On April 23, 2008, the U.S. House of Representatives passed H.R. 3033, "Contractors and Federal Spending Accountability Act," agreeing by voice vote that GSA would maintain a centralized database of government contractors.  The GSA database would collect information on contract defaults, suspensions, and debarments, as well as "any civil or criminal proceeding, or any administrative proceeding" for which a contractor paid at least $5,000 in restitution, that has been "concluded" by the federal or state governments.  If a contractor committed in a three-year period more than one offense for which it could be debarred, the contracting officer must affirmatively demonstrate the contractor’s responsibility prior to award.

This utopian effort is aimed at the elimination of poor and dishonest performers from government contracting, but, as drafted, will almost certainly have unanticipated consequences.

It is difficult to quibble with a Congressional interest in a procurement system populated by contractors who will be paid for the good work they do supplying and servicing the government.  But implicit in this legislation are the twin assumptions that (a) unaccountable contractors are the system’s biggest threat and (b) the proposed database is a meaningful and fair deterrent to that threat.  Both of these assumptions are wrong.

First, the legislation ignores the incontestable fact that problems beset both sides of the procurement equation.  The Government-wide problems engendered by a shrinking base of experienced federal procurement professionals have been widely discussed and really are not open to debate.  Indeed, the Acquisition Advisory Panel’s final report in January 2007 acknowledged that "successful federal procurement cannot be achieved" without improving the federal acquisition workforce (page 352).  On this score, Congress still has work to do.  See GAO-08-515TH.R. 3033 seems to rest on the proposition that "whipping those [expletive deleted] contractors into shape" is all that is needed to solve our acquisition woes.  It just isn’t so.

Moreover, the "whip" here has a long reach that will leave welts and scars on the innocent and guilty alike and is unlikely in the end to have any meaningful impact on any but the most inconsequential contract awards.

With respect to first of these two points, one needs only a quick tour through H.R. 3033 to appreciate the problems inherent in the legislation.  Any prior "concluded" offense that could have debarred a contractor is to be reported.  So every kooky qui tam relator who extorts a nuisance value settlement will end up as a line item in the GSA database.  The same could pertain each time a contractor innocently neglects to perform or poorly performs any obligation imposed upon it by contract.  A "one-size-fits-all" rule means that whether a contractor incurs a huge fine for violating the International Traffic in Arms Regulation or settles a meritless lawsuit, the penalty is identical.

The good news is that a contractor can post comments to its own entry.  The bad news is that the feature will be sorely needed to offset the damage caused by public accessibility of the GSA database, which may not contain accurate or even relevant information.  Moreover, such widespread public consumption will surely invite harassment and frustrate a contractor’s efforts to redeem its wrongs.  A capable hand might be able, with some modicum of confidentiality, to administer effectively a powerful resource like the database, but the Fourth Estate has never handled negative information relating to contractors with any measure of balance and, as for GSA, it has its own budget and leadership problems, customer-satisfaction problems, and online-ordering problems, among others.  Could Congress not have appointed another gatekeeper?

However the GSA database is run, the mandate will be, "if it’s concluded it’s included."  Even the non-debarrable offense can – but should not – influence award decisions.  For example, a contractor discovers during an audit that for years, the contractor unintentionally improperly accounted for North Carolina’s state and local and use taxes.  The contractor promptly pays its due.  While that oversight would not necessarily determine responsibility under H.R. 3033, will the contracting officer look askance at the contractor’s tax issues?  What if the contracting officer does?  Is this the sort of independent knowledge a source selection authority may properly factor into an award decision?  Is the information included in the database so "close at hand" that source selection authorities can, or even must, take it into account in proposal evaluation?  H.R. 3033 is silent, and places no controls on the information that is collected in the GSA database.

These are a sample of the problems certain to flow from H.R. 3033.  Unfortunately, a similar bill is winding its way to passage in the Senate.  Contractors should be ready to flood the rulemaking authority with questions and demands for clear regulations, and make suggestions that could improve (or diminish) the use of the GSA database.

Authored by:

Bruce Shirk




Daniel J. Marcinak