by CKR
The Washington Post has been doing a good job of covering the various misuses of government contracting. Their latest outlines how Charles Reichers, while waiting to be confirmed as Air Force principal deputy assistant secretary for acquisition, was paid by a supposedly nonprofit corporation. He didn’t do any work for the corporation, but rather for the Air Force.
I’ve experienced the government contracting process from both sides: managing contracts to others working for me and working on contracts to the government. I haven’t blogged on these issues much because it’s hard to know where to begin in today’s morass. What the Washington Post article uncovers is wrong in so many ways, I could probably spend a couple of weeks writing it up. But I won’t. I’ll enumerate, in the order I find stuff in the article and then comment minimally.
Commonwealth Research and its parent company, Concurrent Technologies, are registered with the Internal Revenue Service as tax-exempt charities, even though their primary work is for the Pentagon and other government agencies.The company reported lobbying expenditures of $302,000 for the year ending in June 2006, more than double what it spent on lobbying four years earlier.
Concurrent and its subsidiaries receive grants and contracts for an eclectic variety of other activities, including support of faith-based initiatives and specialized welding work.
Specialists in federal contracting law said Commonwealth Research's arrangement with Riechers may have violated regulations governing how the Air Force is permitted to hire and use contractors, including a prohibition on certain uses of consultants to augment the federal workforce.
The principal deputy assistant secretary for acquisition and management should not be making himself into a glaring example of what not to do with acquisition and management.
"We needed some way to kind of gap me," Riechers said about the temporary job.
The Washington Post article points up the questionable tax-exempt charity status and the inappropriateness of a procurement executive taking such a, er, casual approach to the regulations. I suspect that the charity status is necessary in order for Concurrent to receive government grants. The wide range of services that Concurrent provides is typical of beltway bandits; during the 1980s, when defense contracts were less available, suddenly the defense contractors were experts in environmental remediation and received a pretty penny that way. And there are companies that those of us merely working in a field have never heard of that bid on and win contracts requiring expertise. If they win the contract, they will try to hire the experts or just make do with whoever they’ve got on staff. So perhaps CRI would use a faith-based expert to provide intelligence analysis.
Something that bothered me as I dealt with those contracts in both directions was the question of economy. Back when Ronald Reagan was president and Admiral James Watkins was Secretary of Energy, those of us working at the national laboratories began to be pummeled with “industry can do it better and cheaper.” Taking the sort of rough first-principles approach I had learned both in science and systems studies, I figured that the University of California took only a nominal management fee, much less than a business would expect for profit. I had been exposed to some of the costs per professional at the oil companies, which looked to be about half again the costs at the national labs. All that suggested that industry would be more expensive.
Ah, but they would do things more quickly and efficiently! Or so we were told. And the privatization went on and on and on. Now even the weapons design laboratories are privatized.
Walter Pincus today does some calculations for Blackwater costs. Not surprisingly, Blackwater costs much, much more than does the Army. And Pincus starts from the same, rather obvious, place I started.
It comes down to the simple business equation of every transaction requiring a profit.As privatization moved forward, I had more and more nudges and winks from various corporate sorts who wanted to bid on my Requests for Proposals. It appears that the Federal Acquisition Regulations are now as quaint as the Geneva Conventions.