[House Report 110-594]
[From the U.S. Government Publishing Office]
110th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 110-594
======================================================================
GOVERNMENT CONTRACTOR ACCOUNTABILITY ACT OF 2007
_______
April 17, 2008.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Waxman, from the Committee on Oversight and Government Reform,
submitted the following
R E P O R T
together with
ADDITIONAL VIEWS
[To accompany H.R. 3928]
[Including cost estimate of the Congressional Budget Office]
The Committee on Oversight and Government Reform, to whom
was referred the bill (H.R. 3928) to require certain large
government contractors that receive more than 80 percent of
their annual gross revenue from Federal contracts to disclose
the names and salaries of their most highly compensated
officers, and for other purposes, having considered the same,
report favorably thereon with an amendment and recommend that
the bill as amended do pass.
CONTENTS
Page
Purpose and Summary.............................................. 2
Background and Need for Legislation.............................. 2
Legislative History.............................................. 3
Section-by-Section............................................... 3
Explanation of Amendments........................................ 4
Committee Consideration.......................................... 4
Roll Call Votes.................................................. 4
Application of Law to the Legislative Branch..................... 4
Statement of Oversight Findings and Recommendations of the
Committee...................................................... 4
Statement of General Performance Goals and Objectives............ 4
Constitutional Authority Statement............................... 4
Federal Advisory Committee Act................................... 4
Unfunded Mandates Statement...................................... 5
Earmark Identification........................................... 5
Budget Authority and Congressional Budget Office Cost Estimate... 5
Changes in Existing Law Made by the Bill, as Reported............ 6
Additional Views................................................. 7
The amendment (stated in terms of the page and line numbers
of the introduced bill) is as follows:
Page 3, line 22, strike ``$5,000,000'' and insert
``$25,000,000''.
PURPOSE AND SUMMARY
H.R. 3928, the Government Contractor Accountability Act of
2007, was introduced by Rep. Christopher Murphy on October 23,
2007. The measure would increase accountability and
transparency in federal contracting by requiring companies that
receive more than 80 percent of annual gross revenue from
federal contracts to disclose the names and salaries of their
most highly compensated officers.
BACKGROUND AND NEED FOR LEGISLATION
Each year the federal government spends billions of dollars
to procure goods and services, making federal contracts one of
the fastest growing components of the federal budget. In fiscal
year 2006, the federal government spent over $400 billion on
contracts with private companies.
Although the government spends billions of dollars on
private contractors, the American taxpayer and Congress know
very little about the management practices, financial
statements, and employment policies of these firms. Of these
contractors, Blackwater USA has received particular attention
and scrutiny. At a hearing before the House Committee on
Oversight and Government Reform, Blackwater CEO Erik Prince
refused to provide Congress with details of Blackwater's
profits or his personal compensation.
Blackwater has grown to become one of the world's largest
providers of private military services. Prior to the war in
Iraq, the company primarily offered training services for law
enforcement and military personnel. But during the past six
years, the company has expanded and diversified to include
overseas security contracting.
Blackwater's government contracts have grown exponentially,
particularly since the start of the war in Iraq. Blackwater
went from having government contracts worth less than a million
dollars in 2001 to contracts worth more than half a billion
dollars in 2006. In fiscal year 2001, Blackwater had $736,906
in federal contracts. By 2006, Blackwater had over $593 million
in government contracts, an increase of more than 80,000
percent. In total, Blackwater has received over a billion
dollars under its federal government contracts during fiscal
years 2001 to 2006.
H.R. 3928 would create disclosure requirements for
privately held government contractors similar to existing
requirements for publicly traded companies and nonprofit
organizations. Publicly traded companies are required to
disclose similar information on executive compensation to the
Securities and Exchange Commission, and nonprofit organizations
are required to disclose such information to the Internal
Revenue Service on Form 990. These disclosures are publicly
available. The rationale behind the requirements is to mandate
transparency for entities that receive government benefits and
public investment. Publicly traded companies receive access to
government-regulated capital markets. Nonprofit organizations
are tax-exempt and donations to non-profits are tax-deductible
for the donor.
Companies that derive the vast majority of their revenues
from government contracts receive the benefit of a revenue
stream generated by taxpayer dollars. Taxpayers should be able
to review how their money is being spent.
LEGISLATIVE HISTORY
H.R. 3928, the Government Contractor Accountability Act of
2007, was introduced by Rep. Murphy on October 23, 2007, and
was referred to the Committee on Oversight and Government
Reform.
The Subcommittee on Government Management, Organization,
and Procurement held a hearing on H.R. 3928 on February 27,
2008. The witnesses were Paul Denett, Administrator, Office of
Federal Procurement Policy, Office of Management and Budget;
John Hutton, Director, Acquisition and Sourcing Management,
U.S. Government Accountability Office; Marcia Madsen, Partner,
Mayer Brown and Chair, Acquisition Advisory Panel; Scott Amey,
General Counsel, Project on Government Oversight; and Alan
Chvotkin, Senior Vice President and Counsel, Professional
Services Council.
The Subcommittee held a markup to consider H.R. 3928 on
March 11, 2008, and ordered the bill to be favorably reported
by voice vote.
The Committee held a markup to consider H.R. 3928 on March
13, 2008, and ordered the bill, as amended, to be favorably
reported by voice vote.
SECTION-BY-SECTION
Section 1: Short title
The short title of the bill is the Government Contractor
Accountability Act of 2007.
Section 2: Certification and other financial disclosure requirements
for certain government contractors
This section directs federal government contracting
officers to require ``covered contractors'' to submit for each
contract entered into either (1) a certification that the
contractor received 80 percent or less of its annual gross
revenues from other federal contracts during the fiscal year
preceding the fiscal year in which the contract is awarded; or
(2) a statement disclosing the names and salaries of the
contractor's principal executive officer, principal financial
officer, three most highly compensated other executive officers
or individuals, and directors. Such certifications and any
annual updates that are required to be submitted are to be made
publicly available in searchable form through the Federal
Procurement Data System. The term ``covered contractor'' means
an entity that (1) received more than $25 million in annual
gross revenues from federal contracts in the preceding fiscal
year and (2) is not a publicly traded company required to file
periodic reports under section 13(a) or 15(d) of the Securities
Exchange Act of 1934. The Administrator of the General Services
is required to issue regulations to implement these provisions.
EXPLANATION OF AMENDMENTS
Mr. Murphy offered an amendment, passed by voice vote,
striking a provision that defined a ``covered contractor'' as
an entity that received more than $5 million in annual gross
revenues from federal contracts, and replacing it with a
provision that defined a ``covered contractor'' as an entity
that received more than $25 million in annual gross revenues
from federal contracts.
COMMITTEE CONSIDERATION
On Thursday, March 13, 2008, the Committee met in open
session and favorably ordered H.R. 3928 to be reported, as
amended, to the House by a voice vote.
ROLL CALL VOTES
No roll call votes were held.
APPLICATION OF LAW TO THE LEGISLATIVE BRANCH
Section 102(b)(3) of Public Law 104-1 requires a
description of the application of this bill to the legislative
branch where the bill relates to terms and conditions of
employment or access to public services and accommodations. The
bill does not relate to employment or access to public services
and accommodations.
STATEMENT OF OVERSIGHT FINDINGS AND RECOMMENDATIONS OF THE COMMITTEE
In compliance with clause 3(c)(1) of rule XIII and clause
2(b)(1) of rule X of the Rules of the House of Representatives,
the Committee's oversight findings and recommendations are
reflected in the descriptive portions of this report.
STATEMENT OF GENERAL PERFORMANCE GOALS AND OBJECTIVES
In accordance with clause 3(c)(4) of rule XIII of the Rules
of the House of Representatives, the Committee's performance
goals and objectives are reflected in the descriptive portions
of this report, including improving the efficiency and
transparency of federal procurement.
CONSTITUTIONAL AUTHORITY STATEMENT
Under clause 3(d)(1) of rule XIII of the Rules of the House
of Representatives, the Committee must include a statement
citing the specific powers granted to Congress to enact the law
proposed by H.R. 3928. Article I, Section 8, Clause 18 of the
Constitution of the United States grants the Congress the power
to enact this law.
FEDERAL ADVISORY COMMITTEE ACT
The Committee finds that the legislation does not establish
or authorize the establishment of an advisory committee within
the definition of 5 U.S.C. App., section 5(b).
UNFUNDED MANDATES STATEMENT
Section 423 of the Congressional Budget and Impoundment
Control Act (as amended by section 101(a)(2) of the Unfunded
Mandates Reform Act, P.L. 104-4) requires a statement on
whether the provisions of the report include unfunded mandates.
In compliance with this requirement the Committee has received
a letter from the Congressional Budget Office included herein.
EARMARK IDENTIFICATION
H.R. 3928 does not include any congressional earmarks,
limited tax benefits, or limited tariff benefits as defined in
clause 9(d), 9(e), or 9(f) of rule XXI.
COMMITTEE ESTIMATE
Clause 3(d)(2) of rule XIII of the Rules of the House of
Representatives requires an estimate and a comparison by the
Committee of the costs that would be incurred in carrying out
H.R. 3928. However, clause 3(d)(3)(B) of that rule provides
that this requirement does not apply when the Committee has
included in its report a timely submitted cost estimate of the
bill prepared by the Director of the Congressional Budget
Office under section 402 of the Congressional Budget Act.
BUDGET AUTHORITY AND CONGRESSIONAL BUDGET OFFICE COST ESTIMATE
With respect to the requirements of clause 3(c)(2) of rule
XIII of the Rules of the House of Representatives and section
308(a) of the Congressional Budget Act of 1974 and with respect
to requirements of clause 3(c)(3) of rule XIII of the Rules of
the House of Representatives and section 402 of the
Congressional Budget Act of 1974, the Committee has received
the following cost estimate for H.R. 3928 from the Director of
the Congressional Budget Office:
April 8, 2008.
Hon. Henry A. Waxman,
Chairman, Committee on Oversight and Government Reform, House of
Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 3928, the
Government Contractor Accountability Act of 2007.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Matthew
Pickford.
Sincerely,
Peter R. Orszag.
Enclosure.
H.R. 3928--Government Contractor Accountability Act of 2007
H.R. 3928 would require certain privately owned companies
that received more than 80 percent of their annual gross
revenue from federal contracts to annually report the names and
salaries of their highest-ranking company officials. The bill
would apply to firms with more than $25 million in annual gross
revenue. The legislation would require the General Services
Administration (GSA) to promulgate new regulations and make the
information publicly available through the Federal Procurement
Data System.
Based on information from GSA, CBO estimates that
implementing H.R. 3928 would cost $2 million in 2009 and about
$5 million over the 2009-2013 period, assuming the availability
of appropriated funds. GSA would incur those costs to amend the
Federal Procurement Data System and train employees to use it.
H.R. 3928 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would not affect the budgets of state, local, or tribal
governments.
The CBO staff contact for this estimate is Matthew
Pickford. This estimate was approved by Peter H. Fontaine,
Assistant Director for Budget Analysis.
CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED
No changes to existing law are made by H.R. 3928, as
reported.
ADDITIONAL VIEWS OF RANKING MEMBER TOM DAVIS
H.R. 3928 would require any non-public company receiving
more than $5 million from federal contracts and earning 80
percent of its revenue from federal contracts to disclose: the
names and salaries of the contractor's principal executive
officer, principal financial officer, three other most highly
compensated officers, as well as firm's directors--information
which currently is available to government acquisition
officials.
Therefore, H.R. 3928 serves only one purpose: to embarrass
Blackwater USA because the Chief Executive Officer of that
privately held company performing under fixed-price government
contracts refused to disclose his salary during a hearing on
security contracting.
Information regarding salaries of top company officials
could be useful under certain cost-type contracts where the
government reimburses a firm for its reasonable and allowable
costs plus a fee. Under current acquisition regulations
governing such contracts, such information is available to
government contracting officials, In fact, procurement
regulations place a ceiling on executive compensation costs
which can be reimbursed under cost-type contracts.
Moreover, this information is also available to acquisition
officials (to the extent it is relevant) during the
negotiations leading up to the award of a fixed-priced
contract. Thus, H.R. 3928 has no acquisition purpose. The only
purpose of this bill is to ``punish'' and embarrass privately
held firms. It will accomplish nothing other than to discourage
the participation of privately held firms in the government
market--which will decrease competition and, ultimately,
increase government costs.
Tom Davis.