Janine Wedel - Shadow Elite - How the World's New Power Brokers Undermine Democracy, Government, and the Free Market

FASA and FARA removed many of the traditional competition and oversight mechanisms that had been in place for decades and provided the statutory basis for new kinds of megacontracts, such as the “Multiple Award” Indefinite Delivery/Indefinite Quantity (IDIQ) system, under which an estimated 40 percent of all federal government contracts are now awarded in areas ranging from computer support to analysis of intelligence. (In some functional areas this proportion is much higher. For instance, nearly all contractors in Iraq are working under IDIQ contracts.) Like the euphemisms of politicians obscuring their intentions, the language of these awards is telling: “contracts” that aren’t really contracts; “competitions” without real competition; “task” orders that may sound like small potatoes but can net billions of dollars for the contractor. 49

The stated intention of the “reforms” was a streamlined procurement process that would reduce the time, costs, and bureaucracy incurred in separate purchases and make contracting more efficient. As a result, over the past decade and a half, small contracts often have been replaced by bigger, and frequently open-ended, multiyear, multimillion-and even billion-dollar, and potentially much more lucrative (IDIQ) contracts with a “limited pool of contractors,” as the Acquisition Advisory Panel put it. The changes may, in part, have simplified bureaucracy, but with players on this terrain personalizing bureaucracy, they also reinvented it and helped bring about new institutional forms of governing in which government and business cozily intertwine. The IDIQ contracting system substantially removes public information and transparency from the contracting process and creates conditions that encourage network-based awarding of contracts, off-record deal making, and convoluted lines of authority—all ingredients in the personalization of bureaucracy. 50

Legally, IDIQ contenders engage in “full and open competition.” But IDIQ contracts are not traditional contracts, they are agreements to do business in the future, with the price and scope of work to be determined. “Competitions” for open-ended contracts preapprove contractors for almost indeterminate periods of time (five to ten years, for instance) and money ranging into billions of dollars. When so anointed, contractors’ names appear on a list maintained by a government agency. That agency, and usually other agencies, can turn to the chosen contractors, who now possess what has been called a “hunting license,” to purchase everything from pens to services. The old system required publicly announcing—through posting in the Commerce Business Daily— each solicitation for government work over $25,000, and then allowing companies to compete for it. Under today’s IDIQ system, only competitions for hunting licenses are required to be announced in advance (by posting on a government Web site).

What comes next—after the award of a megacontract—takes place behind closed doors and constitutes a virtual revolution in government procurement. Under the old system, overseers could document the amount of the contract because the amount was, more or less, clear when the contract was awarded. Under the current system, services are contracted in the form of “task orders,” minicontracts that specify particular work assignments. There is no public posting of task orders, so the ability to obtain sub-rosa information is crucial to success. Issuances of task orders occur on an ad hoc basis without prior announcement. For instance, in July 2007, the government awarded a telecommunications IDIQ contract worth $50 billion to twenty-nine companies. Such awards are only the beginning of the day at the hunt. No open bidding will divvy up those billions. With competition off the books, rather than through bureaucratically monitored processes, the deciders are afforded more discretion and subject to less oversight than in the past. Who you know and who you owe are more likely to be decisive. Not surprisingly, since the institution of the IDIQ system, an entire support industry has taken off, replete with trade publications (such as Washington Technology, Federal Computer Week , and Government Computer News ) that highlight new business opportunities and “networking events” that bring together companies and government officials. There, contractors lobby officials who select the contractors they want to do the work. A company can say good-bye to competition for years while collecting millions or even billions of taxpayer dollars. All of this exists mostly out of public view. 51

Not only has the process of determining who gets what been banished to the basement, with only those involved having the facts to question it. But the new system also requires little to be disclosed: Neither the company nor the government agency must make any public announcement or report transactions involving task orders, except that which is reported on a long list in the Federal Procurement Data System (FPDS)—a resource friendly only to government procurement wonks—sometimes months after the fact, long after deals are done.

For example, by August 2008, the Federal Procurement Web site that lists transactions had not posted any transactions for 2007. Thus, not only are important goings-on substantially behind the scenes, but one cannot be sure that reliable data will be made available. The current practices are largely beyond monitoring, let alone real-time accountability. 52

Another practice that has risen sharply over the past decade and a half that makes monitoring even more difficult is the use of IDIQ contracts for interagency acquisition of services. IDIQ contracts are the primary form of interagency contracts. In an interagency contract, the agency that actually needs the contractor’s services, and with whom the contractor will work most closely, isn’t necessarily the legal contracting entity or legally responsible for monitoring the contractor.

The contractor CACI, whose employees allegedly participated in Abu Ghraib prisoner abuse, was working under such a contracting agreement. When the Defense Department, in the midst of a war for which it wasn’t fully prepared, needed personnel, CACI, which had a long collaboration with the department, was well positioned to supply them. CACI officials told GAO investigators that they “marketed their services directly to Army intelligence and logistics officials in Iraq because of relationships they had developed over time.” Contractors such as CACI are not legally authorized to sell goods or services not provided for in their contract. Yet, with realtionships often trumping contracts, that rule is often breached. During their investigation, the inspector general of the Department of Interior (legally, CACI’s monitoring authority) and the General Services Administration (the government agency that manages government properties and purchasing) found that the contract under which CACI supplied interrogators was for technology, including computer integration and data processing work: CACI was not approved to provide interrogation services. 53

The personalization of bureaucracy in the awarding of contracts and task orders is only the beginning. Interagency contracts are vulnerable to diffusion of authority and responsibility, helping to create the mother of all Swiss-cheese bureaucracies. While the Defense Department enlisted the services of CACI and CACI worked for Defense in Iraq, Defense was not legally responsible for CACI. The Department of Interior, an agency better known for its management of national parks, was. (Interior manages some Defense contracts in exchange for a fee.) Interior, not surprisingly, had little capacity to monitor CACI. Moreover, Defense relied on the absentee Interior Department not only to manage the contract but to issue individual task orders. Clearly, the official operational control that would apply through a government chain of command does not necessarily apply to contractors. One result, clearly, is the obfuscation of authority. 54