Lawmakers differ over efforts to increase competition

Earlier this month Sen. Hillary Clinton (D-N.Y.) urged the Senate to tighten rules on large government contracts awarded without competition. On March 12th, Clinton introduced a provision to rein in such “wasteful” and “abusive” contracts.

It is one of many recent attempts in Congress to slow what some see as an increase in noncompetitive contract awards under the Bush administration. Although most capitalist economists agree that full and open competition is ideal in theory, the need for oversight makes the mechanics of the system more complex.

Just days before Clinton debuted her pro-competition measure, several Democrats criticized Sen. John McCain (R-Ariz.) for his alleged role in influencing the Air Force’s competitively awarded $35 billion contract for refueling tankers, won by a consortium led by Europe-based Airbus. The loser was U.S.-based Boeing Co., which has since filed a protest.

McCain opposed a previous Air Force tanker deal with Boeing. He also reportedly urged the Air Force to ignore European subsidies to Airbus despite Boeing’s argument that they helped unfairly lower Airbus’ price. McCain has defended the award as the result of fair and open competition.

However, House Speaker Nancy Pelosi (DCalif.) and Rep. Rahm Emanuel (D-Ill.) blamed McCain for Boeing’s loss. “The person who stopped [the tanker deal] from going to a U.S. company was Sen. McCain,” Emanuel told the Seattle Post-Intelligencer. “And now we are going to send major high-paying jobs overseas.”

Experts say increasing the proportion of contracts awarded with full and open competition presents other challenges. For example, at the Homeland Security Department, 27.2 percent of contracts in 2007 were awarded through full and open competition with two or more bids received, according to the USAspending.gov Web site. Another 20 percent were awarded competitively but with only a single bid received.

Those figures are an improvement from 2006, when DHS awarded 18 percent of contracts with two or more bids and 12 percent with a single bid. In 2005, there were 17 percent with two or more bids and 16 percent with one bid.

The department had greater competition in its first two years, but the percentage has dropped since then. In 2003, 53 percent of the contracts had two or more bids.

DHS has always struggled to make its contracting fully competitive, said Charles Tiefer, professor and government contracts specialist at the University of Baltimore School of Law.

“In the early years, the explanation was that DHS was in an emergency situation,” he said. “Now, five years later, those reasons have lost their credibility.”

Secretary Michael Chertoff has not made procurement reform a priority, Tiefer said, and as a result, DHS continues to exhibit a “shockingly low” level of competition in contracting.

Rep. Henry Waxman (D-Calif.), chairman of the Oversight and Government Reform Committee, conducted a study that found no-bid contracts governmentwide doubled to $103 billion from 2000 to 2006. In 2006, 50 percent of procurement spending was awarded without full and open competition, the study states.

Designing a way to enforce competition has proven to be tricky. Under Clinton’s provision, a parliamentary point of order would be permitted against any spending bill in fiscal 2009 that does not explicitly require an agency’s compliance with competitive contracting rules. The head of each agency would also be required to certify in a sworn affidavit that its decisions comply with open and competitive contracting rules.

A House subcommittee recently heard testimony on three bills that would create a database on contractor performance, sanction contractors that do not pay federal taxes, and require disclosure of executives’ compensation.