[Senate Hearing 109-873]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 109-873
 
                      NOMINATION OF PAUL A. DENETT

=======================================================================



                                HEARING

                               before the

                              COMMITTEE ON
               HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE


                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                                 ON THE

   NOMINATION OF PAUL A. DENETT TO BE ADMINISTRATOR OF THE OFFICE OF 
      FEDERAL PROCUREMENT POLICY, OFFICE OF MANAGEMENT AND BUDGET


                               __________

                             JUNE 20, 2006

                               __________

        Available via http://www.access.gpo.gov/congress/senate

                       Printed for the use of the
        Committee on Homeland Security and Governmental Affairs




                      U.S. GOVERNMENT PRINTING OFFICE
29-505 PDF                    WASHINGTON  :  2007
---------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government
Printing Office Internet:  bookstore.gpo.gov Phone:  toll free (866)
512-1800; DC area (202) 512-1800 Fax: (202)512-2250 Mail: Stop SSOP,
Washington, DC 20402-0001 



        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

                   SUSAN M. COLLINS, Maine, Chairman
TED STEVENS, Alaska                  JOSEPH I. LIEBERMAN, Connecticut
GEORGE V. VOINOVICH, Ohio            CARL LEVIN, Michigan
NORM COLEMAN, Minnesota              DANIEL K. AKAKA, Hawaii
TOM COBURN, Oklahoma                 THOMAS R. CARPER, Delaware
LINCOLN D. CHAFEE, Rhode Island      MARK DAYTON, Minnesota
ROBERT F. BENNETT, Utah              FRANK LAUTENBERG, New Jersey
PETE V. DOMENICI, New Mexico         MARK PRYOR, Arkansas
JOHN W. WARNER, Virginia

           Michael D. Bopp, Staff Director and Chief Counsel
            Jennifer A. Hemingway, Professional Staff Member
             Michael L. Alexander, Minority Staff Director
         Adam R. Sedgewick, Minority Professional Staff Member
                  Trina Driessnack Tyrer, Chief Clerk



                            C O N T E N T S

                                 ------                                
Opening statements:
                                                                   Page
    Senator Collins..............................................     1
    Senator Warner...............................................     1
    Senator Coburn...............................................     6
Prepared statements:
    Senator Allen................................................     7
    Senator Lieberman............................................    19

                                WITNESS
                         Tuesday, June 20, 2006

Paul A. Denett to be Administrator of the Office of Federal 
  Procurement Policy, Office of Management and Budget:
    Testimony....................................................     8
    Prepared statement...........................................    21
    Biographical and professional information....................    23
    Responses to pre-hearing questions...........................    29
    Letter from U.S. Office of Government Ethics.................    50
    Responses to post-hearing questions..........................    51


                      NOMINATION OF PAUL A. DENETT

                              ----------                              


                         TUESDAY, JUNE 20, 2006

                                       U.S. Senate,
                           Committee on Homeland Security  
                                  and Governmental Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10 a.m., in room 
342, Dirksen Senate Office Building, Hon. Susan M. Collins, 
Chairman of the Committee, presiding.
    Present: Senators Collins, Coburn, and Warner.

              OPENING STATEMENT OF SENATOR COLLINS

    Chairman Collins. The Committee will come to order. Good 
morning. Today the Committee will consider the nomination of 
Paul Denett to be the Administrator of the Office of Federal 
Procurement Policy. I am going to withhold on my opening 
statement in order to recognize our distinguished colleague, a 
Member of this Committee and the Chairman of the Armed Services 
Committee, Senator Warner.
    Senator Warner is, of course, managing the Defense 
Authorization Bill on the Senate floor, and I know that they 
are waiting for him so that they can resume the debate. So, 
without further delay, Senator Warner, we would recognize you 
for the purpose of introducing the nominee.

TESTIMONY OF THE HON. JOHN WARNER, U.S. SENATOR FROM THE STATE 
                          OF VIRGINIA

    Senator Warner. Madam Chairman, I appreciate your courtesy 
as always, and the bill comes up momentarily, and I am anxious 
to get there. I wanted to be here because this is one of the 
most important posts in our overall Executive Branch, and I 
think the President has chosen very wisely. Mr. Denett is an 
absolutely outstanding individual.
    So, I am pleased to introduce to you, and other Members of 
the Committee, Paul Denett, a fellow Virginian, nominated to 
serve as the Administrator of the Office of Federal Procurement 
Policy. He is joined today by his family, and I would ask that, 
at this time, he introduce his family.
    Chairman Collins. Thank you. Mr. Denett.
    Mr. Denett. Thank you. With me today is my mother, Irene 
Denett, from Biddeford, Maine, which I like to tack on. My 
wife, Lucy Denett. My son, Michael Denett. And my brother-in-
law, Howard Morton. And his wife, my sister, Lucille Morton.
    Chairman Collins. We welcome all of your family members 
this morning.
    Mr. Denett. Thank you.
    Senator Warner. I thank the Chairman.
    The job of the Administrator of the Office of Federal 
Procurement Policy is a critical one, tasked with the 
responsibility of overseeing the development and enforcement of 
sound policies and practices Federal agencies use to acquire 
goods and services. The Administrator is responsibility for 
ensuring that the Federal acquisition system provides the best 
possible value to the taxpayer.
    As you know, as a member of the Armed Services Committee on 
which you and I serve, that Committee, next year, presumably 
under the Chairmanship of Senator McCain, will spend an 
extensive period of time on the review of procurement policy 
and working with you, Mr. Denett.
    This nominee has extensive procurement experience in the 
Federal Government and the private industry. He reminded me 
this morning that his first job was with the Department of the 
Navy when I was Secretary. I asked him if I treated him well, 
and he said, fortunately, he never met me the whole time I was 
there.
    [Laughter.]
    Senator Warner. He kept out of my way.
    Subsequent to earning his Bachelor of Arts at Nasson 
College in 1968, the nominee dedicated 33 years to the Federal 
Procurement, serving in a variety of contracting positions at 
five cabinet-level agencies. One of the many highlights from 
his public service record is his work with the Department of 
the Interior. From 1993 to 2001, he served as Director of 
Administration and Senior Procurement Executive in the Office 
of the Secretary for the Department of the Interior. In these 
positions, he managed over 900 employees in the areas of 
acquisition, grants, and property management.
    While a senior executive at the Interior, the nominee was 
the recipient of the Presidential Rank Award for his 
outstanding leadership and strong commitment to public service
    In addition to Federal Government experience, he has 
considerable experience in the private sector. Since 2003, he 
has served as Vice President of Contracting Programs at ESI 
International in Arlington, Virginia. Having worked in the 
Federal Government and the private industry, the nominee has a 
solid understanding of all sides of the procurement issues.
    We are very fortunate, Madam Chairman, to have this fine 
individual offer again his services as a public servant. I wish 
him well.
    You are on your own. [Laughter.]
    [The prepared statement of Senator Warner follows:
               PREPARED STATEMENT OF SENATOR JOHN WARNER
    Madam Chairman and my other distinguished colleagues on the 
Senate's Homeland Security and Governmental Affairs Committee, I thank 
you for holding this confirmation hearing today.
    Today, I am pleased to introduce to you Paul Denett, a fellow 
Virginian, who has been nominated to serve as the Administrator of the 
Office of Federal Procurement Policy. He is joined today by his family, 
including his wife, Lucy, his son, Michael, his sister, Lucille, and 
his brother-in-law, Howard Morton.
    The job of Administrator of the Office of Federal Procurement 
Policy is a critical one, tasked with the responsibility of overseeing 
the development and enforcement of sound policies and practices Federal 
agencies use to acquire goods and services. Thus, the Administrator is 
responsible for ensuring that the Federal acquisition system provides 
the best possible value to the taxpayer.
    The nominee has extensive procurement experience in the Federal 
Government and the private industry. Subsequent to earning his Bachelor 
of Arts at Nasson College in 1968, Mr. Denett has dedicated 33 years to 
the Federal Government, serving in a variety of contracting positions 
at five cabinet-level agencies, including senior procurement positions.
    One of the many highlights from his public service record is his 
work at the Department of the Interior. From 1993 to 2001, Mr. Denett 
served as the Director of Administration and Senior Procurement 
Executive in the Office of the Secretary for the Department of the 
Interior. In these positions, he managed over 900 employees in the 
areas of acquisition, grants, and property management. While a senior 
executive at Interior, he was the recipient of the Presidential Rank 
Award for his outstanding leadership and strong commitment to public 
service.
    In addition to Federal Government experience, he has considerable 
experience in the private sector with contracting. Since 2003, he has 
served as Vice President of Contracting Programs at ESI International 
in Arlington, Virginia. Having worked in the government and private 
industry, Mr. Denett has a solid understanding of all sides of the 
procurement issue.
    Madam Chairman, obviously, Mr. Denett is highly qualified to serve 
as the Administrator of the Office of Federal Procurement Policy. I 
support his nomination and look forward to the Committee reporting out 
his nomination favorably.

    Chairman Collins. Thank you, Senator. I look forward to 
joining you on the Senate floor, and I very much appreciate 
your taking the time to be here this morning.
    We will now resume with the regular order of this hearing 
and I will resume my opening statement.
    The Federal Government spends approximately $350 billion 
annually for a wide range of goods and services purchased from 
the private sector. The Office of Federal Procurement Policy, 
known as OFPP, plays a central role in shaping the policies and 
practices Federal agencies use to acquire goods and services. 
In doing so, the OFPP has an obligation to ensure that the 
Federal acquisition process promotes the economy, efficiency, 
and effectiveness that provide the best value to taxpayers.
    Fulfilling that role and meeting that obligation present a 
challenge that grows ever more complex. It requires an 
administrator dedicated to the broad principles of sustaining a 
skilled acquisition workforce, making consistent and effective 
use of competition to harness market forces, developing 
contracts that reflect the government's buying power, and 
improving our data systems so that Federal managers have the 
information they need to evaluate results and to plan 
effectively.
    There are specific issues that I want to highlight this 
morning. First, although progress has been made, we must 
continue to look for ways to make Federal contracting more 
accessible to smaller businesses. Right now many small business 
owners find it to be a daunting prospect to try to do business 
with the Federal Government. We must do this not merely for the 
sake of small business, although the continued growth of this 
sector is vital to our Nation's economy, we must do this 
because it is in the Federal Government's interest to ensure 
that a large pool of contractors exists for any given item or 
service to ensure robust competition.
    If many small businesses are excluded from this process, 
then the government is losing out on potentially higher quality 
and lower cost goods and services. Greater competition leads to 
lower prices and higher quality for the American taxpayer. 
Simply choosing the same proven contractors over and over again 
may be a good short-term strategy for a beleaguered contract 
officer, but failing to take into account the impact of such a 
practice on the pool of businesses willing and capable of doing 
business with the Federal Government can lead to a smaller 
contractor base undisciplined by market forces.
    The second concern is maintaining a highly trained and 
motivated acquisition workforce. This is a challenge as the 
procurement workforce ages. Those who make the purchasing 
decisions for the Federal Government have considerable power 
and responsibility. They are on the front lines of guarding 
against waste, fraud, and abuse. As many of this Committee's 
and Senator Coburn's oversight Subcommittee's hearings have 
made clear, the taxpayer pays the price when front-line defense 
fails.
    Our investigation into the misuse of government purchase 
cards also revealed weaknesses in the acquisition workforce. 
Whether outright fraud or merely failure to make purchases at 
the best previously negotiated price, the lack of effective 
financial controls squanders precious financial resources and 
damages the public confidence in government.
    The Purchase Card Waste Elimination Act that I introduced 
and that the Senate passed 2 weeks ago mandates that the Office 
of Management and Budget create guidelines to assist agencies 
in improving their management in government-wide purchase cards 
for making micro-purchases. The OFPP will be the entity 
responsible for seeing that these internal controls are in 
place.
    Third, I am concerned that the most recent update of the 
Government Accountability Office's high-risk list includes 
interagency contracting, largely because of unclear lines of 
responsibility between customer agencies and servicing 
agencies. If government agencies cannot do business with one 
another in a way that is effective and efficient, the prospects 
for doing business properly and efficiently with the private 
sector are hardly encouraging.
    Fourth, the Committee's investigation into Hurricane 
Katrina exposed an urgent need to reform the emergency 
procurement process. What we found, and what Senator Coburn has 
found, as well, are numerous examples of layering of contracts 
where the prime contractors receive one price from the Federal 
Government and the person actually doing the work is receiving 
only a fraction of that price. That either means that we are 
paying way too much for the service or that the person that is 
ultimately doing the work is not getting a fair price. Either 
is not an acceptable outcome.
    The lack of coordination during Hurricane Katrina both 
prolonged the suffering of the storm's victims and contributed 
to unacceptable and massive waste, and it continues to impede 
the recovery today. I am very interested in hearing the 
nominee's views on how OFPP can better coordinate efforts in 
this area and improve the effectiveness of procurement in times 
of emergency.
    And finally, throughout government, there needs to be much 
more emphasis on full and open competition to procure goods and 
services. This is an issue that I have worked on for many 
years. When I was a young staffer for this Committee, decades 
ago, we wrote the Competition and Contracting Act. Senator Bill 
Cohen was the sponsor of that bill. I see that Act being 
circumvented or curtailed far too often.
    Senator Warner has already gone through the nominee's 
significant private and public sector experience, so I am going 
to submit that final part of my statement for the record. I do 
want to emphasize that his mother, who is here today, is from 
Biddeford, Maine, so I want to commend Mr. Denett for his wise 
choice in mothers----
    [Laughter.]
    As well as welcome him to the Committee today.
    [The prepared statement of Senator Collins follows:]
             OPENING STATEMENT OF SENATOR SUSAN M. COLLINS
    Today the Committee will consider the nomination of Paul Denett to 
be Administrator for Federal Procurement Policy.
    The Federal Government spends approximately $350 billion annually 
for a wide range of goods and services purchased from the private 
sector. The Office of Federal Procurement Policy plays a central role 
in shaping the policies and practices Federal agencies use to acquire 
the goods and services they need to carry out their responsibilities. 
In doing so, the OFPP has an obligation to ensure that the Federal 
acquisition system promotes the economy, efficiency, and effectiveness 
that provide the best value to taxpayers.
    Fulfilling that role and meeting that obligation present a 
challenge that grows ever more complex. It requires an administrator 
dedicated to the broad principles of sustaining a skilled acquisition 
workforce, making consistent and effective use of competition, 
developing contracts that reflect the government's buying power, and 
improving our data systems so that Federal managers have the 
information they need to evaluate results and to plan effectively.
    There are specific issues that continue to concern me. First, 
although progress is being made, we must continue to look for ways to 
make Federal contracting more accessible to small businesses. We must 
do this not merely for the sake of small business, although the 
continued growth of this sector is vital to our Nation's economy. It is 
also in the Federal Government's best interest to ensure that a large 
pool of contractors exists for any given item or service to ensure 
robust competition.
    Greater competition leads to lower prices and higher quality for 
the American taxpayer. Simply choosing the same proven contractors over 
and over may be a good short-term strategy for a beleaguered contract 
officer, but failing to take into account the impact of such a practice 
on the pool of businesses willing and capable of doing business with 
the Federal Government can lead to a smaller contractor base, 
undisciplined by market forces.
    Second, maintaining a highly trained and motivated acquisition 
workforce remains a challenge as the procurement workforce ages. Those 
who make the purchasing decisions for the Federal Government have 
considerable power and responsibility. They are on the front lines of 
guarding against waste, fraud, and abuse. As many of the Committee's 
oversight hearings have made clear, the taxpayers pay the price when 
the front-line defense fails.
    Our investigation into the misuse of government purchase cards also 
revealed weaknesses within the acquisition workforce. Whether outright 
fraud or merely failure to make purchases at the best, previously 
negotiated price, the lack of effective financial controls squanders 
precious financial resources and damages the public's confidence in 
government. The Purchase Card Waste Elimination Act that I introduced, 
and which the Senate passed two weeks ago, mandates that the Office of 
Management and Budget create guidelines to assist executive agencies in 
improving the management of government-wide commercial purchase cards 
for making micro-purchases. The OFPP will be responsible for seeing 
that the necessary internal controls are in place to ensure that those 
guidelines are followed.
    Third, I am concerned that the most recent update of the Government 
Accountability Office's high-risk list includes interagency 
contracting, largely because of unclear lines of responsibility between 
customer agencies and servicing agencies. If government agencies cannot 
do business with one another in a way that is effective and efficient, 
the prospects for doing business properly with the private sector are 
hardly encouraging.
    Fourth, the Committee's investigation of Hurricane Katrina exposed 
an urgent need to reform the emergency procurement process. The lack of 
such coordination during Hurricane Katrina both prolonged the suffering 
of the storm's victims and contributed to massive and unacceptable 
waste. I am very interested in hearing Mr. Denett's views on how the 
OFPP can better coordinate efforts to develop interagency contracting 
plans that reduce duplication of effort and improve the effectiveness 
of procurement in times of emergency.
    And, finally, throughout government, there needs to be more 
emphasis on the use of full and open competition to procure goods and 
services.
    Paul Denett brings significant private- and public-sector 
experience to this nomination. Since 2003, he has served as Vice 
President of Contracting Programs at ESI International, where he has 
focused on providing training to Federal employees and their private 
sector counterparts in contract and project management. Mr. Denett 
previously held several senior contract management positions at the 
Departments of Interior, Treasury, Agriculture, and Defense. He has 
also served as vice chairman of the government-wide Procurement 
Executives Council, a precursor to the Federal Acquisition Council. Mr. 
Denett received several awards during his government career, including 
a Presidential Rank Award in 1995.
    Mr. Denett earned a Master of Science in Administration degree with 
an emphasis in procurement and contracts from The George Washington 
University. He holds a Bachelor of Arts degree from Nasson College in 
Maine. In addition, his mother is from Biddeford, Maine. I commend Mr. 
Denett for his wise choice in mothers and welcome him to the Committee.

    Chairman Collins. Senator Coburn.

              OPENING STATEMENT OF SENATOR COBURN

    Senator Coburn. Thank you, Madam Chairman.
    This is an issue--and the responsibility Mr. Denett is 
going to have is tremendous. We are having our 38th hearing 
today in terms of looking at spending and waste. There are some 
things that I think the American people have no idea that are 
going on.
    First of all, the Federal Government is not getting the 
best price. Most of the time we are not getting the best price, 
but we cannot really know that because we do not follow it to 
see if we got the best price. Nobody is checking to see if we 
got the best price. GSA does not know, the contracting agencies 
do not know.
    Second, too often there are no specific performance 
requirements in the contracts. And if there are, they are not 
available and they are not measured.
    Third, there is very poor contract oversight by us, as a 
body, as well as within the agencies, which ends up creating 
opportunities for mischief.
    Fourth, performance bonuses. The above two problems that I 
talked about, lacking performance indicators and poor 
oversight, lead to the problem of non-performing contracts. We 
end up paying performance bonuses on contracts that did not 
meet the performance requirements because we cannot measure it 
or we do not measure it.
    Also, as you alluded to, there are sole source contracts, 
both in terms of Iraq reconstruction and Hurricanes Katrina and 
Rita. And many of these are cost plus. The motivation behind 
those contracts are: The more money you spend, the more money 
you make. It is not about the objective of securing the end 
result.
    Finally, there is minimal transparency in this country. We 
are going to have a hearing this afternoon, asking why the 
United Nations does not have transparency in their contracting, 
but we really have to ask those questions of the United Nations 
with one arm tied behind our back because we do not have 
transparency. Myself and Senator Obama and a large group of--a 
bipartisan bill is the Federal Funding Accountability and 
Transparency Act, where all these contracts go online to where 
the American people get oversight of them, as well as us. What 
are we buying, what are we paying for it, and who are we paying 
it to, and what are the requirements and performance on that?
    I value the contracting officers and procurement officers 
we have in this country. I know they are stretched in a great 
many details. And, to a great extent, I think we have to give 
them the resources, one, but we also have to set up the systems 
that are necessary so that we can truly measure performance. We 
can know that we are getting the best price. We eliminate cost 
plus and no bid contracts. And we get down to preserving the 
moneys that we have.
    We are running out of money. The budget crunch that we are 
going to be under--in 9 short years, 81 percent of the budget 
will be Medicare, Medicaid, Social Security, and interest. That 
means 19 percent of the budget is for everything else that we 
do. That is an untenable position, and we have to start now by 
making sure that we make wise choices.
    First of all, let me congratulate you on your nomination. 
We had a good visit in my office, and I look forward to your 
testimony today.
    Thank you, Madam Chairman.
    Chairman Collins. Thank you, Senator.
    I want to note for the record that Senator Allen has also 
submitted a statement in support of Mr. Denett, and I would ask 
it that be made part of the hearing record at this point.
    [The prepared statement of Senator Allen follows:]
                   STATEMENT OF SENATOR GEORGE ALLEN
    Madam Chairman and Members of the Committee, it gives me great 
pleasure to introduce Paul A. Denett, the President's nominee to serve 
as the Administrator for Federal Procurement Policy (OFPP) in the 
Office of Management and Budget. I think you will quickly discover that 
Paul's distinguished background in acquisition makes him a perfect 
choice to serve as Administrator.
    Congress established OFPP in 1974 to ensure the policies and 
practices our Federal agencies use for buying goods and services to 
meet their varied missions are efficient and effective. This 
responsibility is of considerable consequence. Last year, the Federal 
Government spent more than $340 billion on goods and services, 
including major weapon systems to support the war on terrorism and 
basic humanitarian assistance to help our citizens recover from natural 
disasters. We must have a solid acquisition system to deliver the cost-
effective, quality service taxpayers expect and deserve from our 
government.
    I am confident that Paul will provide the type of leadership that 
is required to serve as head of OFPP. A longtime career procurement 
professional, Paul possesses the insight and determination to help our 
agencies meet the many acquisition challenges of the 21st Century. He 
is widely recognized as an expert in Federal contracting, having spent 
more than 35 years in the Federal acquisition community, including 
senior level positions at four cabinet agencies and the private sector. 
For many years, Paul served as the Director of Administration in the 
Office of the Secretary for the Department of the Interior (DOI), where 
he managed 900 employees in the areas of acquisition, grants, and 
property management. He also served as a Vice Chairman of the 
Procurement Executives Council, a high-level body of senior agency 
acquisition officials that was a predecessor to the Chief Acquisition 
Officers Council. Over the years, Paul has received many prestigious 
awards to recognize his accomplishments as an acquisition executive.
    It is no surprise that Paul is highly regarded by the acquisition 
workforce. Throughout his career, he has taken a strong personal 
interest in making sure our contracting professionals have the skills 
and resources they need to perform at their best. He laid the 
foundation for the first government-wide acquisition intern program to 
attract talented young professionals to contracting. In addition, he 
established a nationwide university at DOI that more than doubled the 
amount of training provided to the Department's acquisition employees.
    I am proud to call Paul Denett a fellow Virginian. The acquisition 
community and our taxpayers need the wisdom and leadership Paul would 
provide as Administrator. They will also be well served by his high 
levels of personal integrity and honesty--qualities that lie at the 
heart of our acquisition system. I urge you to act quickly and 
favorably on Paul's nomination.

    Chairman Collins. Mr. Denett has filed responses to the 
biographical and financial questionnaire, answered pre-hearing 
questions submitted by this Committee, and had his financial 
statements reviewed by the Office of Government Ethics.
    Without objection, this information will also be made part 
of the hearing record, with the exception of the financial 
data, which are on file and available for public inspection in 
the Committee's office.
    Our Committee's rules require that all witnesses at 
nomination hearings give their testimony under oath. Mr. 
Denett, would you please stand and raise your right hand?
    Do you swear the testimony you are about to give the 
Committee will be the truth, the whole truth, and nothing but 
the truth, so help you, God?
    Mr. Denett. I do.
    Chairman Collins. Please be seated. I would ask that you 
proceed with your statement at this time.

TESTIMONY OF PAUL A. DENETT,\1\ TO BE ADMINISTRATOR FOR FEDERAL 
      PROCUREMENT POLICY, OFFICE OF MANAGEMENT AND BUDGET

    Mr. Denett. Thank you. I would like to thank John Warner 
for coming in and introducing me. I know his schedule is busy, 
and I really appreciate it and admire Senator Warner.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Denett appears in the Appendix on 
page 21.
---------------------------------------------------------------------------
    I also thank Senator Allen, for getting his remarks into 
the record.
    Thank you, Madam Chairman. And thank you to Ranking Member 
Lieberman, who cannot be with us today, and Members of the 
Committee.
    I am honored to appear before you today as the President's 
nominee to serve as Administrator for Federal Procurement 
Policy at the Office of Management and Budget. I am excited to 
be considered for this position and by the opportunity to help 
the Federal acquisition workforce deliver the best value and 
results for our taxpayers.
    I also want to thank the Members of the Committee who met 
with me in advance of today's hearing. Our meetings allowed me 
to gain a better appreciation of their priorities and thoughts 
for improving the acquisition system.
    Thank you to my mother, Irene Denett, from Biddeford, 
Maine, who provided me with some Maine common sense.
    A special thank you to my wife, Lucy, an Italian-born New 
Jersey girl whose constant love and support enable me to make 
this commitment to public service if confirmed.
    Over the years, I have developed a great appreciation for 
the broad and important statutory responsibility assigned to 
the Office of Federal Procurement Policy, the Executive 
Branch's office for government-wide acquisition policy. I have 
devoted my entire career, which spans more than 35 years, to 
Federal acquisition matters. Most of these years were spent in 
Federal service as a career official at four different cabinet 
agencies in both operations and policy positions.
    After leaving Federal service several years ago, I spent 
time in the private sector to learn about the procurement 
process from a vendor's perspective. These first-hand 
experiences have helped me understand on many levels the 
importance of having effective acquisition policies and 
practices.
    If confirmed, I welcome the opportunity to return to 
Federal service as OFPP Administrator, where I would leverage 
my experience to shape policies and practices that facilitate 
the efficient and effective delivery of goods and services on 
behalf of our taxpayers. Our acquisition workforce has faced 
unprecedented challenges over the last several years, due in 
large part to the ongoing War on Terror and recovery from the 
largest natural disaster in our Nation's history. These 
challenges provide important reminders of the close connection 
between an effective acquisition system and an agency's ability 
to deliver effective results.
    If confirmed as Administrator, I would work with Congress 
and the agencies to ensure that the acquisition workforce is 
well equipped. Agencies must identify short and long-term 
skills requirements and hiring needs. Training must be tailored 
to the acquisition skills demanded in today's environment and 
supplemented with development programs, including mentoring and 
rotational assignments that help employees obtain the 
competencies required to meet the increasingly complex 
acquisition challenges.
    We must promote programs, such as procurement professional 
interns, that attract and top talent, not just at the entry 
level, but at mid-level career positions, as well. Agencies 
must plan and operate more effectively in emergency situations. 
We must improve interagency communications and information 
available on pre-positioned contracts to reduce duplication of 
effort and improve the effectiveness of agency emergency 
preparedness.
    Agencies need to be aware of existing emergency procurement 
flexibilities, situation-specific authorities, and best 
practices for mitigating risk throughout the acquisition 
process. Increased attention should be given to contract 
management. We must ensure contractors make good on their 
commitments and are held accountable for results. Contracts 
must have clear performance standards and agencies must 
dedicate sufficient resources to contract administration to 
evaluate if contract work is meeting agency needs.
    We need greater clarity, transparency, and accountability 
throughout the contract management process, as well as a timely 
and accurate procurement data system. Competitive sourcing 
should be used in a reasonable and responsible manner. A 
public-private competition that is carefully planned and 
tailored to the needs of the agency can serve as a catalyst to 
implement better business processes and cost savings measures. 
Competition must be applied in a fair and transparent manner, 
and agencies must track implementation of completed 
competitions to evaluate results.
    It has been a privilege to meet many of you and your staffs 
over the past several weeks. If confirmed as Administrator, I 
will look forward to working with you and other Members of 
Congress to build a world-class acquisition system that garners 
the confidence of our taxpayers by consistently delivering 
effective, efficient, and ethical contracting service.
    Thank you again for allowing me to appear before you today 
and for considering my nomination to serve as OFPP 
Administrator. This concludes my prepared remarks. I look 
forward to hearing your input, and I am pleased to answer any 
questions you may have.
    Chairman Collins. Thank you, Mr. Denett. We will begin with 
three standard questions that we ask of all nominees for the 
record.
    First, is there anything that you are aware of in your 
background which might present a conflict of interest with the 
duties of the Office to which you have been nominated?
    Mr. Denett. No.
    Chairman Collins. Second, do you know of anything personal 
or otherwise that would, in any way, prevent you from fully and 
honorably discharging the responsibilities of this office?
    Mr. Denett. No.
    Chairman Collins. And third, do you agree, without 
reservation, to respond to any reasonable summons to appear and 
testify before any duly constituted committee of Congress if 
you are confirmed?
    Mr. Denett. Yes. I do.
    Chairman Collins. Thank you. I am now going to begin our 
first round of questions, limited to 7 minutes each. We will do 
a second round, as well.
    Mr. Denett, I mentioned in my opening remarks my concern 
about the Federal Government's excessive use of very large sole 
source contracts. We saw it in the wake of Hurricanes Katrina 
and Rita, and we have seen it in Iraq with the reconstruction 
funding. I want to focus particularly on the FEMA contracts.
    In the aftermath of the hurricanes, FEMA awarded four large 
sole source contracts to provide temporary housing. Originally, 
these big four contracts were valued at $100 million each. 
Then, in the fall of 2005, FEMA raised the ceilings of each of 
these four contracts to $500 million. In testimony before this 
Committee, where I and several other Members expressed concern 
about it, the then-acting Director of FEMA, who has since been 
confirmed, promised to this Committee that FEMA would re-
compete the requirements covered by these contracts, but 
unfortunately, that is not what happened.
    Instead, some of the peripheral requirements covered by the 
contracts were stripped off and awarded competitively to small 
and locally owned businesses, while the main portion of the 
work continued to be done by those four large firms. Then, in 
February of this year, the value of two of these big four 
contracts was again raised. The largest is now valued at $1.2 
billion.
    So, a contract that was originally for $100 million and was 
awarded without competition now has a ceiling of $1.2 billion. 
I think we all ought to be able to agree that awarding nearly 
$3 billion in sole source contracts is not the right model for 
the Federal Government, even during a catastrophe.
    I do not accept the concepts that either we get essential 
goods and services out quickly to those in dire need or we do 
competitive contracting. You can negotiate on the shelf 
contracts that you can use in the event of an emergency. There 
are lots of other ways around this problem.
    What are your comments on the use of sole source 
contracting, which is really a misnomer because these are not 
sole source? They really are noncompetitive contracts, when 
there were alternative sources available. What are your 
comments with regard to this specific case, and what will you 
do to promote the use of full and open competition, even in 
dealing with disasters?
    Mr. Denett. Well, for the disasters that you had mentioned, 
Senator Cohen, earlier, and when I was a practicing contracting 
person, we set very aggressive competitive goals and were 
required to submit annual reports on competition. And I always 
managed to exceed those goals. But competition is the bedrock 
of everything that contracting does.
    As you have already eloquently stated, if we do not have 
competition, we get short changed. We do not get the right 
prices. We do not get more companies engaged in the market. 
That is a disservice to all of us.
    I would work with FEMA to try to minimize that happening. I 
understand everybody is working now to get contingency 
contracts in place so that when a disaster happens in the 
future, we will be better prepared and will not have to do any 
emergency, last minute procurements for things that we know, 
with slight planning, that we are going to need. We are going 
to need food, water, housing, and those sorts of things.
    In the unfortunate circumstances where those are not set up 
and we are compelled to do some noncompetitive contracting, we 
have to strongly commit to reverting them back to full and open 
competition at the earliest possible moment.
    I do not know the particulars of why FEMA has not done that 
on these housing ones, but I would be pleased to work with them 
and the Committee to get to the bottom of it, if confirmed.
    Chairman Collins. Thank you.
    I would like to see OFPP take a far stronger leadership 
role in this area. It seems to me that when an agency relies 
excessively on unnecessary noncompetitive contracts, that OFPP 
ought to perhaps be doing audits of their procedures, providing 
them with recommendations. I think OFPP is often too passive in 
its role, and I would like to see a more aggressive approach, 
and I hope that you will undertake that.
    The second issue that I want to turn to this morning before 
yielding to my colleagues is another issue that I raised in my 
opening statement, and that is the accessibility of the 
procurement process to smaller businesses. I know in my State 
that there are a number of small businesses that could provide 
high quality, affordable goods and services to the Federal 
Government, but they have no idea how to get started and they 
find it a daunting prospect. It just seems too difficult to 
even get your toe in the water. Now, one way that we have 
worked with small businesses is to put on Federal procurement 
conferences, and I have sponsored some of them myself. I am 
going to sponsor another one in October, but oftentimes I have 
found that smaller companies that attend these procurement 
conferences come away without any tangible results.
    There is not much coordination among Federal agencies on 
marketing and outreach. I think if there were, these 
conferences could translate into real value for a small 
business.
    What are your thoughts on making small businesses more 
aware of how to do business with the Federal Government and 
making the Federal procurement process more open to smaller 
companies?
    Mr. Denett. I agree with you that we need to do more 
outreach. In fact, when I was at the Department of the 
Treasury, we would sponsor conferences like the one that you 
described. My experience was that the first one that we did, 
the feedback from the small businesses that attended, they were 
very disappointed because they did not walk away with any 
actual business. They had to do a lot of follow-up work to get 
even a modicum of business to make it worth their effort.
    So, we worked hard with the SBA and within the Treasury 
Department, and I would try to do this on a broader scale, 
working closely with the Small Business Administration to try 
to bring some actual business to these, where they have work 
that needs to be done, and in some instances, they can actually 
leave the conferences with purchase orders for actual business 
to get them started. Nothing breeds success like a little bit 
of success in the beginning. And some of these companies have 
grown to become major contributors to the Federal Government 
from getting that little start from that little order in the 
beginning. I would work with the SBA to try to duplicate that, 
if confirmed.
    Chairman Collins. Thank you. Senator Coburn.
    Senator Coburn. Thank you.
    The task in front of you, Mr. Denett, is certainly 
amazingly complex. I wonder, what tools do you see out there 
now to measure, whatever you want to accomplish in your 
position, what are the tools you are going to use to measure 
whether you have accomplished it?
    Mr. Denett. Well, one would be the accuracy of our Federal 
procurement data system that you and I spoke of when we had our 
pre-chat. It is a major concern that we do not have, currently, 
an accurate count on the number of contracts and related 
information that we need to have. So, one measurement would be 
to have that next-generation one up and working with accurate 
data so that we can measure accurately how much is competed, 
how much goes to small business. We need information on how 
often we use incentive contracts, cost plus contracts, all of 
the ones that we know are more vulnerable to potential abuse 
and are awkward. We need to get a handle on what those numbers 
are. And I need to talk with the Chief Acquisition Officer 
Council to get feedback from them on how to attack these 
problems and how can we minimize their use and improve the 
system.
    Senator Coburn. So do you have a plan that you want to 
institute so that there is a true metric to measure performance 
in contracting?
    Mr. Denett. I have worked with some throughout my career on 
trying to measure difficult things like that. I have used 
balanced scorecards that have been a combination of customer 
satisfaction, prudent spending, and a variety of other metrics.
    I think we would have to explore those and whatever is 
currently being attempted to see what might work best, and I 
would look forward to working with the Committee to try to 
agree on what the best metrics would be.
    Senator Coburn. Out of the $360 billion that we contracted 
for last year, how much of that do you think is wasteful?
    Mr. Denett. I think that we can do a better job of 
contracting. I think that if we increase competition, surely we 
would get better prices. I think if we did a better job of what 
is called strategic sourcing where we combine our buying power, 
we could certainly get significant discounts off of a lot of 
commonly used items that we buy.
    In fact, we have an initiative now in strategic sourcing 
where we are trying to buy cell phones, copiers, and some other 
common office supplies, combining them all within departments. 
I expect we will get significant discounts and save money on 
what we are spending now.
    Senator Coburn. OK. But I am going to bring you back to my 
question, how much do you think is wasted now?
    Mr. Denett. I do not have a handle on what an exact 
percentage is, but I am sure that we could save more money by 
better contracting and using some of these things that I 
described earlier, but I do not have an exact percentage.
    Senator Coburn. Well, let me just review some things. Let 
us say that we spent $6 billion on contracts to contractors 
that did not meet performance requirements in the Defense 
Department last year. That is $6 billion. We had no competitive 
contract in the majority of the Hurricane Katrina stuff, which 
we know we have at least $6 to $8 billion. You know, there are 
just two areas. So, we have $14 billion--you would not care to 
think that we could use Wal-Mart-type thinking in our 
purchasing and say, we set a goal, we spent $360 billion, we 
are going to get the same thing for $325 billion this next 
year?
    That is what I am looking for. I am looking to secure the 
future for this next generation by setting a metric out there 
and saying, here is what we have spent, here is what we are 
going to spend next year. We are going to spend it wiser.
    And we are going to put into place a measurement to do 
that, and that is the kind of leadership we need in this 
position. The way we have been doing it does not work. It works 
for the people who are supplying to the Federal Government. You 
know, there are some real gravy trains out there. And there is 
the expectation that it is going to continue. And what I am 
looking for you to say is, yes, there is a lot of waste, first. 
Second, is that there are ways to attack that waste. And third, 
I am going to be in there and going after the waste.
    Mr. Denett. Well, contracting officers should be measured 
by what prices they get. And using competition and market 
research, they should be held accountable to get the best price 
possible. Those instances where they do not, they should be 
held accountable and we should pressure them to get better 
prices.
    Senator Coburn. Is not the GSA supposed to set us up to get 
the best possible prices on phones and paper clips and 
everything else? Was that not the design of the GSA? I mean, 
was not the General Services Administration, the goal behind it 
is to be the person that sets up the way where we get the best 
price?
    Mr. Denett. Historically, that was one of their set ups. 
Under the current schedule program, they allow a large number 
of people to get schedules to offer a variety of those types of 
items, and then through further negotiations, by the various 
departments, they usually get better discounts than what are 
usually awarded on the schedules.
    Senator Coburn. Would you think that the American people 
should expect that if we are the largest purchaser of almost 
everything in this country that we ought to get the best price, 
every time, bar none?
    Mr. Denett. Yes.
    Senator Coburn. Is that happening?
    Mr. Denett. No. It is not happening often enough. In many 
instances, I think that we are getting very good prices, but 
there is certainly vast room for improvement.
    Senator Coburn. Would it be your goal that we get the best 
price every time?
    Mr. Denett. Absolutely.
    Senator Coburn. All right. One of the problems that we see 
in Hurricane Katrina, and we see it with different agencies, is 
that we hire another government agency to be a supposed 
contracting manager, or project manager, who then hires a true 
project manager. And so, what we did was--I am not talking 
specifically about the Army Corps of Engineers--FEMA hired the 
Corps to do a lot of stuff, and they did not do it. They just 
hired somebody else, but yet they took a couple hundred million 
dollars off of the top for their agency.
    Is there something that can be done, in terms of 
contracting, to bypass that? Or, say we are going to be the 
contracting agency in certain of these different agencies that 
are contracting these large amounts, rather than paying 
somebody else to be the contract manager?
    Mr. Denett. I think that is a workforce issue that we 
really do need to pay a lot of attention to. We have to figure 
out what the right mix is. How many contract people we need. 
What training they need. What competencies they need so that 
they can do as much of the contracting themselves as possible.
    Certainly, the fewer middlemen there are, the more 
efficient the system is in general. But there are instances 
where government agencies have better skills at a particular 
thing where government agencies help one another. Now, in the 
case that you have cited, it looks like they just turned around 
and gave it off to someone else. I am not familiar with that 
particular case, but I would be glad to look into it.
    Senator Coburn. Would you think, and this will be my last 
question, Madam Chairman, if you would allow me to----
    Chairman Collins. Absolutely.
    Senator Coburn. Do you think it would be beneficial for 
both the government, the contractors, and the people of this 
country to know where we spend our money, and who is getting 
it, and what the conditions are in those contracts, and what 
the performance is for those contracts?
    Mr. Denett. Yes. I do.
    Senator Coburn. So, you would not have any opposition as 
OMB is working with us--by the way, very greatly. They are 
supportive of our effort to have all this online so that 
everybody can see it in America. You would not have any 
objection to that?
    Mr. Denett. No. I would not.
    Senator Coburn. And would you think that would help you 
accomplish some of the goals that you have set out as head of 
this agency?
    Mr. Denett. Absolutely. I think that transparency and 
people seeing what we are doing would assure that we are honest 
brokers and that we would welcome any observations from people 
seeing what we are doing.
    Senator Coburn. As a matter of fact, if in fact I am going 
to contract with the Federal Government, I know it is going to 
be online, it is going to change some of my expectations, is it 
not? It is going to change the expectations of some of the 
Federal contractors.
    Mr. Denett. It easily could. Yes, sir.
    Senator Coburn. Thank you, Madam Chairman.
    Chairman Collins. Nice job, Senator Coburn, getting the 
witness on record in favor of your proposal. Artfully done. I 
am sure that swept away the last remaining vestiges of 
opposition within OMB and the Administration.
    Mr. Denett, I want to return to the issue of contingency 
contracting. The GAO recently released a report on this issue 
and found that without effective acquisition planning, 
management, and communication processes and sufficient numbers 
of capable people, poor acquisition outcomes often result. I do 
not think that is an earth-shattering finding, not really a 
very surprising one. But what is surprising is that the Federal 
Acquisition Regulation (FAR) does not now contain a single easy 
to use compendium of provisions related to contingency 
contracting that could be used in emergency situations to 
ensure legal compliance.
    That seems to me to be a simple, common sense step that is 
long overdue. I understand that work is under way to complete a 
revision to the FAR, and as I said, I am shocked that it is not 
there already. We are in the midst of the hurricane season. Can 
you give us a good estimate on when the revision to the FAR 
will be completed?
    Mr. Denett. Yes. As you have stated, they are combining all 
of their contingency contracting rules that are sprinkled 
throughout the Federal acquisition regulations into one 
section. My understanding is that it is going to be complete 
and published within the next few weeks. That is what I was 
told very recently. So, they are very close. They have done all 
the work. They are now getting all of the necessary signoffs 
and administrative things, but that should be issued shortly.
    Chairman Collins. I hope that you will keep the Committee 
informed on that issue.
    Mr. Denett. We will.
    Chairman Collins. GAO also found that a lack of adequately 
trained personnel contributed to the waste of government 
resources in the contracting area in the aftermath of Hurricane 
Katrina. I mentioned in my opening statement that I am also 
concerned, and I know Senator Voinovich shares this concern, 
that we have an aging procurement workforce. Many of our 
contracting officers, including our most experienced 
contracting officers, qualify for retirement, and we are 
expected to see an exodus in the coming years.
    What role do you believe OFPP should play in preparing the 
acquisition workforce, both in terms of helping to ensure that 
we have qualified, trained, experienced contracting officers, 
but also making sure that they have the training necessary to 
respond to emergency contracting?
    Mr. Denett. I believe OFPP and myself, if confirmed, should 
play a very active role. I have always been a very strong 
proponent of recruiting and retraining talented contracting 
people.
    I had the privilege of setting up a contract intern program 
at the Department of Treasury. I set one up also at the 
Department of the Interior and then actually expanded that to 
be a government-wide intern program. The people that we have 
recruited in that have grown to be real stars in the 
acquisition community and now hold senior positions sprinkled 
throughout the Federal Government.
    We just have to do a better job of selling to people that 
it is a good career opportunity. Where else can you get a job 
that you are exposed to virtually everything that the Federal 
Government does? Whether it is assisting the Coast Guard, going 
out on cutters, helping the Interior and Forest Service fight 
forest fires, just a wide variety of programs.
    So, it is really exciting, and if you invest the time to 
let young people, college graduates, know about it and spend 
some time, we will get our share of them. But it does not 
happen without a lot of effort. And we have the Federal 
Acquisition Institute, which, fortunately, there has been a lot 
of cooperation on the Hill to get some funding for that, and 
that is in the point position of giving adequate training and 
reliance on private sectors.
    One of the companies I came from and many others provide 
outstanding training. We just have to make sure that our people 
get it on time, that we recruit enough people, and that we make 
it exciting for them, where they do not get too bogged down on 
regulations and are allowed to blossom as business managers.
    Chairman Collins. As far as specific training on how you 
handle contracting in the aftermath of the disaster, is that an 
area that you see OFPP taking a leadership role on?
    Mr. Denett. Yes. I think that we have to make sure that FAI 
and Defense Acquisition University have available all the 
appropriate agencies, FEMA, the Corps, the Coast Guard, to make 
sure that we have actual classes available that will assist 
them in doing a good job.
    Chairman Collins. Thank you. In April 2006, just 2 months 
ago, OMB released its report on competitive sourcing results 
for fiscal year 2005. The report found that Federal employees 
who had formed what is referred to as the most efficient 
organizations have won approximately 80 percent of the 
competitions during the last 3 years. I appreciated your 
statement in the pre-hearing questions against the use of 
arbitrary quotas or targets in competitive sourcing decisions.
    In light of your statement, what would be your general 
approach to ensuring that future competitions are conducted in 
a fair and transparent manner and that Federal employees have 
access to the information and the training necessary to win 
these competitions?
    Mr. Denett. Yes. We have to make sure that they have some 
good people assigned to put together their most efficient 
organization, make available to them training so that their 
presentation is every bit as professional as the companies that 
they will be competing against, and making sure that we do not 
get into areas that are not commercial areas, that can clearly 
be done by either the private sector or government employees.
    Chairman Collins. Thank you. Mr. Denett, we have covered a 
lot of issues here this morning, and there are many more that 
will come before you. I do have a few more questions that I 
will submit for the record.
    I want to end this hearing by emphasizing how important I 
think the OFPP Administrator's job is. You have a real 
opportunity to put in place the reforms, the training, the 
policies, and practices necessary to save taxpayers literally 
hundreds of millions if not billions of dollars. The waste, 
fraud, and abuse in contracting that this Committee has been 
able to document is absolutely inexcusable.
    In Hurricane Katrina alone, we were able to document more 
than a billion dollars of wasteful and fraudulent spending. I 
am very concerned that no one seems to be taking charge to 
ensure that these same mistakes do not happen again, that we do 
not purchase $750 million worth of manufactured housing that 
cannot be installed in a flood plain that is unsuitable for 
other reasons and is sitting now in a farmer's field in Hope, 
Arkansas. That kind of waste is just inexcusable.
    The American taxpayers just are not going to stand for it. 
I think the taxpayers are compassionate. They want to help the 
people who need help, but they want to be assured that their 
money is not frittered away on wasteful spending, unnecessary 
supplies, sloppy contracts, high prices, and uncompetitive 
contracts.
    You are in a pivotal position to really make a difference 
in that area. I think OFPP has been too passive in the past as 
far as exerting the kind of leadership that is necessary. I 
hope your vast experience in both the public and private 
sector, as well as that Maine common sense that you inherited 
from your mother, will lead to a real change, a sea change. I 
look forward to working very closely with you.
    I do not want you to think that the absence of Members this 
morning indicates a lack of interest in this issue by this 
Committee. Instead, it reflects confidence in you and your 
background, which is to your credit. It also reflects very busy 
schedules and a Defense Authorization bill that is on the 
floor. But, believe me, this Committee will be watching you 
closely and working with you closely. We need, and expect, 
leadership.
    I would invite you to make any final comments, and then I 
will go through the procedure for adjourning the hearing.
    Mr. Denett. Well, I agree with everything you say, and I 
hope I am given the opportunity and really do look forward to 
working with you and other Committee Members to provide the 
leadership that is needed by our country.
    Chairman Collins. Thank you. Without objection, the hearing 
record will be kept open until 5 p.m. tomorrow for the 
submission of any written questions, any statements from the 
Committee, and any additional information.
    It is my hope that we can proceed quickly to report you 
favorably to the full Senate. This is a vital position at a 
critical time, and I am very pleased that the President has 
nominated such a well-qualified nominee. I look forward to 
supporting and advancing your nomination to the full Senate.
    This hearing is now adjourned.
    [Whereupon, at 10:52 a.m., the hearing was adjourned.]
                            A P P E N D I X

                              ----------                              

                STATEMENT OF SENATOR JOSEPH I. LIEBERMAN
    Mr. Denett, we welcome you before the Committee as the President's 
nominee for a position that is extremely important to the U.S. 
taxpayer, the Administrator of the Office of Federal Procurement Policy 
(OFPP) at the Office of Management and Budget. Federal agencies spend 
approximately $375 billion each year on the purchase of goods and 
services, ranging from simple products such as office furniture to 
complicated systems such as secure information technology that supports 
our military and homeland security operations. When agencies fail to 
practice sound procurement policies, waste, fraud, and abuse ensues at 
an enormous cost to taxpayers.
    Mr. Denett, your nomination comes at a time when discipline on 
Federal contracting seems to have broken down. Our Committee's 
investigation of the response to Hurricane Katrina found that the 
Federal Emergency Management Agency (FEMA) failed to put in place 
contingency contracts before hurricane season that would have allowed 
FEMA to move disaster supplies into the Gulf region quickly and 
efficiently. Instead, FEMA's chaotic scramble to respond led to no-bid 
contracts worth hundreds of millions of dollars, the purchase of over 
$800 million of mobile homes, many of which are still sitting unused in 
Arkansas, and frequent instances of subcontractors being paid only a 
fraction of what the prime contractor received.
    Wasteful contracting practices appear far too often across Federal 
agencies. For example, poor planning and oversight of contracts at the 
Transportation Security Administration have led to cost overruns in the 
hundreds of millions of dollars. The award of Federal contracts without 
full competition--a practice that undoubtedly drives up costs to U.S. 
taxpayers--has skyrocketed under the Bush Administration, rising from 
$67.5 billion in 2000 to $145 billion in 2005, an increase of 115 
percent. I am particularly disturbed by the reports issued by the 
Special Inspector General for Iraq Reconstruction that have identified 
instance after instance of waste, fraud, and corruption related to 
Iraqi reconstruction projects. In many cases, reconstruction projects 
have been halted or downscaled as a result of inadequate contract 
planning and oversight, and in some instances the failure of 
contractors to fulfill their obligations has jeopardized the health and 
safety of our troops.
    We need an Administrator of the OFPP who will establish clear 
policies for Federal agencies that will ensure that the negotiation, 
award, and oversight of contracts are conducted with the utmost 
efficiency and integrity. We also need an Administrator who will 
address the shortage of experienced procurement personnel in the 
Federal Government. Without a strong procurement workforce, agencies 
are simply unable to conduct the oversight of contractor performance 
necessary to prevent wasteful spending. I am pleased to hear, Mr. 
Denett, that you have an expertise and a strong interest in helping 
agencies attract and retain skilled personnel.
    The Administrator of OFPP also plays a central role in forming 
Administration policy on competitive sourcing. Contractors provide 
valuable services for the Federal Government in many areas, and public-
private competitions, when conducted fairly, can be an important tool 
in helping agencies reduce costs and become more efficient. These so-
called ``A-76'' competitions, though, are time consuming and expensive 
to administer, and the rules of competition do not always allow Federal 
employees to compete fairly for their jobs. The appeals procedure is 
fundamentally unfair because Federal employees or their union 
representatives cannot appeal the results of competitions to GAO or the 
courts, although contractors have those appeal rights.
    Unfortunately, the Administration's competitive sourcing appears to 
be driven not by budget savings or improvement of management, but by an 
ideological pursuit of privatizing government jobs at any cost. In 
fact, recent statements from OFPP personnel suggest the Administration 
is considering allowing the ``direct conversion'' of work involving 
less than 10 Federal employees to contractors. This policy would be 
inherently unfair to Federal employees and would create the potential 
for widespread abuse at the expense of U.S. taxpayers. Instead of 
pursuing privatization at all costs, the Administration must turn its 
focus to improving agency performance through internal re-engineerings, 
strengthened financial oversight, and other alternatives that do not 
carry the wasteful costs of the A-76 process. Mr. Denett, should you be 
confirmed, I urge you to ensure that the rules for competitive sourcing 
are fair to Federal employees and are not biased in favor of 
privatization.
    In closing, I want to emphasize how important sound procurement 
practices are to the successful performance of any government agency. 
The next Administrator of OFPP faces major challenges in improving 
acquisition practices and contract oversight throughout the government. 
Mr. Denett, should you be confirmed, I look forward to working with you 
to meet those challenges.
[GRAPHIC] [TIFF OMITTED] 29505.001

[GRAPHIC] [TIFF OMITTED] 29505.002

[GRAPHIC] [TIFF OMITTED] 29505.003

[GRAPHIC] [TIFF OMITTED] 29505.004

[GRAPHIC] [TIFF OMITTED] 29505.005

[GRAPHIC] [TIFF OMITTED] 29505.006

[GRAPHIC] [TIFF OMITTED] 29505.007

[GRAPHIC] [TIFF OMITTED] 29505.008

[GRAPHIC] [TIFF OMITTED] 29505.009

[GRAPHIC] [TIFF OMITTED] 29505.010

[GRAPHIC] [TIFF OMITTED] 29505.011

[GRAPHIC] [TIFF OMITTED] 29505.012

[GRAPHIC] [TIFF OMITTED] 29505.013

[GRAPHIC] [TIFF OMITTED] 29505.014

[GRAPHIC] [TIFF OMITTED] 29505.015

[GRAPHIC] [TIFF OMITTED] 29505.016

[GRAPHIC] [TIFF OMITTED] 29505.017

[GRAPHIC] [TIFF OMITTED] 29505.018

[GRAPHIC] [TIFF OMITTED] 29505.019

[GRAPHIC] [TIFF OMITTED] 29505.020

[GRAPHIC] [TIFF OMITTED] 29505.021

[GRAPHIC] [TIFF OMITTED] 29505.022

[GRAPHIC] [TIFF OMITTED] 29505.023

[GRAPHIC] [TIFF OMITTED] 29505.024

[GRAPHIC] [TIFF OMITTED] 29505.025

[GRAPHIC] [TIFF OMITTED] 29505.026

[GRAPHIC] [TIFF OMITTED] 29505.027

[GRAPHIC] [TIFF OMITTED] 29505.028

[GRAPHIC] [TIFF OMITTED] 29505.029

[GRAPHIC] [TIFF OMITTED] 29505.030

[GRAPHIC] [TIFF OMITTED] 29505.031

[GRAPHIC] [TIFF OMITTED] 29505.032

[GRAPHIC] [TIFF OMITTED] 29505.033

[GRAPHIC] [TIFF OMITTED] 29505.034

[GRAPHIC] [TIFF OMITTED] 29505.035

[GRAPHIC] [TIFF OMITTED] 29505.036

[GRAPHIC] [TIFF OMITTED] 29505.037

[GRAPHIC] [TIFF OMITTED] 29505.038

[GRAPHIC] [TIFF OMITTED] 29505.039

[GRAPHIC] [TIFF OMITTED] 29505.040

[GRAPHIC] [TIFF OMITTED] 29505.041

[GRAPHIC] [TIFF OMITTED] 29505.042

[GRAPHIC] [TIFF OMITTED] 29505.043

[GRAPHIC] [TIFF OMITTED] 29505.044

[GRAPHIC] [TIFF OMITTED] 29505.045

[GRAPHIC] [TIFF OMITTED] 29505.046

[GRAPHIC] [TIFF OMITTED] 29505.047

[GRAPHIC] [TIFF OMITTED] 29505.048

[GRAPHIC] [TIFF OMITTED] 29505.049

[GRAPHIC] [TIFF OMITTED] 29505.050

[GRAPHIC] [TIFF OMITTED] 29505.051

[GRAPHIC] [TIFF OMITTED] 29505.052

[GRAPHIC] [TIFF OMITTED] 29505.053

[GRAPHIC] [TIFF OMITTED] 29505.054

[GRAPHIC] [TIFF OMITTED] 29505.055

[GRAPHIC] [TIFF OMITTED] 29505.056

[GRAPHIC] [TIFF OMITTED] 29505.057

[GRAPHIC] [TIFF OMITTED] 29505.058

                                 
