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House panel digs deeper into use of contractors

According to testimony, mismanagement of federal projects by private companies is a `systemic problem.'

February 09, 2007|Adam Schreck | Times Staff Writer

WASHINGTON — For years, the federal government has turned to private contractors for jobs that it can't easily do -- building bombers, feeding the troops, even hauling overnight mail.

Now, Democrats in Congress are suggesting that things may have gone too far.

For-profit contractors are no longer responsible just for providing government services, but are playing an increasingly influential role in determining which companies get those contracts and how well they perform.

At a hearing Thursday, the House Oversight and Government Reform Committee took aim at the wide latitude given to contractors involved with multibillion-dollar Department of Homeland Security programs to secure the nation's borders and modernize the Coast Guard's aging fleet.

"There seems to be no task too important to be outsourced to outside contractors," said panel Chairman Henry A. Waxman (D-Los Angeles).

Waxman released a memo prepared by Democratic staff showing that outside contractors made up a majority of the teams involved in writing the contracts for and overseeing the high-tech border security program.

The memo also suggested potential conflicts of interest between Boeing Co., which won the contract to complete the initial phase of the program, and another company involved with the program's oversight.

The memo was released at the third of what promises to be many such hearings by the committee, which is exploring the growing role of for-profit companies in providing government services.

Earlier in the week, committee members pressed the former American administrator in Iraq, L. Paul Bremer III, about what happened to billions of reconstruction dollars flown in after the invasion. This morning, they plan to discuss allegations of fraud and abuse in drug pricing.

In testimony Thursday, Comptroller General David S. Walker warned the panel, "Giving more flexibility and responsibilities to contractors results in more risk to the government and to the taxpayers."

He added that troubles related to the use of outside contractors, such as the apparent mismanagement of the Coast Guard's widely criticized Integrated Deepwater System program, were part of a "systemic problem throughout the entire federal government."

Walker, who heads the Government Accountability Office, the independent investigative arm of Congress, emphasized that many outside contractors did good work, and cautioned against casting all contractors in a bad light because of apparent mismanagement by some. But, he said, government and corporate interests do differ.

"Civil servants have the duty of loyalty to the greater good. The private sector, which is the engine of growth and innovation in this economy, has a duty of loyalty to its shareholders," he said. "Ultimately, responsibility and accountability has to come from civil servants."

The Coast Guard's $24-billion, 25-year Deepwater program has been dogged by allegations of mismanagement and waste. Critics have pointed to structural flaws in the program's flagship national security cutters and an overall lack of external oversight.

Waxman called the program "a textbook case for what not to do," and Rep. Stephen F. Lynch (D-Mass.) likened it to Boston's problem-plagued Big Dig highway and tunnel project, which suffered from ballooning costs and poor construction.

"If this was the private sector, I tell you, there'd be some people getting their walking papers," Lynch said. "Someone's got to be held responsible."

Although many committee members expressed outrage at the contractors' handling of the program, Rep. John L. Mica (R-Fla.) disputed suggestions that the government could have done anything more efficiently.

"This isn't as bad as this all sounds," he said.

The border security plan, known as the Secure Border Initiative or SBInet, is to create a "virtual fence" along the nation's northern and southern frontiers using, among other equipment, sensors and cameras mounted on towers. Boeing won an initial three-year contract worth $67 million to install a 28-mile stretch near Tucson, and could have the contract extended to more than $2 billion after that.

Richard L. Skinner, inspector general of the Department of Homeland Security, said Thursday that the cost to install the system along the entire southwest border could be $8 billion.

"The costs are going to rise as we go on if we don't monitor them carefully," he warned. House Democrats contend the cost for the entire system could eventually reach $30 billion.

adam.schreck@latimes.com

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