The Washington Times - February 24, 2009, 08:39AM

President Obama’s fiscal summit Monday was a fascinating event. Little at the White House goes unscripted, but there was a real sense that senior and influential lawmakers, along with issue experts, met together with administration officials who really were there to listen to them.

The flipside of that is the administration revealed almost nothing about how it plans to act on several major reform issues coming down the pike, such as health care, tax policy, entitlement spending and specific spending cuts.

Presumably the president will outline his plans in some detail Tuesday night during his address to Congress.

The summit Monday began with a few speeches and ended with Obama taking questions from a room full of lawmakers and experts. In between, administration officials met in five separate “breakout sessions” on the issues I listed above.

The sessions were open to the press, but the White House decided to use pool reporters for the breakouts, rather than letting anybody who wanted to come.

I was one of three reporters in the room to watch a session on procurement and contracting. I was the pool reporter. The other two were from wire services. So I was responsible for reporting on the session back to all the other White House reporters in a pool report.

The session was a unique opportunity to watch political heavyweights like Sen. John McCain, Sen. Joseph Lieberman, Sen. Carl Levin and a few others dialogue with top administration officials and a few issue experts in a fairly private and uncontrolled atmosphere. There were only a few White House staff in the room, and I did not see any staff for the lawmakers.

Now, I know that contracting and procurement makes tax policy look exciting to most people. Even Janet Napolitano, the secretary of Homeland Security who led the session, acknowledged that, stating at the beginning that the topic could be thought of as “dry.”

But the problems with contracting waste, fraud and abuse are costing taxpayers millions and sometimes billions of dollars a year. And the members of the group there to talk about the issue knew that. It was a spirited discussion that was kept interesting by several experienced lawmakers, foremost among them McCain, the Arizona Republican who was by turns sarcastic, grumpy and insightful. He has a keen grasp of the problems with defense spending and is unafraid to speak his mind. The fact that he lost the presidential election to Obama last fall and was on his former opponent’s turf made for an interesting subtext.

It was also a fortuitous session for me to be in. I wrote a 3,500-word piece on contracting problems back in October, as part of a three-part series on the growth of government in the Bush era (click here to read the whole series).

I’ve pasted my pool report below.


DHS Sec Janet Napolitano

Deputy Sec of State for Management Jack Lew
Sen. Levin
Sen. Lieberman
Sen. McCain
Sen. Susan Collins
Sen. McCaskill
Rep. Tom Price
Rep. Tauscher
Rep. Ed Towns
Anna Burger, Change to Win
Joe Flynn, American Federation of Government Employees
Larry Korb, Center for American Progress
Martin Regalia, U.S. Chamber of Commerce
Hilary Shelton, NAACP. 

Rahm Emanuel attended for the last 10 minutes.

Summary: this was a wonky session that Napolitano admitted at the top might be dry but covered a wide range of factors that are causing government contracting to spiral out of control. Much of the conversation revolved around why cost overruns are becoming so common, whether the government should go back to fixed-price contracts as the norm instead of the exception, and issues surrounding the federal workforce.

Levin announced he is introducing a bill that will require defense contracts to be reexamined if its cost increase more than 25 percent over its initial estimate. “It will create a presumption that a system will not continue if it breaks that barrier. …  There is presumption that a weapons system will not continue to be built, or if it is a requirement that there be a new beginning in terms of the economic assessment … the cost assessments would have to be made again,” Levin said, adding that there will also be a requirement that if there is a $100 billion umbrella contract it must be competitive.

Lieberman also announced that he and Collins have asked McCaskill to chair a new Homeland Security subcommittee on procurement oversight.

And McCain, when talking about the military, popped off on Iraq and Afghanistan: “We will be shifting those troops that come back from Iraq not back to the united states … but to afghanistan. And they’ll be gone for a long time … I think the president’s announcement of 17,000 is only a first announcement.”

Other than that, McCain was the most combative of the lawmakers. He appeared irritable and close to losing his temper at one point with Tauscher, when she said that satellite contracts in California needed to be preserved, despite cost overruns.

The funniest line of the session came from Levin. When Issa remarked that U.S. military generals and other officers in theater are controlling more money than the entire State Department, Levin blurted out, “Thank God.”

“Jack’s not smiling,” Price cracked, looking at the deputy Secretary of State.

“You’re writing who the hell invited that guy,” Levin said, laughing.

Emanuel entered at 3:24. “Oh, nice of you to join us,” said Issa. Emanuel said nothing and asked no questions.

The 90-minute session was dominated by the lawmakers. McCain, Lieberman, Levin and Issa did most of the talking, with Korb and McCaskill and Price also talking a good bit. Napolitano and Lew asked questions but said little else.

Afterward, Lieberman remarked that the session was productive, and McCaskill noted on her Twitter page: “Surprised at how productive breakout session was on procurement. McCain Collins Lieberman Issa Tauscher Price Levin Towns. All great … It was a session of good policy not politics. Makes me hopeful. If we could just keep that kind of productive atmosphere down the street.”

Your pooler was led into the fourth floor EEOB auditorium, Room 450, where a small group of lawmakers and advocacy group and think tank officials were on the dais, chatting amongst themselves and standing. There were no staff with the lawmakers that I saw.

Everyone sat down in folding chairs arranged in a circle. Napolitano, who was facing away from us, began session by saying that procurement sounds dry but that it quickly gets into issues of good governance, and then had the group go around the circle and introduce themselves.

Order of circle: Napolitano, Shelton, Burger, Price, Lieberman, Flynn, McCasill,Collins, Lieberman, Levin, Korb, Tauscher, Issa, Regalia, Towns, Emanuel’s empty seat and Lew.

Lew started off session by he wants more progress toward competitive contracting and asked the group for their ideas.

Napolitano took down the group’s ideas and ran them down at the end, saying she was taking the list to brief the president before the start of the last session, an address by POTUS to the summit attendees in the same room.

Here are some of the policy issues that were discussed. If something is a direct quote, it’s in quotation marks. If not, it’s paraphrase.

Collins: Procurement last year was $532 billion, a 141 percent increase from 2001 to 2008. But at same time procurement work force has dropped by 22 percent. If you look at why there’s insufficient competition, there’s poor defining of requirement’s, poor mgt of contracts, there are these enormous task orders that are not competed … “It all comes down to an insufficient number of procurement officials.” the problem’s going to get worse — 2012, 50 percent of procurement workforce is eligible to retire — we don’t have the people coming through the system to replace them.

McCain: the record is very clear … we have seen a consolidation in defense corporations. That was encouraged by both republican and democrat administrations …. now they have three or four names … we have had a decrease in competition. “And so we’ve ended up with a defense industry that is both noncompetitive and unregulated .. the worst of all worlds.”

Lieberman: More than 50 percent of procurement contacts every year go to services … There is a law forbidding gov’t from contracting for inherently governmental functions: “It is obvious that they’re not following that law.”

said contractors are outmaneuvering procurement officials

McCain: “there have been so many cost overruns .. that it’s sort of a routine thing now. We’re sort of notified and it’s business as usual … it used to be a big deal.”

McCaskill: all kind of people that work at DHS that should be gov’t employee are contractors. It’s easier to hire contractor but far more expensive: “thats stupid.”

Napolitano: “we’re looking at that very hard right now”

Issa: people should not be able to take a fed workforce, all of whom have healthcare, and then be able to take it and sub it out where you don’t Intellectual property – contractors are sucking up federal dollars by retaining rights to material they produce, which forces the gov’t to keep coming back and paying time and again.

Fed workforce: at the end of 25 years benefits go down and the incentive for staying decreases … should pay “premiums” to those who stay beyond retirement

Lew’s second question: How do you deal with surge requirements … how do we meet surge needs while trying to move toward less and less contracts?

Burger: violations of law and of environment are not being enforced against contactors

Levin: the law is not being enforced

McCaskill: “there should be somebody at justice with the authority to look at violations within the contracting world.”

McCaskill: “[Internet Technology] has been a huge, huge black hole …. we could spend a whole afternoon talking about …. the massive amount of waste”

gov’t didnt know what it wanted … there has been this reluctance to admit that costs have gone down the road and start over … making it worse.

Hard to attract IT specialists into gov’t “part of the silver lining of what’s going on right now is that there are more good IT people available”

McCain: there was a time when we had fixed costs contracts, period. Maybe we ought to say, technical changes, count that into your bid .. instead of these constant cost overruns.”

Levin: there are times when the military needs to stop trying to add the latest technology that leads to cost hikes and delays in process and just go with what they’ve got “you’ve got to take a damn good plane that is 80 or 90 percent instead of ever looking for the better the better the better”

McCaskill: “The IG community … has also suffered. Their workforce has in fact shrunk.” and some IG’s think they should be cheerleaders not watch dogs

McCain said the Pentagon should implement something like the Goldwater/Nichols act of 86 to their civilian side. Lieberman said DHS should have something like that as well.

Collins said that the government needs something similar to the Nunn-McCurdy Act for IT, to keep track of projects and protect against waste.

— Jon Ward, White House reporter, The Washington Times


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