Congressional Record: May 1, 2003 (Senate)
Page S5631-S5633
SUNSHINE IN IRAQI RECONSTRUCTION CONTRACTING ACT
Mr. WYDEN. Mr. President, we rise today to discuss the call of a
bipartisan coalition for some badly needed sunshine in the process of
awarding Iraqi reconstruction contracts. I particularly commend several
of my colleagues for joining me in the bipartisan legislation, the
Sunshine in Iraqi Reconstruction Contracting Act introduced April 10.
First, Senator Clinton and I are especially grateful to the chair of
the Governmental Affairs Committee, Senator Collins of Maine. Not only
is she an excellent chair of the committee that will take up this
legislation, she is also an expert on procurement law, a real authority
on the very issue we have addressed in our legislation. We are very
proud to have her as our lead bipartisan coalition builder on this
legislation because her leadership qualities on the committee and
special proficiency on this topic give me great confidence this bill is
the right move for America, the right move for the Senate, particularly
the right move for our taxpayers, and we are very grateful for Senator
Collins' support and participation in this effort.
Our legislation has a simple aim. It says if a Federal agency awards
an Iraqi reconstruction contract without the benefit of open and
competitive bidding, that agency must publicly justify their decision
to do so. I will tell the Senate and my colleagues the events and news
reports of the 21 days since our bill's introduction have only
strengthened our bipartisan conviction that Iraqi reconstruction
contracts must be awarded in the sunshine and not behind a smokescreen.
There are two primary reasons we believe it is so important American
taxpayers deserve additional details about this closed and secretive
process. First, there is a huge amount of money on the line, a
projected $100 billion in taxpayer funds. Second, the General
Accounting Office has already reported sole-source or limited-source
contracts almost always are not the best buy for the taxpayer.
In my view, the need for explanation increases a hundredfold if
Federal agencies are going to employ a process that may expose
taxpayers to additional cost. When we introduced this legislation, we
were concerned that the U.S. Agency on International Development had
already awarded four of eight major Iraqi contracts through a closed
bid or no-bid process. Even at that time, sole-source and limited-
source contracts already seemed to be the rule and not the exception
for rebuilding Iraq. USAID announced it would limit competition to
companies they felt had the technical ability and accounting ability to
handle these matters.
But since our legislation was introduced, not only have a number of
Federal agencies continued to award no-bid or closed-bid contracts, but
once the bids have been solicited, they even started to ignore or
circumvent their own publicly stated criteria for limiting the pool of
applicants. More than ever, our bipartisan coalition believes if the
Federal Government chooses not to use free market competition to get
the most reasonable price from the most qualified contractor, then at a
minimum they should tell the American people why that is necessary.
Sunshine is the best disinfectant and the news reports of recent days
simply beg for a clearing of the air.
On April 11, the day after we introduced our bill, one firm secured a
$2 million Iraq school contract through an invitation-only process. On
April 18, USAID awarded the biggest contract yet through an invitation-
only bid process. A $680 million contract to rebuild Iraq's
infrastructure was awarded to Bechtel. On April 19, a $50 million
policing contract was awarded through a closed bidding process. On the
same day, the Washington Post reported that a renewable $7.9 billion
contract for personnel services in Iraqi reconstruction was awarded
February 25, nearly a month before the war began, with a single company
invited to bid for the job. According to the press reports, that
invitation came a full 55 days before the start of the hostilities.
As each of the contracts was awarded, Federal agencies justified the
no-bid or closed-bid process only by saying that they simply had to
move quickly. That is basically one of the only arguments the agencies
have left. Originally, USAID said the only companies with security
clearances could be invited to apply. But that argument fell apart just
a couple of days ago. USAID's own inspector general revealed that USAID
waived the security clearance requirement when one bid was awarded. It
turned out that the winner of a $4 million ports contract, in fact, did
not have the security clearance that was supposedly essential when the
limited bid process started. In effect, USAID eliminated the very
criteria it used to limit bidders on the project. USAID suddenly said
the outbreak of war in Iraq simply made the security clearance process
unnecessary.
The only reason the United States would be awarding contracting to
rebuild Iraq would be if the United States went to war. So if the
requirement for security clearance was needed before the war broke out,
it is hard to see what would have changed once the war started. As a
Member of the Senate Intelligence Committee, I thought the argument was
a bit shaky at the outset. I was not certain why you would need all of
the security clearances to fix the sewer system. Weeks ago, it was
clear that most of the Iraqi work would be subcontracted out to
companies who did not meet the security requirements in the first
place. But the report from the inspector general this week has
significantly increased my concern. It turned the agency's argument
about security clearances from suspect to essentially ludicrous.
This incident makes the case better than any other that agencies
should have to clearly and publicly state how they are choosing
companies for these invitation-only bids. Perhaps if they know they
have to face the public on these issues they will have better
explanations or a more open process.
We want to be clear, in the presence of actual security concerns, our
legislation assures the protection of classified information. But at
the same time, it does give the Congress oversight over the billions in
taxpayer money that Americans are being asked to commit in Iraq and
that is desperately needed. Historically, open and competitive bidding
by Federal agencies has been the tool to get the best value for the
taxpayers of our Nation.
Again, independent reports from the General Accounting Office show
that in the past, the soul-source or limited-source contracts have not
been before the buy. According to the General Accounting Office,
military leaders have
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often simply accepted the level of services given by a contractor
without ever asking if it could be done more efficiently or at a lower
cost. In the case of Iraq, again, with estimates being low-balled at
$25 billion and some exceeding $100 billion, taxpayers in our country
have a great interest in making sure this money is spent efficiently.
I also note in wrapping up that many of these contracts are so-called
cost-plus contracts. They pay a company's expenses, plus a guaranteed
profit of 1 to 8 percent. There are no limits on total costs, so the
more a firm charges in expenses, the more profit it is going to make.
If the Federal Government is going to spend the money of the people of
Oregon in this fashion without asking for competitive bids, I think the
people of Oregon and the people of this country deserve to know why.
There simply should not be a place for waste when you are talking about
at least $100 billion of taxpayers' cash.
I understand the argument that these contracts need to be awarded
quickly. I understand in many cases the companies receiving them have a
long history of international work. I simply believe if the need for
speed can adequately justify these closed-bid processes that may expose
the taxpayers to additional expenditures, then those agencies need to
make public why they would take these extraordinary measures that could
very well waste significant amounts of taxpayer money.
I want to yield my time to Senator Clinton. I thank her. She is on
the Senate Armed Services Committee. She and I and Senator Collins have
been a bipartisan coalition.
I would also like to note a number of other Senators--Senator Byrd in
particular, who serves on the Appropriations Committee and the Armed
Services Committee--have been very helpful as well. But I yield to
Senator Clinton and particularly express my support to her. With
Senator Collins, we have tried to make the focus that there is a
bipartisan need for protecting taxpayers, to make sure this money is
spent wisely at a time when there is so much economic hurt across the
Nation.
I yield to the distinguished Senator from New York.
Mrs. CLINTON. Mr. President, will my distinguished colleague yield
for a question?
Mr. WYDEN. I will.
Mrs. CLINTON. Mr. President, it is a great privilege to be working in
this bipartisan coalition with the chairman of the Governmental Affairs
Committee, Senator Collins, and with a long-time champion of taxpayers
and consumers like Senator Wyden.
Is it the understanding of the Senator from Oregon that the buck
really stops with Congress? It is the Congress's responsibility to
ensure the funds we appropriate for reconstruction in Iraq are spent in
a fair and open manner?
Mr. WYDEN. The Senator from New York has summed it up. This is
Congress's call. The buck in fact does stop with the Congress.
What we are talking about here is making sure Congress keeps in place
vigorous oversight about the process. The process is what has, in our
view, put taxpayers' dollars in some peril. People have focused on one
company or another. There are inquiries underway. What we are going to
do is protect the process that ensures, as the Senator from New York
suggests, that the taxpayers are protected and Congress in fact has the
last word in making sure this money is spent responsibly.
Mrs. CLINTON. Mr. President, that is an eloquent summation as to why
I have joined with my colleagues in introducing the Sunshine In Iraqi
Reconstruction Contracting Bill.
Tonight President Bush will address our Nation and will tell the
world that Operation Iraqi Freedom's military action is over, at least
insofar as major military engagements may be required. We know we will
have continuing problems, like those we have seen in the last few days.
But it is true we are now moving toward the second phase, which is the
rebuilding of Iraq. So this colloquy we are having today is especially
timely because of the President's announcement this evening.
With respect to our going forward, I think the important points the
Senator from Oregon has made need to be underscored because, for many
of us, we want to see the plans that have been explained in the last
several weeks about the rebuilding effort move forward as expeditiously
and cost-effectively as possible.
We know, as we just heard from the distinguished Senator, that a
number of contracts have already been let. They have been no-bid or
closed-bid contracts. As one follows the information about these
contracts in the press, it has become clearer and clearer this has been
in the planning for quite some time and it has been largely the
province of a rather small group of insiders.
I think it is imperative, not only for the integrity of our
procurement process, for the integrity of the congressional
appropriation and oversight process, but for the integrity of the
entire operation that has been undertaken in Iraq, to be transparent
and open before the world.
If I may ask the Senator from Oregon another question, is it correct
the legislation we have introduced would require when contracts are
awarded without a full and open competition, behind closed doors, that
the awarding agency--whether it is the Department of Defense or USAID--
would have to publicly explain why they could not have had an open
process?
Mr. WYDEN. The Senator is correct. Again, that is what the
legislation is about. There is a certain irony in that that information
is in fact already available. The bipartisan legislation we have put
together with the Chair of the Governmental Affairs Committee, Senator
Collins, says what is already completed work, in terms of the analysis
and justification, simply would be made public so as to reinforce the
proposition that there be the maximum amount of transparency, the
maximum amount of accountability, and so the public can see why, if
necessary, a special process that doesn't involve open bids would be
necessary.
Mrs. CLINTON. You know, our bill also requires as part of that
transparency, letting the sunshine come in, that the agencies would
make public the amount of the contract, the scope of the contract,
would provide information about how contractors were identified, as
well as the justification and determination of the documents that led
to the decision not to use full and open competition.
I find that very reassuring. I do not understand why this would not
be legislation we could literally pass by unanimous consent this
afternoon. I don't think it is in our Government's interest nor is it
in America's interest that there be any doubt at all, any shadow cast
over this process so people in our own country or elsewhere can say
there is something funny going on, this is not being done straight.
Would the Senator agree, in addition to fulfilling what we know to be
the appropriate procurement procedures, the fact that no-bid or closed-
bid contracts time and time again lead to overruns, to excessive costs,
that we are also, through this legislation, trying to send a warning,
in a sense holding out a helping hand to the Government, to say let's
do this in the open so nobody can ever go back and question motive or
process with respect to what we are attempting to do with the
reconstruction of Iraq?
Mr. WYDEN. The point of the Senator about the credibility of the
Government I think is fundamental. I think we all know if people see
something taking place behind closed doors, in secret, without the open
and full process of competitive bidding, it just engenders suspicion,
it just engenders a sense of skepticism and cynicism about government
that just does not have to be.
It is particularly troubling here because the General Accounting
Office, the nonpartisan organization of auditors, has already
documented there is a problem. So we have a combination of taxpayer
skepticism about work done in secret coupled with the long history of
the General Accounting Office's skepticism about these reports, and
here is an area that just cries out for sunshine.
I talked about sunshine being the best disinfectant, but certainly
since we introduced this bill with Senator Collins over the last 21
days, the fact we have seen all these contracts--in fact, one of them
where the agency just waives their own process, without an
explanation--I think highlights the Senator's point that the
Government's credibility is at stake.
Mrs. CLINTON. Mr. President, I hope we will have an even larger
bipartisan
[[Page S5633]]
coalition supporting this legislation, working with us, perhaps even
convincing the Government agencies responsible for letting these
contracts to think very hard about the process they are now following.
Again, I thank my colleague from Oregon and my colleague from Maine
for providing such leadership. It is a pleasure to work with them. But
it is also a duty. I think all of us feel a heavy responsibility to
make sure the billions and billions of dollars--maybe as much as $100
billion that will be spent on reconstructing Iraq--is spent in the most
effective way. Because, while we are looking at the extraordinary costs
of this kind of task awaiting us in Iraq, we are also in this body
hearing from our constituents, as many of us did over the previous 2
weeks, about what is happening to their schools, what is happening to
their hospitals.
So we have to be especially conscious that this money can be
justified; that we can look our constituents in the eyes when they say,
I don't understand, Senator. I thought we were going to get more help
for our poor schools. Senator, I don't understand. Our hospital has
just closed down because we can't get enough reimbursements from the
Federal Government.
This is not only about all of the good government principles. It is
not even only about the integrity and credibility of our government. It
is about the choices that are being made. These choices are not only
important with respect to contracting, but they are important with
respect to our values.
I hope our colleagues will join us in moving this piece of important
legislation through so that we can begin to practice what many of us
preach about transparency and openness and also making sure we get the
very best deal. Our dollars are limited. If there is any excess on
justified dollars going to Iraq that could go to my kids and schools in
New York City, or to Ron's hospital in Oregon, that is our
responsibility.
Let me again thank my colleagues. I look forward to being successful
with this bipartisan coalition and getting this legislation passed at
the earliest possible time.
Mr. WYDEN. Mr. President, to wrap up, I would like to reaffirm a
point that the distinguished Senator from New York mentioned with
respect to the feeling of our citizens at a time when there are so many
schools that are underfunded and seniors can't afford their medicine
and other services. When I was home over the break--perhaps the Senator
from New York heard this as well--many constituents came up to me and
said: We are really glad that you are pushing this bill at more
competitive bidding and reconstruction contracts. But, to tell you the
truth, why don't you just have Iraqi oil pay for all of the
reconstruction? We don't need the taxpayer money.
There already is a sense about the Nation that we have to be careful
about how these funds are being used. I think there is a role for the
United States to play. I think it is clear that is a part of an
important contribution that our country can make with the conflict
winding down. But it just reaffirms in my mind how critical it is to
use this money wisely. With the American people hurting now with what
one might say is the highest unemployment rate of our country, you
can't explain to the taxpayers of this Nation frittering away dollars
on contracts that are let without competitive bids.
We look forward to colleagues of both political parties joining us in
this effort. It seems to me a bill such as this should be passed
unanimously with all 100 Senators onboard. We look forward to seeing
the resolution of this legislation to protect the taxpayers.
Again, I want to close by expressing my thanks to the chairman of the
committee where this legislation was sent. Senator Collins has been a
critical partner in this effort to direct procurement law. Senator
Byrd, who holds, of course, a longstanding interest in this matter and
serves on both the Appropriations and the Armed Services Committees,
has been invaluable to me in particular in providing counsel with
respect to how to move this legislation forward. Together we look
forward to passing this bill and protecting the taxpayers' interests as
perhaps $100 billion of taxpayer money is spent in the rebuilding of
Iraq.
I yield the floor.
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