Is the Federal Contracting System Out of Whack?

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Meet Robin Smith. A veteran of the Air Force, she once guarded military aircraft bearing nuclear weapons before going to work for Wackenhut, the Florida-based private security giant that took in $400 million in federal contracts last year (and $516 million the year prior). Between June 2005 and April 2006, Smith served as a security officer at the Department of Homeland Security’s Washington headquarters, where she says she witnessed a litany of security lapses by Wackenhut employees: guards who fell asleep at their posts, who were allowed to carry weapons after repeatedly flunking certification tests on the company’s gun range, and who gained access to sensitive locations without the requisite security clearances. On numerous occasions, she says, she saw the door to the guards’ armory left open and unattended, allowing anyone access to the cache of weapons and ammunition inside.

But the most egregious breach happened in the fall of 2005, when a DHS staffer opened a letter containing white powder. Instead of quarantining the area, or calling for a hazmat team, the security guards who responded to the scene handled the envelope themselves and called others over to have a look at the suspicious powder. They also directed the employee who had opened the letter, and who had spilled some of its contents on herself, to wash the powder off. To do so she walked across a hall and past Michael Chertoff’s office, putting the Homeland Security secretary himself and other employees at risk of contamination. “I’ve never seen anything like the way Wackenhut ran Homeland Security,” Smith told the House Subcommittee on Government Management, Organization, and Procurement today. “I’ve never seen any company disrespect a government contract like Wackenhut did.”

The purpose of the hearing was to examine why certain companies with spotty performance records (see: Halliburton, Bechtel, Boeing, among many others) are routinely rewarded with more lucrative government contracts. Such was the case with Wackenhut, which, despite security breaches at Homeland that were corroborated by multiple Wackenhut guards, went on to secure a 5-year, $250 million contract with Immigration and Customs Enforcement, a branch of the Department of Homeland Security

On hand to defend Wackenhut’s record was one of the firm’s VPs, Dr. Lawrence Brede, who told the subcommittee he was “disturbed” that the company’s past performance was being called into question. He described the allegations against Wackenhut as a coordinated misinformation campaign carried out by “disgruntled, terminated” former employees who have been “co-opted by the SEIU,” which he accused of undertaking a campaign to “besmirch our reputation” and “displace the unions” that serve Wackenhut employees. (Smith, for the record, wasn’t fired by Wackenhut.) According to Brede, the contract in question was originally with the Navy (which occupied the buildings later taken over by Homeland) and called for less stringent security. Under the circumstances, he said, Wackenhut met its “contractual obligations.”

It’s hard to fault Brede for getting defensive—after all, his company’s track record is fairly pristine when pared with those of other federal contractors, some of which continue to receive taxpayer funding despite instances of outright fraud in their recent pasts. One of the worst offenders is Lockheed Martin, which, since 1995, paid out $288.5 million in fines (the company can afford it, it received close to $20 billion in federal contracts last year) and racked up 39 instances of misconduct, everything from procurement fraud to kickbacks to nuclear safety violations.

So why do federal contracting officers continue to place their trust (and our money) in the hands of companies that have played them in the past? One reason—and it certainly isn’t the only one—raised by the several witnesses today, including the Department of Homeland Security’s inspector general, Richard Skinner, is that the federal government lacks a single, centralized database containing detailed information (including on past investigations, settlements, and consent decrees) on the contractors that do business with the government. But it’s not as if such a repository doesn’t exist; the Project on Government Oversight has been operating a comprehensive “contractor misconduct” database since 2002, and released a new and improved version today. For as many years as POGO’s database has been in existence, Carolyn Maloney, the New York Democrat and a member of Towns’ subcommittee, has been trying to pass legislation to build a similar government database for use by contracting officers across all the federal agencies. Last week, she reintroduced the legislation, which is dubbed the Contractors and Federal Spending Accountability Act. It remains to be seen whether the bill stands a better chance now that the Dems have taken back control of Congress. Surely, there are powerful interests that would prefer that the various misdeeds of government contractors are not stored in such an easily accessible locale. As POGO’s general counsel, Scott Amey, noted in his prepared remarks this afternoon, “the top 50 contractors spent over $146 million on lobbying” in 2006 and “donated over $15 million to federal campaigns” during the last election cycle.

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