Industry Insight: That's No Way To Treat a Contractor

It seems that it is open season on government contractors in Washington right now. Any potential problem, real or perceived, is treated as a more egregious violation than the one that preceded it. Leading the investigation is the legislative branch. Like the old Bugs Bunny cartoon, be "vewy, vewy quiet," Congress is hunting contractors.

The weapons of choice are investigations and legislation. Investigations are being used to examine specific cases of alleged wrongdoing, while legislation is an equal opportunity punisher. Taken together, the weapons are helping create a government market atmosphere not seen since the late 1980s and the original "toilet seat crisis."

Larry Allen is EVP of the Coalition for Government Procurement (CGP). Look for a new column from CGP twice a month.

While this column will not single out those under investigation, any casual observer knows that recognized industry names are under the microscope. The alleged misdeeds range from Iraq and Katrina abuses to more routine GSA Multiple Award Schedule matters. Even routine business matters, such as the extension of contracts, are taken out of context by those unfamiliar with federal contracting rules, but with a substantial political point to make. Contractors must be precise and careful in every federal business dealing, lest today's business transaction end up as tomorrow's headline.

While those doing the investigating are part of the legislative branch, their tactics and procedures are very much like a judicial proceeding. Indeed, Congressional investigators, especially those working for the House Government Oversight and Reform Committee, act very much like prosecuting attorneys. Despite this, those under investigation do not have protections normally afforded to those under prosecutorial scrutiny. It is cold comfort, for example, to know that any verdicts rendered against companies may be from the court of public opinion, not a judicial court. The effect on the company can be just as severe, with even less opportunity for redress.

In the meantime, legislation making its way through Congress would add more steps and overhead to the conduct of government business. While other columns here and elsewhere have delved into specific legislation in greater detail, the gist of the many bills currently under consideration is that contractors are not to be trusted and that Congress must attempt to legislate to the lowest common denominator in order to "protect" the public. Whether government contracting or some other topic, such an attitude usually makes for poor public policy and unworkable processes.

While the intent of some bills is admirable -- transparency, competition, etc. -- the net impact will be to drive up the cost of government acquisition significantly. Yes, the government will know what it is buying, but they will only have to wonder why it is significantly more expensive and took three times as long as it should have. Yes, the federal government is a large purchaser of many items. Being the biggest, however, doesn't always mean you get it cheaper or faster if you have put in hurdles to market efficiency.

Some common sense and coordination is needed in Congress to prioritize these measures, take the harder edges off and allow the business of government to be done in such a way that there is a healthy mix of competition, openness and speed. A healthy first step would be for Government Oversight and Reform Chair Henry Waxman (D-Calif.) to drop his seemingly preconceived notions that business is evil and engage industry in meaningful discussions. Right now, Waxman is notable by his absence, which only lends credence to those who suspect his true intention is to single out anecdotal horror stories for use as a 2008 campaign issue and not actually ensure a sound, efficient government acquisition system.

What, then, does all of this mean for contractors? It means playing government business by the book for one thing. As referenced above, even seemingly routine matters can be looked at negatively in today's reality. Similarly, the need for timely information on the latest legislative and policy changes has never been greater. Smart companies simply must know what's happening in order to make informed business decisions on whether, or to what extent, government business is good business for them to pursue. The great majority of those who move forward with government business must do so with both feet in the arena. This is no time to have just one foot in the federal business pond. Such companies are quite likely to lose that foot by not keeping informed.

Finally, it is important to note that all of this does not mean that government contractors are bound for extinction. Veteran contractors know that the type of scrutiny and legislative change has happened before. Sticking with government business for the long haul is still the smart bet for the overwhelming majority of firms. The bottom line is that the government relies on contractors more today then ever before and that is not likely to change anytime soon unless someone events wholesale cloning of government workers willing to work for free.

So, stay with it, double check your processes, and ride out the storm.