[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]








  PROTECTING TAXPAYER DOLLARS: IS THE GOVERNMENT USING SUSPENSION AND 
                         DEBARMENT EFFECTIVELY?

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

                                HEARING

                               before the

                         COMMITTEE ON OVERSIGHT
                         AND GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             JUNE 12, 2013

                               __________

                           Serial No. 113-35

                               __________

Printed for the use of the Committee on Oversight and Government Reform





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              COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

                 DARRELL E. ISSA, California, Chairman
JOHN L. MICA, Florida                ELIJAH E. CUMMINGS, Maryland, 
MICHAEL R. TURNER, Ohio                  Ranking Minority Member
JOHN J. DUNCAN, JR., Tennessee       CAROLYN B. MALONEY, New York
PATRICK T. McHENRY, North Carolina   ELEANOR HOLMES NORTON, District of 
JIM JORDAN, Ohio                         Columbia
JASON CHAFFETZ, Utah                 JOHN F. TIERNEY, Massachusetts
TIM WALBERG, Michigan                WM. LACY CLAY, Missouri
JAMES LANKFORD, Oklahoma             STEPHEN F. LYNCH, Massachusetts
JUSTIN AMASH, Michigan               JIM COOPER, Tennessee
PAUL A. GOSAR, Arizona               GERALD E. CONNOLLY, Virginia
PATRICK MEEHAN, Pennsylvania         JACKIE SPEIER, California
SCOTT DesJARLAIS, Tennessee          MATTHEW A. CARTWRIGHT, 
TREY GOWDY, South Carolina               Pennsylvania
BLAKE FARENTHOLD, Texas              MARK POCAN, Wisconsin
DOC HASTINGS, Washington             TAMMY DUCKWORTH, Illinois
CYNTHIA M. LUMMIS, Wyoming           ROBIN L. KELLY, Illinois
ROB WOODALL, Georgia                 DANNY K. DAVIS, Illinois
THOMAS MASSIE, Kentucky              PETER WELCH, Vermont
DOUG COLLINS, Georgia                TONY CARDENAS, California
MARK MEADOWS, North Carolina         STEVEN A. HORSFORD, Nevada
KERRY L. BENTIVOLIO, Michigan        MICHELLE LUJAN GRISHAM, New Mexico
RON DeSANTIS, Florida

                   Lawrence J. Brady, Staff Director
                John D. Cuaderes, Deputy Staff Director
                    Stephen Castor, General Counsel
                       Linda A. Good, Chief Clerk
                 David Rapallo, Minority Staff Director








                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on June 12, 2013....................................     1

                               WITNESSES

Mr. John Neumann, Acting Director, Acquisition and Sourcing 
  Management, U.S. Government Accountability Office
    Oral Statement...............................................     4
    Written Statement............................................     6
The Honorable Angela B. Styles, Partner, Crowell & Moring
    Oral Statement...............................................    14
    Written Statement............................................    16
Mr. Scott Amey, General Counsel, Project on Government Oversight
    Oral Statement...............................................    24
    Written Statement............................................    26

                                APPENDIX

The Honorable Gerald E. Connolly, a Member of Congress from the 
  State of Virginia, Opening Statement...........................    66

 
  PROTECTING TAXPAYER DOLLARS: IS THE GOVERNMENT USING SUSPENSION AND 
                         DEBARMENT EFFECTIVELY?

                              ----------                              


                       Wednesday, June 12, 2013,

                  House of Representatives,
              Committee on Oversight and Government Reform,
                                                   Washington, D.C.
    The committee met, pursuant to call, at 9:37 a.m., in Room 
2154, Rayburn House Office Building, Hon. Darrell Issa 
[chairman of the committee] presiding.
    Present: Representatives Issa, Mica, Duncan, McHenry, 
Jordan, Chaffetz, Walberg, Lankford, DesJarlais, Gowdy, 
Farenthold, Woodall, Meadows, Cummings, Maloney, Norton, 
Tierney, Clay, Connolly, Speier, Duckworth, Kelly, Cardenas, 
Horsford.
    Staff Present: Alexia Ardolina, Majority Assistant Clerk; 
Alexa Armstrong, Majority Staff Assistant; Kurt Bardella, 
Majority Senior Policy Advisor; Richard A. Beutel, Majority 
Senior Counsel; Molly Boyl, Majority Parliamentarian; Lawrence 
J. Brady, Majority Staff Director; Ashley H. Callen, Majority 
Senior Counsel; John Cuaderes, Majority Deputy Staff Director; 
Adam P. Fromm, Majority Director of Member Services and 
Committee Operations; Linda Good, Majority Chief Clerk; Laura 
L. Rush, Majority Deputy Chief Clerk; Scott Schmidt, Majority 
Deputy Director of Digital Strategy; Peter Warren, Majority 
Legislative Policy Director; Rebecca Watkins, Majority Deputy 
Director of Communications; Meghan Berroya, Minority Counsel; 
Jennifer Hoffman, Minority Press Secretary; Carla Hultberg, 
Minority Chief Clerk; Elisa LaNier, Minority Deputy Clerk; Dave 
Rapallo, Minority Staff Director; Donald Sherman, Minority 
Counsel; Mark Stephenson, Minority Director of Legislation; 
Cecelia Thomas, Minority Counsel.
    Chairman Issa. The Oversight Committee exists to secure two 
fundamental principles. First, Americans have a right to know 
that the money Washington takes from them is well spent. And 
second, Americans deserve an efficient, effective government 
that works for them.
    Our duty on the Oversight and Government Reform Committee 
is to secure these rights and to protect American tax dollars. 
Our solemn responsibility is to hold government accountable to 
taxpayers, because taxpayers have a right to know what they get 
from their government.
    It is our job to work tirelessly in partnership with 
citizen watchdogs to protect these rights and to deliver the 
facts to the American people and bring genuine reform to the 
Federal bureaucracy.
    In recent years, we have seen a massive expansion of 
government and its growth in spending. That is a given, as our 
economy has grown. But there is a culture that has been created 
that feels it is entitled to taxpayer dollars. The entitlement 
philosophy has grown both in the area of contracts and in 
grants. Today, among other things, we will examine the growth 
in grants. Grants are a circumvention of both competitive 
bidding and specific appropriation by Congress.
    Today when we talk about suspensions and debarment, what we 
are really talking about is a common sense process that does 
what the American people already expect government to do: 
ensure that the vendors we use, whether for grants or 
contracts, in fact meet the expectation of the law. And when 
they don't, don't use them again.
    We need to have a culture of zero tolerance for fraud, for 
criminals, for tax cheats, for those receiving taxpayer money 
through grants and contracts. We must have a standard that 
meets the expectation of the American people.
    When I was a small child and all my life growing up, we 
have heard the expression, fool me once, shame on you. And we 
all know that fool me twice, shame on me. One of the problems 
in suspension and debarment is in fact that the system does not 
prevent fool me twice. In some cases, fool me twice occurs 
within the same agency; in some cases it occurs within 
different agencies who do not communicate about bad actors.
    I wish I could say that this is the first debarment hearing 
that has been held by this committee. But this is at least 
biannually a hearing that we come back to again and again, 
because the problem isn't fixed. Several months ago, I publicly 
put forward draft legislation for a comprehensive suspension 
and debarment reform bill entitled Stop Unworthy Suspending 
Act, or Suspend Act. It has been posted on the committee's 
website since February, and I believe it is becoming time to 
move it forward, especially when we look at specific events 
that have led to us having less faith in our government. We 
need to restore that faith.
    Year after year, Washington takes more money and Americans 
have seemingly less to show for it. Time and time again, we see 
contracts being re-issued when failure has been the previous 
result.
    So on this issue, one that I am proud to say has been 
bipartisan, has been in fact one where we on this dais know 
there is a problem, Administration after Administration has 
said, give us a little more time, and we will fix it, I believe 
that the time to believe that it will be fixed without 
legislation has expired. Today's hearing is to probe into any 
final details before this committee seeks to move comprehensive 
legislation to ensure suspension and debarment is reformed.
    With that, I recognize the ranking member for his opening 
statement.
    Mr. Cummings. Thank you very much, Mr. Chairman.
    This is indeed a bipartisan issue. As I was sitting here, I 
could not help but think about the neighborhood that I live in 
and that I left a few hours ago, where we have young men who 
make one mistake, get a record, and then are punished for the 
rest of their life, jobs they can't get, opportunities they 
cannot take advantage of.
    I am sure when they hear about big companies doing things 
wrong, and then finding themselves right back doing business 
with the government, they ask the question, where is the 
justice, or is it just us?
    So Mr. Chairman, I thank you for calling this important 
hearing. Today we will examine how the government is using 
suspension and debarment in Federal spending to protect 
taxpayers from potential waste, fraud and abuse. Suspension and 
debarment are mechanisms by which the Federal Government 
protects taxpayers by prohibiting the award of new contracts or 
grants to individuals and businesses that are bad actors. 
Debarment is automatic upon conviction of certain crimes.
    But Federal agencies also have the authority to suspend or 
debar an individual or business in cases where there has not 
been a conviction or an indictment, but where there is, 
nevertheless, ample evidence of unethical behavior or 
incompetence. A report issued by GAO in 2011 found that some 
agencies have failed for years to suspend or debar a single 
individual or business. For example, GAO found that FEMA had no 
suspensions or debarments from 2006 to 2010, despite the fact 
that congressional committees found numerous instances of 
contract waste, fraud, abuse and poor performance in the 
aftermath of Hurricane Katrina. What is wrong with that 
picture?
    In another example, the Department of Justice suspended or 
debarred only eight contractors from 2006 to 2010. Making 
matters worse, a 2011 Inspector General's audit found that from 
2005 to 2010, the Department issued 77 contracts and contract 
modifications to some of the same entities the Department 
suspended or debarred. Something is absolutely wrong with that 
picture.
    Although a 2012 report by the Interagency Suspension and 
Debarment Committee noted that marginal improvements have been 
made since the release of the GAO report in 2011, it also 
stated that persistent weaknesses remain throughout various 
agencies.
    The vast majority of individuals and businesses who 
participate in the Federal marketplace are honest and do their 
upmost to fulfill the terms of their Federal contracts. It is 
not ethical or fair when these competent government contractors 
lose government business to those who have performed 
ineffectively, inefficiently and dishonestly.
    Our goal is not to punish contractors, but to protect 
taxpayers. Taxpayers deserve to know that the Federal contracts 
and grants are not awarded to those who have acted dishonestly, 
irresponsibly or incompetently.
    Having powerful suspension and debarment tools does little 
good if they are not being used effectively. The GAO report 
found that the civilian agencies with the highest numbers of 
suspensions and debarments share certain characteristics. 
First, they dedicate full-time staff to suspension debarment 
process. Second, they have detailed guidance in place. And 
finally, they have a robust case referral process I think we 
need to carefully examine these best practices.
    The draft Suspend Act that the Chairman is sponsoring 
seems, and I think that it is something we should be able to do 
in a bipartisan way, it is an effort to shed light and make 
this whole debarment process much more efficient and 
transparent, and make it accountable, and make sure that those 
who are suspended and debarred are effectively dealt with.
    I look forward to working with the Chairman to further 
improve this legislation. As our Nation's economic recovery 
continues, it is important that we guard against unnecessary 
spending and make sure that we are doing every single thing in 
our power to protect taxpayer funds.
    I look forward to the testimony of our witnesses today. 
With that, I yield back.
    Chairman Issa. I thank the gentleman.
    Members may have seven days to submit opening statements 
and other extraneous material for the record.
    We now welcome our witnesses. Mr. John Neumann is Acting 
Director of Acquisitions and Sourcing Management at the 
Government Accountability Office. Welcome.
    The Honorable Angela Styles is a partner at Crowell & 
Moring's Washington, D.C. office, and of course the former 
Administrator of Federal Procurement Policy in the Office of 
Management and Budget.
    Mr. Scott Amey is the General Counsel at the Project on 
Government Oversight.
    Welcome all. Pursuant to the rules of the committee, would 
you please rise, raise your right hands to take the oath.
    Do you solemnly swear or affirm that the testimony you are 
about to give will be the truth, the whole truth and nothing 
but the truth?
    [Witnesses respond in the affirmative.]
    Chairman Issa. Let the record reflect that all witnesses 
answered in the affirmative. Please be seated.
    I am pleased to say you are all pretty experienced at this. 
So your entire opening statements will be placed in the record. 
We would like you to stay as close as you can to five minutes 
or less, to leave plenty of time for questioning, because 
ultimately, we will read your opening statements or in most 
cases have. But we certainly would like to be able to get your 
insight to specific questions.
    Mr. Neumann?

                       WITNESS STATEMENTS

                   STATEMENT OF JOHN NEUMANN

    Mr. Neumann. Thank you. Chairman Issa, Ranking Member 
Cummings and members of the committee, I am pleased to be here 
today to discuss the Federal Government's use of suspensions 
and debarments.
    In 2012 alone, the Federal Government spent more than $517 
billion on contracted goods and services. As you know, to 
protect the government's interest, Federal agencies are 
required to award contracts only to responsible contractors, 
those with a satisfactory record of integrity and business 
ethics and capable of performing required work.
    One way to protect the government's interest is through the 
use of suspensions and debarments to exclude firms or 
individuals from receiving contracts when they engage in 
misconduct. My statement today highlights two key points. 
First, agencies we reviewed with the most suspension and 
debarment activity shared certain characteristics. Secondly, 
Federal Government efforts to oversee and coordinate the use of 
suspensions and debarments faced challenges.
    Let me expand a little bit on my first point. In 2011, when 
we looked at 10 different agencies, we found that the four 
agencies with the most suspension and debarment activity shared 
three characteristics. They each had dedicated program and 
dedicated staff, detailed policies and procedures and practices 
that encouraged an active referral to process.
    The first of these characteristics is the dedicated program 
and staff. This is needed to carry out the essential functions 
of an agency's program. Each of the four agencies we reviewed 
with active programs had dedicated staff that were focused on 
reviewing cases of contractor misconduct and poor performance 
for possible suspension and debarment.
    Secondly, these agencies had detailed policies and 
procedures that went well beyond the guidance in the Federal 
Acquisition Regulation. And lastly, we found that those 
agencies with active programs each had practices to encourage 
referrals of contractor misconduct to be considered for 
appropriate action. This referral process required senior 
agency officials to promote a culture of acquisition integrity, 
so that suspension and debarment is understood and utilized by 
all staff.
    The remaining six agencies we looked at in 2011 lacked 
these characteristics and had few or no suspensions or 
debarments of Federal contractors despite having billions of 
dollars in contract spending.
    The second point that I would like to highlight is on 
Federal Government efforts to oversee and coordinate the use of 
suspensions and debarments. At the time of our review in 2011, 
the Interagency Suspension and Debarment committee faced a 
number of challenges.
    This committee, as you know, is charged with monitoring and 
coordinating the suspension and debarment system across the 
Federal Government. However, it relied on voluntary 
participation and an informal coordination process that not all 
agencies participated in. We noted that agencies without active 
suspension and debarment programs generally were not 
represented at the committee's monthly coordination meetings.
    In response to our recommendation, OMB issued guidance that 
directed Federal agencies to appoint a senior official to 
ensure regular agency participation in the Interagency 
Committee meetings, among other actions. Since then, several 
agencies have taken steps to address our findings and 
recommendations.
    Chairman Issa, Ranking Member Cummings and members of the 
committee, this concludes my prepared statement. I am pleased 
to respond to any questions that you may have.
    [Prepared statement of Mr. Neumann follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Mica. [Presiding] Thank you, and we will withhold 
questions until we have heard from all of the witnesses.
    Let's recognize now Angela Styles, Partner in Crowell & 
Moring. Welcome, and you are recognized.

                   STATEMENT OF ANGELA STYLES

    Ms. Styles. Thank you very much, Congressman Mica, 
Congressman Cummings and members of the committee. It is an 
honor to be invited to testify here today.
    There is little question that changes to the suspension and 
debarment system are needed. I commend the committee for taking 
a hard, bipartisan look.
    Federal suspension and debarment officials exercise a 
powerful and highly discretionary authority that directly 
affects the credibility of our entire procurement system. It 
has to be fair and it has to be transparent. The dialogue 
created by your draft legislation has already created greater 
attentiveness to fair process, consistency and timeliness.
    Because a significant portion of my legal practice involves 
the representation of companies and individuals in suspension 
and debarment proceedings before many Federal agencies, both 
civilian and defense, I have a unique perspective on the 
multitude of processes, procedures, standards of review and 
remedies, both written and I think very important to the 
committee, unwritten ones as well.
    While the Federal Acquisition Regulation, the FAR, and the 
non-procurement rule establish a high level framework, much of 
the system operates using unwritten practices and tools. While 
many civilian agencies are bolstering suspension and debarment 
programs in response to your congressional oversight, it is 
hard to be confident that the current written processes or the 
unwritten practices ensure fairness, meaning that all companies 
and individuals facing debarment are given a similar 
opportunity to properly present their case, and that the 
correct result is obtained.
    It is important, however, to separate the process from the 
people. We have been extraordinarily fortunate over the years 
to have dedicated, objective and fair-minded civil servants 
running the suspension and debarment processes across the 
Department of Defense, the General Services Administration and 
the Environmental Protection Agency. The creativity and 
openness of the suspension and debarment officials at these 
three agencies has for many, many years facilitated fairness 
and objectivity.
    For the long term, however, the system cannot be sustained 
on the fairness and objectivity of individual suspension and 
debarment officials alone. Across the government, the 
processes, procedures, standards of review, remedies and tools 
must be consistent and transparent. The lack of access and 
transparency is an impediment for companies that are working to 
improve ethics and compliance programs. When problems do arise 
at companies, and they arise even at the most responsible of 
contractors, the agencies need to be able to work in 
partnership with contractors toward continual improvements.
    DOD, EPA and GSA learned long ago that by having an open 
door for contractors to discuss compliance and ethics concerns, 
both parties could agree on expectations and appropriate 
changes to contractor programs.
    From my perspective, the greatest concern are the unwritten 
processes across agencies. They create significant issues of 
fairness. I have seen this most specifically in five areas 
where the processes vary significantly across agencies and are 
not transparent to all the parties. I discuss it extensively in 
my written statement, but this includes show-cause letters, 
requests for information, access to the administrative record, 
the public release of information, administrative agreements 
and lead agency determinations. These five different areas are 
not articulated in the FAR. They are not available to the 
public to understand how the suspension and debarment process 
actually works on a day to day basis.
    In conclusion, I think there is little question that 
changes are needed, and changes can add significantly to 
consistency among the agencies and transparency. I think making 
our procurement process better through ensuring that our 
suspension and debarment process works better will give 
taxpayers significantly greater confidence that the government 
is buying from contractors with the highest ethical standards.
    And I don't mean contractors that are just meeting the law. 
We need contractors that understand what value-based 
procurement programs are, ethics and compliance programs within 
their companies and they need to do more than simply meet the 
requirements of the law. They need to lead our U.S. companies 
in what it means to be a responsible company.
    That concludes my prepared statement and I am happy to 
answer any questions you may have.
    [Prepared statement of Ms. Styles follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    
    Mr. Mica. Thank you. We will hold questions.
    We will now turn to our next and last witness, Scott Amey. 
He is General Counsel, Project on Government Oversight. Welcome 
and you are recognized.

                    STATEMENT OF SCOTT AMEY

    Mr. Amey. Thank you, Congressman Mica, Ranking Member 
Cummings and members of the committee.
    Thank you for inviting me to testify today about the state 
of the Federal Government's suspension and debarment system, 
from exposing outrageously priced spare parts to initiating the 
creation of the FAPIIS system, which was born out of this 
committee, POGO has promoted a good government agenda. Today's 
hearing, and improved attempts to prevent the government from 
doing business with risky contractors, contractors with 
criminal, civil and administrative misconduct records or poor 
performance histories, is essential to improving Federal and 
grant spending that now exceeds $1 trillion annually.
    Everyone agrees that the Federal Government should not do 
business with companies that have defrauded the government or 
violated laws or regulations or performed poorly on contracts 
or had their contracts terminated for default or cause. But in 
reality, the government is awarding contracts and grants to 
such companies. The government has a two-tier system to protect 
the public, pre-award responsibility determinations and 
suspension and debarment. I discuss both in my written 
testimony, but I will focus today on the failures of the 
suspension and debarment system.
    The suspension and debarment system is a vital tool in 
protecting agencies, government missions and programs and 
taxpayers. Despite a complex framework outlined in the Federal 
Acquisition Regulations, and comprehensive programs within 
certain agencies, we are still finding flaws in the system. 
Excluded activities are still receiving new contracts or 
grants. Companies can be viewed presently responsible by just 
firing a few employees or promising to enhance training or 
compliance measures.
    Many agencies are not effectively using the suspension and 
debarment tools at their disposal, with NRC, Social Security, 
Commerce, HHS and Labor having 10 or fewer suspensions or 
debarments in recent years. Inconsistences are the norm. And we 
often hear about government reports and audits and media 
stories alleging criminal activity or poor performance one day, 
and a new multi-million dollar contract or grant awarded to the 
same entity within days.
    Additionally, the length of suspension can range from 
anywhere from a few days to years. Referrals of the suspension 
and debarment actions can be slow. I am still confused at how 
BP was considered responsible for years after the Gulf oil 
spill disaster, but was only suspended two weeks after it 
pleaded guilty to numerous criminal counts. BPs suspension has 
lasted over six months. It will be interesting to see how much 
longer it will last, and if it will be waived or lifted prior 
to a new solicitation for oil or petroleum products or 
services.
    This is the perception, that the larger contractors are too 
big to suspend or debar. Since 2000, POGO estimates that there 
have been approximately 82,000 suspension or debarment actions 
levied against companies and individuals. But the number of 
large contractors that have been sanctioned under the system 
can be counted on two hands.
    As far as the Suspend Act, earlier this year, Chairman Issa 
released a discussion draft of a bill entitled the Stop 
Unworthy Spending, or the Suspend Act. I applaud the chairman's 
handling of this draft bill and the outside the box thinking 
that was put into it.
    We have heard for years that the suspension and debarment 
system is fine. But yet nearly every government report reports 
that there are flaws in the system. Past efforts to reform the 
system have been cause for mandatory suspension or debarment 
for certain procurement or tax-related offenses. Those efforts 
were short-sighted and unrealistic. SDOs need flexibility to 
review a contractor's present level of responsibility and 
mandate suspension or debarment only when necessary and not to 
just punish a contractor.
    I agree with the chairman and the draft language in the 
bill that the consolidation of the suspension and debarment 
offices and resources will improve consistency and be a better 
use of the limited resources that are appropriated for 
suspension and debarment activities. The bill also attempts to 
expedite review, which is crucial. Section 5 looks to 
coordinate agency actions.
    For years, POGO has been concerned with the lack of 
coordination between IGs and others within the acquisition and 
oversight world. POGO provides the following recommendations 
that should be considered as the Suspend Act is being 
finalized.
    Mandate that IGs or other investigative units make 
referrals to SDOs after opening an investigation and making 
findings that reasonably support a basis for suspension or 
debarment. SDO shouldn't have to wait until the Justice 
Department has closed a file to make a responsibility 
determination.
    Require SDOs to make suspension or debarment determinations 
within a set period of time after receiving a government 
referral. The determination should include a description of the 
referral, the SDOs justification for suspending or debarring 
the entity or not taking action, and any description that is 
concluded in a settlement or agreement.
    A record should be publicly available so that SDOs are held 
accountable to the public. Enhance annual reporting to Congress 
of the spending and suspension debarment workforce, the total 
number of referrals, declinations, fact-based suspensions or 
debarments, administrative actions, anything that comes from 
those offices clarifies that suspension and debarment 
activities are inherently governmental functions that must be 
performed by government employees.
    Release past performance data. In the past, past 
performance data is currently released by GAO and Federal 
courts in bid protest decisions and the proactive release of 
such information would benefit government officials, 
competitors and the public.
    Thank you for inviting me to testify. I look forward to 
working with the committee to further explore how we can 
strengthen the suspension and debarment process.
    [Prepared statement of Mr. Amey follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    
    Mr. Mica. Thank you. We will start a quick round of 
questioning.
    Mr. Neumann, this looks like we are spending about a 
trillion dollars a year, it looks like, of government money on 
contracts and also grants. Is it as bad in grants as it is in 
contracts as far as not compliance with getting rid of the bad 
players? About half a trillion of each, isn't it? And is it as 
bad in contracts as in grants? Did you look at both?
    Mr. Neumann. In 2011, we did look at the total number of 
exclusions for both grants and contracts. But our work focused 
on agency actions taken under the Federal Acquisition 
Regulation for contracts. The same practices apply for non-
procurement.
    Mr. Mica. So you really didn't look at that aspect as one, 
just in general, you looked at the failure to comply with 
getting the bad actors out of the process?
    Mr. Neumann. Certainly we looked at the agency suspension 
and debarment programs.
    Mr. Mica. Let me ask you this.This is another one of these 
groundhog attempts by government where we keep going back and 
back and trying to clean this up and nothing is done. There 
have been attempts in the past, mechanisms put in place to try 
to make again the bad actors be identified and excluded. Is it 
your belief that only legislation now can remedy this? GSA had 
some ability to do this. OMB had some ability to take steps.
    Mr. Neumann. I think based on our work there are a number 
of improvements that agencies can take.
    Mr. Mica. Do we need a law with teeth in it to make certain 
that these things get done?
    Mr. Neumann. We certainly need agency action.
    Mr. Mica. Well, okay, they already have the ability for the 
agency to act, for agencies to act. It appears, and you were 
with OMB, Ms. Styles, OMB directed agencies to appoint senior 
officials responsible to the agency's suspension and debarment 
program. Has that taken place in all the agencies? Are you 
aware, Ms. Styles or Mr. Neumann? Go ahead? Yes, no, maybe?
    Ms. Styles. I can tell you from the outside perspective, 
not consistently, no. And to the extent that they have been 
appointed, it is actually very difficult to figure out who they 
are in certain agencies.
    Mr. Mica. Is that your observation too?
    Mr. Neumann. Yes. That is our observation as well.
    Mr. Mica. They have the ability and can administratively go 
after some of these things. Then we have some of these 
programs. How much money has GSA spent on either the SAM 
program or EPLS program? Do you know?
    Mr. Neumann. We didn't look at that.
    Mr. Mica. They are trying to merge these two. One was to 
set up a list of bad players, right. And that has not been 
effective. That is the crux of most of the testimony that we 
are here for.
    Now, who is responsible for again moving forward? Is it GSA 
and OMB? And neither have done that, is that correct, Mr. 
Neumann?
    Mr. Neumann. Both OMB and GSA have roles in decisions about 
that.
    Mr. Mica. But obviously people aren't reporting, contracts 
are being given and hundreds of millions of dollars to bad 
players, is that correct?
    Mr. Neumann. We do know that there have been some mistakes 
made in the past where contractors that were debarred were 
given contracts.
    Mr. Mica. Who is the worst? Mr. Cummings mentioned FEMA, 
you have HHS and Commerce, lack effective programs. Who is the 
worst?
    Mr. Neumann. What we found was that there were six agencies 
at that time that had taken few or no suspension or debarment 
actions and didn't even have policies or procedures in place or 
dedicated staff.
    Mr. Mica. In spite of, again, the requirement, 
administrative requirement to report, in spite of the 
requirement to set up a system to maintain a current list, the 
list hasn't been current, right? Or complete?
    Mr. Neumann. The GSA has continued to experience problems 
with that. GAO has reported on that over the years. We 
understand they have taken steps to work with the agencies to 
improve that. But there are still reports of problems.
    Mr. Mica. And you were at OMB, Ms. Styles. What are they 
doing at OMB? That is part of their, that is Office of Budget 
and Management, just ignoring again either the requirements to 
report or keeping a list that would be referred to and people 
disbarred or suspended being prohibited from getting these 
contracts or awards?
    Ms. Styles. At this point, they issued the 2011 memo, and 
they have policy responsibility for the EPLS, which is now in 
the system for award management, or SAM. The data is in SAM, it 
is just not as thorough and complete, and it is difficult to 
manage.
    Mr. Mica. I have a question. You have looked at some of the 
legislation and commented on it. Does it have enough teeth to 
get the job done and make these agencies comply?
    Mr. Amey. There may be a few minor tweaks that need to be 
implemented. But for the most part, I think you are hitting on 
the problem. Unfortunately the suspension and debarment system 
has been around for many years, but it has been through 
executive order, it has been through some regulations, it has 
been through kind of a stovepipe mentality that the agencies 
are required.
    You won't find anywhere in the U.S. Code other than a note 
in the financial chapter of the U.S. Code in Section 31 where 
there is a note on how the ISDC is even supposed to run. So I 
think that is part of the problem, we created a system but we 
didn't supply sufficient guidance on how that system should 
operate.
    Mr. Mica. Well, again, every one of these hearings are 
absolutely stunning, of the unresponsiveness of agencies and 
simple things like keeping a list and then debarring or 
disallowing people who are bad players and ripped of the 
government.
    Mr. Cummings?
    Mr. Cummings. Mr. Amey, the thing I am concerned about is 
ineffective and inefficient. Period. And I state it quite 
often, we in Congress have a lot of motion, commotion, emotion 
and no results. At the same time, the public, who pays us, 
depends upon us to carry out government in a responsible way, 
are shortchanged.
    The question becomes when you look at, based on your 
research, do you get the impression that there are just some 
folks that just don't give a damn about whether somebody who is 
a bad actor continues to have opportunities over and over 
again? Is it that the policies are not in place?
    And then I want you to comment on the chairman's bill, 
again, I want you to note if there are any deficiencies in it, 
again we want to know. It looks like a very good bill to me.
    But you get tired of going down the same road over and over 
again and nothing, when I say nothing, nothing happens. And so 
what this says to the bad actors is that we could continue to 
do the stuff that we do and keep coming right back to the 
government and saying, keep me in business, not for a year or 
two, but for generations. So help me with this. Start with the 
Suspend Act. I think that is a good place to start.
    Mr. Amey. I think the Suspend Act has some great qualities 
to it. We would support it. There are a few minor tweaks. I 
think there is some room for Improvement in trying to get 
referrals in quicker. The biggest thing is the IGs or the 
oversight community conducts investigations and they may have 
met the burden to make a referral over to an SDO to have them 
start the suspension and debarment process.
    Unfortunately, I hate to say it, but in reality the 
suspension and debarment process is being used as a punishment 
in its current state, because so many times we have to wait for 
the Justice Department to close its file and get a conviction 
or some kind of civil action against the company before an SDO 
takes action. I don't think we should be doing that. We need to 
protect the taxpayer.
    They are two separate systems. One is accountability and to 
hold them criminally or civilly accountable. But the other is 
to protect the American taxpayer. The BP example is the best 
that I can think of, where I don't know why two weeks after 
they finally pleaded guilty that they were considered non-
responsible. I am sure the EPA was looking at them and I know 
there were some issues with lead agency discussions. Obviously 
BP is a major supplier of oil and petroleum products and 
services to the Federal Government. So at that point, the 
military, the last thing they need, especially from a 
competition standpoint, is to be down a vendor.
    However, it just boggles my mind that we had to wait nearly 
30 months after the oil disaster before we could hold BP 
accountable and consider them non-responsible, which now they 
have been considered non-responsible for the last six months.
    As far as the answer to your overall question, the FAR does 
provide a very complex system that should be followed. Do I 
think people want to provide bad companies with contracts or 
grants? No. Part of it is laziness, part of it may be they 
checked the excluded parties list or the SAM system a month ago 
and all the vendors checked out, but they didn't check the day 
that the award was given. So at that point, a contractor may 
have been suspended or debarred in that time frame.
    Contractors know how to game the system. Until we end up 
with a system of unique identifiers and be able to track 
companies and their owners, we are going to have a problem. It 
is very difficult, the contractors know so, okay, we are 
suspended or debarred, but we will open up a new entity under 
my wife's name, my uncle's name, my brother's name. So at that 
point, there is some gaming of the system. That is where you 
kind of have some of the flaws that GAO and some of the IGs and 
ISDC have pointed out through the years.
    Mr. Cummings. Mr. Neumann, what is the most common cause 
for debarment? In other words, maybe you can answer that, Ms. 
Styles, I don't know, what is the most common reason, one, two, 
three?
    Mr. Neumann. We didn't do analysis on the reasons that were 
used.
    Mr. Cummings. Why don't you tell me a few? You know some of 
them, right? That is your job.
    Mr. Neumann. Certainly contract fraud, bribery, theft, tax 
evasion, any other contractor misconduct, or even poor 
performance, are all reasons for suspending or debarring 
contractors in cases that we have looked at.
    Mr. Cummings. So somebody can be debarred for poor 
performance?
    Mr. Neumann. Yes, they can.
    Mr. Cummings. How is that measured, Ms. Styles? In other 
words, what is poor performance in one person's mind may not be 
poor performance in another. We have a lot of situations where 
we see contractors come in, and this is to me, it bothers me 
tremendously, we saw it in the Coast Guard, I was chairman of 
the Coast Guard subcommittee, they will come, they will do a 
bid for one price, and I know they do change orders. Not change 
orders, but changes need to be made. But some of them were just 
ridiculous. Almost a third more for the cost of a ship or 
whatever. You begin to wonder about some of those things.
    Is that the kind of stuff, talk to me, Mr. Amey.
    Mr. Amey. I don't' think that is enough to get you 
suspended or debarred. It is a possibility, especially if that 
type of information is captured in the FAPIIS system, then at 
that point at least it raises red flags for contracting 
officers. You have a frontloaded part of the system and you 
have a backloaded part of the system.
    So you are trying to get as much information to your 
contracting officers pre-award to make sure that we are only 
truly working with those who are responsible.
    Mr. Cummings. I see. Thank you very much.
    Chairman Issa. [Presiding] Thank you.
    I am going to follow up on the ranking member. Ms. Styles, 
when we look at suspension versus debarment, in your 
experience, and I know Mr. Amey knows this from the outside, 
suspension is often used for a poor performer, because piling 
on additional contracts by definition only makes the matter 
worse. In other words, if you are growing into ineffectiveness, 
if you are growing in a way in which you can't handle the 
contracts you already have, suspension is more often looked at 
as, if you will, temporary versus permanent. Is that roughly 
what we should understand for the record?
    Ms. Styles. Absolutely. There are actually measures less 
than suspension. So there are show cause letters from agencies 
to understand why they would have a termination for default. I 
have seen them in instances where there is poor performance on 
one contract, where the agency has had them come in to the 
suspension and debarment official and explain why the company 
should not be debarred permanently because of a poor 
performance issue. We are seeing it more and more.
    So the agencies are becoming more active and following the 
information that actually is available on FAPIIS on termination 
for default specifically.
    Chairman Issa. Mr. Amey, you mentioned BP. I want to broach 
that for a moment, because in any legislation, we want to make 
sure that we get the best value for the American taxpayer. The 
failure of BP to oversee a drilling rig in the Gulf versus the 
delivery of finished product fuel, wouldn't you agree that one 
of the challenges, when you get into very large companies, is 
you can have perfect performance over here, no logical reason 
for suspension or debarment, and you can have, over here, an 
entity that should not get access to do what they were doing 
again at a minimum until they prove that that bad outcome has 
been prevented.
    Would you say that bifurcating is inherently part of it? I 
am using them as a large, very separated entity. I could be 
using Lockheed Martin or Raytheon or any number of other 
entities who operate in very different areas. It is one of the 
areas of concern for procurement officers.
    Mr. Amey. Yes, and there are ways to get around that in the 
suspension and debarment system. Boeing was suspended, but it 
was only a unit of Boeing, so the whole company was not 
suspended. It was only, I think, their missile division unit 
and some certain individuals that headed up that department. So 
there are ways to kind of massage that issue, especially for 
the larger contractors.
    But in the case of BP, BP had, in our Federal contractor 
misconduct data base, BP I think is either one or two in the 
number of instances of misconduct. They had numerous instances 
of other environmental violations, some procurement related and 
some non-procurement related instances.
    Chairman Issa. Yes, and I am not picking on BP other than 
from a legislative standpoint. You were very kind to call it 
minor tweaks. But we are concerned that this kind of 
legislation happens once in a generation. So whatever we leave 
off or we do wrong, you and the oversight, if you will, the 
sunlight community and the GAO and our IGs are all going to be 
dealing with for generations if we miss something.
    That was an area that I think the ranking member and I 
would share that we are not asking for input as much for big 
companies. I think when we look at Raytheon's space activities 
in some program versus their being a vendor to Boeing in 
others, those are so big it is pretty easy to go through them. 
We can have an exception at some level.
    But it is really the person who is delivering office 
supplies that is a crook versus the person delivering office 
supplies that makes a mistake, and making sure that we divine 
the difference, so that we are not losing valuable vendors. I 
am very concerned that we are writing thinking about big 
companies. I want to make sure that it works for the smallest 
vendor too, both to catch them when they are wrong, but not 
over-punish them when it is in fact a benign occurrence.
    Mr. Amey. That is where the flexibility is needed in the 
system, whether it is within your board or within the 
individual suspension and debarment offices, to look at the 
facts before them, look at the record that they received from 
the other oversight agencies within the Federal Government, 
talk to the company to make sure that you have a fair, level 
playing field.
    I think actually with the consolidation you may actually 
find you are going to get more of that. A few years ago I 
talked to a suspension and debarment official and he said, if I 
would have known that other agencies had entered administrative 
agreements with this same company, I wouldn't have been the 
fourth. So at that point, there wasn't a sharing of information 
that was helpful to realize what the full record and the track 
record of that company was.
    Chairman Issa. Mr. Neumann, the proposal Mr. Amey gave of, 
if IGs were able to make direct referrals and that they were 
immediately considered, at least for suspension, figuring 74 
major IGs and, as we consolidate, the understanding, do you 
believe that that would be helpful to the process, to 
essentially empower IGs to make findings due to their audits?
    Mr. Neumann. Yes, we do. You saw in our 2011 report that 
agencies with active programs often got referrals from the IG. 
So they are very important to the referral process.
    Chairman Issa. Ms. Styles, having been at OMB, there is an 
OMB think, which is, let us manage it, we can manage it. How 
much should we let to Office of Management and Budget and 
others, versus how much do we have to put strictly into 
legislation, in your opinion?
    Ms. Styles. Since the ISDC was created by executive order, 
it would probably be helpful for that to be in statute. I do 
think because OMB effectively manages the FAR Council and the 
non-procurement rules, which means the grant process as well, 
that they are the right place to make consistent government-
wide changes that need to happen to the rules and processes and 
tools. That is the only place it can really happen from a 
consistent basis.
    Chairman Issa. Do you see any conflict in essentially 
second-guessing the grant process and exceptions to suspension 
and debarment? Do you see that it can be bifurcated at OMB 
sufficiently that you are not sort of encouraged to get the 
money out there, and at the same time encouraged to spend it 
well, and at the same time being pushed for bad actors?
    Ms. Styles. The management and budget processes over there 
have been bifurcated for a long time. So I think they run 
pretty well separately in terms understanding their roles and 
responsibilities there.
    I do think that the procurement and the grant processes 
need to be put together, which I know is part of your 
legislation. It makes no sense whatsoever to have two different 
processes that are absolutely inconsistent for the same 
suspension and debarment process.
    Chairman Issa. My time is expired. I will comment, strictly 
for the record, that one of the challenges that I think we face 
is that when you define something as a grant more broadly, not 
just suspension and debarment, versus procurement, you often go 
from a system that does a really good job of saying, you have 
to justify the winner to a beauty contest with grants. That is 
a separate problem for this committee to make sure that grants 
are as objective as possible, rather than subjective.
    But that is another hearing. And I am told next we go to 
Ms. Kelly.
    Ms. Kelly. Thank you, Mr. Chairman. Good morning.
    Mr. Neumann, you have looked at a number of agencies with a 
variety of suspension and debarment programs. I would like to 
talk to you about what you have learned about best practices. 
Your 2011 report notes that agencies with the most suspensions 
and debarments have dedicated full-time staff. Should all 
agencies have full-time staff to manage their suspension and 
debarment programs?
    Mr. Neumann. Not all the agencies necessarily have full-
time staff, but they do have dedicated staff that are tasked 
with looking for and considering cases for suspension and 
debarment.
    Ms. Kelly. So even though they are not full-time, that is 
the only thing they focus on, you are saying?
    Mr. Neumann. They do have other duties, but they do spend a 
portion of their time doing that. The main agencies we looked 
at in 2011 did have full-time staff. But our characteristic 
that we thought was important to note was that they dedicated 
program and staff with full Management commitment.
    Ms. Kelly. The report also mentioned that agencies with the 
most suspensions and debarments also had detailed policies or 
guidance involving the suspension and debarment process. What 
do you feel are the key policies that lead to an active S&D 
program?
    Mr. Neumann. There are many different policies and guidance 
out there at each of the agencies that are unique to the 
agency. It allows people in the agency to understand who to 
refer cases of contractor misconduct or serious poor 
performance or faulty appropriate officials. So those policies 
and procedures went beyond what is in the FAR to actually 
implement it. So someone at EPA knows exactly who to refer the 
case to.
    Ms. Kelly. Okay, thank you. You indicated that agencies 
with the most suspensions and debarments also have an active 
referral process. What are the elements of an active referral 
process?
    Mr. Neumann. For example, in DOD, we looked at 2012, we 
looked a little more deeply at the four components at DOD, we 
found that they actively met with the IG community, they 
trained contracting officers and other officials that had 
access to contractor records to get referrals. And they 
coordinated with the Department of Justice.
    Ms. Kelly. Okay. Lastly, your statement also mentions other 
efforts underway to improve coordination of suspension and 
debarment programs. Can you please elaborate on those?
    Mr. Neumann. We were pleased to see that OMB had taken 
action to direct agencies to participate in the Interagency 
Suspension and Debarment Committee. That committee is only as 
effective as its member agencies' participation. So that is 
very important. I think that is one of the key things to having 
a system of suspension and debarment, is having that 
coordination between the agencies, so that they can coordinate 
on many things, including sharing practices, deciding who 
should be a lead agency and bringing more transparency to the 
process of suspension and debarment.
    Ms. Kelly. Thank you very much. I yield.
    Mr. Cummings. Would the gentlelady yield?
    Ms. Kelly. Yes.
    Mr. Cummings. I was just talking to the chairman about the 
whole idea of, when you have the debarment and then you have 
suspension. I was just wondering, do you have a situation where 
you, folks are, say for example, it appears that somebody 
deserves debarment. And so those who are making the decision 
say to themselves, well, you know, we don't want to be so 
harsh. So they end up giving them the suspension. In other 
words, if it sounds like somebody should be debarred, do they 
have longer suspension? Do you follow me, Ms. Styles?
    Ms. Styles. Yes. So most agencies, DOD, GSA, have been 
dealing with this through show cause letters. So instead of 
suspending a company, because if you suspend the company it 
becomes public, their stock prices drop, and a lot of times 
suspension and debarment officials have only read an article in 
the paper, or they don't feel like they have enough facts in a 
particular situation.
    So they have created their own process. They issue a show 
cause letter, which is not a suspension, and they ask the 
company to come in and tell them what is going on.
    Mr. Cummings. And this is all private, right?
    Ms. Styles. Yes, sir.
    Mr. Cummings. Okay. So then the company comes in and they 
talk about what the issue is and then they either let them go 
or what?
    Ms. Styles. They oftentimes have actual filings. So it 
depends, the process varies by agency. Some of them may require 
an actual filing with the agency, some of them allow you just 
to come in and discuss the issue, make a presentation in 
person. Some agencies have both.
    At that point in time, the suspension and debarment 
official decides whether he wants to go ahead with an official 
suspension or proposed debarment process, or if he believes the 
company is presently responsible and usually he will give the 
company a letter stating that they are presently responsible.
    Mr. Cummings. Just one last thing. Talk about 
communications between agencies. Mr. Amey, you were talking 
about that. How much communication do we have between the 
agencies? Then I will finish.
    Mr. Amey. My experience is that it was very little until we 
got the FAPIIS data base. But even then, are we getting the 
right and the quantity of information that we need in there for 
the contracting officers as well as the suspension and 
debarment officials, to make the proper rulings.
    Mr. Cummings. Thank you, Mr. Chairman.
    Chairman Issa. Thank you.
    We now go to the gentleman from Tennessee, Mr. Duncan.
    Mr. Duncan. Thank you, Mr. Chairman.
    Mr. Amey, in every industry, the more it is regulated, the 
more it ends up in the hands of a few big giants, because the 
little guys just aren't able to get the contracts or the 
favorable regulatory rulings or various other things, or comply 
with all the rules and regulations and red tape. We end up with 
this big government, big business duopoly. We see that now in 
the Dodd-Frank law, because it was passed to get back at some 
of the big Wall Street banks and financial firms. Yet over 200 
small banks have gone out of business.
    I noticed in your testimony you say large contractors have 
a financial means, plus high-priced attorneys that enable them 
to negotiate an alternative to suspension or debarment. The 
possibility of delays, litigations and reductions in 
competitions can mean the difference between the maximum 
penalty and a lesser sanction. As a result, large contractors 
have an unfair advantage over smaller contractors when it comes 
to avoiding suspension and debarment.
    What do you think the Congress can do to prevent or rectify 
this problem of too big to suspend or debar, this favoritism 
that is going toward the big giants?
    Mr. Amey. I think the regulations that we have in the FAR 
will work if they are utilized properly. There is a provision 
that allows for waivers or compelling reasons determinations. 
So at that point, even a suspended or debarred contractor can 
still get new business. And we saw it with Boeing, during their 
suspension, they received multiple waivers.
    So if it is a large contractor and we do need them for the 
competition, then at that point the government can get around 
it. But at least they have the safety that they have been 
suspended, but we are going to grant them a waiver and if so, I 
think that waiver or justification should be publicly available 
so that we can all see it.
    When they are too big to suspend or debar, it is a problem. 
When MCI WorldCom was suspended, their suspension was lifted 
just days before the next big huge national telecommunications 
contract was awarded. When I called people within the agency, 
they said, we needed them to compete. So at that point, we have 
seen some tradeoffs in the system.
    Small businesses are at a disadvantage because mainly they 
are operated by a small number of operators, owners or have a 
small number of employees. So it is more difficult for them to 
take action, like in a large business where you can let go an 
executive or managers or whoever it may be that was at fault. 
We just don't see that with small or mid-size contractors. And 
they don't have the legal resources to fight, as Ms. Styles 
mentioned, of going in, receiving the show cause letter and 
then going in and doing what they need to do to protect their 
business. Unfortunately they are not in the same position as a 
large contractor with the resources they have.
    Mr. Duncan. Well, I hope that we keep that in mind as this 
legislation progresses. But before my time runs out, I want to 
ask you about something else. In your testimony you talk about 
the Inspector General for Afghanistan reconstruction and how 
all these companies and people that were still getting taxpayer 
money even though they had actively supported terrorism in 
Afghanistan and you mentioned the December letter sent by a 
bipartisan group of Senators and the January 2013 reply from 
Secretary McHugh, in which he said there was not enough 
evidence.
    What is the situation since then? Have you looked at any of 
those to see if there was enough evidence? That sound terrible, 
to keep giving taxpayer money to companies and people that are 
actively supporting terrorists.
    Mr. Amey. You are correct. We haven't looked at it because 
it hasn't been publicly available. I have had some meetings 
with people in SIGARs office. And they are still upset that the 
SDO within the Army wasn't acting on these. I do think that 
this is where, when the Secretary of the Army responded, he 
said, well, we didn't have enough evidence based on the 
evidentiary standard for debarment. But he didn't refer to 
whether there is enough evidence that for the lower standard 
for suspension.
    So the fallout of that has been that the SIGAR has actually 
asked for suspension and debarment authority. And that is 
another issue that this committee may want to consider. But 
should IGs, as kind of the investigator, the prosecutor, the 
judge and the jury then, have that much power. SIGAR, at least 
SIGIR, the Special Inspector General for Iraq Reconstruction, 
are a little different. We are spending billions of dollars 
very quickly in a contingency environment.
    Therefore I think it is worth putting on the table on 
whether they should have some kind of authority when they find 
certain evidence against contractors in those environments on 
whether they should have the authority to hold those 
contractors accountable.
    Mr. Duncan. Thank you very much.
    Lastly, very quickly, Mr. Neumann, why are there so many 
persistent problems with the SAM data base? Are those being 
corrected, do you think? A lot of complaints, apparently.
    Mr. Neumann. We have seen problems in the past with the 
data base from excluded parties, and this continues in the SAM. 
We understand that there are numerous technical glitches, 
including inability to search on DUNS number, which is a unique 
identifier for companies. So that is something that definitely 
needs to be corrected. We hope that GSA is working toward that.
    Mr. Duncan. We spend fortunes on all this technology, yet 
we seem to just take anything, if somebody says computer 
glitch, we seem to accept things that we should never accept.
    Thank you, Mr. Chairman.
    Chairman Issa. Thank you. And perhaps we should let the NSA 
do it. They seem to be able to deal with big data bases.
    [Laughter.]
    Chairman Issa. Ms. Styles, following up just on what the 
gentleman had asked, the proposal of special IGs dealing in 
foreign nations being able to essentially bypass ordinary due 
process and be the judge, jury and hangman, what do you think 
about that from OMB? Is that a process that you would support, 
essentially support Congress agreeing to in the case in which 
you are dealing with an overseas special operation generally in 
relation to a war zone? And I might mention that Abraham 
Lincoln would have supported it.
    Ms. Styles. I actually think the Army does it overseas as 
well. I think they have special people overseas to do it. In 
that situation, and I think many of your civilian agencies 
would tell you the same thing, they know and understand the 
situation, and their contractors are better, and they are able 
to assess the situation and deal with it in a more appropriate 
way, because they are there and they are close to that 
contractor.
    Chairman Issa. Thank you. The gentleman from California.
    Mr. Cardenas. Thank you very much, Mr. Chairman.
    The Federal Acquisition Regulation requires Federal 
agencies to ensure that contractors have a satisfactory 
performance record and a satisfactory record of integrity and 
business ethics before they make purchases and award contracts 
to these individuals or companies. Does the GSA suspension and 
debarment data base document a contractor's past performance 
record on prior government contracts?
    Mr. Neumann. There is some past performance information 
available. But there is information on FAPIIS, rather, that 
includes the administrative agreements and other things. But 
GSA does manage these data bases. I can get back to you with 
more specifics on that.
    Ms. Styles. There is a past performance information system 
data base that is just not publicly available. So it is part of 
the system that they are putting together. But it is not 
information that is made publicly available, it is only 
available to contracting officers.
    Mr. Cardenas. Are we dealing with one system or various 
systems?
    Ms. Styles. It is one system that we put together 
collectively. So it is all trying to be put into this system 
for award management.
    Mr. Cardenas. So different departments could actually know 
who is a good actor, bad actor, et cetera?
    Ms. Styles. Yes, sir.
    Mr. Amey. But there are questions about past performance 
information on whether it is genuine and helpful? In the past 
we have heard some examples of great inflation for past 
performance, and contracting officers will give the minimum 
grade that doesn't get them sued or involve litigation. So at 
that point, and I think it is either a GAO or recent IG report 
that even talked about the past performance information isn't 
where we really need it to be to be very helpful to contracting 
officers.
    Mr. Cardenas. And when you are talking about the government 
having to be concerned with being sued, once again, it was 
mentioned earlier, the bigger the corporation you are dealing 
with, the higher likelihood that they are going to fight with 
lawyers, et cetera and trying to protect their name.
    Mr. Amey. The larger a corporation and also it depends on 
the government's reliance on those contractors. There are a lot 
of contractors that we are giving hundreds of millions of 
dollars to, and there are a few that we are giving billions of 
dollars to annually. So at that point it is very difficult to 
hold those contractors accountable when you need them and 
different agencies need them on a daily basis.
    Even with suspension and debarment, a contractor can still 
work on their existing contracts but they are not permitted to 
get new contracts. There are even questions there when there 
are options or extensions of those should suspension and 
debarment, the rules say it can apply and they can exercise it. 
But there are questions on does that hurt government mission in 
the fact that you are taking someone out of the equation that 
was there that you are going to have a drop off and a learning 
curve to bring someone else in. So at times the system 
handcuffs the government.
    Mr. Cardenas. Yes, and the experienced legislators know 
that when you have legislation there is a big difference 
between the words can and shall, a big, big difference. So it 
is very permissible, when the word can is there, and it is open 
to interpretation.
    POGO has recommended that the contractor performance and 
responsibility system would be improved if contracting data 
were made public and posted on a public website. Mr. Amey, how 
would making past performance information publicly available 
improve the government-wide suspension and debarment process?
    Mr. Amey. In multiple ways. I think it would be more 
helpful actually to the contractor community, because we do see 
a lot of bid protests and bid protests slow down the system. So 
at that point it would be nice for contractors when, if they 
lose a contract, that they are going to know right off the bat 
before debriefing anything else, here is what the past 
performance ratings were for this specific contractor, for this 
specific program, to have it publicly available. I would assume 
that we would see a decline, at least on past performance bid 
protests.
    Also for the public. It is very difficult in the public 
side to hear about contractors who break the law, or violate 
regulations or, whether it is in a government report or in the 
news media. And then continually hear that they are performing 
well and the government keeps using them. The Army, especially 
in Iraq, has used multiple contractors that have had a laundry 
list of allegations against them. It is very difficult, I think 
public perception-wise, contractor-wise, to feel that we do 
have a level playing field for everyone in the system, both 
small businesses, mid-size businesses as well as large 
contractors.
    Mr. Cardenas. When it comes to resources for holding 
companies responsible for their actions and/or their standard, 
whether or not they are meeting our standard, are your 
resources increasing or declining to enforce that?
    Mr. Amey. Mine or the government's?
    Mr. Cardenas. Our government's resources. Because this is a 
process. It takes men and women hours and data bases, et 
cetera, it takes funding for us to be able to defend the 
government's position with these multi-billion dollar 
contracts, well, hundreds of billions of dollars in contracts 
that go across the board in any given year.
    Mr. Amey. It has kind of been an up and down system. A few 
years ago, many years ago, we cut back on the size of the 
acquisition work force, which is your contracting officers, 
which is our first line of defense. We have been cutting back 
on the IG community, which, there is return on the dollar for 
the investment that they make of their time in trying to fight 
waste, fraud and abuse.
    But as government is trying to make ends meet, I don't see 
resources increasing in those areas, and in a lot of instances, 
they are probably going to shrink to minimal levels. So it is 
something that we have to be wary of.
    Mr. Cardenas. So less resources means it is harder to 
actually hold the contractors accountable?
    Mr. Amey. It can be, but that is where the consolidation of 
all these systems is trying to make it a little easier by 
having kind of a one stop shop where a contractor can go to get 
information on past performance, get information on present 
responsibility, track records, administrative agreements, which 
should be, in this day and age, is we are trying to automate 
the process to make it a lot easier, so it is a lot less staff 
time, a lot less paper shuffling back and forth.
    But as people have mentioned, the same system has increased 
a lot in money, it is over budget and behind schedule. It has 
even been shut down because it wasn't working efficiently. So 
at that point even the systems that we are creating aren't 
working. I actually think the SAM system is a step back. The 
EPLS worked well if you knew how to use it. Now I even 
struggle, and I use these systems on an everyday basis, trying 
to find who is excluded in the new SAM system.
    Mr. Cardenas. Thank you, Mr. Chairman. I yield back.
    Chairman Issa. Thank you. The question for the committee 
might be, did we debar the person who failed on the SAM system.
    [Laughter.]
    Chairman Issa. We are not going to say IBM publicly. I 
promise you.
    We now recognize the gentleman from Utah, Mr. Chaffetz.
    Mr. Chaffetz. Thank you, Mr. Chairman. I appreciate your 
holding this, and thank you all for being here.
    Mr. Neumann, I want to ask you, the GAO did this great 
study back in 2007, April 19th of 2007. It says, thousands of 
Federal contractors abuse the Federal tax system. And right at 
the beginning, right at the very top it says, roughly there are 
$7.7 billion owed from Federal contractors that had unpaid 
Federal taxes. It went on to say that that was an understated 
number and gave some reasons why.
    Is there any sort of update to this? Is there a way to look 
at this on a more regular basis since the 2007 report?
    Mr. Neumann. I am not aware of any recent work that GAO has 
done to update that, but I can check and get back to you for 
the record.
    Mr. Chaffetz. That would be real helpful, because Mr. 
Chairman, it says in the second sentence, specifically, 27,000 
DOD contractors, 33,000 civilian agency contractors, and 3,800 
GSA contractors owed, then if you tally them up, about $7.7 
billion. Mr. Amey, I think you wanted to add something?
    Mr. Amey. If I may. Those reports were great. This issue 
has even come up recently with going after government employees 
that haven't paid their taxes, and it recently came up with 
contractors that haven't paid their taxes. That has been one of 
the systems that they have said, okay, then we need probably 
mandatory disclosure or mandatory suspension or debarment, is 
if you are a tax cheat.
    So that has been kind of the knee jerk reaction on the 
Hill. But it would be nice, even from my perspective, to get an 
update on those reports, to hold those contractors accountable 
in the present day.
    Mr. Chaffetz. Yes, and I would share with the panel, as the 
chairman knows, we passed out two bills, one that requires 
Federal workers, if they haven't paid their Federal taxes, they 
should be prohibited from getting jobs and should be relieved 
of their duties if they are unable to get on any sort of 
payment plan. And also specifically, we did one very specific 
to contractors. If they haven't paid their Federal taxes, they 
should be prohibited from getting additional Federal contracts.
    Mr. Amey. And there were some issues with those reports, 
because I think they required IRS cooperation, which isn't 
always easy, to be able to get access to those records. But 
also, in the responsibility determinations, there are annual--
--
    Ms. Styles. I was going to add, there is an annual 
certification now. So what happened since that report is that 
there was added an annual certification. Actually you will find 
in SAM, you can pull it up for any contractor, that makes a 
certification that they don't have any delinquencies over 
$3,000. So that has been helpful. People have to fill it out, 
and they have to go and look and know and realize that they 
have to go pay it before they can become a contractor.
    Mr. Chaffetz. Let me shift gears, if I could. I want to 
talk about the Department of Defense, where so many of these 
big problems are. My understanding is that DOD has set a goal 
of completing suspension and debarment referrals from the 
Inspectors General within 30 days. But the reality is these are 
taking close to 323 days, is the last average that we saw. So 
here you have the Special Inspector General, Mr. Chairman, on 
September 18th, 2012, sending us a letter saying that we have 
contractors that are affiliated with the Haqqani network, the 
Taliban, and/or al Qaeda, we as a responsible group here, the 
Special Inspector General for Afghan Reconstruction, sends this 
over to the Department of Defense and says, here are the 
problems.
    And yet, not a one of them gets reviewed, let alone 
debarred, along this process. So how do we solve that? Why not 
just give the SIGAR, in that type of setting, given the fact 
that we are funding the very terrorists that are killing our 
men and women, instead of dealing with the bureaucratic mess 
that is the Department of Defense? Mr. Amey?
    Mr. Amey. It is a really good question. I think there is a 
fear factor involved there with the checks and balances in the 
system, to make sure that the IG isn't the one making the 
findings, and then also the one making the decision on the 
future viability of that company or individual.
    Mr. Chaffetz. My understanding is, Mr. Chairman, the 
Department of Defense has one person dedicated to this. So we 
have tens of thousands of Americans serving overseas and yet we 
have billions of dollars going out the door and we have exactly 
one person to review this. Why do we allow that person to just 
ignore what the SIGAR is able to find is pretty appalling.
    Mr. Amey. I hope in my best dreams that they are not 
ignoring the problem. It is not an easy process.
    Mr. Chaffetz. Yes, but if we were talking about the Army, 
by the way, just the Army, and this person sits in the United 
States of America, doesn't even sit in Afghanistan.
    Mr. Amey. I believe there are some suspension and debarment 
officials within Iraq and Afghanistan.
    Mr. Chaffetz. If you can name one, if you can show me an 
email, point them out to us, get them back to us. Because it is 
not happening. And it is a travesty.
    Mr. Amey. I can't disagree with you more that 323 days 
seems overly excessive. So at that point I hope there is a way 
to turn these around. That is one of my suggestions for the 
Suspend Act, is to get referrals. At that point, if there is an 
argument over the evidence that the SIGAR provided to the Army 
SDO, but at least we should have some kind of decision on why 
it is taking so long, some kind of transparency in the system 
to report back on, are you considering them, have you made no 
decision at all.
    Mr. Chaffetz. Mr. Chairman, as I yield back, perhaps what 
we should do is give the Department of Defense an opportunity 
to challenge it. But if unchallenged within 30 days, then they 
do go under suspension and debarment, make the Pentagon 
probatively say no, we want to keep this person to make a case 
for it, we just can't keep taking these chances.
    I appreciate the generosity of time and yield back.
    Chairman Issa. I thank the gentleman.
    We now go to the gentlelady from Illinois, Ms. Duckworth.
    Ms. Duckworth. Thank you, Mr. Chairman, and thank you so 
much for holding this hearing today. I applaud your efforts to 
bring more accountability, efficiency and transparency to the 
Federal contracting process.
    The conversation we are having today is absolutely critical 
for fiscal responsibility of taxpayer dollars and good 
government oversight efforts. I am very much looking forward to 
working with you both on improving contracting practice at 
civilian agencies, which is the focus of today's hearing, and 
hopefully taking a closer look at the problems at the 
Department of Defense.
    The wars in Iraq and Afghanistan have showcased some of the 
difficulties in managing contractors who perform government 
contracts overseas. So far, we have talked about debarment and 
the lack of debarment for folks here in the United States. But 
as my colleague, Mr. Chaffetz, pointed out, we have a lot of 
contractors overseas who are also in need of debarment. For 
example, in 2007, the State Department came under criticism for 
its handling of the prime contractor, First Kuwaiti General 
Trading and Contracting Company, which was tasked with building 
the American embassy in Iraq.
    This committee raised concerns at that time about the poor 
workmanship performed by this contractor, as well as its past 
record of corruption, which may have been purposely overlooked. 
Suspension and debarment is one tool that the government has at 
its disposal to help ensure accountability when dealing with 
contractors. However, a tool like this is only effective if it 
is actually used.
    Mr. Neumann, GAO's recent findings shows that there has 
been little use of suspension and debarment against military 
contractors with poor performance records and documented 
ethical violations, especially overseas. Are there special 
circumstances when we are dealing with these overseas 
contractors that might account for that?
    Mr. Neumann. At the time of my review, we did find that the 
Army and other DOD components had good processes and procedures 
in place. But they do have limited staff. They have dedicated 
staff, but they get thousands of referrals every year. So that 
is something that I would defer to the Army as to what accounts 
for the time that it takes them.
    But it certainly seems that they should be investigating 
all leads. We found that they did do that in the cases we 
looked at, when they had sufficient evidence that there was 
misconduct or some other wrongdoing.
    Ms. Duckworth. Have they actually debarred anyone overseas?
    Ms. Neumann. I don't recall if they had any specific cases. 
I think there were some that involved overseas contractors when 
we looked at 75 cases. I would have to check our files to see 
how many of those, if any, were for overseas contractors.
    Mr. Amey. I believe there is one that I know of. I think 
there was a company, Agility, that has been suspended. I think 
it is even involved in current, ongoing litigation. But you 
raise a good point, and it was raised by the Commission on 
Wartime Contracting, I think they held a hearing on it, and 
some of their annual reports and their final report on the 
under-utilization, in contingency environments of the 
suspension and debarment system. Again, justifications for 
declinations, of holding contractors accountable. They did 
present in the report the unique circumstances that continency 
contracting presents.
    And then in the case of First Kuwaiti, they were the 
largest contractor that was building the Baghdad Embassy. SO it 
wasn't like, if you were, they could continue to work on that 
contract, but there would be some real questions about being 
able to use them in that environment where they have the 
logistics there, they have the people there.
    The one thing you do have to weigh in all this is fairness 
and due process for the contractors. But it is also fairness 
for the Federal Government, because you don't want to eliminate 
competition or place the government at a disadvantage by ruling 
out contractors. And there is only a certain number of 
contractors that can do big picture work. That is unfortunately 
the way we bundle contracts now.
    Ms. Duckworth. But that is how we got to $800 million 
overpaid for food contracts in Afghanistan to Supreme. Why do 
you think certain agencies will refuse to initiate sanctions 
against a company that flagrantly disregards the law? I am 
thinking specifically of the case of Academie Blackwater, which 
continued to be used as government contractors after criminal 
investigation by the U.S. Attorney at the Eastern District of 
North Carolina found out they engaged in repeated systematic 
violations of U.S. laws and regulations that protect national 
security over an extended period of time. At what point do you 
say, well, you are the only game in town so we are just going 
to continue to work with you even though we know you are 
breaking national laws? At some point you have to stop.
    Mr. Amey. You are correct. It ends up being a question of 
competition for the Federal Government. But it also ends up 
being a question of present responsibility. What you are 
looking at is this time. The time you get a referral and you 
are looking at a contractor, or a grantee and you are saying, 
are they currently, presently responsible. Usually what happens 
is, once an allegation comes out against the company, they fire 
people, they bring in a corporate compliance monitor, they 
probatively self-police and do the best they can to mitigate 
any further, and mitigate a suspension or debarment because 
they don't want that to hurt their bottom line.
    So a lot of times what SDOs are looking at is only, are you 
currently responsible now. Sometimes it may not matter what 
they did a week ago or six months ago.
    So again, suspension and debarment is not a punishment and 
therefore the SDOs are somewhat limited. Unfortunately I do 
think that we buy too much into the promises that are given by 
the contractors, and I would like to see the use of suspension 
and debarment. If we do need them again, then grant them a 
waiver. And let's bring them back in and let's justify it. 
They're suspended from future contracts, but we need them and 
here is why, and let somebody justify and go on the record, so 
at least then we know why contractors with poor performance or 
that have defrauded the government are still receiving taxpayer 
dollars, rather than having us all sit here and scratch our 
heads.
    Ms. Duckworth. Thank you, gentlemen, Ms. Styles.
    Mr. Walberg. [Presiding] I thank the gentlelady and 
recognize myself for my five minutes of questioning.
    Ms. Styles, you stated in your written testimony that the 
actual process of suspension and debarment varied widely across 
Federal agencies. You also mentioned that the lack of access 
and transparency not only creates an impediment for companies 
that are working to improve ethics and compliance programs, but 
also creates issues of fairness.
    Can you describe for us further and suggest some changes 
that might be made to improve this process?
    Ms. Styles. Absolutely. I think what you find is you have a 
written system, you have the Federal Acquisition Regulation and 
you have non-procurement rules. The problem is that the active 
suspension and debarment agencies over time have really created 
some flexible processes to get information and to be fair to 
contractors. But if you are a company that either is proposed 
for debarment or suspended, or you are a company, believe it or 
not, lots and lots of companies probatively go in to suspension 
and debarment officials to talk about compliance and ethics 
issues.
    So if something happens at their company, if there is an 
article in the newspaper, if they are under investigation, the 
first thing they do and the first thing we recommend is that 
they go in and talk to their suspension and debarment official 
about how they discovered the activity, how they detected it, 
how they fixed it, how they remediated, what they have done to 
enhance their compliance programs. So there is a lot of 
interaction that is going on between the active suspension and 
debarment offices and the contractors to recognize the fact 
that some bad things can happen in good companies who want to 
improve compliance programs, and you also have situations with 
medium size companies and small companies that get into 
trouble, didn't realize that they needed to have a compliance 
program, that they needed to have an ethics program.
    So they actually work with the suspension and debarment 
officials through these unwritten practices and using the tools 
like administrative agreement to make the companies better 
contractors.
    Mr. Walberg. How different are the procedures between 
various SDO offices?
    Ms. Styles. They are vastly different. It is like night and 
day.
    Mr. Walberg. Describe an example of working with two 
different entities on very similar issues.
    Ms. Styles. So you could work with the EPA or the Army, 
which has a more hearing-like process, they have a suspension 
and debarment official that actually acts more like a hearing 
officer. They have people that work within the office that 
present the case and that work with them, a lot of times the 
inspector general is involved in presenting the case.
    You have agencies with significantly more informal 
practices. So the General Services Administration, the Small 
Business Administration, in many respects the Air Force or the 
Defense Logistics Agency, they are much more informal. They 
will issue a show cause letter for you to come in, they will 
ask for some written statements.
    So the practices, I think the difficulty with the system 
right now and the way that it can be improved is by putting a 
lot of these unwritten policies, procedures, practices, tools 
into the FAR, into a place that anybody can understand they are 
available, even the other civilian agencies that may not know 
that there is a show cause letter or that you could have an 
administrative agreement. So that even a medium or small 
company would have fair access to the system and understand.
    Mr. Walberg. So you would say consistency would be very 
helpful for contractors?
    Ms. Styles. Absolutely. It would be very helpful just to be 
able to understand the process. Because you can't read the 
rules and understand the process right now.
    Mr. Walberg. Seems common sense. Let me follow up. In your 
written testimony you mentioned you have confronted a number of 
problems for contractors under the current lead agency process. 
What were the problems and how should we address them?
    Ms. Styles. The main problem that we see is that there is 
no actual written in the FAR articulation of what a lead agency 
is. So one agency will take the lead for the entire Federal 
Government. So one agency makes a decision if a contractor or 
individual will be suspended or debarred for the entire Federal 
Government. As you know, many contractors work with a variety 
of agencies.
    It is hard to understand how that actually happens. I have 
seen it in process where one agency sends an email to all the 
other agencies on the Interagency Suspension and Debarment 
Committee, telling them, I am taking lead agency, if you are 
interested or if you think you should take lead agency, let me 
know. It is not something that we as contractors have a lot of 
access or information to.
    But what is important are the companies that want to 
probatively go in and talk to their suspension and debarment 
official when there is an issue. That is exactly what you want. 
You want early engagement between the contractors and the 
agencies. You can't figure out on your own which lead agency 
you should approach.
    So we have had situations where we have approached the 
agency, where a contractor has the most, highest dollar value 
contracts. We assumed we were the right agency. We had 
extensive discussions and filings with the suspension and 
debarment official only to have a completely different agency 
debar the company the next day for the same issues. So that 
agency didn't tell the other agencies that they were 
considering the suspension and debarment matter of this 
particular company. So all the effort that this company went 
through to prove what they had done to remediate was for 
naught, because then they were publicly suspended.
    Mr. Walberg. Okay. Thank you. My time is expired. I 
recognize Ms. Norton.
    Ms. Norton. Thank you, Mr. Chairman. I appreciate this 
hearing.
    Mr. Amey, I have a question for you based on a report from 
the Commission on Wartime Contracting 2011. The only experience 
I know personally about debarment and contracts comes from my 
own experience as Chair of the Equal Employment Opportunity 
Commission. We worked with the Office of Federal Contract 
Compliance.
    Lots of folks wanted debarment and suspension and it rarely 
happened. But actually the OFCCP was very effective in 
combating discrimination because it did a lot of monitoring and 
nobody wanted to lose a contract or be held up as somebody who 
discriminated. So it did a quite effective job.
    I was looking for some, recognizing that debarment, for 
example is a kind of nuclear weapon, I was trying to think of 
something short of that that would get people's attention. I 
note that this Commission on Wartime Contracting from a couple 
years ago recommended something that seems to me to be very 
mild and at the very least, it would have occurred, they 
recommended that the State Department, because they were 
talking about State Department funds, document in writing their 
justification for overturning from debarment officials the 
people whose job it is to evaluate this.
    Their recommendations were suspension or debarment. Put it 
in writing, and in writing you might have thought that if you 
were going to overturn it, that that would signal not only to 
them but to other contractors, you better watch out. It is not 
as easy as you think.
    But I understand that the State Department responded that 
simply putting in writing their reasons, and surely they had 
reasons, would have been overly burdensome. So I am flummoxed 
at that. Do you agree that such a requirement to put in writing 
why you are overturning a recommendation of those closest to 
the facts would be unduly burdensome?
    Mr. Amey. I do not agree with that statement of the State 
Department. I would like to even see it expanded further, that 
we see summary data, at least, at a minimum, but all data from 
those SDOs offices on what it went through, what was presented 
by either the government or by the contractors that made them 
make any decisions, whether it is a declination or not. I think 
even if they are going to suspend or debar a contractor, I 
think there should be some kind of public display of that 
information so it does put contractors on notice.
    I think it would actually help in the sense that it would 
act as a deterrent.
    Ms. Norton. Surely, in writing, to see they will call you 
out. Particularly since this information is already available. 
It is not like they would have to gather it, assuming they did 
not make an arbitrary decision. They simply have to put down 
the data, as you indicate, and the reasons for their decision.
    Mr. Amey. Correct.
    Ms. Norton. Are you aware of why they would have considered 
such a requirement, or the other two witnesses, why they would 
have considered a requirement burdensome? Would either of you 
consider such a requirement burdensome?
    Ms. Styles. Most of the suspension and debarment agencies 
that I work with do have something in writing to the record 
about what they found.
    Ms. Norton. Sure. They will make arbitrary decisions. So 
the notion of putting it out there as a possible deterrent, 
especially when, as you have indicated, it is difficult to 
impart. Really in the case of the State Department, it amazed 
me, you were talking about $200 billion in contingency 
contracting and about a quarter of it, $60 billion, more than a 
quarter of it, was attributed to fraud and waste and abuse. 
They should have been reaching out for some way to correct 
this. But I suspect they were left with nothing to do except 
continue as they were going along.
    Do you see the same kind of waste in taxpayer dollars if 
this continues, and would you take action to see to it that 
this recommendation of two years ago from the Commission, where 
it was in fact implemented?
    Mr. Amey. Certainly. Unfortunately I think we see a lot of 
the commissions and panels that are created produce hundred-
page books and reports and then they are not acted upon. There 
are a lot of recommendations and I know that there were some 
efforts last year to pass, especially in the Senate, with 
Senator McCaskill and Senator Webb, to pass a lot of the 
recommendations that were in the Wartime Commission's final 
report. And Unfortunately a lot of them, some got into the 
Defense Authorization bill but some fell on deaf ears.
    It is an open issue and that is the kind of information 
that you hope to bring together, especially with the open 
process that the Suspend Act has had. I do applaud the chairman 
for the way that you have gone about putting it out and having 
a discussion draft that people can comment on. I think it is 
going to end up at the end of the day a better piece of 
legislation, because it will add a lot of debate to the current 
draft bill to where we can pull on the other experiences, the 
IG reports, GAO and what other commissions and panels have 
recommended.
    Ms. Norton. Ms. Styles said the information already exists. 
So Mr. Chairman, I will expect to see that information duly 
available and recorded, since there is not a compilation of new 
information. I believe calling people out, expecting things to 
overturn what those closest to the facts have said is the 
least, otherwise you leave the impression you are making 
arbitrary decisions.
    Chairman Issa. [Presiding] Would the gentlelady yield?
    Ms. Norton. I would be glad to, Mr. Chairman.
    Chairman Issa. I agree with the gentlelady that this is an 
issue that this bill may be timely to send some form of a 
message in. Ms. Styles, from your experience, would it be 
helpful if either through the letter of a new law or through, 
if you will, the report language, we made it clear that the 
harvesting, maintenance and future reference for this kind of 
material would be essential to the evaluation?
    Ms. Styles. Absolutely. I think the agencies need to keep 
an administrative record.
    Chairman Issa. Not agencies. Harvesting collection, in 
other words, centralizing. I think back to no policeman in 
Detroit would fail to want to know that there was an arrest or 
investigation in Cleveland, even if it didn't lead to an 
indictment. That is sort of the way I view it, is that 
information, even if you can't use it in court, is valuable to 
know whether you have somebody you need to look at more 
thoroughly.
    Ms. Styles. Absolutely. You can take a look at the EPA 
suspension and debarment opinions that are actually public and 
published and it helps you as a practitioner and it should help 
other people understand how the decisions are made and where 
the lines are drawn. So to the extent you can make information 
public without harming companies that the suspension and 
debarment official actually decided didn't do anything wrong, 
that is always the risk that I see.
    Chairman Issa. Thank you. I thank the gentlelady.
    We now go to the gentlelady from California, Ms. Speier.
    Ms. Speier. Mr. Chairman, thank you.
    I am flummoxed in some respects that this issue has been 
around for as long as it has. We have really done very little 
to address it. It is a system that is basically voluntary in 
terms of suspension and debarment, one in which the entity that 
has responsibility and has limited resources and an incomplete 
and unreliable data base. And we wonder why it is not working.
    This is really documented from, I believe, the General 
Accounting Office. Here is Boeing. This is no small company. 
Big company. Boeing has just charged the taxpayers of this 
Country $2,200 for a bearing sleeve that retails for $10. This 
is metal tube assembly. Boeing charged the taxpayers $12,000 
and the retail cost is $1,100.
    Now, at some point, a big company like Boeing needs more 
than a slap on the hand. Now, the likelihood of us debarring 
Boeing is pretty remote, correct? But as long as suspension and 
debarment are really not options, what is going to get the 
attention of a Boeing? To me the only thing that is going to 
get the attention of a Boeing is slapping them with hefty 
fines. I am curious, Mr. Amey, if you have any comment on that.
    Mr. Amey. Unfortunately I would have to disagree. I don't 
think fines work. Boeing has a lot of money in the bank, and 
they paid millions of dollars in fines, when they were 
suspended. They were suspended many years ago. That plus a 
personal conflict of interest that occurred with a high senior 
level official at the Air Force that went to work for Boeing in 
violation of conflict of interest standards, they were fined, 
and if I remember correctly, it was in the $600 million range.
    But since that fine has been paid, there have been multiple 
spare parts horror story reports out by the DOD IG, that has 
shown that they have over billed on spare parts, on screws, 
nuts, bolts, and the products that you just named in the most 
current report. So it is possible to suspend Boeing, even if it 
is just a portion of Boeing. That is what happened when it was 
suspended before. They suspended their missile division. They 
didn't suspend the whole company. But it did prevent at least 
that division of Boeing, that is a very large company, from 
receiving new Federal contracts. But then it was waived.
    Ms. Speier. So where are we?
    Mr. Amey. We are in a position where at least, if you go to 
suspend them, it is on record, it is, as Ms. Styles said 
earlier, it is kind of a public nightmare for them. It is a 
problem on Wall Street for a company to be suspended or 
debarred, and it puts everybody on notice that, before I award 
the next multi-million dollar contract to Boeing, I need to ask 
a few questions, I need to make sure that their compliance and 
their performance standards, as well as their level of 
professionalism and integrity, are at the top of the charts.
    Ms. Speier. Mr. Chairman, I guess my question is, are some 
of these companies too big to suspend and debar? I think that 
is the situation we are in. Because in the end, even if we 
suspend them or debar them, in the case of Boeing, it was 
waived.
    I am also concerned, Mr. Amey, maybe you can help me on 
this, John Sopko, who is the SIGAR, recently came to our 
Congressional Watchdog Caucus. It was pretty astonishing. We 
could have him come and speak to us for a full hearing and 
learn a great deal. He said, and with great frustration, that 
the Army is refusing to look at the classified evidence that 
SIGAR found to support suspension and debarment. My question to 
you, Mr. Amey, is do you think the Inspector General should 
have this authority? How else are we ever going to get some 
kind of accountability here?
    Mr. Amey. It presents a very unique situation, due to the 
fact of the SIGAR is operating in a contingency operation. So I 
may separate it from, do we want to grant all IGs the power to 
suspend or debar contractors? I would probably say no. But with 
SIGIR and SIGAR, we have had hundreds of millions of dollars 
pour into Iraq and Afghanistan. The money is being spent very 
quickly. There is a lack of oversight over the money. We are 
building things that aren't being used, we are building things 
that are being turned over, we are funding the insurgency.
    So at that point, I think there needs to be, if we don't 
grant them the suspension and debarment authority, I think we 
need to tweak the system to be able to speed it up. Waiting 323 
days for the SDO to make decisions on referrals is ridiculous. 
There needs to be more consistency in that system and speed in 
that system. The legislation may get there, and I think there 
is a point in the legislation that talks about this, only 
involves civilian agencies. But other agencies may enter 
agreements.
    So that may be something where we may want to have SIGAR, 
SIGIR, have a special inspector general for contingency 
operations, whatever it is, mandatorily have to enter into an 
agreement with a board or with an SDO to be able to get those 
decisions reviewed quicker. Because as you mentioned, it is 
problematic, especially when it is overseas money that is just 
going out the door with very little result.
    Ms. Speier. Thank you. I yield back.
    Chairman Issa. I thank the gentlelady, and I think your 
points are good.
    Before you came in, we had multiple questions along this 
line. I think the ranking member and I came to an understanding 
that at least in report language, we are going to have a 
finding in the bill that this needs to be addressed. Whether we 
address it in explicit language or more, the next time a 
special IG is appointed, these powers must be managed, there 
will be some agreed-on language. Mr. Cummings and I have come 
to a general understanding. We will work out the details. We 
would love your input.
    We now go to the gentleman from- you know, you have to sit 
in the front row when you come in early, because Lacy will get 
ahead of you.
    [Laughter.]
    Chairman Issa. The gentleman from Nevada rather than 
Missouri. Lacy, I always see you when you come in. The 
gentleman is recognized. Thank you.
    Mr. Horsford. Thank you, Mr. Chairman.
    This is actually a very important hearing, and I want to 
commend you, Mr. Chairman, and the ranking member. Because when 
you follow the money, you see where there can be efficiencies 
identified and implemented. We desperately need to find 
efficiencies. Contracting is one of the major areas.
    I want to ask, the amount of contracting and grant award 
dollars have increased from approximately $200 billion in 
fiscal year 2000 to over $1 trillion in fiscal year 2012. In 
2009, the GAO found 25 instances in which companies and 
individuals suspended or debarred for committing serious 
offenses were later awarded new contracts. Contracting 
officials either failed to check the suspension and debarment 
data base before awarding the contract, or if they did check 
it, the data base failed to turn up the name of the suspended 
or debarred entity.
    So if we had this huge increase in contracts and awards, 
did we have a corresponding increase in the workforce that is 
required to monitor whether or not these are eligible entities?
    Mr. Neumann. GAO has done a lot of work looking at the 
acquisition workforce and certainly has found that there have 
been new challenges there, particularly at certain agencies, in 
identifying the right size and the training skill set needed 
for the acquisition workforce. So that certainly is an issue.
    Mr. Horsford. So the POGO actually made a recommendation 
that the ISDC reports to Congress should include summaries of 
size and spending on the suspension and debarment workforce. 
Why is this important?
    Mr. Amey. We have seen some, first off, the ISCDs first 
report that was due in 2009 was delayed two years. At that 
point we sort of had to sit and wait for it. At least they got 
the fiscal year 2011 report out in time. But I think there is 
an effort, especially with the legislation that is on the table 
with the Suspend Act, is trying to make the government more 
effective and efficient. Currently I don't know what the total 
number is of SDOs that are in the Department of Defense, that 
are in the civilian agencies. Earlier there was a discussion on 
there are some full-time, there are some part-time. So that 
means they are sharing hats. Is that the best system?
    POGO a few years ago even found contractors, the GSA had 
contractors come in and support their suspension and debarment 
work, doing research and analytical research into the 
contractors that have allegations before them. So there is even 
a contractor workforce that is in this community, which is a 
little scary. That is one of the reasons why we have 
recommended that we have to figure out how much we are spending 
on this workforce, how many people are in this workforce, add 
consistency to the current system to make it run better.
    And then also more than likely, have to put this in the 
hands of government employees, because a lot of the data that 
is front of the SDO office is proprietary or needs to be 
protected. Therefore, especially after the week we have had 
with NSA and the ties to Booz Allen and Mr. Snowden, we do have 
to at some point ask some questions about who is in our 
workforce and what do they cost.
    Mr. Horsford. So definitely including that within a 
proposed legislation would be important, a workforce element 
within what we are trying to achieve here.
    Let me ask, 1,300 criminal, civil and administrative 
instances of misconduct for over 170 of the Federal 
Government's largest contractors. Out of the information that I 
was able to glean, what are the largest type of offenses that 
we are seeing contractors making? And specifically I want to 
know, there was an ad hoc hearing conducted where members heard 
from low wage workers who are employed by these Federal 
contractors who are being paid minimum wage with no benefits, 
even though the contractor was required to pay prevailing wage 
or Davis-Bacon wage rates and failed to do so.
    Is that an issue? If so, where can we find the 
documentation for that, and what are the other type of offenses 
that these contractors are making?
    Mr. Amey. The information you are referring to is in the 
Project on Government Oversight's Federal Contractor Misconduct 
data base. We collect annually the data on the top 100 
government contractors. So even though it is top 100, people 
have moved in and out. That is why it is 172.
    And you are hitting an issue. A few years ago, suspension 
and debarment only applied for procurement. Then it was 
expanded and it went non-procurement. So you could have a labor 
violation, a tax violation, an anti-trust violation, a worker, 
labor issues, consumer protections. So our data base includes 
all that.
    Born out of that, out of this committee in 2008, they 
passed a law to create a Federal Awardee Performance and 
Integrity Information System, it is called FAPIIS. That system 
is supposed to gather information. But it was only limited to 
procurement. So what I would recommend is, and you may want to 
go back and look at the scope of the FAPIIS legislation and see 
if it needs to be expanded to include the type of information 
you are referring to to make sure that that is on the radar of 
a contracting officer prior to award to see what the track 
record is.
    And also to the suspension and debarment officials in 
trying to make a determination of present responsibility. You 
want them to have the most accurate, complete and up to date 
report as possible on the contractors that we are working with 
to avoid risky contractors that put government agency mission 
and projects in jeopardy.
    Mr. Horsford. Thank you, Mr. Chairman. I hope that we can 
be as inclusive as possible with your proposed legislation and 
take some of these other provisions into account, your draft, 
as being considered by the full committee. Thank you.
    Chairman Issa. Thank you. The ranking member and I will be 
meeting in a few days to work out the final tweaks as a result 
of this. We would welcome your input for that.
    We now go to the always noticed gentleman from Missouri, 
Mr. Clay.
    Mr. Clay. Thank you, Mr. Chairman. I don't mind bringing up 
the rear. I will try not to take all of the five minutes.
    Mr. Neumann, Chairman Issa has a draft bill that would call 
for a board of civilian suspension and debarment that would 
consolidate more than 41 civilian agency and government 
corporation's suspension and debarment functions into one 
centralized board. This board would be responsible for, among 
other things, ensuring the excluded parties list is current, as 
well as employing a transparent case Management system that 
would allow the public to be informed of all cases.
    How effective do you believe this board would be in 
improving efficiency and transparency?
    Mr. Neumann. Given that GAO has found that there have been 
problems with the current process and the inconsistency between 
agencies on the activity level of their suspension and 
debarment programs, GAO would welcome any changes that would 
make improvements to that overall process and ensure 
consistency and transparency.
    I think it is important to note that there are certain 
characteristics that agencies will still need to have in place 
in order to get the referrals to whoever is managing the 
suspension and debarment process, including having a very 
active referral process involving IGs and other officials at 
the agency level and be trained on that, so they know what 
cases should be referred for appropriate action.
    Mr. Clay. But having a central clearinghouse, so to say, 
with timeliness being one of the major factors here, do you 
think that would make this process more efficient and 
transparent?
    Mr. Neumann. It certainly would build on some of the 
existing responsibilities of the current voluntary system under 
the Interagency Suspension and Debarment Committee. That 
committee has the charge to monitor and oversee this 
government-wide system. As we noted, it has been ineffective in 
the past. While there has been some improvements made, I think 
we still want to see some more improvement there overall.
    Mr. Clay. How likely is it that having a single point of 
authority for maintenance of the excluded parties data base 
would resolve the accuracy problems it has had over the years?
    Mr. Neumann. Do you mean the accuracy of the data base?
    Mr. Clay. Yes.
    Mr. Neumann. The problems with the data base I think are 
longstanding. So there would be, there needs to be some look at 
how to improve that particular data base. GAO has noted that as 
far back as 2005 and again in 2009, even when we did regional 
work, there are still problems with the data base.
    So I think that any efforts to take a look at the problems 
and have someone take steps to improve it would be welcome.
    Mr. Clay. I thank you for your responses.
    Mr. Chairman, that is all I have and I yield back.
    Chairman Issa. I thank the gentleman.
    I will just follow up with a quick question round that came 
from the earlier questions. Ms. Styles, the process which is 
undocumented of show cause, our legislation currently does not 
formalize that nor address the reality that it is and likely 
will continue to be done unless we either formalize it or 
prohibit it. Would you suggest that as we are preparing a final 
bill, that we do just that, either formalize it or prohibit it?
    Ms. Styles. I think it should be formalized, absolutely. It 
is a very good process. In situations where an SDO wants more 
information, they just don't always have the facts. They want 
to make sure they are dealing with an ethical contractor, but 
they don't want to suspend them unnecessarily.
    Chairman Issa. Mr. Neumann?
    Mr. Neumann. Yes, we saw that as the Department of Defense 
used those very efficiently to get more information, in some 
cases to either get the contractor to improve its ethics 
programs, or in other cases to get enough evidence to do a 
suspension or debarment. So those were very effective tools 
that they used.
    Chairman Issa. Mr. Amey?
    Mr. Amey. I believe the SDOs believe it is as well. The 
ISDC has been reporting it, on how many administrative 
agreements or how many settlements that they have entered into, 
non-prosecution agreements, different things that help them 
gather information about contractors. So I think the community 
finds it to be an important tool as well.
    Chairman Issa. So getting a three for three that would 
should formalize it. Let me just ask one question. Is this an 
appropriate place to tie in a specific, if you will, right of 
IGs to at a minimum create a mandated show cause? In other 
words, less than a direct authority to suspend or debar, the 
idea that IGs' findings in audits and other work would 
automatically empower a show cause so that they would have a 
direct part of this, their investigation would link directly to 
this process? Ms. Styles?
    Ms. Styles. I think at most of the effective agencies they 
already do. So they refer them and it automatically causes the 
show cause process to start. So it actually would be putting in 
the statute a process that already exists.
    Chairman Issa. And you had earlier said that the best part 
of our bill is that we take an executive order and put it in 
statute.
    Ms. Styles. That is correct.
    Chairman Issa. Okay. Unless I have any further thoughts 
from any of the three of you, I want to thank you for your 
generosity of time, and for helping us in what is likely to be 
a very shortly put forward piece of legislation. We stand 
adjourned.
    [Whereupon, at 11:30 a.m., the committee was adjourned.]









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