The White House is urging contracting officers at agencies across the federal government to review news coverage as they vet companies competing for federal contracts.
A recent memo by the Office of Management and Budget’s Office of Federal Procurement Policy outlines broad recommendations on gauging “past performance” — a key determination for contracting officers as they decide whether companies will be likely to complete contracts.
“Review articles and other publications and for timely and relevant news about a contractor’s performance or business integrity,” said the July 10 memo issued by the procurement policy’s acting chief, Lesley Field, who also recommended “research steps” on major acquisitions.
The memo, which has received scant attention, doesn’t mention any specific contract awards or companies. But it was issued just as lawmakers began raising questions about past performance vetting in the case of a background check company deemed “low risk” despite being sued by the Justice Department.
Two prominent lawmakers on opposite sides of most issues — Rep. Elijah E. Cummings, Maryland Democrat and ranking member of the House Oversight and Government Reform Committee, and Sen. Tom Coburn, Oklahoma Republican — issued a joint letter to the Department of Homeland Security questioning the award of a $190 million contract to background check contractor USIS.
The award was granted months after the Justice Department sued the Falls Church-based company over accusations that it falsely claimed to have finished hundreds of thousands of investigations from 2008 to 2010.
While a competing bidder protested, USIS officials defended the award, saying in a statement that the company’s professional services division won the award after a rigorous two-year competition that followed “longstanding government procurement procedures.”
Company officials also said they are cooperating with government investigations and have “implemented extensive changes to business processes, internal controls, organizational structures, management, and personnel.”
Under federal procurement law, agencies must determine that contractors are “presently responsible.”
Alan Chvotkin, executive vice president of the Professional Services Council, a prominent contractor trade group whose members include USIS, said news coverage can be taken into account but shouldn’t be a determining factor in whether contractors are eligible to bid.
“One of the concerns we have is that so often the initial press reporting doesn’t reflect what’s happened or the subsequent activity,” Mr. Chvotkin said. “Contracting officers need to rely more than just on a news story.”
He said it’s hard to say how many companies are affected by negative publicity when it comes to competing for federal contracts but added that some decide the potential headaches aren’t worth it.
“The headlines add an element of risk,” he said. “I don’t think the government has an appreciation for or much consideration of the reputational risk for companies from the instant analysis and commentary,” Mr. Chvotkin said.
He said some companies that had capabilities and never did anything wrong were considering bidding for work in Iraq and Afghanistan but backed out because of negative publicity surrounding military contractors.
“I’ve had CEOs and analysts say the companies aren’t going to be bothered,” he said.