The drone that wouldn’t die: How a Defense contractor bested the Pentagon

With large budget cuts looming in the next decade, top Air Force officials knew last year they needed to halt spending on some large and expensive programs. So they looked for a candidate that was underperforming, had busted its budget, and wasn’t vital to immediate combat needs.

They soon settled on the production line for a $223 million aircraft with the wingspan of a tanker but no pilot in the cockpit, built to fly for a little over a day over vast terrain while sending imagery and other data back to military commanders on the ground. Given the ambitious name “Global Hawk,” the aircraft had cost far more than expected, and was plagued by recurrent operating flaws and maintenance troubles.

“The Block 30 [version of Global Hawk] is not operationally effective,” the Pentagon’s top testing official had declared in a blunt May 2011 report about the drones being assembled by Northrop Grumman in Palmdale, Calif.

Canceling the purchase of new Global Hawks and putting recently-built planes in long-term storage would save $2.5 billion over five years, the service projected. And the drone’s military missions could be picked up by an Air Force stalwart, the U-2 spy plane, which had room for more sensors and could fly higher.

But what happened next was an object lesson in the power of a defense contractor to trump the Pentagon’s own attempts to set the nation’s military spending priorities amid a tough fiscal climate.

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No leeway on contractor campaign gifts

A district judge’s rejection of a request by three federal contract employees to temporarily relax a long-standing ban on contractor campaign contributions likely prolongs the uncertainty on the issue during the first full election cycle since the Supreme Court’s landmark 2010 Citizens United v. Federal Election Commission ruling on corporations and politics.

On April 16, U.S. District Judge James Boasberg denied a request for a preliminary injunction filed by three corporate employees — two under contract with the U.S. Agency for International Development and one who supports the Administrative Conference of the United States, an independent agency that uses research and private sector expertise to improve the government’s rule-making.

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Budget encourages contractors’ political contribution disclosures

The Obama administration has not backed off its plan to require contractors to disclose political campaign contributions when they submit contract bids.

The idea first surfaced in April 2011, when the administration began circulating a draft executive order that would have directed agencies to gather information from companies about their political contributions. The administration had hoped such transparency would prevent contributions from influencing contract decisions.

The plan had sparked strong objections on Capitol Hill, leading to the introduction of several bills as well as congressional hearings.

During one hearing in May, senators warned Dan Gordon, then administrator of the Office of Federal Procurement Policy, of the consequences of such a rule. Gordon would not comment on the proposal at the hearing because it was only in draft form. However, he said evaluations of companies’ bids should be objective and should not be influenced by who or what a bidder supports. And if a company believes its bid was unfairly evaluated, he said the firm have recourse by filing a bid protest.

Congress has already blocked the controversial proposal though. With support among both Republicans and Democrats, the fiscal 2012 National Defense Authorization Act included a provision that blocks the disclosures with bids. President Barack Obama signed the bill into law in January.

About the Author: Matthew Weigelt is a senior writer covering acquisition and procurement for Federal Computer Week. This article appeared Feb. 13, 2012 at

OFPP and the dangers of politicizing procurement

Keep political rhetoric out of procurement policy.

That’s the advice some acquisition experts would like to share with Joe Jordan, President Barack Obama’s nominee to lead the Office of Federal Procurement Policy.

They say it is tempting for a new OFPP administrator to inject some campaign-style thinking into his job, but it generally ends up distracting him from the task at hand: creating sound procurement policy.

“His highest priority should be improving the procurement process instead of getting sucked into campaign rhetoric and high-profile — but ultimately empty — gestures,” said Steven Schooner, a professor of government procurement law and co-director of the Government Procurement Law Program at George Washington University.

At a time of heightened concern about government spending, procurement policy could be a legitimate issue in campaign politics. Unfortunately, what sounds good in a stump speech doesn’t always work well as policy, said Larry Allen, president of Allen Federal Business Partners.

“You need to be able to tell your superiors ‘no’ to some of their ideas that might end up causing disruptions to the procurement program,” he said.

Experts say that for the most part, former OFPP Administrator Dan Gordon managed to keep politics out of procurement. He focused on three primary tenets: ensuring fiscal responsibility, reducing high-risk contracts and strengthening the acquisition workforce. In an interview with Federal Computer Week in December 2011, Gordon reiterated those points, adding that his successor should keep them as the highest priorities.

Gordon left the post at the end of 2011 to become associate dean for government procurement law studies at George Washington University.

Nevertheless, the Obama administrator has had a tendency to view the procurement process as fodder for the campaign trail by focusing on issues such as insourcing and contractors’ political contributions, Schooner said.

He added that Jordan should steer clear of such tactics and instead focus on improving the skills of the acquisition workforce and defining clear regulations that empower employees to make wise decisions on the government’s behalf.

Gordon earned respect from the acquisition community by reinstituting the Frontline Forum, which gives acquisition employees the opportunity to discuss key challenges and concerns in face-to-face meetings with the administrator. Gordon also initiated the Mythbusters campaign to clarify misconceptions among government and industry employees that hinder the procurement process.

“Personally, I think the most successful administrators have reached out to, engaged with, and won the confidence and support of the acquisition community,” Schooner said.

Before joining the Office of Management and Budget in early December as a special assistant to Acting Director Jeffery Zients, Jordan was associate administrator of government contracting and business development at the Small Business Administration.

He also spent a number of years in the private sector. He worked at global consulting firm McKinsey and Co., where he specialized in developing purchasing and supply management strategies for a number of industries, and he managed operations at Backwire, a Web-based publishing and marketing firm.

“His experience gives him a unique perspective on the effects government acquisition policies can have on businesses of all sizes, and we believe that sensitivity will help drive sound polices,” said Stan Soloway, president and CEO of the Professional Services Council.

Jordan might also be well-prepared to tackle some key small-business issues, such as how small companies have suffered as a result of the government’s insourcing efforts, said Robert Burton, former deputy OFPP administrator and now a partner at Venable law firm.

In recent months, several members of Congress have introduced legislation that seeks to reform small-business procurement, including bills that would increase the government’s 23 percent goal for small-business contracting and add consequences for missing the mark.

However, Allen cautioned against narrowing the OFPP administrator’s broad responsibilities. In other words, “don’t try to be the head of the SBA or some other government organization from this position,” Allen said.

Jordan will have his hands full. Allan Burman, who served as OFPP administrator in the early 1990s, said the administrator needs to communicate with disparate groups in the procurement community, including federal employees, contractors and members of Congress, who play a major role in acquisition.

“It helped me get in good standing by doing that,” said Burman, who is now president of Jefferson Solutions, the government consulting practice of Jefferson Consulting Group.

About the Author: Matthew Weigelt is a senior writer covering acquisition and procurement for Federal Computer Week. This article was published on Feb. 10, 2012 at

Gordon: Look to component BPAs, not interagency contracts, for inefficiencies

Federal agencies do not, in fact, spend $200 billion annually through interagency contracts–they spend more like $50 billion, and most of that through General Services Administration schedule contracts, said Dan Gordon, administrator of the Office of Federal Procurement Policy. Gordon testified May 25 before the Senate Homeland Security and Governmental Affairs Committee.

The number of interagency contracts have been the subject of much hand wringing during the past few years, but the $200 billion figure often cited as annual volume in fact represents the amount agencies spend through indefinite delivery, indefinite quantity contracts, whether set up for interagency purchases or not, Gordon said.

Of the $50 billion that is spent through interagency contracts–whereby one agency places orders for goods or service through a contract vehicle managed by another agency, usually paying a transaction fee of less than 1 percent–slightly less than $40 billion goes through GSA schedule contracts, Gordon said. Several billion dollars are spent via governmentwide acquisition contracts, which are interagency vehicles for the purchase of information technology only. “What’s left over is a small number of contracts,” Gordon added.

One of the main arguments against interagency contracts is that they undermine the ability of the federal government to consolidate its purchasing power since it presents multiple access points to industry. (Advocates argue that technology procurement in pre-competition days was awful, since procurement officials in charge of monopolistic governmentwide contracting lacked incentive.) But, according to Gordon, the real challenge to purchasing power dispersal isn’t from interagency contracting, but from intraagency contracting.

“Far too often, separate and redundant contracts and BPA–blanket purchase agreements–are awarded by each agency component to serve a narrow customer base, which duplicates effort and denies us the benefit of the federal government being the world’s largest customer,” he added.

Whereas it’s possible to track down with exactitude the number of interagency contracting vehicles–via a private sector database, Gordon said–the number of BPAs remains a mystery. “If you asked me how many BPA exit under the [GSA] schedule, the answer is I don’t know,” he explained.

In response to a question during the hearing from the committee’s ranking member, Susan Collins (R-Maine) about a controversial  draft executive order that would require potential federal contractors to disclose political contributions, including those to independent third parties, Gordon refused to comment directly. However, he said that the Obama administration “will protect our contracting system from any appearance of political influence.”

Collins said the draft order, if enacted, would do exactly that. “Businesses are going to decide that the system is stacked against them, and not bother to submit a bid. Because otherwise, why would this information be required?” she said.

Meanwhile, the House of Representatives attached on the evening of May 25 an amendment to the fiscal 2012 national defense authorization bill that would preclude the executive branch from ever implementing such an executive order. The amendment, sponsored by Rep. Tom Cole (R-Okla), gained 261 votes in favor, including from 26 Democrats. Only one Republican, Rep. Walter Jones (N.C.) voted against it.

– by David Perera – Fierce Government – May 25, 2011 at

Administration set to order contractors to disclose campaign contributions

Prospective federal contractors would be required to disclose to government procurement officials political contributions dating back two years prior to bidding on a new project, according to controversial guidance being drafted by the Obama administration.

The draft executive order, which has circulated on the blogosphere for about a week and which was independently obtained by Government Executive, would require companies bidding on agency contracts to release a list of contributions or political expenditures that total in excess of $5,000 made on behalf of federal candidates, parties or political action committees.

“It is incumbent that every stage of the contracting process — from appropriations to contract award to performance to post-performance review — be free from the undue influence of factors extraneous to the underlying merits of contract decision-making, such as political activity or political favoritism,” the order states. “It is important that the contracting process not only adheres to these principles, but also that the public have the utmost confidence that the principles are followed.”

The disclosure would be required whenever the aggregate amount of the contributions and expenditures made by the company, its directors or officers, or any affiliates or subsidiaries within its control, exceeds $5,000 to a recipient in a given year, the order states. The rule essentially would require inquiries about contributions from individual officers that come out of their wallets and not out of corporate accounts.

The order would not apply to public-sector unions or grantees, which historically have tended to support Democrats. Most influential federal contractors either stay out of politics or contribute money to members of both parties — typically giving to the chairmen and ranking members of congressional committees with jurisdiction over their program’s purse strings — and lobby lawmakers on specific issues. Becoming tied to an individual politician or party, some have argued, can damage a company’s long-term prospects for doing business with the government.

Political opposition has already emerged. “This order is a purely political act offered under the benign label of disclosure,” said Rep. Darrell Issa, R-Calif., chairman of the House Oversight and Government Reform Committee and one of several Republicans to publicly condemn the document. “The order would not impose the same requirements on the labor unions or other organizations that support the president. Furthermore, it unnecessarily politicizes the procurement process.”

The order would require contractors to disclose contributions to third-party nonprofit groups — known as a 501(c)(4) organizations — in which the company has the “reasonable expectation” that the funds would be used to pay for electioneering communications such as paid advertisements.

The Supreme Court, in its landmark Citizens United v. Federal Election Commission case in January 2010, ruled that companies, labor unions and trade associations can make unlimited “independent expenditures” on advertisements supporting candidates through these third-party groups.

The disclosed contractor data would be made publicly available in a centralized, searchable database at, a federal website.

The proposal appears to be modeled on a new law in Illinois, which created similar disclosure requirements for state contractors.

An administration official told Government Executive in a statement that additional disclosure is needed to ensure that contracting decisions are not influenced by politics. “Taxpayers deserve to feel confident that federal contracting decisions are based on merit alone and are not influenced by political favoritism,” the official said. “That said, this document is a draft EO that is still moving through the standard review and feedback process. It is not a final document. But the president is committed to bringing more accountability and transparency to a federal contracting system that has long needed reform.”

But some observers suggest the procurement system is already insulated from politics and that bid decisions are based on factors such as price, technical expertise and past performance. They disagree with the administration’s assumption that the system is vulnerable to politics.

“Why would a contracting officer need to see this?” said one acquisition expert familiar with the memo. “Why not just have the company report quarterly or on an annual basis? There is a level of political gamesmanship at play.”

The source noted that the timing of the required disclosure — prior to the award of a contract — “strongly suggests that political donations will be a consideration during the source selection process.”

Some industry officials said the plan shows a lack of awareness of the realities of the procurement system. “The draft order says it is necessary to ensure that politics are not allowed to impair the integrity of the procurement process,” said Stan Soloway, president of the Professional Services Council, a contractor trade group. “But by force-feeding irrelevant information to government contracting officers, who would otherwise never consider such factors in a source selection, the rule would actually do precisely what it is intended to stop — inject politics into the source selection process.”

Soloway noted that campaign contribution data are already publicly available in the FEC’s disclosure database and in the congressional lobbying database.

The order appears to revive and amend aspects of the 2010 DISCLOSE Act, a bill that would have prohibited the funding of campaign ads by government contractors, corporations with at least a 20 percent foreign ownership and recipients of Troubled Asset Relief Program bailout funds. The bill passed the then-Democratically controlled House but did not receive a vote in the Senate.

While the proposed executive order would not impose a ban as envisioned by the DISCLOSE Act, critics believe the result will be the same, and that it could scare companies away from contributing to political opponents of the administration.

“I am concerned that this ill-conceived policy draft could have a chilling effect on the First Amendment rights of individuals to contribute to candidates of their choice,” said Sen. Susan Collins, R-Maine, ranking member of the Homeland Security and Governmental Affairs Committee. “It troubles me that the draft executive order could be perceived as making political contributions a factor to be considered in awarding federal contracts.”

The order also could prevent some small businesses from working with the government, according to House Small Business Committee Chairman Sam Graves, R-Mo. Graves sent a letter to President Obama on Thursday afternoon calling on him to abandon the order.

“This order will either intimidate contractors not to get involved in politics, or make them believe that they need to contribute to the party in power if they want to compete for contracts,” Graves wrote.

The plan does have support among transparency advocates. “The public needs to know who is giving how much to which candidates, and no person or corporation should be allowed to hide behind a shroud of secrecy and prevent the people from seeing who is trying to influence government and policymaking through political contributions,” Gary Bass, executive director of the nonpartisan OMB Watch, wrote on his blog.

The watchdog group, however, has a number of questions about how the order would be implemented, including how subsidiaries and affiliates would be defined and what would be the penalties for providing false or misleading information.

The draft order requires the Federal Acquisition Regulatory Council to adopt implementation regulations by the end of 2011. Depending on the effective date of the regulations, the order could be implemented before the 2012 election, when Obama is once again on the ballot.

– By Robert Brodsky – – April 21, 2011

This article was updated to clarify which online databases were being referred to as sites where contribution information is already public.