Amey: Protecting their turf

If share-in-savings contracts are here to stay, as David Drabkin, deputy chief acquisition officer at the General Services Administration, wrote in the Jan. 24 issue of Federal Computer Week, he had better figure out a way to quickly improve the current system.

Touted by proponents of contract reform as a risk-free strategy to fund government projects, share-in-savings contracting allows agencies to receive funding for capital projects directly from vendors.

At the urging of large technology and defense contractors, House Government Reform Committee Chairman Rep. Tom Davis (R-Va.) has spent a considerable amount of time and energy promoting legislation to expand the use of such contracts.

A recent Government Accountability Office report indicates that contracts that allow private industry to finance capital energy projects for the federal government waste money. The finding is significant because those energy contracts operate in a manner similar to share-in-savings contracts, which Drabkin and some lawmakers have sought to rely on more heavily.

Specifically, the GAO report found that energy contracts increased the government's costs by 8 percent to 56 percent when using this risky mechanism rather than timely, full and upfront appropriations.

The frightening fact is that performance-based energy savings contracts are considered among the most risk-free contracts of this type because energy costs are easily estimated. Effective? I think not.

The government's reliance on a system that is not working in the taxpayers' interest is appalling, and critics have not been silent. Angela Styles, the Bush administration's former administrator of the Office of Federal Procurement Policy, has expressed strong concerns about the use of share-in-savings contracts, saying they will create bad deals for the government and taxpayers.

Other critics have argued that share-in-savings contracts may violate the Constitution and federal laws. Furthermore, they argue that such contracts will limit congressional oversight, require uncertain projections, increase direct spending by $450 million and create a noncompetitive contracting environment.

Those criticisms, however, are falling on deaf ears. Now that GAO officials have proven that even the best example of performance-based financing increases costs rather than savings, Congress should revisit share-in-savings contracts and rein in overzealous executive branch officials who are not protecting taxpayers' interests.

The government's program to promote share-in-savings contracts should cease and agencies should go about their contracting activities subject to the checks and balances built into our system.

Amey is general counsel for the Project on Government Oversight, a nonprofit watchdog group in Washington, D.C. This column is in response to a series of columns that ran in Federal Computer Week's Jan. 24, 2005 issue.