[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.
____________________