Giving Taxpayers Their Money’s Worth

Hearing Examines Waste in Federal Contracting

A House Committee today will probe the billions of taxpayer dollars spent in overpaid contracts to poor-performing contractors.

Businesses that are the most efficient, have the highest productivity, and deliver the best product to their customers should be rewarded with customer loyalty, growing business, and expanding profits. Right?

Federal contracting makes up 3 percent of the entire U.S. economy, but these contractors are often ineffective and inefficient in providing their critical services. So why are these businesses repeatedly rewarded with lucrative and often over-priced contracts?

That’s the question that the House Committee on Oversight and Government Reform’s Subcommittee on Government Management, Organization, and Procurement will consider today in a hearing titled “Federal Contracting: Do Poor Performers Keep Winning?”

Earlier this year the Center for American Progress released a report, “A Return to Competitive Contracting: Congress Needs to Clean up the Procurement Process Mess,” that highlights the problem of corruption and lack of competition in the procurement process. The Subcommittee will focus on “the disconnect between the requirement to take past performance seriously and the minimal effects of a poor track record.” This disconnect is a primary symptom of the cronyism that rewards ineffective contractors with billions of taxpayer dollars. The Center’s report is a thorough critique of the broken system.

Contracting expenditures increased by 86 percent between 2000 and 2005, when the federal government awarded $337 billion to private contractors in one year—nearly 40 percent of all federal discretionary spending. In 2005 almost $150 billion went to companies in the form of no-bid contracts, a startling 115 percent increase over the 2000 figure. Led by former Rep. Randy “Duke” Cunningham (R-CA), more than five federal officials have been convicted and sent to jail for corruption directly related to bribery for special treatment in procurement.

One of the most prominent results of corruption and uncompetitive contracts is American taxpayers’ inability to get the best deal from the company best equipped to do the job effectively. Because of this, contracts are awarded to those who participate in corruption or heavy lobbying, regardless of the quality of their past performance.

Given the vast national expenditure on federal contracts and the vital services contractors perform, transparency and responsibility in the procurement process are of the highest importance. Today’s hearing must begin the process of creating a more efficient and competitive federal contracting system.

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