to avoid because the sponsors of the bill will tell you that they “fixed” the problem.

The fight for the FAPIIS database is not over until it achieves its purpose of being a true and thorough tool to track contractor misconduct that the government and the public use to keep the same corporations from ripping us off over and over again.

So, POGO and the sympathetic members of Congress still have work to make the reform work while fighting off the people who are determined to deform it. It makes reformers sometimes feel like Sisyphus with the rock, but that is the burden in trying to fight and change the status quo. Fortitude.

I am interested in reading and perhaps publishing other stories about reforms that have been beaten up on their way to becoming effective law and methods that other reformers have used to get good reforms through the system. I believe that this area of solutions is perhaps even more important than coming up with the original legislation. If you have a story you would like to tell, send me an email at