The American Recovery and Reinvestment Act of 2009 (Recovery Act) was signed into law on 17 February, 2009. The Recovery Act was a never seen before effort to stimulate our economy and alleviate the effects of the recession. The Act was an enormous response to an economic crisis/condition not experienced by this country since the Great Depression and included efforts to modernize the nation’s infrastructure, improve energy independence, and stimulate economic growth. The Recovery Act in itself is an admirable effort, however, the ultra dependence on the government procurement/contracting community to implement large chucks of the legislation and has brought tremendous challenges (through new rules and laws) into the area of contract administration. The burdens of the Recovery Act have been enormous for the contract community because of the enormous oversight required of the funds and contracts associated with the Recovery Act itself. Federal Acquisition Regulations (FAR) should never have been burdened with these extensive responsibilities The purpose of the Recovery Act as stated earlier was and is to stimulate the economy through the creation and retention of jobs at the local, state, and national levels. However, instead of the monies being allocated to the states or to responsible agencies to allocate, the federal government (executive office) chose to use the federal contracting process to utilize and expend the funds. On the surface it would appear the federal contracting process would be the perfect vehicle to assist in implementation of the Recovery Act, however, the funds associated with the stimulus package are valued at $787 billion dollars and 165 additional Internal Revenue Service (IRS) laws were written to monitor expenditure of the funds, and numerous Federal Acquisition Regulation Sections (FAR) in many instances were added to or rewritten to incorporate IRS requirements, additional audit requirements, and contract oversight for the expenditure of these funds.
The Recovery Acts places stronger mandates on the use of firm fixed contracts additional and the use of greater open competition. Numerous contracting officers (with ample justification) have become very dependent upon cost-reimbursement and time and material contracts, in concurrence with the use of ID/IQ category contracts. Cost reimbursement and time and material contracts offer administrative flexibility if numerous unknowns exist with performance of a contract and costs cannot easily be estimated (such as a research and development project on a new energy development project). One of the main negations of the enhanced requirement is that extreme pressure has been put on the contract community to expedite all Recovery Act contracts. Additionally, the Recovery Act contracts require an extreme level of transparency and accountability in procurement process which almost always requires a significantly longer contract process. The integrity of the contract process is affected by the new legislation because the government and in turn the taxpayer ultimately wastes excessive dollars by attempting to use fixed-prce contracts in scenarios in which the contract officer does not have adequate time, resources, or employees to correctly gauge costs or to conduct open and fair competitions in such a manner as to solicit appropriate levels of qualified offers. It would appear that though the outward rhetoric says otherwise the primary purpose if the Recovery Act is to spend money without much concern being paid to contract integrity. The Recovery Act has initiated changes at an unprecedented level new changes and additions to the FAR from detailed oversight responsibilities for contracting officers and contracting officer technical representatives (COTR), detailed auditing requirements, incorporating Internal Revenue (IRS) requirements into the FAR, Inspector General responsibilities, Government Accountability Office duties etc. These additional requirements and changes are ultimately to be managed by the respective agencies but just like anything else the responsibilities tend to be pushed downward and they ultimately fall upon the contracting community to implement and manage in the ongoing source of contract administration. For example, the Recovery Act has established an oversight board at the cost of $84 million dollars which has been named the “Recovery Act Accountability and Transparency Board”. The board operates outside of the preview of the acquisition committee and whose primary responsibilities include: 1. Monitoring of Recovery Act contracts and grants to ensure they meet all applicable standards to include purpose of the contract, measures of performance, and if all associated competition requirements have been satisfied. 2. Auditing of Recovery Act funds to evaluate if fraud, waste, and abuse is occurring and if applicable referring the activities to the appropriate agency to correct or take action on.
3. Reviewing if appropriate mechanisms are in place to enable interagency collaboration for Recovery Act funds. In a recent GAO audit of the IRS, the lack of implementation of intensified contract administration and monitoring required by the Recovery Act was placed squarely on the Contracting Officer and COTR’s shoulders. The causes of the problems essentially were the IRS lacked the manpower to keep up with all the oversight requirements required by the Recovery Act. Some of the noted discrepancies and suggested corrective actions were as follows: 1. Inappropriate monitoring to reduce acquisition risks. 2. Identify all IRS employees’ performing COTR related duties and ensure they are formally delegated authority by the responsible CO, adequately trained and certified in accordance with government acquisition requirements.
3. Revaluate the current approach and expand the reviews of COTR contract files to ensure reviews are routinely performed to substantiate relevant, accurate, and complete documentation are maintained and reported for contractor billed expenses. The amount of oversight being added to contract administration is unprecedented. Keep in mind these are not the normal contracting responsibilities required by the FAR in the past but intense detailed oversight. The contracting community is expected to minimize, fraud, waste and abuse in contracting. Procurement offices must be able to and are expected to report data and statistics on the use of noncompetitive contract awards, contract types, recipients of the contracts, amounts of the award, type of projects for which Recovery funds were awarded. Some of these responsibilities include: 1. Have transparent lines of procurement responsibility, authority, and oversight defined and in place. 2. Ensure contracts are well structured by establishing clear requirements prior to expedited award. 3. Award contract competitively. 4. Use fixed price contracts to the maximum extent possible and provide detailed justification if you do not 5. Appoint contract surveillance personal as early as possible, preferably prior to or as soon as contracts are awarded and ensure these personnel have clear guidance and training as to their roles and responsibilities and that there is clear responsibility for approving payments and required reporting. 6. Enforce penalties for companies and individuals that commit severe ethics violations or fail to demonstrate a acceptable performance and refer suspended fraud to the appropriate agency. 7. Coordinate with state and local programs and auditors in the planning and execution of contracts, agreements, and other reviews. The unprecedented level of oversight of contract proposal and contract administration for associated contracts had the contract community in a crux. Solicitations must be advertised to a detailed and unprecedented level, oversight must be maintained and enormous amounts of data gathered for government officials, justifications for non firm fixed contracts must developed outside the normal preview, audits must be conducted, and detailed surveillance of a contractors performance must be monitored. My solution to the problem is simple and very un-complex. Eliminate the super rules for the Recovery Act contracts and utilize the tried and true government contract system. Utilize and enforce the rules that are already in place. In my years in government contracting, if a program was performing badly or exceeding budget limitations, as much blame could be placed on the program managers as on the government contractors and or corporations. The administrative burden being placed on contracting officials is making the government contracting process bureaucratic and inflexible. The dictating types of contracts when and where forces unwise economic decisions and takes away the contracting officers ability to do what is right at the right time. Rather than increasing the level of monitoring and oversight enforce the rules in place already established by the FAR.
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Bibliography
Jackson Kelly PLLC, 4 April 2009, New Regulations Control Procurement of Stimulus Funds Immediately, Government Contracts Monitor, 3 December 2012, http://govtcontractsmonitor.jacksonkelly.com/2009/04/new-regulations-control-procurement-of-stimulus-funds-immediately.html
Recovery Act Projects Slow to Award, Start Due to Federal Requirements, GovCon, 26 February 2010, GovCon, http://blogs.cbh.com/govcon
Jackson Kelly PLLC, 2 Feb 2009, The Stimulus Package: What About Contract Integrity, Government Contracts Monitor, 3 December 2012, http://govtcontractsmonitor.jacksonkelly.com/2009/02/the-stimulus-package-what-about-contract-integrity.html