The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council issued an advance notice of proposed rulemaking on May 13 that could establish standards for posting federal contracts online. Providing the public online access to electronic copies of federal contracts could create a new level of accountability in federal procurement, but some contractors have opposed the idea, claiming it would cost too much and could reveal confidential business information.

Developing a means to quickly post federal contracts and related documents online could shed new light on how the government spends hundreds of billions of taxpayer dollars each year.

As a senator, President Obama co-sponsored the Federal Funding Accountability and Transparency Act (FFATA), which was signed into law by President George W. Bush and resulted in the creation of USAspending.gov. While USAspending.gov answered questions about who receives government money, as well as how much and what the money was for, it failed to answer the more fundamental questions of why the agencies made the contracting choices they made and whether contractor performance was adequate. Why did some contractors repeatedly receive large contracts with almost no competition? Why were some products and services so expensive? Why did some agencies have to outsource so many activities? Did the contractor actually do the work it was being paid to do and was the work completed on time? Posting contract documents online certainly won’t answer all of these questions, but it would likely be the first significant step into understanding the government’s choices.

Posting the records related to all, or even nearly all, contracts would be no small feat. In FY 2009, the federal government spent almost $540 billion on contracts with more than 250,000 recipients. The number of records associated with such activity, including individual task orders, is substantial. However, many public access advocates assert that technological advances make the handling of such large collections of records more feasible than ever.

What the Notice Said

The advance notice of proposed rulemaking, entitled "Enhancing Contract Transparency," asked “how best to amend the Federal Acquisition Regulation (FAR) to enable public posting [online] of contract actions, should such posting become a requirement in the future, without compromising contractors' proprietary and confidential commercial or financial information.” In particular, the councils were looking for efficient and equitable methods to exclude protected information from disclosure in processing the incredible number of government contracts. The councils also asked for information on the benefits of contract transparency, impacts on contractors and the government, and whether to institute a threshold amount (i.e., to exclude contracts under a certain dollar amount).

The notice received 14 comments, but the councils have not yet released their analysis of the comments.

Pros and Cons of Posting Contracts Online

One of the most significant potential advantages of posting contracts online is the increase in comprehensiveness and accountability. Currently, the government discloses some information about federal contracts at the bidding stage through summary data on USAspending.gov and through responses to Freedom of Information Act (FOIA) requests. Although some agencies and contractors claim these processes provide adequate transparency, the reality is that these systems are not linked and fail to provide comprehensive information about federal procurement.

For instance, USAspending.gov only offers coded summaries – often with significant data quality problems – such as the total contract amount, but lacking the contract details. Such details may be available through FOIA requests for contracts; however, only such contracts as are requested are even considered for disclosure, rather than comprehensive disclosure of all contracts government-wide. Moreover, even when requested contracts are disclosed, only the requester receives them, not the general public, and often with significant sections redacted.

A comprehensive public posting of contracts could address many of these deficiencies. In fact, some agencies have started voluntarily posting certain contracts online, including the Department of the Treasury posting many contracts related to the Troubled Asset Relief Program (TARP). However, this practice is still small-scale. Many public access and procurement reform advocates would like to see this type of posting made mandatory government-wide.

Another major potential advantage of online disclosure is improved ease of use. Rather than requiring citizens to search for the complete details of a contract through separate systems, contract details could instead be provided on USAspending.gov, linked to the summary data already present on that site. Navigating a website is a much easier task for most Americans than pursuing a lengthy and bureaucratic FOIA request.

Studies indicate that the current disclosure process performs poorly on timeliness. FFATA requires that spending be reported on USAspending.gov within 30 days of its obligation, yet a recent report found the average delay government-wide to be 55 days, nearly double the limit. Meanwhile, while the backlog of FOIA requests decreased nearly 40 percent in FY 2009, almost 80,000 requests were still pending at the end of that fiscal year.

Another factor that could vary widely depending on specifics is the cost. Several contractor and agency representatives expressed concern in their comments about the workload and resource requirements of online disclosure, including training and oversight. But a well designed system could manage these costs.

Perhaps the greatest variance in cost could depend on the method chosen for processing protected information in contracts. Currently, the process for disclosing contracts under FOIA or voluntary proactive disclosure involves the agency reviewing the issued contract for any protected information to be redacted, as well as contacting the contractor to afford the contractor an opportunity to object to the disclosure of particular information. This time-consuming process would be inappropriate to apply to the routine disclosure of hundreds of thousands of contracts issued each year. A variety of changes have been proposed to better manage this process, including:

• Notifying prospective offerors that successful offers will be made public
• Instructing contractors to provide a version of the offer with protected information redacted, to serve as the basis for the version to be posted online
• Instructing contractors to include all protected information in an appendix, to be excluded from the version posted online
• Designating particular data fields as containing protected information, to be automatically excluded from the version posted online
• Requiring contractors to submit justifications for their proposed redactions simultaneous with the proposed redactions, limiting the need for agencies to contact contractors for clarification during processing

Several contractors and their representatives, such as the Coalition for Government Procurement, raised the specter of protected information being accidentally disclosed through the online posting of a contract containing it. This possibility also can be reduced through proper procedures. Some comments, such as those from the Associated General Contractors of America, went so far as to suggest that government employees could be held personally liable for revealing trade secrets contained in contracts posted online. However, such liability should not apply to accidental disclosure in the good-faith execution of governmental duties.

Another interesting aspect of posting contracts online would be its effect on competition. Several comments postulated a decrease in competition for government contracts as potential offerors fear exposure of their confidential business information. For instance, the Department of Health and Human Services (HHS) in its comments asserted, "The posting of contracts will discourage potential offerors from submitting proposals." Likewise, industry group TechAmerica stated (pp. 32-35) that contract disclosure would produce a "reduction in competition for government requirements, particularly for small businesses." Others said, however, that increased access to market information could lower barriers to entry and thus support a flourish of competition. As the Project on Government Oversight (POGO) stated in its comments, "When contract information is publicly accessible, genuine competition will increase."

Perhaps the most shocking claim came in the HHS comments, which seemed to suggest that increased transparency is undesirable because it could enhance public support for accountability and broader participation:

The real burden and cost to the Government will come following the posting by virtue of a significant surge in public inquiries and how that will detract from the Contracting Officer's primary responsibility to award and manage contracts.

History of Online Posting Idea

Lawmakers and organizations have previously proposed posting contracts online. A requirement to do just that was included in the Strengthening Transparency and Accountability in Federal Spending Act of 2008, introduced by then-Sen. Barack Obama (D-IL) and Sens. Tom Coburn (R-OK), John McCain (R-AZ), and Tom Carper (D-DE). The bill was a follow-up to FFATA. The bill would have required that the government provide copies of the request for proposal, announcement of award, actual contract, and scope of work documents, linked to the spending information on USAspending.gov. The bill did not pass in the 110th Congress.

A similar requirement nearly became law under the American Recovery and Reinvestment Act of 2009, (the Recovery Act). As OMB Watch noted at the time, the provision passed in the House but was not included in the Senate bill and was eventually dropped in conference.

Next Steps

The councils' analysis of the comments should be forthcoming, which may address the questions that have been raised about the proposed rulemaking. Additionally, the councils may hold a public hearing on the topic.