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As the National Defense Authorization Act conferees once again wrestle with whether to subject government contractors to more stringent disclosure of past labor law violations, some perspective is necessary. Dating back to the American Revolution, Congress has justifiably sought to curtail waste, fraud, and abuse concerning taxpayer funds. From passage of the False Claims Act of 1863 countering corruption during the Civil War to the Competition in Contracting Act of 1984 requiring greater fairness and transparency in contract awards, Congress has sought to maintain the public trust.
But reforms of an earlier era are often the impediment to present day progress. The unintended consequence of requiring companies to abide by an ever-expanding array of arcane, typically antiquated, and static government regulations translates into higher acquisition costs and increased divergence with rapidly evolving commercial best practices. While the intent of reforms over the years has been to improve the accountability of specific procurement actions, the acquisition system as a whole has paid the price for the lack of modernization in procurement. As recently noted by Army Chief of Staff General Mark Milley, “Right now, the Army’s structure — the institution, the processes, the organization is not coherent to deliver effective capabilities for the future.”
Before the widespread availability of information technology to speed and streamline commercial operations, federal agencies required companies who bid on contracts to provide evidence of ability to perform within the rigorous constraints of acquisition requirements. In the pre-IT era, agencies had no alternative other than demand bidders provide mountains of paperwork to demonstrate such competencies. But over the past two decades, the IT revolution has fundamentally transformed American business culture. Transparency, internal compliance, due diligence, and corporate responsibility are at the forefront of this change.
While senior agency acquisition leaders decry the lack of competition on recent major programs, fewer bidders reflect the internal decision-making of companies to avoid the financial and public relations risks associated with winning contracts that are not fully executable. Indeed, the history of government acquisition is rife with escalating requirements, design modifications, budget cuts, and even termination of otherwise successful programs.
Despite the shifts in the contracting marketplace, Congress is still seeking to apply age-old remedies – like blacklisting – to a new reality. Rather than declaring victory and walking off the field, some in Congress seek to isolate the contractor community further by imposing more burdensome rules and regulations. Ironically, this comes at a time when Congress is also mulling acquisition reform legislation.
The remarkable dearth of contracting scandals over the past two decades is not primarily attributable to greater oversight through Inspector General investigations or Government Accountability Office audits, but largely due to changes in commercial sector practices. The advances in the way American companies innovate, manufacture, and deliver goods and services is something the U.S. government should leverage by reducing, not increasing, agency-unique burdens in its contracting system.