[Congressional Record Volume 154, Number 65 (Wednesday, April 23, 2008)]
[House]
[Pages H2574-H2577]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




              GOVERNMENT FUNDING TRANSPARENCY ACT OF 2008

  Mr. TOWNS. Mr. Speaker, I move to suspend the rules and pass the bill 
(H.R. 3928) to require certain large government contractors that 
receive more than 80 percent of their annual gross

[[Page H2575]]

revenue from Federal contracts to disclose the names and salaries of 
their most highly compensated officers, and for other purposes, as 
amended.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                               H.R. 3928

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Government Funding 
     Transparency Act of 2008''.

     SEC. 2. FINANCIAL DISCLOSURE REQUIREMENTS FOR CERTAIN 
                   RECIPIENTS OF FEDERAL AWARDS.

       (a) Disclosure Requirements.--Section 2(b)(1) of the 
     Federal Funding Accountability and Transparency Act (Public 
     Law 109-282; 31 U.S.C. 6101 note) is amended--
       (1) by striking ``and'' at the end of subparagraph (E);
       (2) by redesignating subparagraph (F) as subparagraph (G); 
     and
       (3) by inserting after subparagraph (E) the following new 
     subparagraph:
       ``(F) the names and total compensation of the five most 
     highly compensated officers of the entity if--
       ``(i) the entity in the preceding fiscal year received--

       ``(I) 80 percent or more of its annual gross revenues in 
     Federal awards; and
       ``(II) $25,000,000 or more in annual gross revenues from 
     Federal awards; and

       ``(ii) the public does not have access to information about 
     the compensation of the senior executives of the entity 
     through periodic reports filed under section 13(a) or 15(d) 
     of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a), 
     78o(d)) or section 6104 of the Internal Revenue Code of 
     1986.''.
       (b) Regulations Required.--The Director of the Office of 
     Management and Budget shall promulgate regulations to 
     implement the amendment made by this Act. Such regulations 
     shall include a definition of ``total compensation'' that is 
     consistent with regulations of the Securities and Exchange 
     Commission at section 402 of part 229 of title 17 of the Code 
     of Federal Regulations (or any subsequent regulation).

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from New 
York (Mr. Towns) and the gentleman from Virginia (Mr. Davis) each will 
control 20 minutes.
  The Chair recognizes the gentleman from New York.
  Mr. TOWNS. Mr. Speaker, I yield 5 minutes to Chairman Waxman, the 
gentleman from California.
  Mr. WAXMAN. Mr. Speaker, my colleagues, this is the third of the 
three bills we had before us out of the Oversight and Government Reform 
Committee dealing with contracting issues. And I rise in strong support 
of this bill, H.R. 3928, the Government Funding Transparency Act. This 
bill requires contractors and other entities that are dependent on 
taxpayers funds for more than 80 percent of their annual gross revenue 
to disclose the names and salaries of their most highly compensated 
officials.
  This requirement is similar to requirements that already apply to 
publicly traded companies under the rules of the Security and Exchange 
Commission and to nonprofit organizations through the Tax Code. It is 
based on a very simple principle. If you receive the vast amount of 
your revenue from the public, then the public has a right to know how 
that money is being spent.
  The need for this bill became evident when the head of Blackwater, 
the private security military company, refused to tell Congress how 
much it earns, how much he earns. Blackwater gets almost all of its 
revenue from contracts with the Federal Government, yet Eric Prince, 
the head of the company, refused to answer Congressman Murphy when Mr. 
Murphy asked how much he earned.
  As originally introduced by Representative Murphy last October, H.R. 
3928 would have applied only to government contractors. Some felt that 
this approach unfairly singled out those entities, and we worked with 
the ranking member of the committee, Representative Tom Davis, to 
address this concern. And I believe that the result is a much stronger 
bill.
  The measure before us today applies to any entity that receives 
government funding, whether through a contract, grant, cooperative 
agreement, subsidy or any other form of Federal funding. The measure 
will bring much needed sunshine to how tax dollars are spent, including 
on contracts. Under the bill, companies that are privately held that 
receive the vast majority of their revenues from taxpayers' dollars 
would be required to disclose the salaries of their top officers.
  I want to congratulate and express my appreciation to Congressman 
Murphy for introducing this commonsense bill. American taxpayers have a 
right to know where their hard earned dollars are going.
  I commend the sponsor and those who have worked on this bill on both 
sides of the aisle. And I urge my colleagues to support this bipartisan 
piece of legislation.
  Mr. DAVIS of Virginia. Mr. Speaker, I yield myself such time as I may 
consume.
  (Mr. DAVIS of Virginia asked and was given permission to revise and 
extend his remarks.)
  Mr. DAVIS of Virginia. Let me thank Chairman Waxman and the author of 
this bill, Mr. Murphy of Connecticut, for reaching out. I think we have 
a pretty good work product at the end of this. I think what started as 
a germination of one idea going in one direction, as we sat and 
discussed and talked about it, we have a more inclusive bill that I 
think gets the gentleman the information that he thought should be 
public. But I think is even more encompassing and shines even more 
sunshine on government. And I'm happy to get up here today and speak 
for this legislation.

                              {time}  1230

  Specifically, H.R. 3928 will require any nonpublic company receiving 
more than $25 million from the Federal sources, whether it is grants, 
loans, cooperative agreements, contracts, and other forms of financial 
assistance and earning 80 percent of its revenue from those sources, to 
disclose the names and total compensation of the organization's five 
most highly compensated officers. The mandatory disclosure of this type 
of information on a public Web site is what will ensue.
  As introduced, the bill would have accomplished, I think, a much more 
limited scope, but in working with the author of this bill, we now 
expand the Federal Funding Accountability and Transparency Act that was 
authored last year by myself and Mr. Blunt and in the Senate by Mr. 
Coburn and Mr. Obama, to include compensation disclosures for all 
entities receiving more than $25 million a year.
  This isn't a contracting reform bill in the strictest sense of the 
word, but it is a disclosure bill that I think will shed much sunlight 
on government. And transparency in government is very fundamental. 
Sunshine is the best disinfectant.
  I want to again thank Chairman Waxman and Mr. Murphy and their staff 
for a willingness to work to make an open-government bill, one that I 
think will have good ramifications in the years ahead.
  Today we rise to take up H.R. 3928, the Government Funding 
Transparency Act. This legislation would expand the Federal spending 
database created by the Federal Funding Accountability and Transparency 
Act of 2006 to include information about the compensation of management 
officials of private entities receiving most of their revenues from the 
Federal Government.
  Specifically, H.R. 3928 would require any non-public company 
receiving more than $25 million from Federal sources--such as grants, 
loans, cooperative agreements, contracts, and other forms of financial 
assistance, and earning 80 percent of its revenue from those sources--
to disclose the names and total compensation of the organization's five 
most highly compensated officers.
  As introduced, the bill would have set the threshold at $5 million 
from Federal sources instead of the $25 million threshold in the bill 
we are considering today; focused exclusively on ``contracts'' rather 
than all recipients of Federal funds; required a contract certification 
regarding the percentage of revenues received from the Federal 
Government; and placed the salary information on the Federal 
Procurement Data System, which is only for information on Government 
acquisitions.
  The mandatory disclosure of this type of information--on a public Web 
site--would have had no useful purpose for contracting officials.
  Information regarding salaries of top company officials can be useful 
under certain cost-type contracts where the Government reimburses a 
firm for its reasonable and allowable costs plus a fee. Under current 
acquisition regulations governing such contracts, this information is 
already available to Government contracting officials. In fact, 
procurement regulations place a ceiling on executive compensation costs 
which can be reimbursed under such cost-type contracts.

[[Page H2576]]

  Moreover, this information is also available to contracting 
officials--to the extent it is relevant--during the negotiations 
leading up to the award of a fixed-priced contract.
  As introduced, H.R. 3928 would have accomplished nothing other than 
to discourage the participation of privately held firms in the 
Government market--which would decrease competition and, ultimately, 
increase Government costs.
  I am pleased to say I have been able to work with Chairman Waxman and 
the bill's sponsor, Mr. Murphy of Connecticut, to bring to the floor 
today a bill which has matured into an ``open government'' bill.
  The bill now expands the Federal Funding Accountability and 
Transparency Act of 2006, authored by Mr. Blunt and me last Congress, 
to include compensation disclosure for all entities receiving more than 
$25 million a year in Government funds from such sources as contracts, 
grants, loans, cooperative agreements and other forms of financial 
assistance--as long as these Federal funds make up 80 percent or more 
of their income.
  But again I must say, this bill, while much improved, is not a 
``contracting reform'' bill and will do little to improve the ability 
of the Federal Government to get the best value goods and services it 
needs at fair and reasonable prices.
  But, transparency in Government is fundamental--as I've always said, 
``Sunshine is the best disinfectant.'' So I thank Chairman Waxman and 
Mr. Murphy and the staff for their willingness to work with us to make 
this an ``open government'' bill.
  Mr. Speaker, I reserve the balance of my time.
  Mr. TOWNS. Mr. Speaker, I yield 5 minutes to Congressman Murphy who 
is the author of the bill who has done a fantastic job. I think the 
people in this country should be very proud of him and his work.
  Mr. MURPHY of Connecticut. Mr. Speaker, I rise today to speak in 
support of this very important commonsense legislation, the Government 
Funding Transparency Act 2008. I would like to thank, of course, 
Chairman Towns for his work on the subcommittee, Chairman Waxman for 
his early and active support on this legislation, and especially to the 
ranking member, former chairman, Mr. Davis, who we were able to work 
directly together with over the past days and weeks to make this, as he 
states, I think a much stronger bill and one that answers many of the 
concerns that were raised by Mr. Davis, his office, and members of the 
minority of the committee.
  Mr. Speaker, as described, the Government Funding Transparency Act 
will require that companies who receive more than 80 percent of their 
income in annual gross revenue from the Federal Government and more 
than $25 million worth of Federal work in any given fiscal year 
disclose the salaries of their most highly compensated employees.
  This disclosure would be, as Representative Davis noted, posted on an 
existing OMB Web site, www.USAspending.gov, which was authorized as 
part of the Federal Funding, Accountability, and Transparency Act, a 
bipartisan measure passed by the 109th Congress.
  As pointed out in a recent GAO report, buying services accounted for 
60 percent of the total 2006 procurement dollars. And expenditures on 
security services, due to our engagement in the wars in Iraq and 
Afghanistan, have forced those service expenditures to increase 
substantially.
  In addition, according to that same Web site, we have seen an 
increasing number of contracts that weren't competed at all. In fact, 
in 2000, the amount of contracts not competed was $48 billion, just 
north of there; and in 2007, 7 years later, that number had ballooned 
to $112 billion.
  And yet with such a substantial increase in government funding going 
to companies through no-bid processes, these companies are virtually 
subsidiaries of the United States government taking in 80 to 90, 
perhaps 100 percent of their revenues from U.S. taxpayers. We don't 
know enough about these tax companies. We don't know their management 
practices, their financial statements, or their employment policies. 
They are often highly and tightly held secrets not subject to public 
scrutiny.
  So it is not surprising, as Chairman Waxman mentioned in October 2007 
when the full Oversight and Government Reform Committee brought the CEO 
of Blackwater before us, one of the largest government contractors, 
taking in nearly 90 percent of their revenue contracts from Federal 
contracts, the CEO of that company, Eric Prince, refused to disclose to 
Congress the amount of profit that company makes or the amount of 
salary that he took in; yet despite the fact that 90 percent of that 
salary, 90 percent of the company's revenues, come from the United 
States' taxpayers.
  It's our money. We deserve to know how it's being used. Regardless of 
your position on this war or any other war, we deserve to know whether 
or not public funds are being used to unjustly enrich government 
contractors.
  But this principle, as Representative Davis and others pointed out, 
shouldn't just be applied to these types of private security or service 
contracts. It should be required of all entities that make the vast 
amount of their earnings, over 80 percent, from U.S. taxpayer dollars. 
And I would especially like to thank Representative Davis and 
Representative Foxx for their advocacy for this principle.
  Importantly, it's important to note that this bill will actually only 
affect a limited number of companies, only those entities that subsist 
almost entirely on Federal money and only those that are not publicly 
traded, since public companies who do the lion's share, frankly, of 
Federal contracting, already disclose executive compensation 
information.
  Mr. Speaker, profit is clearly a powerful motive, and this 
legislation does nothing to remove this incentive from our Federal 
contracting structure. But when it comes to private companies like 
Blackwater and others that would not exist if it wasn't for United 
States taxpayer dollars, the taxpayers and this Congress should have 
the information necessary to decide whether we've gone too far in 
padding the personal pockets of those who feed at the government 
trough.
  As the late Supreme Court Justice Brandeis said, sunlight is the best 
disinfectant. I believe this legislation will apply a little bit more 
sunlight to the Federal funding process.
  Again, I thank the chairman and the ranking member for their 
assistance on this legislation. And I know that this body will agree 
that as stewards of the people's treasure, we must do everything in our 
power to make sure it's being spent justly and responsibly. Again, I 
thank the chairman.
  Mr. DAVIS of Virginia. I would yield back the balance of my time, Mr. 
Speaker.
  Mr. TOWNS. Mr. Speaker, I yield 1 minute to Congressman Welch.
  Mr. WELCH of Vermont. As a cosponsor, I strongly support this 
legislation.
  It was pretty shocking what we heard when this came up. Mr. Eric 
Prince of Blackwater was in before our committee, and the question was, 
how did your contracting go from $75 million to over $1 billion. And 
then in the course of it, what was your salary. He admitted to about $1 
million in salary but then also disclosed there's about a 10 percent 
profit, which would mean, just by doing plain math, $100 million just 
in the bottom-line profit to the sole owner. We don't know exactly 
whether that's the case, but that's certainly the way it looks.
  Mr. Murphy's legislation will let the taxpayers know how much they 
are spending that goes to the bottom-line profit of an individual in 
this war when our soldiers are working so hard in such danger and 
getting so little pay for it.


                             General Leave

  Mr. TOWNS. Mr. Speaker, I ask unanimous consent that all Members may 
have 5 legislative days in which to revise and extend their remarks.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from New York?
  There was no objection.
  Mr. TOWNS. Mr. Speaker, H.R. 3928, the Government Funding 
Transparency Act of 2008, will provide more information about executive 
pay at large organizations that get almost all of their revenue from 
Federal taxpayers' dollars. It closes a loophole in the current law.
  Right now, the salaries of most people who are paid from Federal 
funds are public information. The salaries of every Member of Congress 
is public information. However, large private companies that draw most 
of their revenue from Federal funds have no such requirements. As a 
result, nobody knows

[[Page H2577]]

if the taxpayers are funding enormous executive pay packages.
  This bill is intended to apply the same standards of transparency to 
these large companies that apply to other people and groups that 
benefit from Federal expenditures. For example, each year the Federal 
Government spends hundreds of billions of dollars on contracts. In 2006 
alone, the Federal Government spent over $400 billion.
  This increase in spending has enriched Federal contractors by way of 
record-breaking profits and escalating executive compensation. Yet, 
although the government spends billions of dollars on private 
contractors, the American taxpayers and Congress know very little about 
the financial and compensation policies of these firms.
  This bill is very narrowly targeted. It requires disclosure of 
executive pay only from private companies that bring in more than $25 
million a year in Federal funds and only if those Federal funds are 
more than 80 percent of the company's revenue.
  The executives of companies falling into that category are basically 
being paid by the taxpayers, and the taxpayers have a right to know 
where their money is going. I don't have a problem with people making 
money. That's okay. That is not what this bill is about. It is about 
getting the information needed to see if taxpayers' dollars are being 
well spent. That is important.
  If a company whose revenue is primarily from government funds can pay 
its executives millions of dollars, it raises questions about whether 
the government is getting a good bargain. It suggests the government 
could spend its money more efficiently through more competition or more 
different requirements. Enormous taxpayer-funded pay packages should be 
a trigger for more oversight of the programs involved.
  The sponsor of this bill, Mr. Murphy from Connecticut, has put in a 
lot of work on this bill because he recognizes the importance of 
greater transparency and the need of safeguarding tax bill dollars from 
waste, fraud, and abuse.
  Mr. Speaker, this bill is an important step towards our goal of 
improving accountability and transparency in Federal spending. We 
should know whether taxpayers are footing the bill for high salaries 
paid to executives. I fully support its passage, and I urge my 
colleagues to do the same.
  Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from New York (Mr. Towns) that the House suspend the rules 
and pass the bill, H.R. 3928, as amended.
  The question was taken; and (two-thirds being in the affirmative) the 
rules were suspended and the bill, as amended, was passed.
  The title was amended so as to read: ``A bill to amend the Federal 
Funding Accountability and Transparency Act of 2006 to require certain 
recipients of Federal funds to disclose the names and total 
compensation of their most highly compensated officers, and for other 
purpose.''
  A motion to reconsider was laid on the table.

                          ____________________