In FY 2007, the federal government paid contractors about $420 billion to provide thousands of goods and services, but it had little insight into whether those companies were delinquent in paying their federal taxes, had broken contracting rules or laws, or if those firms paid top-level executives exorbitant levels of compensation. However, if several proposed bills become law, these obstacles to oversight and transparency will be greatly reduced. H.R.s 3033, 3928, and 4881 were approved by the House Oversight and Government Reform Committee the week of March 10, while H.R. 5602 and a companion Senate bill were introduced the same week.

H.R. 3033: Contractors and Federal Spending Accountability Act of 2007
H.R. 3033 would direct the General Services Administration to compile and maintain a database containing information on civil, criminal, and administrative proceedings brought by the federal government and state governments against contractors or assistance recipients. It would also include federal suspensions and debarments of federal contractors.

Testifying before the Government Management, Organization and Procurement Subcommittee on Feb. 27, Scott Amey, General Counsel of the Project on Government Oversight (POGO), declared his support for the measure.

H.R. 3033 would go a long way in improving pre-award contracting decisions and enhancing the government's ability to weed out risky contractors, especially those with repeated histories of misconduct or poor performance.

But Amey also expressed astonishment that such a database is not currently administered by the federal government, as POGO currently operates a database similar to the one described in the bill. Amey thought it "shocking" that a nonprofit would be compiling this data instead of the federal government. Without easy access to such data, it is impossible for government procurement officers to make informed decisions about proper allocations of federal contracts.

H.R. 3928: Government Contractor Accountability Act of 2007
Although publicly-traded firms are required by the Securities and Exchange Commission to disclose the names and salaries of top-level managers, many firms that contract with the federal government, like private security company BlackwaterUSA, are private entities for which this information is not publicly available. H.R. 3928 is intended to provide the federal government and citizens insight into whether federal contractors are adding value to federal procurement or simply lining the pockets of a select few individuals.

The measure would provide this level of transparency by requiring federal contracting firms or grant recipients receiving more than 80 percent of their revenue from the federal government to disclose the names and salaries of their most highly compensated executives and would make this information available in the Federal Procurement Data System-Next Generation (FPDS-NG). During the committee markup, an amendment from Rep. Chris Murphy (D-CT) was adopted that would require disclosure of this information only from companies that have more than $25 million in gross revenues. The bill does not differentiate between for-profit and nonprofit companies.

While this increased transparency is certainly welcome, it would be a mistake for Congress to solely add this information to the FPDS database. The database is a complex and hard-to-use data source that often confounds even the most expert analysts and government employees. It is not a sufficient vehicle for disclosure of this important information to the public. At a minimum, this data should also be included in the new government website designed for tracking federal contracts — USASpending.gov, which is authorized under the Federal Funding Accountability and Transparency Act.

H.R. 4881: Contracting and Tax Accountability Act of 2007
According to the Government Accountability Office (GAO), there are thousands of firms that are delinquent in paying their taxes to the federal government. Exasperated that over $7 billion is owed to the Treasury by firms receiving payments from the federal government, Rep. Brad Ellsworth (D-IN) introduced H.R. 4881 to ensure that this practice ceases. H.R. 4881 would require all firms bidding on federal contracts to submit a declaration that they are not delinquent in their taxes. The bill would also bar firms on which the IRS has placed a tax lien from being awarded a federal contract.

POGO's Amey believes the act would "help address the need for greater transparency to prevent risky contractors from receiving federal dollars," and that "[i]mproved market research and contractor specific information should provide for better preaward contractor responsibility determinations."

The legislation has undergone significant changes since Ellsworth first introduced it in May 2007, in order to address concerns about how the law would be administered. Rather than setting a dollar level to focus on only the largest delinquent companies, the new version uses the filing of a tax lien by the IRS as the determinant. The change is designed to ensure that only significant cases are used to prevent companies from getting contracts. It also was made to give federal procurement officers a clear-cut way to check whether a company is ineligible for a contract.

Sen. Barack Obama (D-IL) has sponsored a companion measure (S. 2519) in the Senate.

H.R. 5602: Fair Share Act of 2008
Introduced March 13 by Reps. Rahm Emanuel (D-IL) and Ellsworth and Sens. John Kerry (D-MA) and Obama, this bill could also be called the "KBR's Fair Share Act." Kellogg Brown & Root, one of the largest contractors working in Iraq, has been using a shell company located in the Cayman Islands to avoid paying an estimated $100 million per year in taxes. The practice, in which some 10,500 KBR workers are officially employed by an off-shore company, allows the firm to avoid paying Social Security and Medicare taxes. And according a Boston Globe story, only KBR and one other American firm use this method of employment to dodge paying payroll taxes. H.R. 5602 would change the tax code "to treat foreign subsidiaries of U.S. companies performing services under contract with the United States government as American employers for the purpose of Social Security and Medicare payroll taxes."